No Power to Order Indemnity Costs in Work Injury Damages Claims

In Chubs Constructions Pty Limited v. Chamma [2009] NSW CA 98 the New South Wales Court of Appeal considered whether indemnity costs can be ordered against a party in Work Injury Damages claims.
The primary judge had entered an indemnity costs order against the employer, on the basis that the amount recovered by a worker exceeded a compromise offer made by the worker.

Whilst accepting that the Court was granted wide powers in relation to costs pursuant to Section 98(1) of the Civil Procedure Act 2005, the Court was ultimately persuaded by the fact that Section 98(1) was stipulated to be subject to the provisions of “any other Act”, including the Workplace Injury Management Act 1998.

The Court accepted that Section 346(3) and (4) of the Workplace Injury Management Act provided that in a claim for Work Injury Damages, a Court could only award costs as prescribed by the Regulations or by the Rules of Court, and that in the event of any inconsistency between them, the Regulations are to prevail.

On this basis, the Regulations were ultimately determinative of the Court’s power to order costs in favour of a worker. In general terms, the Regulations provide that there is to be no order for payment of the worker’s costs unless the worker recovers a more favourable order or judgment than the worker’s final offer at Mediation, and that a worker who fails to obtain an outcome more favourable than the employer’s final offer at Mediation is to pay the employer’s costs.

Further, such an order must be limited to party/party costs, as the Regulations do not contain any provision for the awarding of indemnity costs.

Increased Rate for Loss of Superannuation Benefits in WID Claims

Damages for loss of superannuation benefits in Work Injury Damages claims have traditionally been assessed on the basis of 9% of net past and future economic loss.

However, in Najdovski v Crnojlovic [2008] NSW CA 175, the New South Wales Court of Appeal considered that Section 15C of the Civil Liability Act 2002 allowed for the calculation of superannuation contributions by taking 9% of gross damages for lost earning capacity in accordance with the Superannuation Guarantee (Administration) Act 1992 (Cth).

Basten JA then considered the issue of how to compensate for the differential between gross earnings and net economic loss, concluding as follows:

“For the purposes of calculation of lost superannuation benefits, it is appropriate to add together the past and future lost wages and, accepting that those figures are net figures, allow 11% of the total for superannuation”.

Although the decision in Najdovski concerned a claim for damages arising from a motor accident, there is no reason in principle that this aspect of the decision should not also be applicable for Work Injury Damages Claims, as the Court found that the Civil Liability Act did not alter or modify the general law.

District Court Rejects claims for Interest and Costs in WID claim

On 10 June 2009, Gibson DCJ dismissed a worker’s claim for interest on a Work Injury Damages judgment in Daniel McKay v Palmer’s Removals and Storage Pty Limited.

The claim for interest was defeated by operation of Section 151M of the Workplace Injury Management Act 1987, on the basis that the worker’s damages after deduction of weekly payments of compensation did not exceed the employer’s highest offer, contained in an Offer of Compromise, by more than 20%.

The Plaintiff was also not entitled to costs, pursuant to Regulation 91 of the Workers Compensation Regulation 2003 and the Court of Appeal Decision in Smith v Sydney West Area Health Service (No.2) (2009) NSW CA 62, as the worker’s judgment was less favourable than his final offer recorded at Mediation. Accordingly, each party was ordered to pay its own costs of the proceedings.

Parties Must Disclose Evidence in WID Pre-Filing Documents

Section 318(1)(d) of the Workplace Injury Management Act 1998 provides that a party to proceedings is not entitled to have any report or other evidence admitted in proceedings unless the report or evidence is disclosed by the party in a Pre-Filing Statement or Defence.

Section 318(1)(d) allows some discretion for non-disclosed documents to be admissible, but only with leave of the Court. However, sub-section (2) provides that such leave is not to be granted unless the Court is satisfied that:

  • the material concerned was not reasonably available to the party when the Pre-Filing Statement or Defence was served, and
  • the failure to grant leave would substantially prejudice the parties case.

Elkaim DCJ considered the above discretion in George Magoulias v Coffee Serve Pty Limited (No. 1252/08 – 4 July 2008). His Honour found that a two-fold test must be satisfied in order for the discretion to be exercised. In other words, the party seeking to admit the previously non-disclosed documents must establish both the issue of prejudice and that the material was not reasonably available to the party when the Pre-Filing document was served. His Honour stated that unless both of these elements were satisfied, then the discretion could not be exercised and the documents would be inadmissible.

This decision emphasises the importance of ensuring proper disclosure of all relevant documents when preparing Pre-Filing documents, or of positively adducing evidence of both prejudice and that the documents were not reasonably available at the time the Pre-Filing documents were served in order to obtain leave to admit non-disclosed documents.

Update on Arbitrator v. Approved Medical Specialist Jurisdiction

A number of decisions of both Presidential members of the Commission and the Court of Appeal have considered the question of jurisdiction to determine medical disputes.

In Gane v Dubbo City Council [2007] NSW WCC PD 140, Deputy President Roche considered that once issues of injury and causation are determined “the only course open in a claim for lump sum compensation where there is a dispute as to the degree of permanent impairment is to refer the claim to an AMS for assessment”.

In Total Steel of Australia Pty Limited v Waretini [2007] NSW WCC PD 33 Snell ADP found that once an Arbitrator had determined that the effects of injury had resolved, there was no longer any “medical dispute” to refer for AMS assessment.

More recently, in Haroun v Rail Corporation NSW and Ors [2008] NSW CA 192 the Court of Appeal considered a situation where the findings of a Medical Appeal Panel were inconsistent with consent findings made by an Arbitrator. However, it was common ground that the matters referred to the Approved Medical Specialist were “medical disputes” and that the effects of injuries continued to contribute to impairment suffered by the worker. The Court of Appeal accepted that factual and legal issues were to be resolved by an Arbitrator, but that medical issues were to be decided by an Approved Medical Specialist/Medical Appeal Panel. It was found that the Arbitrator had no jurisdiction to decide the medical dispute and so his findings were not binding on the AMS or the Appeal Panel.

Deputy President O’Grady has attempted to reconcile these decisions in Peric v Chul Lee Hyuang, Ho Shin Jong Lee and Mi Ran t/as Pure and Delicious Health and Anor [2009] NSW WCC PD 47 (4 May 2009). In that case, the Arbitrator specifically found that the effects of injury suffered by the worker had resolved and, accordingly, declined to refer the worker for AMS assessment.

Deputy President O’Grady agreed with the Arbitrator’s decision, on the basis that findings in relation to the pathological consequences of injury are within the exclusive jurisdiction of the Commission and that once the Arbitrator found that there the effects of the injury had resolved, there was no longer any “medical dispute” to be referred for AMS assessment.

Deputy President O’Grady distinguished Haroun on the basis that the consent findings in that case specifically accepted that the effects of injury continued to contribute to any impairment, thereby allowing jurisdiction to determine the medical dispute.

These decisions underline the importance of carefully considering the nature and extent of pathology and having any issues in that regard properly determined by an Arbitrator prior to AMS referral, particularly in circumstances where the evidence suggests that the effects of injury may have resolved.

In summary, Arbitrators retain exclusive jurisdiction to determine questions of liability and causation, however should a “medical dispute” persist after those findings have been made, issues such as the degree of Whole Person Impairment are to be determined by an Approved Medical Specialist.