Ellis v Workers' Compensation Regulator [2020] QIRC 201

QUEENSLAND INDUSTRIAL RELATIONS COMMISSION CITATION: Ellis v Workers' Compensation Regulator QIRC [2020] 201 PARTIES: Ellis, Damien Barry (Appellant) v Workers' Compensation Regulator (Respondent) CASE NO: WC/2020/57 PROCEEDING: Application in existing proceedings DELIVERED ON: 25 November 2020 MEMBER: HEARD AT: McLennan IC On the papers ORDER: 1. That each party bear its own costs with respect to the Appeal filed 18 May 2020 and the Application in existing proceedings filed 21 October 2020. CATCHWORDS: WORKERS' COMPENSATION – APPEAL AGAINST DECISION OF WORKERS' COMPENSATION REGULATOR – where appeal conceded by Regulator prior to hearing – where parties unable to agree on costs – whether costs order should be made. LEGISLATION: Industrial Relations Act 2016 (Qld) s 545 Industrial Relations (Tribunals) Rules 2011 (Qld) r 70 -- 1 of 13 -- 2 CASES: Workers' Compensation and Rehabilitation Act 2003 (Qld) s 562, s 558 Workers' Compensation and Rehabilitation Regulation 2014 (Qld) reg 132 Bowers v WorkCover Queensland (2002) 170 QGIG 1 Church v Simon Blackwood (Workers' Compensation Regulator) [2015] ICQ 031 Du Preez v Chelden (No. 2) [2020] ICQ 015 Canton v Workers' Compensation Regulator [2019] QIRC 145 Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 Kim v Workers' Compensation Regulator [2019] ICQ 14 Kujawa v Workers’ Compensation Regulator [2020] QIRC 179 MIM Holdings Limited v Automotive, Metals, Engineering, Printing and Kindred Industries Industrial Union of Employees Queensland (2000) 164 QGIG 370 Trimble v Q-COMP AND State of Queensland (Queensland Audit Office) [2013] QIRC 135 Yousif v Workers’ Compensation Regulator [2019] ICQ 10 Reasons for Decision [1] On 18 May 2020 Mr Damien Barry Ellis (the Appellant, and the Applicant) filed an appeal against a decision of the Workers’ Compensation Regulator (the Respondent). The parties were directed, by order from the Industrial Registry, to provide disclosure, file statements of facts and contentions and exchange outlines of evidence. The parties were to then advise whether they required a conciliation conference or wished to proceed to hearing. Those directions were to be completed by 26 October 2020. [2] On 7 September 2020, Ms Cheryl-Lea Godfrey on behalf of the Respondent advised the Industrial Registry that the Respondent had made an offer to Mr Ellis to resolve the -- 2 of 13 -- 3 appeal, and the parties consented to the outstanding Directions being vacated. It appears that the only outstanding issue was the question of costs. [3] On 21 October 2020 Mr Ellis filed an Application in existing proceedings (the Application), seeking an Order that the Respondent pay his reasonable legal costs and disbursements incurred in lodging and pursuing the appeal. That Application is the subject of this decision. Submissions The Application filed 21 October 2020 [4] The Application sought the following orders: 1. That the Respondent pay the Applicant’s reasonable legal costs and disbursements incurred Applicant in lodging and pursing the Appeal before the Queensland Industrial Relations Commission. 2. Such further or other order as the Court deems appropriate. [5] The Application was supported by an affidavit of Mr Ellis, filed 21 October 2020. In short, it provided:  Mr Ellis has incurred considerable costs in engaging several different legal representatives throughout the application, review, and appeal process.  In the appeal process before this Commission, Mr Ellis prepared a comprehensive list of documents and filed a detailed statement of facts and contentions.  In the review process, the Regulator was assisted by the report of Dr Sharon Harding. The Regulator concluded that Mr Ellis had sustained a psychological injury, and the events contributing to that injury could be best addressed by considering three factors: 1. Accommodation Mr Ellis resided in; 2. The report of Professor Adam Scott and a subsequent job transfer; and 3. The reclassification of his position and his unsuccessful job application.  The Regulator concluded that the injury arose out of his employment, and that in relation to each of those three factors the injuries sustained by Mr Ellis arose from management action.  The only basis for the rejection of the review was that on each of those three factors, the Regulator determined that the management action was reasonable management action taken in a reasonable way. -- 3 of 13 -- 4  The Regulator, in arriving at that view, did not fully consider the medical evidence. Both medical reports and all other relevant evidence had already been supplied by that time.  The Commission is empowered to award costs by virtue of s 558 of the Workers’ Compensation and Rehabilitation Act 2003 (Qld),1 which provides that costs of the hearing are in the appeal body’s discretion, except as provided under a regulation.  The relevant regulation is reg 132 of the Workers’ Compensation and Rehabilitation Regulation 2014 (Qld).2  The general power to award costs in these proceedings is contained in s 545 of the Industrial Relations Act 2016 (Qld).3 It is further submitted that it should have been reasonably apparent to the Regulator that the response to the application had no reasonable prospects of success.  Dr Harding obtained a detailed history of Mr Ellis, and when commenting on the stressors contributing to his psychiatric distress noted: [7] – “being removed from his duties without being given other satisfying duties commensurate with his level of training and expertise”. [11] – “Mr Woodhouse allegedly deleting an email from Mr Ellis without reading it.”  Further, in a report by Dr Rama Krishna Bhavanishankar it was stated that “the perpetuating factors appear to be a lack of any communication or any investigation into his complaints and concerns.”  In the review process, it was made clear by both reporting specialists that there was unreasonable management action.  There was sufficient information to show that there was effectively being a constructive dismissal process being affected against him, which cannot be reasonable management action.  The Regulator should have appreciated, from the medical evidence available at the time, that the response had no reasonable prospects of success given that Mr Ellis would succeed on that point at least, and possibly several others. 1 ‘the WC Act’. 2 ‘the WC Regulation’. 3 ‘the IR Act’. -- 4 of 13 -- 5  Because that information was available to the Regulator during the review process, any and all costs incurred by Mr Ellis during the appeal were unnecessary and the Commission should made an order for costs at the appropriate scale. Submissions in Response filed 2 November 2020 [6] The Respondent’s submissions to the Application may be summarised as follows:  The Respondent has conceded the appeal, and sought to resolve the matter by way of consent order on the basis that each party bear their own costs.  The chronology of events was as follows: o On 20 April 2020 the Respondent confirmed the decision of WorkCover Queensland to reject the application for assessment for permanent impairment. o On 18 May 2020 an appeal was filed against that decision in the Commission. o On 27 July 2020 Mr Ellis advised the Respondent that they had further disclosure additional to their list of documents, but did not provide those. o On 12 and 13 August 2020 witness conferencing in Mt Isa occurred. o On 24 August a proposal to concede the appeal was prepared. o On 2 September 2020 a consent order was sent to Mr Ellis’ solicitor conceding the appeal.  The Respondent conceded the matter within three weeks of their witness conferencing, and without the further disclosure of documents by Mr Ellis.  The discretion to award costs in these proceedings does not arise out of s 558 of the WC Act, because there was no event to trigger that discretion.  The discretion arises from s 545 of the IR Act.  The issue is therefore whether Mr Ellis has proven, on the balance of probabilities, whether the Respondent’s response to the appeal or during the carriage of the matter was either vexatious or without reasonable cause, or without reasonable prospects of success.  In considering that question, it is important to note the statutory functions of the Regulator under Ch 13 Pt 2 of the WC Act. Those functions involve the review of -- 5 of 13 -- 6 evidence, conducting investigations and conferencing with witnesses as a prelude to appearing at a hearing before the Commission.  Once further details of the case informed the prospects of success for Mr Ellis, the Respondent properly conceded the substantive matter without delay.  There is nothing vexatious or unreasonable about the way the Respondent has conducted itself in the course of these proceedings.  As to reasonable prospects of success, the question of reasonable management action was to be central to any hearing of the matter. The concept of “reasonable” in that context is said to mean “reasonable in all the circumstances of the case”, citing Bowers v WorkCover Queensland (2002) 170 QGIG 1 and others.  The appeal is a hearing de novo from a decision of the review unit made on the papers and based only upon the evidence before the appeal unit. There is no power for the review unit to interview witnesses or otherwise properly test credibility and reliability of the evidence before it. That can only occur during the appeals process and was undertaken by the Respondent in a timely manner. Critical new information arose during the witness conferencing, and so the matter was properly and promptly conceded.  In MIM Holdings Ltd, 4 President Hall explained that the phrase “without reasonable cause” means “objectively recognisable as one which could not succeed at the time when the application was made”.  This appeal was ultimately not heard. It might be a different scenario in circumstances where the appeal had progressed and the Commission found facts which ultimately meant the appeal was successful, but there were not even hearing dates in this instance.  The application should be dismissed. Given that it is abundantly clear that Mr Ellis had no prospects of success on any ground of the application, an order for costs against him is appropriate, citing Gambaro v Workers’ Compensation Regulator [2017] ICQ 005. The Respondent seeks their costs of an incidental to this application. [7] An affidavit from the hand of Ms Godfrey was filed in support of those submissions on 2 November 2020, which attests to the factual circumstances set out in the Respondent’s submissions. Reply submissions filed 12 November 2020 4 MIM Holdings Limited v Automotive, Metals, Engineering, Printing and Kindred Industries Industrial Union of Employees Queensland (2000) 164 QGIG 370, 371. -- 6 of 13 -- 7 [8] Mr Ellis’ reply submissions confirmed that no material argument existed with respect to the background facts or chronology set out in the Respondent’s submissions, and also agreed that s 545 of the IR Act is the appropriate power in this instance to award costs. [9] As to acting vexatiously or without reasonable cause, Mr Ellis confirms that he does not contend the Respondent acted vexatiously. He goes on to say that: Reasonableness is raised as a valid argument by the Applicant and is further addressed in the next heading as being the more appropriate heading for consideration of reasonableness. [10] Mr Ellis goes on to submit that: No issue is taken with the Respondent as to the cases submitted as appropriate for consideration in considering the words “reasonable or without reasonable cause”. The applicant maintains that on consideration of the medical report of Dr Sharon Harding dated 26 July 2019 and the report of Dr Bhavanishankar of 4 December 2019 it would have been reasonably apparent to the WorkCover Regulator that the Applicant had a valid WorkCover claim and therefore the response to the review process was without reasonable cause and/or that the response to the application had no reasonable prospects of success. [11] The submissions go on to provide that Mr Ellis seeks that his costs be assessed by the Industrial Registrar in accordance with the Industrial Relations (Tribunals) Rules 2011,5 and that he opposes any order for costs in response to this Application in circumstances where the evidence obtained by the Respondent in interviewing its witnesses and the reason for the determination of the Respondent for conceding the appeal cannot be tested. [12] Those reply submissions were supplemented by an affidavit from Mr Allen Grant, which annexed the medical reports of Drs Harding and Bhavanishankar referred to in Mr Ellis’ earlier submissions. Legislative framework [13] The parties agree that s 545 of the IR Act is the appropriate venue for costs in this instance. I agree. [14] The WC Act at s 558 empowers this Commission to award the “Costs of the hearing…”. There has been no hearing of this matter. [15] The IR Act at s 545 provides (emphasis added): 545 General power to award costs 5 ‘the Rules’. -- 7 of 13 -- 8 (1) A person must bear the person’s own costs in relation to a proceeding before the court or commission. (2) However, the court or commission may, on application by a party to the proceeding, order— (a) a party to the proceeding to pay costs incurred by another party if the court or commission is satisfied— (i) the party made the application or responded to the application vexatiously or without reasonable cause; or (ii) it would have been reasonably apparent to the party that the application or response to the application had no reasonable prospect of success; or (b) a representative of a party (the represented party) to pay costs incurred by another party to the proceeding if the court or commission is satisfied the representative caused the costs to be incurred— (i) because the representative encouraged the represented party to start, continue or respond to the proceeding and it should have been reasonably apparent to the representative that the person had no reasonable prospect of success in the proceeding; or (ii) because of an unreasonable act or omission of the representative in connection with the conduct or continuation of the proceeding. (3) The court or commission may order a party to pay another party an amount reasonably payable to a person who is not a lawyer, for representing the other party. [16] That section has a broader ambit. It relates to costs in the proceeding, rather than the costs of the hearing. It is the general power to award costs in this Commission.6 [17] Further, the Rules provide: 70 Costs (1) This rule applies if the court or commission makes an order for costs under section 545 of the Act. (2) The court or commission, in making the order, may have regard to— (a) for a proceeding before the commission—the costs payable on the scale of costs for Magistrates Courts under the Uniform Civil Procedure Rules 1999, schedule 2; or (b) for a proceeding before the court or the full bench—the costs payable on the scale of costs for the Supreme Court and District Court under the Uniform Civil Procedure Rules 1999, schedule 1; or (c) any other relevant factor. (3) The court may order that costs be assessed by the registrar and, in assessing costs, the registrar may have regard to the Uniform Civil Procedure Rules 1999, chapter 17A. [18] The question posed by the Application is therefore whether the Regulator responded without reasonable cause, or in the alternative whether it would have been reasonably apparent to the Regulator that the response had no reasonable prospect of success. 6 Kim v Workers' Compensation Regulator [2019] ICQ 14, [53]. -- 8 of 13 -- 9 [19] The question posed by the Respondent seeking the costs of responding to this costs application is whether it would have been reasonably apparent to Mr Ellis that the Application had no reasonable prospect of success. [20] In Kanan v Australian Postal Telecommunications Union, his Honour Justice Wilcox provided (emphasis added, citations removed):7 It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being ‘without reasonable cause’. But where it appears that, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause. [21] In Yousif v Workers’ Compensation Regulator, his Honour Justice Martin considered s 563 of the Workers’ Compensation and Rehabilitation Act 2013 (Qld). That section presents the same question as s 545(2)(a) of the IR Act. In that matter, while considering the term ‘without reasonable cause’, his Honour said (emphasis added, citations removed):8 The test to be applied is not simply whether or not the application was unsuccessful. It is whether the application could not succeed at the time when it was made. [22] It is relevant to note from the outset that s 545(1) imposes a default position that each party bear their own costs in proceedings such as this. It is only in circumstances where those criteria are satisfied that I may award costs. Even where the criteria under s 545 are met, an order for costs is not mandated. As his Honour Justice Martin recently said in Du Preez v Chelden (No. 2):9 But, the presence of a finding that an application was made without reasonable cause or that an applicant had no reasonable prospect of success, does not mandate an order for costs in favour of the opponent. Section 545(2) provides a discretion to make such an order. [23] It is also worth noting that any costs awarded can only be in respect of the proceedings before this Commission. It does not appear to me that s 545 of the IR Act would encompass Mr Ellis’ expenses prior to the appeal. Consideration Should costs be awarded with respect to the Appeal? [24] The primary thrust of Mr Ellis’ submissions is that the Regulator should have known they had no prospects in defending the decision from the outset, because of the medical reports before them. 7 Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257, 29. 8 Yousif v Workers’ Compensation Regulator [2019] ICQ 10, [31], citing MIM Holdings Limited v Automotive, Metals, Engineering, Printing and Kindred Industries Industrial Union of Employees Queensland (2000) 164 QGIG 370, 371. 9 Du Preez v Chelden (No. 2) [2020] ICQ 015, [11]. -- 9 of 13 -- 10 [25] Expert evidence, such as medical reports, involves the witness forming a view, from the factual scenario presented to them, as to whether the person has sustained an injury. The opinion they form with respect to their expertise, such as whether a person has sustained an injury and what the cause of that injury was, is the result of that factual scenario before them. Their opinions cannot supplant the exercise of finding facts itself. That is most evident in circumstances where the Commission finds that facts relied upon in forming the expert opinion did not actually occur. In that instance, the value of the expert evidence is limited or nullified. [26] Mr Ellis’ submission somewhat misunderstands the role of medical evidence. When the matter is before the review unit, it is for the Review Unit Officer to turn their mind to the evidence before them and determine the factual issues. If the matter were before the Commission, that role would fall to the Member. The Review Unit Officer or the Member would be informed by the expert evidence insofar as it relates to that witness’ area of expertise. [27] Here, the Doctors each formed a view that Mr Ellis had sustained a psychological injury and formed a view about what the cause of that injury was. It is not their role to determine whether the alleged incidents were actually true. The Doctors do not interview witnesses or pay mind to evidentiary processes. Their role is limited to providing an opinion from and about their area of expertise with respect to the facts presented to them. [28] All of the issues that the Doctors were qualified to provide evidence about were substantiated in the Review Unit Officer’s decision. Here, the Review Unit Officer found that, on the basis of the evidence before her including the medical reports, Mr Ellis had sustained a personal injury which arose out of his employment, with employment being the major significant contributing factor. [29] It is also not the Doctor’s role to answer questions of law. The Review Unit Officer went on to conclude that the injury arose of out reasonable management action taken in a reasonable way. That is a complex question of fact and law which is entirely unrelated to the medical opinions provided about Mr Ellis. [30] As the Regulator points out in their submissions, Review Unit Officers are not tasked with undertaking an investigative process such as interviewing witnesses, but rather assessing and determining the issue on the papers. Once the matter was appealed, it is for Mr Ellis to prove, on the balance of probabilities, that he has sustained a compensable injury within the meaning of s 32 of the WC Act. The appeal is conducted as a hearing de novo. As Commissioner Knight explained in Kujawa:10 10 Kujawa v Workers’ Compensation Regulator [2020] QIRC 179. ‘Kujawa’ -- 10 of 13 -- 11 The issue is the same but the parties in a sense 'commence the application again'; that is, the Commission starts afresh.11 The 'reasoning, determinations, evidence and/or allegations' of the review decision are irrelevant to the appeal.12 [31] On appeal, Mr Ellis would have been required to prove each of those elements again, except for those elements which the Regulator concedes. It would then be for the Regulator to prove that the injury was exempted by virtue of s 32(5) of the WC Act. [32] Mr Ellis set out his factual and legal contentions in his appeal in the Statement of Facts and Contentions he filed on 24 July 2020. Shortly thereafter, the Regulator proceeded to undertake witness conferencing with a large number of relevant persons. As it eventuated, the Regulator determined through those investigations that the injury had occurred and was not exempted by being reasonable management action taken in a reasonable way. The Regulator promptly conceded the appeal. [33] The power to award costs under s 545(1)(a)(i) is contingent upon a determination a party responded without reasonable cause. There has been no response. The Regulator conceded prior to filing a Response to the Statement of Facts and Contentions. It is trite to say that I cannot then find that the response was without reasonable cause. [34] There is a similar problem inherent to the Applicant’s reliance upon s 545(1)(a)(ii). Not only has there been no response, but as soon as the Respondent realised they had no reasonable prospects by virtue of their witness conferencing they determined to concede and not file a response. That section of the IR Act is designed to dissuade persons from defending proceedings they should sensibly concede, so as to avoid putting the applicant or appellant party to unnecessary cost. That is precisely what the Respondent has done. [35] Apart from those issues, it is worth noting that what constitutes reasonable management action taken in a reasonable way is complex. Determining that issue typically requires a detailed consideration of the evidence of lay witnesses followed by a discretionary consideration. What may have been reasonable to the Review Unit Officer may not have been considered reasonable by the Regulator or their Counsel, particularly after actually hearing the evidence of the relevant witnesses. [36] In Kujawa, Commissioner Knight dismissed an application for costs filed by the appellant. There, the matter had resolved prior to hearing, but subsequent to a conciliation conference and the parties’ each filing their statements of facts and contentions. In that way, the matter was far more advanced there than in this instance. I accept that the concession of the appeal in that case occurred in slightly different circumstances. Nonetheless, the Commissioner’s conclusion is apposite:13 11 Church v Simon Blackwood (Workers' Compensation Regulator) [2015] ICQ 031, 7-11 [24]-[39]. 12 Canton v Workers' Compensation Regulator [2019] QIRC 145, 8 [24], citing Trimble v Q-COMP AND State of Queensland (Queensland Audit Office) [2013] QIRC 135, 5 [39]. 13 Kujawa [43]. -- 11 of 13 -- 12 For what it is worth, I might add that the litigation here was in its infancy. This is not a case where the Appellant was put to the cost of all or part of a hearing only for the Regulator to concede the appeal following, say, the implosion of its witnesses' credibility under cross-examination. Nor did the Regulator concede, as it were, on the steps of the courthouse. [37] The Application for costs with respect to the appeal is refused. The parties are to bear their own costs with respect to the appeal. Should costs be awarded with respect to the Application? [38] The principles and legislative framework governing that question are the same as those which governed the question of whether to award costs with respect to the appeal. [39] Neither party has made substantial submissions about an award of costs with respect to the Application. The Regulator submitted, at their conclusion of their material:14 Given that it is abundantly clear that the Applicant has no prospect of success on any ground of the application, an order for costs against the applicant is appropriate. The Respondent seeks its costs of and incidental to this application. [40] The Regulator cites Gambaro v Workers’ Compensation Regulator [2017] ICQ 005 in support of that proposition. That matter dealt with s 558 of the WC Act, rather than s 545 of the IR Act. However, I accept the conclusions therein that, in circumstances where it is abundantly clear that a matter cannot succeed, an order for costs can be appropriate. [41] In reply, Mr Ellis submits that such an order is opposed, because the evidence obtained by the Respondent in interviewing its witnesses and the reason for the determination by the Respondent for conceding the appeal cannot be tested. [42] In this matter, the parties resolved the substance of the appeal with a minimum of expense and delay. That approach is to be lauded. It is regrettable that the parties could not resolve the entirety of the dispute. [43] While Mr Ellis’ costs incurred prior to the appeal would not be recoverable even if Mr Ellis were successful in being awarded costs, I am conscious that Mr Ellis has expended considerable money, time and effort in obtaining his statutory entitlement, namely workers’ compensation. No doubt he has been substantially delayed in receiving that entitlement by virtue of being denied at first instance by WorkCover and at second instance in the Review Unit. [44] I do not believe that the Application was so obviously fruitless that it may be described as having no reasonable prospect of success or being brought without reasonable cause. It was not an application which would clearly fail from the outset, in my view. The matter 14 Submissions in Response, filed 2 November 2020, [22] – [23]. -- 12 of 13 -- 13 required submissions from both parties before it could be resolved. In that sense, my power to award costs is not enlivened. Even if it were, I do not believe this is a circumstance which warrants the exercise of my discretion to award costs. [45] The parties are to bear their own costs with respect to the Application. Conclusion [46] For the preceding reasons, I have concluded that the parties are to bear their own costs with respect to the Appeal and the subsequent Application for costs. [47] I order accordingly. Order: 1. That each party bear its own costs with respect to the Appeal filed 18 May 2020 and the Application in existing proceedings filed 21 October 2020. -- 13 of 13 --