Leyh v Tandou Dairy Pty Ltd [1994] NSWCC 1; (1994) 10 NSWCCR 1 (1 February 1994)

[1994] NSWCC 1; (1994) 10 NSWCCR 1 (matter no 1859-91)

LEYH v. TANDOU DAIRY PTY LTD

Compensation Court of New South Wales: Burke J

1 February 1994

Costs - Taxation - Work done in furtherance of existing or likely claim - Highly anticipatory work - Review of taxation

J.L. Sharpe, for the applicant

L.M. Virtue, for the respondent

Ex tempore

BURKE J: In this matter the respondent employer seeks a review of a taxation of costs pursuant to section 18(3) of the Compensation Court Act 1984. The taxation was conducted by Assistant Registrar Cox on 21 June 1993.

At the taxation the respondent objected to items 1 - 33 inclusive and items 142, 143, 145,147,148,150, 151 and 154. Some reduction in amounts were made in relation to items 142, 143, 145, 146, 150, 151 and 154. The employer appears to be under a misapprehension that items 147 and 148 were disallowed. They weren't.

Background facts

The worker sustained injury on a periodic journey between her place of abode and place of employment on 18 January 1989. She was riding her bicycle to work when struck by a motor vehicle. She sustained some lacerations, was conveyed to Broken Hill Hospital, admitted for a couple of days, the lacerations were sutured. She consulted her general practitioner Dr Howarth on one occasion for a clearance to return to work and apparently resumed her usual duties about 1 February 1989 and continued to do so until ceasing work on 11 October 1990. For the period off work from the accident to resumption the worker was paid compensation.

On 27 February 1991 the application in the present matter was filed seeking weekly payments in respect of the period from 12 October 1990 onwards. It appears that an amendment was made at some time claiming additionally a 5 per cent permanent impairment of the back. Such was probably made at some time during the course of the hearing. On 23 April 1991 the respondent filed an answer which denied the nexus of any incapacity to the 18 January 1989 injury.

In the result an award on the basis of total incapacity was made in favour of the worker for the period 16 October 1990 to 14 May 1991. It was found that there was no resultant permanent impairment. The usual orders in relation to medical and other expenses of treatment was made as was the usual order in respect of costs.

The objected items

Items 1 - 28 in the bill of costs related to work done by the solicitor between 24 January 1989 and 6 June 1990. Items 29 - 33 to work done in November 1990. The respondent submitted that the work detailed in items 1 - 28 was done at a time when the applicant was either (briefly) in receipt of voluntary payments or back at work doing her usual work. During this time it is inferred there was no element of entitlement under the Workers Compensation Act 1987 capable of being litigated and there were no matters which could properly and prudently be done by a solicitor to further the interests of the worker in regard to any claim under that Act. As a corollary it is submitted that since the injury arose out of the use of a motor vehicle it could have been prudent to investigate a claim under the provisions of the Motor Accidents Act 1988. Items 29 - 33 comprised matters related to preparation and delivery of a brief to counsel to advise on evidence which was delivered on 14 November 1990 (four weeks after the commencing date of the claim ultimately prosecuted).

Items 1 - 28 were concerned with instructions to act and the gathering of evidence. Instructions were received by the solicitor on 24 January 1989. Reports were obtained from the Police and Broken Hill Hospital and arrangements were made for examination of the worker by Dr Ormandy on 25 May 1989 and on 30 March 1990 and by Dr Stuckey on 6 June 1990 and the consequential reports obtained.

The accident occurred on 18 January 1989. The solicitor was instructed on 24 January 1989 - six days later. The worker was in fact voluntarily paid weekly payments in respect of the approximately two week period off work to about 1 February 1989. Even assuming that the worker completed a relevant claim form on the day of the accident - and that is improbable - section 93 allows an employer seven days to forward such to the relevant insurer patently envisaging at least that delay in the making of payments to the worker. Indeed section 102 prescribes that weekly payments shall be instituted as soon as practicable but not later than 21 days after the making of the claim. Instructions to claim compensation given within six days of injury seems quite premature and, in the result, unnecessary as no issue then arose between the parties and that continued to be so for some 21 months.

In relation to a claim under the Motor Accidents Act it would be otherwise. It would then have been quite prudent and proper to instruct a solicitor to investigate and if appropriate proceed with such a claim.

It seems more likely than not that the work detailed in the objected items 1- 28 was directed primarily to ascertaining the viability of a claim under the Motor Accidents Act rather than towards any putative future claim under the Workers Compensation Act. The obtaining of the Traffic Accident Report (sought in April 1989 and received in June 1989) seems completely irrelevant to any issue likely to be raised in a journey claim when that claim has been fully met by the relevant workers compensation insurer prior to the request for such report.

The qualifying of specialists and the obtaining of medical reports after the worker had resumed work and continued in pre-injury duties is hardly likely to be directed to any supposed issue of incapacity yet to be manifest by some economic decrement. It could certainly be relevant to a claim under section 66 in regard to losses allegedly resulting from the injury. However no such claim was formulated it would seem until the trial had commenced and certainly was not particularised in the application which initiated this proceeding. Indeed no such loss was assessed by either doctor who examined the worker in this period.

In so far as it could be suggested that the qualifying of Dr Ormandy and Dr Stuckey was directed to the ascertainment of rights under section 66, since, in the ultimate, it was found that the worker had no such rights, that was an issue found adversely to the worker and she was not entitled to recover costs which are severable on issues incurred in pursuit of the issue upon which she failed.

The work in question seems more likely directed to actions other than in respect of compensation. The only workers compensation relevance appears to a be on the lines of a Micawber principle - or like my grandmother saving bits of string - it just might come in handy sometime.

The Taxing Officer in her report indicates that she felt that the respondent erroneously believed that the applicant had prosecuted a claim under the Motor Accidents Act and consequently had recovered costs in respect of the items now in dispute. As Mr Virtue correctly pointed out on this review the respondent's insurer would have been among the first to know were it so as they would get back the payments they had made to the worker. The respondent was under no such misapprehension.

With regard to these reports of Dr Ormandy and Stuckey the applicant in submissions emphasises that reports of both doctors were admitted into evidence at the hearing without objection suggesting thereby, I gather, that such represents some sort of concession by the respondent that the obtaining of them at the time was prudent and proper in relation to these proceedings. If the reports were served in accordance with the rules what possible objection could be taken? They constitute clearly relevant medical evidence and are made admissible by the statute. There can be no suggestion that the respondent approbated the propriety of obtaining the reports by its lack of objection at the hearing and reprobated such by the objection on taxation.

The qualifying of Dr Ormandy and Dr Stuckey was done in the diathesis of the worker having no medical treatment of any sort at that time. The evidence discloses that from resumption of work in February 1989 until some months after cessation of work in October 1990 the worker sought no medical treatment in relation to any consequences of the journey injury. Her only medical consultation, in evidence, was a consultation with a general practitioner, Dr Gregory, who then referred her for a mammogram. Had the worker remained under active treatment there could be a case for a reasonable and prudent solicitor conceiving of a likelihood that further incapacity could result from the employment injury and taking some steps in advance to obtain appropriate specialist medical evidence. However that just was not the position.

As Mr Sharpe for the worker correctly submitted in argument the time at which the propriety and prudence of the action is evaluated is at the time the action was taken not in retrospect. As at May 1989 and March 1990 when Dr Ormandy was qualified the worker had no outstanding claim and none would arise until nearly 18 months after the first of those consultations. As at June 1990 when Dr Stuckey was qualified the worker had no outstanding claim and none would arise until four months later. At the time the work in question was done there appears no basis upon which a reasonable solicitor would anticipate a prudent need for the work to meet some future inchoate claim. That reinforces the impression that the work was done for other reasons, most likely investigation of a possible claim under the Motor Accidents Act.

Even if the client had communicated to the solicitor (and there is no evidence of it) an impression that she would, at an indefinite time in the future, be likely to cease work because of the effects of injury, the prudent advice in the circumstances would probably have been to consult her general practitioner and seek referral to a specialist for treatment. If the worker herself considered medical treatment unnecessary it seems hardly logical that her solicitor could conceive a reasonable necessity to acquire medical evidence for a case that was yet to materialise.

It seems to me that the retaining of Dr Ormandy and Dr Stuckey at these particular times could not be recoverable against the respondent as a matter of law if considered in relation to any issue under section 66 and could not in principle be recoverable if considered as related to an issue of incapacity which had not arisen and of which there was no indication that such was likely to arise.

The report from the Broken Hill Hospital was obtained in early March 1989. There is no indication that it was submitted to the specialists qualified by the applicant. The report itself was not tendered in evidence. It was obtained at a time when no dispute existed as between the applicant and respondent. There is nothing that suggests that either then or later it was proper and prudent to obtain such information for any purpose relating to any entitlement under the Act.

Costs are a form of indemnity for expense to which a party has been put by the act of the other party. The guiding principle is that the cost of such as is done that would be done by a reasonable and prudent man in furtherance of the claim should be a burden on the unsuccessful party who should not be called upon to pay more than is just. In relation to the four general areas discussed above (the Traffic Accident Report, the records of Broken Hill Hospital, the qualifying examinations and reports of Dr Ormandy and of Dr Stuckey) it appears to me that it could not reasonably be conceived that such work was in fact done in furtherance of any existing, or likely future, claim under the Act. Reason and prudence would dictate that such work would abide the existence or imminence of some justiciable claim. It would not be just that such highly anticipatory work (as far as any claim under the Act is concerned) should be a burden on the respondent to these proceedings.

Mr Sharpe has emphasised in submissions that to warrant interference it must be shown that the Taxing Officer was wrong in principle: House v. The King [1936] HCA 40; (1936) 55 CLR 499; Schweppes Ltd v. Archer (1934) 34 SR (NSW) 178. The Taxing Officer has reported that the items were allowed because she was of the view that it was demonstrated that the work was done in relation to these proceedings under the Act. These proceedings related to claim for relief from 12 October 1990. All the relevant work was done before the inception of the claim and the great bulk of it long before. In my view no proper exercise of discretion could found a conclusion that this work related to these proceedings.

That leaves two other general areas of work. Items 1 and 2 relate to instructions to act given on 24 January 1989; items 29 - 33 to preparation of a brief to advise on evidence delivered on 14 November 1990 and the solicited advice received on 28 November 1990.

Doubtless the applicant informed the solicitor when she ultimately ceased work in October 1990 with the result that the application issued on 27 February 1991. That information could readily be construed as an instruction to act and take the appropriate steps to enforce such rights as the client may have. However the Taxing Officer is required to adjudicate on the items claimed. The instruction to act in respect of which the applicant claimed was one given on 24 January 1989. Such could not conceivably have related to the ultimate claim prosecuted. If it related to the initial two week period of incapacity in January 1989 such instruction was premature and that claim was met by the respondent apparently without unreasonable delay. It would appear that such instruction was probably a general retainer in relation to such rights as the worker might have arising out of the traffic accident. The Taxing Officer notes that the instruction was headed "Workers Compensation Proceedings". That would seem to suggest that the instruction related to the initial period of incapacity. At that time, six days after the accident, it was not reasonable or prudent that the worker instruct a solicitor in relation to that period of incapacity nor is it just that the respondent should bear the burden of the cost of her then doing so. That there may have been a further instruction properly chargeable against the respondent at a later time does not derogate from that conclusion.

Had the Taxing Officer taken the view that I have just expressed and disallowed items 1 and 2 it would have been open to the worker to seek to amend the bill to include an item in relation to a later instruction. That the solicitor had instructions to act is indisputable. The only question is when were they given. If the claim as framed had been disallowed there would appear no reason why an amendment to claim in respect of a later instruction would not be allowed and such an item allowed in the bill. I could remit the matter back to the Taxing Officer to deal with that matter but the amount involved is fairly minimal and would be properly chargeable in relation to a later time - by which time the permitted charges may have in fact risen - so it seems equitable to leave the matter as determined by the Taxing Officer.

The brief to advise on evidence was delivered on 14 November 1990 and the advice tendered on 28 November 1990 (vide item 33). The worker had ceased work on 12 October 1990. The application was issued on 27 February 1991. The trial Judge in making the order for costs certified a fee for counsel for advice on evidence. This is the only fee for advice sought against the respondent. That the advice is tendered before action brought doesn't preclude it from being a relevant advice. It was more prudent to have such then than proximate to the hearing when difficulty could be experienced in complying with the advice. There appears no error in the exercise of the Taxing Officer's discretion in allowing the relevant items in the bill.

It follows that in my view items 3 - 28 should have been disallowed entirely and not merely reduced as some in fact were.

Disbursements

The remaining items subject to objection relate to disbursements associated with the obtaining of the Traffic Accident Report; the records of Broken Hill Hospital and the arrangements and fees for the medical examinations of Dr Ormandy and Dr Stuckey dealt with above.

The trial Judge in awarding costs certified two qualifying fees. That was certainly one each in respect of Drs Ormandy and Stuckey. If the earlier examinations be premature or unrelated to the proceedings brought against the respondent then the last of those examinations by each doctor would properly attract a qualifying fee. They were the examinations by Dr Ormandy on 1 September 1991 and by Dr Stuckey on 16 December 1991. Neither of those charges (comprised in items 144 and 146) is the subject of any present objection. The other two examinations and reports by Dr Ormandy were subject to objection on taxation as was the other report of Dr Stuckey. All reports were used in evidence.

Dealing with Dr Stuckey first. The two examinations and reports were brought in at $150 in relation to that of 6 June 1990 and $325 in relation to that of 16 December 1991. They were allowed at $112 and $225. The latter was in fact the scheduled fee for qualifying to give evidence and report at the time of that report. The former was probably a similar fee at that time. I have held that it was not proper to qualify the doctor in relation to the earlier examination. However, the applicant having been seen by the doctor for whatever reason, it was certainly in my view proper, prudent and reasonable that a report be obtained and, if obtained, used. At the time of that report the scheduled fee for such was $55 and there was no discretion in the Taxing Officer to vary that figure. It therefore seems to me that in respect of that report the proper fee to be allowed on taxation was $55 not $112 and item 145 should be reduced accordingly.

Much the same applies to Dr Ormandy's reports of 25 May 1989 and 30 March 1990. These were brought in at $150 each (as indeed was the ultimate report of 1 September 1991) and allowed at $120 and $112 respectively. In relation to the 1989 report the scheduled fee then applicable for a report from a specialist who had seen the worker was $55 with a discretion in the Taxing Officer to increase that figure should it appear reasonable to do so. The Taxing Officer in fact appears to have allowed the fee proper for qualifying to give evidence and report and I have held that wrong in principle. She therefore did not exercise the discretion vested in her in relation to the fee for a report from a specialist who has seen the worker. Such would in my view have been the proper approach to that item. The Court is free to exercise that discretion. The report is reasonably comprehensive, deals with a variety of different consequences of the accident and warrants some increase above the base schedule fee (which by then had remained unaltered for some three years). It my view it would have been proper to allow a sum of $90 in respect of that report. By the time of the report regarding examination on 30 March 1990 the discretion formerly vested in the Taxing Officer in relation to the fee for such reports had been abrogated. The scheduled fee remained at $55. No more could properly be allowed by the Taxing Officer. Therefore in my view item 142 should be allowed at $90 rather that the actual $120 allowed by the Taxing Officer and item 143 at $55 rather than the actual $112 that was allowed.

Item 147, the disbursement incurred in obtaining the report of Broken Hill Hospital, should be disallowed. Similarly item 148 in respect of the Traffic Accident Report.

Items 151, 152 and 154 relate to the expenses of Drs Ormandy and Stuckey in attending at Broken Hill to examine the worker. Having held that it was not a proper charge as against the respondent to qualify the doctors at those times it follows that those items brought in at $182, $182 and $182 and allowed at $35, $35 and $66 should have been entirely disallowed.

Summary

On review the disputed items are resolved in this fashion:

Items 1 & 2 allowed as taxed

Items 3 - 28 disallowed entirely

Items 29 - 33 allowed as taxed

Item 142 reduced to $90 from $120 allowed on taxation

Item 143 reduced to $55 from $112 allowed on taxation

Item 145 reduced to $55 from $112 allowed on taxation

Item 147 disallowed entirely

Item 148 disallowed entirely

Items 150, 151 disallowed entirely

Item 154 disallowed entirely

I assume that the parties can probably agree on the practical effects of these findings. I therefore list the matter to be mentioned before me on Monday 28 February. If the parties have not then agreed I will then remit the matter to the Taxing Officer to deal with in accordance with these findings and to re-allocate the bill.

Solicitors for the applicant: Buckworth & Keady

Solicitors for the respondent: Leigh Virtue & Collins