On 6 December 2022, Justice Cooper delivered judgment in this matter which has caused some alarm and concern for lawyers acting for injured workers and their clients regarding recovery legal costs in WorkCover claims.
Background
For injured workers who have achieved a certificate injury which relates to more serious injuries in which the assessment of whole person impairment for a physical or psychological injury is equal to or more than 20% whole person and if the claim is litigated, the provisions of the Workers Compensation and Rehabilitation Regulation 2014 allowed injured workers to recover legal costs from WorkCover.
For injured workers who do not have a certificate injury, no legal costs are recoverable from WorkCover unless the injured worker proceeds with their case to trial, wins the trial and achieves a judgment or verdict for an amount which is higher than their written final offer which has happened but happens rarely.
In our experience, the recovery of legal costs in certificate injury cases generally allows an injured worker to recover about 50% to 70% of their total legal costs from when the case is litigated but this can vary from law firm to law firm depending on their fee structure or client agreement.
The recovery of legal costs in a certificate injury WorkCover matter has been very important for our clients when making decisions about whether to proceed further with the matter to achieve a better or superior ‘in hand’ figure as compared with resolving the matter at the compulsory settlement conference.
When recovering legal costs this allows the injured worker to recover some but not all of their lawyers’ professional costs and also outlays such as court filing fees, medical report fees and the fees of their Barrister or Counsel.
Decision of Cooper J
The decision of Cooper J is important because at the present time the decision means that Counsel’s fees are not able to be recovered in a certificate injury case.
In the decision, Cooper J considered what was meant by the term or phrase ‘legal costs’ and whether this included Counsel’s fees. Cooper J determined that Counsel’s fees were not recoverable.
The decision is interesting and important because the outcome is not consistent with the common experience when negotiating the recovery of legal costs with WorkCover prior to the decision.
The writer’s experience over the past 25 years in this type of matter has not ever encountered this argument being raised by WorkCover or their lawyers with Counsel’s fees being routinely accepted and recovered.
Of course, there is nothing to stop or prevent WorkCover from reviewing the legislation and running a fresh argument that has not previously been raised or pursued to a final determination by the Court.
With the decision of Cooper J, it really came down to the interpretation of what was meant by the term or phrase ‘legal costs’ and whether the legislation which seeking to include or exclude the recovery of Counsel’s fees in this type of matter.
There is a strong sentiment of unfairness for injured workers with the decision due to the inability to recover Counsel’s fees if other legal costs are recoverable.
In litigated certificate injury cases, there can be complex issues regarding quantum [or the full value of the claim] and liability [or negligence]. For the conduct of a serious injury claim for an injured worker, it is common if not industry standard for an injured worker and their lawyer to retain a Barrister to assist with the preparation of the matter through litigation and for any trial. For the injured worker to be required to absorb and not recovery anything for Counsel’s fees in this situation does seem rather unfair while they can recover other legal costs such as the professional costs of their solicitor, medical report fees and court filing fees.
For example, if the quantum of a particular case is worth say $500,000.00 and to prepare the matter from the compulsory conference to a mediation prior to trial involves total legal costs of say $50,000.00 and of that Counsel’s fees are say $15,000.00 the outcome means that the injured worker achieves no recovery of the $15,000.00 regarding Counsel’s fees. What if the matter involved a catastrophically injured worker with both quantum and liability in issue with the quantum of the claim being $6 million with total legal costs of say $150,000.00 with Counsel’s fees being $50,000.00.
Was it really the intention of the parliament to deprive a seriously injured worker the recovery of Counsel’s fees in this situation? It is hard to imagine that this was the intention.
The writer genuinely believes that the current situation of not being able to recover Counsel’s fees for an injured worker in a litigated certificate injury case does involve a substantial injustice.
Policy Considerations
The WorkCover legislation was amended many years ago which removed the recovery of legal costs for most claims other than certificate injury or serious injury cases.
Even for certificate injury cases, the recovery of legal costs up to and including the compulsory conference is often very modest and is usually at or about $6,000.00 to $10,0000.00.
For certificate injury cases, the recovery of a healthy contribution towards legal costs has been only achieved after court proceedings have been commenced.
The decision of Cooper J presently means that for litigated certificate injury cases, the costs recovery has been further compromised or reduced due to Counsel’s fees being unrecoverable.
The removal of an injured worker’s right to recover legal costs in most WorkCover claims was a significant detriment to injured workers. This was done at a time to help preserve the financial health and sustainability of the WorkCover system in Queensland.
We also know that the WorkCover system in Queensland is the best performing workers compensation system in Australia. It is financially healthy. It has the lowest premium rate of any State or Territory in Australia. Less than 4% of all claims result in a common law claim. It has the fastest dispute resolution and the highest proportion of payments made directly to injured workers.
Appeal
On 6 February 2023, an application for leave to appeal was heard by Cooper J.
There was some argument about whether the injured worker required an order for leave to appeal from the original decision but ultimately Cooper J determined that the injured worker did not require an order for leave to appeal which allows the injured worker to proceed with an appeal against the decision which Cooper J described as follows:-
In those circumstances, and weighing the various matters relied on by the parties, my view is that notwithstanding the relatively modest quantum of the sum of money involved, the plaintiff would suffer a substantial injustice if any error in my construction is not corrected on appeal. Had I determined that leave was required to appeal by reason of s 64, I would have granted leave.
For injured workers, it is hoped that the Court of Appeal will overturn the original decision.
Where to from here?
If it was not the intention of the parliament to deprive an injured worker the recovery of Counsel’s fees and having regarding the current wording of the legislation, the current issue would benefit from an amendment of the legislation to specifically include Counsel’s fees as ‘legal costs’.
Other than some legislative clarification or fine-tuning, the other remedy is with the appeal to the Queensland Court of Appeal.
If the legislation is not amended in the interim, it is hoped that the decision of Court of Appeal will be favorable to the injured worker. If the appeal is successful and legislative amendment is encouraged or required, it is also hoped that this will be done swiftly to avoid any further injustices to injured workers with a certificate injury.
