A lesson on costs31 March 2017
The recent decision of Midson v Workers Compensation Commission & Ors (No 2)  NSWSC 147 makes it clear that in circumstances where a party files a submitting appearance and takes no active role in proceedings, Courts will be hesitant to award costs against that party, even if the application is successful.
Mr Midson suffered a psychological injury during his employment, due to workplace harassment. He subsequently sustained a severe hand injury, which also impacted his psychological wellbeing and was resolved through a work injury damages payment. He then made a claim for workers' compensation benefits, arising from the harassment. Following this claim, Mr Midson was referred to an approved medical specialist (AMS) who determined that he had a 15% whole person impairment (WPI) arising from the injury, after deducting 1.7% WPI pursuant to s 323 under the Psychiatric Impairment Rating Scale (PIRS)—on the basis that it was difficult to determine the appropriate deduction.
The employer appealed the decision on two grounds:
- there was an error in relation to the PIRS ratings in respect of two areas, and
- there was an error in respect of the s 323 deduction, which could be specifically determined.
The Medical Appeal Panel (the Panel) referred the matter for re-assessment by a member of the Panel and the worker's psychological injury was deemed to be only 13% WPI. The Panel also determined that an s 323 deduction was not warranted as the worker's non-injury related to psychological problems that arose from a subsequent event. The Panel determined that there was enough information to assess the worker on his psychological claim in isolation. The Panel also reviewed Mr Midson's PIRS in four areas of assessment.
Mr Midson subsequently filed a summons in the Supreme Court to quash the decision of the Panel. This was on the basis that the Panel had referred the worker for re-assessment before determining a ground of appeal, and had determined the worker's appeal on grounds that were not sought by the appellant.
All other parties filed a submitting appearance in the Supreme Court, including representatives of the employer, meaning they took no part in the proceedings and submitted to any orders to be made by the Court.
Having only heard Mr Midson's argument, the Supreme Court accepted these and quashed the Panel's decision.
Leave was granted to the worker to approach the Court within 14 days for further argument concerning costs.
Mr Midson subsequently listed the matter for argument on costs and submitted that his employer should pay his costs of the proceedings, because he was successful in his application and the employer was unsuccessful.
The employer argued that as it had filed a submitting appearance and taken no part in the proceedings, the general rule should follow that no order of costs should be made against it. The employer also argued that it had now incurred costs in relation to the argument.
In a short, but detailed, decision the Supreme Court determined that the employer should not pay the worker's costs of the proceedings because:
- a submitting appearance was filed quickly by the Defendant
- the Defendant played no active part in the proceedings and the trial was shortened considerably due to this fact, and
- the Defendant was not accountable for the error of the Medical Appeal Panel and the parties were unable to resolve the matter by agreement, given the Court had to be persuaded to exercise its judicial powers in quashing the decision.
In making this determination, the Court indicated that there was no reason why the usual costs order should not apply to the costs application and in the circumstances ordered that the worker pays the employers' costs of the application in respect of costs.
This case is a reminder that in matters dealing with judicial review, it is important to make a decision as early as possible if any application is to be defended or whether it is appropriate to file a submitting appearance. Courts will be hesitant to award costs against a party that files a submitting appearance and does not take an active role in proceedings.