Lourey v WA Country Health Service [2025] WADC 19

In Lourey v WA Country Health Service [2025] WADC 19, the District Court of Western Australia (Cormann DCJ) heard an appeal against personal costs orders made against two solicitors during the course of Arbitration proceedings. 

In the Arbitration proceedings the appellants acted on behalf of a worker who had brought claims against her employer, the WA Country Health Service, in relation to an injury sustained in March 2017. 

After dismissing the worker’s compensation claim, the arbitrator ordered that her representatives personally indemnify the respondent’s costs under section 265(1)(c) of the Workers' Compensation and Injury Management Act 1981 (WA) (the Act) (now s 398 under the 2023 Act). 

The appeal only concerned the costs orders made at Arbitration, not the dismissal of the compensation claims themselves.

Key Facts

The injured worker pursued two claims: 

Firstly, a claim for a determination of permanent impairment based on a medical report from Dr Cordova assessing her at 7% impairment; 

Secondly, a claim for underpayment of weekly compensation benefits. The respondent defended both claims, relying on updated reports by Dr Hammersley, who assessed the worker’s impairment at 0% and indicated her condition had significantly improved. 

The arbitrator found the medical evidence relied upon by the worker to be "stale" and unreliable and concluded that the worker had resumed her pre-injury duties without restriction by December 2022, meaning she was no longer entitled to compensation under the Act. 

Importantly, the arbitrator found that the representatives had improperly pursued hopeless claims and attempted to exclude damaging evidence through misleading submissions.

At the arbitration hearing on 15 November 2023, the respondent expressly stated its intention to seek personal costs orders against the worker’s representatives under section 265(1)(c). The arbitrator made procedural orders for the parties to file written closing submissions, which were to include submissions on the issue of costs. 

However, the appellants either filed inadequate submissions or none at all, failing to directly respond to the proposed personal costs orders. After Chapmans ceased to act for the worker and Premier Legal took over, no further submissions were made on behalf of the former representatives. Consequently, the arbitrator proceeded to make personal costs orders against the appellants based on the evidence and submissions available.

Principles of Law

Procedural Fairness

The appellants contended that they were denied procedural fairness because they were not properly notified that personal costs orders were contemplated against them, particularly after Premier Legal took over the conduct of the worker’s case. However, the Court found that procedural fairness was satisfied because:

• the appellants had been clearly notified during the hearing of the respondent’s intention to seek personal costs orders.
• they were given an opportunity through the closing submissions process to respond but failed to do so.
• procedural fairness does not require the decision-maker to separately re-notify a party after a change in representation, especially where the party had prior notice of the live issue and a clear opportunity to address it.

The Court reaffirmed that procedural fairness requires a reasonable opportunity to be heard, but not multiple or special invitations to respond.

Personal costs orders under the WCIM

The appellants argued that the arbitrator misapplied s 265 of the Act by:

• making findings unsupported by evidence,
• failing to link their conduct to specific wasted costs,
• misunderstanding the proper test for misconduct or improper conduct.

The Court rejected these arguments. It found that the arbitrator’s decision was firmly based on the evidence that: 

• the appellants had relied on outdated and insufficient medical reports;
• the worker’s own testimony contradicted the compensation claims; and
• the attempts to exclude evidence were baseless and misleading. 

In these circumstances, the arbitrator had correctly applied section 265(1)(c) to the facts, and the costs orders were appropriate.

Exercise of Discretion

The Court emphasised that it would not interfere with the arbitrator’s exercise of discretion unless a material error was demonstrated - here, no such error was established. Even if the procedural fairness ground was successfully raised, there was no real prospect that the result would have changed, given the overwhelming evidence against the appellants’ conduct.

Key Takeaways 

This case provides important reminders for all parties involved in workers’ compensation matters:

• Legal representatives must ensure they are advancing claims supported by current, reliable evidence. Pursuing claims that are stale or hopeless exposes practitioners to personal cost liability.
• If a representative is put on notice that adverse costs orders are being sought against them, they should respond promptly and comprehensively. Failing to respond means you may lose the opportunity to raise a procedural fairness argument later.
• Personal costs orders against legal representatives, though rare, will be upheld where the conduct in litigation falls short of professional standards and causes unnecessary costs to be incurred by other parties.

Overall, the decision in Lourey reinforces the serious professional risks associated with advancing unmeritorious claims, and the costs consequences that not only clients may face – but also practitioners.

This article was written by Liam Porter, Law Graduate Insurance & Risk