Negligent Workers Compensation Advice: The Osei Case - What Osei v P K Simpson Pty Ltd means for NSW injured workers, settlement advice, lost compensation entitlements and professional negligence
- Brian AJ Newman, LLB
- 2 minutes ago
- 13 min read
Negligent Workers Compensation Settlement Advice: What Osei v P K Simpson Pty Ltd Means for Injured Workers
When an injured worker is advised to settle a workers compensation dispute, the decision can permanently affect weekly payments, treatment expenses and future financial security. A settlement may appear attractive because it provides certainty and ends a stressful dispute. But certainty is only valuable when the worker understands precisely what is being received, what is being surrendered and why the proposed outcome is considered reasonable.
The decision in Osei v P K Simpson Pty Ltd (2022) 106 NSWLR 458; [2022] NSWCA 13 arose from allegedly inadequate professional advice given to an injured worker before he compromised proceedings for weekly workers compensation. The case is an important warning about the consequences of settlement advice that does not equip a worker to make a properly informed decision.
The authority must nevertheless be understood accurately. The substantive findings that the solicitor and barrister breached their duties were made by the District Court of New South Wales in Osei v P K Simpson & Co Pty Ltd and Carney [2021] NSWDC 74. The later Court of Appeal decision principally determined a different question: whether the costs cap applying to certain personal injury damages claims also applied to Mr Osei’s professional negligence proceedings.
The Court of Appeal held that Mr Osei’s loss was pure economic loss arising from professional negligence. It was not an award of “personal injury damages” for the purpose of the statutory costs cap.
The case therefore provides an important illustration of how negligent settlement advice may cause a worker to lose the opportunity to obtain greater statutory compensation. It does not establish that every disappointing settlement recommendation is negligent.
The essential point
The most important lesson from Osei is straightforward:
“An injured worker should not be asked to surrender disputed workers compensation entitlements without clear, competent and comprehensible advice about the value of the claim, the available alternatives, the risks of continuing and the practical consequences of settlement.”
A worker remains entitled to make the ultimate settlement decision. A representative may recommend acceptance, explain that the evidence carries serious risks and give firm advice about the possibility of losing. What the representative must not do is substitute pressure for explanation or place the worker in a position where consent is given without an adequate understanding of the decision.
Who was Mr Osei?
Mr Kofi Osei worked as a taxi driver. On 7 March 2010, he was assaulted while performing that work and sustained physical and psychological injuries. His workers compensation claim was initially accepted and weekly compensation payments commenced.
The insurer ceased paying weekly compensation on or about 8 November 2011. Mr Osei then filed three applications in the former Workers Compensation Commission seeking reinstatement of weekly benefits. The first two applications were discontinued. The third was resolved by agreement on 29 January 2013.
Under the consent determination:
• Mr Osei was to receive weekly compensation at $630 per week for the period from 20 December 2011 to 19 April 2012, agreed at a total of $10,889.99;
• there was thereafter an award for the respondent concerning claims for weekly compensation;
• there was an award for the respondent concerning certain treatment expenses associated with the psychiatric injury after 19 April 2012; and
• Mr Osei agreed that, upon payment, he had received his workers compensation entitlements to that date and suffered no economic loss or incapacity from the psychiatric injury identified in those proceedings.
Those terms mattered. The settlement did not merely determine the amount immediately payable. It also affected Mr Osei’s capacity to pursue further weekly payments and treatment expenses within the scope of the agreement.
The later professional negligence proceedings
In January 2019, Mr Osei commenced District Court proceedings against his former solicitor and barrister. He alleged that negligent professional advice had induced him to compromise his workers compensation proceedings instead of continuing to a determination.
The District Court found that the barrister breached the duty of care owed to Mr Osei by giving inadequate advice that induced him to accept the compromise. The Court also found that the solicitor breached the applicable duty by failing to correct the barrister’s advice.
There was an additional and particularly concerning finding. The solicitor encouraged Mr Osei to pursue a work injury damages claim that the solicitor knew was hopeless and that was irrelevant to the decision about whether to settle the weekly compensation proceedings.
The District Court further found that both representatives failed to ensure that the professional advice was interpreted into Mr Osei’s first language. This was not a minor administrative omission. The ability to converse in everyday English does not necessarily mean that a person can understand technical advice about statutory compensation, evidentiary risk, consent orders and the permanent consequences of settlement.
In the Court of Appeal, there was no application to challenge those findings by cross-appeal. The appeal judgment therefore recorded the District Court findings but was not itself a new trial of whether the solicitor and barrister had acted negligently.
That distinction is important when relying upon the authority. It is more accurate to say:
• the District Court found that the advice was inadequate and breached the representatives’ duties; and
• the Court of Appeal subsequently characterised the resulting claim as one for pure economic loss arising from professional negligence and determined the costs-cap issue.
The official Court of Appeal judgment records the underlying findings and the appellate issues in detail.
How was Mr Osei’s loss calculated?
The assessment of damages demonstrates why a professional negligence case is not determined simply by comparing the settlement amount with the amount a worker hoped to receive.
The District Court assessed what the former Workers Compensation Commission could have awarded if Mr Osei had continued. The maximum amount was calculated by reference to 54 weeks of compensation at $960.18 per week, producing $51,849.72.
Further deductions were made for:
• the amount already received under the settlement;
• relevant disability support pension payments; and
• taxation.
After those deductions, the trial judge assessed $21,683.26 as the amount by which Mr Osei would have been out of pocket if he had pursued the compensation proceedings to a wholly successful conclusion.
But complete success was not certain. Mr Osei had significant evidentiary difficulties, including a lack of reliable records substantiating his earnings as a taxi driver. The District Court applied a 40 per cent discount to account for the possibility that he would not have succeeded in the Workers Compensation Commission. The resulting value of the lost opportunity was $13,009.96. After interest, judgment was entered for $19,086.65.
Liability was apportioned 70 per cent to the solicitor and 30 per cent to the barrister.
Why the 40 per cent discount matters
Mr Osei sought leave to challenge the 40 per cent discount in the Court of Appeal. Leave was refused on that ground. The Court held that the discount was open to the trial judge because of the uncertainties in the underlying workers compensation claim.
This part of the decision carries an important practical lesson. Even where deficient advice is established, compensation for professional negligence is not automatically calculated on the assumption that the worker would have achieved the maximum possible result.
The worker must ordinarily establish a causal connection between the inadequate advice and an identifiable economic loss. The Court may need to consider:
1. what the worker would probably have done if properly advised;
2. whether the worker would have rejected the settlement and continued the case;
3. what evidence would have been available in the underlying proceedings;
4. the worker’s prospects of success;
5. the amount likely to have been awarded;
6. statutory deductions, offsets and taxation consequences; and
7. the value of the opportunity that was lost.
The difference between an unfavourable settlement and negligent advice is therefore critical. A worker may receive less than expected because the evidence is weak, causation is disputed, work capacity is contested or the relevant legislation limits the available entitlement. A poor financial outcome does not, by itself, prove professional negligence.
What did the Court of Appeal decide?
The principal successful appeal concerned the costs of the professional negligence proceedings.
The District Court had ordered the defendants to pay Mr Osei’s costs but capped the recoverable amount at $10,000 under clause 2 of Schedule 1 to the Legal Profession Uniform Law Application Act 2014 (NSW).
That provision fixed maximum costs for certain claims for personal injury damages where the amount recovered did not exceed $100,000.
The Court of Appeal held that the cap did not apply. Mr Osei’s damages were not awarded for his original physical or psychological injuries. They were awarded for economic loss caused by the professional negligence of his former representatives—specifically, the loss of the opportunity to recover greater statutory compensation.
The Court explained that the phrase “personal injury damages” should be confined to damages for personal injury. Mr Osei’s professional negligence claim had its historical origin in a workplace injury, but the immediate legal cause of the damages was the allegedly negligent professional advice.
Garling J also reasoned that the underlying Workers Compensation Commission claim concerned a statutory entitlement to weekly payments, rather than damages for personal injury.
The Court consequently removed the $10,000 limitation from the District Court costs order and ordered the respondents to pay the costs of the successful appeal.
The Supreme Court of New South Wales also summarises the decision in its annotated discussion of personal injury damages.
What is pure economic loss?
In this context, pure economic loss means financial loss that is not itself compensation for a new physical or psychological injury.
Mr Osei’s professional negligence claim was not seeking to compensate him again for the assault. It sought the value of the opportunity he lost when he settled his weekly compensation proceedings on the basis of inadequate advice.
The distinction can be expressed simply:
• Original workers compensation claim: statutory payments and expenses connected with the workplace injury.
• Later professional negligence claim: economic loss caused by losing the chance to obtain a better result in the original compensation proceedings.
That distinction was decisive in determining that the personal injury costs cap did not apply.
What Osei does not establish
The decision should not be treated as a universal answer whenever a worker disagrees with settlement advice.
It does not prove that a low offer is negligent.
A settlement offer may be substantially lower than the worker’s asserted loss and still represent a rational compromise when evidentiary and statutory risks are considered. The proper question is not whether the offer feels disappointing. The question is whether the worker has been given enough accurate information to make an informed choice.
It does not guarantee recovery of every claimed loss
Medical expenses, weekly payments, permanent impairment compensation, work injury damages, legal costs and other claimed losses may be governed by different statutory tests. Not every expense is recoverable in every form of proceeding.
It does not prevent representatives from recommending settlement
Competent representation includes giving frank advice. A representative does not breach a duty merely by expressing the view that an offer should be accepted. The concern arises where the recommendation is unsupported, materially incomplete, misleading or not adequately communicated.
It does not prevent a law practice from terminating an engagement
The Court of Appeal did not decide when a solicitor may withdraw. That question depends upon the retainer, the professional conduct rules, the procedural position and whether there is just cause and reasonable notice.
Under the current NSW Solicitors’ Conduct Rules, solicitors must act in a client’s best interests, deliver services competently and diligently, provide clear and timely advice and follow lawful, proper and competent instructions. Rule 13 regulates completion and termination of an engagement.
A disagreement about settlement does not automatically establish that a law practice is entitled to abandon a worker at a critical procedural stage. Equally, a worker should not assume that a firm must continue in every circumstance. The costs agreement, notice given, outstanding fees, court or tribunal deadlines and availability of replacement representation all require careful attention.
It does not mean that every file must be released immediately without qualification
A worker may request documents and an account of costs. However, ownership of particular documents, confidentiality, privilege and any effective lien for unpaid legal costs may affect how and when a complete file is delivered.
What information should a worker receive before settling?
Before authorising settlement, an injured worker should ordinarily seek a clear written explanation addressing the following matters.
1. The gross settlement amount
The total amount being offered should be identified without ambiguity.
2. Every proposed deduction
This may include legal costs, disbursements, statutory repayments, refunds, Centrelink implications, taxation or other deductions. The worker should be told the estimated net amount they will actually receive.
3. The legal and evidentiary valuation
The worker should understand which parts of the claim are accepted, disputed, weak or unavailable. A valuation should not consist only of a final number. It should explain the principal assumptions and risks supporting that number.
4. Past and future weekly payments
The advice should identify whether settlement affects arrears, continuing incapacity payments, work capacity decisions or future claims for weekly compensation.
5. Treatment and medical expenses
The worker should know whether past accounts, future treatment, medication, rehabilitation and related expenses remain payable after settlement.
6. Permanent impairment and damages claims
Any effect upon lump-sum permanent impairment compensation or a possible work injury damages claim should be explained. A worker should not be encouraged to rely upon a damages claim that has not been properly assessed against the applicable statutory requirements.
7. The consequences of rejecting the offer
Those consequences may include delay, further medical examinations, hearing risks, legal costs, procedural deadlines and the possibility of receiving less—or nothing—after adjudication.
8. The consequences of accepting the offer
The advice should identify which rights are finalised, which rights survive and whether consent orders, releases or settlement deeds contain admissions, confidentiality obligations, indemnities or repayment provisions.
9. The costs position
Workers should be given an updated estimate of costs and told the contractual basis upon which any fees or disbursements will become payable. Section 174 of the Legal Profession Uniform Law requires disclosure of the basis on which costs are calculated and an estimate of total legal costs, together with sufficient information about significant changes. A client who receives a lump-sum bill may also request an itemised bill under section 187.
10. Who controls the settlement decision
A worker should be told clearly that no settlement will be accepted without the authority required by the retainer and professional rules. If a worker does not accept an offer, that instruction should be communicated promptly and in writing.
Warning signs in settlement advice
Workers should seek clarification where they encounter any of the following:
• pressure to accept an offer immediately without a written calculation;
• refusal to explain the difference between the gross and net outcome;
• an unexplained assertion that the worker will “lose everything” if the offer is rejected;
• advice based on a future claim that has not been properly assessed;
• failure to explain what happens to weekly payments or treatment expenses;
• unexplained changes in the estimated legal costs;
• advice delivered in language the worker cannot properly understand;
• threats of withdrawal without reasonable notice or information about urgent deadlines;
• refusal to confirm that settlement authority rests with the worker; or
• reluctance to provide the settlement offer, proposed deed, consent orders, medical evidence or calculations for independent review.
These matters do not automatically establish misconduct or negligence. They are reasons to pause, request written clarification and obtain an independent assessment before irreversible authority is given.
What should a worker do if the figures do not add up?
If the proposed settlement would leave a worker out of pocket, the worker should identify precisely why.
For example, the shortfall may consist of:
• unpaid medical accounts;
• future treatment costs;
• unreimbursed expenses;
• legal costs and disbursements;
• statutory repayments;
• lost weekly compensation; or
• a gap between the claimed and recoverable loss.
The fact that a worker remains $5,000, $10,000 or more out of pocket is relevant, but it is not a complete valuation. The key questions are whether the shortfall is legally recoverable, whether it has been included in the settlement calculation and whether the risks of pursuing it have been adequately explained.
Obtaining an independent review
Before accepting a settlement that permanently affects workers compensation entitlements, an injured worker may consider obtaining an urgent independent review from a suitably experienced NSW workers compensation solicitor.
The reviewing practitioner should ordinarily receive:
• the costs agreement and all updated costs disclosures;
• the insurer’s offer;
• the proposed settlement deed or consent orders;
• the settlement calculation;
• relevant medical evidence;
• work capacity and weekly payment decisions;
• counsel’s written advice, if available;
• correspondence explaining the offer and recommendation;
• details of any urgent limitation or procedural deadline; and
• the worker’s own calculation of outstanding loss and expenses.
Time matters. Offers can expire, proceedings may have scheduled dates and some rights are subject to strict statutory time limits. A worker should not wait until after signing a deed or authorising consent orders to ask what the settlement means.
Frequently asked questions
Did the Court of Appeal find the solicitor negligent?
The substantive breach findings were made by the District Court in Osei v P K Simpson & Co Pty Ltd and Carney [2021] NSWDC 74. The Court of Appeal recorded those findings. There was no cross-appeal challenging them. The main successful issue in the Court of Appeal concerned whether the costs of the professional negligence proceedings were capped.
Does Osei apply outside New South Wales?
The decision concerns NSW legislation and proceedings. Its reasoning may be considered elsewhere, but workers compensation schemes and professional regulation differ between jurisdictions.
A worker should obtain information specific to the applicable State or Territory.
Can a solicitor settle without the worker’s permission?
A solicitor must follow the client’s lawful, proper and competent instructions. Questions about authority can depend upon the retainer and what has already been communicated, so a worker who rejects an offer should give that instruction clearly and in writing.
Is being left out of pocket enough to prove negligence?
No. The worker must distinguish between an unrecovered loss caused by the limits or risks of the underlying claim and a loss caused by inadequate professional advice. Establishing professional negligence ordinarily requires examination of duty, breach, causation and quantifiable loss.
Why was Mr Osei’s recovery discounted?
His underlying compensation claim carried evidentiary risks, particularly concerning proof of earnings. The Court accepted that the trial judge was entitled to discount the value of the lost opportunity by 40 per cent to reflect the possibility that the claim would not have succeeded.
Why was the later claim described as pure economic loss?
The damages compensated Mr Osei for the financial value of the opportunity lost through professional negligence. They were not damages compensating him for the original workplace injuries.
The MYUNION position
Workers should not be treated as passive recipients of decisions made about their injuries, income or future. A recommendation to settle must be accompanied by information the worker can understand and test.
That means providing the figures, identifying the risks, explaining the alternatives and respecting the worker’s final instructions. Where language, disability, psychological injury or unfamiliarity with the compensation system creates an additional barrier, reasonable steps should be taken to ensure that the worker genuinely understands the advice.
Osei does not promise that every worker who accepts a disappointing settlement will have a professional negligence claim. It demonstrates something more fundamental: informed consent to settlement requires more than a signature. It requires advice that allows the worker to understand the real choice being made.
MYUNION stands for independent, individual worker advocacy. No politics. Just help.
For advocacy support and assistance understanding the employment and workplace consequences surrounding an injury or compensation dispute, contact MYUNION:
1300MYUNION
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Authorities and official resources
1. Osei v P K Simpson Pty Ltd [2022] NSWCA 13 — NSW Court of Appeal.
2. Supreme Court of NSW — annotated discussion of personal injury damages.
3. Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 — current NSW version.
4. Legal Profession Uniform Law, section 174 — costs disclosure obligations.
5. Legal Profession Uniform Law, section 187 — request for an itemised bill.
Publication notice
This article provides general information and advocacy commentary. It does not provide legal advice and should not be relied upon as a substitute for advice from a suitably qualified Australian legal practitioner about particular circumstances. MYUNION is an independent worker advocacy service and is not a law firm.