Albarracin v Pirelli Cables Australia Ltd

[2006] NSWWCCPD 351

WORKERS COMPENSATION COMMISSION

APPEAL AGAINST A DECISION OF THE REGISTRAR IN RELATION TO COSTS

CITATION:Albarracin v Pirelli Cables Australia Ltd [2006] NSWWCCPD 351

APPELLANT:  Maria Albarracin

RESPONDENT:  Pirelli Cables Australia Ltd

INSURER:Allianz Australia Workers Compensation (NSW) Ltd

FILE NUMBER:  WCC16759-05

DATE OF REGISTRAR’S DECISION:             10 January 2006

DATE OF APPEAL DECISION:  19 December 2006

SUBJECT MATTER OF DECISION: Appeal against the Registrar’s decision in relation to costs: claim under Item 2.04A; whether maximum costs specified in the Compensation Costs Table in Schedule 6 of the Workers Compensation Regulation 2003 before 17 March 2006 are inclusive of GST.

PRESIDENTIAL MEMBER:  Acting Deputy President Robin Handley

HEARING:On the papers

REPRESENTATION:  Appellant:      Maurice May Lawyers

Respondent:   Sparke Helmore Lawyers

ORDERS MADE ON APPEAL:  The Registrar’s determination of Ms Albarracin’s costs in this matter, dated 10 January 2006, is amended in accordance with these reasons.

The Respondent, Pirelli Cables Australia Ltd is to pay the Appellant, Ms Albarracin $250 inclusive of GST in respect of her costs in this appeal.

BACKGROUND TO THE APPEAL

1. On 17 January 2006, Maria Albarracin filed an appeal against a costs determination made by the Registrar of the Workers Compensation Commission (‘the Commission’) on 10 January 2006. The Respondent to the appeal is Pirelli Cables Australia Ltd (‘Pirelli’). On 24 February 2006, Pirelli filed a ‘Notice of Opposition’ to the appeal. Pirelli’s workers compensation insurer is Allianz Australia Workers Compensation (NSW) Ltd (‘Allianz’).

1. Ms Albarracin was born on 4 September 1951 and is aged 55. She claims to have suffered a psychiatric/psychological injury in the course of her employment with Pirelli on 8 May 2003. By letter dated 6 June 2003, Allianz denied liability for the injury. On 12 February 2004, the Commission registered Ms Albarracin’s ‘Application to Resolve a Dispute’ in respect of her claim for weekly compensation and medical expenses. Pirelli filed its ‘Reply’ on 4 March 2004.

1. On 21 May 2004, an Arbitrator conducted a teleconference with the parties, during the course of which the parties came to an agreed resolution of the issues in dispute. On 24 May 2004, the Arbitrator issues a Certificate of Determination in the following terms:

“1. That without admission of liability the Respondent is to reaccredit the Applicant with half her leave entitlement taken during the period 9 May 2003 to 12 June 2003.

2. That the Respondent is to pay the Applicant’s s60 expenses up to $704.10 in respect of s60 expenses to date.

3. That the Respondent pay the Applicant’s costs as agreed or assessed.”

1. On 4 October 2005, the parties having failed to agree on the costs payable, Ms Albarracin’s solicitors lodged an ‘Application for Assessment of Costs’ with the Commission in respect of their Bill of Costs dated 29 September 2004. Allianz’s submissions were received on 2 November 2005, and Ms Alberracin’s solicitors’ response on 9 November 2005.

1. The Registrar delegated the assessment of costs to a Commission Arbitrator (‘the Delegate’) who made a determination dated 10 January 2006. The Certificate of Determination stated:

“1. Pursuant to a Certificate of Determination dated 24 May 2004 the Respondent is liable to pay the Applicant’s costs as agreed or assessed, in respect of a claim for weekly benefits and medical expenses compensation.
2. The Applicant’s costs of the substantive proceedings are assessed in the sum of $2,932.60.
3. The Applicant is not entitled to costs of the assessment.
4. The Respondent is, therefore, to pay to the Applicant a total of $2,932.50, if those costs have not already been paid.”

1. The relevant parts of the Delegate’s Statement of Reasons for his decision are referred to below.

ISSUE IN DISPUTE

1. Ms Albarracin’s solicitors submit the Delegate erred by disallowing recovery of their claim in respect of Item 2.04A and by failing to allow recovery of an additional amount in respect of GST payable on their professional costs. The parties’ submissions on these issues are considered below.

ON THE PAPERS REVIEW

1. Section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’) states:

“(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”

1. Having regard to Practice Directions Numbers 1 and 6 and the documents before me, neither party having made any submission on this issue, I am satisfied that I have sufficient information to proceed ‘on the papers’ without holding any conference or formal hearing and that this is the appropriate course in the circumstances. 

SUBMISSIONS, DISCUSSION AND FINDINGS

1. The relevant legislation concerning appeals to the Commission against an assessment of costs, set out in the 1998 Act and the Workers Compensation Regulation 2003 (‘the 2003 Regulation’), was discussed by Deputy President Fleming in Berger v Moree Plains Shire Council [2005] NSWWCCPD 152 (‘Berger’). I note, in particular, that clause 119(1) of the 2003 Regulation limits the grounds on which an appeal may be made against the decision of the Registrar on an assessment of costs “to a matter of law” arising in the proceedings to determine the costs application. Where the exercise of the Registrar’s or her delegate’s discretion in determining what is fair and reasonable is challenged, only where that discretion has miscarried because it has been exercised unfairly or unlawfully would this constitute an error of law: Nebauer v Hunter Area Health Service [2004] NSWWCCPD 60 (‘Nebauer’), at paragraph 19; Berger, at paragraph 136.

1. Clause 84 of the 2003 Regulation fixes the maximum costs recoverable by legal practitioners and agents at those set out in Schedule 6, except where otherwise provided in Part 19. Schedule 6 sets out the maximum costs recoverable in workers compensation matters by reference to the Compensation Costs Table (‘the Table’) at the end of the Schedule. The Table identifies particular activities or events with an Item number.

GST

1. Ms Albarracin’s solicitors’ first ground of appeal is that the Delegate made an error of law by failing to allow recovery of GST on professional costs claimed under Items in the Table. The Delegate stated: “No GST is payable on Items in the Compensation Costs Table as stated in the appeal decision of Berger.”

1. Ms Albarracin’s solicitors submit that GST is not a legal cost and is not regulated either by Part 8 of the 1998 Act or by Schedule 6 of the 2003 Regulation. It was manifestly not the intention of the legislation to exclude an applicant from recovering GST payable on costs, and any failure to make this explicit was merely an oversight by the Legislature. Ms Albarracin’s solicitors provided a copy of a letter dated 12 December 2005 from the Chief Executive Officer of WorkCover to the President of the Law Society in which he refers to a forthcoming amendment to the 2003 Regulation “to make it clear that GST may be added to appropriate items within the Costs Table”.

1. Allianz submits the Commission does not have jurisdiction to make a determination on whether GST is payable on legal services provided.

1. Whether the maximum costs specified in the Table are inclusive of GST is an issue I addressed in Chapman v Gosford City Council [2006] NSWWCCPD 4. I stated there, at paragraphs 13 to 18:

“ 14. As Deputy President Fleming noted in Berger at paragraph 156:

“The 1998 Act and the WC Regulation are silent in relation to the power of an Assessor to increase the award of costs pursuant to the Compensation Costs Table by the amount of any GST payable. Costs regulated by Schedule 6 are expressed to be the ‘maximum costs that are recoverable’ (clause 84 of the WC Regulation). There is no provision that expressly allows GST to be awarded in addition to the ‘maximum costs’ allowed in the Table.”

15. Section 337 of the 1998 Act states relevantly:

“337 Maximum lawyer and agent costs

(1) The regulations may make provision for or with respect to the following:

(a) fixing maximum costs for legal services or agent services provided to a claimant, an employer or an insurer in or in connection with any workers compensation matter or work injury damages matter,
(b) fixing maximum costs for matters that are not legal services or agent services but are related to a claim for compensation or work injury damages (for example, expenses for witnesses or medical reports).

(2) ...
(3) A legal practitioner is not entitled to be paid or recover for a legal service or other matter an amount that exceeds any maximum costs fixed for the service or matter by the regulations under this section.
(4) An agent is not entitled to be paid or recover for an agent service or other matter an amount that exceeds any maximum costs fixed for the service or matter by the regulations under this section.
(5) ...
(6)...”

16. Clause 84(1) of the 2003 Regulation states:

“84 Fixing of maximum costs recoverable by legal practitioners and agents

(1) The costs that are recoverable, and the maximum costs that are recoverable, for:

(a) legal services or agent services provided in or in relation to a claim for compensation, and
(b) matters that are not legal or agent services but are related to a claim for compensation,

are the costs set out in Schedule 6, except as otherwise provided by this Part.

Note. The effect of this clause is that a legal practitioner or agent cannot recover any costs in relation to a claim for compensation unless those costs are set out in Schedule 6, except as otherwise provided in this Part.”

17. By contrast, clause 123 of the 2003 Regulation specifically provides for costs recoverable in work injury damages matters to be increased by the amount of any GST payable in respect of the service to which the costs relates. Similarly, GST on costs excluded from Part 19 of the 2003 Regulation and Schedule 6, but regulated by the Legal Profession Act 2004, may be added pursuant to clause 115 of the Legal Profession Regulation 2005. (The relevant provisions of the 2004 Act and 2005 Regulation are similar to those contained in the now repealed Legal Profession Act 1987 and Legal Profession Regulation 2002 (see clause 50).)

18. In my view, the ordinary meaning of the wording of clause 84 of the 2003 Regulation is that the maximum amount allowable for a particular activity or event in the Compensation Costs Table of Schedule 6 must be interpreted as being inclusive of GST. The inclusion of clause 123 of the 2003 Regulation applicable to costs in work injury damages matters, specifically allowing the maximum amount to be increased by the amount of GST payable, indicates that had it been intended that the maximum amounts for the items in the Compensation Costs Table could be increased to take into account any GST payable, then specific provision would have been made for this.”

1. I note that since this decision, with effect from 17 March 2006, clause 123(1) of the 2003 Regulation has been specifically amended to permit costs recoverable in compensation matters to be increased “by the amount of any GST payable in respect of the service to which the cost relates, and the cost as so increased is taken to be the cost fixed by this part”.

1. In the current matter, the services were performed before the above amendment took effect, and the Delegate was therefore correct in disallowing a claim for GST to be added to the costs claimed in respect of Items in the Table.

Item 2.04A

1. Ms Albarracin’s solicitors’ second ground of appeal is that the Delegate made an error of law by disallowing their claim under Item 2.04A. Item 2.04A is described in column 2 of the Table as follows: “Where a claim cannot be brought without a witness statement, preparing witness statements”. The Delegate referred to the decisions in Nebauer (on which Allianz relied) and Berger, and disallowed the claim because “[t]here is nothing in the substantive file or in the submission by the parties to indicate that the Worker’s statement was taken after initial instruction”.

1. Ms Albarracin’s solicitors submit that it should have been evident to the Registrar that the statement was prepared at a later date to the initial taking of instructions and that additional work had been performed in the preparation of the witness statement. Moreover, since the decision in Berger was handed down (on 12 December 2005) after the filing of the Applicant’s submissions on 8 November 2005, Ms Albarracin’s solicitors state they were not aware that they would be required to make submissions on this issue, and by failing to afford them an opportunity to make submissions, the Delegate denied them procedural fairness.

1. Allianz submits that examination of the ‘Application to Resolve a Dispute’ indicates that Ms Albarracin’s statement is the earliest dated document and, in accordance with Berger and Nebauer, it was reasonable for the Registrar to infer that the statement was taken at the time of taking instructions, so that any claim under Item 2.04A should be disallowed.

1. In Nebauer (which I note was published on 30 August 2004), at paragraph 19, Deputy President Fleming said: “In my view, the costs involved in obtaining a worker’s statement are encapsulated and absorbed by Item 2.01 ‘Obtaining instructions from client’ ...” In Berger, at paragraph 141, Deputy President Fleming modified that view:

“141. The issue of duplication in the claim for the costs of obtaining the witness statements of Mr and Mrs Berger was correctly identified by the Registrar as relevant to the cost claimed for the investigation report. The issues raised in this matter provide the opportunity to revisit previous costs determinations in the Commission (Nebauer v Hunter Area Health Service [2004] NSW WCC PD 60 and McManus v Gosford City Council [2004] NSW WCC PD 61). The costs involved in obtaining a witness statement may be claimed under Items 2.01 or 2.04A of the Compensation Costs Table, depending upon when the cost is incurred. In Nebauer v Hunter Area Health Service [2004] NSW WCC PD 60 (‘Nebauer’) the investigative report obtained essentially amounted to the preparation of a statement by the worker. This was disallowed in that case on the basis that this task was encompassed in ‘obtaining instructions from client’ in Item 2.01. The reasoning in Nebauer as to whether the worker is to be considered a ‘witness’ for the purpose of 2.05 is not correct when the costs regime of Items 2.01, 2.04A and 2.05 is considered together. The better view is that the worker is included in the term ‘witness’ in the Table. Part 2A of the Compensation Costs Table sets out a costs regime relative to events that occur on behalf of a claimant prior to the dispute being referred to the Commission. It is possible, under that regime, for a statement by the worker to be taken either at the time of taking instructions (for which two hours is allowed pursuant to Item 2.01) or at some later time (Item 2.04A). Item 2.05 does not permit a claim for briefing a factual investigator to obtain witness statements, which includes a statement from the worker. Where, as in Nebauer, the preparation of the workers statement is undertaken by the legal practitioner or agent representing the worker and occurs at the time of taking instructions, then no claim may be made under Item 2.04A for the same work.”

1. Thus, it is clear that a claim may be made under Item 2.04A for preparing a statement by the worker if this was performed at some time later than the taking of instructions, and the claim may be allowed if the Registrar considers it fair and reasonable (clauses 110 and 111 of the 2003 Regulation). The decision in Berger was published on 12 December 2005, after Ms Albarracin’s solicitors’ submissions on the assessment of costs were lodged on 9 November 2005. Ms Albarracin’s solicitors were, however, on notice that Item 2.04A was at issue by virtue of Allianz’s submissions lodged on 2 November 2005, which disputed the claim under Item 2.04A, relying on Nebauer. Ms Albarracin’s solicitors responded in their submissions lodged on 9 November 2005. There was no specific mention in these submissions of when the witness statement was prepared.

1. I have examined the ‘Application to Resolve a Dispute’ lodged by Ms Albarracin’s solicitors. Attached to the application are two statements from Ms Albarracin: a statement dated 26 May 2003 apparently made for a representative of Allianz subsequent to Ms Albarracin lodging her notice of injury and workers compensation claim on 8 May 2003, and a later statement, dated 1 December 2003, of two pages. This appears to be the statement prepared by Ms Albarracin’s solicitors. I note that the following are also attached to the ‘Application’: a copy of a letter from Ms Albarracin’s solicitors to Pirelli dated 18 August 2003 stating that they acted on behalf of Ms Albarracin and requesting various information; copies of two letters from Ms Albarracin’s solicitors to Allianz, also dated 18 August 2003, stating that they acted on behalf of Ms Albarracin and requesting various documents and information; and a reply from Allianz to Ms Albarracin’s solicitors dated 22 August 2003. Thus, Ms Albarracin’s solicitors had obviously obtained instructions from their client by about mid-August 2003, some months before preparing her statement of 1 December 2003.

1. I am therefore satisfied that Ms Albarracin’s solicitors prepared a statement for their client some months after taking instructions and, in my view, it is fair and reasonable to allow recovery of the $150 claimed under this Item.

Conclusion

1. In conclusion, while no additional claim can be allowed in respect of GST, Ms Albarracin’s solicitors should be allowed an additional $150 in respect of their professional costs under Item 2.04A. The amount allowed by the Delegate in respect of Ms Albarracin’s solicitors’ costs should therefore be increased from $2,932.50 to $3,082.50.

DECISION

1. The Registrar’s determination of Ms Albarracin’s costs in this matter, dated 10 January 2006, is amended in accordance with these reasons.

COSTS

1. Ms Albarracin’s solicitors have been partly successful in this appeal. In my view, it is appropriate to order that Pirelli pay Ms Albarracin’s costs in this appeal in the sum of $250, inclusive of GST, representing the equivalent of approximately one hour of work. The appropriate order, therefore, is: “The Respondent, Pirelli Cables Australia Ltd is to pay the Appellant, Ms Albarracin $250 inclusive of GST in respect of her costs in this appeal.”

Robin Handley

Acting Deputy President  

19 December 2006

I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ROBIN HANDLEY, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

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