Arakelian v Freeman Adams Pty Ltd

[2007] NSWWCCPD 26

WORKERS COMPENSATION COMMISSION

DETERMINATION OF APPEAL AGAINST A DECISION OF THE REGISTRAR IN RELATION TO COSTS

CITATION:Arakelian v Freeman Adams Pty Ltd [2007] NSWWCCPD 26

APPELLANT:  Hassmig (Jasmine) Arakelian

RESPONDENT:  Freeman Adams Pty Ltd

INSURER:GIO Workers Compensation (NSW) Ltd

FILE NUMBER:  WCC12069-05

DATE OF REGISTRAR’S DECISION:             3 March 2006

DATE OF APPEAL DECISION:  25 January 2007

SUBJECT MATTER OF DECISION: Appeal against the Registrar’s decision in relation to costs: professional costs - claim under Item 9.01 of the Compensation Costs Table in Schedule 6 of the Workers Compensation Regulation 2003; whether maximum costs specified in the Table before 17 March 2006 are inclusive of GST; disbursement – fee for private investigator’s report.

PRESIDENTIAL MEMBER:  Acting Deputy President Robin Handley

HEARING:On the papers

REPRESENTATION:  Appellant:      McCabe Partners Lawyers

Respondent:   no appearance

ORDERS MADE ON APPEAL:   Clause 2 of the decision of the Registrar dated 3 March 2006 is revoked and the following clause is substituted:

“2. The Applicant’s costs of the proceedings are assessed at $5,308.00.”

The decision of the Registrar dated 3 March 2006 is otherwise confirmed.

There is no order as to the costs of this appeal.

BACKGROUND

1. On 21 March 2006, Hassmig (Jasmine) Arakelian filed an appeal against the Registrar’s assessment of costs in proceedings determined by a Commission Arbitrator. The Respondent to the appeal is Freeman Adams Pty Ltd (‘Freeman Adams’). Freeman Adams’ workers compensation insurer is GIO Workers Compensation (NSW) Ltd (‘GIO’).

1. Ms Arakelian was born in Lebanon on 12 April 1964 and is aged 42. She migrated to Australia in 1994, is now separated from her husband, and has a 10 year old dependent son. On the date of the accident, 7 March 2002, Ms Arakelian was employed by Freeman Adams, which is a recruitment agency, as a data entry officer working for the HSBC Bank. The accident occurred when a colleague moved her office chair and Ms Arakelian fell to the floor injuring her tailbone. She notified her employer of the accident on that day and claimed workers compensation on 19 March 2002.

1. On 26 May 2004, the Commission registered Ms Arakelian’s ‘Application to Resolve a Dispute’ in respect of her claim for (1) medical, hospital or related expenses, and (2) compensation for permanent impairment and pain and suffering. Freeman Adams filed a ‘Reply’ on 17 June 2004.

1. On 18 August 2004, an Arbitrator conducted a teleconference with the parties in the course of which the parties came to an agreed resolution of the issues in dispute. On 20 August 2004, the Arbitrator issued a Certificate of Determination in the following terms:

“1. The Application is to be discontinued.
2. The requirement to file a Notice of Discontinuance pursuant to Rule 74 is dispensed with.
3. The Respondent is to pay the Applicant’s costs as agreed or assessed.

The following is not a determination of the Commission, however, I note that the parties have agreed that the Respondent will pay the Applicant lump sum compensation on the basis of whole person impairment of 7% and amounting to $8,750.00 pursuant to Section 66 of the Act.”

1. By letter dated 7 January 2005, the Commission notified the parties of the registration of a section 66A lump sum agreement in accordance with the above terms.

1. On 20 July 2005, the parties having failed to agree on the costs payable, Ms Arakelian’s solicitors lodged an ‘Application for Assessment of Costs’ with the Commission. On 4 October 2005, Quantum Costs Assessors Pty Ltd (‘QCA’) lodged submissions in reply on behalf of Freeman Adams. The Registrar delegated the assessment to a Commission Arbitrator (‘the Delegate’) who made a determination dated 3 March 2006. The Certificate of Determination stated:

“1. Pursuant to a Certificate of Determination issued on 20 August 2004 the Respondent employer is liable to pay the Applicant’s costs of the proceedings as agreed or assessed.

2. The Applicant’s costs of the proceedings are assessed at $5,408.00.

3. There are no costs of the assessment.”

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

ISSUES IN DISPUTE

1. Ms Arakelian’s solicitors submit the Delegate erred in his determination of their claim under Item 9.01 in respect of their costs of the assessment, and in disallowing their claim for a disbursement in respect of the fee for the private investigator’s report. They also submit he erred 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, there being no submission by the parties on whether the matter can be dealt with ‘on the papers’, 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. 

1. No application to adduce fresh evidence was made.

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’) applicable at the time of the Delegate’s assessment, 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. It is these item numbers that are referred to below.

1. As stated above, Ms Arakelian’s solicitors identify their claim for professional costs under Item 9.01 and a disbursement in respect of the fee for the private investigator’s report as being in dispute, together with the issue of whether an additional amount in respect of GST payable on their professional costs should be allowed. These issues are discussed below.

Professional Costs

Item 9.01

1. The activity/event for which a claim may be made under Item 9.01 is described in column 2 of the Table as “Conduct of any other proceedings before the Commission involving the determination of substantive legal issues, including preparatory work”. This includes a claim for the cost of a costs assessment. The Delegate disallowed Ms Arakelian’s solicitors’ claim for their costs of the assessment on the ground that “[t]he Applicant was unsuccessful on the claim for costs”.

1. Ms Arakelian’s solicitors submit they are entitled to $625 for their costs of the assessment because the Association’s solicitors were only prepared to negotiate costs on a ‘without prejudice’ basis to enable them to recommend a figure to their client (GIO). Moreover, with regard to the professional costs Items in dispute in the assessment (Items 2.01, 4.05 and 4.08), they contend “the Applicant substantially beat the Respondent’s offer”.

1. A review of the Delegate’s assessment of the three professional costs Items identified as being in dispute in the ‘Application for Assessment of Costs’ shows that the outcome was as follows:

Item 2.01: Applicant claimed $500 (two hours), Respondent conceded $250 (one hour), Delegate allowed $375 (one and a half hours).
Item 4.05: Applicant claimed $500 (two hours), Respondent conceded $187.50 (45 minutes), Delegate allowed $500 (two hours).
Item 4.08: Applicant claimed $500 (two hours), Respondent conceded $250 (one hour), Delegate allowed $375 (one and a half hours).

1. In addition, I note the Delegate also disallowed the Applicant’s claim under Item 10.01 and, moreover, disallowed the following claimed disbursements: (1) the fee for the private investigator’s report (identified by the Applicant as being in dispute - that QCA submitted was “ excessive” and should be disallowed or reduced substantially), (2) the claimed agency fees, (3) the claim for sustenance (the Delegate also reduced the claim for the Applicant’s travelling expenses), (4) the miscellaneous fees claimed, (5) the “conduct money” claimed. In summary, the Delegate allowed $4,420.00 in respect of $4,857.50 professional costs claimed and $988.00 of $3,929.60 disbursements claimed.

1. Thus, while the Delegate’s statement that the Applicant was unsuccessful on the claim for costs is not accurate, nevertheless, it appears that Ms Arakelian’s solicitors were largely unsuccessful in the costs assessment. I am not satisfied from their submissions on the appeal that there is any proper basis for my interfering with the exercise of the Delegate’s discretion. I therefore reject this ground of appeal.

Disbursement

Private Investigator’s Report

1. Ms Arakelian’s solicitors claimed $2,404.60 in respect of the fee charged by St George Registration & Investigation Services Pty Ltd (‘St George’) for preparing a factual and liability summary report. In its submission on the assessment, QCA submitted that this should be disallowed “as excessive or in the alternative reduce substantially”. The Delegate disallowed the claim. He said that in accordance with the decision in Berger, the report:

“was not in my discretion reasonably necessary considering the issues that were in dispute between the parties. There is no evidence that the Report contains factual information other than what could have been obtained by the Applicant’s Solicitor when obtaining instructions.”

1. In their submissions on the appeal, Ms Arakelian’s solicitors submit that the Delegate denied them natural justice by disallowing their claim for the fee, and he failed to provide adequate reasons for doing so. They noted the Delegate allowed $100 under Item 2.05 for briefing a factual investigator.

1. I have reviewed St George’s Factual and Liability Summary Report dated 3 February 2003. Apart from the summary itself (of five pages), the index to the report states it also includes a business names search “of the Defendant”, the advice of a barrister, and a statement by Ms Arakelian. The business names search and barrister’s advice were not attached to the ‘Application to Resolve a Dispute’ which only included the summary and Ms Arakelian’s statement. A copy of St George’s invoice for the report was not attached to the ‘Application for Assessment of Costs’.

1. In Berger, at paragraph 142, Deputy President Fleming, recognising that the fee for an investigator’s report may be claimed pursuant to clause 82(b) of the 2003 Regulation, noted:

   “The test of whether such a report is claimable will, as discussed above, essentially be one of ‘reasonableness’. In most cases, it will not be reasonable to obtain witness statements by way of an investigator’s report, where the legal practitioner or agent has already obtained such statements, either at the time of taking instructions or at a later time, but before an application to the Commission is filed.”

1. The Deputy President confirmed that where an activity may be claimed as a cost for which provision is made in the Table, a separately claimed disbursement in respect of that activity by a private investigator would not be considered reasonable. In McManus, at paragraph 21, Deputy President Fleming noted that “the costs involved in obtaining a worker’s statement are encapsulated and absorbed by Item 2.01”, where the activity/event is described as “Obtaining instructions from a client”.

1. Thus, no disbursement may be claimed in respect of the statement from Ms Arakelian, which one would expect to see prepared by her solicitor subsequent to the taking of instructions. I am not satisfied on the basis of the other sparse evidence provided that the report was reasonably necessary. Thus, I am also not satisfied that the Delegate made any error in disallowing the claim, and, in the light of the sparse evidence provided, in my view his statement of reasons was adequate in terms of the obligation to provide a statement of reasons set out in clause 115 of the 2003 Regulation: lengthy written reasons are not required – Orr v Direct Couriers (Australia) Pty Ltd [2004] NSWWCCPD 28, at paragraph 48.

1. However, the Delegate was in error in allowing Ms Arakelian’s solicitors’ claim for briefing a factual investigator under Item 2.05, since, in my view, this was not reasonably necessary, and their claim for $100 under this Item should therefore be disallowed.

GST

1. Ms Arakelian’s solicitors also claimed GST in respect of their professional costs claimed under Items in the Table. The Delegate disallowed any additional amount in respect of GST relying on the decision in Berger.

1. Deputy President Fleming stated 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.”

1. However, 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 and the Delegate’s assessment was made 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.

Conclusion

1. I reject the grounds of appeal identified by Ms Arakelian’s solicitors. However, my review indicates that the Delegate erred by allowing their claim for $100 under Item 2.05, and the costs awarded must therefore be reduced accordingly from $5,408.00 to $5,308.00.

DECISION

1. Clause 2 of the decision of the Registrar dated 3 March 2006 is revoked and the following clause is substituted:

“2. The Applicant’s costs of the proceedings are assessed at $5,308.00.”

1. The decision of the Registrar dated 3 March 2006 is otherwise confirmed.

COSTS

1. There is no order as to the costs of this appeal.

Robin Handley

Acting Deputy President

25 January 2007

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.

ASSOCIATE