Fifita v SPL Group Limited
[2007] NSWWCCPD 53
•15 February 2007
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE REGISTRAR IN RELATION TO COSTS
CITATION:Fifita v SPL Group Limited [2007] NSWWCCPD 53
APPELLANT: Kalolo Fifita
RESPONDENT: SPL Group Limited
INSURER:QBE Workers Compensation (NSW) Limited
FILE NUMBER: WCC17194-05
DATE OF REGISTRAR’S DECISION: 28 February 2006
DATE OF APPEAL DECISION: 15 February 2007
SUBJECT MATTER OF DECISION: Appeal against the Registrar’s Assessment of Costs, application of GST; procedural fairness.
PRESIDENTIAL MEMBER: Acting Deputy President Deborah Moore
HEARING:On the papers
REPRESENTATION: Appellant: Maurice May Lawyers
Respondent: QBE Legal
ORDERS MADE ON APPEAL: 1. The Registrar’s determination of Mr
Fifita’s claim for costs in this matter, dated 28 February 2006 is amended in accordance with these reasons.
2.The Respondent, SPL Group Limited is to pay the Appellant, Mr Fifita, $165.00 inclusive of GST in respect of his costs in this appeal.
BACKGROUND TO THE APPEAL
On 6 March 2006 Kalolo Fifita (‘the Appellant’) filed an ‘Appeal Against a Cost Determination’ made by the Registrar of the Workers Compensation Commission (‘the Commission’) on 28 February 2006. The Respondent to the appeal is SPL Group Limited (‘the Respondent’). The Respondent’s insurer is QBE Workers Compensation (NSW) Limited (‘QBE’).
No ‘Notice of Opposition’ to the appeal or submissions have been filed by either the Respondent or QBE.
The Appellant commenced proceedings in the Commission on 22 January 2004 seeking permanent impairment/pain and suffering compensation as a consequence of an injury to his back and left leg on 21 February 1992.
A Teleconference was held on 4 May 2004 where the parties came to an agreed resolution of the issues in dispute. On 6 May 2004 a ‘Certificate of Determination – Consent Orders’ was issued which included a clause requiring the Respondent to pay the Appellant’s costs “as agreed or assessed”.
On 10 October 2005, the parties having failed to agreed on the costs payable, the Appellant filed an ‘Application for Assessment of Costs’ with the Commission in respect of his Bill of Costs dated 1 June 2004. The Respondent filed submissions on 17 June 2004.
The Registrar delegated the assessment of costs to a Commission Arbitrator (‘the Delegate’) who made a determination dated 28 February 2006. The ‘Certificate of Determination stated as follows:
“1.Pursuant to a Certificate of Determination dated 6 May 2004 the Respondent is liable to pay the Applicant’s costs as agreed or assessed, in respect of a claim for permanent impairment compensation.
2.The Applicant’s costs of the substantive proceedings are assessed in the sum of $4,462.50.
3.The Respondent is to pay the Applicant’s costs of the assessment in the sum of $220.00.
4.The Respondent is, therefore, to pay to the Applicant a total amount of $4,682.50, of those costs have not already been paid.”
The relevant aspects of the Delegate’s ‘Statement of Reasons’ for her decision will be dealt with below.
ON THE PAPERS REVIEW
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.”
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, DISCUSSIONS AND FINDINGS
The Delegate made the following observations in relation to her assessment of costs:
“The Applicant’s solicitors set out the claim for party/party costs by way of an itemised Bill of Costs under cover of a letter to the Respondent dated 1 June 2004. The Bill of Costs and covering letter were attached to the Application for Assessment of Costs.
By letter dated 10 June 2004 the Respondent replied to the claim for costs.
The Applicant responded by letter dated 1 June 2004 noted that agreement had been reached with the exception of Items 4.05, 4.08 and 4.09.
I turn, therefore, to assess the Applicant’s costs.
The Respondent did not make any specific submissions in relation to all Items claimed. I am still required to assess whether all Items claimed are fair and reasonable and in accordance with the Table.
I have reviewed Items 4.05, 4.08 and 4.09 below. All other Items were appropriately claimed in accordance with the Table and were fair and reasonable.”
The Delegate then proceeded to review the Items in dispute but disallowed any claim for GST not only on the disputed Items, but also on the Items agreed to between the parties which had been expressed to include GST.
The only issue on appeal is the failure of the Delegate to allow a recovery of GST claimed to be payable, the Delegate having allowed the claims as follows:
· Item 4.05 $500.00 (inclusive of GST)
· Item 4.08 $500.00 (inclusive of GST)
· Item 4.09 $187.50 (inclusive of GST)
In her ‘Statement of Reasons’, the Delegate noted, in respect of the three Items in dispute, that: “Costs specified in Schedule 6 are inclusive of GST. Chapman v Gosford City Council [2006] NSWWCCPD 4. Berger v Moree Plains Shire Council [2005] NSWWCCPD 152.”
In detailed submissions on appeal, the Appellant makes reference to the decisions referred to by the Delegate, together with Clause 82 of the Workers Compensation Regulation 2003, (‘the 2003 Regulation’) the Legal Profession Act 2004 and “A New Tax System (Goods & Services Tax) Act 1999.”
The Appellant makes the following submissions:
“The Applicant submits that it is contemplated by all of this legislation that the GST is not a legal service and is not a charge, cost or amount levied by a legal practice upon any person or corporation liable for payment of its costs and disbursements. The Applicant submits that the GST is a Federal Government tax, which a legal practice is liable to collect on behalf of the Federal Government for all Items defined as taxable in the relevant Legislation. It does not form part of a legal practice’s costs in any way, shape or form. Therefore, following the logic of the decision in Berger, the GST is not a legal cost and it is not regulated by Part 8 of the 1998 Act and Schedule 6 of the Regulation.
The decision in Berger is correct in stating that those matters which are not fixed pursuant to Part 19 of the Regulation are capable of being assessed by a Costs Assessor under the Commission’s broad statutory power to determine ‘by whom, to whom and to what extent’ costs are to be paid in the Commission (section 341 of the 1998 Act). The broad power must, by the same logic, extend to ordering payment of the GST as an additional Item on costs, given that the Applicant’s Solicitor is required to add the GST to amounts it is entitled to recover for services provided.
The Applicant also submits that it is manifestly not the intention of the Legislation to exclude the Applicant from recovery of the GST payable on costs and any failure to make this explicit is merely an oversight on the part of the legislator. In the absence of a provision specifying that costs are to be inclusive of any GST payable, the Applicant submits that the expression ‘costs’ cannot be interpreted to be inclusive of any GST payable.”
The Appellant annexed to his submissions by way of ‘Fresh Evidence’ a copy of a letter from Mr John Blackwell, Chief Executive Officer of WorkCover to the President of the Law Society dated 12 December 2005 wherein Mr Blackwell stated as follows:
“However, WorkCover does not want to wait until this review is completed before introducing a number of changes into the costs regulations. It is our intention that pending the review the following changes to the costs regulations will be implemented as soon as possible:-
·A provision to make it clear that GST may be added to appropriate Items within the Costs Table.”
The issue of GST was considered by Acting Deputy President Handley in Chapman v Gosford City Council [2006] NSWWCCPD 4 (‘Chapman’). ADP Handley noted that the Respondent in that case “… acknowledges that the majority of reported Commission decisions allow GST in addition to the Schedule 6 maximum amounts, but comments that it appears no issue has been taken by parties requiring a determination by the Commission on this matter, and contend Schedule 6 fees are GST inclusive.”
ADP Handley then went on to consider the statement by Deputy President Fleming in Berger v Moree Plains Shire Council [2005] NSWWCCPD 152 (Berger) quoting from paragraph 156 of that decision as follows:
“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). Thee is no provision that expressly allows GST to be awarded in addition to the ‘maximum costs’ allowed in the Table”.
ADP Handley went on to consider the Legal Profession Act 2004 and the wording of the 1998 Act before concluding that “… Had it been intended that the maximum amounts for the Items in the Compensation Costs Table could be increased taking into account any GST payable, then specific provision would have been made for this.”
As ADP Handley rightly noted, many Commission decisions prior to his decision in Chapman allowed for the inclusion of GST in addition to Schedule 6 maximum amounts. However, more recently, in Bridge v ANZ Banking Group Limited [2006] NSWWCCC 21, a decision of a delegate dated 7 August 2006, the delegate made the following remarks:
“The Applicant has claimed GST on all Items under the Regulation. The Respondent opposed the allowance for GST, citing Berger and noting that an amendment to the Regulation allowing GST was not made until March 2006 and submitting that the amendment does not have retrospective operation.
The Workers Compensation Amendment (Costs in Compensation Matters) Regulation 2006 came into operation on 17 March 2006. The explanatory note provides, inter alia, that one of the objects of the amending Regulation is to make it clear that GST may be added to costs.
Prior to the amendment, the decision of Berger provides that GST is not payable on regulated costs.
As GST is a tax levied upon a service or supply, it is not ascertainable or incurred until the value of the service or supply is determined. In relation to legal costs, the liability for GST arises upon agreement as to costs or assessment of costs. In the present case, liability for GST arises at the date of assessment, which is after the Regulation amendment. Accordingly, the provisions of the amending Regulation apply and GST is payable on the Applicant’s costs.”
Thus where a dispute exists, and that dispute is the subject of assessment after 17 March 2006, GST will be payable notwithstanding that the work was undertaken pre-dating the amendment.
In the present case, the Delegate’s assessment is dated 28 February 2006. The parties had agreed on all but three Items, and had agreed that the Items not subject to dispute should have the GST component added. Notwithstanding their agreement, the Delegate proceeded to, as it were, “reassess” all professional Items, disallowing any claim for GST.
The issue in the present case as I see it is more to do with procedural fairness. As the Appellant points out:
“… Until the claim in Berger, the Applicants have always been entitled to recover the GST payable as an amount additional to their legal costs. At all times prior to Berger, the Commission itself had always awarded the GST as an additional amount. The Applicant would not have known it would be required to argue this point and had no opportunity to file evidence on the subject. In addition, the letter [from Mr Blackwell] only came into existence after all submissions had been filed in this matter.”
As to the ‘fresh evidence’ claim, the Appellant states:
“… There is no disadvantage to the Respondent in admitting the letter as it is now commonly known to exist, within the legal profession. Further, the letter confirms what the Respondent would have understood to be the position, vis a vis recovery of the GST, prior to its creation.”
Section 352(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’) provides that ‘fresh evidence’ may not be given on appeal except with the leave of the Commission. The principles relevant to the exercise of the discretion to grant leave are well set out in Ross v Zurich Workers Compensation Insurance [2002] NSWWCCPD 7. In line with those principles and particularly having regard to the fact that this ‘evidence’ came into existence after the Appellant filed his submissions, in the interests of justice, it is appropriate to allow that evidence.
More relevantly however is the Appellant’s complaint that he was not afforded the opportunity to address the issue of GST particularly in circumstances where the parties had reached agreement on all but three Items.
The issue of ‘procedural fairness’ in costs appeals was recently considered by ADP Tydd in Berry v South Eastern Sydney and Illawarra Area Health Service [2006] NSWWCCPD 256 where she stated as follows:
“33.The application of procedural fairness in costs assessments was considered by the Commission in a number of decisions including Asimus v J.J. Walker, A.D. Walker & Temple Pty Ltd t/as Templemore Partners [2006] NSWWCCPD 113 (‘Asimus’) and Bar Beach Bowling Club Ltd v McGill [2006] NSWWCCPD 2 (‘Bar Beach’). In Blain v Burrangong Pet Food Pty Limited NSWWCCPD 200 I confirmed my view that the 2003 Regulation dictates that the exercise of the delegate’s power is conditioned on the observance of the principles of natural justice (Kioa v West (1985) 159 CLR 550 (‘Kioa’)). The Registrar (or her delegate) exercises these powers as a member of the Commission (section 368(1)(a) of the 1998 Act).
34. Of particular relevance, clause 103 of the 2003 Regulation provides that:
“103 Consideration of applications:(1)The Registrar must not determine an application for assessment unless the Registrar:
(a) has given both the applicant and any legal practitioner, agent, client or other person concerned a reasonable opportunity to make written submissions to the Registrar in relation to the application, and
(b) has given due consideration to any submissions so made. (Emphasis added)
(2)In considering an application, the Registrar is not bound by rules of evidence and may inform himself or herself on any matter in such manner as he or she thinks fit.
(3)...”
In my view, the principles of natural justice required the Delegate in this case to afford the Appellant (and indeed the Respondent) the opportunity to make submissions on the issue of GST in circumstances where the Delegate ‘reviewed’ and ‘re-determined’ Items not in dispute between the parties.
The Delegate’s Determination
At paragraph 30 of the Delegate’s Statement of Reasons, she set out her summary of Items allowed. The Delegate assessed professional costs of $3,417.50. There is some inconsistency in the Delegate’s reasons, particularly in relation to Items 4.05 and 4.08. I note that the Delegate in reference to Item 4.05 has allowed $500.00 having previously stated that she would allow $450.00 (page 13 of her ‘Statement of Reasons’). The same applies in Item 4.08. All other Items are either as per agreement or as assessed by the Delegate.
The maximum amount allowed under Item 4.05 and 4.08 is $500.00. These amounts were claimed by the Appellant. The Delegate incorrectly stated that “The Applicant claimed $450.00 plus GST [under Item 4.05]” and again said “The Applicant claimed $450.00 plus GST under [Item 4.08]”. The Delegate stated in respect of each Item “I find that the Applicant’s claim is fair and reasonable”. In fact, the Appellant had claimed $500.00 under each Item.
Thus, whilst the Delegate’s reasons with respect to individual Items may be inaccurate, her ultimate determination reflected an accurate assessment of professional costs allowed.
The Delegate’s determination of the disputed items was in line with the decision in Berger and Chapman and was made in the absence of the letter from Mr Blackwell to which I have referred earlier. In those circumstances, it is not therefore appropriate for me to review that determination on appeal. However, I am of the view that the Appellant was denied procedural fairness in relation to the other Items not in dispute and accordingly, I would allow GST on all the undisputed Items as agreed to between the parties, and confirm the Delegate’s decision in relation to Items 4.05, 4.08 and 4.09.
In the alternative, I am of the view that the Delegate exceeded her jurisdiction in purporting to assess Items not in dispute between the parties.
The 2003 Regulation makes provision for a party to apply to the Registrar for assessment of costs once a Bill of Costs has been provided. The Registrar's task, pursuant to Clause 105 of the 2003 Regulation is to determine if "...disputed costs are unfair or unreasonable..."
In the absence of any dispute between the parties as to all but three Items, the Delegate was not entitled to substitute her own assessment
SUMMARY
The Delegate assessed professional costs in the sum of $3,417.50. The disputed Items totalled $1,087.50. To the undisputed Items totalling $2,330.00, I would add GST of $233.00, a total of $2,563.00. To that, I would add the disputed Items totalling $1,087.50, bringing total professional costs payable (inclusive of GST) of $3,650.50.
To this should be added agreed disbursements ($1,045.00) and costs of the assessment ($220.00 inclusive of GST), a total of $4,915.50.
The Delegate’s assessment of $4,682.50 should therefore be increased by $233.00 to $4,915.50.
DECISION
The Delegate’s determination of the Appellant’s claim for costs in this matter dated 28 February 2006 is amended in accordance with these reasons.
COSTS
The Appellant has been successful in this appeal, and in my view it is reasonable to order that the Respondent pay the Appellant’s costs of the appeal in the sum of $165.00 inclusive of GST.
The appropriate order therefore is that the Respondent, SPL Group Limited, pay the Appellant, Mr Fifita, $165.00 inclusive of GST in respect of his costs in this appeal.
Deborah Moore
Acting Deputy President
15 February 2007
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF DEBORAH MOORE, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
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