Green v Chris Mc Leod Cotton Picking Pty Ltd
[2006] NSWWCCPD 51
•22 March 2006
WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE REGISTRAR IN RELATION TO COSTS
CITATION:Green v Chris McLeod Cotton Picking Pty Ltd [2006] NSWWCCPD 51
APPELLANT: Edward Green
RESPONDENT: Chris McLeod Cotton Picking Pty Ltd
INSURER:Employers Mutual Indemnity (Workers Compensation) Ltd
FILE NUMBER: WCC 16409-04
DATE OF REGISTRAR’S DECISION: 22 December 2004
DATE OF APPEAL DECISION: 22 March 2006
SUBJECT MATTER OF DECISION: Appeal against the Registrar’s determination in respect of costs; fee for investigation report; Item 2.06 of Schedule 6 of the Workers Compensation Regulation 2003
PRESIDENTIAL MEMBER: Acting Deputy President Robin Handley
HEARING:On the papers
REPRESENTATION: Appellant: McCabe Partners, Lawyers
Respondent: Rankin Nathan, Lawyers
ORDERS MADE ON APPEAL: (1) Pursuant to clause 119(3) of the Workers Compensation Regulation 2003, clause 2 of the Registrar’s determination dated 22 December 2004 is set aside and the following clause is substituted:
“2. The Respondent is to pay the Applicant’s costs in this assessment.”
(2) Clauses 1 and 3 of the Registrar’s determination are affirmed.
(3) The Respondent, Chris McLeod Cotton Picking Pty Ltd, is to pay Mr Green’s costs in this appeal referable to the costs order made by the Registrar in relation to her assessment. There is no order in relation to costs referable to the other issues in dispute in this appeal.
BACKGROUND TO THE APPEAL
On 12 January 2005, Edward Green filed an appeal in respect of a costs determination made by the Registrar of the Workers Compensation Commission (‘the Commission’) dated 22 December 2004. The Respondent to the appeal is Chris McLeod Cotton Picking Pty Ltd. The Respondent’s workers compensation insurer, which acted on behalf of the Respondent in the Commission proceedings, is Employers Mutual Indemnity (Workers Compensation) Ltd (‘EMI’).
The dispute to which the costs determination relates was finalised in the Commission on 1 October 2004 by registration of an ‘Agreement to Discontinue Proceedings in the Commission’, pursuant to section 66A of the Workers Compensation Act 1987 (‘the 1987 Act’). The parties’ terms of settlement included agreement that the Respondent pay Mr Green’s costs as agreed or assessed.
The parties having failed to come to an agreement as to costs, on 13 October 2004, Mr Green applied to the Registrar for an assessment of costs. The Registrar delegated the assessment to a Commission Arbitrator who made the determination dated 22 December 2004. The Certificate of Determination stated:
“1. Pursuant to the registration of a Section 66A Lump Sum Agreement on 1 October, 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 assessment are not allowed.
3. The Respondent is to pay the amount of $7,959.47 to the Applicant if those costs have not already been paid.”
In his ‘Statement of Reasons for Decision’, the Arbitrator identified and discussed the costs items and disbursements in dispute and made a finding in respect of each. Mr Green’s appeal is in respect of two of these findings, identified below, and in respect of the Arbitrator’s determination not to allow the Applicant’s costs of the assessment.
The disputed item of costs was item 2.06: the amount claimed by Mr Green’s solicitors was $500.00; the amount allowed by the Arbitrator was $250.00. The Arbitrator gave the following reasons for his decision:
“The Applicant has not provided details of the specific times taken or the work done to request a Review from the Insurer and in these circumstances I will allow one hour only.”
The disputed disbursement was that for St George Registration & Investigation Services Pty Ltd’s Factual & Liability Summary Report: the amount claimed by Mr Green’s solicitors was $442.75; the amount allowed by the Arbitrator was “Nil”. The Arbitrator gave the following reasons for his decision:
“Disallowed. The Tax Invoice from St George Registration & Investigation Services Pty Ltd does not disclose what investigations were undertaken on behalf of the Applicant or what evidence was obtained. A Factual Liability Summary Report has not been provided to enable an assessment as to whether this disbursement is an exempt disbursement pursuant to Part 19 Regulation 82 of the Workers Compensation Regulation 2003. See also Nebauer v Hunter Area Health Service [2004] NSW WCC PD 60.”
The Arbitrator determined not to allow Mr Green’s costs of the assessment on the ground that the “Applicant has been unsuccessful in this Application”.
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, the documents that are before me, and the submissions by the parties on the appeal, 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.
DISCUSSION
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’), has recently been discussed by Deputy President Fleming in Berger v Moree Plains Shire Council [2005] NSW WCC PD 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.
Clause 84 of the 2003 Regulation fixes the maximum costs recoverable by legal practitioners and agents to 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.
Professional Costs Item 2.06
With regard to costs item 2.06 (described in the Table as “requesting a review of the claim from the insurer, prior to referral of the matter to the Commission”), Mr Green’s solicitors submit that for the Arbitrator to only allow one hour:
“for completely reviewing the Applicant’s file, which required the Applicant’s solicitor to peruse all the medical reports and other evidence before seeking a review of the claim by the insurer ... is clearly inequitable and may constitute an error of law in that there has been a miscarriage of the discretion in that it has been exercised unfairly and/or unlawfully when taking into account the scope of the discretion and the objects or purposes for which it is conferred.”
Mr Green’s solicitors attached copies of their (three page) letters of claim to the Respondent and EMI dated 17 January 2003 as evidence of the substantial time and costs involved. In their later response to EMI’s solicitors’ submissions, Mr Green’s solicitors provided further details of the work involved in seeking a review of the claim.
EMI’s solicitors note that the letters do not specifically request a review in accordance with the wording of item 2.06. They submit such letters are covered by item 1.02 in the Table (“Lodging claim with insurer if the insurer has not already made an offer of settlement”).
Notwithstanding this, EMI’s solicitors note the letters to the Respondent and EMI are identical and dispute Mr Green’s solicitors’ claim that the time and cost involved is substantial. EMI’s solicitors also point out that drafting the ‘Application to Resolve a Dispute’ is covered by item 4.01 (includes lodging an ‘Application to Resolve a Dispute’ with the Commission), perusing medical reports is covered by items 1.01 (“Obtaining and reviewing medical reports” in relation to the making of the claim) and 2.04 (“Obtaining and reviewing medical reports (other than where Item 1.01 applies)”), and drafting letters to the Respondent and its insurer is covered by items 2.02 (“Obtaining medical or other reports from insurer or requesting further information”) and 4.05 (“Reviewing documentation produced under a direction of the Commission, exchanging information with the other parties and obtaining further instructions from the client”).
EMI’s solicitors submit there has been no miscarriage of the Arbitrator’s discretion, and his decision to allow one hour in respect of item 2.06 is not unreasonable in the circumstances.
I note that the Arbitrator allowed Mr Green’s solicitors’ costs, as agreed, in relation to items 4.01, 1.01, 2.02 and 2.04. Having reviewed the file documentation, I am not satisfied that the Arbitrator’s reasons for only allowing $250.00 rather than the $500.00 claimed indicate any miscarriage or error of law in the exercise of his discretion. Mr Green’s solicitors’ description of the work done in relation to this item made in their submission to the Commission dated 7 October 2004, is broad and non-specific and could well overlap with work done in relation to other items in respect of which they made a claim for costs.
Disbursement for St George Registration & Investigation Services Pty Ltd’s Factual & Liability Summary Report
Mr Green’s solicitors state that at the time their client instructed them to accept the Respondent’s offer of settlement, they had already instructed St George Registration & Investigation Services Pty Ltd (‘St George’) to prepare a factual and liability summary report. The Arbitrator allowed their costs of $100 for briefing St George, pursuant to item 2.05. Mr Green’s solicitors submit the Arbitrator’s reliance on clause 82 of the 2003 Regulation in determining that St George’s fees were not recoverable was an error of law. They submit that when a cost is not covered by Part 19 of the 2003 Regulation, it is then a matter for the Registrar to determine whether the disputed amount is fair and reasonable in the circumstances of the particular case in accordance with clauses 105 and 106. It would be inequitable not to allow recovery of the investigator’s fee when insurers are able to recover such fees from WorkCover.
EMI’s solicitors submit, in relation to clause 105, that the commissioning of a factual report was not reasonable and necessary in the circumstances and, in relation to clause 106, that the matter was not complex. Thus, the Arbitrator’s decision to disallow the amount claimed in respect of a disbursement for St George should be affirmed.
Clause 82(b) of the 2003 Regulation specifically excludes from the costs regulated by Part 19 “fees for investigators’ reports or for other material produced or obtained by investigators (such as witness statements or other evidence)”. In Berger, Deputy President Fleming held (at paragraph 56(b)) that clause 113 of the Legal Profession Regulation 2005 (‘the LP Regulation’) applies to the assessment of costs for investigators’ services. When claimed as a disbursement, the investigators’ fee must be assessed in accordance with Schedule 3, Part 1, Item 10 of the LP Regulation. This states:
“Any disbursement necessarily incurred is to be allowed except in so far as any such disbursement is of an unreasonable amount or has been unreasonably incurred and any doubts which the taxing officer/costs assessor may have as to whether any disbursement was reasonably incurred or was reasonable in amount are to be resolved in favour of the receiving party”
In Berger, Deputy President Fleming noted that it is not reasonable to claim a cost as a disbursement that has already been the subject of a claim under Schedule 6 of the 2003 Regulation.
St George’s Memorandum of Costs and Disbursements dated 13 August 2003 shows that their fee of $442.75, including disbursements of $15.00 and GST, was in respect of their “perusal” of nine pages of correspondence from Mr Green’s solicitors, the preparation of a Client Service Agreement and sending this to Mr Green’s solicitors, two letters to Mr Green with a view to interviewing him, the preparation of a Memorandum of Costs and Disbursements on being advised that the matter had been settled and that a factual and liability summary report would not be required, and a letter to Mr Green’s solicitors attaching the Memorandum of Costs and Disbursements. Essentially, apart from reading nine pages of documents supplied by Mr Green’s solicitors, only work of an administrative nature appears to have been done on the file.
I note Deputy President Fleming’s recent decision in Flegerbein v Tom B Blackburn Pty Ltd [2006] NSWWCCPD 30 (‘Flegerbein’) where a similar issue arose in relation to an investigator’s report. The Deputy President was concerned about the duplication of legal work. There, as in this case, the applicant’s solicitor claimed the maximum amount for professional costs in relation to item 2.01 of the Table for “Obtaining instructions from client”. Yet no statement by the applicant was filed with the ‘Application to Resolve a Dispute’, in accordance with Rule 38 of the Workers Compensation Commission Rules 2003.
I note that in their ‘Application for Assessment of Costs’ dated 7 October 2004, Mr Green’s solicitors made no specific submission as to why the St George report was reasonable and necessary. In his Statement of Reasons, the Arbitrator commented on the lack of information provided about the St George investigation to enable an assessment of this disbursement to be made in relation to Clause 82 of the 2003 Regulation. The Arbitrator also referred to the decision in Nebauer v Hunter Area Health Service [2004] NSW WCC PD 60 (‘Nebauer’), where Deputy President Fleming considered the application of clause 82(b) of the 2003 Regulation in conjunction with clauses 105 and 106. It is reasonably clear that the Arbitrator considered that he had a discretion pursuant to clause 105, but was unable to make a decision on the exercise of that discretion because of the lack of information provided about the St George fee.
As Deputy President Fleming pointed out in Nebauer at paragraph 19, whether a disputed amount of costs is fair and reasonable in the circumstances of a particular case, pursuant to clauses 105 and 106, is clearly a matter for the discretion of the Registrar or her delegate:
“Only where the discretion can be said to have miscarried because it has been exercised unfairly or unlawfully, taking into account the scope of the discretion, and the objects or purpose for which it is conferred, would it be an error of law.”
The same consideration must also apply in relation to the discretion exercised by a taxing officer/costs assessor in relation to disbursements under Schedule 3, Part 1, Item 10 of the LP Regulation.
In this case, the Arbitrator disallowed the disbursement for lack of information, albeit under the wrong provision. In my view, it was for Mr Green’s solicitors to provide information to show that the cost incurred was reasonable and necessary, and it is clear the Arbitrator was not satisfied with the information provided. There is nothing to indicate that the Arbitrator’s determination on this issue was unfair.
While the Arbitrator should have considered whether the disbursement was reasonably incurred and was reasonable in amount pursuant to Schedule 3, Part 1, Item 10 of the LP Regulation rather than clauses 105 and 106 of the 2003 Regulation, similar considerations apply. I am not satisfied on the evidence available to me that this matter was a complex one and that the commissioning of a factual and liability summary report was reasonable in all the circumstances. Given my doubt that the disbursement was reasonably incurred, Item 10 requires that I resolve the issue in favour of the receiving party – in this case, the Respondent, and I therefore resolve that there should be a nil award in respect of this item.
The Arbitrator’s decision not to allow costs
Mr Green’s solicitors submit the Arbitrator had no regard to the final offer made by EMI: the costs items agreed between the parties totalled $1,687.50; the amounts claimed in respect of disputed items totalled $2,250.00 with EMI conceding only $600.00. However, I note that in its response to Mr Green’s solicitors’ application to the Registrar for costs, EMI conceded a further $250.00 in respect of item 1.01 (up from $350.00 to $600.00). The only disbursement in dispute was the $442.75 in respect of the St George account.
Mr Green’s solicitors submit they were largely successful in respect of their application over disputed costs, with the Arbitrator ordering the payment of $2,000.00 in respect of the disputed items for which $2,250.00 was claimed.
EMI’s solicitors submit that pursuant to sections 341 and 342 of the 1998 Act, the Arbitrator has a discretion to make an order that there should be no costs of the assessment and his decision in this regard should be affirmed.
The lack of correlation in some of the costs items between Mr Green’s solicitors’ claimed amounts and the amounts allowed by the Arbitrator makes a straight comparison difficult. However, it is clear from his Statement of Reasons that the Arbitrator allowed a total of $3,280.00 (exclusive of GST) in respect of $3,530.00 costs claimed, and that this is significantly greater than the costs conceded by EMI’s solicitors. In my view, the Arbitrator’s statement that the “Applicant has been unsuccessful in this Application” was wrong and Mr Green’s solicitors’ claim that they were largely successful on their claim in relation to costs is correct. Thus, in my view the Registrar should have made an order that the Respondent must pay Mr Green’s costs in relation to the assessment of costs.
DECISION
Pursuant to clause 119(3) of the Workers Compensation Regulation 2003, clause 2 of the Registrar’s determination dated 22 December 2004 is set aside and the following clause is substituted:
“2. The Respondent is to pay the Applicant’s costs in this assessment.”
Clauses 1 and 3 of the Registrar’s determination are affirmed.
COSTS
The Respondent, Chris McLeod Cotton Picking Pty Ltd, is to pay Mr Green’s costs in this appeal referable to the costs order made by the Registrar in relation to her assessment. There is no order in relation to costs referable to the other issues in dispute in this appeal.
Robin Handley
Acting Deputy President
22 March 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.
ASSOCIATE
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