Magann v McInnes Processing Pty Limited

[2007] NSWWCCPD 73

WORKERS COMPENSATION COMMISSION

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

CITATION:Magann v McInnes Processing Pty Limited and anor [2007] NSWWCCPD 73

APPELLANT:  Neil Maxwell Magann

FIRST RESPONDENT:  McInnes Processing Pty Limited

SECOND RESPONDENT:  McInnes Packaging Pty Limited

INSURER (FIRST, and

SECOND RESPONDENTS)  CGU Workers Compensation (NSW) Limited

FILE NUMBER:  WCC20959-05

DATE OF REGISTRAR’S DECISION:             21 March 2006

DATE OF APPEAL DECISION:  2 March 2007

SUBJECT MATTER OF DECISION:                Appeal against the Registrar’s assessment of costs; adequacy of reasons; costs of disbursements; costs of application for assessment of costs.

PRESIDENTIAL MEMBER:  Acting Deputy President Tydd

HEARING:On the papers

REPRESENTATION:  Appellant:      McCabe Partners Lawyers

Respondents:Lyons Barnett Kennedy Solicitors

ORDERS MADE ON APPEAL:  1. The decision of the delegate dated 21 March 2006 is revoked and the following orders are made in its place:

“(i) Pursuant to an Order dated 15 April 2005 the Second Respondent is liable to pay the Applicant’s costs of the substantive proceedings as agreed or assessed.

(ii) The parties have agreed that the Second Respondent pay the Applicant the costs of $12,840.68 (inclusive of GST) for the costs incurred in the substantive proceedings.

(iii) The Applicant’s costs of obtaining a statement have been assessed in the sum of $110.00 (inclusive of GST).

(iv) The Second Respondent is to pay the Applicant the sum of $137.50 (inclusive of GST) for the costs of the application for assessment.

(v) The Second Respondent is, therefore, to pay to the Applicant a total amount of $13,088.18 if those costs have not already been paid.”

2. The Second Respondent, McInnes Packaging Pty Limited is to pay the Appellant, Mr Magann, $275.00 inclusive of GST in respect of his costs in this appeal.

BACKGROUND

Prior proceedings

1. On 20 March 2003 Mr Neil Maxwell Magann (‘Mr Magann’) lodged an ‘Application to Resolve a Dispute’ in the Workers Compensation Commission (‘the Commission’), (WCC 8122-05). Mr Magann named McInnes Processing Pty Limited as the First Respondent (‘McInnes’), and McInnes Packaging Pty Limited (‘McInnes Packaging’) as the Second Respondent. Against McInnes Mr Magann claimed that he suffered injuries to his back; right and left legs; neck; right and left shoulders; carpal tunnel syndrome in his right and left arms below the elbow and impairment to his sexual organs as a result of the nature and conditions of his employment as a labourer from 31 December 1995 to 17 May 1999. Against McInnes Packaging Mr Magann claimed injuries to the same body parts as a result of frank injuries on 31 July 1999 and 28 May 2002 together with injuries claimed to have been sustained as a result of the nature and conditions of his employment as a labourer from 21 May 1999 to 31 December 2001 and again from 1 January 2002 to 28 May 2002. Against both respondent employers (‘the Respondents’) Mr Magann sought weekly compensation and lump sum compensation pursuant to section 66 and 67 of the Workers CompensationAct 1987 (‘the 1987 Act’).

1. On 7 April 2003 McInnes Packaging filed a Reply to the Application in which it disputed the claim on the basis that it had paid all wages to date and continuing and that it relied on a medico legal report that Mr Magann’s condition was not static and therefore permanent impairment could not be assessed.  On my review I have been unable to locate a reply filed by McInnes and given that the Respondents are jointly insured and represented I have concluded that the Reply filed was intended to be a joint reply.

1. On my review of the Commission’s files teleconferences were conducted by a Commission arbitrator (‘the Arbitrator’) on 18 August; 26 November and 3 December 2003 at which time procedural directions were issued.  Further directions were also issued on 7 July 2004 and on that day the dispute was referred for assessment to two Approved Medical Specialists (‘the AMSs’). An amended application was filed by Mr Magann on 2 March 2004 in which he sought a total of $133,050.00 in lump sum compensation against McInnes and $303,600.00 in lump sum compensation against McInnes Packaging. The amended application also provided further submissions regarding Mr Magann’s entitlement to weekly benefits compensation. 

1. Following the issuing of the medical assessment certificates (‘the MACs’) a further teleconference was conducted on 16 March 2005 and the dispute was resolved on that day. The Arbitrator issued a ‘Certificate of Determination – Consent Orders’ dated 15 April 2005 ordering that: the application is withdrawn and the Second Respondent to pay Applicant’s costs as agreed or assessed. By way of notation the orders also reflected the parties agreement that McInnes Packaging pay Mr Magann a total of $30,500.00 and that an agreement pursuant to section 66A be filed as soon as practicable.

1. On 9 December 2005 Mr Magann’s solicitor lodged an ‘Application for Assessment of Costs’ and referred to matter WCC 8122-03. On 21 December 2005 the Respondents’ solicitor filed submissions in reply.   

1. The Registrar’s decision in relation to this application, by her delegate, a Commission arbitrator, (‘the delegate’) was made on 21 March 2006. The delegate’s decision was accompanied by a ‘Statement of Reasons’.  The decision is set out as follows:

   “1.         Pursuant to Agreement and Order dated 15 April 2005 the Respondent employer is liable to pay the Applicant’s costs of the Application as agreed or assessed.

   2.The costs claimed by the Applicant for the services of St George Registration and Investigation Services are not costs that are in accordance with Schedule 6 of the Workers Compensation Regulation and are not fair and reasonable.

   3.The Applicant is to pay the Respondent’s costs of the assessment in the sum of $500.00 (inclusive of GST).”

Lodgement of the appeal

1. On 7 April 2006 Mr Magann’s solicitor lodged an ‘Appeal from the Registrar’s Determination on Costs’ and referred to matter WCC 6808-04. I have interpreted the submissions to be relevant to the assessment conducted in relation to WCC 8122-03.

1. On 4 May 2006 the solicitor for the Respondents lodged submissions in reply to the Appeal.  The Respondents are insured by CGU Workers Compensation (NSW) Limited.

ON THE PAPERS

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. Mr Magann’s solicitor’s submissions are silent in respect of the requirement for a formal hearing. The Respondents’ solicitor submits that the matter is capable of being dealt with ‘on the papers’.  Neither party has sought to adduce fresh evidence. Having regard to the submissions, Practice Directions Numbers 1 and 6 and the documents that are before me 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

Issues in dispute

1. Mr Magann’s solicitor submits that the delegate denied him natural justice and erred in law in failing to award the costs of obtaining a factual investigation report (‘the Report’). It is also submitted that the delegate erred in failing to have regard to section 112(3) of the 1998 Act when determining the costs of the Application for Assessment of Costs (‘the Application’).  I note that this provision has no application as the proceedings lodged and resolved in accordance with Chapter 7 of the 1998 Act which outlines the ‘New Claims Procedure’.  The following matters are in dispute:

·whether the delegate erred in determining the costs of disbursements, and

·whether the delegate erred in determining the costs of the Application.

1. Following consideration of the relevant legislation I will deal with the submissions made in relation to the matters in dispute.

The relevant legislation

1. The relevant legislation concerning appeals to the Commission against an assessment of costs contained in the 1998 Act and the WC Regulation has been considered in a number of decisions: Orellana Fuentes v Standard Knitting Mills Pty Ltd & Anor [2003] NSWCA 146 (‘Fuentes’); Berger v Moree Plains Shire Council[2005] NSWWCCPD 152 (‘Berger’); Orr v Direct Couriers (Australia) Pty Ltd [2004] NSWWCCPD 28 (‘Orr’), and Flegerbein v Tom B Blackburn Pty Ltd [2006] NSWWCCPD 30 (‘Flegerbein’) and need not be canvassed again in this decision.  

1. I find that the WC Regulation and Legal Profession Regulation2002 (‘the LP Regulation’) apply as the order for the payment of costs was made on 15 April 2005 (see discussion in Woodbury v Miles [2006] NSWWCCPD 55). However, in my view the delegate’s orders do not accurately reflect the order for the payment as costs he relied upon. The order made on 15 April 2005 is that the Second Respondent pay the Applicant’s costs as agreed or assessed. Accordingly it is necessary to proceed on the basis of the order made by the Arbitrator that the Second Respondent pay the Applicant’s costs as agreed or assessed. Clause 84 of the WC Regulation fixes the maximum costs recoverable by legal practitioners and agents to those set out in the Table. The maximum permissible under the Table has been considered by the Commission in a number of decisions including Berger and Orr. These decisions set out the Commission’s reasoning and application of the authority provided in Fuentes in respect of the maximum amount allowable under the Table being the maximum total for the type of activity/event set out in Column 4.

1. Clause 110 provides the Registrar with discretion to determine whether or not it was reasonable to carry out the work to which the costs relate, and what is a fair and reasonable amount of costs for the work concerned. Clause 119(1) 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. An error of law arises only where the discretion can be said to have miscarried because it has been exercised unfairly and unlawfully (see discussion in Flegerbein at paragraphs 27 – 29).

1. The claim for disbursements must be assessed pursuant to Schedule 2, Pt 1, Item 10 of the LP Regulation which provides that “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.” 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 WC Regulation (Berger).

Did the delegate err in determining the costs of disbursements?

The Report

1. In his correspondence to the Respondents’ solicitor dated 28 November 2005 Mr Magann’s solicitor confirmed the parties’ agreement that the Respondent pay the costs incurred in the substantive proceedings in the sum of $12,840.68 (inclusive of GST) and Mr Magann’s solicitor sought $1,288.00 [sic $1,298.00] the costs incurred in obtaining the Report.  The delegate disallowed the claim and relied upon the authority provided in the Commission’s decision in Berger. The delegate considered that “what the investigator did here was no more than take instructions from the Applicant.” and as the maximum was agreed to the parties in respect of Item 2.01 for obtaining instructions no further allowance could be made.

1. On appeal Mr Magann’s solicitor submits that the Respondents agreed that he was entitled to brief the private investigator and allowed the sum claimed under Item 2.05 and the Report contains statements from the worker and his wife relevant to the Application. Further Mr Magann’s solicitor submits that the delegate failed to provide proper reasons.  Mr Magann’s solicitor sought $1,298.00 for the costs of the Report. The Respondents’ solicitor submits that the Applicant lodged an Application in the Commission in full knowledge that all wages had been paid and that the Respondents relied upon medical evidence that Mr Magann’s condition had not stabilised. Further the delegate’s reasons are adequate and the costs of the Report are not fair and reasonable as it was obtained without foundation.

1. In my view the delegate was required to consider the contents of the Report, the nature of the claim and the issues in dispute in determining whether the cost of the Report was ‘necessarily incurred’ (Asimus). The delegate’s disallowance of the claim on the basis that the investigator did no more than take instructions does not accord with the application of the assessment required by the LP Regulation. Accordingly I find that the delegate erred in this regard. If I am wrong in my application of the legislation I also find that the delegate’s reasons are inadequate to sufficiently demonstrate that he applied the LP Regulation as required and exercised his statutory duty, to fairly and lawfully determine the application (Cargill Meat Processors Pty Limited v Clark[2005] NSWWCCPD 7).

1. On my review of the Commission’s files I have not located a Report nor has a report been annexed to the submissions and I accept the Respondents’ solicitor’s submissions in this regard.  I note that the submissions on appeal refer to the statements of Mr Magann dated 15 January 2003 and his wife, Dianne Magann dated 29 November 2002 taken by Kelly Slater of St George Investigations (‘SGI’). These statements were annexed to the application.  On appeal a letter dated 24 October 2002 from SGI outlining Mr Magann’s employment history and duties is also relied upon in support of the claim.

1. I am not persuaded that the correspondence from SGI was necessary to the claim. Particularly as it duplicates the information contained in Mr Magann’s statement and I disallow the costs incurred in respect of the correspondence (see discussion in Berger; Asimus and Flegerbein).

1. In relation to the claim for Dianne Magann’s statement I note that Mr Magann’s solicitor made a claim under Item 2.04A of the Table for the costs of obtaining a witness statement and this claim was agreed by the parties. I have no information before me as to whether the claim was referable to Mr or Mrs Magann’s statement. However in his statement Mr Magann refers to Mrs Magann as being a ‘witness’ to his injury. Following my consideration of the claim which involved consideration of sections 15 and 16 of the 1987 Act I am prepared, on balance to conclude that the claim was agreed by the parties in respect of Dianne Magann’s statement.  However my conclusion does not explain why the claim is also made as a disbursement.  As an allowance has been made for the statement of Dianne Magann no further allowance is permissible (see discussion in Berger and paragraphs 14 – 16 of this decision).  The claim under 2.04A was agreed and is not raised on appeal.  Therefore I do not propose to deal with it further except as it is relevant to the claim for obtaining Mr Magann’s statement.

1. The remaining matter for consideration is Mr Magann’s statement.  Mr Magann’s solicitor did not claim the taking of his statement under Item 2.01 and in my view only one statement was claimed under Item 2.04A of the Table. In the environment of the Commission which requires all evidence to be filed at the time of commencement of proceedings I conclude, on balance that Mr Edwards’ claim could not be brought without his statement (see discussion in Asimus at 24-25). Whilst I accept the Respondents’ solicitor’s submissions that the statement should properly be taken by the solicitor when taking instructions and therefore encapsulated under Item 2.01 I am satisfied on the evidence before me that the work was not performed at that time.  I also note that the maximum allowable was agreed between the parties under Item 2.01 and Item 2.05 and these agreements are not challenged on appeal.  The invoice supplied by SGI makes a claim for 45 minutes for this activity in the sum of $90.00 and in respect of typing the statements and the Report a further $37.50 is claimed. When typed the statement extends over approximately 5 pages. In these unique circumstances which involve the Respondents’ acceptance of the claims made under Items 2.01, 2.04A and 2.05 it is reasonable to allow one hour for the costs of the statement taken by a non-professional, including typing and in applying the allowance for similar work under Item 2.04A I allow the claim in the amount of $110.00 (including GST).

Did the delegate err in determining the costs of the proceedings?

1. The delegate determined that the cost of the Report was the only matter in dispute and as the application had no prospects of success in accordance with the authority provided in Berger the delegate determined that the Applicant should pay the Respondent’s costs of proceedings.

1. The costs of proceedings are governed by section 341(4) of the 1998 Act.

1. Section 341 provides:

“341 Costs to be determined by Commission

(1) Costs to which this Division applies are in the discretion of the Commission.
(2) The Commission has full power to determine by whom, to whom and to what extent costs are to be paid.
(3) The Commission may order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act2004 (or in relevant regulations under Division 4 of this Part) or on an indemnity basis.
(4) The Commission may not order the payment of costs by a claimant unless the Commission is satisfied that the claim was frivolous or vexatious, fraudulent or made without proper justification.
(5) If the Commission is satisfied that a part only of a claim was frivolous or vexatious, fraudulent or made without proper justification, the Commission may order the claimant to pay the costs relating to that part of the claim.
(6) Any party to a claim may apply to the Commission for an award of costs (emphasis added).”

1. On my review of the delegate’s reasons I cannot be satisfied that he considered whether the claim was: frivolous; vexatious; fraudulent or made without proper foundation in determining that the Applicant should pay the Respondent’s costs of proceedings.  In the absence of more comprehensive reasons I am not prepared to accept that the delegate’s finding, that the Application had “no prospects of success” must be interpreted as a finding that the Application was made without proper justification as required by section 341(4) of the 1998 Act particularly in circumstances where the Application demonstrated the Respondents’ acceptance of the claim under Item 2.05 for costs incurred in briefing a factual investigator.  Accordingly I find that the delegate erred in making his order for the payment of costs of the proceedings.  If I am wrong in my application of the legislation I also find that the delegate’s reasons are inadequate to sufficiently demonstrate that he applied section 341(4) of the 1998 Act as required and exercised his statutory duty, to fairly and lawfully determine the application (Cargill Meat Processors Pty Limited v Clark[2005] NSWWCCPD 7).

1. The onus of proof that an order for costs should be made against the worker rests with the employer (Jackson v Tooheys Pty Limited [1952] WCR 60). On appeal the Respondents’ solicitor submits that he was obliged to read all the material contained in the Application most of which was irrelevant and it was not readily apparent that it was only the investigator’s fees that were the subject of the assessment. I accept that the Application contains a significant amount of irrelevant and unnecessary material which is general in nature and which does not assist in the illumination of the claim made by Mr Magann’s solicitor. However I have no evidence before me to satisfy me on the balance of probabilities that the grounds contained under section 341(4) have been made out. I am not satisfied that the claimant did not have a genuine claim (see discussion in Angelozzi v Carrington Slipways Pty Limited [1996] NSWCC 30). On my review of the Application one item was in dispute and the claim for that item, the Report was straightforward. Accordingly the Application did not, in my view, warrant extensive legal work or submissions to the delegate. Accordingly I assess the costs incurred in making the Application to be minor and the appropriate order is that the Second Respondent pay the Applicant’s costs of the proceedings in the sum of $137.50 (including GST).

Summary

1. I have determined the disbursements challenged by Mr Magann’s solicitor as follows:

Disbursements

The delegate’s disallowance of the costs of the Report claimed as a disbursement is revoked.

The costs of $110.00 (including GST) for the statement of Mr Magann obtained by the factual investigator was necessarily incurred and is allowed.

1. The decision of the delegate dated 21 March 2006 is revoked and the following orders are made in its place:

“(i) Pursuant to an Order dated 15 April 2005 the Second Respondent is liable to pay the Applicant’s costs of the substantive proceedings as agreed or assessed.
(ii) The parties have agreed that the Second Respondent pay the Applicant the costs of $12,840.68 (inclusive of GST) for the costs incurred in the substantive proceedings.
(iii) The Applicant’s costs of obtaining a statement have been assessed in the sum of $110.00 (inclusive of GST).
(iv) The Second Respondent is to pay the Applicant the sum of $137.50 (including GST) for the costs of the Application for Assessment of Costs.
(v) The Second Respondent is, therefore, to pay to the Applicant a total amount of $13,088.18 if those costs have not already been paid.”

COSTS

1. The Appellant has been successful on appeal. In my view, it is reasonable to order that the Second Respondent pay Mr Magann’s costs in the appeal.

1. The appropriate order therefore is: “The Second Respondent, McInnes Packaging Pty Limited is to pay the Appellant, Mr Magann, $275.00 inclusive of GST in respect of his costs in this appeal.”

Elizabeth Tydd

Acting Deputy President

2 March 2007

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

ASSOCIATE