McCrae v KT Hine

[2006] NSWWCCPD 305

WORKERS COMPENSATION COMMISSION

APPEAL AGAINST A DECISION OF THE REGISTRAR IN RELATION TO COSTS

CITATION:McCrae v KT Hine [2006] NSWWCCPD 305

APPELLANT:  Donald McCrae

RESPONDENT:  KT Hine

INSURER:Alliance Australia Workers’ Compensation (NSW) Ltd

FILE NUMBER:  WCC11472-05

DATE OF REGISTRAR’S DECISION:             20 October 2005

DATE OF APPEAL DECISION:  13 November 2006

SUBJECT MATTER OF DECISION: Appeal against Registrar’s decision in relation to costs; fee for private investigator’s report; claims under Items 2.06, 9.01 and 10.01 of the Compensation Costs Table in 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: Glenn Capel, Solicitor

ORDERS MADE ON APPEAL:  The Registrar’s determination of Mr McCrae’s claim for costs in this matter, dated 20 October 2005, is amended in accordance with these reasons.

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The Respondent, KT Hine, is to pay the Appellant, Mr McCrae $275.00 inclusive of GST in respect of his costs in this appeal.

BACKGROUND TO THE APPEAL

1. On 7 November 2005, Donald McCrae filed an appeal against a costs determination made by the Registrar of the Workers Compensation Commission (‘the Commission’) on 20 October 2005. The Respondent to the appeal is KT Hine and Mr Hine’s workers compensation insurer is Alliance Australia Workers’ Compensation (NSW) Ltd (‘Allianz’). On 21 November 2005, Allianz’s solicitor filed submissions in relation to the appeal.

1. Mr McCrae was born on 23 January 1926 and is aged 80. Until 1994, he was employed as a shearer by Mr Hine, against whom he succeeded in workers compensation proceedings in the Compensation Court of NSW in respect of various injuries. In about 2002, Mr McCrae made a claim for industrial deafness. Allianz offered Mr McCrae compensation for binaural hearing loss and pain and suffering, which he accepted. However, Allianz denied liability for the cost of hearing aids. In March 2003, Mr McCrae’s solicitors made a claim on his behalf for this expense.

1. On 7 October 2003, the Commission registered Mr McCrae’s ‘Application to Resolve a Dispute’. Allianz’s ‘Reply’ was filed on 12 November 2003. Following a teleconference conducted by an Arbitrator on 19 January 2004, the parties came to an agreed resolution of the issues in dispute, and the Arbitrator issued a Certificate of Determination dated 24 February 2004 in the following terms:

“1. This Application is discontinued by consent. The parties to file a notice pursuant to Rule 74 within 7 days.

2. That the Respondent 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 the following:

The Respondent to pay the Applicant [sic] lump sum $12,155 pursuant to section 66 of the Act in respect of 18.3% binaural hearing loss due to industrial deafness, plus lump sum $6,100 pursuant to section 67. The Respondent will pay the Applicant s60 of the Act expenses in the amount of $3,200 for hearing aids.”

1. The parties being unable to agree to the costs payable, on 13 July 2005, Mr McCrae’s solicitors lodged an ‘Application for Assessment of Costs’ with the Commission in respect of their Bill of Costs dated 13 February 2004. Allianz’s submissions in response were dated 27 July 2005. Mr McCrae’s solicitors responded to Allianz’s submissions by letter dated 30 August 2005.

1. The Registrar delegated the assessment to a (different) Commission Arbitrator who made a determination dated 20 October 2005. The Certificate of Determination stated:

“1. Pursuant to an order for costs made on 24 February 2004, the Respondent is liable to pay the Applicant’s costs as agreed or assessed.

2. The Applicant’s costs of the substantive proceedings are assessed in the sum of $2,708.50.

3. No order as to the costs of the assessment.

4. The Respondent is, therefore, to pay to the Applicant a total amount of $2,708.50 if those costs have not already been paid.”

ISSUES IN DISPUTE

1. Mr McCrae’s solicitors submit that the Arbitrator made errors of law in disallowing their claims for the following: professional costs claimed under Items 2.06 ($375.00 plus GST), 9.01 ($625.00 plus GST), and 10.01 ($187.50 plus GST), and the balance of a disbursement for a private investigator’s report ($1,152.50, being $1,402.50 less $250.00 allowed by the Arbitrator). The total amount in dispute, including GST of $118.75 in respect of Items 2.06, 9.01 and 10.01, is $2,458.75.

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, the documents before me, and the submission by Allianz’s solicitor that the matter can be heard ‘on the papers’, Mr McCrae’s solicitors having made no 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. 

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’), 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. 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. Mr McCrae’s solicitors submit the Arbitrator made an error of law by ignoring relevant material. This claim is discussed below.

Professional Costs

Item 2.06

1. With regard to 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 McCrae’s solicitors state that the Arbitrator did not refer to their letter dated 30 August 2005 (which in turn referred to their letter dated 8 July 2005 accompanying the ‘Application for Assessment of Costs’), in which they responded to Allianz’s submissions to the Registrar in relation to the assessment. Moreover, the Arbitrator did not refer to the correspondence included with the ‘Application to Resolve a Dispute’ which indicates that Allianz did review its decision in relation to the hearing aids. The correspondence between Mr McCrae’s solicitors and Allianz’s solicitors shows that in respect of the $500 originally claimed for this Item, Allianz’s solicitors were prepared to recommend payment of $250, whereas Mr McCrae’s solicitors stated they would accept $375. Mr McCrae’s solicitors maintain that they are entitled to $375 under this Item.

1. In his Statement of Reasons, the Arbitrator said the “Applicant provided no evidence of any request to ground this claim”, which he therefore disallowed. Allianz’s solicitor states Mr McCrae’s solicitors did not provide copies of the relevant correspondence in its initial Application and should, accordingly, be disentitled from relying on the same.

1. I have examined the correspondence between Allianz and Mr McCrae’s solicitors attached to the ‘Application to Resolve a Dispute’. Allianz’s letter dated 3 June 2003 indicates that it recognised that Mr McCrae’s solicitors had requested a review in respect of their decision not to pay the cost involved in purchasing hearing aids for Mr McCrae. There is also an implicit request to review contained in Mr McCrae’s solicitors’ letter to Allianz dated 17 March 2003 with which they enclosed a copy of a quotation from Jeff Myers of ‘Hearing Aid Specialists’ dated 14 February 2003, for supplying and fitting hearing aids. I am therefore satisfied that there is evidence of a request for a review. In my view, given that the matter in respect of which the review was sought was straightforward, it would be fair and reasonable to allow an amount of $250 (plus GST of $25) under this Item.

Item 9.01

1. The activity/event for which a claim may be made under Item 9.01 is described in the Table as “Conduct of any 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. Mr McCrae’s solicitors submit they are entitled to costs of the assessment of $625 plus GST. The Arbitrator said:

“Neither party was completely successful in this application, such that I consider each party should bear its own costs of the assessment. I do not consider it appropriate that the Applicant should recover any costs of the assessment. I therefore determine that there should be no order as to the costs of the assessment.”

1. Mr McCrae’s solicitors contend that Allianz’s solicitors did not negotiate costs on a proper basis, only conceding that they were “prepared to recommend payment” with respect to certain items. Mr McCrae’s solicitors submit that this approach cannot be considered equivalent to making a counter offer. Had Allianz’s solicitors sought instructions at the initial stages, this would have saved a lot of time and effort.

1. Allianz’s solicitor submits that since neither party was completely successful on all issues in dispute on the assessment, it was appropriate for the Arbitrator to find that each party should bear its own costs.

1. I have reviewed the Schedule of costs and disbursements prepared by the Arbitrator summarising his findings (paragraph 40 of his Statement of Reasons). Of the professional costs claimed - $2,942.50 (excluding GST), the Arbitrator allowed $2,235.00. Of the disbursements claimed - $1,593.30, he allowed $250, although admittedly most of this was founded in the fee for the private investigator’s report. In my view, given the beneficial nature of the workers compensation scheme, it would have been fair and reasonable to allow Mr McCrae’s solicitors a reduced amount to reflect their partial success, and I therefore substitute an award of $300.00 (plus GST of $30) under Item 9.01.

Item 10.01

1. The activity/event for which a claim may be made under Item 10.01 is described in the Table as: “All work associated with instructing an agent to act on a claim or a matter relating to the claim”. Mr McCrae’s solicitors claimed $187.50 under this Item in respect of “All work associated with instructing an agent to act on re: claim”. (A disbursement was claimed for payment of the agent for “filing”.) The Arbitrator disallowed the claim, agreeing with Allianz’s objection that documents can be filed at the Commission by mail. The Arbitrator also commented that, “in any event the activity of filing is covered by Item 4.01, for which the Applicant has recovered the maximum”.

1. In their submissions on the appeal, Mr McCrae’s solicitors state the instructions relate to the claim for $190.85 for agents’ fees. I have examined their Bill of Costs where there is reference to a disbursement of that amount, although it is not clear to what those fees relate. There is reference at another point in the Bill to agency fees for filing on 16 January 2004 and to two other undated occasions of filing. There is also an undated reference to preparation of costs and disbursements with no cost attributed to this. In my view, this lacks the necessary specificity required for consideration of payment. Moreover, I agree that the activity of lodging documents is covered under Item 4.01 for which Mr McCrae’s solicitors were allowed the maximum amount. Thus, I am not satisfied that the Arbitrator made any error in disallowing the claim under this Item.

Disbursement

1. Mr McCrae’s solicitors claim the balance of a disbursement for a private investigator’s report ($1,152.50). In their Bill of Costs, they claimed $1,402.50 in respect of St George Registration and Investigation Services Pty Ltd (‘St George’)’s fee for preparing a factual and liability summary report. The Arbitrator said:

“35. In the first instance, it is not appropriate to claim for work performed by an investigator that was in fact legal work covered by and encapsulated in the events and activities set out in the Table.

36. Thus, for example, the costs involved in obtaining a worker’s statement are encapsulated and absorbed by Item 2.01: Nebauer v Hunter Area Health Service [2004] NSWWCCPD 60 at [18]. Similarly, advising the Applicant on the legislation or merits of the claim is legal work recoverable only by solicitors under the Items in the Table.

37. On the other had, it is legitimate to retain an investigator to gather other information, not otherwise obtainable from the employer or the Applicant.

38. The only work performed by the investigator in this matter that might fall within Clause 82(b) relates to the statement from his wife. On this basis I allowed an amount of $250.00, which I considered a fair and reasonable allowance for that purpose.”

1. I note that in Berger at paragraph 142, Deputy President Fleming said:

“The fee for an investigator’s report, whether to obtain witness statements or other factual investigations (including a statement from the worker), may be claimed pursuant to clause 82(b) of the WC Regulation. 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 those statements, either at the time of taking instructions or at a later time, being before an application to the Commission is filed.”

1. In my view, there is nothing to suggest that the Arbitrator exercised his discretion unfairly or unlawfully in only awarding $250.00 in respect of this disbursement. In terms of the work undertaken by St George set out in their report, the Arbitrator’s determination appears to be entirely reasonable. Apart from a witness statement from the applicant, Mr McCrae, the cost of which is “encapsulated and absorbed by Item 2.01, ‘Obtaining Instructions from client’” (McManus v Gosford City Council [2004] NSWWCCPD 61, at paragraph 21; see also Berger at paragraph 141), the only other witness statement contained in St George’s report is one provided by Mrs McCrae, and there seems to be little else of substance in the report that would have contributed to preparation of what appears to have been a straightforward case. I therefore reject the appeal in relation to this disbursement.

Summary

1. The outcome of my review of the Arbitrator’s decision in relation to the professional costs and the disbursement challenged by Mr McCrae’s solicitors is as follows:

Professional Costs
• Item 2.06: it would have been fair and reasonable for the Arbitrator to allow $250.00 (plus GST of $25.00, gives a total of $275.00) for requesting a review of the claim from the insurer.
• Item 9.01: it would have been fair and reasonable for the Arbitrator to allow $300.00 (plus GST of $30.00, gives a total of $330.00) in respect of the costs of the assessment.
• Item 10.01: the Arbitrator’s disallowance of this claim is confirmed.

Disbursement
• Private investigator’s report: the Arbitrator’s decision to award only $250.00 in respect of the fees claimed is confirmed.

1. The Arbitrator’s award of $2,708.50 should, therefore, be increased by $605.00 to $3,313.50.

DECISION

1. The Registrar’s determination of Mr McCrae’s claim for costs in this matter, dated 20 October 2005, is amended in accordance with these reasons.

COSTS

1. Mr McCrae’s solicitors have been only partially successful in this appeal. In my view, it is reasonable to order that Allianz pay Mr McCrae’s costs in this appeal in the sum of $275.00 inclusive of GST, representing the equivalent of approximately one hour of work. The appropriate order, therefore, is: “The Respondent, KT Hine, is to pay the Appellant, Mr McCrae $275.00 inclusive of GST in respect of his costs in this appeal.”

Robin Handley

Acting Deputy President  

13 November 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