O'Neill v Home Care Services of NSW

[2007] NSWWCCPD 7

WORKERS COMPENSATION COMMISSION

APPEAL AGAINST A DECISION OF THE REGISTRAR IN RELATION TO COSTS

CITATION:O’Neill v Home Care Services of NSW [2007] NSWWCCPD 7

APPELLANT:  Judith Ann O’Neill

RESPONDENT:  Home Care Services of NSW

INSURER:Allianz Australia Insurance Ltd

FILE NUMBER:  WCC16706-05

DATE OF REGISTRAR’S DECISION:             29 May 2006

DATE OF APPEAL DECISION:  9 January 2007

SUBJECT MATTER OF DECISION: Appeal against the Registrar’s decision in relation to costs: professional costs - claim under Item 4.07; whether maximum costs specified in the Compensation Costs Table in Schedule 6 of the Workers Compensation Regulation 2003 are inclusive of GST; disbursements – agency fees, fee for private investigator’s report, fee for medical report.

PRESIDENTIAL MEMBER:  Acting Deputy President Robin Handley

HEARING:On the papers

REPRESENTATION:  Appellant:      McCabe Partners Lawyers

Respondent:   Turks Legal

ORDERS MADE ON APPEAL:  The Registrar’s determination of Ms O’Neill’s claim for costs in this matter, dated 29 May 2006, is amended in accordance with these reasons.

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

BACKGROUND TO THE APPEAL

1. On 19 June 2006, Judith O’Neill filed an appeal against a costs determination made by the Registrar of the Workers Compensation Commission (‘the Commission’) on 29 May 2006. The Respondent to the appeal is Home Care Services of NSW (‘Homecare’). On 18 July 2006, Homecare filed a ‘Notice of Opposition’ to the appeal. Homecare’s workers compensation insurer at the relevant time was the Treasury Managed Fund, but is now Allianz Australia Insurance Ltd.

1. Ms O’Neill was born on 24 July 1952 and is aged 54. On 1 April 2004, the Commission registered her ‘Application to Resolve a Dispute’ in respect of her claim against Homecare for (1) weekly compensation, (2) medical, hospital or related expenses, and (3) compensation for permanent impairment and pain and suffering. Ms O’Neill claims to have injured her left shoulder and right and left arms as a result of the nature and conditions of her employment as a care worker with Homecare from 23 February 1998. Homecare’s ‘Reply’ was received on 22 April 2004.

1. On 19 August 2005, conciliation having proved unsuccessful, an Arbitrator conducted an arbitration hearing, following which, on 7 September 2005, he issued a Certificate of Determination in the following terms:

“1. That the Respondent pay the Applicant as lump-sum compensation under section 67 of the Workers Compensation Act 1987 $5,750.00 in respect of pain and suffering.

2. Award for the Respondent in respect of the Applicant’s claim for weekly payments from 18 August 2000.

3. The parties will file a section 66A Agreement within 28 days.

4. That the Respondent pay the Applicant’s costs as agreed or assessed.”

1. In his Statement of Reasons, the Arbitrator noted that the parties had agreed that the Respondent would pay $11,250 to the Applicant in respect of a 15% permanent impairment of the left arm at or above the elbow, and $8,000 in respect of a 10% permanent impairment of the right arm at or above the elbow.

1. On 30 September 2005, the parties having failed to agree on the costs payable, Ms O’Neill’s solicitors lodged an ‘Application for Assessment of Costs’ with the Commission in respect of their Bill of Costs dated 19 August 2005. Homecare’s submissions were received on 18 October 2005, and Ms O’Neill’s solicitors’ response on 31 October 2005.

1. The Registrar delegated the assessment of costs to a Commission Arbitrator (‘the Delegate’) who made a determination dated 29 May 2006. The Certificate of Determination stated:

“1. Pursuant to Agreement and Order dated 7 September 2005 the Respondent employer is liable to pay the Applicant’s costs of the Application as agreed or assessed.
2. The Applicant’s costs of the proceedings assessed in the sum of $7,420.09 (inclusive of GST) are determined as fair and reasonable.
3. The Applicant’s costs of the assessment (inclusive of GST) are allowed in an amount of $550.00.
4. The Respondent is to pay the amount of $7,970.09 to the Applicant if those costs have not already been paid.”

1. The relevant parts of the Delegate’s Statement of Reasons for his decision are referred to below. I note that by letter dated 31 May 2006, Homecare sought clarification from the Registrar of the Certificate of Determination and Statement of Reasons contending that how the Delegate arrived at the figure of $7,420.09 could not be ascertained. The Registrar responded by letter dated 7 September 2006 noting that there was no total in the column of the table in the Statement of Reasons for “Amount Allowed” because this only dealt with the items in dispute or where the Delegate had altered an amount.

1. Having reviewed the Delegate’s Statement of Reasons I can understand why clarification was sought. It is apparent from the comment made by Ms O’Neill’s solicitors in their submissions on the appeal, where they say “to the best of our ability, we assume that the agreed amounts are as follows”, that they also had difficulty understanding how the Delegate calculated the total costs of the proceedings payable. I will address this matter once I have dealt with the issues in dispute.

ISSUE IN DISPUTE

1. Ms O’Neill’s solicitors submit the Delegate erred in his determination of their claim under Item 4.07 and in relation to their disbursements for agency fees, the private investigator’s fee, and a medical report by Dr Kwa. They also submit the Delegate erred by failing to allow recovery for 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, the documents before me, and the submission by Homecare that the matter can be dealt with ‘on the papers’, Ms O’Neill’s solicitors not 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. 

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’), 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. Ms O’Neill’s solicitors identify one professional costs Item and three disbursements as being in dispute, each of which I will deal with in turn, together with the issue of whether an additional amount in respect of GST payable on their professional costs should be allowed.

Professional Costs

Item 4.07

1. Item 4.07 is described in column 2 of the Table as “Applying to refer a matter to an approved medical specialist, or responding to such an application...”. The Delegate disallowed Ms O’Neill’s solicitors’ claim for $100 under this Item, stating: “The referral was made in the telephone conference and this item does not apply.”

1. Ms O’Neill’s solicitors submit the Delegate made an error of law by failing to provide adequate reasons for his determination. They also state the parties could not settle the applicant’s claim and therefore applied to the Commission to refer the matter to an Approved Medical Specialist (‘AMS’). Once the Commission had selected the AMS, Ms O’Neill’s solicitors state they had to request pre-payment of the applicant’s travelling expenses in attending the AMS. Further, they are entitled to the cost of reviewing the AMS’s report.

1. In Berger, at paragraph 108, Deputy President Fleming said:

“The first point to make about Item 4.07 is that the activity it describes must in fact be undertaken by the legal representative in order to claim the cost. When an application to refer a matter to an AMS is made in the course of a telephone conference, without any evidence of other activity by the legal representative, then Item 4.07 is effectively subsumed into Item 4.09 [“Attending and participating in a conference with an Arbitrator...”]. It is not intended that Item 4.07 be claimable regardless of whether the discrete activity it describes was carried out or not.”

1. Thus, Ms O’Neill’s solicitors are not entitled to claim in respect of ‘applying’ to refer a matter to the AMS since the referral to an AMS was made by the Arbitrator, following a teleconference with the parties on 7 July 2005, at which the parties agreed on an appropriate AMS. However, I note the description of the activity/event in Item 4.07 permits a claim in respect of costs associated with the review of the report of the AMS. In their Bill of Costs dated 19 August 2005, Ms O’Neill’s solicitors’ claim under Item 4.07 included their costs for reviewing the AMS’s report. In my view, it is fair and reasonable to allow them $50 under this Item.

Disbursements

Agency Fees

1. Ms O’Neill’s solicitors claimed agency fees of $264 for work undertaken by St George Registration & Investigation Services Pty Ltd (‘St George’) comprising filing fees of $66 (for filing on three occasions - $22, including GST, on each occasion) and fees of $198 for “Inspection of documents, to claim legal professional privilege over and photocopying documents” (on three occasions - $66.00, including GST, per occasion). Homecare submitted that this claim (and that for the fee for the private investigator’s report) should be disallowed as being excessive and unreasonable. The Delegate dealt with this claim and that for the fee for the private investigator’s report together, and disallowed the claims. In relation to agency fees, he stated: “The amount for inspecting documents etc are the same work as allowed in item 4.05.”

1. I note that the Delegate accepted Ms O’Neill’s solicitors’ claim for $300.00 under Item 4.01 for the lodging of documents with the Commission, and their claim for $40.00 under Item 4.02 for service of the material under Item 4.01. It appears likely that there was duplication in the claim for agency fees for filing in relation to the filing fees claimed for 18 March 2004 (Item 4.01) and 5 April 2004 (Item 4.02). Moreover, there is no reason why the documents could not have been filed and served through the post or via DX, and I therefore do not consider fees claimed for filing (or giving instructions in relation to filing) to be reasonably necessary.

1. In Dunn v Port Macquarie RSL Club Ltd [2004] NSWWCCPD 33 (‘Dunn’), where the applicant’s solicitors had claimed the maximum amount permitted under Item 4.05 for reviewing documents produced under a direction, Deputy President Fleming said, at paragraph 41, that to allow the recovery of fees paid to an agent for inspection and photocopying of documents produced under a direction would be to allow recovery of an amount exceeding the maximum allowable under Schedule 6 and would be an error. She confirmed this in McManus v Gosford City Council [2004] NSWWCCPD 61 (‘McManus’), at paragraph 30, where for similar reasons, she disallowed a claim for instructing an agent under Item 10.01. See also Flegerbein v Tom B Blackburn Pty Ltd [2006] NSWWCCPD 30, a matter involving agency fees claimed for filing and inspection and photocopying of documents.

1. In the current matter, Ms O’Neill’s solicitors claimed the maximum of $500 under Item 4.05. In my view, for the reasons stated in Dunn, recovery of the claimed agency fees for the inspection and photocopying of documents is not permitted because Ms O’Neill’s solicitors have already claimed and been allowed the maximum under Item 4.05.

1. Thus, I reject Ms O’Neill’s solicitors’ appeal in relation to agency fees.

Fee for Private Investigator’s Report

1. Ms O’Neill’s solicitors claimed $2,442.00 in respect of St George’s fee for preparing a factual and liability summary report. (I note St George’s invoice dated 23 December 2003 is for the amount of $2,992. Ms O’Neill’s solicitors claimed $2,442 in respect of St George’s fee. The difference appears to be $550 in respect of barrister’s fees not claimed by Ms O’Neill’s solicitors.) Homecare submitted: “Much of the legal work allegedly performed by the investigator is legal work regulated by the 2003 Regulation and the applicant’s solicitor is not entitled to separately recover those fees as a disbursement.” Homecare contended that significant fees were claimed in respect of work which was not relevant to the dispute before the Commission, were unreasonably incurred, and are not recoverable.

1. The Delegate found, disallowing the claim, that the investigator’s claim in respect of “obtaining information” was included under other professional costs Items including the taking of instructions: “The Applicant cannot obtain payment for work that is not allowed under the tables by the expedience of appointing investigators to do work that is otherwise not allowable.”

1. I have reviewed St George’s Report dated 15 April 2003 and its more detailed invoice dated 15 December 2003. The invoice includes fees for a client service agreement ($140) and “Letter to client” ($40), for “Perusal of correspondence from McCabe Partners Lawyers” ($315.00), for “Telephone Conference with Client” ($80), “Investigator dictating statement” ($75) and “Secretary typing statement” ($75), for researching the factual and liability summary, dictating the summary and “Secretary typing summary” - a total of $562.50, and for a letter to a barrister ($20) and the copying of a brief for him ($97).

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 O’Neill, which one would expect to see prepared by her solicitor subsequent to taking instructions from her. In my view, other disbursements, for example in respect of a client service agreement, do not fall within clause 82(b) of the 2003 Regulation, or are not fair and reasonable - for example, the $315.00 claimed for perusal of correspondence and documents, the $562.50 for researching, dictating and typing the report, and $117 for copying the report and sending it to the barrister. Thus, I am not satisfied that the Delegate made any error in disallowing this claim.

Fee for Medical Report

1. Ms O’Neill’s solicitors claimed $495 (inclusive of GST) for a medical report from Dr Geoffrey Mutton, Orthopaedic Surgeon, and $110 (inclusive of GST) for a medical report from Dr Samuel Kwa, Hand and Orthopaedic Surgeon, dated 17 October 2003. Homecare objected because both doctors were orthopaedic surgeons and Part 10 of the 2003 Regulation applies to prevent the applicant recovering report fees where there is a duplication of specialists. The Delegate disallowed the claim for Dr Kwa on the basis that “it is not disputed that this is the second report of an orthopaedic surgeon”.

1. In their submissions on the appeal, Ms O’Neill’s solicitors maintain their claim in respect of Dr Kwa’s report on the basis that this should be regarded as a claims management phase report, one provided by a medical practitioner as part of and in the course of treatment of the injured worker by the practitioner: clause 45 of the 2003 Regulation.

1. I note Dr Kwa is Ms O’Neill’s treating specialist and performed a right carpal tunnel release on 31 July 2002 and a left carpal tunnel release on 12 February 2003. There are other reports from Dr Kwa dated 19 July 2002 and 31 March 2003, attached to the ‘Application to Resolve a Dispute’ which would also appear to fall into the category of “claims management phase report” as defined in clause 45(2) of the 2003 Regulation. In my view, the claim for $110 for Dr Kwa’s later report should therefore have been allowed.

GST

1. Ms O’Neill’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 which he said “makes it clear that GST on professional costs is not an allowable item”.

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, 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, although the services were performed before the above amendment took effect, the GST payable could not be ascertained until the value of the services supplied had been determined. Since there was no agreement between the parties as to the value of the services supplied, that value was not determined until the Delegate’s determination dated 29 May 2006. Because this took place after the amendment to clause 123(1) took effect, Ms O’Neill’s solicitors are, therefore, entitled to recover GST in respect of their professional costs. The Delegate therefore made an error of law by disallowing their claim for GST to be added to the costs claimed in respect of Items in the Table.

The Delegate’s Calculations

1. As noted above, it is difficult to understand from the Delegate’s Statement of Reasons how he arrived at the total amount he determined for the costs of the proceedings payable by Homecare. I have examined Ms O’Neill’s solicitors’ Bill of Costs dated 19 August 2005 and the submissions made by the parties to the Delegate. The following is my summary of the costs allowed and payable by Homecare incorporating my amendment of the Delegate’s determination in respect of Item 4.07 (in respect of which I allowed $50) and the disbursement in respect of the fee for Dr Kwa’s medical report (in respect of which I allowed $110).

Professional Costs
Item 1.01: $600 allowed
Item 1.02: $100 not disputed
Item 2.01: $500 allowed
Item 2.02: $40 allowed
Item 2.03: $40 allowed
Item 2.04: $600 claimed, $500 conceded, and it appears fair and reasonable relying on Ms O’Neill’s solicitors’ further submissions dated 31 October 2005 to allow $600
Item 2.05: $100 not disputed
Item 2.06: $500 allowed
Item 4.01: $300 not disputed
Item 4.02: $40 not disputed
Item 4.03: $80 not disputed
Item 4.03A: $80 not disputed
Item 4.03B: $80 not disputed
Item 4.04: not allowed
Item 4.05: $500 allowed
Item 4.07: $50 allowed on appeal
Item 4.08: $500 allowed
Item 4.09: $562.50 allowed
Item 4.12: $380 (2 teleconferences) not disputed
Item 7.01: $120 not disputed
Item 10.01: not allowed

Total professional costs: $5,172.50
The GST allowed in respect of these costs is therefore $517.25.

Disbursements
Medical reports: $1,146 (incl $110 for Dr Kwa’s report)
Agency fees: not allowed
Private investigator’s report fee: not allowed
Applicant’s travel expenses: $295.08 allowed
Solicitor’s and Barrister’s travel expenses: $429.16 allowed (in respect of Barrister only)
Barrister’s fees: Ms O’Neill’s solicitors conceded these were not recoverable

Total disbursements: $1,870.24

Total professional costs (incl GST) and disbursements: $7,559.99

1. The Delegate also allowed $550 inclusive of GST in respect of the costs of the assessment which is not in dispute.

Conclusion

1. In my view, the Delegate’s calculations were incorrect and his determination of the amount payable by the Respondent to the Applicant must therefore be increased from $7,970.09 to $8,109.99.

DECISION

1. The Registrar’s determination of Ms O’Neil’s claim for costs in this matter, dated 29 May 2006, is amended in accordance with these reasons.

COSTS

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

Robin Handley

Acting Deputy President  

9 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.

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