Smith v Vajoso Pty Ltd t/as Donges IGA Supermarket

[2006] NSWWCCPD 311

WORKERS COMPENSATION COMMISSION

APPEAL AGAINST A DECISION OF THE REGISTRAR IN RELATION TO COSTS

CITATION:Smith v Vajoso Pty Ltd t/as Donges IGA Supermarket [2006] NSWWCCPD 311

APPELLANT:  Helen Louise Smith

RESPONDENT:  Vajoso Pty Ltd t/as Donges IGA Supermarket

INSURER:Allianz Australia Workers’ Compensation (NSW) Ltd

FILE NUMBER:  WCC12014-05

DATE OF REGISTRAR’S DECISION:             24 October 2005

DATE OF APPEAL DECISION:  16 November 2006

SUBJECT MATTER OF DECISION: Appeal against the Registrar’s decision in relation to costs; agency fees and fee for private investigator’s report; claims under Items 4.04, 4.07, 4.08, 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: Sparke Helmore Lawyers

ORDERS MADE ON APPEAL:  The Registrar’s determination of Ms Smith’s claim for costs in this matter, dated 24 October 2005, is slightly amended in accordance with these reasons.

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

BACKGROUND TO THE APPEAL

1. On 7 November 2005, Helen Smith filed an appeal against a costs determination made by the Registrar of the Workers Compensation Commission (‘the Commission’) on 24 October 2005. The Respondent to the appeal is Vajoso Pty Ltd t/as Donges IGA Supermarket (‘Vajoso’) and Vajoso’s workers compensation insurer is Allianz Australia Workers’ Compensation (NSW) Ltd (‘Allianz’). On 29 November 2005, Vajoso lodged its Notice of Opposition to the appeal.

1. Ms Smith was born on 12 June 1968 and is aged 38. From 2000, she was employed by Vajoso as a casual storesperson at Donges supermarket and, on 9 November 2001, was injured when a customer dropped a five litre tin of pineapple juice on her right forearm. She notified Vajoso of the injury and lodged a claim for workers compensation. On 29 October 2003, Ms Smith’s solicitors wrote to Allianz on her behalf claiming compensation for permanent impairment and pain and suffering, and for medical expenses. There followed correspondence between the parties without resolution of the issues in dispute. On 17 May 2004, the Commission registered Ms Smith’s ‘Application to Resolve a Dispute’. Allianz filed a ‘Reply’ on 3 June 2004.

1. An Arbitrator conducted a teleconference with the parties on 16 August 2004 and a second teleconference on 20 October 2004, following which the parties came to an agreed resolution of the issues in dispute. On 22 October 2004, the Commission issued a Certificate of Determination stating:

“The following is not a determination of the Commission, however, I note that the parties have agreed the following:

1. The Respondent agrees to pay the Applicant a sum of $40,000 in respect of the Applicant’s claim for lump sum benefits, Section 60 expenses and weekly benefits. The Terms of the settlement to be embodied in the Section 66A Agreement to be completed by the parties and filed with the Commission within 21 days of the date hereof.

2. Respondent to pay the Applicant’s costs as agreed or assessed.”

1. The parties subsequently filed an ‘Application for Registration of Agreement’ under section 66A of the Workers Compensation Act 1987 (‘the 1987 Act’) reflecting the above agreement.

1. On 20 July 2005, the parties having failed to agree on the costs payable, Ms Smith’s solicitors lodged an ‘Application for Assessment of Costs’ with the Commission in respect of their Bill of Costs dated 30 November 2004. Vajoso’s submissions were received on 2 August 2005.

1. The Registrar delegated the assessment to a Commission Arbitrator (‘the Delegate’) who made a determination dated 24 October 2005. The Certificate of Determination stated:

“1. Pursuant to an order for costs made on 22 October 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 $9,653.49.

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

4. The Respondent is, therefore, to pay to the Applicant a total amount of $9,653.49, if those costs have not already been paid.”

ISSUES IN DISPUTE

1. Ms Smith’s solicitors submit the Delegate made errors of law in relation to the following professional costs and disbursements claimed:

Professional Costs
Item 4.04 - $60.00
Item 4.07 - $200.00
Item 4.08 - $1,000.00, of which $500.00 was allowed by the Delegate
Item 10.01 - $187.50

Disbursements
Agency fees - $297.00
Private investigator’s report - $3,613.00, of which $1,000.00 was allowed by the Delegate.

1. The total amount in dispute, including GST, is $3,952.25.

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 Vajoso’s solicitors that the matter can be heard ‘on the papers’, Ms Smith’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] 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, 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 Smith’s solicitors submit the Delegate made an error of law by ignoring relevant material, namely their written submissions, in relation to specific claims made in their Bill of Costs. These claims are discussed below.

Professional Costs

Item 4.04

1. The activity/event in respect of which a claim may be made under Item 4.04 is described as “Lodging an objection to a request for a direction for the production of documents”. Ms Smith’s solicitor’s claim $60.00 under this Item in respect of “Lodging objection to subpoena – Dr Larcombe”. In his Statement of Reasons the Delegate stated, disallowing the claim:

“The Applicant responded that the claim related to a claim for professional privilege over letters produced by Dr Larcombe. In my view this activity does not fall within Item 4.04.”

1. In their submissions on the appeal, Ms Smith’s solicitors submit “that there were no submissions by the Respondent and therefore the Applicant should be allowed this item as claimed”. Vajoso’s solicitors state that in their letter dated 7 January 2005, when they requested evidence in relation to the claim under Item 4.04, none was provided and the claim was not then pursued. In relation to the privilege claimed over three letters produced by Dr Larcombe, they were never notified of this claim and question whether, in any event, privilege can be claimed over such documents, especially since the claim was made by an agent. In all the circumstances, Ms Smith’s solicitors should not now be permitted to pursue such a claim.

1. I agree with the Delegate that the activity of claiming privilege in respect of documents produced under direction does not fall within Item 4.04, which is concerned with lodging an objection to a request for the production of documents. Moreover, the work for which the claim was made was performed by St George Registration & Investigation Services Pty Ltd (‘St George’) and not by Ms Smith’s solicitor. Thus, I reject this ground of appeal.

Item 4.07

1. The activity/event in respect of which a claim may be made under Item 4.07 is described as “Applying to refer a matter to an approved medical specialist, or responding to such an application (including costs associated with agreeing on the approved medical specialist and review of the report of the approved medical specialist)”. In their Bill of Costs dated 30 November 2004, Ms Smith’s solicitors claimed $200 in respect of referring the matter to Dr Korbel and Dr Searle. The Delegate noted that Vajoso “objected on the basis that there was no referral of any medical dispute to an AMS”, and found that Ms Smith’s solicitor had “not established any entitlement under this item”.

1. In their submissions in the appeal, Ms Smith’s solicitors contend that agreement was reached between the parties that the Approved Medical Specialist (‘AMS’) for assessment of sexual loss would be Dr Korbel and of orthopaedic injuries would be Dr Searle. Vajoso maintains that as no AMS appointment was ever finalised, and as an AMS never assessed Ms Smith, there is no basis for the claim, which should, therefore, be disallowed. They also point out that, in any event, the maximum that can be claimed under Item 4.07 is $100.

1. On this last point, Vajoso is, of course, correct. In Orr v Direct Couriers (Australia) Pty Ltd [2004] NSWWCCPD 28, Deputy President Fleming discussed the application of column 4 of the Table in Schedule 6. Column 4 bears the heading “Maximum total for type of activity/event”. With reference to clause 1(2) of Schedule 6, the heading for column 4, and the NSW Court of Appeal decision in Orellana-Fuentes v Standard Knitting Mill Pty Ltd (2003) 57 NSWLR 282 (‘Fuentes’), the Deputy President said, at paragraph 38:

“the monetary values set out in Column 4 of the Table, are the maximum total for an event type in any particular claim, regardless of the number of individual activities that may take place under the event heading.”

1. A review of the file indicates that at the teleconference on 16 August 2004, the Arbitrator was asked to refer the matter to an AMS. After the teleconference, the Arbitrator completed the necessary documentation requesting medical assessment by an AMS, and noting the parties’ agreement for an assessment of orthopaedic injuries by Dr Alan Searle, Orthopaedic Surgeon, and of “loss of sexual organs” by Dr Korbel, Urologist. However, it appears the referral did not go ahead because, after the teleconference, there were late applications by the parties for an amended ‘Application to Resolve a Dispute’ and ‘Reply’ to be admitted, as a result of which the second teleconference was scheduled. Thus, although the matter was never ultimately referred for AMS assessment, an application for referral was made. In my view, Ms Smith’s solicitors are therefore entitled to the maximum of $100 under this Item.

Item 4.08

1. The activity/event in respect of which a claim may be made under Item 4.08 is described as “Preparing for a conference (including providing advice to client)”. At the relevant time, the maximum total for such activity/event was $500. Ms Smith’s solicitors claimed $1,000 under this item, comprising $500 for the teleconference on 16 August 2004 and $500 for the teleconference on 20 October 2004. The Delegate allowed $500.

1. Ms Smith’s solicitors submit they are entitled to claim the maximum of $500 in respect of each conference. Vajoso concedes this. However, as stated in paragraph 20 above in relation to stated column 4 maximum totals, the legal practitioner is not allowed more than one column 4 maximum total regardless of the number of activities/events of that type. The only exception is under Item 4.12, in respect of reporting to a client on the outcome of a conference or arbitration, where, pursuant to the NSW Court of Appeal decision in Fuentes, a claim can be made in respect of each reporting back. Thus, the Delegate’s assessment was correct and I reject the appeal in relation to this Item.

Item 10.01

1. This Item is described in the Table as: “All work associated with instructing an agent to act on the claim or a matter relating to the claim”. Mr Smith’s solicitors claimed $187.50 under this Item in respect of “All work associated with instructing an agent [St George] to act on re: claim”. The Delegate noted this claim was in respect of instructing an agent to file documents at the Commission and to inspect and photocopy documents, and that Ms Smith’s solicitors also claimed $297 for the agent’s fees:

“The Respondent objected, submitting that documents can be filed at the Commission by mail, in any event the activity of filing is covered by Item 4.01, for which the Applicant has recovered the maximum. It further submitted that the inspection and photocopying of documents cannot be claimed as a disbursement over and above the allowance under Item 4.05. I agree with the submissions of the Respondent.”

1. I have examined St George’s invoices for the relevant activity and note this involved the filing, sealing and return of documents at the Commission on three occasions, and the inspection and photocopying of documents at the Commission on four occasions. I note that Ms Smith’s solicitors also claimed the maximum of $300 permitted under Item 4.01 for “Lodging with the Commission”, presumably in respect of the lodging of the ‘Application to Resolve a Dispute’, and the maximum of $500 permitted under Item 4.05 for reviewing documents produced under a direction.

1. Ms Smith’s solicitors submit that Item 4.01 is relevant to the lodging on the ‘Application to Resolve a Dispute’, as stated in the column 2 description of the activity; Item 4.05 refers to the work performed by the solicitor, for example, reviewing documentation produced under direction, and not to any costs incurred by the agent. Vajoso submits that pursuant to Dunn v Port Macquarie RSL Club Ltd [2004] NSWWCCPD 33 (‘Dunn’) and McManus v Gosford City Council [2004] NSWWCCPD 61 (‘McManus’), an amount claimed under Item 10.01 should be disallowed where the maximum has already been claimed under Item 4.05.

1. In Dunn, at paragraph 41, Deputy President Fleming held 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, 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 my view, 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 the fees claimed for filing to be reasonably necessary. It would also appear that some of the fees in respect of filing (for example, St George’s fees of 6 May 2004 and 19 May 2004) were probably in respect of the ‘Application to Resolve a Dispute’, the lodging of which is covered by Item 4.01. With regard to the fees for the inspection and copying of documents produced under a direction, for the reasons stated in Dunn, recovery of such fees is not permitted because Ms Smith’s solicitors have already claimed and been allowed the maximum under Item 4.05.

1. Thus, I am not satisfied that the Delegate made any error of law in his determination in relation to Item 10.01.

Disbursements

Agency Fees

1. Ms Smith’s solicitors claimed agency fees of $297.00 in respect of St George’s filing documents (invoices dated 6 May 2004, 19 May 2004 and 2 August 2004, at $20.00 per occasion, plus GST, a total of $66.00) and inspection and photocopying of documents (invoices dated 5 July 2004 - $30 plus GST, 30 June 2004, 8 July 2004 and 13 July 2004, at $60.00 per occasion plus GST, a total of $231.00). The Delegate disallowed the claim for the reasons stated in conjunction with those for his disallowing the claim under Item 10.01, referred to above. The parties’ submissions on this claim are also those made in conjunction with the claim under Item 10.01, discussed above.

1. As stated above, in my view, it was not reasonably necessary to incur fees for filing, and the fees for the inspection and photocopying of documents are not permitted because of the maximum amount allowed under Item 4.05. I therefore reject this ground of appeal.

Private Investigator’s Report

1. Ms Smith’s solicitors also dispute the Delegate’s determination in respect of their claim for private investigator’s fees. Ms Smith’s solicitors claimed $3,613.00, being the fee for the Private Investigator’s Report prepared by St George. The Delegate allowed $1,000. He stated that “[a] large part of the work performed by the investigator falls outside clause 82(b) of the 2003 Regulation”:

“29. 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.

30. 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 the solicitors under the items in the Table. On the other hand, it is legitimate to retain an investigator to gather other information, not otherwise obtainable from the employer or the Applicant.

31. I have concluded that a number of recoverable matters of an investigatory nature were undertaken, including the investigation of employment and wages matters, a factual summary and a statement obtained from the Applicant’s husband. The only further matter for assessment is to determine a reasonable amount for that work. I assess a sum of $1,000.00 as adequate and proportionate to the disputed issues in this claim, and therefore a fair and reasonable amount for the investigator’s fee.”

1. Ms Smith’s solicitors contend that all items were in dispute and the private investigator’s report “is a very detailed factual investigation and provides information, which cannot be construed to be legal advice or anything else”. Obtaining all the necessary information required to support a claim in the Commission cannot be achieved in the two hours maximum which may be claimed under Item 2.01 in respect of obtaining instructions from the client.

1. Vajoso submits that that the Delegate’s decision to allow $1,000 in respect of the private investigator’s fees was a fair and reasonable one:

“The Respondent contends that McCabe Lawyers are not entitled to claim fees for the factual investigator to conduct a business names search, to prepare a brief to Counsel, to prepare the Applicant’s witness statement (noting in particular that this is expressly disallowed by Item 2.05), to discuss issues with the Applicant’s husband, to prepare a client service agreement, to incorporate fees from Robert Taylor, Barrister and telephone, photocopying, faxes and stationery as disbursements.”

1. I have examined St George’s “Factual Liability and Summary Report” dated 23 April 2003. I note it includes statements from Ms Smith and from her husband, copies of relevant medical reports, and correspondence from Allianz. I have also examined St George’s “Memorandum of Costs and Disbursements” of the same date and that dated 15 March 2004. The invoice dated 23 April 2003 includes fees for a client service agreement, for interviewing Ms Smith and dictating and typing her statement, and a letter to a barrister and the copying of briefs for him. Disbursements include the barrister’s fees.

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 Smith, 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 or in respect of barrister’s fees, do not fall within clause 82(b) of the 2003 Regulation, or are not fair and reasonable - for example, in the invoice dated 23 April 2003, a total of $555 for perusal of correspondence from the solicitors. Thus, I am not satisfied that the Delegate made any error in allowing only $1,000 of the $3,613 claimed. For the reasons stated by him, this seems fair and reasonable.

Summary

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

Professional Costs
• Item 4.04: the Delegate’s disallowance of the claim for this Item is confirmed.
• Item 4.07: it would be fair and reasonable for the Delegate to have allowed $100.00 (plus GST of $10.00, gives a total of $110.00) for applying to refer the matter to an AMS.
• Item 4.08: the Delegate’s disallowance of the claim for this Item is confirmed.
• Item 10.01: the Delegate’s disallowance of the claim for this Item is confirmed.

Disbursements
• Agency fees: the Delegate’s disallowance of this disbursement is confirmed.
• Private Investigator’s Report: the Delegate’s disallowance of all but $1,000 of this disbursement is confirmed.

1. The Delegate’s determination of $9,653.49 should therefore be increased by $110.00 to $9,763.49.

DECISION

1. The Registrar’s determination of Ms Smith’s claim for costs in this matter, dated 24 October 2005, is slightly amended in accordance with these reasons.

COSTS

1. Ms Smith’s solicitors have been largely unsuccessful in this appeal. In my view, the appropriate order, therefore, is: “There is no order as to the costs of this appeal.”

Robin Handley

Acting Deputy President  

16 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.

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