Smith v Wandella Pet Foods Pty Ltd

[2006] NSWWCCPD 312

WORKERS COMPENSATION COMMISSION

APPEAL AGAINST A DECISION OF THE REGISTRAR IN RELATION TO COSTS

CITATION:Smith v Wandella Pet Foods Pty Ltd [2006] NSWWCCPD 312

APPELLANT:  Mark Roy Smith

RESPONDENT:  Wandella Pet Foods Pty Ltd

INSURER:CGU Workers Compensation (NSW) Ltd

FILE NUMBER:  WCC9380-05

DATE OF REGISTRAR’S DECISION:             19 October 2005

DATE OF APPEAL DECISION:  17 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 2.05, 2.06, 4.08, 4.09, 4.12, 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: Moray & Agnew Solicitors

ORDERS MADE ON APPEAL:  The Registrar’s determination of Mr Smith’s claim for costs in this matter, dated 19 October 2005, is amended in accordance with these reasons.

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The Respondent, Wandella Pet Foods Pty Ltd, is to pay the Appellant, Mr Smith $275.00 inclusive of GST in respect of his costs in this appeal.

BACKGROUND TO THE APPEAL

1. On 4 November 2005, Mark Smith filed an appeal against a costs determination made by the Registrar of the Workers Compensation Commission (‘the Commission’) on 19 October 2005. The Respondent to the appeal is Wandella Pet Foods Pty Ltd (‘Wandella’) and Wandella’s workers compensation insurer is CGU Workers Compensation (NSW) Ltd (‘CGU’). Wandella’s ‘Notice of Opposition’ to the appeal and submissions were received on 30 November 2005.

1. Mr Smith was born on 26 February 1957 and is aged 49. He claims to have suffered injuries to his neck, back, left shoulder and left leg, together with psychological problems, as a result of the nature and conditions of his employment with Wandella at Burrangong Abattoirs between 2001 and 2003. On 22 November 2004, the Commission registered his ‘Application to Resolve a Dispute’ in respect of his claim for (1) weekly compensation, (2) medical, hospital or related expenses, and (3) compensation for permanent impairment and pain and suffering. Wandella’s ‘Reply’ was received on 13 December 2004.

1. On 18 February 2005, an arbitrator conducted a teleconference with the parties and, on 24 March 2005, a conciliation conference, at which she assisted the parties to come to an agreed resolution of the issues in dispute. On 31 March 2005, the arbitrator issued a Certificate of Determination stating:

“1. The parties have settled the dispute and will file a ‘Discontinuance’ within 14 days or the proceedings will be dismissed.

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

1. On 17 June 2005, the parties having failed to agree on the costs payable, Mr Smith’s solicitors lodged an ‘Application for Assessment of Costs’ with the Commission in respect of their Bill of Costs dated 5 April 2005. Wandella’s submissions were received on 13 July 2005, and Mr Smith’s solicitors made further submissions in response dated 27 July 2005.

1. The Registrar delegated the assessment to a Commission Arbitrator (‘the Delegate’) who made a determination dated 19 October 2005. The Certificate of Determination stated:

“1. Pursuant to Consent Orders of 31 March 2005 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 proceedings are assessed at $10,068.00.

3. The Applicant’s costs of the assessment are not allowed.

4. The Respondent is to pay the amount of $10,068.00 to the Applicant if those costs have not already been paid.”

The relevant parts of the Delegate’s Statement of Reasons for his decision are referred to below.

ISSUES IN DISPUTE

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

Professional Costs
Item 2.05 - $100.00
Item 2.06 - $500.00
Item 4.08 - $500.00
Item 4.09 - $1,000.00
Item 4.12 - $190.00
Item 9.01 - $625.00
Item 10.01 - $187.50

Disbursements
Medical reports - $620.00
Agency fees - $44.00
Private investigator’s report - $3,155.83
Solicitor’s travel - $29.50

1. The total amount in dispute, including GST, is $7,262.08.

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 Wandella’s solicitors that the matter can be heard ‘on the papers’, Mr 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. Mr 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 2.05

1. Mr Smith’s solicitors maintain their claim for $100.00 under this Item in respect of briefing St George Registration and Investigation Services Pty Ltd (‘St George’) to prepare a factual and liability report. In the Bill of Costs at page 19, they contended: “The Applicant is entitled to the cost of briefing a factual investigator to obtain evidence under item 2.05.” They suggested that the matter should be regarded as complex.

1. The Delegate noted Wandella’s objection that it was not reasonably necessary for an investigator to be instructed and that many of the matters dealt with in the report were not relevant to the very limited issues in dispute. Wandella contended that the only evidence of any relevance was Mr Smith’s statement, for which a separate claim had been made and conceded under Item 2.04A. The Delegate commented that there was no complexity and, having studied St George’s invoice, said there was no grounding for the suggestion that such a report was reasonably necessary. Much of the billed activity, such as ‘client service agreement’ and ‘secretary typing statement’ were not claimable. He did not “accept that the investigatory engagement was in any sense appropriate to the circumstances of this matter” (page 4).

1. In their submissions on the appeal, Mr Smith’s solicitors submit that it was prudent for them to obtain a factual investigation report, and that the investigator’s report was extremely helpful in preparing Mr Smith’s case. They point to the medical information, wages information and schedule, photographs of damaged clothes, the business names search and other material included in St George’s report. This material was instrumental in enabling them to maximise Mr Smith’s entitlements under sections 66 and 67 of the Workers Compensation Act 1987 (‘the 1987 Act’) in the settlement negotiations.

1. I note that in McManus v Gosford City Council [2004] NSWWCCPD 61, at paragraph 21, Deputy President Fleming said:

“Item 2.05 does not encompass briefing a factual investigator to take a statement from a worker/applicant. The costs involved in obtaining a worker’s statement are encapsulated and absorbed by Item 2.01, “Obtaining instructions from client ...”

She confirmed this in Berger at paragraph 141:

“Item 2.05 does not permit a claim for briefing a factual investigator to obtain witness statements, which includes a statement from the worker.”

1. With this in mind, and noting both the Delegate’s and Wandella’s comments about the lack of complexity in the case, I am not persuaded by Mr Smith’s solicitors’ submissions that the Delegate exercised his discretion unfairly or unlawfully in determining that a factual investigation was not reasonably

2. necessary. I therefore reject Mr Smith’s solicitors’ appeal in relation to Item 2.05.

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 Smith’s solicitors state that the Delegate did not have access to their letter dated 27 July 2005, which they say was forwarded to the Commission. In their submissions of that date, they referred to a letter to CGU dated 4 August 2004 enclosing relevant documentation (including a “proposed” ‘Application to Resolve a Dispute’ dated 2 August 2004) and requesting a review of Mr Smith’s claim. A similar letter, dated 3 August 2004, was sent to Wandella. I have reviewed these letters.

1. In its submissions to the Delegate, Wandella submitted that this Item does not cover the work identified as being performed in respect of this Item. In my view, the Delegate appears to have interpreted this submission as meaning that “there was no such review request activity” and that the Application was simply filed. This is incorrect. While Mr Smith’s solicitors’ submission contains a longish reference to the WorkCover Guidelines of dubious relevance to Item 2.06, they did, nevertheless, request a review, and the Delegate made an error by determining otherwise. Mr Smith’s solicitors claim $500 in respect of this Item. I note the letter dated 4 August 2004 (of three and a half pages) requesting a review, sets out details of Mr Smith’s claim and encloses supporting material. In my view, it is fair and reasonable to allow the claim for $500.00 (plus GST of $50.00) under this Item.

Items 4.08, 4.09 and 4.12

1. Mr Smith’s solicitors’ submissions in respect of these Items are difficult to follow. However, they appear to be directed more specifically to claims in relation to the conciliation conference on 24 March 2005.

1. The activity or event covered by Item 4.08 is described in the Table as “Preparing for a conference (including providing advice to client)”. At the relevant time, the maximum total for the type of activity or event was $500. The activity or event covered by Item 4.09 is described as “Attending and participating in a conference with an Arbitrator (other than an arbitration hearing or where Item 4.10 applies)”. (Item 4.10 is not relevant in this appeal.) The maximum total for the type of activity or event was $1,000. The activity or event covered by Item 4.12 is described as “Reporting to the client on the outcome of a conference or arbitration ...”. The maximum total for the type of activity or event was $190.

1. 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. Thus, in respect of Items 4.08 and 4.09, the legal practitioner may not be allowed more than the column 4 maximum regardless of the number activities/events of that type. However, as Deputy President Fleming recognised in McManus v Gosford City Council [2004] NSWWCCPD 61, there is an exception in respect of Item 4.12 where, following Fuentes, the column 4 maximum of $190 may be allowed in respect of each conference or conciliation/arbitration.

1. In his Statement of Reasons, the Delegate addressed Mr Smith’s solicitors’ claims under Items 4.08, 4.09 and 4.12 for the teleconference on 18 February 2005 and under Items 4.08 and 4.12 for the conciliation conference on 24 March 2005. For the telephone conference, the Delegate allowed $500.00 under Item 4.08, $125.00 under Item 4.09 (for a half hour conference from 1.00 to 1.30pm, even though Wandella claimed that the conference actually lasted for only 11 minutes), and $190.00 under Item 4.12. For the conciliation conference, he allowed $nil under Item 4.08 and $190.00 under Item 4.12.

1. The Delegate’s determination in respect of Items 4.08 and 4.12 is in accordance with the maximum permitted for those activities/events by the law set out above. It appears that the Delegate only made a determination in respect of Item 4.09 for the teleconference and not for the conciliation conference because Mr Smith’s solicitors did not make a claim under Item 4.09 for the conciliation conference (see their Bill of Costs at page 29). Mr Smith’s solicitors are not therefore in a position to contend the Delegate made an error in this regard. If there was an error it appears to have been theirs. Thus, I reject their appeal in relation to Items 4.08, 409 and 4.12.

Item 9.01

1. This Item is described in the Table as: “Conduct of any other proceedings before the Commission involving the determination of substantive legal issues, including preparatory work”. Mr Smith’s solicitors claimed $500.00 under this Item. The Delegate noted Wandella’s submission that the costs claimed were excessive, and said: “In the exercise of my discretion, in the circumstances of this costs presentation, I am not prepared to make any allowance for assessment of costs.” A review of the Delegate’s Statement of Reasons indicates a level of frustration with Mr Smith’s solicitors’ submissions: for example, the Delegate commented on page 3, “There is no integrity to this element of the submissions whatsoever”.

1. In their submissions on the appeal, Mr Smith’s solicitors now claim $625.00 in respect of their costs in relation to the costs assessment. No explanation is provided for the increased amount claimed. Mr Smith’s solicitors cite a number of matters where an arbitrator held the applicant was entitled to costs under Item 9.01.

1. Mr Smith’s solicitors are entitled to some allowance in respect of their costs but, in the circumstances of the case, where clearly the Delegate considered the costs claimed to be excessive, in my view, an award of $250 is appropriate. Mr Smith’s solicitors’ claim in respect of their costs in this appeal is dealt with below.

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 Wandella’s objections that the claim lacks clarity, that if it relates to investigator instructions it should be disallowed, or if it relates to an agency filing documents, it is not allowable and not reasonably necessary. The Delegate said: “The Applicant does not meet these submissions and I am not satisfied as to the basis of the claim. It is disallowed.”

1. In their submissions in the appeal, Mr Smith’s solicitors refer to their submissions dated 27 July 2005. In those submissions, they state:

“This item refers to us writing to St George Registration and Investigation Services Pty Limited and asking them to file documents for our office on the 15.11.2004 and again on the 26.11.04.”

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 ($20.00 plus $2.00 GST for each of the two occasions), or giving instructions in relation to filing, to be reasonably necessary. It would also appear that the fees in respect of filing on 15 November 2004 were probably in respect of the ‘Application to Resolve a Dispute’, the lodging of which is covered by Item 4.01.

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

Disbursements

Medical Reports

1. Mr Smith’s solicitors identify three medical reports disallowed by the Delegate: Dr McGrath dated 26 June 2004 - $400.00; Dr Endrey-Walder dated 5 February 2004 - $55.00; and Dr Endrey-Walder dated 10 June 2004 - $165.00.

2. In his Statement of Reasons, the Delegate said of Dr McGrath’s report: “The Respondent objects to this secondary report ($400). It is not reasonably allowable to that earlier.” The Delegate allowed $550.00 for Dr McGrath’s report dated 12 December 2003, the claim for which was conceded by Wandella.

1. Mr Smith’s solicitors note that Dr McGrath’s reports dated 12 December 2003 and 26 June 2004 were both attached to the ‘Application to Resolve a Dispute’, and submit that clause 45 of 2003 Regulation “permits the recovery of the cost of obtaining unserved claims management phase reports” into which category this report falls. Wandella submitted there was no need for two reports from Dr McGrath.

1. I note Dr David McGrath, Musculoskeletal and Occupational Physician, had been provided with a report on an MRI scan dated 21 May 2004 and an x-ray report dated 14 May 2004 (both of which post-date his earlier report dated 12 December 2003), together with reports from Dr Endrey-Walder (27 January 2004, 5 February 2004), and from Dr Michael Lowy (27 January 2004 (x 2) and 4 February 2004).

1. The Delegate has not adequately explained why Dr McGrath’s report dated 26 June 2004 was not reasonably allowable. For the purposes of clause 45, it should be treated as having been admitted in evidence, being included with the ‘Application to Resolve a Dispute’. In my view, it was reasonable for Dr McGrath to be asked to comment on further medical reports not previously available, and the cost of the report should be allowed.

1. The Delegate said of reports of Dr P Endrey-Walder, Surgeon, dated 5 February 2004 ($55.00) and 10 June 2004 ($165.00), noting that Wandella objected to these: “They are disallowed as not reasonably allowable additional to the earlier allowance for this doctor.” The Delegate allowed recovery of $880.00 for Dr Endrey-Walder’s report dated 27 January 2004, the claim for which was conceded by Wandella.

1. Mr Smith’s solicitors state that Dr Endrey-Walder was asked to comment on a recent report from Ms Anna Britton, Clinical Psychologist, dated 13 December 2003, and this was the subject of his report dated 5 February 2004 included with the ‘Application to Resolve a Dispute’. Wandella submits the supplementary report was not reasonably necessary as it contained matters that should have been included in the initial report.

1. I note the Delegate has not explained why this report is not reasonably allowable. In my view, given the closeness of the dates and the Christmas/New Year period, it is likely Dr Endrey-Walder was asked to assess Mr Smith prior to Ms Britton’s report being available. I do not consider it unreasonable to have sought this supplementary report from Dr Endrey-Walder, the cost of which ($55.00) should, therefore, be allowed.

1. With regard to Dr Endrey-Walder’s report dated 10 June 2004, I note this was not included with the ‘Application to Resolve a Dispute’, it is absent from the Commission files, and there is no evidence that it was ever served. I agree with the Delegate that it is not reasonably allowable.

Agency Fees

1. As noted above, Mr Smith’s solicitors claimed agency fees of $44.00 in respect of St George’s filing documents on 15 November 2004 and 26 November 2004 (at $20.00 per occasion plus $2.00 GST, a total of $44.00). The Delegate noted, disallowing the claim, that this had also been claimed under Item 10.01. Mr Smith’s solicitors submit the Registrar should take into account where instructions were received and legal services were provided in this case – in Young.

1. I note that the Delegate accepted Mr Smith’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, at least in relation to the filing fees claimed for 15 November 2004. Moreover, as stated above, 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. Thus, I am not satisfied from Mr Smith’s solicitors’ submissions that they are entitled to a further sum for an agent’s filing fees either as a disbursement or under Item 10.01. The appeal in relation to filing fees of $44.00 is therefore rejected.

Private Investigator’s Report

1. Mr Smith’s solicitors also dispute the Delegate’s determination in respect of their claim for Private Investigator’s Fees. Mr Smith’s solicitors claimed $3,155.83, being the fee for the Private Investigator’s Report prepared by St George. The Delegate commented that he had dealt with this claim in the context of Item 2.05 and, for the same reasons, this disbursement was disallowed.

1. I have discussed this above at paragraphs 14 to 18 and, as stated there, I am not persuaded by Mr Smith’s solicitors’ submissions that the Delegate exercised his discretion unfairly or unlawfully in determining that a factual investigation was not reasonably necessary. I therefore also reject Mr Smith’s solicitors’ appeal in respect of this disbursement.

Solicitor’s Travel

1. Mr Smith’s solicitors claimed the cost of attending the conciliation conference in Sydney on 24 March 2005: namely, $501.50, comprising 850 kms at $0.59 per km. The Delegate accepted Wandella’s submission that the correct calculation was 750 kms at $0.59 per km, amounting to $442.50, in accordance with Item 10.02, which excludes any claim for the first 50 kms of travel. In their submissions on the appeal, Mr Smith’s solicitors acknowledge that Item 10.02 excludes a claim for the first 50 kms, but maintain that they are entitled to claim for 800 kms at $0.59 per km, amounting to $472.00.

1. In my view, Mr Smith’s solicitors are clearly correct and the Delegate made an error in his calculation. Mr Smith’s solicitors should therefore be allowed travel expenses of $472.00, rather than the $442.50 allowed by the Delegate, a difference of $29.50.

Summary

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

Professional Costs
• Item 2.05: the Delegate’s disallowance of the claim under this Item is confirmed.
• Item 2.06: it would have been fair and reasonable for the Delegate to allow $500.00 (plus GST of $50.00, gives a total of $550.00) for requesting a review of the claim from the insurer.
• Item 4.08: the amount allowed by the Delegate is confirmed.
• Item 4.09: the amount allowed by the Delegate is confirmed.
• Item 4.12: the amount allowed by the Delegate is confirmed.
• Item 9.01: it would have been fair and reasonable for the Delegate to allow $250.00 (plus GST of $25.00, gives a total of $275.00) for preparation of the ‘Application for Assessment of Costs’.
• Item 10.01: the Delegate’s disallowance of this claim is confirmed.

Disbursements
• Medical reports: the Delegate should have allowed the cost of Dr McGrath’s report dated 26 June 2004 - $400, and Dr Endrey-Walder’s report dated 5 February 2004 - $55.00, an additional $455.00.
• Agency fees: the Delegate’s disallowance of this disbursement is confirmed.
• Private investigator’s report: the Delegate’s disallowance of this disbursement is confirmed.
• Solicitor’s travel: Mr Smith’s solicitors are entitled to an additional $29.50 for travel expenses.

1. The Delegate’s determination of $10,068.00 should, therefore, be increased by $1,309.50 to $11,377.50.

DECISION

1. The Registrar’s determination of Mr Smith’s claim for costs in this matter, dated 19 October 2005, is amended in accordance with these reasons.

COSTS

1. Mr Smith’s solicitors have been only partially successful in this appeal. In my view, it is reasonable to order that Wandella pay Mr Smith’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, Wandella Pet Foods Pty Ltd, is to pay the Appellant, Mr Smith $275.00 inclusive of GST in respect of his costs in this appeal.”

Robin Handley

Acting Deputy President  

17 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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