Starkey v Arakella Pty Ltd

[2006] NSWWCCPD 218

WORKERS COMPENSATION COMMISSION

APPEAL AGAINST A DECISION OF THE REGISTRAR IN RELATION TO COSTS

CITATION:Starkey v Arakella Pty Ltd [2006] NSWWCCPD 218

APPELLANT:  Dianne Lee Starkey

RESPONDENT:  Arakella Pty Ltd

INSURERS:Employers Mutual Indemnity (Workers Compensation) Ltd

GIO General Ltd

FILE NUMBER:  WCC 16236-05

DATE OF REGISTRAR’S DECISION:             1 February 2006

DATE OF APPEAL DECISION:  6 September 2006

SUBJECT MATTER OF DECISION: Appeal against the Registrar’s decision in respect of costs; assessment of costs under Items 2.04A and 4.12 of the Compensation Costs Table in Schedule 6 of the Workers Compensation Regulation 2003; whether maximum costs specified in the Compensation Costs Table are inclusive of GST

PRESIDENTIAL MEMBER:  Acting Deputy President Robin Handley

HEARING:On the papers

REPRESENTATION:  Appellant: Maurice May Lawyers

Respondent: Sparke Helmore Lawyers

ORDERS MADE ON APPEAL:  The Registrar’s determination of Ms Starkey’s claim for costs in this matter, dated 1 February 2006, is amended in accordance with these reasons.

The Respondent, Arakella Pty Ltd, is to pay the Appellant, Ms Starkey, the sum of $385.00 inclusive of GST in respect of her costs in this appeal.

BACKGROUND TO THE APPEAL

1. On 7 February 2006, Dianne Starkey filed an appeal against a costs determination made by the Registrar of the Workers Compensation Commission (‘the Commission’) dated 1 February 2006. The Respondent to the appeal is Arakella Pty Ltd (‘Arakella’). On 2 March 2006, Arakella filed a ‘Notice of Opposition to the Appeal’.

1. Ms Starkey was born on 18 March 1960 and is aged 46. She commenced employment with Arakella as a picker/packer in 1998. Ms Starkey suffered injuries to her back and neck on 8 November 2000 when dragging a loaded pallet jack. She commenced proceedings in the Compensation Court of NSW in relation to her claim for workers compensation, which resulted in a settlement on 11 November 2003. Arakella’s workers compensation insurer in relation to this claim is Employers Mutual Indemnity (Workers Compensation) Ltd (‘EMI’). On 28 March 2003, Ms Starkey suffered a similar injury when she hit her head on a steel bar, and she subsequently lodged a second claim for workers compensation. Arakella’s workers compensation insurer in respect of this injury is GIO General Ltd (‘GIO’).

1. On 1 February 2005, the Commission registered Ms Starkey’s ‘Application to Resolve a Dispute’ in respect of her claim for weekly compensation from 29 October 2003 to date and continuing. On 7 June 2005, following a conciliation conference at which the parties came to an agreed resolution of the issues in dispute, the Commission issued a Certificate of Determination setting out the terms of settlement. These provided for the insurers to pay Ms Starkey’s medical, hospital or related expenses pursuant to section 60 of the Workers Compensation Act 1987 (‘the 1987 Act’), together with weekly compensation in respect of one day – 23 February 2004, and “Costs as agreed or assessed”, which the parties, in their Terms of Settlement filed on 5 July 2005, agreed would be shared equally between GIO and EMI.

1. The parties being unable to agree to the costs payable, on 22 September 2005, Ms Starkey’s solicitors lodged an ‘Application for Assessment of Costs’ with the Commission in respect of their Bill of Costs dated 19 July 2005. Both Ms Starkey’s solicitors and Arakella’s solicitors lodged submissions in relation to this application.

1. The Registrar delegated the assessment to a Commission Arbitrator who made a determination dated 1 February 2006. The Certificate of Determination stated:

“1. Pursuant to a Certificate of Determination of 7 June 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 $6432.08.
3. The Applicant’s costs of the assessment are allowed at $250.
4. The Respondent is to pay the amount of $6682.08 to the Applicant if these costs have not already been paid.”

ISSUES IN DISPUTE

1. Ms Starkey’s appeal concerns three aspects of the Arbitrator’s determination: (1) to disallow the claim in respect of Item 2.04A of the Compensation Costs Table (‘the Table’) in Schedule 6 of the Workers Compensation Regulation 2003 (‘the 2003 Regulation’), (2) not to award an additional amount in respect of GST, and (3) to award only $190 in respect of Item 4.12.

1. In his ‘Statement of Reasons for Decision’, in which he relied on the decision of Deputy President Fleming in Berger v Moree Plains Shire Council [2005] NSWWCCPD 152 (‘Berger’), the Arbitrator noted, in relation to Item 2.04A, that:

“the obtaining a witness statement from the Applicant can be claimed under Items 2.01 or 2.04A depending upon when incurred, in particular, if the activity is substantively at the time of taking instructions, then it cannot be duplicated under a separate reference of Item 2.04A. There is no material reliably before me on the Applicant’s behalf establishing that the Applicant’s statement was a discrete activity separate and apart from the chronology of the taking of instructions at Item 2.01. Any considered allowance under item 2.04A accordingly would appear, on reliable balance of the material before me, not to have foundation in the circumstances here. The claim is disallowed.”

1. In relation to GST, the Arbitrator said that costs regulated by Schedule 6 of the 2003 Regulation are expressed to be the “maximum costs that are recoverable” (clause 84 of the 2003 Regulation), and there is no provision that expressly allows for GST to be awarded in addition to those maximum costs. This is unlike GST on clause 82 costs, such as disbursements, that may be added pursuant to clause 115 of the Legal Profession Regulation 2005.

1. In relation to Item 4.12, in respect of which Ms Starkey’s solicitors’ claimed $380.00, the Arbitrator said that the maximum total for this Item of $190.00 covers the “type of activity/event” described, “not for each time the contended activity might repetitively occur”.

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. I have had regard to Practice Directions Numbers 1 and 6, the documents before me (which include the parties’ written submissions to the Arbitrator on the assessment), and Arakella’s submission that the matter can be decided ‘on the papers’. Ms Starkey’s solicitors are silent 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.

FRESH EVIDENCE

1. Fresh evidence on appeal is governed by section 352(6) of the 1998 Act, which provides as follows:

“(6)     Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission.”

1. Practice Direction No 6 sets out the process for seeking leave of the Commission to give ‘new evidence’ on appeal. It provides as follows:

“New Evidence

Where a party seeks leave to give new evidence in relation to the decision appealed against, that party must serve a copy of the new evidence on the other parties to the dispute when serving the Application or Opposition.

In general, the Commission will allow new evidence to be introduced only where it can be demonstrated that the new evidence could not reasonably have been obtained by the party and tendered in proceedings before the Arbitrator and that failure to allow the new evidence would cause a substantial injustice in the circumstances of the individual case.”

1. Practice Direction No 6 also provides that if new evidence is sought to be relied upon, the Application or Opposition to the Appeal must contain:

   “ -a schedule of the new evidence,
     -a copy of the new evidence,
     -a brief outline of the new evidence and the reasons why it was not given in the
      proceedings before the Arbitrator, and
     -submissions why the new evidence should be admitted.”

1. Ms Starkey’s solicitors seek leave to introduce new evidence, namely, a letter dated 12 December 2005, from Jon Blackwell, the Chief Executive Officer of WorkCover, to the President of the NSW Law Society. This letter refers to proposed changes to the 2003 Regulation “to make it clear that GST may be added to appropriate items within the Costs Table”. In my view, with due respect to Mr Blackwell, his opinion on the interpretation of the law is not relevant evidence in terms of whether an additional amount may be awarded in respect of GST pursuant to the 2003 Regulation. Leave to introduce this new evidence is therefore refused.

DISCUSSION AND FINDINGS

The claim disallowed under Item 2.04A

1. Ms Starkey’s solicitors submit that the Arbitrator made an error when he found that there was no material before him establishing that the taking of a statement from Ms Starkey was a discrete activity separate and apart from the taking of instructions. It should have been evident from the Commission file that the statement was prepared at a later date than the initial taking of instructions and that additional work was involved in its preparation. Item 2.04A is in respect of the preparation of a witness statement which in the case of an applicant involves not only using material obtained when the solicitor obtained instructions from the client, but also drawing on other material that the solicitor has obtained including medical reports, claim forms, correspondence, Injury Management Plans, wages information etc. In Ms Starkey’s case, a range of material was used in preparing the witness statement. The draft statement was then prepared and the applicant consulted as to appropriate and necessary amendments. Once any such amendments had been made, the statement was forwarded to Ms Starkey for signature.

1. Ms Starkey’s solicitors also submit the Arbitrator denied them procedural fairness in relation to this Item because he failed to notify them that the time at which the statement was prepared was an issue on which submissions were required and to provide them with an opportunity to make submissions on that issue, the decision in Berger having been handed down on 12 December 2005, after the filing on their submissions on 11 October 2005.

1. Arakella submits that “Item 2.01 encapsulates both the taking and preparing of the Applicant’s statement” and, therefore, Item 2.04A is not claimable.

1. In Berger, at paragraph 141, Deputy President Fleming said: “It is possible ... for a statement by the worker to be taken either at the time of taking instructions (for which two hours is allowed pursuant to Item 2.01) or at some later time (Item 2.04A).” The activity/event in respect of which a claim may be made under Item 2.04A is “preparing witness statements”. The Arbitrator recognised correctly that obtaining a witness statement from the applicant can be claimed under either Item 2.01 or 2.04A depending upon when the activity occurred, but said he was not satisfied on the material before him that Ms Starkey’s statement was “a discrete activity separate and apart from the chronology of the taking of instructions at Item 2.01”.

1. I note the submissions put to the Arbitrator by the parties on this issue concerned whether a claim could be made under Item 2.04A for preparing a statement by the applicant worker, and did not discuss whether Ms Starkey’s solicitors had substantiated their claim in respect of this Item. As Ms Starkey’s solicitors note, these submissions were filed before publication of the decision in Berger. Given Ms Starkey’s solicitors submissions on the appeal, I am therefore prepared to accept that had they been aware of the need to substantiate their claim in respect of Item 2.04A, they would have done so. I am also satisfied from their submissions that the activity of preparing a witness statement for Ms Starkey was undertaken as a separate activity to that of their obtaining obstructions from Ms Starkey, noting that Ms Starkey had been involved in pursuing claims for workers compensation since at least 2002, when she commenced proceedings in the Compensation Court of NSW.

1. In my view, the Arbitrator made an error of law by disallowing Ms Starkey’s solicitors’ claim in respect of Item 2.04A. I therefore revoke his determination on Item 2.04A and substitute a determination that Ms Starkey’s solicitors be allowed an amount of $150.

Whether an additional amount may be claimed in respect of GST for Schedule 6 costs

1. Ms Starkey’s solicitors submit the Arbitrator made an error of law by disallowing their claim for GST in addition to the maximum amounts recoverable in respect of costs pursuant to Schedule 6 of the 2003 Regulation. Arakella made no submission on this issue.

1. This is an issue I considered in Chapman v Gosford City Council [2006] NSWWCCPD 4, and I can do no better than repeat what I said there:

“14. As Deputy President Fleming noted 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.”

15. Section 337 of the 1998 Act states relevantly:

“337 Maximum lawyer and agent costs

(1) The regulations may make provision for or with respect to the following:
(a) fixing maximum costs for legal services or agent services provided to a claimant, an employer or an insurer in or in connection with any workers compensation matter or work injury damages matter,
(b) fixing maximum costs for matters that are not legal services or agent services but are related to a claim for compensation or work injury damages (for example, expenses for witnesses or medical reports).
(2) ...
(3) A legal practitioner is not entitled to be paid or recover for a legal service or other matter an amount that exceeds any maximum costs fixed for the service or matter by the regulations under this section.
(4) An agent is not entitled to be paid or recover for an agent service or other matter an amount that exceeds any maximum costs fixed for the service or matter by the regulations under this section.
(5) ...
(6)...”

16. Clause 84(1) of the 2003 Regulation states:

“84 Fixing of maximum costs recoverable by legal practitioners and agents

(1) The costs that are recoverable, and the maximum costs that are recoverable, for:
(a) legal services or agent services provided in or in relation to a claim for compensation, and
(b) matters that are not legal or agent services but are related to a claim for compensation,
are the costs set out in Schedule 6, except as otherwise provided by this Part.

Note. The effect of this clause is that a legal practitioner or agent cannot recover any costs in relation to a claim for compensation unless those costs are set out in Schedule 6, except as otherwise provided in this Part.”

17. By contrast, clause 123 of the 2003 Regulation specifically provides for costs recoverable in work injury damages matters to be increased by the amount of any GST payable in respect of the service to which the costs relates. Similarly, GST on costs excluded from Part 19 of the 2003 Regulation and Schedule 6, but regulated by the Legal Profession Act 2004, may be added pursuant to clause 115 of the Legal Profession Regulation 2005. (The relevant provisions of the 2004 Act and 2005 Regulation are similar to those contained in the now repealed Legal Profession Act 1987 and Legal Profession Regulation 2002 (see clause 50).)

18. In my view, the ordinary meaning of the wording of clause 84 of the 2003 Regulation is that the maximum amount allowable for a particular activity or event in the Compensation Costs Table of Schedule 6 must be interpreted as being inclusive of GST. The inclusion of clause 123 of the 2003 Regulation applicable to costs in work injury damages matters, specifically allowing the maximum amount to be increased by the amount of GST payable, indicates that had it been intended that the maximum amounts for the items in the Compensation Costs Table could be increased to take into account any GST payable, then specific provision would have been made for this.”

1. I note that since this decision was published on 23 January 2006, the 2003 Regulation has been amended. The Workers Compensation Amendment (Costs in Compensation Matters) Regulation 2006, gazetted on 17 March 2006 (and which therefore took effect on that date), amends clause 123 of the 2003 Regulation to permit the amount of costs recoverable pursuant to Schedule 6 to be increased by the amount of any GST payable in respect of the service to which the cost relates. Since the costs determination made by the Arbitrator was made on 1 February 2006 and the amendment to the 2003 Regulation does not have retrospective operation, the Arbitrator’s decision not to award an additional amount in respect of GST was correct.

The award under Item 4.12

1. Ms Starkey’s solicitors submit that the Arbitrator erred by only allowing recovery for one advice to the client under Item 4.12. They contend that the Arbitrator must have moved into the arbitration phase of the conciliation/arbitration hearing in order to make the orders set out in the Certificate of Determination. Moreover, the fact that Ms Starkey was present during the conciliation phase is not relevant to Item 4.12. Arakella has made no submission in relation to Item 4.12.

1. The Arbitrator said about this Item:

“A claim under 4.12 is able to be made at the Table maximum of $190 with reference to either ‘conference’ or ‘arbitration’ activity. It is for the ‘type’ of activity that the Column for maximum Table allowance is prescribed ($190), not for each time the contended activity might repetitively occur (Orr v Direct Couriers (Australia) Pty Ltd [2004] NSWWCCPD 28 [‘Orr’]).”

1. In Orr, at paragraph 36, Deputy President Fleming, referring to wording of clause 1(2) of Schedule 6, set out the general principle that the maximum costs identified in Column 4 of the Table represent the maximum costs that can be claimed for that activity or event, notwithstanding the number of activities or events of that type which have taken place:

“Maximum costs attach to the event/activity in the Table for a ‘claim’ made in respect of the particular injury, not, as the Appellant suggests, for each time the event or activity is claimed.”

1. However, there is an exception to that general principle in the case of Item 4.12. In the NSW Court of Appeal decision in Orellana Fuentes v Standard Knitting Mill Pty Ltd (2003) 57 NSWLR 282, Ipp JA, with whom Spigelman CJ and Handley JA agreed, commented, at paragraph 66:

“In my view item 4.12 is to be construed as meaning that $190 is recoverable for reporting to the client on the outcome of a conference prior to the commencement of an arbitration hearing and a further $190 is recoverable for reporting to the client on the outcome of the arbitration. Thus a maximum of $380 is now recoverable under item 4.12.”

(See also McManus v Gosford City Council [2004] NSWWCCPD 61 (‘McManus’) and Woodbury v Miles [2006] NSWWCCPD 55.)

1. Thus where, as in Ms Starkey’s case, there was both a telephone conference and a conciliation conference, the solicitor can claim in respect of both. (I reject the contention that there was also an arbitration. Settlement was reached in the conciliation phase and the Arbitrator issued the Certificate of Determination pursuant to that settlement. In any event, only one claim can be made in respect of a conciliation and arbitration held on the same day: McManus, at paragraph 26.) The fact that the client was present at the conferences does not, in my view, prevent the solicitor claiming for reporting to the client. Such a report will often be an essential part of the service provided to the client.

1. Thus, the Arbitrator made an error of law by only allowing Ms Starkey’s solicitors’ claim in respect of one activity/event under Item 4.12. He should have allowed their claim for two activities/events, namely reporting in relation to both a teleconference and a conciliation conference. I therefore revoke the Arbitrator’s determination on Item 4.12 and substitute a determination that Ms Starkey’s solicitors’ be allowed an amount of $380 (rather than $190).

Conclusion

1. In accordance with these reasons, the Arbitrator’s award of $6,432.08 in respect of the costs of the proceedings should be increased to $6,772.08, an increase of $340, comprising $150 under Item 2.04A and $190 under Item 4.12.

DECISION

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

COSTS

1. Ms Starkey’s solicitors have been partially successful in this appeal. In my view, it is reasonable to order Arakella pay Ms Starkey’s costs in this appeal in the sum of $385.00 inclusive of GST, representing the equivalent of approximately one and a half hours work. The appropriate order, therefore, is: “The Respondent, Arakella Pty Ltd, is to pay the Appellant, Ms Starkey, the sum of $385.00 inclusive of GST in respect of her costs in this appeal.”

Robin Handley

Acting Deputy President  

6 September 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