Sharah v Zoological Parks Board of NSW

[2007] NSWWCCPD 57

WORKERS COMPENSATION COMMISSION

DETERMINATION OF APPEAL AGAINST A DECISION OF THE REGISTRAR IN RELATION TO COSTS

CITATION:Sharah v Zoological Parks Board of NSW [2007] NSWWCCPD 57

APPELLANT:  Kevin Anthony Sharah

RESPONDENT:  Zoological Parks Board of NSW

INSURER:Allianz Australia Workers’ Compensation (NSW) Ltd

FILE NUMBER:  WCC7722-06

DATE OF REGISTRAR’S DECISION:             29 August 2006

DATE OF APPEAL DECISION:  20 February 2007

SUBJECT MATTER OF DECISION: Appeal against the Registrar’s decision in relation to costs: professional costs - claims under Items 1.01, 4.05, 4.10 and 10.01 of the Compensation Costs Table in Schedule 6 of the Workers Compensation Regulation 2003; costs of the assessment.

PRESIDENTIAL MEMBER:  Acting Deputy President Robin Handley

HEARING:On the papers

REPRESENTATION:  Appellant:      Jones Staff & Co, Lawyers

Respondent:   Allianz Australia Workers’ Compensation (NSW) Ltd

ORDERS MADE ON APPEAL:  The Registrar’s decision dated 29 August 2006 is amended in accordance with these reasons.

The Respondent, the Zoological Parks Board of NSW is to pay the Appellant, Mr Sharah $440 inclusive of GST in respect of his costs of the appeal.

BACKGROUND

1. On 13 September 2006, Kevin Sharah filed an appeal against the Registrar’s assessment of costs in proceedings determined by a Commission Arbitrator. The Respondent to the appeal is the Zoological Parks Board of NSW (‘the Board’). The Board’s workers compensation insurer is Allianz Australia Workers’ Compensation (NSW) Ltd (‘Allianz’).

1. Mr Sharah was born on 16 December 1954 and is aged 52. He is a mechanical engineer who was employed by the Board at Taronga Zoo. He claims that on 11 January 2002 he suffered a psychological injury arising out of his employment with the Board. On 31 October 2005, the Commission registered Mr Sharah’s ‘Application to Resolve a Dispute’ in respect of his claim for compensation for permanent impairment and pain and suffering. On 21 November 2005, Allianz lodged a ‘Reply’. On 31 January 2006, an Arbitrator conducted a teleconference with the parties, following which she referred Mr Sharah to an Approved Medical Specialist (‘AMS’), Dr Julian Parmegiani, Psychiatrist, for assessment. Dr Parmegiani’s Medical Assessment Certificate was issued by the Commission on 28 February 2006.

1. On 3 April 2006, the Arbitrator conducted a further teleconference with the parties and, on 13 April 2006, conciliation having proved unsuccessful, she conducted an arbitration hearing. On 18 April 2006, she issued a Certificate of Determination in the following terms:

“1. The Respondent is to pay the Applicant a lump sum of $27,500 pursuant to section 66 representing 20% whole person impairment.
2. The Respondent is to pay the Applicant a lump sum of $30,000 pursuant to section 67.
3. The Respondent is to pay the Applicant’s costs as agreed or assessed.”

1. On 19 May 2006, the parties having failed to agree on the costs payable, Mr Sharah’s solicitors lodged an ‘Application for Assessment of Costs’ with the Commission. Allianz filed its submissions in reply on 19 June 2006. On 22 June 2006, Mr Sharah’s solicitors lodged submissions in response. The Registrar delegated the assessment of costs to an Arbitrator (‘the Delegate’) who made a determination dated 29 August 2006. The Certificate of Determination stated:

“1. Pursuant to a Statement of Reasons, which issued [sic] on or about 13 April 2006, 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 $5,164.50.
3. The Applicant’s costs of the assessment are not allowed.
4. The Respondent is, therefore, to pay to the Applicant a total amount of $5,164.50 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 under the heading ‘Submissions, Discussion and Findings’.

ISSUES IN DISPUTE

1. Mr Sharah’s solicitors submit the Delegate failed to give adequate or any reasons for his decision, erred in his construction of Items 1.01, 4.05, 4.10, and 10.01, and exercised his discretion unfairly or unlawfully in his determination of claims under those Items and in relation to their claim for costs of the assessment. 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, and the documents before me, neither party 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. 

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’) applicable at the time of the Delegate’s assessment, 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.

Item 1.01

1. The activity/event in respect of which legal costs can be recovered under Item 1.01 is described in column 2 of the Table as “Obtaining and reviewing medical reports”. In their Bill of Costs dated 26 April 2006, Mr Sharah’s solicitors claimed $550 (including GST) for obtaining and reviewing six medical reports. The Delegate allowed the claim on the basis that “there is a valid claim for five reports”, but commented that the sixth report referred to by Mr Sharah’s solicitors in their Bill of Costs, that of HealthQuest, “is of dubious relevance to the Section 66 Application”.

1. In their submissions on the appeal, Mr Sharah’s solicitors, referring to the Delegate’s comment on the HealthQuest report, submit that the Delegate “[o]mits to consider relevance to Section 67 claim and to the issue of permanence of the condition ...”. Allianz submits that it was open to the Delegate to form this view having considered the HealthQuest report.

1. I have reviewed the one page HealthQuest report dated 26 February 2002, headed “Fitness to Work Summary”. This appears to have been prepared in relation to whether or not Mr Sharah should be medically retired. Comprising two paragraphs, this states that Mr Sharah is suffering from “a health condition that will, in all likelihood, prove permanent”. The report goes on to say Mr Sharah is unable to perform his usual duties and that this will continue for the foreseeable future. The report is signed by Mr Sharah’s medical practitioner and a NSW Government Medical Officer.

1. Thus, the report is relevant to the issue of permanence but otherwise contributes little to Mr Sharah’s claim under sections 66 and 67. In my view, it was open to the Delegate to comment on the report in the way he did. The comment did not affect his determination in relation to Item 1.01 since there were five other reports identified in the Bill of Costs in relation to this Item, and the Delegate allowed Mr Sharah’s solicitors’ claim in full. I therefore reject this ground of appeal.

Item 4.05

1. The activity/event in respect of which legal costs can be recovered under Item 4.05 is described in column 2 of the Table as “Reviewing documentation produced under a direction of the Commission, exchanging information with the other parties and obtaining further instructions from client”. Mr Sharah’s solicitors claimed $605.00 (including GST) under this Item identifying “Dr Skinner, Allianz, further instructions”. In submissions in reply to those of Allianz, Mr Sharah’s solicitors conceded that they had applied the wrong hourly rate and that the claim should have been for $550.00 (including GST). In its submissions, Allianz stated that all reports it produced under direction had already been provided to the Applicant prior to the commencement of proceedings pursuant to section 126 of the 1998 Act. It submitted that one hour only should be allowed in respect of this claim as being sufficient for this activity. The Delegate stated:

“The Respondent says ... that the documents produced by Allianz Australia had previously been produced to the Applicant pursuant to section 126. The Applicant says the Allianz documents were not produced pursuant to section 126, but does not deny that they had previously been produced to it. On this basis the service of a Direction to Produce on Allianz is not reasonable or necessary. In these circumstances, one hour is sufficient.”

1. In its submissions on the appeal, Mr Sharah’s solicitors submit the Delegate erred in finding that the service of the Direction on Allianz was unreasonable. They note:

“a section 126 request was made in previous proceedings in 2002 for weekly compensation and a copy of the claim form, five WorkCover certificates and a one page letter were produced. In 2006, pursuant to the Direction, somewhere between 200 and 300 documents were produced.”

1. Allianz notes that the Direction to Produce issued to Allianz was limited to “all reports held on your file from Dr Yvonne Skinner”, but, while agreeing it was reasonable for the Applicant to issue a further Direction to Allianz, submits it was open to the Delegate to reduce the time allowed on the basis that no such report was produced, there being none in the possession of Allianz. Allianz submits there are no reasonable grounds for overturning the exercise by the Delegate of his discretion.

1. I note Allianz concedes that it was reasonable for Mr Sharah’s solicitors to seek the service of a Direction to Produce on Allianz. It was the Delegate’s finding that this Direction was “not reasonable or necessary” which was the basis for his allowing only one hour under Item 4.05. I am satisfied from Mr Sharah’s solicitors’ submissions, and noting Allianz’s concession, that it was reasonable for them to seek the service of a Direction on Allianz. The basis of the Delegate’s decision is, therefore, in my view, flawed and his determination in respect of Item 4.05 must be set aside. I am also satisfied from Mr Sharah’s solicitors’ submission to the Delegate that “[t]he time taken in reviewing this documentation and Dr Skinner’s documents as well as the time taken obtaining instructions exceeded two hours”, supports a determination that a claim for two hours under this Item is, in the circumstances, reasonable. I therefore allow $550 (including GST) in respect of this Item, rather than the $275 (including GST) allowed by the Delegate.

Item 4.10

1. The activity/event in respect of which legal costs can be recovered under Item 4.10 is described in column 2 of the Table as “Attending and participating in a conference with an Arbitrator where the Arbitrator determines that the matter is complex and the matter proceeds directly to arbitration”. Mr Sharah’s solicitors claimed $1,134.37 (including GST) under this Item on the basis that the matter was declared complex and proceeded straight to arbitration. Allianz submitted the matter was not certified as complex. The Delegate inspected the file for the substantive proceedings and commented: “I found no note to this effect and the form of the costs order suggests to the contrary”. He therefore disallowed the claim under Item 4.10.

1. The Delegate noted that Mr Sharah’s solicitors had claimed in the alternative under Item 4.09 (“Attending and participating in a conference with an Arbitrator (other than an arbitration hearing or where Item 4.09 applies)”), but stated (Statement of Reasons, paragraph 23) that he disallowed that claim on the ground that the Applicant had claimed the matter proceeded straight to arbitration. However, I note that in his summary, the Delegate did in fact allow the claim for $302.50 under Item 4.09.

1. In their submissions on the appeal, Mr Sharah’s solicitors submit the fees paid to the Applicant’s counsel will confirm that the matter was complex. In the alternative, they submit the Delegate erred in determining that “no fee at all was payable for 3 3/4 hours advocacy”. Allianz submits the fees paid to counsel are irrelevant to determining whether a matter was certified as complex: this is a matter of certification by the Arbitrator. Allianz submits the Applicant’s contention that the matter proceeded directly to arbitration precluded a claim under Item 4.09, and the Delegate properly dealt with the claim for costs as framed.

1. It is at the teleconference stage that the Arbitrator will provide certification of a matter as being ‘complex’ for the purpose of assessment of costs under Item 4.10, with the consequence that there is no conciliation stage in the proceedings and the matter proceeds directly to arbitration from the teleconference. An inspection of the file indicates that this did not happen in Mr Sharah’s case – there appears to have been no such certification and the Arbitrator conducted a conciliation conference before the matter proceeded to arbitration. In my view, the Delegate was therefore correct in disallowing the claim under Item 4.10. However, in my view, given that Mr Sharah’s solicitors seem to have misunderstood the basis on which a claim may be made under Item 4.10, and that a claim was also made under Item 4.09, the Delegate should have allowed that claim for $302.50 (including GST), which, in the circumstances, appears to have been fair and reasonable. As noted above, the Delegate did, in fact, do so, albeit in error, and his award under Item 4.09 of $302.50 is, therefore, confirmed.

1. The Delegate was correct in not making an award under Item 4.11 (“Attending and participating in an arbitration hearing ...”) since Mr Sharah’s solicitors had not made such a claim.

Item 10.01

1. The activity/event in respect of which legal costs can be recovered under Item 10.01 is described in column 2 of the Table as “All work associated with instructing an agent to act on the claim or a matter relating to the claim”. Mr Sharah’s solicitors mistakenly referred to their claim in respect of instructing an agent as being under Item 9.01 whereas it should have been under Item 10.01. In their Bill of Costs dated 26 April 2006, Mr Sharah’s solicitors claimed $110 (including GST) for “Instructing agent re claims for privilege”. In their response to Allianz’s submissions to the Delegate, Mr Sharah’s solicitors referred to a letter of instructions to an agent dated 19 January 2006 in relation to making a claim for privilege, but did not, as they stated they would, enclose a copy of the letter.

1. The Delegate disallowed the claim on the ground that Item 9.01 deals with “Conduct of any other proceedings before the Commission involving the determination of substantive legal issues, including preparatory work”, and that there was no evidence of any such relevant conduct. The Delegate also noted that a copy of the letter of instructions had not been provided and so it was not possible to establish whether the instructions were given to a legally qualified person.

1. In their submissions on the appeal, Mr Sharah’s solicitors note that the Registrar apparently failed to forward the letter to the Delegate, and they, therefore, enclose another copy. They emphasise that the fee under Item 10.01 is payable for ‘instructions’, note that the agent instructed is a qualified solicitor, and refer to my decision in Hutchins v NSW Police [2006] NSWWCCPD 171. Allianz submits the activity claimed does not relate to the conduct of proceedings before the Commission as required by Item 9.01. In a further submission dated 13 October 2006, Mr Sharah’s solicitors note their mistake in respect of Item 9.01 and state that the claim should have referred to Item 10.01. There has been no further response from Allianz.

1. In my view, it was clear from the description of the activity in respect of which the claim was originally made, and from Mr Sharah’s solicitors’ submissions, that they had mistakenly referred to Item 9.01 rather than 10.01, and the Delegate should have proceeded on this basis or, if in doubt, sought clarification. 

1. While Mr Sharah’s solicitors assumed, incorrectly, that the Registrar had failed to forward a copy of the letter of instructions to the Delegate – I have checked the file and no copy of the letter of 19 January 2006 was enclosed with their submissions to the Delegate – in my view, there was sufficient evidence to put the Delegate on notice of the instructions. Had he not been satisfied of this, he could have sought a copy of the letter of 19 January 2006 which it would appear was not enclosed as a result of an omission on the part of Mr Sharah’s solicitors. Having reviewed this letter, it is clear that instructions were given to an agent to inspect documents produced and, where appropriate, to claim privilege. Thus, in my view, Mr Sharah’s solicitors’ claim under Item 10.01 should have been allowed and the Delegate erred by not doing so.

Costs of the Assessment

1. In a letter dated 24 May 2006, Mr Sharah’s solicitors note that because there had been no agreement between the parties in relation to their claim under Item 4.07, Allianz put their whole Bill of Costs in issue. Mr Sharah’s solicitors estimated their costs of the assessment as involving one hour and 40 minutes (letter dated 24 May 2006), together with one and a half hours in respect of submissions to the Delegate (submissions dated 22 June 2006). The Delegate stated:

“The Applicant was mainly unsuccessful in this Application. In the circumstances, I am not prepared to make an order in favour of the Applicant in relation to costs of the assessment.”

1. In their submissions on the appeal, Mr Sharah’s solicitors contend that contrary to the Delegate’s finding, “the Applicant substantially succeeded in the assessment”. Allianz submits:

“The correspondence between the parties clearly indicates the only matters in real dispute between the parties were the six items initially raised by the Respondent. Since the Applicant was mainly unsuccessful in its claim it was open for the Costs Assessor to conclude an award of costs for the assessment was not justified.”

1. Mr Sharah’s solicitors respond that this argument is fallacious, especially in view of Allianz’s letter of 19 May 2006 – all matters were in issue.

1. I have reviewed Allianz’s letter dated 19 May 2006. This stated there was no agreement between the parties on costs, Mr Sharah’s solicitors having not agreed to the deletion of Item 4.07, and “we suggest you proceed to assessment in respect of the entirety of your claim”. I have also reviewed the Delegate’s overall assessment, noting that Mr Sharah’s solicitors succeeded in their claim under Item 4.07. Taking into account my amendments to the Delegate’s decision in respect of Items 4.05 and 10.01, my view is that Mr Sharah’s solicitors were mainly successful in the assessment and it would have been fair and reasonable to allow their costs of the assessment in the sum of $550 (including GST).

Summary

1. The outcome, in terms of the issues in dispute in the appeal, is as follows:

Item 1.01: the Delegate’s decision is confirmed
Item 4.05: the Delegate’s determination is amended by increasing the sum allowed from $275 to $550 (including GST)
Item 4.09: the Delegate’s determination of $302.50 is confirmed (but note my discussion as to the Delegate’s error)
Item 4.10: the Delegate’s decision is confirmed
Item 10.01: the Delegate should have allowed the sum of $110 (including GST)

Costs of the assessment: $550 (including GST) should be allowed.

1. In conclusion, the Delegate’s assessment of costs must be increased by $385 (Items 4.05 and 10.01) from $5,164.50 to $5,549.50 and the Applicant’s costs of the assessment in the amount of $550 must be allowed. The total amount payable to the Applicant as a result of this amended assessment is, therefore, $6,099.50.

Decision

1. The Registrar’s decision dated 29 August 2006 is amended in accordance with these reasons.

COSTS

1. Mr Sharah’s solicitors have been partially successful in this appeal, and, in my view, it would be fair and reasonable to allow an amount of $440 (including GST) in respect of their costs of the appeal, being equivalent to approximately one and a half hours of work. The appropriate order, therefore, is: “The Respondent, the Zoological Parks Board of NSW is to pay the Appellant, Mr Sharah $440 inclusive of GST in respect of his costs of the appeal.”

Robin Handley

Acting Deputy President

20 February 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.

ASSOCIATE