Ahern & Anor v Aon Risk Services Australia Limited

THE SUPREME COURT PROCEEDING

1. The costs assessment arose from a proceeding commenced by the plaintiffs against the defendant in the Supreme Court of New South Wales (the 'Supreme Court Proceeding'). The following account is taken from the plaintiffs' application for costs assessment and is uncontroversial. The fire that occurred in June 2006 largely destroyed the house and most of its contents.
2. The plaintiffs discovered, in March 2006, that a policy for insurance for home contents had lapsed in 2004. Mr Di Paolo, one of the defendants in the Supreme Court proceeding, purportedly affected building and home contents coverage on 26 March 2006. Mr Di Paolo had been a long serving insurance broker for the first plaintiff. By 2006, Mr Di Paolo had become employed by an entity which contracted with the defendant to be its commissioned agent.
3. The plaintiffs made claim on policies with the insurer and were paid out (in relation to both building and contents policies), but the payouts left a significant shortfall. The plaintiffs sued the defendant for professional negligence to recover their loss represented by that shortfall resulting from what they contended was chronic under-insurance. The plaintiffs' case was that they suffered losses in the order of $3 million.
4. The Supreme Court proceeding commenced in 2012. The trial commenced on 2 February 2015 and it settled after the trial had run for 7 days. The costs assessor and Costs Review Panel separately indicated that the litigation was hard-fought and involved significant complexity and some novel questions of law, and featured the defendant initially putting the plaintiffs to proof on virtually every aspect of the case (see paragraph 8.3 of the Panel's Review Decision). The Supreme Court ultimately made orders to give effect to a settlement reached on 10 February 2015. For relevant purposes, the Supreme Court ordered that save for the vacation of prior costs orders favouring the defendant (which the parties agreed would to be absorbed by the parties themselves), the defendant was to pay the plaintiffs' costs of the proceedings as agreed or assessed.

THE COST ASSESSOR'S DETERMINATIONS

1. On 13 September 2016, by a narrative statement, the plaintiffs applied for an assessment of their costs. After issuing an interim certificate of determination, in the sum of $798,709.99, on 22 December 2016, the costs assessor issued the two certificates of determination on 7 April 2017 to which reference has already been made.
2. The costs assessor took into account the plaintiffs' bill, totalling $1,748,077.10 and correspondence between the solicitors for the parties. In his description of the background, the costs assessor essentially accepted the plaintiffs' submissions that the Supreme Court proceeding concerned a novel case (paragraph 3.1) where the plaintiffs' were required to prove every aspect of their case; which itself led to a voluminous number of affidavits and retainer of 6 different experts leading to the preparation of expert evidence exceeding 500 pages (paragraph 3.2).
3. The material parts of the reasons for the costs assessor's assessment, which formed the basis for the application for review to the Costs Review Panel, may be briefly stated.
4. First, at clauses 4.1 - 4.2, the costs assessor set out his approach to assessing what was 'fair and reasonable' costs. The costs assessor had regard to the question of proportionality, not only in terms of the quantum of the costs (as against the value of the subject proceeding) but also in terms of the complexity of the matter, the parties' conduct, the importance of the proceedings to the parties and the orders made by the Court. The costs assessor alluded to s 364(1) of the LP Act.
5. The costs assessor reproduced the mandatory (but non-exhaustive) considerations he was required to take into account by s 364(1) of the LP Act. The mandatory considerations were (a) whether or not it was reasonable to carry out the work to which the costs relate; (b) whether or not the work was carried out in a reasonable manner and (c) what is a fair and reasonable amount of costs for the work performed. Assessment of the last matter was guided (by s 364(2)) by a range of matters which the costs assessor could, in his discretion, take into account. This included: (a) the skill, labour and responsibility displayed by a practitioner; (b) the complexity, novelty or difficulty of the matter; (c) the quality of the work done and whether the level of expertise was appropriate to the nature of the work done; (d) the place where and circumstances where the services were provided; (e) the time within which the work was required to be done; and (f) the outcome of the matter.
6. Secondly, at cl 5.2, the costs assessor determined what he regarded as the fair and reasonable hourly rates reflecting the professional costs of the plaintiffs' legal team (from Partner through to the law clerks and paralegals). In the case of the partner, Mr Clancy (admitted in 1987), allowance was made for an hourly rate of $460; whereas the claimed hourly rate was $550 - a discount exceeding 16%. The costs assessor did so after having noted the extent of the legal experience of each member of the legal team and having noted the hourly rate claimed on the plaintiffs' behalf.
7. The balance of the material items concerned the disbursements of the plaintiffs' solicitors. Thirdly, at cl 6.5, the costs assessor determined that it was fair and reasonable for Mr Clancy, the partner, to consult with a costs consultant, Mr Cordner about the reasonable range of party/party costs. The costs assessor significantly discounted the number of hours claimed for those consultations.
8. Fourthly, at cl 6.6, the costs assessor significantly reduced the amount claimed for the preparation of the costs assessment made on the plaintiffs' behalf by DGT Costs Lawyers.

THE PARTIES' APPLICATIONS FOR REVIEW TO THE REVIEW PANEL

1. The parties to the Supreme Court proceedings were dissatisfied, for their own reasons, with the costs assessor's final determinations: the plaintiffs complained that not enough was awarded; whilst the defendant complained that too much was awarded. On 16 June 2017, the plaintiffs and the defendant each lodged their own applications for review. In this appeal, Counsel for the defendant noted that this has significance for the complaint about the extent to which the Costs Review Panel entirely reassessed the costs assessor's costs assessment.
2. The plaintiffs' application relied upon 5 grounds of review. They were: "1. The Costs Assessor erred in determining at 4.1 of his Reasons that he "…Have regard to the question of proportionality but only in terms of the quantum of costs as against the value of the subject proceeding, but also in terms of regards the subject matter of the complexity of the matter and the conduct of the parties, the importance of the proceeding to the parties and the orders made by the Court. Section 364 of the LP Act does not mention the word 'proportionality' - this concept has been introduced in the Legal Profession Uniform Law (NSW) and Legal Profession Uniform Law Application Act 2014 with respect to both solicitor/client and ordered costs. 2. The Costs Assessor noted at 3.2 of his Reasons that this case was novel and at 3.3 (and also at 6.3 that it was a 'novel and complex case') that the Review Applicants were required to prove every aspect of the case and then further erred by his reliance on, and application of, this incorrect test of 'proportionality' for party/party costs at 4.1 of his Reasons to reduce all of the hourly rates claimed in the itemisation of costs for the Fiona is working on the matter for the review applicants: see paragraph 5.2 of the reasons. No other specific reasons for these reductions are provided. The hourly rates claimed a fair and reasonable and should have been allowed in accordance with the application of the correct provisions set out in Section 364 of the LPA as claimed. 3. The Costs Assessor erred at 6.6 of his reasons in reducing the disbursement incurred by the Review Applicants to DGT Costs Lawyers at item 4338 which fee was charged at 8.9% of the professional fees. The costs assessor has erred in failing to provide any reason for the reduction of the piece to 8.5%. 4. The costs assessor erred in making the reductions referred to at 6.5. In his reasons in respect of disbursement item 4337 (being fees incurred to GD Cordner Counselling) in respect of costs consulting services provided in every 2016 in finding that it was fair and reasonable for the Review Applicants' Solicitor to speak with Mr Cordner and obtain advice in relation to the reasonable range of party/party costs but then finding the amount of time spent by Mr Cordner in providing advice to be neither fair nor reasonable. The corresponding allowed by the costs assessor of six hours is disproportionate and unreasonable to the work undertaken (which was already substantially reduced from the time actually taken 42.4 hours). 5. The costs assessor further erred in making the reductions referred to at 6.5 and 6.6 of his reasons in failing to have proper regard to the review applicants submissions and having regard to the review respondents' failure to make any offer of settlement prior to the review applicants' incurring the fee at item 4338 and thereafter failing to make any reasonable offer to settle the costs."
3. It is to be noted the level of specificity with which these grounds for review were stated.
4. By contrast, the defendant's application for review was stated at a higher level of generality. It was very broad ranging in its scope. Complaints were made generally about the failure by the costs assessor to provide adequate reasons for calculation of allowances and disallowances for costs (grounds 1 - 2); misdirection as to the scope of the work to be performed for its prosecution (ground 3); lack of proportionality between the amount claimed and the amount at which the plaintiffs agreed to settle (grounds 4 & 11); not clearly assessing work for aspects of the work claimed (ground 5); failing to state the effect of costs of interlocutory applications (ground 6); exaggerating the complexity of the matter and what it was worth (grounds 7-8); failing to take into account the family relationship between the costs applicants and their lawyer (ground 9); and the erroneous determination that the defendant was to pay the costs of the assessment, especially in the light of the defendant's offer for the costs on the assessment (grounds 10 - 11).

Structure of the reasons

1. The Review Panel's Decision was structured, by topic (and several sub-topics), as follows: 1. Materials considered; 2. Legal costs and disbursements claimed and allowed; 3. Background; 4. General Principles; 5. Reasons; 5.1 Objections; 5.2 Hourly rates; 5.3 Scanning of documents; 5.4 Solicitor and own client costs; 5.5-5.6 Brief to senior counsel; 5.7-5.8 Tender Bundle; 5.9 Facsimile; 5.10 Photocopying; 5.11-5.12 Chronology; 5.13 Travelling time; 5.14-5.21 Affidavits of the first plaintiff and Mr Clancy; 5.22 Deliveries; 5.23 Administrative tasks; 5.24 Telephone messages; 5.25 Claims to amend and review expert reports; 5.26-5.27 Preparation for hearing by the partner; 5.28 Preparation of the Court book; 5.29 Schedule of claimable items; 5.30 Perusing the transcript and comparing notes to assist Counsel; 5.31 Costs of the assessment; 5.32 Interim certificate; 6.1 Filing fees; 6.2-6.3 Senior Counsel's fees; 6.4 Counsel's fees of Mr Watson; 6.5 Fees of Mr Cordner, costs consultant; 6.6 Fees of DGT Costs Lawyers; and 7 Costs of the Assessment.
2. Another significant feature of the structure of the Review Panel's Decision was its attempt to bundle together, or link, grounds for review agitated by the parties where there was a co-incidence in the subject matter of the ground. Counsel for the plaintiffs did not say that such approach was impermissible, although she argued that it may have produced some uncertainty in which parts of the reasoning were applicable to a party's grounds of review.

Material part of the Review Panel's Decision

1. With reference to the plaintiffs' grounds of appeal in this proceeding, I set out the parts of the reasons about which the plaintiffs' make complaint.

Reduction of hourly rates

1. At paragraphs 12.9 - 12.13 (incl.) of the Review Panel's Decision, the Panel set out its views on the hourly rates claimed by professionals within the plaintiffs' legal team. At paragraph 12.9, it noted that it had reassessed costs. It referred to the position of each member on the legal team, the experience of each person, the type of work done and how it was done, and the involvement of barristers. It also referred to its access to the file of the Supreme Court proceeding and CARC guidelines. Having made reference to what it considered, the Review Panel stated (at paragraph 12.10) its conclusion that it accepted and affirmed the rates arrived at by the assessor for work done. It did so again at paragraph 20.1.
2. The Panel then (at paragraph 12.11) specifically refuted the plaintiffs' complaint about the costs assessor's failure to articulate reasons for reducing the hourly rates. The Review Panel stated that there was no presumption that the hourly rate claimed should be allowed. The assessor's obligation (and that of a Panel upon review) was to look at the relevant factors and arrive at the hourly rates. The Panel acknowledged the need for a costs assessor (and itself, as part of its approach for a general reassessment) to give reasons, having regard to all the relevant factors and said that so long as those matters were set out, there was sufficient explanation for the amount arrived at.

Re-assessment approach

1. The Review Panel generally set out its approach to its task of review in Section 5 of its reasons. Citing a range of authorities, it summarized its approach at paragraphs 5.17- 5.19. It said: "5.17 on the basis of those authorities, the function of the panel is to conduct a reassessment of those items and areas identified by the ground, and then to indicate in reasons that give a real and not illusory right of appeal, how the items identified in the grounds were dealt with. A panel may adopt the whole or any part of an assessor's reasons if those reasons are themselves sufficient. 5.18 the process may involve looking at separate areas of the original assessment identified by the grounds and determining whether the grounds are made out and the assessor's approach was incorrect. However a panel need not necessarily determine whether an assessor's reasons or approach were correct or incorrect, adequate or inadequate. 5.19 in a case where the grounds effect all of the items originally assessed, or a substantial number of the grounds, those grounds might effectively require a reassessment of the costs stop the grounds must be examined to determine the contents of the panels function on review."
2. In section 12, the Review Panel indicated that, in a number of places, it took upon the task of reassessing for itself the correctness of matters considered by the costs assessor. This included the relevance of the question whether there must, for the purpose of the assessment, be taken into account the consideration of proportionality between the quantum of damages claimed, the settlement sum for damages with the amount of costs allowed; and, more materially, the hourly rates.
3. Later, in Section 18 of its reasons, the Panel appeared to also assess for itself the amount of costs for negotiation and the costs assessment process generally.

Costs of negotiation and assessment process

1. At paragraphs 18.2 - 18.16, the Review Panel addressed the plaintiffs' complaints about the costs assessor's treatment of the topic concerning costs of the assessment process. It acknowledged that the parties' respective applications for review raised for its consideration, relevantly, whether the plaintiffs should have their costs of the assessment process, including negotiation costs (paragraph 18.3).
2. For this purpose, the Panel indicated that it referred to the offers of settlement in respect to costs that had been made by the parties during the pendency of the Supreme Court proceeding and, thereafter, offers on costs exchanged thereafter. It concluded that, by 20 June 2016, the plaintiffs had made a reasonable offer. No complaint is made about this.
3. The plaintiffs' main complaint concerns the Panel's reasoning at paragraphs 8.12 - 8.15. The Panel noted that the costs assessor reduced the amount claimed by the plaintiffs. It decided to assess for itself the costs of negotiating costs and the reasonable costs of dealing with the assessment process in a global fashion, having regard to the fact that some of the work done by the plaintiffs' solicitors (apparently set out in items 4336, 4337 and 4338) was not done in a reasonable manner. Once those items were disallowed, the Panel determined for itself that one method for valuing the global amount for costs was that to adopt 10% of the fees (incl. of GST) as a reasonable amount for the (GST incl.) costs of the work in negotiating costs and the application and process for the assessment of costs. That yielded a sum of $66,133.30.
4. The Panel indicated that an alternative approach to valuation for its global approach was to adopt a certain number of hours (200) at a fixed hourly rate ($275), and adding another period (10 hours) for supervision at a higher hourly rate ($506).
5. The Panel compared the two approaches and took a figure in substitution for the approach involving disallowance of certain fees.

THE PLAINTIFF'S GROUNDS OF APPEAL

1. The plaintiffs' grounds of appeal may be summarized as follows: 1. the Panel failed to give any or any adequate reasons for affirming the costs assessor's decision to reduce hourly rates (ground 1); 2. the Panel erroneously adopted an approach whereby it reassessed completely the costs assessment, rather than substituting the determination that the costs assessor should have made (grounds 2 & 3); and 3. the Panel failed to give reasons for deciding the issue of costs of the assessment as it did and erroneously adopted a global assessment of the costs of the negotiation and costs assessment process (ground 4).

STATUTORY PROVISIONS AND APPLICABLE PRINCIPLES

1. Section 364 of the LP Act relevantly provided that: (1) In conducting an assessment of legal costs payable as a result of an order made by a court or tribunal, the costs assessor must consider: (a) whether or not it was reasonable to carry out the work to which the costs relate, and (b) whether or not the work was carried out in a reasonable manner, and (c) what is a fair and reasonable amount of costs for the work concerned. (2) In considering what is fair and reasonable amount of legal costs, a costs assessor may have regard to any or all of the following matters: (a) the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter, (b) the complexity, novelty or difficulty of the matter, (c) the quality of the work done and whether the level of expertise was appropriate to the nature of the work done, (d) the place where and circumstances in which the legal services were provided, (e) the time within which the work was required to be done, (f) the outcome of the matter.
2. Section 375 sets out the requirements for review by the Costs Review Panel. Section 375(1) of the LP Act relevantly provided that: "A panel constituted … may review the determination of the costs assessor and may: (a) affirm the costs assessor's determination; or (b) set aside the costs assessor's determination and substitute such determination in relation to the costs assessment as, in their opinion, should have been made by the costs assessor who made the determination that is the subject of the review."
3. Section 375(2) provided that: "For the purposes of subsection (1), the panel has, in relation to the application for assessment, all the functions of a costs assessor under this Part and is to determine the application, subject to this Subdivision and the regulations, in the manner that a costs assessor would be required to determine an application for costs assessment."
4. Section 375(3) indicated that the review is to be conducted on the evidence received by the costs assessor. Unless the panel determines otherwise, it is not to receive submissions from the parties or to receive fresh evidence or evidence additional to or in substitution for evidence received by the costs assessor.
5. Section 380 requires that a costs review panel provide a statement of the reasons for the panel's determination and such supplementary information as may be required by the regulations. Regulation 134(1) of the Legal Profession Regulation 2005 (NSW) required that the panel (in the circumstances of the present case) provide the same kinds of information as were required to be provided by the costs assessor under Regulation 128. Regulation 134(2) provided that: "134 Statement of reasons - section 380 of the Act (2) A statement of reasons to which this clause applies may be accompanied by such further information as the panel concerned considers necessary to clarify the review of a costs assessor's determination."
6. Section 384, as previously indicated, conditioned the right of appeal to demonstration of "a decision" of a costs assessor "as a matter of law" arising in the proceedings to determine the application.

NATURE OF APPEAL TO THIS COURT UNDER S 384 OF THE LP ACT

1. In McCausland v Surfing Hardware International Holdings Pty Ltd [2010] NSWDC 222, Johnstone DCJ determined (at [48]) that the proper construction of the right of appeal under s 384 involved comparison, among other things, with the avenue for appeal under s 385. His Honour said that under s 384, the Court is not concerned with the facts, except to the extent that a decision is based on the facts found and the Court is not concerned to ascertain whether facts were wrongly decided, incorrect, inadequate or incomplete. The appeal is concerned, no more and no less, with matters of law.
2. In her submissions, Counsel for the defendant fairly acknowledged some difference in judicial approach as to the stringency of approach in deciding that there is a matter of law. On one view, where there was an omission by the Panel to give reasons, unless there was demonstrated a decision in respect to not giving reasons, the omission is not necessarily an erroneous decision with respect to a matter of law: Bobb v Wombat Securities Pty Ltd (No 2) [2014] NSWCA 261 per Basten JA (Ward, Emmett JJA agreeing) at [14].
3. Counsel for the defendant also cited another decision of Johnstone DCJ, being Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd (2011) 12 DCLR (NSW) 304 as authority for the proposition that demonstration of an error of law is a necessary, but not sufficient requirement, to enliven the Court's power to disturb a panel's decision on review. The appellant must also demonstrate that the error was material to the determination [2] .

THE NATURE OF THE PANEL'S REVIEW TASK

1. In Wende v Horwath (NSW) Pty Limited [2014] NSWCA 170, Barrett JA (Beazley P - as her Excellency then was - and Basten JA, relevantly agreeing) set out (at [155]-[180]) the approach for a Costs Review Panel on review. His Honour said that: 1. the panel must deal with the original application for assessment and ultimately make its own determination of that application as if it was the costs assessor; 2. but the panel's duty 'to emulate' a costs assessor applies only to the extent that the paramount purpose of making a 'review' of the assessor's determination is thereby served; 3. the panel must consider the competing contentions (raised with the costs assessor) and make up its own mind; 4. there is no statutory requirement that an applicant for review articulate objections to the original assessment or even state 'grounds of review'; 5. however, the function of the review panel will vary according to the way which the applicant for review chooses to frame the application: if specific objections are stated, the panel will of necessity deal with them. If no objections are stated and the implicitly indicated desire of the applicant is to have the panel conduct a general review, no specific matters will call for attention. In either case, the function of the review panel is to review the costs assessor's determination and decide whether to affirm or alter it; 6. the review panel is not required to make a new assessment, as if the original assessment had never been made. The starting point will generally be the costs assessor's original determination, the application and the documents accompanying the application (in accordance with the regulation); 7. where the applicant elects to raise particular objections, a review panel will be entitled to proceed on the basis that the person is, in all other respects, content with the original assessment [3] . In such cases, the panel will adequately perform its function by dealing with the expressed grounds of objection and giving each of them separate and distinct consideration (emphasis supplied); 8. there is no basis for argument that a review panel which considered to be right the decision under review and the reasons given for it must formulate its own paraphrase of those reasons. In performing its function, it may be sufficient, if a panel agrees with conclusions given by the costs assessor, for the panel to state its endorsement of those reasons stated by the costs assessor that the panel considered to be correct.

OBLIGATION TO PROVIDE REASONS

1. In Frumar v The Owners of Strata Plan 36957 (2006) 67 NSWLR 321, Giles JA (Beazley JA and Ipp JA agreeing) said at [44]-[45] (with reference to a predecessor provision), that the reasons which a costs assessor or review panel must give must be such as to confer upon the disappointed party a 'real and not largely illusory' right of appeal. As I have already noted, the Review Panel in this case referred to that expression. In Frumar, the Court of Appeal indicated that the parties needed to be placed in the position where they could understand why the decision was made sufficiently to allow them to exercise any right of appeal. Giles JA emphasised that this extended not merely to questions of law, but also to questions of fact, and instanced, as an example of the latter, a question of whether the hourly rate was reasonable.
2. In Cassegrain v CTK Engineering [2008] NSWSC 457 White J (as his Honour then was) at [76]-[94] determined that a failure to give adequate reasons was properly a matter of law giving rise to a right of appeal. When interpreting the requirements from Frumar, his Honour emphasised (at [92]) that where a costs assessor takes the legitimate approach of making his or her own assessment of what work was reasonable (rather than a point-by-point analysis of an itemised bill) it is necessary for the assessor to inform the parties what work was reasonable and how s/he costed it. White J noted that the same obligation applies to Review Panels. Frumar and Cassegrain were applied by Davies J in Dunn v Jerrard & Stuk Lawyers [2009] NSWSC 681.
3. These decisions were given before the Court of Appeal's decision in Bobb v Wombat Securities Pty Ltd (No 2) at [23], which is the leading authority on what constitutes a decision as to a matter of law in the present statutory context. Nevertheless, it was submitted that a range of other decisions in this Court (which, it was suggested, I should follow as a matter of comity) were authorities for the view that a failure to give reasons, or adequate reasons, could ground a right of appeal under s 384.
4. Counsel for the plaintiffs emphasised the practical importance of a Court not taking too strict an approach to adjudicating whether a failure to give reasons amounts to a decision on a matter of law. She noted that an aggrieved party's avenue for appeal to the Supreme Court, exercising its supervisory jurisdiction, is practically attenuated because of a view that the Court may decline to exercise its discretion in an applicant's favour if it has not taken advantage of the statutory scheme for costs review.

Plaintiffs' submissions

1. The plaintiffs noted that the way in which the costs assessor and the Review Panel reduced costs on the hourly rates actually charged led to a significant difference in the outcome and the costs assessor gave no reasons for departing from the rates that the client agreed to. Counsel submitted that in accordance with the general principle of indemnity [4] , the correct starting point was for an assessor to deal with the hourly rate(s) actually charged. If adjustment was made to that rate, it needed to be justified. Although a Review Panel may be entitled to adopt a costs assessor's decision as to the appropriate hourly rate, that entitlement arises only when the assessor's reasons themselves are adequate. Unless that was so, the plaintiffs would not be given a 'real and not (merely) illusory' right to appeal.
2. The plaintiffs did not cavil with the assessor's approach to determining what were fair and reasonable costs (in paragraph 4.1 of his reasons). But they submit that the costs assessor did not give any reasons, or any adequate reasons, for deciding (paragraph 5.2) upon a different hourly rate for each of the members of the plaintiffs' legal team to the rates that were claimed.
3. Although the costs assessor may have referred to the correct criteria (in ss 364(1) and (2) of the LP Act), he did not explain how each of the criteria applied. Such reasons were important in a context of a complex case. The costs assessor mentioned 'proportionality' which may or may not have been erroneous, but its significance was not explained.
4. The plaintiffs then contended that no adequate reasons were given as to why the Review Panel agreed with the costs assessor that the charged rates should be reduced and what factors were relied upon in justifying such reduction. They cited the Panel's rejection of most of the defendant's grounds of review (other grounds of review being immaterial on the relevant question) meant that the Panel should logically have found that the hourly rates selected were in fact justified.
5. The Review Panel thereafter dealt with the reduced hourly rates in the same erroneous way: not adequately explaining how the statutory criteria applied. The plaintiffs submit that it was wrong for the Review Panel to decide that the costs assessor's reasons for reducing the hourly rates were adequate and therefore justified the Panel's adoption. They contend that the hourly rate ($550) for Mr Clancy was towards the lower end of the CARC guidelines - which applicable to complex cases in the Supreme Court as well as rates for the inferior courts - and did not take into account the extent of Mr Clancy's experience and the complexity of the matter. If 'proportionality' could be regarded as a valid consideration, it supported the hourly rate claimed.
6. The Court was referred to each of the relevant criteria in s 364 of the LP Act to ground the submission that they say should have led the costs assessor and Panel to accept the hourly rates claimed. If there was a concern about the extent of the work performed, this was not evident in the reasons of the costs assessor and Panel: the assessor and Panel found that it was reasonable to do the work and that the work was performed in a reasonable manner. The plaintiff's lawyer's file consisted of 300 lever arched volumes; Counsel's brief comprised 16 volumes. The matter was complex, novel and difficult. The quality of the work done was necessarily high and the level of expertise - especially Mr Clancy's involvement - was appropriate having regard to the novelty and complexity of the matter. The services were supplied in Sydney (where legal practice is notoriously more expensive than in other regional centres). The eventual outcome for the first plaintiff was very good: save for interest, he almost recovered the full amount of his claim, plus costs. In relation to pre-settlement costs, the Panel only partly reduced the amount claimed by the first plaintiff or the amount allowed by the costs assessor.
7. The plaintiffs said that it is not enough for a costs assessor, or Review Panel, to merely refer to some or all of these statutory criteria, as if by ritualistic incantation. The decision maker has to actually engage with the criteria and explain how and why the criteria applied in affecting the hourly rate which was ultimately selected.
8. It was possible, the plaintiffs conceded, for the assessor and the Panel to take the approach that some of the work performed by Mr Clancy, say, was not complex, or did not warrant much if any of his attention (as distinct from someone else on the plaintiffs' team), but some of it was highly complex, and justified his attention and that an average hourly rate could be chosen to meet these two extremes on the spectrum. This was not done. It was also said that notwithstanding that the Court can accept the expertise of the costs assessor and the members of the Review Panel, as the decision in Frumar showed, the statutory obligation to give reasons is not imposed because of any lack of trust in the qualifications of these decision makers but to facilitate a dissatisfied party's right of appeal.

Jurisdictional Point

1. The defendant queried whether a failure to give reasons, or adequate reasons, could amount to a "decision" as to a matter of law, but amounted only to an error of law in the decision making for which leave was required (under s 385).
2. That point aside, the defendant made the following additional points.
3. First, the appeal ground erroneously stated that the Review Panel affirmed a decision of the costs assessor to reduce rates when in fact, the Panel made its own decision, independently, and merely stated, along the way, that it affirmed and accepted the costs assessor's view of the hourly rates arrived at.
4. Secondly, when considering the role of a costs assessor (and Panel) adequate reasons were given, within the statement of reasons itself, for why the hourly rate was reduced. Principally, the costs assessor referred to the relevant statutory criteria and indicated that primacy should be given to the criteria of the "outcome" (s 364(2)(f) of the LP Act), or, described in another way, a fair and reasonable proportion of value of the eventual settlement outcome and the costs incurred to obtain that outcome. The Panel endorsed this view. The defendant says that the ground of appeal is really a thinly-veiled merits attack on the weight to the criteria deployed by the costs assessor (the 'outcome') to arrive at the hourly rates, in comparison to the weight ascribed to the other criteria in s 364; and that the plaintiffs' complaint, in substance, was an appeal which required the Court's leave under s 385.
5. The defendant submitted that the obligation of a costs assessor (and Panel) is not identical, in substance, to that of a judicial officer and that significance should be attributed to the role of a costs assessor. This was important in the sense that the authorities do not support the contention that elaborate reasons are needed to explain why a particular hourly rate, or rates, have been chosen. Accepting that the purpose of providing reasons was to preserve the parties' rights to appeal, the content of the reasons only needed to enable the parties to understand why the decision was made, and that could be facilitated in a number of ways beyond the statement of reasons. Reference was made, in these respects, to observations made by Johnstone DCJ in Randall v Willoughby City Council [2009] NSWDC 118 at [55]-[57]. Here, the parties not only had the respective statements of reasons (of assessor and Panel), but also had the benefit of being provided with an entirely marked up bill of costs and a schedule of changes. The statement by the Panel of its reasons, in conjunction with these other documents, was more than enough to inform the plaintiffs and allow them to determine whether to seek leave to appeal under s 385 to challenge the merits of the Panel's determination of what costs were fair and reasonable. Counsel for the defendant indicated, somewhat rhetorically, that the parties here received much more information than is commonly supplied by costs assessors (and Panels): they received a 'Rolls Royce' service and the benefit, in effect, of three independent assessments. Counsel submitted that even a statement, for example, that the hourly rate of $460 (for Mr Clancy) was reasonable was, with other information, sufficient for the parties' purposes.
6. Thirdly, even if the statement of reasons of the Review Panel was to be viewed in isolation, it is evident that the Panel provided adequate reasons. It referred (at paragraph 12.3 of the Panel's Review Decision), with approval, to the reasons given by the costs assessor (paragraphs 4.1]-[4.2]) in the assessor's reasons. Particular reference was made here to the criteria that is found in s 364(2)(b) and (f) of the LP Act, as well as the quantum of costs, as against the value of the subject proceeding, the conduct of the parties and the importance of the proceedings to the parties. Counsel for the defendant submitted that the costs assessor plainly indicated that the concept of 'proportionality' played a very significant role in the assessor's reasons for adjusting the hourly rates. So much was understood by the plaintiffs (in their application for review) and the Panel dealt with that point. There was no ground of appeal that the Panel misapplied the criteria of the "outcome" (which picked up the concept of 'proportionality') and there was appellate authority to suggest that the concept was relevant [5] .
7. The Panel then reassessed the costs itself. It accepted and affirmed the hourly rates arrived at by the costs assessor for the work done. The Panel did this after a process which saw it consider the position of each member of the plaintiffs' team, the experience of each member, and the type of work done (in terms of how much was done by those on lower rates and by those on higher rates). It also considered the barristers' involvement and had regard to material that was before the costs assessor (the Supreme Court file) and CARC guidelines.
8. The Panel also specifically addressed the plaintiffs' ground 2 of its application for review. The Panel indicated its disagreement with the plaintiffs' argument that there was a presumption that hourly rates would be allowed as charged. The defendant submitted that, contrary to the plaintiffs' argument, there was no requirement, under the LP Act as it then was, for a costs assessor or Panel to explain why the hourly rate (or the costs more generally) charged would be departed from. To the extent that the view was expressed by Wilson SC DCJ in Aesthete No 3 Pty Ltd ACN 127 464 966 v Gilmore Finance Pty Ltd ACN 104 792 627 and Anor. [2018] NSWDC 1, that view was expressed in relation to the subsequent (differently worded) legislative scheme. What the Panel said at paragraph 12.11 of its reasons was correct and, even if it was not, there is no ground of appeal contending that the statement was a decision as to a matter of law.
9. Fourthly, Counsel for the defendant submitted that it is not enough for the plaintiffs to demonstrate error. They also needed to establish materiality. In circumstances where they had enough information to launch an application to seek merits review in a s 385 appeal, any error of law in the provision of inadequate reasons was not material.

Plaintiff's submissions in reply

1. The plaintiffs acknowledged that the costs assessor's reference to 'proportionality' in his reasons, which reference the Panel agreed with, was unbalanced: although the "outcome" (here the settlement sum obtained) was a matter to consider when assessing the fairness and reasonableness of costs, the concept of proportionality also embraced other matters: including the importance of the matter to the parties.
2. The plaintiffs submitted that if the Panel did have regard to proportionality, or the criteria of the outcome, then this was not expressed in the Panel's explanation for its reassessment, in paragraph 12.10 of its reasons.
3. The plaintiffs submitted that the defendant's reliance to the circumstance that the Panel had provided a marked up bill and an explanatory schedule was a red herring: there was no reference in either of those documents to the hourly rate(s) of members of the plaintiffs' legal team. But even if that could be inferred, there was still another problem. Counsel for the plaintiffs referred me to the itemised bill of costs (item 2360) where a handwritten annotation 'PL' was made. Item 2360 in the bill of costs indicated that Ms Ghalloub performed work. Ms Ghalloub was identified as having performed work as both a solicitor and a clerk, which was charged at the same rate ($315 per hour). 'PL' was identified in the schedule as work performed at a paralegal rate. I infer that the rate applied ($150) determined by the Panel was a percentage reduction of over 50% for that which was charged. Counsel generally complained that no explanation was given by the Panel for why the rates of different personnel within the plaintiffs' legal team were differentially reduced.
4. Counsel submitted that if the Panel took the view that the 'outcome' of the settlement received justified a reduction in costs incurred to reach that outcome so as to make it "proportionate", this needed to be articulated.

The jurisdiction point

1. On the preliminary point concerning the Court's jurisdiction to adjudicate on the grounds of appeal (1 and 4) concerning adequacy of reasons, I do not consider that I am precluded from considering those grounds on the basis that the plaintiffs have not identified a decision as to a matter of law. Counsel for the defendant correctly acknowledged the well-established line of authority that non-compliance with a statutory obligation to give reasons amounts to an error of law which is properly susceptible to legal review in a s 384 appeal. I do not understand anything that was said in Bobb as amounting to an unequivocal endorsement of the view that a costs assessor or review panel's inadvertent omission to give any or any adequate reasons is immune from legal review where such omission amounts to a failure to comply with the statutory obligation to give reasons. The Court of Appeal in Bobb must be taken to have been well aware of the well-established authorities that a failure to give any or any adequate reasons constitutes error justifying legal review and if it intended to alter a party's right to legal review, it would have clearly said so. In the leading judgment of Basten JA, his Honour cautioned against taking too narrow a construction of the appeal conferring provisions. I also consider that when one considers the Court of Appeal's reasoning at [25], it could be said that an argument about the adequacy of reasoning might implicitly be treated as an implied decision as to how an assessor (or Panel) decided to explain the reasoning process; and on that basis, might be regarded as a decision as to a matter of law. I reject the defendant's jurisdictional point, which, in fairness, was tentatively expressed.

Determination

1. As to the merits of ground 1, I acknowledge that, as Giles JA noted in Frumar at [44], the allowance that a costs assessor makes in relation to hourly rates can be very important to the practical outcome of what costs are ultimately assessed. In this case, the factor has assumed large significance in the ultimate outcome. Some indication or explanation should be given for why an hourly rate (or rates) has or have been chosen. In this case, in my view, the costs assessor and the Review Panel, separately, provided explanation. The real question is the adequacy of that, or those explanations. It is, essentially, how far an assessor (and a Review Panel) needs to go to discharge the obligation to explain how the hourly rate was calculated.
2. The task of assessment for a costs assessor may be said to involves: (a) the assessor deploying his or her expertise in (b) applying a range of discretionary criteria (s 364(2))(a) to (f) of the LP Act) make a determination in accordance with specific matters (s 364(1)). The first part of this might be thought to be a statement of the obvious but, in the context of criticisms of the adequacy of reasoning, it is a factor that is perhaps under-appreciated: the assessment of costs generally and the choice of an hourly rate (for a single solicitor) or, as is the case here, hourly rates (for a team of solicitors) in particular is peculiarly a matter for consideration by experienced practitioners with particular proficiency in assessing costs. I infer that the costs assessor (and members of the Panel) here, were highly experienced in costs assessments. An invariable and inevitable feature of their task is to select the appropriate hourly rate, or rates. After a sufficient period of experience, dealing with a great many assessments, many costs assessors would, I apprehend, select an hourly rate somewhat intuitively. It is not a concept that is necessarily reducible to simple articulation of everything that a costs assessor has taken into account in arriving at the hourly rate selected.
3. The selection of that rate (or rates), was undertaken in corresponding fashion to the assessor's general assessment of costs, pursuant to s 364(1) and (2) of the LP Act. That is, the selection of the hourly rate(s) could be assessed in the light of multiple considerations (in s 364(2)) consistent with the consideration of the three factors in s 364(1). As s 364(2) indicates, not all of that criteria needs to be taken into account in making the determination required by s 364(1). But one of those considerations, in s 364(2)(f), was the "outcome" of the litigation. In this case, the outcome was not the product of judicial adjudication, but a settlement between the parties (the relevant court order sanctioning such settlement). Parties settle for different reasons. The costs assessor has no way of knowing, and is not tasked with deciding whether the settlement, objectively, undervalued or overvalued the merits of plaintiffs' claim. The settlement sum was bargained for between the parties, represented as they were by experienced lawyers. This is so even if the assessor has read all the material provided to him.
4. In selecting an appropriate hourly rate, not all of the considerations in s 364(2) (if all were to be considered) pointed in the same direction. For example, one assessor might give greater prominence to the complexity, novelty or difficulty of a matter. Another might consider that the eventual "outcome" was of more significance. This is where the skill and experience of a costs assessor, which will vary from one assessor to another, becomes important. Moreover, different costs assessors might reasonably take a different view as to which of the factors is more material than others.
5. In this case, the costs assessor (at paragraphs 4.1 - 4.2 of his reasons) set out his understanding of what the 'question of proportionality' involved. Plainly, he was indicating the basis for his costs assessment. But to reiterate, this was also relevant generally to the assessor's approach and the more specific question of selecting hourly rate(s). In the assessor's view, that question embraced: a comparison between the quantum of the costs against the value of the subject proceeding; the complexity of the matter; the conduct of the parties; the importance of the proceeding to the parties and the orders made by the Court. He specifically alluded to applying that concept to his consideration of appropriate hourly rates (paragraph 5.2). Earlier in his reasons (at paragraphs 3.1-3.2) he accepted the plaintiffs' submission as to the novelty or complexity of the proceeding, and the burdensome nature of the task of compiling evidence to meet the defendant's approach of putting the plaintiffs to prove on every issue. As is apparent in paragraph 5.2, the costs assessor also took into account the extent of the experience of each practitioner on the plaintiffs' team. Overall, however, it appears from his reasons that the assessor gave primacy to the 'outcome': the amount of the settlement sum and the circumstance that the costs claimed were high in proportion to that outcome. In so doing, the costs assessor was acting in accordance with appellate authority [6] .
6. The plaintiffs did not complain to the Panel that they did not understand what the assessor meant by his application of the concept of proportionality. Put another way, they had enough information on the point to make application for review. Their challenge, which the Panel rejected, was to the application of that concept. Ultimately, in this Court the plaintiffs did not seriously press, in this appeal, a contention that the costs assessor was not entitled to take into account the principle of 'proportionality'. There was also appellate authority which noted that, although the expression was not actually used in the legislation, it was something of a shorthand way of describing the legislative criteria [7] . There is no ground of appeal in this proceeding that the Panel committed a decision as to a matter of law to ground an appeal (under s 384) in doing so.
7. The plaintiffs' central complaint is that the costs assessor, and (in its reassessment) the Panel, did not sufficiently indicate which of the criteria were more important than others, as applied to each category of legal practitioner on the plaintiffs' legal team. Thus, in her submission in reply, Counsel for the plaintiffs submitted that what might be called the proportionality 'calculus' embraced not merely the consideration of the eventual 'outcome' (here the settlement sum) but other matters as well, such as the significance of the case to the plaintiffs.
8. In my opinion, it is highly questionable whether such delineation, or perhaps, hierarchical ranking as to which of the s 364(2) criteria was treated by the assessor as being more important than other criteria goes beyond what is necessary for a costs assessor to comply with his or her statutory obligation to inform the parties as to why an hourly rate was chosen. Rather the argument amounts, in effect, to a challenge to the merits of the determination on hourly rate(s); upon which minds may reasonably differ. But even if there was such a requirement to rank what criteria was considered, in my view, it was sufficiently implicit in the reasoning of the assessor in this case that he gave primacy to the aspect of the 'outcome'. A challenge to that is an attack on the merits.
9. The practical consequences of expecting a costs assessor to engage in a sort of ranking exercise were revealed when, in her written submissions, Counsel for the plaintiffs set out (at paragraphs 19-47) how the plaintiffs contended that the assessor and Panel might have reasoned in their application of the criteria in s 364(2) to the matter of the appropriate hourly rate. It was a lengthy exposition. But if the contention is right, it would be necessary for an assessor (or Review Panel) to go through that prolix and elaborate process for each of the (eight or more) legal practitioners in the plaintiffs' legal team. It would be very difficult for a costs assessor (or Panel) to accurately identify and thereafter concisely expose his reasoning on an hourly rate on the basis of some of the statutory criteria: for example, whether the quality of the work done was appropriate to the nature of the work. By its terms, the factors in s 364(2) are not mandatory considerations: some, but not all of them, may be taken into account by an assessor. They serve as a guide to an assessor's approach under s 364(1). Some of them were plainly taken into account by the costs assessor in this case.
10. If, as I have suggested, the professional competence and experience of the assessor is also an important but underrated factor in the exercise of selecting an hourly rate, then even this approach would not suffice as a discharge of an obligation to fully disclose reasoning for the rate according to the plaintiffs' argument, which apparently requires full disclosure of all that animated the assessor's reasoning process. In the practical determination of s 364(1) an assessor will, unavoidably, call upon his or her reservoir of experience regarding past assessments. That goes to the determination of costs generally, but also to the exercise of judgement in the selection of hourly rate(s) in particular. It is impractical to expect that an assessor will accurately disclose what part of that past experience has influenced the assessor's judgment as to an appropriate hourly rate. It cannot be expected that an assessor would catalogue past cases to provide a comparison with the instant costs assessment on the matters set out in s 364(2). But if the plaintiffs' approach - that a costs assessor is required to disclose all of which s/he actually took into account in determining the hourly rate - then logically, that would have to include not only a statement of how the legislative criteria applied, but also involve the assessor's view as to how the hourly rate selected in the instant case compared to past cases.
11. To expect an assessor (or Review Panel) to disclose the results of the intellectual activity referred to in the last two paragraphs would, in my view, be not only impractical, but would also add to the expense and complexity of the assessment task which, as Giles JA noted in Frumar (at [44]), is a material consideration to factor into assessment of the adequacy of an assessor's reasoning. The impracticality and inconvenience that would result points against the plaintiffs' contention.
12. I therefore reject the submission that the costs assessor did not give reasons, or adequate reasons, for his selection of the hourly rate.
13. Turning now to the Panel's treatment of hourly rates, as was noted in Wende, in the decision of Barrett J, so long as a Panel adhered to its statutory obligation in s 375(2) of the LP Act, there is flexibility in the way that it can conduct its review. That may be moulded by the way in which the parties present their applications for review. As in Wende, one possibility is for a Panel, who agrees with a costs assessor's decision or reasoning, simply to express its affirmation and acceptance of it.
14. The Panel's reasoning essentially disclosed that it did two things.
15. First, it rejected the challenge to the substance of the assessor's reasons, contained in the plaintiffs' ground 2 of its application for review. In doing so, it endorsed the costs assessor's application of the concept of proportionality to deciding the hourly rate. This is apparent at paragraphs 12.1 - 12.9 of its reasons. I do not infer that the Review Panel was intending to say that that reasoning as to the proper approach to generally conducting a costs assessment was not also relevant to the Review Panel's more specific task of reviewing the selection of the hourly rate: as indicated, the costs assessor (at paragraph 5.2 of his reasons) expressly linked his approach to selection of the hourly rate to his general approach to the assessment of costs (outlined at paragraphs 4.1-4.2). It also rejected the proposition that the charge out rate should be treated as a starting point or should be presumed to be correct; or, that express justification was needed if it was to be departed from.
16. Pausing here, if the plaintiffs are correct about the limited approach to review to be undertaken by a Costs Review Panel which they advocate in grounds 2 & 3, such reasoning by the Panel might be thought to have been sufficient in itself to discharge the Panel's functions. Effectively, on the matter of the hourly rate, the Panel was affirming and accepting the hourly rates determined by the costs assessor. In accordance with Wende, that would be sufficient to discharge its functions of both conducting its review and explaining its reasoning for its decision on the review.
17. But (secondly) the Review Panel went further: it conducted an assessment of the reasonableness of the hourly rates itself, by reference to the materials that were before the assessor. When the Panel explained its own approach to the selection of hourly rates in paragraph 12.10 of its reasons, it did so in the context of its having endorsed the costs assessor's reference and application of the s 364 criteria as set out in paragraph 12.8. It was saying, in effect, that having gone through the reassessment and having considered the information, it came to the same conclusion on rates. I see no reason for not also concluding that the Panel's reasoning was adequate.
18. I agree with the submission of Counsel for the defendant that much of the plaintiffs' argument as to how the costs assessor (and Panel) could have teased out more fully the s 364(2) criteria amounts, in substance, to a merits-based challenge to the selection of that rate. That required an application for leave to appeal under s 385 of the LP Act.
19. Ground 1 is not made out.

Grounds 2 and 3

1. I do not perceive any substantial difference between these two grounds and Counsel for the plaintiffs accepted that there was no real difference. Both impugn the approach of the Review Panel in its task of review.

Plaintiffs' submissions

1. The plaintiffs submit that having accepted most of the costs assessor's adjustments and confirmed most of his determination, and rejecting nearly all of the defendant's grounds of review, the Panel should not have reassessed costs for itself. They say that no request for a reassessment was contained in either of the applications for review. During the hearing, Counsel for the plaintiffs said that this situation was analogous to the situation whereby an appellate court entertains and rejects all the grounds of appeal raised by a defendant in a damages appeal, but nonetheless goes on to reduce a claimant's damages award on other grounds. In effect, the plaintiffs say that once the Panel had rejected the grounds of review raised (respectively) by the defendant and the plaintiffs, its function of review was spent - there was no legitimate basis for it to go on and indicate its own view as to what was fair and reasonable. To adopt the description of the task of review indicated by Barrett JA in Wende, having conducted its review, the Panel had to "make a quantification of the costs accordingly" i.e. consistently with its determination of the grounds of review in the application(s) before it; and no more. In other words, what Barrett JA said in Wende were words of limitation.
2. The plaintiffs say that the defendant's grounds of review did not warrant any reassessment of costs. Grounds 1 & 2 of the defendant's review application merely complained about the costs assessor's omission to provide a marked up bill of costs. It agreed with the costs assessor's reasons and determination on the grounds. To the extent that it varied from the costs assessor's reasoning, it was mainly to disallow most of the costs and disbursements of the costs assessment process itself. That step went beyond what the defendant sought (in ground 10). The defendant's grounds 3-5 (incl.) did not give rise to any request to reassess the whole bill. The Review Panel should have affirmed the assessor's determination and provide a marked up bill as part of its reasons.
3. The plaintiffs complain that having found that the costs assessor's figure ($1,262,598) fell within a reasonable range, the Panel nevertheless allowed the plaintiffs $84,000 less, or 66% less, for costs than that which had been allowed by the assessor.

Defendant's submissions

1. The defendant submits, firstly, that the plaintiffs did not complain for a considerable time after the Review Panel had first foreshadowed the approach to review that it would take.
2. Secondly, the defendant submitted that the Review Panel's approach was consistent with the task of review outlined by Barrett J in Wende, outlined earlier in these reasons. That is to say, if the plaintiffs were right in characterising what the Review Panel did as embarking upon a wholesale reassessment of the costs, it did not err in doing so. This was because the Review Panel was faced with two applications for review of the costs assessor's decision which essentially required the Review Panel to conduct a wholesale reassessment.
3. The defendant submitted that it was ironic and unusual for a complaint to be made along the lines of these grounds: usually parties that are dissatisfied with decisions on review by the Panel assert that there was a failure by the Panel to exercise a statutory function by not conducting its own assessment and taking a 'shortcut' approach directed only to responding to specific grounds of review. In this case, the Panel was faced with applications by the plaintiffs and the defendant in which they commonly sought to set aside the assessor's determination. The latter application adopted broadly stated grounds of review, but, theoretically did not need to state any ground of review at all. If no ground of review was specifically stated, a Review Panel would probably do what this Review Panel did and conduct its own reassessment.
4. Thirdly, even if error was demonstrated, the Panel's approach did not create any practical injustice to the plaintiffs requiring the Court's intervention.

Determination

1. I do not consider that the plaintiffs are precluded from advancing these grounds on account of a delay in complaining about them. It was not suggested that any doctrine of waiver or acquiescence to the approach that the Panel foreshadowed it would undertake is an answer to the complaint about the approach if the approach undertaken is erroneous as a matter of law. It might, on the other hand, have been relevant to the (discretionary) question of whether leave should be granted if the application of the approach gave rise to factual findings by an assessor or Panel which a party might impugn.
2. I referred to the Review Panel's approach to its task of review in paragraphs 5.17 - 5.19 of its reasons. Counsel for the plaintiffs did not expressly or directly take issue with that statement of the Panel's approach.
3. I do not read Barrett JA's statement of principles of review in Wende as mandating any particular approach to the task of review. It is true, and the defendant accepted, that where an applicant states grounds for review (at whatever level of generality), it would be expected that the Panel would address those grounds in its decision on review. Otherwise, there is no textual indication in s 375 of the LP Act which militates against the Panel's approach of conducting its own assessment. To the contrary, s 375(2), by its reference to the Panel's adoption of "all the functions of a costs assessor", and determining the application "in the manner that a costs assessor would" amounts to a legislative invitation that the Panel 'emulates' the approach of a costs assessor if it considers that is appropriate to determine the review. The Review Panel is entitled, if it sees fit, to conduct the assessment afresh.
4. In this case, the Review Panel was faced with two review applications. One was, by its nature, specific as to the parts of the assessor's reasons which were impugned; the other was very general. No party complained that the Review Panel would, in effect, determine the review applications in the composite way that it did. The generality of the defendant's application would, by itself, have justified the Review Panel considering the costs assessment afresh.
5. Contrary to the plaintiff's submissions, the language of s 375 suggests that the analogy with an appellate court's disposing of all of the grounds of a defendant's appeal on damages only and then to thereafter reduce the damages is inapposite. If the analogy is pressed in relation to the Court of Appeal, its powers on appeal [8] are fundamentally different to a Review Panel's power under s 375. Section 375(1)(c) specifically contemplates that the Panel may substitute an award for costs that is different to that which was imposed by a costs assessor based upon its own independent reconsideration. It is not confined to the choice of affirming it or setting it aside. Where it disagrees with the Costs assessor's determination, it is not itself authorised to remit it back to the costs assessor for reconsideration.
6. So much is, or should be, commonly understood by legal practitioners for clients who have received a costs assessor's determination. Should the client seek review, he or she (or it) will take their chances that they might receive a greater or lesser determination for costs than that which was determined by the costs assessor.
7. Further, and in the alternative, if I had found that there was error in the Panel conducting its own assessment, I agree that the application of this particular approach did not create any practical injustice. By conducting its own assessment, the Panel might have favoured a higher amount for costs instead of favouring a lower amount. A challenge to the amount selected is apt for an application to bring a merits appeal under s 385.
8. Grounds 2 and 3 are rejected.

The plaintiffs' submissions

1. The plaintiffs' first complaint concerned the Review Panel's conclusion (paragraph 18.12 of its reasons) that the costs regarding negotiation and the costs assessment process were too high. They say that, as with the ultimate question on assessment of costs, so too the costs of the assessment process must be undertaken with reference to the criteria in s 364(2) of the LP Act. Although, it was true, the Review Panel gave some reasoning (at paragraphs 18.14 - 18.1) explaining how it decided to reduce the costs of negotiation and assessment, it did not explain why it should do so, with reference to those criteria.
2. Some of the costs which were reduced were of the nature of professional costs for the assessment process (paragraph 18.14). Some of them were disbursements. In the latter context, the costs assessor had significantly discounted the costs of the costs consultant, Mr Cordner, and the costs of DGT Costs Lawyers (being items 4337 and 4338). The Review Panel decided for itself to reduce the items as well (paragraph 18.15). But it was said that the Review Panel provided no explication for how the criteria in s 364(2) of the LP Act was engaged in a way that would justify those reductions.
3. The plaintiffs complained that it was not possible to tell how these reductions were made in the light of the criteria the Panel identified as relevant: whether it was reasonable to do the work; whether the work was done in a reasonable manner; and the fair and reasonable amount for that work.
4. A second, and subsidiary complaint, is that having inexplicably decided to reduce the plaintiffs' costs in the relevant respect, without invitation or regard to the approaches of the plaintiffs or the defendant (which were predicated on a line-by-line approach), the Review Panel went on to do so on a 'global' basis.

The defendant's submissions

1. The defendant again left open the question whether the failure to give reasons, or adequate reasons, for reducing costs of negotiation and of the assessment was a decision as to a matter of law conferring a right to appeal.
2. The defendant submitted that the statement in paragraph 18.3 of the Panel's reasons does not take the plaintiffs' case anywhere and should be ignored. This was because the Panel took the view that it should assess for itself negotiation and assessment costs. The process by which it embarked upon that assessment was then explained at paragraphs 18.14 - 18.18.
3. Taking a 'global approach' to the question about the costs of the assessment process, the defendant submitted, was consistent with the approach taken by Johnstone DCJ in Bellevarde (at [28]-[32]) where his Honour emphasised that it is not the task of a costs assessor to assess each individual item. A 'global' approach was also endorsed by Mr Dal Pont in his work on costs.
4. At any rate, the plaintiffs had enough information, if dissatisfied with the Panel's decision, to apply for leave to appeal under s 385.

Plaintiff's submissions in reply

1. Counsel for the plaintiffs maintained that it was erroneous for the Panel to assess negotiation and assessment costs on a global basis. It was obliged to determine the costs claimed and disputed in the (same) way that the parties approached the matter: it is the parties that set out the parameters for the review.

Determination

1. I reiterate my view in response to the defendant's jurisdictional point that I am not precluded from considering this ground on the basis that it does not disclose a decision in relation to a matter of law.
2. Once it decided to embark upon its own assessment of the question, the Panel's opinion on how the costs assessor treated negotiation and assessment costs became inconsequential.
3. The two aspects to this ground of appeal concerned, firstly, the adequacy of reasons for what the Panel did; and, secondly, whether a global approach to the question was justified. Both grounds are, in my view, related. That is, its decision to disallow some of the items in the bill of costs reflected its preference for a global approach.
4. I reject the proposition that the Panel did not provide any reasons for its assessment of these particular costs. Plainly it did, when reference is made to its reasoning at paragraphs 18.4 - 18.18 (incl.). This included a specific reduction of certain costs because of its view that some of the work done by the plaintiffs' solicitors was not done in a reasonable manner. If the plaintiffs disagreed with that reasoning, it was open for it to apply for leave to appeal that reasoning.
5. The real complaint (reflected in appeal ground 4(b)), as I perceive it, is that the Panel did not follow the common approach by the parties to considering the particular costs question (i.e. the costs of negotiation and the assessment process) by reference to a line by line approach, but instead, and without articulating why, it favoured the global approach.
6. In my view, there is nothing contained within the legislative provisions which militated against the Panel conducting itself in that fashion. As Giles JA in Frumar acknowledged (at [45]), any consideration of the adequacy of reasoning has to take into account the delay and expense of an excessively onerous obligation to provide reasons. In this context, considerations of efficiency and economy by a costs assessor (and Panel) may intrinsically justify the adoption of a global approach to the task of deciding the costs of the assessment process. Adoption of a global approach has also been countenanced by authority [9] .
7. Further, there is no legal error established simply because the approach of the assessor or panel may depart from the common approach of the parties, of utilising a line by line method. There is no warrant, in my view, for a view that the assessor or Panel is fettered by the approach taken by either, or both parties. Nor do I consider that the Panel must justify why it has taken the approach which it is legally permitted to take, even if it be contrary to the expectations of the parties. No point was taken about any denial of procedural fairness.
8. Once it is accepted, as I consider it should be accepted, that a global approach was open to be taken by the Panel, the Panel set out its reasoning in applying that approach. It did so on the primary basis of a percentage of the fees. It then used, as a comparator, the basis of a selection of hours at various fee rates for the work done. The results were very similar.
9. I see no proper basis for finding error of law in this regard. Ground 4 is rejected.

DETERMINATION

1. None of the grounds are made out. The appeal has failed. Ordinarily, this result would indicate that the plaintiff pay the defendant's costs, however the defendant has indicated that it wishes to be heard on costs. The Defendant shall have that opportunity.

ORDERS

1. The Amended Summons is dismissed.
2. The plaintiffs are to pay the defendant's costs.
3. Liberty to apply is granted in relation to costs. Such liberty is to be exercisable in accordance with the following directions: 1. the defendant should prepare and serve a short submission on costs (not exceeding 3 pages, excluding attachments) within 7 days; 2. the plaintiffs should serve any submissions on costs (not exceeding 3 pages) in response contrary to those of the defendant. It should do so within a further 7 days; and 3. the defendant is thereafter to supply my Associate with the documents referred to in sub-paragraphs (a)-(b) within a further 3 days. Thereafter, absent any contrary indication, I propose to determine the question of costs on the papers.
4. Exhibits to be returned after 28 days.

Endnotes

1. This is the effect of the Legal Profession Uniform Law Application Regulation 2015 (NSW), cl 59.
2. Followed in Khorramdel v RG Macaulay and A Saivanidis trading as Pryor Tzannes & Wallis Solicitors [2016] NSWDC 293 per Gibson DCJ at [39].
3. See also eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd [2015] NSWCA 284 at [43]-[50].
4. Oshlack v Richmond River Council (1998) 193 CLR 72 per McHugh J (at [67]).
5. Skalkos v T & S Recoveries Pty Ltd [2004] NSWCA 281 per Ipp JA (Sheller and Grove JJA agreeing) at [8]; eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd [2015] NSWCA 284 per Beazley P at [8]-[9], per Basten JA at [62]-[63] and per Simpson JA at [122]-[124].
6. Skalkos v T & S Recoveries Pty Ltd [2004] NSWCA 281 at [7]-[8].
7. eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd [2015] NSWCA 284 at [8]-[9], [62]-[63] & [122]-[124].
8. See for example, s 75A(10) of the Supreme Court Act 1970 (NSW).
9. Bellevarde Constructions Pty Ltd v CPC Energy (2011) 12 DCLR (NSW) 304 per Johnstone DCJ at [28]-[32]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 May 2020