Angelo Ferella v Key Nominees Pty Limited

The application for review by a Review Panel

1. An application was made for review of the determinations of the Costs assessor on 16 June 2015. The grounds for making the application for review were as follows: "(1) The costs assessor failed to give sufficient and/or no regard in her decision making regarding the costs respondents' objections. (2) A costs assessor with much more experience in this area would have come up with a much different result. (3) The bill of costs issued by the costs applicant is highly inflated, the objections are justified. (4) The fair and reasonable costs in support of the costs respondents' objections should be allowed in the sum of $6,466.95. (5) The costs of the application, the determination and the review application and determination ought to be paid by the costs applicant."
2. On 7 August 2015, the Review Panel issued a Certificate of Determination affirming the certificate of assessor Young issued on 28 April 2015. The Review Panel issued a further certificate of the same date, certifying costs of the review in the sum of $1,135.75 and directing those costs to be paid by the review applicant.
3. The Review Panel issued reasons dated 8 August 2015. Those reasons set out the history of the costs assessment and the grounds upon which the applicant sought to review the determination of the assessor.
4. The Review Panel set out the relevant provisions of the LPA, dealing with its power and the manner in which the review was to be conducted. The Review Panel also set out, by reference to the authorities, the principles relevant to the review process. That included a reference to the judgment of Master Malpas in Croker v Commissioner of Taxation [2001] NSWSC 188, where the Master stated: "The review process was intended as a relatively informal, expeditious and less expensive process with the challenging of determinations."
5. The Review Panel also referred to the decision of Johnstone DCJ in Randall Pty Limited v Willoughby City Council [2009] NSWDC 118, and the two-stage process to be undertaken by the panel, namely, first, whether to affirm or to set aside the assessor's determination; and secondly, where the determination is set aside then the Review Panel is to substitute its own determination.
6. At [13] of its reasons, the Review Panel stated that it had had regard to the necessity for it to carry out its own review as opposed to conducting an appeal and had acted accordingly. Paragraph [15] of the reasons stated: "15 Turning to the grounds of review, the Review Panel, after careful consideration of all the matters that were placed before the assessor, has determined that it agrees with and adopts the reasoning process of the assessor and accordingly, all of the grounds are not made out."
7. The Review Panel therefore affirmed the assessment and ordered the applicants to pay the costs of the review.

The plaintiff's submissions

1. The plaintiff submitted that pursuant to s 364 of the LPA the Costs Assessor was under a duty to consider what was a fair and reasonable amount of costs for the work done. In his objections to the original assessment, the plaintiff objected to numerous items by way of specific objection on the basis that the items charged were not fair and reasonable. The basis for that claim was that in the application for leave to appeal to the Court of Appeal, there were two respondents, and where the first respondent claimed for work performed in the appeal which related to dealings between the first and second respondents, it was submitted that such items were not properly incurred as party and party costs.
2. The error of law identified in the Review Panel's reasoning concerned paragraph [15] as set out above. It was submitted that by adopting the reasoning of the Costs Assessor, the Review Panel failed to have regard to the matters in dispute, namely, the grounds of objection originally brought to the costs assessment. It was submitted that the Review Panel had not identified the matters in dispute and given separate reasons for its determination in respect of them.
3. Counsel for the plaintiff relied on the Court of Appeal's judgment in Frumar v Owners of Strata Plan 36957 (2006) 67 NSWLR 321, where Giles JA (with whom Beazley JA, as she then was, and Ipp JA agreed) as follows: 44 The reasons must be such that a party dissatisfied with the costs assessor's or panel's determination "should have a real and not largely illusory right of appeal". These words in Attorney-General (NSW) v Kennedy Miller Television Pty Ltd (at 735) were qualified by "in regard to questions of law at least", but in my respectful opinion they apply equally to questions of fact: questions of whether the time engaged or an hourly rate are reasonable can be very important, and although subject to leave s 208M permitted an appeal on those questions. The filter for an appeal as to fact is the Court's decision as to leave, not the cost assessor's or panel's expression of reasons, and whether leave should be granted can only be decided if it is known why the determination was made. 45 The delay and expense of an excessively onerous obligation to providereasons is material, particularly when assessment of costs by costs assessors was intended to provide a faster, easier and cheaper system. In my opinion, however, the observations of Meagher JA in Beale v Government Insurance Office (NSW) (at 444) are applicable; that the balancing act in considering the sufficiency of a statement of reasons "involves the adoption of, at the least, a minimum standard which places the parties in a position to understand why the decision was made sufficiently to allow them to exercise any right of appeal".
4. Frumar concerned the previous costs assessment regime under the LPA 1987. Counsel for the plaintiff, however, referred to the Court of Appeal's decision in Wende & Ors v Horvath (NSW) Pty Ltd (2014) 86 NSWLR 674. In that case there had been a challenge to the adequacy of the reasons of the Review Panel who had adopted the assessor's reasoning. In that case, the assessor's reasons comprised a closely typed document of 34 pages and the court held that the primary judge was correct in not accepting the challenge to the adequacy of the reasons on the basis that they had not been sufficiently identified. At paragraph [176], Barrett JA said: "There is no basis for any argument that a review panel which considers to be right both the decision under the review and the reasons given for it must formulate its own paraphrase of those reasons."
5. The plaintiff also submitted that the costs of the assessment should have been payable by the present defendant. Section 369 of the LPA provides as follows: "369 Costs of costs assessment (1) This section applies to the costs of a costs assessment in relation to: … (b) costs to which s 364 (Assessment of costs - costs ordered by court or tribunal) applies, and (c) costs that on assessment are reduced by 15% or more. … (2A) Subject to any order of or the rules of the relevant court or tribunal, the costs assessor may determine by whom and to what extent the costs of an assessment referred to in s 364 (Assessment of costs - costs ordered by court or tribunal) are payable and include the determination in the certificate issued under this section in relation to the assessment. (3) The costs of a costs assessment to which this section applies are payable: … (b) For a costs assessment in relation to costs to which s 364 (Assessment of costs - costs ordered by court or tribunal) applies - by such persons, and to such extent as may be determined by the costs assessor, or (c) For a costs assessment in relation to costs that on assessment are reduced by 15% or more - by the law practice that provided the legal services concerned or, if the costs assessor so determines, by such persons and to such extent, as may be determined by the costs assessor."
6. Counsel referred to the judgment of Basten JA in elnduct Systems Pty Ltd v 3D Safety Services Pty Ltd [2015] NSWCA 284, where his Honour said at [63]: "63 The statutory scheme under which the costs assessments were undertaken did not use the language of proportionality; on the other hand, it did use the language of reasonableness, a concept which may, depending on the circumstances, involve (and even require) some form of proportionality analysis. Accepting that to be so, no error was demonstrated in the manner in which the primary judge dealt with this ground of appeal."
7. It was submitted that the Review Panel should have considered the costs question on a proportionality basis. Accepting the plaintiff's objections, the reduction to the costs assessment should have constituted 19% of the total claim. In fact, a 10% reduction was achieved and therefore the assessment of costs miscarried.
8. It was submitted that the Review Panel made the following errors of law: 1. It provided no adequate reasons for its determination. 2. On any objective view of their reasons, the Review Panel did not carry out a review of the objections in accordance with the grounds of review. 3. The Review Panel failed to comply with regulation 134(1)(d) which stipulated that a statement of reasons for the panel's determination was required in respect of any disputed costs, together with an explanation of: 1. The basis on which the costs were assessed, and 2. How the submissions made by the parties were dealt with. 1. The Review Panel did not independently consider what were fair and reasonable costs, and in doing so, allowed to be included items which related to the defendant and a third party (namely, Mr Stomo, the second respondent to the Court of Appeal proceedings), and 2. The Review Panel misdirected itself as to its proper function pursuant to s 369(1)(b) and s 379 of the LPA.

Determination

1. I am not persuaded that the plaintiff has demonstrated any error of law here warranting the relief sought in the Summons. It is clear from the reasons of assessor Young that she dealt with all of the items of objection, including general and specific objections, and found that the costs incurred were properly incurred in the Appeal and were fair and reasonable, except where she otherwise indicated in the schedule attached to her reasons.
2. Further, the Review Panel was required to deal with the matter on the five grounds of appeal set out in the application for review. It is clear from the Review Panel's reasons that they did so.
3. Here, the plaintiff relies on only the second ground of appeal as set out in [2] above. However, the plaintiff has not demonstrated any procedural unfairness or that the Review Panel failed to consider the objections to the assessment. The real question is whether the Review Panel failed to give adequate reasons for its determination and that question focuses on paragraph [15] of the Review Panel's reasons. That paragraph set out that the Review Panel had given careful consideration to all of the matters that were placed before the assessor, and that it had determined that it agrees with and adopted the reasoning process of the assessor. That reasoning process was patently clear, and had dealt with all of the objections, both general and specific objections, to the assessment of costs. Like the position in Wende, supra, there is no error demonstrated where the Review Panel considered to be correct both the decision of the assessor under review and the reasons given for it. There was no necessity to formulate its own paraphrase of those reasons, nor does the LPA require that to occur. The basis on which the costs were assessed, and how the submissions made by the parties were dealt with, is clear from the Review Panel's reasoning. The parties were clearly in a position whereby they could understand why the Review Panel's determination was made.
4. Further, I accept the submission made by learned Counsel for the defendant, that no question of proportionality error arises here. Paragraph [63] of the judgment of Basten JA in elnduct, supra, is obiter dicta, and in no way binding here. I further accept that the submission made by the defendant that the Review Panel was not required to look beyond the scope of the grounds of the application review before it.
5. I am also of the view that the costs of the assessment as determined by the assessor was reasonable and no error of law is demonstrated there.
6. I also accept the submission made by Counsel for the defendant that the integers here are de minimis. The object of the scheme for assessment of costs under the LPA was to simplify the process and facilitate an expeditious and cost effective process for the assessment of costs, and review thereof. That is consistent with the objects of the Civil Procedure Act 2005 (NSW) ("CPA"), to facilitate the quick, just and cheap resolution of the real issues in civil cases before the court (see ss 56-58 of the CPA).

Conclusion

1. I am therefore not persuaded that the plaintiff has demonstrated any error of law on the part of the Review Panel in its review of the costs assessment and costs orders made, and therefore the Summons should be dismissed.

Orders

1. I make the following orders: 1. The Summons dated 6 October 2015 is dismissed. 2. The plaintiff is to pay the defendant's costs of the Summons. 3. The parties have liberty to apply on 7 days' notice, by way of Notice of Motion, for any special costs order.

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