In these proceedings, the plaintiff, Professor Masud Behnia, seeks leave to appeal from the determination of a Costs Review Panel dated 3 October 2018 upholding an earlier costs assessment by an assessor. The central issue in the proceedings is whether a final costs order in underlying Supreme Court proceedings had the effect of replacing or vacating a prior order made in favour of the plaintiff for costs in an interlocutory hearing in those Supreme Court proceedings. Both the costs assessor and the Review Panel held that it did. The plaintiff submits that it did not.
The plaintiff commenced this appeal by a Summons filed on 30 November 2018. That Summons was filed more than 28 days after the "material date" being the date on which notice of the decision of the Review Panel was given by or on behalf of the persons who made the decision, to the plaintiff, the person who wishes to appeal. Under Part 50.3(1) of the Uniform Civil Procedure Rules 2005, a Summons commencing an appeal must be filed within 28 days after the material date or within such further time as the "higher court" may allow: see Part 50.2 definitions of "higher court" and "material date" and Part 50.3(1). The District Court is the "higher court" for the purposes of the rule.
Under s 89(1) of the Legal Profession Uniform Law Application Act 2014 (NSW) ("LPUL"), a party to a costs assessment that has been the subject of a review may appeal against a decision of the Review Panel concerned to the District Court, in accordance with the rules of the District Court, but only with the leave of the court if the amount of costs in dispute is less than $25,000. Under s 89(2) of the LPUL, the District Court has all the functions of the Review Panel in relation to the appeal.
Section 85 of the LPUL provides as follows:
"85 Conduct of reviews
(1) A review panel may, on an application made under section 83 or 84, review the determination of a costs assessor and may:
(a) affirm the costs assessor's determination, or
(b) set aside the costs assessor's determination and substitute the determination that, in its opinion, should have been made by the costs assessor.
(2) The review panel has, in relation to the application for review, all the functions of a costs assessor in relation to the assessment concerned and is to determine the application, subject to this Part and the costs assessment rules, in the manner that a costs assessor would be required to determine an application for costs assessment.
(3) Without limiting subsection (2), the review panel is not bound by the rules of evidence and may inform itself on any matter in the manner it thinks fit.
(4) If the costs assessors who constitute the review panel are unable to agree on a determination in relation to an application, the panel is to affirm the determination of the costs assessor."
In my opinion, if I form the view that the Review Panel has relevantly erred, there is an issue as to who should determine the assessment. One possible option is for this court to determine it. A second option is to refer the assessment out to a referee appointed by the court. A third option is to remit the matter to either the Review Panel from whom the appeal is brought or to the Manager, Costs Assessment, to appoint another assessor. It would not seem to be consistent with the purpose of the legislation to have this court determine the assessment having regard to the time and detail which would be involved. I agreed to hear further submissions on this point if I allowed the appeal.
In the Summons filed 30 November 2018, the plaintiff seeks the following orders:
"1. That the determination of the review panel made on 3 October 2018 (comprising the Manager, Costs Assessment Certificate dated 3 October 2018 and the Review Panel's Statement of Reasons dated 3 October 2018) be suspended or stayed under section 90(1) of the Legal Profession Uniform Law Application Act 2014 until the appeal is determined.
2. Leave granted under subsection 50.3(1 )(c) of the Uniform Civil Procedure Rules 2005 to file a summons commencing an appeal from the whole of the decision of the Review Panel's determination comprising the Manager, Costs Assessment Certificate dated 3 October 2018 and the Review Panel's Statement of Reasons dated 3 October 2018 (Determination).
3. That the Determination be set aside.
4. That the order that the appellant bear the costs of the assessment and review be set aside.
5. The appellant's application filed 15 May 2018 for assessment of its costs of the motion filed on 15 December 2016 be remitted to the costs assessor for assessment in accordance with the order of the Supreme Court of New South Wales in respect of the costs of the motion made on 20 March 2017, being "[defendant to pay the plaintiff costs of the motion on an indemnity basis".
6. Upon remittal the costs of the assessment (determined 23 April 2018) and the costs of the review (determined 3 October 2018) run with the costs of the review upon remittal.
7. Costs."
On the appeal, the plaintiff read the following affidavits:
1. Affidavit of Mark John Carmody sworn 21 January 2019. This affidavit had an extensive Exhibit ("the Exhibit");
2. Affidavit of the plaintiff sworn 30 November 2019;
3. Affidavit of the plaintiff sworn 23 January 2019.
The defendant read the affidavit of Rada Golovina sworn 15 February 2019.
In my view, the evidence establishes that the amount in dispute between the parties on the assessment was in excess of $25,000. See Exhibit pages 3 and 19. Accordingly, leave is not required for the appeal apart from the extension of time issue: see s 89(1)(a) of the LPUL. An appeal relating to the proper construction of court orders involves a question of law: see Universal Music Australia Pty Ltd v Sharman Networks Ltd [2006] FCAFC 41 at [19], [54] and [57]. I accept the plaintiff's submission on this issue.
The affidavits and the materials annexed or exhibited to them, establish the following background facts:
1. The costs order, the subject of this appeal, was made in the Supreme Court of New South Wales on 20 March 2017 in proceedings 2016/185060 ("the Supreme Court proceedings"): Exhibit page 8. The plaintiff and the defendant in these proceedings were the plaintiff and defendant in the Supreme Court proceedings.
2. The same solicitors acting in these proceedings were the solicitors who acted for the parties in the Supreme Court proceedings.
3. The plaintiff commenced the Supreme Court proceedings by a Summons filed on 17 June 2016 asserting a breach of confidence by the defendant. In general terms, the plaintiff's case was that the defendant knowingly received a confidential document stolen from the plaintiff's apartment by his former wife and then proceeded to distribute that document to government agencies ("the Confidential Document"): Exhibit page 13.
4. On 2 November 2016, the Supreme Court made interlocutory orders against the defendant to the effect that the defendant was restrained until further order from the court from communicating, disclosing or disseminating the Confidential Document: Exhibit page 13.
5. On 2 December 2016, the plaintiff served a Notice to Produce on the defendant in respect of the production of an affidavit sworn by the defendant on or about 22 November 2016 in Family Court proceedings which the plaintiff alleged was in contravention of the injunction made by the Supreme Court: Exhibit page 171.
6. On 16 December 2016, the defendant filed a Notice of Motion in the Supreme Court proceedings seeking, in substance, orders that the defendant was not compelled to produce to the Supreme Court his affidavit in the Family Court proceedings and for related orders: Exhibit pages 75 and 78.
7. The Notice of Motion filed by the defendant on 16 December 2016 was heard by the Registrar in Equity of the Supreme Court on 20 March 2017. The Registrar dismissed the Notice of Motion filed by the defendant and ordered the defendant to pay the plaintiff's costs of the Notice of Motion on an indemnity basis: Exhibit page 8. The specific order made was as follows: "Defendant to pay plaintiff costs of the motion on an indemnity basis." There was no evidence that there was any appeal from this costs order.
8. The parties later decided to resolve the proceedings. On 16 August 2017, the parties settled the Supreme Court proceedings by agreeing to consent orders which were made by Hallen J in the following terms (Exhibit page 25):
"THE COURT BY CONSENT AND WITHOUT ADMISSION:
1. Orders that the existing injunction granted by Slattery J on 2 November 2016 be continued on a permanent basis.
2. Grants leave to the Plaintiff to uplift the document produced to the Court by the Defendant pursuant to Paragraph 3 of the orders made on 2 November 2016.
3. Makes no order as to the costs of either party to the intent that he will pay his own costs, respectively, of the proceeding.
4. Orders that the balance of the relief claimed in the Statement of Claim filed 7 November 2016 be dismissed.
5. Orders that Confidential Exhibit MB1 and Exhibit MB2 to the affidavit of the Plaintiff sworn 17 June 2016 be returned.
6. Orders that Exhibit MB4 to the affidavit of Mark Carmody sworn 7 October 2016 be returned.
7. Orders that the Court Book be returned.
8. Orders that the hearing on 17 August 2017 before Hallen J be vacated."
1. On 14 November 2017, the plaintiff filed an Application for Assessment of Ordered Costs in relation to the costs order made on the Notice of Motion on 20 March 2017 against the defendant: Exhibit page 2.
2. The cost assessment process went through the normal procedures, including the filing of submissions by the parties: Exhibit pages 2-354.
3. On 15 May 2018, the court issued the parties with Certificates of Determination in relation to the costs assessment application dated 23 April 2018 and the costs assessor's reasons also dated 23 April 2018: Exhibit pages 355-364. The costs assessor, Assessor T Stern, determined that the costs payable by the defendant pursuant to the costs order were nil: Exhibit page 357. The basis of the determination was that the final order made in the Supreme Court proceedings on 16 August 2017 (Exhibit page 25) applied to all the costs of the proceedings and impliedly replaced or vacated the costs order made on the Notice of Motion on 20 March 2017. This was on the basis that Order 3 of the orders made on 16 August 2017 ("makes no order as to the costs of either party to the intent that he will pay his own costs, respectively, of the proceedings") covered all of the costs of the proceedings including the costs of the Notice of Motion. Assessor Stern stated in paragraph 9.12 of his reasons for decision as follows: "I am of the view that the "costs of the proceedings" cover all of the costs of the proceedings including any interlocutory process and, irrespective of the order made 20 March 2017, the result in the case by consent was that each party pay their own costs including the costs of the interlocutory process": Exhibit pages 363-364.
4. On 14 June 2018, the plaintiff filed an Application for Review of the determination of the costs assessor: Exhibit page 365. A Review Panel was appointed by the court.
5. Each party submitted written submissions as to the review: Exhibit pages 379-384.
6. On 25 October 2018, the Review Panel affirmed the determination by agreeing with Assessor Stern: Exhibit page 385. On 25 October 2018, the court issued the parties with the certificates of determination of the costs assessment application dated 3 October 2018 and the Review Panel's reasons dated 3 October 2018: Exhibit pages 386-390. In effect, the Review Panel agreed with and adopted the Assessor's reasons and found that the order of 16 August 2017 "covers all aspects of the proceedings including interlocutory process and thus overrides the Order of 20th of March 2017": paragraph 10, Exhibit page 390.
[3]
Extension of time
The plaintiff seeks an extension of time for the filing of his Summons. As stated above, the Summons was filed on 30 November 2018. It should have been filed within 28 days after the date on which notice of the decision was given to the plaintiff. The Certificate of Determination of the Review Application states that it was sent to the parties on 25 October 2018. Therefore, the time for commencement of these proceedings and the appeal expired on 22 November 2018.
In my view, the extension of time to appeal sought by the plaintiff should be granted for the following reasons:
1. The period of the extension sought by the plaintiff is very short;
2. The short delay in commencing the appeal is fully and adequately explained by the plaintiff's 23 January 2019 affidavit which establishes to my satisfaction that he was absent from Australia in relation to pressing family matters from 4 November 2018 in Iran during which period he had limited contact with matters in relation to Australia and had no notice of the decision of the Review Panel. The evidence establishes that the plaintiff first read the Review Panel's determination on 16 November 2019 and then sought legal advice before giving instructions to lodge the appeal on 26 November 2019;
3. There is no evidence of any prejudice to the defendant if the extension was granted;
4. The appeal has considerable prospects of success.
The defendant, in his submissions, did not point to any prejudice indicating that an extension should not be given. It was submitted that the appeal had no merits. However, I take a different view on this issue as set out below.
[4]
The parties' submissions
The plaintiff relied on the written submissions of his counsel dated 21 March 2019. Those submissions, in general summary:
1. Set out the background to the appeal;
2. Submit that the basis of both the cost assessor's decision and the Review Panel's decision was that the final costs order made in the Supreme Court proceedings extended to the costs which had already been ordered in the previous Notice of Motion and, in effect, impliedly set aside that order;
3. There was nothing in the more general order to indicate that its purpose was to set aside previous costs orders which had been made in interlocutory matters;
4. The decision of the costs assessor and the Review Panel was contrary to established appellate authority: El-Wasfi v State of New South Wales (No 2) [2018] NSWCA 27 at [8]-[11]; Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40 at [21]. It was submitted that these cases were relevantly indistinguishable in principle from the current matter;
5. In El-Wasfi, above, the Court of Appeal stated as follows at paragraph 8:
"[8] An order made at the conclusion of the proceedings will, subject to any order to the contrary, include costs in respect of interlocutory applications which have been reserved or not otherwise dealt with: UCPR r 42.7(1). However, where an order is made at an interlocutory stage without qualification, it is unaffected by a general order of the costs of the proceedings made at the end of the litigation."
1. See also El-Wafsi at paragraph 6 (especially the last sentence) and paragraphs 9-11 (especially the last sentence of paragraph 11);
2. It is submitted that the interlocutory order made on 20 March 2017 was an order made "at an interlocutory stage without qualification." Thus it is unaffected by the general order for the costs of the proceedings made on 16 August 2017;
3. In Ryde Developments, above, the Court of Appeal stated as follows in paragraph 21:
"[21] We should also make clear in making this order that, as the respondent correctly submitted, nothing in this judgment affects the costs orders already made in interlocutory hearings which continue to apply and should not be re-tried in this determination. As this Court has said recently in El-Wasfi v New South Wales; Kassas v New South Wales (No 2) [2018] NSWCA 27:
[8] An order made at the conclusion of the proceedings will, subject to any order to the contrary, include costs in respect of interlocutory applications which have been reserved or not otherwise dealt with: UCPR r 42.7(1). However, where an order is made at an interlocutory stage without qualification, it is unaffected by a general order of the costs of the proceedings made at the end of the litigation."
1. The question to be decided in this appeal is indistinguishable from that which arose for determination in El-Wasfi. Accordingly, the final costs order made in the Supreme Court proceedings did not, on its proper construction, apply to the costs the subject of the interlocutory order in the Supreme Court;
2. Therefore, the determinations of the costs assessor and the Review Panel were erroneous. The appeal should be allowed and the orders made as sought by the plaintiff.
The defendant filed written submissions dated 28 March 2019. The solicitor for the defendant submitted that the final costs order made in the Supreme Court proceedings on its proper construction extended to the costs in the interlocutory costs order on the Notice of Motion and impliedly set it aside.
After setting out the relevant principles relating to costs, costs with a mixed outcome in proceedings where there are numerous issues and indemnity costs, the defendant submitted that El-Wasfi could be distinguished on its facts. It was submitted that the defendant had agreed to settle the matter on the condition that no further costs would be payable by him in the proceedings. The clear intention of the parties was that the final costs order would include the costs of the interlocutory application. It was submitted that the decisions of the assessor and Costs Review Panel were correct as the clear intention of the order was to replace all previous costs orders. Reference was made to James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [35].
[5]
Determination
I have already set out above a number of rules under the UCPR, the legislation pursuant to which this appeal is made and the orders sought by the plaintiff. I have also set out the principles in El-Wasfi, above, and Ryde Developments, above, which the plaintiff submits are applicable to these proceedings.
I also note Part 42.7(1) of the UCPR referred to in paragraph 8 of El-Wasfi, above, which provides that "unless the court orders otherwise, the costs of any application or other step in any proceedings, including: (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made; are to be paid and otherwise dealt with in the same way as the general costs of the proceedings."
It is clear that the Notice of Motion filed 16 December 2016 by the defendant was determined by the Registrar in Equity by orders made on 20 March 2017. Those orders included the costs of the Notice of Motion: the defendant was to pay the plaintiff's costs of the Notice of Motion on an indemnity basis. There was no appeal from that order.
Several months later, consent orders determining the proceedings were made by Hallen J. Those orders included Order 3 which I repeat, as follows:
"3. Makes no order as to the costs of either party to the intent that he will pay his own costs, respectively, of the proceedings."
It is clear that when the costs orders were made by the Registrar in Equity on 20 March 2017 that the parties expected that the proceedings would continue. Several months then passed.
I am not satisfied on the evidence that when the orders were made on 16 August 2017 that the parties intended that Order 3 would have the general effect submitted by the defendant. Usually if the parties intended an order to have that effect they would specify in the orders sought that all previous orders for costs in the proceedings were vacated.
In my view, this matter is governed by the principles in El-Wasfi and Ryde Developments. Neither case was referred to by the Review Panel in its reasons for decision. Paragraphs 8 and 11 of El-Wafsi appear to me to be directly relevant to the issue. Accordingly, the costs order made previously at an interlocutory stage without qualification as to the Notice of Motion is unaffected by the general order for costs in the proceedings made at the end of the litigation. The final order did not without more have the implied effect of vacating or varying the earlier orders between the parties as to discrete interlocutory aspects of the litigation: El-Wasfi at [11]. This, in my opinion, is consistent with Part 42.7(1) of the UCPR. The earlier costs order established that the court had ordered otherwise within the beginning words in Part 42.7(1) of the UCPR.
Much clearer words would have had to have been used in the orders made on 16 August 2017 for it to be held that those orders were objectively intended to replace the earlier interlocutory order made on 20 March 2017. There is nothing in the context or surrounding circumstances of the making of the orders for them to be regarded as having the effect submitted by the defendant: see the principles stated in Wende v Horwath (NSW) Pty Ltd [2014] NSWCA 170 at [59]-[62] and [245].
I do not consider that the case of James, above, relied on by the defendant leads to a different conclusion. It relates to costs orders where there are distinct and severable issues in proceedings. Here, the costs orders in the interlocutory hearing had been finally made. The other authorities and matters referred to in the defendant's written submissions do not alter my views on the approach to be adopted.
For these reasons, the appeal is successful and is allowed.
I accordingly make the following orders:
1. The time for the plaintiff to file the Summons in the proceedings is extended up to and including 30 November 2018.
2. The appeal is allowed.
3. The determinations of Assessor T Stern dated 23 April 2018 are set aside.
4. The determinations of the Review Panel dated 3 October 2018 are set aside.
5. The defendant is to pay the plaintiff's costs of this appeal as agreed or assessed.
6. Liberty to the parties to seek a different costs order to that set out in paragraph (5) above within 21 days.
The parties should discuss the appropriate orders to be made for the undertaking of an assessment in accordance with these reasons. Liberty is granted to the parties to approach my Associate to relist the matter if further submissions are required on the issue.
[6]
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Decision last updated: 18 April 2019