Bennie v Grace

District Court of NSW|2018-08-02|Before: Hulme J

Solicitors: DG Thompson (Plaintiff) In Person (Defendant) File Number(s): 2017/217099

Judgment

This is an action by the plaintiff, Mr Robert Bennie, under s 208J of the Legal Profession Act 1987 (NSW) ("the Act") to recover an amount paid over to his solicitor in relation to legal costs and disbursements which exceeds the amount specified by an assessor in a Certificate of Determination of Costs issued by the costs assessor under the Act. The defendant, Mr Grace, who is a retired solicitor, disputes that the amount is payable and also claims that the cause of action is statute barred under the Limitation Act 1969 (NSW).
Mr Grace acted for Mr Bennie in legal proceedings extending over about a decade. The background and course of those proceedings is complex and will be considered below.

Evidence relied on by the parties

The plaintiff read an affidavit of Kerrie-Ann Rosati sworn 17 April 2018. In that affidavit, Ms Rosati: 1. Provides the factual background to the current proceedings and the underlying Supreme Court proceedings in which the plaintiff Mr Bennie was also the plaintiff; 2. Annexes the lengthy 2009 judgment handed down by Hulme J in favour of Mr Bennie in the proceedings in which Mr Grace acted for him: Bennie v State of New South Wales [2009] NSWSC 96; 3. Annexes a copy of the Certificates of Determination of Costs and reasons for determination of the costs assessor Mr Bartos issued on 18 December 2015 and sent to the parties on 5 January 2016; 4. Provides the background history to the costs assessments; 5. Gives a history of appeals made by the defendant Mr Grace to the Supreme Court (see paragraphs 15-18); 6. States that Mr Bennie sought a review of Mr Bartos' determination to the review panel assessors. The review panel issued a Certificate of Determination on 20 April 2016 affirming the Certificate of Determination of the costs assessor Mr Bartos issued on 18 December 2015 and sent to the parties on 5 January 2016. A copy of the review panel's Determination is attached to the affidavit; 7. Gives evidence that Ms Rosati wrote to Mr Grace demanding the repayment of the amount of $186,141 on 7 July 2016 which has not been paid by him.
Mr Grace read an affidavit of his sworn 10 May 2018. The affidavit simply annexes a number of documents. Important documents annexed include: 1. An account ledger statement of Mr Grace for the period March 2009 to October 2012 concerning the case Mr Bennie brought against the State of New South Wales; 2. A letter from Mr Grace to the plaintiff's wife (who was the plaintiff's tutor in the Supreme Court proceedings) dated 30 June 2009 enclosing a trust account statement relating to the trust account concerning the plaintiff's matter against the State of New South Wales for the period 14 July 1999 to 30 June 2009; 3. The application dated 4 March 2011 of Mr Bennie for a client/practitioner costs assessment which was sent to the Manager, Costs Assessment, at the Supreme Court with a covering letter also dated 4 March 2011; 4. A trust account statement for the trust account relating to the plaintiff's claim against the State of New South Wales for the period 14 July 1999 to 8 February 2011 with a covering letter dated 30 June 2011; 5. Various conditional costs agreements including an undated agreement signed by the plaintiff and a further agreement signed by the plaintiff and the defendant on 3 March 2006; 6. Various authorities to receive and pay; 7. Certain correspondence from Mr Bartos, the costs assessor, dated 24 March 2015 raising the question of limitation periods on the plaintiff's claim.

Factual findings

Taking into account the pleadings, the evidence and the submissions made by the parties, I make the following findings of fact: 1. The plaintiff Mr Bennie joined the New South Wales Police Force in November 1982. 2. In 1991 Mr Bennie reported to superior officers that another police officer was engaging in improper behaviour. Mr Bennie believed that his report would be kept confidential but it seems it was not and thereafter he was subjected to various forms of alleged harassment and bullying conduct. 3. As a result, Mr Bennie alleged that the conduct of members of the police force led him to have a nervous breakdown and various other physical and psychological injuries. 4. Mr Bennie was medically discharged from the Police Service in 1992 having been certified unfit. Initially the delegate of the Commissioner of Police decided that the infirmity which led to his discharge was not caused by Mr Bennie being 'hurt on duty". Mr Bennie appealed to the Compensation Court of New South Wales against that decision and in due course a judge of that court found that Mr Bennie was hurt on duty: [2009] NSWSC 96 at [5]. 5. At some time after his discharge (Mr Grace asserts 1996 and Mr Bennie asserts 1999), Mr Bennie instructed Mr Grace to seek common law damages for him against the State of New South Wales as the legal entity responsible for actions of the New South Wales Police Force. I note the first disbursements on the office account statement relate to 1999 but the date of commencement of the instructions is not central to the issues in the case. 6. In 2001 Mr Bennie commenced proceedings in the District Court of New South Wales alleging breaches of various duties by the State of New South Wales and seeking damages. Following litigation relating to seeking leave to commence proceedings out of time and an appeal, in 2006 the matter was transferred to the Supreme Court: see [2005] NSWCA 172. 7. On some date probably prior to early January 2006, Mr Bennie signed a conditional costs agreement with the defendant relating to work for the proceedings. This agreement included an estimate of fees and disbursements for the proceedings of $414,750. Although it is not entirely clear, it seems that the agreement gave authority to Mr Grace for any judgment or settlement moneys to be paid directly to Mr Grace's trust account and for Mr Grace to then pay himself from the money immediately after sending a bill of costs. As stated, this undated conditional costs agreement was signed by Mr Bennie. 8. Both parties signed a conditional costs agreement dated 9 January 2006. This agreement estimated costs and disbursements of the proceedings against the State at $596,700. It appears that it was signed by the plaintiff on 3 March 2006. 9. At some time, Mr Bennie's wife, Mrs Julie Bennie was appointed as his tutor for the purposes of the Supreme Court proceedings. 10. On 14 September 2007, Mr Grace sent a letter to Mr and Mrs Bennie confirming an agreement said to have been reached at a conference on 12 September 2007 which provided that in the event that Mr Bennie's claim was successful, all accumulated legal expenses "which have been carried by your respective legal representatives over the years shall be payable upon receipt of first moneys from the defendant." The letter was signed by Mr and Mrs Bennie and returned to Mr Grace and apparently received by him on 25 September 2007. 11. The proceedings were heard by Hulme J in the New South Wales Supreme Court between July and November 2007. Justice Hulme delivered his reasons for decision on 3 March 2009 and found in favour of Mr Bennie. Following further submissions, Hulme J entered judgment for Mr Bennie in the sum of $2,236,408 and ordered the State of New South Wales to pay Mr Bennie's costs. 12. On different dates in 2009, Mr Grace received on Mr Bennie's behalf $500,000 and later $1,647,046.81. The moneys were paid into Mr Grace's trust account and are reflected in the trust account statement and the account ledger which were in evidence. 13. At various times in 2009 and 2010, Mr Grace paid from the trust account various disbursements and also transferred other moneys to his office account to pay for his claimed costs and other disbursements. 14. There was no evidence before the court that any invoices for costs or disbursements were first sent by Mr Grace to Mr or Mrs Bennie before amounts were deducted. It may have been that Mr Grace was relying on the authority in the letter dated 14 September 2007 or his claimed rights under the various conditional costs agreements to pay over the moneys. 15. Various moneys were also paid out to Mrs Bennie (for Mr Bennie) from the trust account: for example entry for 30 June 2009 for $400,000. 16. In December 2009, Mr Grace filed on Mr Bennie's behalf an application for assessment of the party/party costs of the Supreme Court proceedings. Later an application in respect of disbursements was filed. These were determined by Mr J Bartos as a costs assessor. 17. A dispute then arose between Mr Bennie and Mr Grace in relation to Mr Grace's costs and disbursements. A bill of costs was apparently requested on behalf of Mr Bennie. After some correspondence, a bill of costs was forwarded by Mr Grace to Mr Bennie's then solicitor. This was received by the solicitor on 5 March 2010. On 4 March 2011, an application was delivered to the Manager, Costs Assessment, of the Supreme Court, making an application for assessment of the costs by Mr Bennie. This application is dated 4 March 2011 and appears to have been received by the Supreme Court on 4 March 2011. 18. After receiving submissions and considering the materials, Assessor Bartos issued Certificates as to Determination of Costs dated 18 December 2015 which were sent to the parties on 5 January 2016. Assessor Bartos determined the application by confirming that a fair and reasonable amount for the disputed costs was $1,534,234.59. Mr Bartos noted that Mr Grace "is to give credit to the Costs Applicant [Mr Bennie], client $1,712,125.59 paid on account and $8,250.00 for the Costs Applicant's costs of assessment." Mr Bartos stated in the certificate: "Accordingly, the costs respondent, practitioner is to pay the costs applicant, client $186,141.00". It is not disputed by the plaintiff in the proceedings that these comments by Assessor Bartos are not binding and that the only relevant part of the Certificate as to Determination of Costs which is binding on the parties is the determination as to the disputed costs in the sum of $1,534,234.59 (as well as the amount of the costs applicant's costs of $8,250). 19. It was noted in the reasons for determination of Mr Bartos dated 18 December 2015 that Mr Grace's bill of costs "claimed legal costs amounting to $861,034.40 and disbursements of $851,091.19, that is, the total sum of $1,712,125.59 including GST". At paragraphs 3-6 of his reasons for decision, it was noted by Mr Bartos that he had determined the application by assessing as fair and reasonable legal costs the sum of $1,534,234.59. He also noted that the costs applicant Mr Bennie claimed that $1,712,125.59 was deducted from the settlement moneys on account of costs and disbursements. Mr Bartos stated: "The Costs Respondent did not contradict this or provide evidence to the contrary." However, Mr Bartos records that a similar amount was claimed by Mr Grace as legal costs. 20. Mr Bartos noted that Mr Grace was retained by Mr Bennie in 1999 and the applicable act was the Act. He referred to his earlier consideration of this. Both parties in the proceedings before me accepted that the relevant provisions were those in the Act rather than any later Legal Profession Act. 21. Earlier, in February 2014, Assessor Bartos had determined that the Act applied to the matter and that he had jurisdiction to deal with the application as the application for assessment had been filed with the Supreme Court within 12 months of receipt of the bill of costs from Mr Grace. 22. Mr Bennie sought a review of Mr Bartos' assessment. This was considered by the review panel and a determination was issued on 20 April 2016 which was sent to the parties on 9 June 2016. The review panel affirmed the Certificate of Determination of Costs of Assessor Bartos issued on 18 December 2015 and gave reasons for that decision. 23. A claim was made by solicitors acting for Mr Bennie to Mr Grace for the payment of $186,141 of overpaid costs and the costs of assessment. No amount has been paid by Mr Grace pursuant to that claim. Mr Grace has filed a number of appeals in the Supreme Court in relation to the assessment of Mr Bartos. However, these have been dismissed with the most recent being dismissed by Harrison AsJ on 31 May 2018 as referred to above. 24. One issue to be considered is the amount of costs and disbursements which Mr Grace paid out of his trust account in the matter. As stated above, Mr Bartos in his reasons for decision referred to an amount. However, there was direct evidence before me in relation to that matter. Annexed to the affidavit of Mr Grace were extracts from his account ledger and trust account for the proceedings between Mr Bennie and the State of New South Wales. Submissions were made by the plaintiff in relation to how those documents should be interpreted. There are some anomalies in the documents. However, they constitute the best evidence in relation to the amount paid out by Mr Grace. I agree with the plaintiff's oral submission that the trust account statement is probably the most reliable document. Having considered the account ledger and the trust account documents, I am satisfied that $1,713,436.93 was paid out by Mr Grace for disbursements or for his own costs and disbursements relating to the proceedings conducted for Mr Bennie from Mr Grace's trust account. This is ascertained from a careful review of the various payments shown. I note that this amount is very similar, although not precisely the same, as the amount referred to by Mr Bartos in his reasons for decision on pages 93 and 94 of the exhibit to Ms Rosati's affidavit sworn 17 April 2017. In my view, the underlying accounting documents should clearly be given greater weight as being more likely accurate.

The relevant provisions of the Act

It was not in issue between the parties that the relevant legislation applicable is the Act. Instructions were received by Mr Grace from Mr Bennie at some time between 1996 and 1999. At that time the relevant act governing costs assessment was the Act. The Legal Profession Act 2004 ("the 2004 Act") came into force on 1 October 2005.
The transitional provisions in the 2004 Act provide in Schedule 9, Part 2 at Clause 18(1) as follows: "18 Client information and legal costs (1) Subject to subclauses (2) and (3), Part 3.2 of this Act applies to a matter if the client first instructs the law practice on or after the commencement day, and Part 11 of the old Act continues to apply to a matter if the client first instructed the law practice in the matter before that day."
The matters in Clause 18(2) and (3) are not applicable.
The relevant Part of the Act is Part 11 which deals with legal fees and other costs. Part 11 of the Act is detailed and lengthy and I will not refer to it in substantial detail. However, it is relevant to note that Part 11 introduced a new system for determining the relevant legal fees and other costs which were to be paid on a solicitor/client and party/party basis. Relevant agreements between the solicitor and client could be taken into account to a certain extent but were not always binding. Under the Act the client was given stated rights in relation to how a barrister or solicitor will charge for legal services provided to the client. If the client disputes the solicitor's bill, the client may apply to have the bill of costs assessed by a cost assessor under Part 11: see ss 174-175, 177-179, 182-184, 189, 192-195 and 199-208E of the Act.
It is noted that under s 199(1), a client who was given a bill of costs may apply to the Manager, Costs Assessment, for an assessment of the whole of, or any part of, those costs. That application may be made even if the costs have been wholly or partly paid by the client to the practitioner. The client may also apply for an assessment even if costs have been paid without a bill of costs.
Section 206 describes the referral of matters to cost assessors and s 207 notes that the costs assessor may require documents or further particulars for the purposes of the assessment. Section 208A and s 208B relate to the assessment of bills and the matters which a cost assessor must and may take into account. Section 208A(2) of the Act provides that a cost assessor is to determine the application by confirming the bill of costs or, if the assessor is satisfied that the disputed costs are unfair or unreasonable, by substituting for the amount of the costs an amount that, in his or her opinion, is a fair and reasonable amount. Certain limitations on the powers of a cost assessor are set out in s 208C, including where the dispute relates only to the rate specified in a costs agreement for calculating the costs. If the dispute relates to any other matter costs are to be assessed by the assessor on the basis of the specified rate unless the cost assessor determines the costs agreement to be unjust: s 208C(1)-(3). Under s 208D a cost assessor may determine whether a term of the particular costs agreement entered into by a solicitor and a client is unjust in the circumstances relating to it at the time it was made: s 208D(1).
Sections 208J and 208JAA of the Act provide as follows: "208J Certificate as to determination (1) On making a determination, a costs assessor is to issue to each party a certificate that sets out the determination. (1A) A costs assessor may issue more than one certificate in relation to an application for costs assessment. Such certificates may be issued at the same time or at different stages of the assessment process. (2) In the case of an amount of costs that has been paid, the amount (if any) by which the amount paid exceeds the amount specified in any such certificate may be recovered as a debt in a court of competent jurisdiction. (3) In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed. (4) For this purpose, the amount of unpaid costs does not include the costs incurred by a costs assessor in the course of a costs assessment. (4A) To avoid any doubt, this section applies to or in respect of both the assessment of costs referred to in Subdivision 2 of this Division (practitioner/client costs) and the assessment of costs referred to in Subdivision 3 of this Division (party/party costs). (5) If the costs of the costs assessor are payable by a party to the assessment (as referred to in section 208JA), the costs assessor may refuse to issue a certificate relating to his or her determination under this section until the costs of the costs assessor have been paid. (6) Subsection (5) does not apply: (a) in respect of a certificate issued before the completion of the assessment process under subsection (2), or (b) in such circumstances as may be prescribed by the regulations. 208JAA Reasons for determination (1) A costs assessor must ensure that a certificate issued under section 208J that sets out his or her determination is accompanied by: (a) a statement of the reasons for the costs assessor's determination, and (b) such supplementary information as may be required by the regulations. (2) The statement of reasons must be given in accordance with the regulations."
Section 208K of the Act provides as follows: "208K Determination to be final A costs assessor's determination of an application is binding on all parties to the application and no appeal or other review lies in respect of the determination, except as provided by this Division."
The plaintiff in the present case claims that the action brought by him is a statutory cause of action created under s 208J(2) of the Act.

Submissions of the parties

Written submissions were provided to the court on behalf of both the plaintiff and the defendant. The plaintiff was represented by counsel. Mr Grace, the defendant, was self-represented. The written submissions were supplemented by detailed oral submissions at the hearing.
The plaintiff submitted, in summary, as follows: 1. Section 208J(2) of the Act permits the plaintiff to sue the defendant to recover the amount overpaid as a debt in this court. It creates a new statutory cause of action; 2. The amount determined by Mr Bartos, the costs assessor, in his Certificate as to Determination as to Costs is final and binding on the parties and the only matter the plaintiff is required to establish and the court to determine before giving judgment is the amount paid to the defendant, so that it may be deducted from the amount on the face of the Certificate of Determination. This is the effect of s 208K of the Act; 3. The role of the court is to determine as a question of fact the amount of money paid to the solicitor and to give judgment for the difference between the amount paid and the amount in the assessor's certificate, if the latter is less; 4. In this matter, the costs assessor Mr Bartos determined the application for assessment and the review panel affirmed it, so the operative determination is that of the costs assessor Mr Bartos; 5. The procedure under Part 11 of the Act is a novel procedure. Prior to the assessment process a party cannot determine the amount which will be recovered, if any. That is only determined following any submissions filed by the parties and an assessment by the assessor over which the parties can have no ultimate control. There is no means objectively by which a party can determine the likely outcome as it involves an assessment by the assessor; 6. The entitlement of the plaintiff under s 208J(2) of the Act is pursuant to a statutory cause of action. The amount to be recovered under the statutory cause of action is only determined following an assessment by the assessor and the issue of a Certificate of Determination. It is only following the issue of that certificate that a cause of action arises where there has been an overpayment by a client to a solicitor; 7. Accordingly, the cause of action of the plaintiff first accrued to the plaintiff following the receipt (or at least the issue) of the Certificate of Determination of Costs by the cost assessor. The amount paid over to Mr Grace was $1,713,436.93; 8. In relation to limitation issues, the matter is governed by s 14(1)(d) of the Limitation Act 1969 (NSW). The question is therefore when the cause of action first accrued to the plaintiff to recover moneys recoverable by virtue of the cause of action in s 208J(2) of the Act. That cause of action first accrued in January 2016 or no later than 18 December 2015 when the Certificate as to Determination of Costs was issued by Assessor Bartos. These proceedings were commenced well before the expiry of six years after either of those dates; 9. Therefore, the cause of action of the plaintiff is not statute barred. First, because the cause of action is to recover moneys recoverable by virtue of an enactment under s 14(1)(d) of the Limitation Act and the cause of action first accrued only on the issue of the Certificate of Determination in December 2015 at the earliest. Secondly, and alternatively, because the application for assessment of costs was brought by the plaintiff within six years of the cause of action accruing and the application for assessment is "an action on a cause of action". The definition of "Action" in s 11 of the Limitation Act includes any proceeding in a court and the application for assessment of costs is a separate action apart from a "proceeding in a court". Thirdly, s 13 of the Limitation Act does not apply to limit the action; 10. Accordingly, the cause of action of the plaintiff has been established. The plaintiff is entitled to judgment for $187,452.34 plus interest. This includes $8,250 for the costs of the assessment as identified by Assessor Bartos.
The defendant, in summary, made the following submissions: 1. The plaintiff carries the onus of proving his case; 2. The plaintiff has to prove the amount by which costs and disbursements actually paid exceeded the amount certified by the costs assessor to be fair and reasonable; 3. The debt referred to in s 208J(2) of the Act cannot be proved simply by filing the Certificate of Determination of Costs or tendering it without proving it; 4. The cause of action pleaded is statute barred under s 14(1) of the Limitation Act and/or is extinguished by operation of s 63 of the Limitation Act; 5. The critical question is when the cause of action relied upon by the plaintiff first accrued. There are various possible dates as to when the cause of action first arose. The earliest relevant date after which the action pleaded by the plaintiff is not maintainable is 15 May 2015, that is six years after 15 May 2009 when the sum of $500,000 comprising part of the verdict moneys was receipted to the defendant's trust account. Certainly by 4 March 2011, when the plaintiff received the bill of costs, the plaintiff was in possession of all facts upon which the cause of action currently relied upon is pleaded; 6. The costs assessor was correct in assuming that the plaintiff's cause of action arose when the payments were made for costs or disbursements and transferred from the defendant's trust account to the office account and otherwise disbursed to counsel and expert witnesses; 7. It is erroneous to suggest that the plaintiff's cause of action arose on the issue of the Certificate of Determination on 18 December 2015. It is the underlying right and title to any debt, and not the costs assessment process, which is subject to the Limitation Act; 8. The issue of a Certificate of Determination is no more and no less than the culmination of an administrative process quantifying the costs and disbursements which in the cost assessor's opinion are fair and reasonable in the particular case assessed: Coshott v Barry [2012] NSWSC 850 at [41]; Preston v Nikolaidis [2017] NSWSC 1527 at [273]-[276]; 9. Further, section 13 of the Limitation Act applies if there are potentially two limitation periods applicable; 10. Accordingly, the cause of action relied upon is statute barred and is extinguished pursuant to s 63(1) of the Limitation Act.

Paragraph 8 of the Amended Defence
In paragraph 8 of the Amended Defence, Mr Grace pleads that as the application by the plaintiff to waive the filing fee for the assessment of practitioner/client costs considered by Mr Bartos was granted on 16 March 2011 and that date was outside the 12 month period within which the plaintiff could make application to have the practitioner/client costs assessed, the plaintiff's application was barred by operation of s 199(2) or (3) of the Act.
This issue was not dealt with in the defendant's written submissions.
I raised this matter with Mr Grace when he was making his oral submissions. Mr Grace indicated to the court that he made no separate submission in relation to this point and the matter was not pursued by him.
This seems to have been a proper approach to take by Mr Grace as the issue of the jurisdiction of the assessor Mr Bartos to hear the matter was considered by him in the course of making his preliminary determination as to jurisdiction. I note that under s 208K of the Act a cost assessor's determination of an application is binding on all parties to the application, subject to any review or appeal rights.

The amount paid to Mr Grace
I have considered above the question of how much Mr Grace transferred from his trust account for the matter for the purposes of paying disbursements and his own costs and disbursements. The plaintiff submitted that the amount which had been paid to Mr Grace through his actions was $1,713,436.93. As indicated above, in my view this amount was established on the evidence.
Mr Grace made no oral submissions challenging this amount and the amount was not considered in his written submissions. In my view, the amount claimed by the plaintiff is established by the evidence as I have referred to above.
The plaintiff ultimately claimed the amount of $187,452.34 together with interest. This amount was arrived at in the following way: $1,713,436.93 (being the amount paid by Mr Grace from the trust account) minus $1,534,234.59 (amount determined by Assessor Bartos under the Act as fair and reasonable costs as set out in the Certificate of Determination issued 18 December 2015) equals $179,202.34 plus $8,250 (being the costs of Mr Bennie of the assessment referred to in the Certificate as to Determination of Costs of Assessor Bartos issued on 18 December 2015: Exhibit A page 91) equals $187,452.34. This amount claimed appears to me to be established by the evidence.
Mr Grace made no submissions challenging the amount or the costs of assessment amount. Accordingly, in the event that I find for the plaintiff, this is the appropriate amount to be awarded together with any claim for pre-judgment interest.

Does s 208J(2) of the Act establish a new and separate cause of action?
The plaintiff Mr Bennie submits that s 208J(2) of the Act creates a separate and new cause of action. It is submitted that this is clear from the section by the reference in s 208J(2) to the fact the excess amount "may be recovered as a debt in a court of competent jurisdiction." It was argued by the plaintiff that the subsection would be unnecessary unless a new cause of action was established by it. It was also argued that the reference to the excess being able to be recovered "as a debt" distinguishes the amount from a potential claim in contract in damages for breach or in quasi-contract (restitution). It was submitted that prior to the Certificate of Determination as to Costs being issued by Assessor Bartos on 18 December 2015, Mr Bennie could not have ascertained what fair and reasonable costs would have been able to be recovered as that was a matter to be determined by an assessor. It was said that there was no method by which Mr Bennie could have determined what costs would, or would likely, have been recoverable. Accordingly, s 208J(2) created a new statutory cause of action in the plaintiff.
I have already set out Mr Grace's submissions above. In essence, he submitted that Mr Bennie could have brought proceedings in contract for a breach of an implied term that only fair and reasonable fees would have been charged. It was said that s 208J(2) merely provided a mechanism by which the recovery could be made by specifying one certain integer being the amount determined in the Certificate of Determination as to Costs. The underlying cause of action was said always to be in contract which was relevant to the calculation of any limitation period.
I have already set out s 208J above. I repeat it here for convenience: "208J Certificate as to determination (1) On making a determination, a costs assessor is to issue to each party a certificate that sets out the determination. (1A) A costs assessor may issue more than one certificate in relation to an application for costs assessment. Such certificates may be issued at the same time or at different stages of the assessment process. (2) In the case of an amount of costs that has been paid, the amount (if any) by which the amount paid exceeds the amount specified in any such certificate may be recovered as a debt in a court of competent jurisdiction. (3) In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed. (4) For this purpose, the amount of unpaid costs does not include the costs incurred by a costs assessor in the course of a costs assessment. (4A) To avoid any doubt, this section applies to or in respect of both the assessment of costs referred to in Subdivision 2 of this Division (practitioner/client costs) and the assessment of costs referred to in Subdivision 3 of this Division (party/party costs). (5) If the costs of the costs assessor are payable by a party to the assessment (as referred to in section 208JA), the costs assessor may refuse to issue a certificate relating to his or her determination under this section until the costs of the costs assessor have been paid. (6) Subsection (5) does not apply: (a) in respect of a certificate issued before the completion of the assessment process under subsection (2), or (b) in such circumstances as may be prescribed by the regulations."
The question whether a new statutory cause of action is intended to be created by s 208J(2) of the Act is a question to be determined by applying principles of statutory construction. In considering this question, the principles set out by the High Court in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [69]-[70] must be applied.
In my view, the submissions of the plaintiff should be preferred on this point.
First, it is necessary to look at the text of the Act. The wording of s 208J(2) by the use of the words "the amount (if any) by which the amount paid exceeds the amount specified … may be recovered as a debt in a court of competent jurisdiction" indicates in my view an intention by the legislature to create a separate cause of action in debt apart from any action on the contract between the solicitor and the client. It seems to me that the subsection would be unnecessary unless it was intended by the legislature to create a new cause of action.
Secondly, the submission of the defendant that the subsection is merely a machinery provision is not attractive. It seems that once a Certificate of Determination is issued determining the amount which is fair and reasonable, a client would clearly have a cause of action to recover any excess paid, for example by an action in restitution. Accordingly, it was not necessary to have the subsection included in the Act unless it was intended to provide a separate cause of action for a client.
Thirdly, I do not see how a client in circumstances such as the present could reasonably have commenced proceedings earlier for the recovery of any amount sought. Until a Certificate of Determination of Costs is issued by an assessor, the client would not know the amount of any excess payment nor could that amount be ascertained by any objective means. It is only after the assessment process is completed following the consideration by the assessor of relevant materials, objections and submissions and a determination is made, that a client would be aware whether there was an excess or the amount of the excess. In other words, there is no objective mechanism prior to the issue of the Certificate of Determination to ascertain whether an amount is owing, or the quantum of that amount.
The present case is somewhat similar to State Insurance Regulatory Authority v Abdul-Rahman [2016] NSWCA 210 where Basten JA (with whom Meagher and Gleeson JJA agreed on this point) held that the cause of action in question there did not arise until the Authority had determined the liability of the employer and the amount recoverable: at [59]-[82]. The statute there considered had some similarities in wording to s 208J(2): see at [14]; [69]-[72]. There, the clear inference from the legislation was that no cause of action arose until the Authority in question had the facts to allow it to form the relevant opinions: at [72]-[73]. This is similar to the costs assessor here. Until the assessment had been made and a certificate issued the amount owed was not known to the plaintiff.
Fourthly, I do not see that there is force in the submission made by Mr Grace that the client could always have sued the solicitor upon receipt of the bill of costs for the excess amount on the basis of breach of an implied term in the contract between the solicitor and the client that the client would only be charged a fair and reasonable amount. The contract in question in the present case (dated 3 March 2006) specified the hourly rates to be charged to Mr Bennie (clause 7), the general work to be performed (clause 3) and the right to be paid the costs and disbursements incurred (clause 10). To the extent that there was any doubt on this issue, it was confirmed by the 14 September 2007 letter countersigned by Mr and Mrs Bennie from Mr Grace which is at page 43 of the exhibit to Mr Grace's 10 May 2018 affidavit.
In my view, the implication of the term proposed by Mr Grace does not comply with the test in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] 52 ALJR 20 at 26. I do not see that the implication of the term proposed is reasonable and equitable and necessary to give business efficacy to the contract. Such a term would also contradict the express terms of the contract: see clause 7. The conditional costs agreement which was signed by the plaintiff dealt with the issue of the costs which would be made for legal services provided. A disappointed client had the procedure under the Act available to turn to if he or she wished to challenge the amount charged by the solicitor: see also clause 13. Accordingly, I do not see how the client would have a claim as submitted by the defendant for breach of an implied term in contract particularly from the date of service of the bill of costs.
It would seem to me to be manifestly unfair to a client that time would begin to run for any limitation purposes from the moment of service of a bill of costs. A client may be completely unfamiliar with the detail of the work undertaken by the solicitor.
Fifthly, reading Part 11 of the Act as a whole, I see no reason why the proposed statutory cause of action is prohibited. The cause of action is, in my view, generally consistent with the policy objectives in Part 11 by being consistent with the procedures in Part 11 first being followed to determine the fair and reasonable amount to be paid: see s 208A of the Act.
For these reasons, I find that s 208J(2) of the Act provides a separate statutory cause of action to the plaintiff in the present case. This first accrued no earlier than 18 December 2015.

Limitation issues
The defendant Mr Grace submitted that any cause of action available to the plaintiff in the present case was statute barred because time began to run from various possible dates in 2009 to 2011: see paragraph 11 of Mr Grace's written submissions dated 20 July 2012.
As in my view a separate statutory cause of action arose pursuant to s 208J(2) of the Act, any cause of action under that statutory cause of action first accrued at the earliest upon issue of the Certificate of Determination as to Costs of Assessor Bartos on 18 December 2015. The current proceedings were commenced well before six years after that date. Therefore, in my view the proceedings are not statute barred as submitted. This in my view is consistent with the approach of the Court of Appeal in State Insurance Regulatory Authority v Abdul-Rahman [2016] NSWCA 210 at [66]-[82]. There is no evidence Mr Bennie, or those he instructed, was dilatory in considering the bill of costs served having regard to the complexity and length of the proceedings.
However, it is necessary for me to consider an alternative argument put by the plaintiff in the event that I rejected his primary argument on s 208J(2).
Section 14(1) of the Limitation Act provides as follows: "14 General (1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims: (a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed, (b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty, (c) a cause of action to enforce a recognizance, (d) a cause of action to recover money recoverable by virtue of an enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture."
Section 11(1) of the Limitation Act defines "Action", unless the context or subject matter otherwise indicates or requires, as including "any proceeding in a court".
The plaintiff submits that the inclusive nature of the definition does not prevent "Action" as including an application by a client for costs assessment under the Act. It was not submitted by the plaintiff that an application for an assessment was a "proceeding" in a court: see Ryan v Hansen (2000) 49 NSWLR 184 at [32].
The defendant Mr Grace relies on the comments of McCallum J in Coshott v Barry [2012] NSWSC 850 at [50]-[52]. Coshott was generally approved by Slattery J in Preston v Nikolaidis [2017] NSWSC 1527. Ms Castle, leading counsel for the plaintiff, relies on the nature of the costs assessment process to submit that I should not follow the decision of McCallum J on this point. Ms Castle refers to a number of matters which she submits are relevant: 1. The fact that a costs assessor has to determine complex questions of fact and law: Griffith v Australian Broadcasting Corporation [2013] NSWSC 750 at [18]; 2. The certificate of a costs assessor is final and binding subject to the question of any appeal: s 208K of the Act; 3. An assessor has to determine whether he or she has jurisdiction to hear the matter; 4. An assessor often has to determine limitation issues and make findings of fact and exercise a discretion; 5. The process is overall a complex one.
It is submitted therefore that the filing of the application for assessment by the plaintiff in the present case on 4 March 2011 with the Manager, Costs Assessment, at the Supreme Court, was an "action" on a cause of action for the purposes of s 14(1) of the Limitation Act and was therefore made within time: submissions dated 2 August 2018 paragraph 9.
Coshott v Barry [2012] NSWSC 850 related to a firm of solicitors seeking to enforce cost assessments against a client: at [4]-[6]. Different considerations apply in the present case where it appears to me that the rights of Mr Bennie arose from the issue of the Certificate of Determination not from the conditional contract with Mr Grace. A solicitor would be fully informed at all times in relation to what steps he or she had taken in relation to costs and disbursements. Therefore, it would appear to me that the present case is distinguishable from that in Coshott v Barry.
However, in my view I should follow the reasoning in the decisions of McCallum J and Slattery J (generally approving McCallum J's decision) unless there is appellate authority to the contrary. Having regard to my findings in relation to the s 208J(2) issue, this approach does not alter the result in the case.

Section 13 of the Limitation Act
Section 13 of the Limitation Act provides as follows: "13 More than one bar Where, under each of two or more provisions of this Part, an action is not maintainable if brought after a specified time, the action is not maintainable if brought after the earlier or earliest of those times."
Mr Grace submitted that the effect of s 13 of the Limitation Act in the present case is that even if the plaintiff had a cause of action under s 208J(2), that this would not result in an extended and different period to commence any action against him for the recovery of the overpaid money.
Mr Bennie submits that s 13 of the Limitation Act does not have the effect contended for by Mr Grace. It is submitted that it only applies where the same particular facts give rise to one action (although it may be brought for example in negligence and nuisance) not two different actions (for example in contract and under a deed): see Fischer v Nemeske Pty Ltd [2014] NSWSC 203 at [200]-[218].
I prefer the plaintiff's argument on this point essentially for the reasons given by Stevenson J in Fischer v Nemeske Pty Ltd. The causes of action in contract (if one exists) and under s 208J(2) which are available to the plaintiff are quite different actions. The first, if it exists, arises in contract when a breach by Mr Grace occurs whereas the second arises as a result of the issue of the Certificate of Determination of Costs made by Assessor Bartos and is stated to be in debt. The present situation is quite different to the examples in Fischer in [206]-[207]. In my view, s 13 is not applicable to bar any action under s 208J(2).
Accordingly, I reject the submission of the defendant Mr Grace that any cause of action available to Mr Bennie to recover the overpaid amount is statute barred and extinguished by s 63 of the Limitation Act.

Disposition

For the above reasons, in my view the plaintiff Mr Bennie has established his cause of action as pleaded in paragraph 18A of the Amended Statement of Claim. Mr Bennie is therefore entitled to recover the amount of $187,452.34 together with any relevant interest. I invite the parties to submit agreed Short Minutes of Order in relation to the relevant amount.
Accordingly, I make the following orders: 1. Judgment for the plaintiff. 2. The defendant is to pay the plaintiff's costs of the proceedings as agreed or assessed. 3. Leave is granted to the parties to apply within 14 days for an alternative costs order to that set out in (2) above. 4. The parties are to bring in agreed Short Minutes of Order reflecting the judgment sum and any claimed interest within seven days. 5. Liberty to apply on three business days' notice. 6. Exhibits are to be retained for 28 days.

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: 28 August 2018

Legal Profession Act 1987(NSW)

Legal Profession Act 2004(NSW)

At a glance

Court

Decision date

Before

Source

Judgment (14 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (11)