Bobb v Wombat Securities Pty Ltd

Judgment 1BASTEN JA: The applicant in these proceedings, Mr Richard Bobb, seeks to review a judgment of the District Court dealing with an appeal brought by Mr Bobb against an assessment of costs. It might be described as "satellite litigation", except that the satellite is the larger of the two bodies. 2The original litigation was in the Equity Division of this Court. It involved a claim by the respondent, Wombat Securities Pty Ltd, that Mr Bobb, in his capacity as a director of that company, had made unauthorised financial dealings causing loss to the company. The misconduct alleged occurred between April 2006 and May 2009. The company commenced proceedings against Mr Bobb in 2009. The proceedings settled on the second day of the trial (25 March 2011), when Mr Bobb (the defendant) consented to the following orders: "1. Judgment for plaintiff in the sum of $185,000. 2. Order that the defendant pay the plaintiff's costs of the proceedings." 3Mr Bobb insisted that the costs be assessed, as was his right. The assessment resulted in a certificate quantifying the costs at $165,570. Mr Bobb sought a review of the assessment by a review panel appointed for the purpose, to which the application was referred under s 374 of the Legal Profession Act 2004 (NSW). On 31 July 2012 the review panel issued a certificate confirming the assessment made by the assessor. 4Pursuant to s 384 of the Legal Profession Act, a party to an application for a costs assessment "who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application" may appeal "against the decision" to the District Court: s 384(1). Mr Bobb exercised that right. The primary basis for his appeal related to an objection taken before the costs assessor. The objection turned on a short point. A few days before the date fixed for hearing of the substantive proceedings in the Equity Division, the company had sought leave to amend its statement of claim to add a further cause of action. The original pleading had asserted that Mr Bobb had exceeded his authority as a director of Wombat Securities by entering into a number of identified transactions with parties that were related to Mr Bobb. That basis of the claim was not abandoned, but the amendment asserted a failure to inform the board of Wombat Securities of relevant matters which, had they been disclosed, would have led the board to refuse to enter into the transactions. Mr Bobb asserted in his objections to the bill of costs that the amendment rendered otiose much of the work which had been done prior to the amendment and submitted that "it would not be fair and reasonable for [him] to pay for costs that were incurred through a failure to prosecute the applicant's [Wombat Securities'] strongest position initially." 5The costs assessor noted the submission and also the submission by Wombat Securities that "the amendment was confined to an alternative argument and [Wombat Securities] did not withdraw any of its original claim." 6Beyond noting the conflicting submissions, the costs assessor did not expressly resolve the conflict. However, it was clear that he rejected Mr Bobb's objection, because he did not disallow any amount of costs incurred prior to the amendment on that basis. 7The application for review of the costs assessor's decision identified as the first ground that the assessor "failed to disclose his decision in relation to the late amendment to the case". The panel accepted that "the treatment of the submissions contained in the reasons is implicit and could have been explained more clearly": decision, par 5.2. However it also accepted that the assessor had considered the objection and the response and disallowed the objection. The panel concluded that the assessor was right to do so. It stated at par 5.4: "In the circumstances the Panel shares the view that the assessor is bound by the orders of the court and is not entitled to adjust or to go behind the orders of the court. The appropriate time for the respondent to object to the amendment or to the costs occasioned by it was at the time of the application before the court." 8Mr Bobb continued to press his complaint based on the effect of the amendment. In his Amended Summons Commencing an Appeal in the District Court, filed on 5 December 2012, he included a ground 4a, that the costs assessor "failed to give a statement of reasons or give any adequate reasons for his decision to ignore the fact of the completely newly pleaded causes of action and the review panel likewise failed so to do and failed in his [sic] obligations to provide adequate reasons for not so doing." 9The appeal came before Knox DCJ on 6 December 2012. In the course of argument the judge expressed concern that the District Court did not have power to consider the substance of the new ground 4(a). It can be seen from the transcript of the argument that the basis of the concern was that the inadequacy of reasons did not constitute "a decision ... as to a matter of law arising in the proceedings" before the assessor or the review panel. Knox DCJ adjourned the District Court proceedings to allow Mr Bobb to commence proceedings in the Common Law Division seeking an order that the assessor and the review panel give reasons for their decisions to reject his objection: DC Tcpt, 6/12/12, pp 44(40)-(45). 53 and 57(20)-58(20). This matter came before Beech-Jones J on 7 June 2013. The proceedings were dismissed: Bobb v Wombat Securities Pty Ltd [2013] NSWSC 757. 10Beech-Jones J noted that relief was abandoned with respect to the costs assessor's decision on the basis that "for the purpose of vindicating Mr Bobb's statutory rights of appeal in the District Court under s 384 it was only the review panel's reasons that were relevant": at [36]. That conclusion was correct. As was noted in Wende v Horwath (NSW) Pty Ltd [2014] NSWCA 170 at [24], "there cannot be two certificates of assessed costs in relation to one matter: where there has been a determination by a review panel ... that determination must, by implication, supersede the determination under review." Beech-Jones J then concluded that the reasons of the review panel did not fail to comply with its obligation to give a statement of reasons for its determination, in accordance with s 380 of the Legal Profession Act. The judge held at [39]: "As I construe its reasons, the review panel rejected Mr Bobb's objection on the basis that it considered that the costs order related to the whole of the proceedings, including those costs incurred prior to the amendments being granted. The review panel acted on the basis that they were obliged by the Court order to allow those costs, subject to them being reasonable in terms of time spent and the tasks undertaken. They rejected Mr Bobb's objection because they considered his contention to be inconsistent with the terms of the costs order." 11There was no appeal from that judgment. Rather, the appeal to the District Court, which had not been finally disposed of by Knox DCJ, was relisted before Elkaim DCJ. It is his judgment of 29 August 2013 which is the subject of the present application for review. Three grounds in the amended summons were pressed before Elkaim DCJ, including ground 4a. At the end of his judgment Elkaim DCJ indicated that he would dismiss the summons, but did not make final orders until the question of the costs of the proceedings in the District Court was resolved. An order dismissing the summons was made on 4 October 2013 and entered on 14 October 2013. It is that order (and the consequential orders as to costs) that the present application seeks to review. 12Elkaim DCJ noted the submission that the costs assessor "not only did not allow any amount by way of reduction but apparently did not deal with the submission [as to the wasted costs caused by the amendment] at all": judgment, p 3. The reasons continued: "When dealt with by the Review Panel it is clear, and conceded, that in para 2.10 of its reasons, the Panel correctly set out its function in the review. However, the appellant has submitted that notwithstanding the Panel recognising what it was supposed to do, it did not in fact do so. In particular, the Panel appears to agree with the view of the assessor that there should be no reduction because of the amendment to the statement of claim, notwithstanding that the assessor did not in fact express any view. The plaintiff submits that this failure and/or mistake amounts to a breach of the statutory requirements set out above to give reasons." 13The judge held (pp 3-4): "In my view, the plaintiff is correct in submitting that [the costs assessor] gave no reasons for rejecting the submission arising from the amendment and that the Review Panel also did not give reasons for agreeing with the assessor's apparent conclusion. Prima facie, there therefore seems to be a failure to give reasons which could be seen as a failure in a matter of law." 14The judge then proceeded to consider whether there was a decision "as to a matter of law arising in the proceedings", for the purposes of s 384(1) of the Legal Profession Act. He concluded (p 5): "The Review Panel may not have given reasons. It did not, however, make a decision in respect of not giving reasons. As stated in [Dayeian v Davidson [2010] NSWCA 42; 76 NSWLR 512], where the decision maker does not positively decide to not give reasons, the failure to do so is not necessarily an erroneous decision with respect to a matter of law." 15The judge then stated that the summons must be dismissed. He continued, adding what he described as "the following observations". In respect of ground 4a (which was the only ground dealing with a failure to give reasons) he concluded that it was not open for him to have considered it (despite the fact that the reasons for dismissing the summons appear to have been concerned solely with that ground), in part because he said it had been "conclusively dealt with by Knox DCJ" and in part because Beech-Jones J had found that "the failure to conform to the statutory requirements, which is at the core of the plaintiff's allegation here that there has been an error of law in not giving reasons, was not made out": judgment, p 6. 16The last conclusion was correct: for reasons which follow, it is also a complete answer to the present proceedings. 17The amended summons before this Court, seeking review pursuant to s 69 of the Supreme Court Act 1970 (NSW), sought relief on four grounds. Two were in generic terms: the first merely stated that Elkaim DCJ misinterpreted and misapplied s 384 of the Legal Profession Act; the fourth merely stated that he erred in dismissing the proceedings before the District Court. The two substantive grounds were as follows: "2. The Primary Judge erred in law in holding that section 384(1) of the Legal Profession Act 2004 (NSW) requires an appellant to identify 'a decision as to a matter of law' in order to enliven the District Court's appellate jurisdiction; 3. The Primary Judge erred in law in holding that a failure by a Costs Review Panel to give any, or any adequate, reasons did not constitute a valid ground of appeal within section 384(1) of the Legal Profession Act." 18Because the question as to whether the review panel had complied with its obligations to give reasons, pursuant to s 380 of the Legal Profession Act, had been determined by the judgment given by Beech-Jones J, the question as to the jurisdiction of the District Court to consider that issue did not arise. If that were the sole basis for seeking review, that would be an end of the matter: the proceedings in this Court should be dismissed. 19However, senior counsel for the applicant submitted that this was not the sole basis on which review was sought. The question as to the construction of s 384 remained live because Elkaim DCJ had dismissed grounds 4 and 5 on the same basis, namely that there was no decision of the review panel which was erroneous as to a matter of law. Whether the primary judge in fact dealt with grounds 4 and 5 on that basis is not entirely clear: nevertheless, it is convenient to set out the issue with respect to the construction of s 384 identified by the applicant, before considering the reasons of the primary judge. For that purpose, it is helpful to set out the relevant parts of ss 384 and 385 of the Legal Profession Act, which make separate provision for appeals from decisions of costs assessors. The existence in s 385 of a right to appeal by way of rehearing, but only with leave, was not engaged in the present case. Nevertheless, the terms of that section have relevance to the issues raised concerning the construction of s 384(1). (Appeals lie against "a decision or determination of a panel" as if the references in these provisions to a "costs assessor" were references to the panel: s 382(1).) 384 Appeal against decision of costs assessor as to matter of law (1) A party to an application for a costs assessment who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the District Court, appeal to the Court against the decision. ... 385 Appeal against decision of costs assessor by leave (1) A party to an application for a costs assessment relating to a bill may, in accordance with the rules of the District Court, seek leave of the Court to appeal to the Court against the determination of the application made by a costs assessor. (2) A party to an application for a costs assessment relating to costs payable as a result of an order made by a court or a tribunal may, in accordance with the rules of the court or tribunal, seek leave of the court or tribunal to appeal to the court or tribunal against the determination of the application made by a costs assessor. ... (4) An appeal is to be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given. 20The applicant submitted that, on its proper construction, s 384(1) allowed for an appeal where there had been a decision by a costs assessor and the basis of the appeal was dissatisfaction "as to a matter of law arising in the proceedings"; there did not have to be a decision of the assessor as to a matter of law arising in the proceedings. For that reason, the applicant did not need to establish that there was any decision, express or implicit, with respect to the legal obligation of the review panel to give reasons: it was sufficient that the applicant was dissatisfied with the decision made by the review panel on the basis that the panel had failed to comply with its legal obligation to give reasons. 21The same issue was said to arise with respect to grounds 4 and 5 as pleaded in the District Court proceedings. Those grounds were as follows: "4. The assessor and also Review Panel failed to take proper cognizance of, and hence failed to properly take into account, that the Amended Statement of Claim created an entirely new cause of action to the cause of action originally commenced, containing [as] it did wholly new grounds of claim making all or most action taken by the defendant in that action prior to that date irrelevant and/or otiose. This fact (which was obvious from the pleadings contained in the newly pleaded action[)] was ignored by both the costs assessor who should have reduced the assessment for that reason alone and the Review Panel [which] likewise failed so to do. These failures constitute errors of law and accordingly the plaintiff's appeal the decision of the Review Panel set forth in ground 5.3 of the Review Panel's decision. ... 5. Further or alternatively, in the circumstances that, at virtually the last moment before the hearing, the plaintiff in those proceedings (the defendant in these proceedings) pleaded entirely new or substantially new causes of action in lieu of those initially alleged and this should have caused the original assessor and, on review, the Review Panel, to substantially reduce or to reduce more than the initial assessor had done the costs and disbursements allowed to the plaintiff in these proceedings." 22In substance, the submission was that a failure to take into account a relevant (mandatory) consideration was an error of law, at least for the purposes of judicial review proceedings, in accordance with well established principle: see, eg, Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24 at 39 (Mason J). The applicant was dissatisfied with the ultimate determination of the review panel and its dissatisfaction was based on a matter of law: accordingly, it was submitted, s 384 was engaged. 23There are two reasons to doubt the correctness of the submission as a matter of statutory construction. First, s 384(1) speaks of dissatisfaction with "a decision of a costs assessor as to a matter of law", which, in its ordinary meaning, appears to require a decision as to a matter of law and dissatisfaction with that decision. Secondly, to treat the subject matter of the dissatisfaction as the ultimate determination of the panel is to ignore the different language of s 385 which allows an appeal (with leave) against "the determination of the application", referring, no doubt, to the final outcome of the application. Although the language of the surrounding provisions is not entirely consistent, the broad structure of Pt 3.2, Div 11 reflects this distinction: see, eg, the headings of sub-div 4, "Determinations" and sub-div 5, "Review of determination by panel". Thus, when s 384 uses the term "decision", arguably it is concerned with a decision reached in the course of the process of determining an application, rather than the ultimate determination. 24On the other hand, there are reasons of both policy and authority for not adopting too narrow a construction of the appeal conferring provisions. As a matter of policy, it may be doubted whether the amendments to the legislative scheme which removed the appellate jurisdiction conferred by s 384 to the District Court from the Supreme Court were intended to create a fine jurisdictional dilemma for an applicant as to whether there was a decision as to a matter of law which would attract the jurisdiction of the District Court or merely legal error in the decision-making process which would require an applicant to invoke the judicial review jurisdiction of the Supreme Court. 25Secondly, as a matter of authority, there is the decision of the High Court in Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; 241 CLR 390. Although the language of s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) there in question was not identical to the language of s 384, nevertheless the reasoning of the Court is relevant. Where there was no evidence to support a factual finding of the Tribunal, the High Court held that "the Tribunal made a wrong decision with respect to a question of law": at [92]. By parity of reasoning, it was open to the applicant to submit that where the review panel had failed to take a relevant matter into account there was an implicit decision that the matter was not a mandatory consideration or was not material to the determination of the application. Either decision, if erroneous, could properly be described as a decision as to a matter of law. Further, care must be taken in adopting the reasoning in Dayeian v Davidson, a decision pre-dating Kostas in the High Court. 26Having noted the issue as to the scope of s 384, it may be put to one side as a matter which it is not necessary to resolve. That is because grounds 4 and 5 can be disposed of on a different basis. To the extent that the primary judge dealt with ground 4, he noted that it depended upon a factual assertion that the grounds raised in the substantive proceedings by the amendments to the statement of claim did not supersede the original grounds, nor replace them. He further noted that the trial judge in the Equity Division (Barrett J) had declined an adjournment on the basis that the amendment could adequately be dealt with at the hearing without requiring further delay. 27While the primary judge appears to have treated this as only a "prima facie basis" for dismissing the ground, apparently on the basis that it had already been disposed of, the reasoning is nevertheless persuasive. The ground is tendentiously expressed, the essential premise being that "all or most action taken by the defendant ... prior to [the date of the amendment was] irrelevant and/or otiose." The factual premise was not made good. As the primary judge further noted, ground 5 failed on a similar basis, describing the new causes of action as being "in lieu of" those initially pleaded. 28Finally, there had been, throughout the proceedings, some ambivalence on the part of the applicant as to whether all, or only some, of the conduct of the proceedings prior to the amendments had been rendered futile. The proposition that all such steps were futile was untenable and was not the primary position adopted in this Court. On the other hand, if only some steps were otiose, the onus lay on the applicant to demonstrate by way of particular objections which steps he submitted should be rejected on that basis. One particular objection related to the original affidavit supporting the original causes of action: item number 226. Again, the objection was that the affidavits were "superseded" by those supporting the additional cause of action. (Item number 268 was to similar effect.) The third specific objection, item number 282, was in rhetorical terms: "How much preparation should be allowed. Reading all affidavits again? One can prepare endlessly but a line has to be drawn. What is really required to bring this case to successful conclusion?" 29The respondent's submission that the new causes of action did not replace or supersede the existing causes of action was accepted by the costs assessor and the review panel and accordingly those particular objections were rejected. Those conclusions followed from the approach adopted above and raise no different or additional issues. Accordingly, the grounds of review, however broadly construed, have not been made out: the summons must be dismissed. 30The proceedings in this Court were initially commenced by way of a notice of appeal, which could only arguably have been brought pursuant to s 127 of the District Court Act 1973 (NSW). The applicant has conceded that the appeal was incompetent: Wende v Horwath at [20]. Accordingly the appeal should be dismissed. The applicant must pay the costs of the first respondent, Wombat Securities, of both proceedings in this Court. 31It is convenient to note one further matter. Although it might be thought that the applicant has failed on a technical issue, namely that he failed to appeal from the judgment of Beech-Jones J, and that the merits of his complaint have not been finally determined, it is proper to add that none of the submissions made in this Court identified any error of principle in the reasoning of Beech-Jones J. On the assumption that the issue was still live, the applicant presented submissions to the effect that the review panel had failed to give reasons in compliance with s 380. The submissions would have been rejected had that been necessary. The reasons given by the review panel have been briefly noted above. The objection was rejected on the ground that the order for costs extended to the whole of the proceedings and not to part only of the proceedings. No cause of action was abandoned, and the proceedings were settled with no qualification to the usual costs order, that costs followed the event. Accordingly, it was, in the view of the review panel, correct for the costs assessor to dismiss the objection. As Beech-Jones J noted, whether right or wrong, that demonstrated a clear reason for that aspect of the review panel's decision. The limited application before Beech-Jones J was properly dismissed. 32It also followed that, whether or not the District Court was correct in treating its jurisdiction as limited (and there was authority in support of the view taken), the applicant was not precluded from challenging the inadequacy of the reasons of the review panel, as involving a failure to comply with its obligation under s 380 of the Legal Profession Act, as the judicial review proceedings before Beech-Jones J recognised. Thus, although the proceedings in this Court must be dismissed for the reasons noted above, the applicant's arguments have been fully ventilated. 33WARD JA: I agree with Basten JA. 34EMMETT JA: The applicant in these proceedings, Mr Richard Bobb, seeks to review a judgment of the District Court dealing with an appeal brought by him against an assessment of costs. The respondent, Wombat Securities Pty Ltd (Wombat), sued Mr Bobb in the Equity Division claiming damages under s 1317H of the Corporations Act 2001 (Cth) in respect of alleged contraventions of ss 181, 182 and 183 of that Act. Shortly before the commencement of the trial, Wombat amended the basis of its claim to allege additionally a contravention of s 180 of the Act. On the second day of the trial, Mr Bobb consented to an order for judgment in Wombat's favour in the sum of $185,000 and to an order that he pay Wombat's costs of the proceedings. The trial judge was not asked to apportion costs in any way. 35Wombat prepared a bill of its costs in respect of the proceedings. Mr Bobb objected to the bill of costs. Relevantly, he asserted that the "simplified and uncomplicated case theory" advanced by Wombat following the amendment should have been Wombat's position from the start and that many costs incurred by Wombat before the amendment were "largely wasted or avoidable". He contends that those costs should not be his burden. 36The task of the costs assessor and the review panel was to determine a fair and reasonable amount of costs to be paid by Mr Bobb for the preparation and conduct of the proceedings. The costs assessor concluded that a fair and reasonable amount of costs to be paid to Wombat by Mr Bobb was $165,570.07. The review panel confirmed that assessment. 37Mr Bobb complains that the costs assessor gave no reasons for rejecting his objection on the ground that certain of Wombat's costs should not be his burden. He also complains that the review panel failed to give adequate reasons for not upholding the review of the costs assessor's determination on that ground. Mr Bobb's appeal to the District Court on that ground was unsuccessful. He now seeks judicial review in this Court of the decision of the District Court, submitting in addition that the District Court judge misconstrued s 384 of the Legal Profession Act 2004 (NSW). 38I have had the advantage of reading in draft form the proposed reasons of Basten JA. I agree with Basten JA, for the reasons proposed by his Honour, that none of Mr Bobb's grounds of review, as set out in his summons, has been made out, and that the summons must be dismissed with costs.

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