Bobb v Wombat Securities Pty Ltd & Ors

Supreme Court of NSW|2013-06-07|Before: Beech-Jones J, Barrett J

ex tempore Judgment 1These proceedings illustrate the difficulties that can arise with the scheme of judicial and merits review created by ss 384 to 389 of the Legal Profession Act 2004 (the "Act"). 2The plaintiff, Richard Bobb, seeks relief in the nature of mandamus directed to the second defendant, Mr Eagle, and the third and fourth defendants, Stephen John Lancken and Rosemary Workman. 3Mr Eagle was a costs assessor appointed under the Act. Mr Lancken and Ms Workman constituted a review panel appointed under the Act. I mean no disrespect to them, but I will refer to them as the "costs assessor" and the "review panel" respectively. Mr Bobb contends that the costs assessor and the review panel did not comply with their statutory responsibilities, as imposed by ss 370 and 380 of the Act respectively, to give reasons for their decisions. He contends that he needs adequate reasons to pursue his statutory right of appeal on a question of law conferred by s 384(1) of the Act.

Background 4In 2009 the first defendant, Wombat Securities Pty Ltd ("Wombat"), commenced proceedings against Mr Bobb. The proceedings were listed for hearing before Barrett J in this Court on 24 March 2011. Shortly prior to the hearing, Wombat applied to amend its statement of claim. The amendments were allowed. No costs order was made at that time concerning the amendments. 5At some point, either prior to or just during the hearing, Mr Bobb commenced representing himself. In any event, on the second day of the hearing the proceedings were settled. The settlement was recorded in consent orders which noted, inter alia, that Mr Bobb had the opportunity to obtain independent legal advice concerning their terms. The relevant orders made were as follows. "1. Judgment for plaintiff in the sum of $185,000. 2. Order that the defendant pay the plaintiff's costs of the proceedings." 6On or about 7 November 2011 Wombat filed an application for an assessment of its party/party costs. It was referred by the Manager Costs Assessment to the costs assessor. On 23 December 2011 the costs assessor issued a certificate, with reasons for his assessment. He determined that the amount of $165,570.07 was a fair and reasonable assessment of the costs to be paid pursuant to the order that I have noted above. 7In accordance with the statutory scheme, Mr Bobb sought review of that determination by a review panel. On 31 July 2012 the review panel issued its reasons for affirming the decision of the costs assessor. On the same day it issued two certificates, one recording its affirmation of the costs assessor's certificate, and another determining that Mr Bobb was to pay the costs of the review before it and specifying the amount. 8On or about 3 September 2012 Mr Bobb filed a summons commencing an appeal in the District Court. The relief sought included orders setting aside the review panel and the costs assessor's certificates of determination. The grounds of the summons raised a number of contentions suggesting that either the cost assessor or the review panel or both made errors deciding various questions of law (see s 384(1)). At some point an amended summons was filed. It further contended that the cost assessor's and the review panel's reasons for their determinations were inadequate. 9Mr Bobb's appeal to the District Court was fixed for hearing on 5 December 2012 before his Honour Knox DCJ. Argument proceeded on that day and into the next. It appears that his Honour was persuaded that the complaint that the reasons of the costs assessor and the review panel were inadequate was not a matter that could be dealt with under s 384(1). His Honour adjourned the proceedings to enable Mr Bobb to commence these proceedings and, in particular, to seek orders compelling the provision of reasons by the costs assessor and the review panel in conformity with the Act.

Division 11 of Part 3.2 of the Legal Profession Act 2004 10For the purposes of these proceedings, it is necessary to note three features of the scheme of costs disclosure and assessment provided for in Division 11 of Part 3.2 of the Act. 11First, as I have indicated, the scheme imposes a statutory obligation on each of the costs assessors and the review panel to give reasons for their decision. In particular, s 380 provides, so far as review panels are concerned: "Reasons for determination (1) The panel must ensure that a certificate issued under section 378 (Certificate as to determination of panel) or 379 (Recovery of costs of review) that sets out the determination of the panel is accompanied by: (a) a statement of the reasons for the panel'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 370 is the equivalent provision for costs assessors. 12Much has been written about the requirements of ss 380 and 370 and similar provisions in other statutes. For present purposes and so far as a review panel is concerned, I need only note that clause 134 of the Legal Profession Regulation 2005 expands upon the requirements of the section by providing as follows: "Statement of reasons - section 380 of the Act (1) A statement of reasons for a panel's determination that is required by section 380 of the Act to accompany a certificate issued under section 378 of the Act must be accompanied by the following information: (a) the total amount of costs for providing legal services determined to be fair and reasonable, (b) the total amount of disbursements determined to be fair and reasonable, (c) each disbursement varied by the determination, (d) in respect of any disputed costs, an explanation of: (i) the basis on which the costs were assessed, and (ii) how the submissions made by the parties were dealt with, (e) a statement of any determination as to the person by whom and the extent to which either the fee paid or payable for the application for review or the costs of the costs assessor, or both, are to be paid, (f) if the determination relates to costs other than party/party costs and the panel declines to deal with an application for review of a bill of costs - the basis for doing so, (g) if the determination deals with any matter of the kind referred to in section 328 (1) or (4) of the Act (relating to the setting aside of a costs agreement), a statement as to the panel's reasons for its decision on that matter. (2) A statement of reasons to which this clause applies may be accompanied by such further information as the panel concerned considers necessary to clarify the review of a costs assessor's determination." Regulation 128 is in similar terms and applies to costs assessors. 13Further, it should be understood that one of the objectives of the obligation to give reasons is to ensure that a party's appeal rights are not rendered nugatory by the absence of any proper reasons for the decision. The difficulty in demonstrating an error of law by an administrative decision-maker, in the absence of any or proper reasons, was one of the evils which the various statutory schemes for judicial review put in place over the past forty years was designed to address. 14Second, in the ordinary course where there has been a review by a costs panel of a decision by a costs assessor, then the appeal regime to which I will refer is directed to the panel's reasons and not those of the assessor. 15Subsection 375(1) specifies that, in conducting a review, the review panel can either affirm the costs assessor's determination or set it aside and substitute its own. The balance of s 375 suggests that the nature of the review panel's review is, in effect, a fresh assessment subject to the constraints noted in s 375(3). The fact that, effectively, the review panel's reasons for assessment supersede that of the costs assessor is also reflected by s 389, which I will address next. 16Third, subdivision 6 of Part 11 provides a statutory scheme for appeals. It includes ss 384, 385 and 389, which provide as follows: "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. (2) After deciding the question the subject of the appeal, the District Court may, unless it affirms the costs assessor's decision: (a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or (b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application. (3) On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given. 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. (3) The District Court or court or tribunal may, in accordance with its rules, grant leave to appeal and may hear and determine the appeal. (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. (5) After deciding the questions the subject of the appeal, the District Court or court or tribunal may, unless it affirms the costs assessor's decision, make such determination in relation to the application as, in its opinion, should have been made by the costs assessor. ... 389 Court may refer unreviewed determination to review panel (1) If an appeal is made under section 385 (Appeal against decision of costs assessor by leave) against a determination of a costs assessor and the determination to which the appeal relates has not been reviewed by a panel in accordance with Subdivision 5 (Review of determination by panel), the court or tribunal to which the appeal is made may refer the appeal to the Manager, Costs Assessment for a review by a panel under that Subdivision. (2) For the purposes of Subdivision 5 (Review of determination by panel), the referral of an appeal by a court or tribunal under subsection (1) to the Manager, Costs Assessment is taken to be a duly made application for a review under that Subdivision." 17The effect of ss 384 and 385 is that in some cases there is a scheme for bifurcated appeals from either a costs assessor or review panel's decision. In a case such as this, where the subject matter of the assessment is a costs order of this Court, an appeal by a party who "is dissatisfied with a decision of a costs assessor as to a matter of law" is heard and determined by the District Court. However, s 385(2) has the result that there is scope to apply for leave to appeal against the merits of assessment to this Court. 18Further, s 389 confers on the District Court a power to remit an appeal from a costs assessment to the Manager of Cost Assessment for review by a review panel. It thus enables the District Court to insist upon the exhaustion of the merits review rights of an appellant before entertaining an appeal on a question of law or, in the appropriate case, by the grant of leave under s 385. 19As I have stated, this reinforces the conclusion that one aspect of the scheme is that decisions, or at least the reasons of review panels, effectively supersede those of costs assessors.

Mr Bobb's dilemma 20It should be apparent from the above that nothing in the statutory regime makes express provision for any interference with that scheme by this Court. Equally, however, that scheme does not alter or impede the exercise of this Court's supervisory jurisdiction, as confirmed by s 69 of the Supreme Court Act 1970. 21In this case, Knox DCJ was persuaded that it was not within the scope of s 384(1) for his Honour to address a complaint of inadequate reasons. It is not part of this Court's function to determine if his Honour was correct in that regard. The exercise of supervisory jurisdiction over the District Court is reserved to the Court of Appeal. It is not exercised by a single judge of this Court. 22However, assuming his Honour was correct and assuming that Mr Bobb's assertions that the reasons of either the costs assessor or the review panel were inadequate, the result is that it is only this Court at first instance that could grant a remedy in respect of that complaint. The only relief that Mr Bobb seeks in this Court is an order compelling the provision of adequate reasons, so that he can continue with his right of appeal to the District Court under s 384(1). The position he is in simply illustrates the numerous possibilities that have been opened up by the manner of drafting of s 384 and s 385, coupled with the lack of any supervisory jurisdiction being conferred on the District Court. For example, it would also have been open to Mr Bobb to seek in this Court relief in the nature of certiorari to quash the costs assessor's or the review panel's decision, either because they did not provide adequate reasons (see Campbelltown City Council v Vegan [2006] NSWCA 284; 67 NSWLR 372 at [130] per Basten JA), or some other error of law that was apparent on the face of the reasons of the relevant decision maker. 23However, all the forms of relief available in this Court in this context are discretionary. In many cases, the terms and existence of a statutory scheme for appeals will warrant the discretionary rejection of claims for relief which seek to invoke the Court's supervisory jurisdiction (see, for example Kennett v Muc t/as GH Healey & Co [2013] NSWSC 119; Gorczynski v Leichhardt Council [2007] NSWSC 202 [16] to [25] per Hidden J; and Currabubula Holdings Pty Ltd v State Bank of New South Wales Ltd [2000] NSWSC 232 at [54] to [69] per Einstein J).

Mr Bobb's Complaint 24The substance of Mr Bobb's complaint, as agitated in this Court, concerns the manner in which the costs assessor and then the review panel dealt with a contention by Mr Bobb concerning the costs incurred by Wombat prior to the making of the amendment that I have noted above. 25Following the making of the application for assessment, Mr Bobb's solicitors notified the costs assessor of their objections. Their objections included the following submission: "The respondent's submission is that this simplified and uncomplicated case theory [being that put forward after the making of the amendments] should have been the applicant's position from the start and that many costs before amendment are largely wasted or avoidable. Amendments infer there has been error or omission. Error or omission adds to the costs. Those extra costs should not be the respondent's burden. There is no new fact or evidence that makes an amendment necessary. Senior Counsel simplified the case and changed the case theory. ... It might be said there are no formal orders arising from the applicant's late amendments. The respondent appeared at hearing unrepresented. His instructions are that he was pressured into settling .... This is not to complain or seek to rerun the case. It goes to explaining why there are no qualifications on the costs order. Notwithstanding there is no direct order arising from the amendment it is open to the Assessor to find that it would not be fair and reasonable for the respondent to pay for costs that were incurred through a failure to prosecute the applicant's strongest position initially." 26Thus it was contended that the making of the amendments necessarily meant that a substantial amount of costs ("many") incurred before the amendment or granted "were largely wasted or avoidable". 27Later, the submission addressed the disputed items including those concerning the period prior to the amendment. The submissions included the following: "The general objection that preparation work performed before the last amendment to the applicant's claim is compromised affects items 1 to 267. At 268 the amended statement of claim appears. The respondent submits the Assessor should make an assessment of what reduction should be made to costs based on his reading of the bill. Often hours of time are claimed in an accounting exercise of examining the respondent's transactions. It is the 'accounting' approach that is later largely abandoned in favour of the failure to disclose approach. The respondent does not say all costs are wasted before the last amendment. The applicant is entitled to obtain facts on which its case is built. The respondent considers the detailed reconciliations and other accounting exercises are made marginal by the later change in the applicant's case." 28The submission then addresses the schedule of items. Although it did not in each case repeat the complaint concerning pre-amendment costs, this was raised again in relation to one of the items, item 226, which concerned the period prior to the making of the amendments. In relation to that item, the submissions stated: "As regards the other affidavits: these affidavits are superseded by very short affidavits filed 21.3.11 wherein it is deposed that there was a failure to disclose transfers to the respondent's related parties but if there had been a disclosure, the respondent's mandate would have been withdrawn. There is a distinct change in the applicant's case rendering the affidavits claimed here unnecessary." 29The costs assessor referred to this submission in the following way: "Amendments to Costs Applicant's Case. The Costs Respondent submitted that a few days before the hearing, the Costs Applicant substantially amended its case, amending the Statement of Claim and serving fresh affidavits. The Costs Respondent submitted that potentially all preparation before the 26 March 2011 amendment was wasted or compromised with the case being abruptly changed. In response, the Costs Applicant submitted that the amendment was confined to an alternative argument and that the Costs Applicant did not withdraw any of its original claim." 30Beyond this, the costs assessor did not address Mr Bobb's contention, nor did he appear to resolve the competing arguments. 31Later in the costs assessor's reasons, he addressed each of the disputed items indicating whether they were reduced or not allowed. The costs assessor stated: "Items Reduced Having regard to the complexity and general nature of the matter, I formed the view that the time allowed for performance of certain of the items should be reduced so that they represented in my opinion a, 'fair and reasonable amount of costs for the work' (s. 364 of the Legal Profession Act; NSW Crime Commission v Fleming; Singleton v Macquarie Broadcasting Holdings Ltd; EMI Records v Ian Cameron Wallace Pty Ltd; Smith v Smith; Huggard v Huggard; D'Alessandro and D'Angelo v Bouloudas; Gallagher v CSR; Verginis v Clena Services Pty Ltd). Items Not Allowed I disallowed Items 19, 25, 43, 48, 55, 56, 104, 212 and 237 on the basis that they were not fair and reasonable on a party/party basis. I disallowed Items 75 and 114 on the basis they were not covered by the Costs Orders the subject of these proceedings. I disallowed Item 264 on the basis that it was precluded by s.319 LPA. I disallowed Item 317 on the basis that insufficient particulars were provided." 32None of the disallowed items appear to have related to any matter that was alleged to have been rendered otiose by the making of the amendments. In my view it seems clear that the costs assessor did not reduce any item in the account on the basis that it was not reasonably incurred having regard to the change to Wombat's case that was effected by the amendments (assuming there was one). 33Mr Bobb repeated this objection before the review panel. He also claimed that the costs assessor had not given any reasons explaining why he rejected Mr Bobb's submissions on this point. The review panel's reasons addressed the complaint in the following way: "5.1 Ground 1 That the assessor failed to disclose his decision in relation to the late amendment to the case put by the costs applicant in the underlying proceedings: 5.2 The review panel considered the assessor's statement of reasons and marked up bill. The panel concedes that the treatment of the submissions contained in the reasons is implicit and could have been explained more clearly. It is apparent from the material contained in the assessor's file that the assessor considered the objection and responses and disallowed the objection. The panel has reviewed the original and amended pleading and shares the view of the assessor that the amendment, although late, was allowed by the court, with no order of the court which would entitle the respondent to limit his costs associated with the costs of the amendment. 5.3 The panel further notes that in his objections the respondent stated: 'It might be said that there are no formal orders from the applicant's late amendments. The respondent appeared at hearing unrepresented. His instructions are that he was pressured into settling and was all at sea. This is not to complain or seek to rerun the case. It goes to explaining why there are no qualifications on the costs order. Notwithstanding there is no direct order arising from the amendment it is open to the assessor to find that it would not be fair and reasonable for the respondent to pay for costs that were incurred through a failure to prosecute the applicant's strongest case initially.' 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. If that was not done, that is a matter for the respondent to address with his counsel or, if none, on his own account. 5.5 The panel allows that the treatment of the objection by the assessor is not clearly stated and could have been explained more clearly. Nonetheless, the panel considers that the assessor had regard to the then costs respondent's objections and submissions and disallowed the objection. 5.6 The review panel agrees that the objection should be disallowed and that the approach adopted by the assessor to disallow the objection is the correct one." (emphasis in original) 34In the balance of its reasons the review panel stated that it had reviewed the costs assessor's assessment of the individual items and agreed with them.

Relief against the Costs Assessor 35As I have stated, the gravamen of the complaint against the costs assessor was that he did not set out any reasons for rejecting Mr Bobb's complaint about the costs incurred prior to the amendment, although it is implicit in his determination that he did not accept that complaint. 36Before me, Counsel for Mr Bobb, Mr Raphael, did not press his claim for relief against the costs assessor. It was accepted, rightly in my view, 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 and not those of the costs assessor.

Relief against the Review Panel 37Instead, Mr Raphael focussed his submissions on the review panel's reasons that I have extracted above. He contended that in a number of respects, they were "quite wrong" in that they attributed various reasons to the costs assessor when there were in fact none. 38However, just because the reasons of the review panel might be "wrong" even in that respect, and I am not saying that they are, that does not mean that they are inadequate, that is, it does not mean that there has been a failure by the review panel to comply with s 380. Mr Raphael also submitted that the review panel could not simply avoid the performance of its obligations of assessing what costs were reasonably incurred by relying on the Court order as extending to the whole of the proceedings. Again, this is not a complaint directed to the adequacy of the reasons, but is instead directed to whether the reasons disclosed an error of principle or not. This is a matter for Mr Bobb to pursue in the District Court. 39As 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. 40I cannot discern any indication from the review panel's reasons that they further considered whether the costs incurred prior to the amendment were unreasonable in light of the amendments being granted, and in light of the way in which the case was run at the trial. To the contrary, the review panel's affirmation of the costs assessor's determination of individual items suggest they did not undertake that task. 41Whether or not the approach of the review panel in this regard discloses that they wrongly decided a matter of law for the purposes of s 384(1) is not a matter for this Court to determine. It is simply sufficient to conclude that the review panel's reasons, whether they be right or whether they be wrong, were in this respect adequate in that they conformed to the statutory requirements.

Discretionary refusal of relief 42Even if Mr Raphael had pursued his client's claim for relief against the costs assessor in respect of his apparent failure to provide adequate reasons, I should indicate that I would have refused relief as a matter of discretion, given that Mr Bobb invoked his right to seek a merits review by the review panel. 43Insofar as the review panel is concerned, counsel for Wombat, Ms Castle, contended that any relief that would otherwise be available should be refused as a matter of discretion because there was available to Mr Bobb the ability to apply to this Court for leave to review the costs assessment under s 385(2) of the Act. 44In light of the conclusion that I have reached, it is not necessary for me to state whether I accede to this submission. However, for the sake of completeness, I should add that I would have had some difficulty in doing so. It seems to me a difficult matter to accept that the ability of a person in Mr Bobb's position to apply for leave to appeal under s 385 could itself be a discretionary basis for refusing relief in the application of the kind that he has made to the Court. 45The only form of review or appeal that Mr Bobb has, as a matter of right, is the right to appeal to the District Court under s 384(1). It is that right which he has invoked. His application to this Court was designed to facilitate his pursuit of that right of appeal. In particular, he alleged that the review panel's reasons did not adequately expose its reasoning on a question of law that was raised before it. In the end I have rejected that contention. However, if I had accepted it, I do not see it is an answer to that claim that there was the possibility of Mr Bobb pursuing a different form of review to that which he wanted to pursue and that to which he was entitled. 46In any event, it follows from the above that the summons will be dismissed and I so order. 47I direct that either party can file any submissions on the question of costs, not to exceed two pages, on or by 4pm on 14 June. I indicate that if neither party files a submission, then the order I would otherwise be inclined to make is that the plaintiff pay the first defendant's costs. Subject to that, I reserve costs.

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: 13 June 2013

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