On 20 June 2013, Spencer & Co Legal received urgent instructions from Ljiljana Coshott and James Coshott and a company known as Schlotzsky Nominees Co Pty Limited in respect of proceedings listed to commence in the Federal Court on the following Monday, 24 June 2013. Ljiljana is Mr Coshott's sister-in-law and James is his nephew. It will be convenient to refer to Ljiljana Coshott, James Coshott and Schlotzsky Nominees Co Pty Limited together as the clients. Mr Coshott was a witness in the Federal Court proceedings but was not a party to them.
On each occasion that Mr Spencer was the author of a communication, he wrote under the hand "Spencer & Co Legal". The references to the following emails are to be read in that context.
By email dated 8 July 2013 to Mr Coshott and James Coshott, Mr Spencer forwarded a tax invoice for a sum of $55,660 in respect of the Federal Court proceedings. He added:
"Ron as we also discussed, please also confirm by return email your authority to pay out the funds in trust as per the letter, to Mr Meltz and to this firm."
By letter dated 10 October 2013 to Mr Coshott, Mr Spencer enclosed a trust account statement as at 26 September 2013, together with copies of invoices received from counsel. Mr Spencer stated in the letter:
"We confirm that we are authorised to pay those invoices to the extent we are able from the remaining funds in Trust".
He also asked Mr Coshott for a further $11,000 on account of costs.
On 12 October 2013, Mr Spencer advised Mr Coshott by email that he had omitted an invoice and requested that he pay $22,000 instead of the $11,000 asked for in the letter of 10 October 2013. Later the same day, Mr Spencer advised in a further email that other invoices were outstanding and stated:
"… so from $22,000 there won't be much left. Instead of dribs and drabs do you want to just make it $44,000."
There were further emails from Mr Spencer to Mr Coshott seeking approval to pay invoices relating to the litigation. In one of the emails, dated 20 November 2013, Mr Spencer specifically sought confirmation of instructions to pay an invoice to counsel "from the trust funds held in the Ljiljana Coshott/CBA debt file".
Mr Coshott responded to the various requests, giving approval as sought.
On 22 October 2013, Mr Coshott gave a written authority to Mr Spencer:
"… to pay from the funds held in your trust A/c on behalf of Ljiljana Coshott (which funds were paid into your firm's trust account by Fewin Pty Ltd) and totalling some $316,00, the balance of your outstanding fees in the matter of Coshott + Ors v Prentice …"
The authority was signed by Mr Coshott "in his personal capacity and in his capacity as the sole director and secretary of Fewin P/L".
On the same day, Ljiljana Coshott signed an authority authorising:
"… Spencer Legal & Co to deal with the monies held by it in its trust account in my name as may be directed by Ronald Coshott/Fewin Pty Limited pursuant to the Deed of Loan."
On 4 August 2014, the clients and Mr Coshott brought an application for assessment of the costs claimed by Spencer & Co Legal relating to the Federal Court proceedings. As the application by the clients was filed outside the 12 month time period prescribed by the 2004 Act, the clients withdrew their application, leaving Mr Coshott as the sole applicant for costs assessment. Mr Coshott's application was not out of time, as he had not up to that time been provided with an itemised bill. The application was referred to Ms Dulhunty for costs assessment on 19 December 2014.
On 9 April 2015, Mr Spencer wrote to the costs assessor, Ms Dulhunty, stating that Mr Coshott had loaned his brother and his brother's wife "significant monies to assist … with their various legal problems" during a lengthy history of litigation in other courts, in circumstances where Mr Coshott's brother was an undischarged bankrupt and his brother's wife was likely to go bankrupt. The letter went on to say:
"As Ronald Coshott/Fewin Pty Ltd had been the original source of the funds and Robert, Ljiljana, James and Michael Coshott deferred to him (they were in no position to argue; without his financial assistance; they would never have had legal representation, at least by this firm) as a matter of courtesy copies of invoices rendered were also provided to him and were approved by him and payment authorised."
On 6 May 2015, the costs assessor wrote to Kejus Pty Ltd T/as Spencer & Co Legal advising it that "[t]he evidence indicates that Ronald Coshott was a third party payer for the matter" and directing it to provide an itemised version of the bill. Spencer & Co Legal responded to that letter on 3 June 2015, in the following terms:
"Ronald Coshott, either personally or through his company Fewin Pty Limited, loaned funds to members of his brother's family, including his sister in law, to pay their legal costs of and incidental to these and other proceedings. The loans were the subject of an initial loan agreement and a supplementary agreement when further monies were loaned."
The letter continued:
"According [sic], with respect, neither Ronald Coshott nor Fewin Pty Limited is a 'third party payer' within the meaning of section 318A of the Legal Profession Act 2004."
Mr Coshott's lawyers responded on 4 June, as follows:
"We have received by email a copy of the costs respondent's letter to you of 3 June, 2015.
It is clear that the costs respondent failed and continues to fail to obey your notice to him to produce documents.
Leaving aside the 'inaccuracies' of the statements made in his letter, nothing in the letter assists him. In fact, he admits that he did not deliver any claim for payment to Ronald Coshott. Further he admits that there was no Costs Disclosure made to Ronald Coshott.
The Costs Applicant asks that the Costs Assessment be completed forthwith and awaits your advice that the Certificates of Determination are available to be uplifted from the Costs Assessment Manager upon payment of the fees."
On 29 June 2015, Ms Dulhunty dismissed Mr Coshott's application for costs assessment on the basis that he was not a "third party payer" within the meaning of the Act.
[2]
Mr Coshott's submissions
Mr Coshott contended that he was a non-associated third-party payer pursuant to s 302A(1)(c) and thus entitled to seek an assessment of costs pursuant to the 2004 Act, s 350(2). He submitted that the determination of whether a person was a "third party payer" lay with the Manager, Costs Assessment, and that the costs assessor had no jurisdiction to make that determination. Mr Coshott also submitted that as the application for assessment had been referred to the costs assessor by the Manager, Costs Assessment, a determination had been made, at least by implication, by the Manager, that Mr Coshott's application was valid. Mr Coshott submitted that in these circumstances the costs assessor was obliged, by the terms of the statute, to undertake the assessment.
Mr Coshott accepted that the costs assessor had limited powers to make determinations in respect of matters other than whether the costs were fair and reasonable. Subject to that qualification, Mr Coshott submitted that the costs assessor's powers were confined to the assessment of costs specified in the bill of costs subject of the referral by the Manager. Mr Coshott thus sought orders, the effect of which were to have the matter remitted to the Manager, Costs Assessment for referral to a different costs assessor for assessment.
[3]
Primary judge's reasons
On Mr Coshott's appeal to the District Court under s 384, two matters were in contention. The first was whether the costs assessor had jurisdiction to determine whether Mr Coshott was a "third party payer" within s 302A of the 2004 Act. Mr Coshott's argument before the primary judge was that the power to determine a question such as whether a party to a costs assessment was a "third party payer" was reserved to the Manager, Costs Assessment. Mr Coshott argued, alternatively, and in any event that, in this case, the Manager, Costs Assessment had made that determination by her act of sending the application for costs assessment to the costs assessor.
The second issue raised two matters of procedural fairness. The latter questions are not before this Court.
The primary judge allowed additional evidence to be filed by Mr Coshott on the appeal which included evidence relating to the question whether he was a "third party payer". Her Honour noted, at 40, that the evidence adduced by Mr Coshott included:
"Various Spencer & Co Legal's financial records showing payments by Fewin Pty Ltd ... It is clear that, while the requests are made to [Mr Coshott], the payments are made by Fewin Pty Ltd, a company which is not a party to this appeal, or to the litigation the subject of the memorandum of costs."
Her Honour determined that the Manager, Costs assessment, had not made, either expressly or implicitly, a decision that Mr Coshott was a "third party payer": see at [52]. Her Honour also determined that the question of whether a party to a cost assessment was a "third party payer" was not within the powers of the Manager, Costs Assessment. Her Honour's view, as stated, at [73], was that "[t]he Manager's role is to refer, not to decide". Her Honour further stated, at [78], that the provisions of the 2004 Act "clearly intend the Manager's role as being the efficient managing of costs assessment referrals". In her Honour's view, the only discretion given to the Manager was where a problem arose in relation to the allocation of an application for costs assessment to a particular costs assessor.
Her Honour also held, at [34], that the costs assessor needed to make "a preliminary finding" as to whether or not Mr Coshott was a "third party payer" and that the costs assessor had done so. Her Honour further observed, at [80], in rejecting the submission that the Manager, Costs Assessment had the power to determine whether a party had a relevant status, in this case that of being a third party payer, that:
"There is nothing in the language of any of these sections to support the submission that the Manager (as opposed to the costs assessor …) has any power to determine whether a party is within time, let alone the status of that party."
Her Honour further held at [97] that she had power to reconsider the issue of "third party payer" pursuant to s 384(2)(a) and concluded that Mr Coshott was not a third party payer. In her Honour's view, at [97], Mr Coshott, on the additional evidence he had filed, had failed to "demonstrate any liability to pay of the kind referred to in s 302A of the Act" as he was:
"… not under a legal obligation to pay these costs. It appears to be acknowledged that he owes no obligation to [Spencer & Co Legal]."
Her Honour, at [97], was also satisfied that there was "no legal obligation owed to 'another person' as set out in s 302A(1)(c) (such as his brother) as there are no documents to support this". Her Honour also noted that the money in question appeared to have been paid by Fewin Pty Ltd, rather than by Ronald Coshott.
[4]
Consideration
In my opinion, the powers of a costs assessor were not limited in the manner argued by Mr Coshott. This, in my opinion, is so because in the usual course an administrative officer has the power to determine whether it is acting within authority. In Wentworth v Rogers (2006) 66 NSWLR 474; [2006] NSWCA 145 Basten JA, at [192], referred to:
"… the principle that administrative officers and bodies, which have no power to make binding determinations of law, are nevertheless required, for the purpose of exercising their powers, to consider matters of law."
Basten JA referred to the decision of Brennan J, sitting as President of the Administrative Appeals Tribunal in Re Adams and the Tax Agents' Board (1976) 12 ALR 239 at 242, which stated that:
"An administrative body with limited authority is bound, of course, to observe those limits. Although it cannot judicially pronounce upon the limits, its duty not to exceed the authority conferred by law upon it implies a competence to consider the legal limits of that authority, in order that it may appropriately mould its conduct. In discharging its duty, the administrative body will, as part of its function, form an opinion as to the limits of its own authority. The function of forming such an opinion for the purpose of moulding its conduct is not denied to it merely because the opinion produces no legal effect."
In my opinion, there is nothing in the provisions of the 2004 Act that would countermand this principle. To the contrary, there are various stages of the costs assessment process that support and/or confirm that the principle applies to a costs assessor undertaking a costs assessment.
An applicant for costs assessment must be either a "client" or a "third party payer" within the meaning of the 2004 Act to be entitled to seek a costs assessment: see s 350. Under s 358, a costs assessor may require the production of documents and information for the purposes of determining the costs application. In my opinion, the determination of a costs application could, and would in an appropriate case, properly include a rejection of the application if a party was not entitled to bring it. If a question arose in a matter that had been referred to a costs assessor by the Manager, Costs Assessment, as to the entitlement of a party to obtain a costs assessment, the costs assessor could engage the powers under s 358 to require the parties to produce documents or information to enable her or him to be satisfied that an applicant was entitled, in accordance with the terms of the Act, to a costs assessment.
Likewise, a costs assessor is entitled to "inform himself or herself on any matter as he or she fits thinks fit": s 359(2). There is nothing in this provision which confines this power to the "number crunching" exercise, as it was described in argument, involved in determining the fair and reasonable costs, or the costs agreed in a costs agreement. Rather, it is a power that supports the costs assessment process, which, on the view I have taken, includes the question whether the costs applicant is entitled to bring the application.
Accordingly, I am of the view that her Honour was correct in finding that a costs assessor in undertaking an assessment has jurisdiction to determine whether a party to the assessment was a "third party payer". There is another factor that supports this view, which is more fully explored by Simpson JA. Section 350 provides that "a third party payer" may apply to a costs assessor for a costs assessment. This is to be contrasted with the position of a "client" who may apply to the Manager, Costs Assessment. There is no apparent reason for this differentiation as between the two classes of applicants. Nor does there appear to be a mechanism for a third party payer to apply to a costs assessor for a costs assessment. It also seems that it is a difference which has escaped the notice of those statutorily engaged in the costs assessment process, of which this case is an example. However, as the legislation provides that a "third party payer" may apply to a costs assessor, then, a fortiori, the costs assessor had the power to determine whether Mr Coshott was a "third party payer" within the meaning of the Act.
It is not necessary, therefore, to determine whether the Manager, Costs Assessment also had that jurisdiction or power. However, I would reject Mr Coshott's argument that the Manager, Costs Assessment had implicitly made the determination that he was a "third party payer". There are no facts that would support any such implication, the mere referral of the application to the costs assessor not being sufficient to give rise to any such implication.
[5]
Court's discretion as to whether to grant relief
If I am wrong in the view expressed above this is a matter in which I would have refused relief on discretionary grounds. My reasons for doing so are twofold. First, I am not satisfied on the evidence before the Court, which was the evidence adduced before the primary judge, that Mr Coshott was a "third party payer". Secondly, the amount involved is relatively small.
The first question leads directly to the proper construction of s 302A.
Mr Spencer submitted that on its proper construction, a party was a "non-associated third party payer" within the meaning of s 302A(1)(c) only if, under the legal obligation that the third party has or had with the client, the third party was required to pay the legal fees directly to the solicitor. He contended that it was not sufficient that a third party loaned monies to a client for the purposes of the client paying the costs of legal services provided by a law practice.
The proper construction and application of s 302A requires reading ss 302A(1)(a) and (c) together. Their combined application, insofar as is relevant in this case, means that a third party is a "non-associated third party payer" in relation to a client of a legal practice if the third party is under a legal obligation to pay the costs for legal services provided to the client and that legal obligation is owed to the client but not to the law practice.
On the evidence adduced in the proceedings before her Honour, Mr Coshott did not have an obligation to pay legal costs to Spencer & Co Legal for legal services provided to the clients. There was no evidence of an agreement of any kind that created any such obligation. The terms of the various emails and the authorities given by Mr Coshott and Ljiljana Coshott dated 22 October 2013 are evidence to the contrary. That is, they are evidence that there was no such legal obligation.
That leaves the question whether Mr Coshott was under a legal obligation to the clients to pay for the legal services provided to them by Spencer & Co Legal. The evidence reveals that there were loans in place as between Mr Coshott and, it would seem, Fewin Pty Ltd and the clients or some of them. That evidence is found in Ljiljana Coshott's authority of 22 October 2013 given to Spencer & Co Legal (see above at [32]) and Spencer & Co Legal's letter of 3 June 2015 to the costs assessor (see above at [35]). That letter stated that loans were provided to the clients "to pay their legal costs of and incidental to these and other proceedings".
There was no evidence that, in providing funds to the clients, or to Ljiljana Coshott, Mr Coshott undertook an obligation to pay their legal fees. Rather, on the evidence before this Court, the monies were lent for the purpose of the clients paying their own legal fees. On that evidence, I consider that, as a matter of the proper construction of s 302A, Mr Coshott was not a "third party payer".
If, as I have concluded, Mr Coshott was not a "third party payer" on the proper construction of s 302A, I do not consider that it is appropriate that statutory costs assessment processes be permitted to be invoked in circumstances where, as here, this would lead to further disputation between the parties, involving further costs and, most likely and more fundamentally, the bringing of further proceedings. An additional circumstance in support of this conclusion is the relatively small amount involved here, being slightly in excess of $56,000.
[6]
The Chorley exception
The primary judge, in her decision of 8 April 2016, ordered, pursuant to the Civil Procedure Act, s 98, that Mr Coshott pay Mr Spencer's costs. The costs order was subject to a costs assessment pursuant to the Legal Profession Uniform Law (NSW). The costs assessor allowed Mr Spencer's professional and profit costs of acting for himself.
It is well established that a self-represented litigant is not entitled to professional costs for acting for herself or himself in proceedings: Cachia v Hanes (1994) 179 CLR 403; [1994] HCA 14. There is a recognised exception to this rule where a solicitor is self-represented in proceedings brought by or against her or him: London Scottish Benefit Society v Chorley (1884) 13 QBD 87 (the Chorley exception). The Chorley exception was applied in Australia in Guss v Veenhuizen (No 2) (1976) 136 CLR 47; [1976] HCA 57.
Mr Coshott contended that, having regard to the definition of costs in the Civil Procedure Act, s 3, the Chorley exception does not apply in New South Wales such that Mr Spencer was not entitled to professional and profit costs.
A question has arisen in a number of recent cases as to whether, having regard to the definition of costs in the Civil Procedure Act, the Chorley exception has any present application in New South Wales. That question, to date, has remained unresolved.
A preliminary question arises in this case as to whether the Court should proceed to determine the question in circumstances where the amount involved is small (the assessed costs were in the sum of $16,388) and in circumstances where there remained other avenues of appeal from the costs assessor's decision which have not been exhausted: see s 205 of the Legal Profession Uniform Law; ss 82 and 89 of the Legal Profession Uniform Law Application Act 2014 (NSW).
Although those factors might, in a given case, have been persuasive in a court refusing relief, I have taken the view that the Court should determine the question on this occasion. It is an important point of principle which has, as I have indicated, been a matter of recent contention. The question has been directly raised in the proceedings and Mr Coshott has not inappropriately brought it in the application which was before the Court in any event.
[7]
London Scottish Benefit Society v Chorley
In Chorley, Brett LJ first explained, at 875, the basis upon which a litigant was entitled to costs as follows:
"When an ordinary party to a suit appears for himself, he is not indemnified for loss of time; but when he appears by solicitor, he is entitled to recover for the time expended by the solicitor in the conduct of the suit. When an ordinary litigant appears in person, he is paid only for costs out of pocket. He cannot himself take every step, and very often employs a solicitor to assist him: the remuneration to the solicitor is money paid out of pocket."
His Lordship continued in relation to a litigant, who being a solicitor, represented himself or herself:
"When, however, we come to the case of a solicitor, the question must be viewed from a different aspect. There are things which a solicitor can do for himself, but also he can employ another solicitor to do them for him; and it would be unadvisable to lay down that he shall not be entitled to ordinary costs if he appears in person, because in that case he would always employ another solicitor."
Bowen LJ based his reasoning perhaps even more directly on the fact that a solicitor's skill and time could be measured. He stated, at 877:
"Professional skill and labour are recognised and can be measured by the law; private expenditure of labour and trouble by a layman cannot be measured. It depends on the zeal, the assiduity, or the nervousness of the individual. Professional skill, when it is bestowed, is accordingly allowed for in taxing a bill of costs; and it would be absurd to permit a solicitor to charge for the same work when it is done by another solicitor, and not to permit him to charge for it when it is done by his own clerk."
Both Brett and Bowen LJJ eschewed the principle as being based upon any position of privilege of the solicitor.
Fry LJ also agreed that a solicitor litigant should be entitled to costs. His Lordship stated, at 877-8:
"I am of the same opinion. This is not a question as to a solicitor's privilege. I think that the conclusion of which we have arrived will be beneficial to the public, because if the rule were otherwise a solicitor who is a party to an action would always employ another solicitor, and whenever he is successful he would recover full costs; whereas under the practice laid down by us, a solicitor who sues or defends in person will be entitled, if he is successful, to full costs, subject to certain deductions, of which his unsuccessful opponent will get the benefit."
[8]
Guss v Veenhuizen (No 2)
In Guss v Veenhuizen (No 2) the Court was concerned with the question whether Mr Guss, a barrister and solicitor of the Supreme Court of Victoria, was entitled to costs in proceedings that he had, as a party, successfully prosecuted on appeal in the High Court. Mr Guss had acted as the solicitor on the record and instructed counsel on his behalf. On taxation, the taxing officer disallowed Mr Guss' bill on the ground that, at the time the costs and disbursements were incurred, he had not been entitled to practice in the High Court, because, due to an administrative oversight, his name had not been entered on the High Court's Register of Practitioners. Mason and Murphy JJ upheld the taxing officer's refusal to allow the costs. Their Honours did not consider the Chorley exception.
The majority (Gibbs ACJ, Jacobs and Aickin JJ) did not consider that the administrative error was a bar to the claim for costs and, applying London Scottish Benefit Society v Chorley, further held that Mr Guss was entitled to his costs and disbursements including his professional costs. Their Honours observed, at 51, that, as had been established in Chorley, and in authorities in which that decision had been applied:
"… the litigant in person does not recover such costs in such circumstances in the capacity of a solicitor, but because, he happening to be a solicitor, his costs are able to be quantified by the Court and its officers."
Their Honours, at 52, reiterated that this was the true basis of the rule and that it was not a case of a solicitor being in a privileged position.
At the time, O 71, r 19 of the High Court Rules provided:
"19 (1) … bills of costs and fees which -
(a) are payable to barristers and solicitors entitled or admitted to practise in the Court in respect of business transacted by them in the Court or its offices; and
(b) have been directed by a judgment or order to be taxed,
shall be taxed, allowed and certified by a Registrar …"
The majority, at 53, observed that O 71, r 19 provided for the method and manner of quantifying costs that had been awarded in the ordinary case. Their Honours were of the view that O 71, r 19 did not affect the long-established rule of practice that entitled a litigant in person who is a solicitor to recover professional costs.
[9]
Cachia v Hanes
In Cachia v Hanes the High Court expressed doubt as to the Chorley principle. The case itself involved a self-represented litigant who claimed costs based upon the professional fees he usually charged as a self-employed consulting engineer.
At that time, the Supreme Court Act 1970 (NSW), s 76(1) provided, relevantly, that "costs shall be in the discretion of the Court". Section 76(2) provided for a definition of "costs" that included "costs of or incidental to proceedings in the Court". Section 19(1) of the Act defined "costs" as including "fees, charges, disbursements, expenses and remuneration". Importantly, r 67(1) of the Supreme Court Rules 1970 (NSW) provided:
"… the provisions of Schedule G or of any costs determination, as the case requires, shall apply to the taxation of costs incurred in relation to proceedings …"
Schedule G contained the relevant scale of costs.
The majority, at 409, held that the appellant was unable to sustain his argument. The "costs" provided for in the rules did not include time spent by a litigant who was not a lawyer in preparing and conducting a case. Rather, "costs" within the rules were confined to monies paid or liabilities incurred for professional legal services. Their Honours, at 410-411, stated that:
"It has not been doubted since 1278, when the Statute of Gloucester … introduced the notion of costs to the common law, that costs are awarded by way of indemnity … for professional legal costs actually incurred in the conduct of litigation."
Their Honours noted that the costs and expenses of travel and loss of time were not included.
Their Honours, at 411, then referred to the somewhat anomalous exception introduced by London Scottish Benefit Society v Chorley, stating that:
"The justification given for the privileged position afforded to a solicitor acting for himself is somewhat dubious, but it serves to emphasise the general rule."
Their Honours quoted from the reasons of Brett MR and Bowen LJ, referred to above, pointing out, at 412, that the issue in Guss v Veenhuizen (No 2) was whether the solicitor litigant was precluded from recovering "costs" in respect of his own time and services in circumstances when he was not on the High Court's Register of Practitioners. Their Honours noted that there had been no argument before the High Court that a solicitor litigant was not entitled to recover costs.
An argument advanced in Cachia v Hanes had been that litigants in person should not be treated unequally, so that they should be allowed to recover costs for their own time expended in the conduct of the proceedings. In rejecting that argument, their Honours referred to the basis upon which taxation of costs occurred, namely, in accordance with the relevant rules of court. Those rules made no provision for the reimbursement of a litigant for time lost in the preparation or presentation of the case. The rules did, however, provide for solicitors' costs that had been incurred. Their Honours added, at [17]:
"That affords some basis (although insufficient in our respectful view) for an award of costs in favour of a solicitor acting for himself and so performing professional duties, but it affords no basis whatsoever for an award by way of recompense to a litigant for time lost in the preparation or presentation of his case."
Their Honours also emphasised the compensatory nature of costs: see at 417.
[10]
New South Wales authority
Chorley has been consistently applied in New South Wales and Guss v Veenhuizen (No 2) has been accepted as binding authority to the effect that a solicitor who acted in proceedings as a litigant in person was entitled to his or her professional costs.
In Atlas Corporation Pty Ltd v Kalyk [2001] NSWCA 10, this Court (Handley, Meagher and Sheller JJA agreeing), considered itself bound by Guss v Veenhuizen (No 2). The Court referred to the doubt expressed by the majority in Cachia v Hanes but added, at [9], that it was nonetheless clear that the majority did not overrule Guss v Veenhuizen (No 2) and that the doubts expressed by the majority in relation to the rule were dicta. The Court also expressed, as a justification for the application of the indemnity principle in favour of a solicitor litigant, that the solicitor had lost the opportunity of using her or his time to do professional work for others and of being remunerated accordingly.
In Khera v Jones [2006] NSWCA 85, the Court (Mason P and Ipp JA) refused leave to appeal to an applicant who sought to challenge an assessment of a self-represented solicitor's costs, which included professional costs, in an application by a solicitor litigant for professional costs. The Court expressed the view that if the matter were "uncluttered by authority" it would have favoured the approach taken in Dobree v Hoffman (1986) WAR 36, where the Court considered that it was not bound by Guss v Veenhuizen (No 2) and that the Chorley exception should not be applied. However, the Court considered that a major impediment to that approach was the Court's recent decision in Atlas Corporation v Kalyk.
[11]
Interstate authorities and other first instance authorities
[12]
Dobree v Hoffman
In Dobree v Hoffman solicitors acted for themselves in a partnership dispute. The taxing officer disallowed professional costs the solicitors claimed for doing so. The taxing officer's decision was upheld by Ipp J. On appeal, the Western Australian Court of Appeal held that the Chorley exception did not apply so that the solicitors were not entitled to profit costs in acting for themselves. In reaching that conclusion, the Court emphasised that in Chorley, the exception was treated as a rule of practice, justified on the basis that a self-represented solicitor's professional costs could be "measured". In this regard, it should be noted that in Chorley the Court was not determining the proper construction and application of a rule of court. The Court was sceptical of the opinion of their Lordships that the exception did not treat solicitors as being in any privileged position.
In rejecting the application of the Chorley exception in Western Australia, the Court relied upon the following factors.
In Chorley, the Court of Appeal had identified the underlying rule relating to costs as being that:
"… a person wrongfully brought into litigation ought to be indemnified against the expenses to which he is unjustly put": per Brett MR at 875 (emphasis added)
The Full Court of the Supreme Court of Western Australia considered that the critical question in this formulation was the meaning of "expenses", in respect of which there were two possible meanings. The first, which had been favoured by the majority in Cachia v Hanes, was it was that it meant actual expenditure reasonably incurred. The other view was that "expenses" extended to loss suffered in the sense of the loss of personal time and effort expended by a litigant in the litigation.
The Full Court considered that the effect of the reasoning in Chorley was to apply the second of these views, but to limit it to a circumstance where the litigant in person was a solicitor. The consequence of that approach, in the view of the Full Court, at 42, was "that a solicitor was not merely to be indemnified for expenses incurred but was to be entitled to earn a profit from the time and effort expended".
The Full Court doubted the logic of this reasoning and considered that the increase in costs to an unsuccessful party by a solicitor litigant engaging another solicitor to act, in relative terms, would be minimal. Further it failed to take into account the disadvantage in solicitors acting for themselves, in that they were without the impartial advice of an independent solicitor. The Full Court concluded on this point, at 42:
"… that there are doubtful elements in the reasoning of the court in Chorley's case and that other implications of the exception, had they been considered, might well have encouraged a result which allowed no exception to what is in truth the general rule ie that a litigant in person is not recompensed for time and effort expended in preparing and presenting the case."
The Full Court echoed the observation in Cachia v Hanes that the application of the Chorley exception was not directly in issue in Guss v Veenhuizen (No 2). The matter in issue, as the Court saw it, was whether the exception applied in circumstances where the solicitor was not registered on the High Court's Register of Practitioners. Accordingly, it was, or at least likely, that it was not bound by the High Court's decision in Guss v Veenhuizen (No 2): see National Enterprises Ltd v Racal Communications Ltd [1975] 1 Ch 397; Baker v The Queen [1975] AC 774 at 788; Barrs v Bethell [1982] Ch 294 at 308-309. See also Coleman v Power (2004) 220 CLR 1; [2004] HCA 39 at [79].
Further, the Full Court did not consider that it was bound, as a matter of precedent, to apply the exception in Chorley: see Cook v Cook (1986) 162 CLR 376, where the High Court stated that, in the absence of a controlling authority of a state Supreme Court, courts in Australia "should as a general rule, follow decisions of the English Court of Appeal". The Court held it was therefore open to it to prefer the reasoning of the majority in Cachia v Hanes that the Chorley exception should not be followed as the practice to be applied in the Western Australian Supreme Court.
Finally, the Full Court observed that Guss v Veenhuizen (No 2) was not concerned with the practice of the Western Australia Supreme Court as regulated by its own Act and Rules. In that regard, the Court observed that its Act was neutral as to whether a solicitor litigant was entitled to professional costs, although the reference in the Rules to fees was an indication that the Rules did not recognise the Chorley exception.
[13]
Soia v Bennett
Despite the Court's compelling analysis in Dobree v Hoffman, the Court of Appeal of the Supreme Court of Western Australia held, in Soia v Bennett [2014] WASCA 27 at [79], that Dobree v Hoffman was wrong and should not be followed. In particular, the Court of Appeal rejected the view taken in Dobree v Hoffman that Guss v Veenhuizen (No 2) was not binding authority and, contrary to the view taken in Dobree v Hoffman, the Western Australia Court of Appeal considered that the High Court's decision in relation to the Chorley exception was part of the ratio decidendi. As the Court stated, at [80]:
"According to McHugh J in Coleman v Power [2004] HCA 39; (2004) 220 CLR 1 [79], if no issue is raised about a point of law, then the application of such point of law does not form part of the ratio decidendi. However, courts do not apply the law as the parties agree it if the court thinks that the parties have a wrong view of the law. The parties' wrong view of the law does not bind the court: Pantorno v The Queen [1989] HCA 18; (1989) 166 CLR 466, 473 (Mason CJ & Brennan J). In Guss v Veenhuizen (No 2), it was necessary that the successful litigant be a lawyer if he was to recover costs. The court decided that because he was a lawyer litigant in person, then, based on the Chorley exception, he was entitled to his costs, subject to the resolution of an issue about whether he was a lawyer if his name was not on the High Court roll of practitioners. A necessary material fact in Guss v Veenhuizen (No 2) was that the successful litigant was a lawyer. The decision was that because he was a successful litigant and a lawyer, he was entitled to his costs because of the Chorley exception. On that reasoning, the reference to the Chorley exception formed part of the ratio of the case."
The Western Australia Court of Appeal continued that even if the observations of the High Court were not part of the ratio decidendi, they were seriously considered dicta and should thus be applied: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [134]. The Court also referred to this Court's refusal, in Atlas Corporation v Kalyk, to follow Dobree v Hoffman and the High Court's observation in Garcia v National Australia Bank Ltd (1998) 194 CLR 395; [1998] HCA 48 at 403, that it was for the "[High Court] alone to determine whether one of its previous decisions is to be departed from or overruled".
The Western Australia Court of Appeal also considered it relevant and indeed compelling, that the same rule of practice should be applied throughout Australia until the High Court decided otherwise. It pointed out that the unsatisfactory situation had arisen in Western Australia where the Chorley exception applied in the Federal Court when exercising its jurisdiction in Western Australia, whereas it did not apply to proceedings in its state courts.
[14]
Other cases
In A & D Douglass Pty Ltd v Lawyers Private Mortgages Pty Ltd [2006] FCA 690, Dowsett J, after referring to the differing lines of authority that had emerged in the intermediate appellate courts of Western Australia and South Australia as compared to that in New South Wales, considered that, as had been recognised in Cachia v Hanes, the law for Australia was reflected in Chorley and in Guss v Veenhuizen (No 2).
In McIlwraith v Ilkin [2007] NSWSC 1052, Brereton J concluded that it was not open to him to follow the interstate authorities that had abandoned the Chorley exception. His Honour considered that he was bound by Guss v Veenhuizen (No 2) and that the decisions in the New South Wales decisions in Atlas Corporation v Kalyk and Khera v Jones were conclusive on the point.
[15]
Do the statutory provisions in relation to costs override any rule of practice?
The argument that the Chorley exception, being a common law principle of practice and procedure, no longer applies, must be subject to the statutory and rule provisions of the particular jurisdiction. The Civil Procedure Act, s 98 provides, relevantly, that costs are in the discretion of the court. "Costs" is defined in s 3 to mean "costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses and remuneration" (emphasis added).
In Wang v Farkas (2014) 85 NSWLR 390; [2014] NSWCA 29 the Court was concerned with an award of "professional costs" under the Criminal Procedure Act 1986 (NSW). "Professional costs" was defined in s 211 to mean:
"… costs (other than court costs) relating to professional expenses and disbursements (including witnesses' expenses) in respect of proceedings before a court."
Basten JA, noting that the costs that could be ordered under the Criminal Procedure Act were limited to professional costs, stated, at [21], that such costs did not "extend to a valuation of time devoted by a litigant, even if a legal practitioner, to his or her own proceedings". His Honour also observed, at [28], that the introduction of the word "payable" in the Civil Procedure Act definition of "costs" in s 3 might at some stage require reconsideration of the Chorley exception in civil proceedings in New South Wales. It is that observation, in particular, which has raised the recent agitation on this question.
To the extent that the Chorley exception has been the subject of recent consideration in this Court, the Court has either determined the matter on the basis of the actual order made in proceedings: see Coshott v Barry [2016] NSWCA 358, or has considered it inappropriate to determine the matter in the absence of a proper contradictor: see Wilkie v Brown [2016] NSWCA 128; Bechara t/as Bechara and Company v Bates [2016] NSWCA 294.
Neither Atlas Corporation v Kalyk nor Khera v Jones made express reference to the provisions of the rules that governed the award of costs in those cases. The same may be said of the High Court in Guss v Veenhuizen (No 2). However, it is important to note that r 19, which governed costs in the High Court at the relevant time, referred to "costs and fees ... payable". As already indicated, the majority observed that r 19 provided for the method and manner of quantifying costs that had been awarded in the ordinary case but that did not affect the application of the Chorley exception. It could not be said therefore, that the High Court did not have regard to the terms in which the rule was expressed. To the contrary, I am of the opinion that their Honours' reference that the Chorley exception nonetheless applied indicates that they had the express terms of the rule in mind.
In the result, I am of the opinion that s 98, by reference to the definition of "costs" in s 3 does not, by its express terms, render the Chorley exception inapplicable. Rather, I consider that this Court is bound by the decision in Guss v Veenhuizen (No 2). This was the view taken in Atlas Corporation v Kalyk and Khera v Jones, albeit that the terms of the relevant costs rules were not discussed in those cases. For that reason, I have not found it necessary to consider other jurisdictions in which the Chorley exception has been discussed, other than to observe that, with the limited exceptions to which I have referred, it has been accepted that Guss v Veenhuizen (No 2) is binding precedent on the question.
For the same reason, it is unnecessary to consider the position where the solicitor litigant acts through an incorporated entity, as was the case here.
It follows that I would reject this aspect of the applicant's summons.
[16]
Orders
I propose that the summons be dismissed with costs.
McCOLL JA: I agree with the reasons of Beazley P and Simpson JA. I also agree with the orders Beazley P proposes.
SIMPSON JA: The relevant facts and circumstances are fully set out in the judgment of Beazley ACJ which I have read in draft and with which I generally agree. Specifically, I agree, for the reasons given by her Honour, that, unless and until the High Court departs from the principle stated in Guss v Veenhuizen (No 2) (1976) 136 CLR 47; [1976] HCA 57, a costs claimant who is a lawyer and who has represented himself or herself may be entitled to recover the costs of self-representation.
These reasons assume a familiarity with the reasons of Beazley ACJ. They address two issues. The first concerns the jurisdiction under the Legal Profession Act 2004 (NSW) (repealed) ("the Act") of a costs assessor to determine the standing of an applicant for costs assessment to make the application. In this case the applicant claimed standing as a "third party payer" as defined in s 302A of the Act. Section 302A recognised two classes of "third party payer" - "associated third party payers" and "non-associated third party payers". A "third party payer" was, generically, defined in sub-s (1)(a) as a person who was not the client of a law practice, but who was under a legal obligation to pay all or any part of the legal costs for legal services provided (by the law practice) to the client. A third party payer was an "associated third party payer" if the legal obligation was owed to the law practice, whether or not it was also owed to the client or another person (s 302A(1)(b)). A third party payer was a "non-associated third party payer" if the legal obligation was owed to the client or another person, but not the law practice (s 302A(1)(d)).
Notwithstanding the repeal of the Act, the issue retains ongoing importance, because the Legal Profession Uniform Law (NSW) No 16a has adopted the definition of "third party payer", together with the classes of "associated" and "non-associated" third party payers (s 171), and the entitlement of third party payers to apply for costs assessment (s 198(1)).
The second issue addressed is whether the primary judge was in error in holding (as had the costs assessor) that the applicant was not a third party payer.
I will recapitulate as briefly as possible the relevant facts. In 2013 certain members of the applicant's extended family ("the clients") were embroiled in litigation. For the purposes of an urgent hearing to take place in the Federal Court of Australia, the clients retained the services of Spencer and Co Legal ("the law practice"), of which the respondent was the principal. The law practice was (it seems) correctly titled "Kejus Pty Ltd t/as Spencer and Co Legal". It appears to be common ground (or at least is undisputed) that the applicant provided funds for the purpose of the litigation. The source of some of the funds was (or may have been) Fewin Pty Ltd, a company of which the applicant was the sole director, secretary and probably shareholder. The applicant was not a party to the litigation and he was not a client of the law practice. From time to time the respondent looked to the applicant for payment of expenses associated with the litigation, and the applicant authorised him to draw on funds he had deposited for that purpose. On 8 July 2013 the respondent rendered a bill to the clients in the sum of approximately $57,000. The respondent did not include the applicant in the list of those to whom the bill was addressed. On 14 August 2014 an application was made, under s 350 of the Act, for assessment of the costs the subject of the bill. The application was directed to "Manager, Costs Assessment", a statutory office holder to whom I will refer as "the Manager". Initially, the application was made in the names of the applicant and the clients. The application named as respondent "Keith Robert Spencer t/as Spencer Legal and Co". When it was pointed out to the clients (by the Manager) that the time in which they could apply for costs assessment had expired (12 months after the bill was given - s 350(4)) the clients withdrew their application, leaving the applicant as the sole applicant for costs assessment. (Since the bill had not been given to him, any application by him was not time-barred.) On 9 December 2014, in correspondence that followed the making of the application, solicitors acting for the applicant told the Manager that the applicant was a third party payer. They provided no information as to the basis on which the claim to third party payer status was made, and did not nominate the class of third party payer the applicant claimed to be. Nor was any such information subsequently provided. The Manager, therefore, was in no position to make any evaluation of the claim.
Notwithstanding that the applicant claimed to be entitled to apply for costs assessment as a third party payer (non-associated) and not as a client, the application was made on a form referable to, and purported to be, an application "by client for assessment of costs".
The Manager referred the application to a costs assessor, Ms K M Dulhunty. Ms Dulhunty amended the name of the respondent to "Kejus Pty Ltd t/as Spencer and Co Legal". After considering the written submissions provided to her, Ms Dulhunty determined that the applicant was not a third party payer within the definition contained in s 302A of the Act and had no standing to bring the application.
She did this on the basis that:
"As far as I can see, the Applicant has no contractual, statutory or other obligation to pay the legal costs for [the clients] as envisaged by s 302A(1)(c) of [the Act]. If he has paid the costs of the litigation personally then he has elected voluntarily to do that for family members rather than being obliged to pay their costs of the litigation." (emphasis in original)
She rejected a proposition, apparently put to her, that the referral to her by the Manager carried with it a finding (at least by implication) that the applicant was a third party payer and accordingly had standing to make the application.
Pursuant to s 384 of the Act the applicant appealed to the District Court. An appeal under s 384 was limited to a matter of law arising in the proceedings in which the costs application was determined. The applicant contended that Ms Dulhunty was in error in finding that he was not a third party payer. He further contended that Ms Dulhunty mistook her jurisdiction in making that finding. That was because, the applicant argued, the question of whether an applicant for costs assessment was or was not a third party payer was one to be decided by the Manager, and not by the costs assessor; and it should be inferred, by the Manager's referral of the application to the costs assessor, that she had determined (at least by implication) that the applicant was a third party payer.
The primary judge (Gibson DCJ) held against the appellant on both issues. She held that there was nothing in the language of the Act to support the submission that the Manager had the power to determine the status of an applicant for costs assessment as a third party payer: [80]. She held that in any event, if she were wrong about that, the applicant was not a third party payer because he was under no legal obligation to pay the clients' costs: [97].
Pursuant to s 69 of the Supreme Court Act 1970 (NSW), the applicant seeks judicial review of that decision, asserting error of law on the face of the record in the primary judge's construction of certain provisions of the Act, specifically with respect to the jurisdiction of the costs assessor.
[17]
(i) the jurisdiction of the costs assessor
The first issue calls for consideration of a number of provisions of the Act. Relevantly, Pt 3.2 of the Act dealt with "Costs disclosure and assessment". Division 3 of Pt 3.2 provided for "Costs disclosure"; Division 5 for "Costs agreements". Division 11, in seven subdivisions, provided for "Costs assessment".
Sections 350(1) and (2) of the Act provided:
"350
(1) A client may apply to the Manager, Costs Assessment for an assessment of the whole or any part of legal costs.
(2) A third party payer may apply to a costs assessor for an assessment of the whole or any part of legal costs payable by the third party payer."
The underlying proposition advanced on behalf of the applicant in this Court was that the function of a costs assessor under the Act was confined to the determination of the fairness and reasonableness of the costs claimed by the law practice. Determination of the status of an applicant as a third party payer, and, therefore, the standing of that person to make an application for costs assessment, lay exclusively in the province of the Manager. The limitation on the role of the costs assessor, it was argued, emerged from s 367(1) and s 367A, which, respectively, provided:
"367(1) A costs assessor is to determine an application for a costs assessment relating to a bill by confirming the bill 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 the assessor's opinion, is a fair and reasonable amount."
"367A A costs assessor is to determine an application for an assessment of costs payable as a result of an order made by a court or tribunal by making a determination of the fair and reasonable amount of those costs."
The argument was that because these provisions stated the function of a costs assessor as being to determine the fairness and reasonableness of the costs claimed, it should be inferred that the function of a costs assessor was limited to those determinations. No express power conferred on the Manager to make a determination as to the standing of a costs applicant was identified.
[18]
Analysis
The proposition that the function of determining the standing of an applicant for costs assessment to make the application is that of the Manager, to the exclusion of the costs assessor, cannot be accepted. Unless the costs assessor was satisfied that the applicant had standing to make the application, she did not have power to determine the application. It has been said that:
"… the first duty of every judicial officer is to satisfy himself that he has jurisdiction, if only to avoid putting the parties to unnecessary risk and expense."
Federated Engine Drivers' and Firemen's Association of Australasia v Broken Hill Co Ltd [1911] 12 CLR 398 at 415; [1911] HCA 31; Eberstaller v Poulos [2014] 87 NSWLR 394; 2014 NSWCA 211 at [1] and [14]; Lazarus v Independent Commission Against Corruption [2017] NSWCA 37 at [41]. It seems to me that the same could be said of any statutory decision-maker whose power extends to the determination of rights.
Although a costs assessor could not be said to be a judicial officer, the ultimate consequence of a determination (in respect of costs that have not been paid) is that the determination operates as a judgment of a court. That is a consequence of s 367 (and s 367A), in combination with s 368(1) (which required a costs assessor to issue a certificate setting out the determination), and s 368(5) by which (in respect of costs that had not been paid) on the filing of the certificate in the office of a registry of a court with an appropriate jurisdictional monetary limit, the certificate was taken to be the judgment of that court. The determination of a costs assessor thus determined substantive rights as between parties.
That the Federated Engine Drivers' and Firemen's Association of Australasia principle extends to an administrative officer (such as a costs assessor) exercising power under a statute may be taken from the decision in Re Adams and the Tax Agents' Board (1976) 12 ALR 239, in the passage extracted in the judgment of Beazley ACJ. It was entirely appropriate, and, indeed, necessary, that Ms Dulhunty satisfy herself that she had power to embark upon a costs assessment. In this case, her power depended upon the standing of the applicant. Only a limited class of persons had standing to make application for costs assessment. They were:
(i) clients (s 350(1));
(ii) third party payers (s 350(2));
(iii) a law practice that retained another law practice to act on behalf of a client (s 351(1));
(iv) a law practice that had given a bill (s 352(1)); and
(v) a person who had paid or was liable to pay or who was entitled to receive or had received a costs order made by a court or tribunal (s 353(1)).
Unless the costs assessor was satisfied that an applicant came within one of those categories, she had no power to determine the application. The standing of the applicant to make the application was a necessary first step in the costs assessment process.
Perhaps anomalously, by s 350(1) a client could apply to the Manager for assessment of the whole or any part of legal costs. But by sub-s (2) a third party payer could apply to a costs assessor for assessment of the whole or any part of legal costs payable by the third party. The anomaly is that the client is permitted to apply to the Manager, who was then (by s 356) required to give notice of the application to any law practice or client concerned or any other person whom the Manager thought it appropriate to notify. Any person so notified became, by s 356(2), a party to the assessment. Section 350(2) appears to have empowered a person claiming to be a third party payer to apply directly to a costs assessor, although how that was to be done was not spelled out in the legislation. Further exploration of the anomaly is unlikely to be productive, and is not necessary because, by some means, the applicant's application came before Ms Dulhunty as a costs assessor, and that process is not now in issue.
The term "Manager, Costs Assessment" was defined in s 4 as:
"the person holding office as Manager, Costs Assessment in the Attorney General's Department, and includes a delegate of that person."
There appears to have been little further explication of the office. Specifically, there was no indication of the qualifications required of a person holding that office.
It is worth examining the functions of the Manager so far as they are spelled out in the Act. Those functions included receiving applications for costs assessment made by applicants claiming to fall into any of the recognised classes set out above. By ss 354(4) and (5) the Manager was empowered to waive or postpone payment of application fees, and to refund application fees that had been paid. By s 356(1) the Manager was required to cause a copy of an application to be given to any law practice or client or any other person the Manager thought it appropriate to notify; and, by s 357(1) the Manager was required to refer an application to a costs assessor. By s 357(3) the Manager could revoke a referral to a costs assessor and refer the application to another costs assessor. Pursuant to ss 358(5A) and (6) the Manager was to receive the certificate of the costs assessor. By s 373(1) a party to a costs assessment dissatisfied with the determination of the costs assessor could apply to the Manager for review of the determination. By sub-ss (3) and (4) the Manager could waive, postpone or refund fees payable in respect of such an application, and by s 374 the Manager was required to refer the application to a panel constituted by two costs assessors. By s 373A the Manager was empowered, himself or herself, to prepare an application for review of a determination, in which case notice had to be given to the parties to the proposed review before referral to a panel constituted under s 374. By s 379, a panel that conducted a review of a costs assessor's determination was to determine the costs of the review and could (subject to s 379(1)) determine by whom and to what extent those costs were to be paid. By sub-s (5) the panel was to issue to the parties and the Manager a certificate that set out its determination. By sub-ss (7) and (8) the costs of the review were to be paid to the Manager, who could take action for recovery of the costs.
The Act contained no explanation of the reasons for the power conferred on the Manager to initiate a review of a determination of a costs assessment, nor the circumstances in which it was envisaged that that power would be exercised. What can be seen is that, with that possible exception, the functions of the Manager were essentially administrative in character. This is consistent with the apparent absence of any requirement for the Manager to possess any particular qualifications, including legal.
That is not to say that the Manager could exercise no discretion in relation to applications. In this case, it was the Manager who queried the standing of the clients to make the application, having regard to the expiration of the time of 12 months. She declined to refer their application to a costs assessor for that reason, and advised that the file would be closed (but could be reopened if an appropriate extension of time was granted by the Supreme Court). Whether an application is or is not within time is generally an objectively ascertainable fact, not involving the exercise of judgment, or the application of legal principle. No doubt the Manager could decline to refer to a costs assessor an application, or purported application, that did not disclose on its face that the nominated applicant came within the classes of persons or entities permitted to make an application. Whether an application disclosed the class of permitted applicants into which the applicant claimed to fall is also an objectively ascertainable fact (quite distinct from a determination of whether the applicant did in fact fall within that class).
It is unnecessary to consider the extent of any discretionary powers conferred on the Manager. The point sought to be made on behalf of the applicant is that the Manager alone had jurisdiction to determine the status of an asserted third party payer.
Against the required qualifications, role and functions of the Manager may be contrasted the required qualifications, role and function of costs assessors. The submission of the applicant that those functions were limited to the assessment of the fairness and reasonableness of the costs claimed is apt to mislead. The Act assumed that that assessment of the fairness and reasonableness of the costs would or could have involved the exercise of judgment, finding of facts, and the application of legal principle.
Costs assessors were required to be Australian legal practitioners of at least 5 years standing: s 390(3) and Sch 5 cl 1. By s 390(2) costs assessors had the functions conferred upon them by the Act or any other Act. While the primary function was to determine applications for costs assessment, and, on determination, to issue certificates setting out the determinations (s 368(1)), much more was involved in the exercise of that function than the applicant's submissions recognise.
Division 5 of Pt 3.2 provided for the making of costs agreements. A costs agreement could be made between a client and a law practice retained by the client, between a client and a law practice retained on behalf of a client by another law practice, and between a law practice and an associated third party (s 322 ff). By s 327(1) a costs agreement that contravened, or was entered into in contravention of, any provision of Division 5 was void (although the Act did not state how, or by whom, a determination that an agreement was void was to be made). By s 328, a costs assessor was empowered to order that a costs agreement, or a provision thereof, be set aside if satisfied that the agreement was not fair or reasonable. Sub-section (2) set out a catalogue of matters to which, in reaching that decision, the costs assessor was entitled to have regard. The matters included:
"(a) whether the client was induced to enter into the agreement by the fraud or misrepresentation of the law practice or of any representative of the law practice,
…
(c) whether the law practice failed to make any of the disclosures required under Division 3,
(d) the circumstances and the conduct of the parties before and when the agreement was made,
…"
By s 328(4) a costs assessor who determined that a costs assessment or a provision thereof be set aside was empowered to make an order in relation to the payment of the legal costs the subject of the agreement. Sub-section (5) required the costs assessor to determine the fairness and reasonableness of costs of the work to which the agreement related, and set out three factors to be taken into account, one of which was:
"(a) the seriousness of the conduct of the law practice or any Australian legal practitioner or Australian registered foreign lawyer acting on its behalf."
Sub-section (7) set out a further catalogue of considerations relevant to the question of the determination of the fairness and reasonableness of costs for the work to which the (set aside) agreement related. These included:
"whether the law practice and any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf complied with any relevant legislation or legal profession rules …"
As mentioned above, Division 11 dealt with "Costs assessment"; sub-division (1) of Division 11 dealt with applications, sub-division (2) with assessment. By s 358 (part of sub-division (2)) a costs assessor could require production of additional documents or further particulars. (No corresponding power was expressly conferred on the Manager, although, plainly, the Manager could request further information.) By s 359(3) a costs assessor, for the purpose of determining an application or exercising any other function, was empowered to determine:
"(a) whether or not disclosure has been made in accordance with Division 3 (costs disclosure) and whether or not it was reasonably practicable to disclose any matter required to be disclosed under Division 3, and
(b) whether a costs agreement exist[ed], and its terms."
By s 363(2), in considering what was a fair and reasonable amount of legal costs, a costs assessor was permitted to have regard to a number of specified matters, including:
"(a) whether the law practice and any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf complied with any relevant legislation or legal profession rules."
The above, which does not purport to be a complete survey of the powers and functions of, respectively, the Manager and costs assessors, satisfies me that the determination of the standing of a person claiming to be a third party payer lay in the province of the costs assessor, and not the Manager (at least, not exclusively in the province of the Manager - whether the holder of that office had concurrent jurisdiction to make the determination does not arise in the present case and need not, and ought not, be decided).
That a costs assessor (in contrast to the Manager) was required to hold legal qualifications and have a degree of experience, adds weight to that conclusion. Where a person claiming to be a third party payer applied for costs assessment, and a dispute arose as to his or her standing, a judgment, on the application of legal concepts, had to be made. The determination was whether the claimant is under a legal obligation to pay all or any part of the legal costs for the legal services provided to the client. The determination might require the provision of additional documents, which it was in the power of the costs assessor (s 358), but not the Manager, to require to be produced.
The applicant's response to questions concerning the relative required qualifications for the office of Manager was that the current (at the relevant time) holder of the office was a Registrar of the Supreme Court. That is not to the point. That the Act does not impose a requirement of legal qualifications does not suggest that it was intended that the Manager make determinations of legal obligations, a necessary determination where the status of an asserted third party payer is in dispute.
In my opinion the primary judge was correct to hold that the costs assessor had jurisdiction to determine the standing of the applicant to bring the application for costs assessment.
[19]
(ii) was the applicant a third party payer?
The second issue, which I can address briefly, is whether the primary judge was in error in holding (as the costs assessor before her had done) that the applicant was not a third party payer.
The finding was not the subject of direct challenge in the present application. Had any error of law been discernible in the approach taken by the primary judge, or in her conclusion, it would have been open to the applicant to challenge the finding, at least as relevant to the discretion of this Court in its s 69 jurisdiction.
There is not the slightest reason to think that the finding was wrong. No evidence of any contract or binding agreement between the clients and the applicant was produced. The evidence merely showed that the applicant (or his company) had made funds available for the litigation in which the clients were involved.
In those circumstances, even if (contrary to my view) determination of the status of a third party was assigned to the Manager and not to the costs assessor, there would be no utility in granting any relief under s 69.
I agree with Beazley ACJ that the summons should be dismissed with costs.
[20]
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: 31 May 2017
Re Adams and the Tax Agents' Board (1976) 12 ALR 239
Soia v Bennett [2014] WASCA 27
Wang v Farkas (2014) 85 NSWLR 390; [2014] NSWCA 29
Wentworth v Rogers (2006) 66 NSWLR 474; [2006] NSWCA 145
Wilkie v Brown [2016] NSWCA 128
Category: Principal judgment
Parties: Ronald Michael Coshott (Applicant)
Keith Robert Spencer (First Respondent)
District Court of New South Wales (Second Respondent)
Christopher Phillip Wall (Third Respondent)
Costs Assessment Manager (Fourth Respondent)
Representation: Counsel:
A Cheshire SC, S Spadijer (Applicant)
P Carey (First Respondent)
Solicitors:
Comino Prassas Solicitors (Applicant)
Spencer & Co Legal (First Respondent)
Submitting Appearance (Second, Third and Fourth Respondents)
File Number(s): 2016/209216
Decision under appeal Court or tribunal: District Court (2015/220241);Costs Assessment (2016/173015)
Citation: Coshott v Spencer [2016] NSWDC 43 (2015/220241);
Keith Robert Spencer, costs applicant (2016/173015)
Date of Decision: 8 April 2016 (2015/220241);
28 July 2016 (2016/173015)
Before: Gibson DCJ (2015/220241);Christopher Phillip Wall, costs assessor (2016/173015)
File Number(s): 2015/220241;
2016/173015
Beazley ACJ (McColl and Simpson JJA agreeing):
(1) A costs assessor undertaking an assessment under the Legal Profession Act has jurisdiction to determine whether a party is a "third party payer". [51]-[53], [111], [112]
Wentworth v Rogers (2006) 66 NSWLR 474; [2006] NSWCA 145; Re Adams and the Tax Agents' Board (1976) 12 ALR 239 referred to.
(2) A party is a "non-associated third party payer" within the meaning of s 302A(1)(c) of the Legal Profession Act if the third party is under a legal obligation to pay the costs for legal services provided to the client of a legal practice and that legal obligation is owed to the client but not to the law practice. [57]-[58], [111], [112]
Simpson JA's additional reasons:
(3) The costs assessor had jurisdiction to determine the standing of the applicant to bring the application for costs.
Legal Profession Act 2004 considered; Re Adams and the Tax Agents' Board (1976) 12 ALR 239 considered; Federated Engine Drivers' and Firemen's Association of Australasia v Broken Hill Co Ltd [1911] 12 CLR 398 at 415; [1911] HCA 31 considered; Eberstaller v Poulos [2014] 87 NSWLR 394; 2014 NSWCA 211 at [1] and [14] considered; Lazarus v Independent Commission Against Corruption [2017] NSWCA 37 at [41] considered
(4) Mr Coshott's contention that determination of the status of an applicant for costs assessment as a third party payer was exclusively that of the Manager, Costs Assessment, could not be accepted. The role and function of the Manager, Costs Assessment under the Legal Profession Act 2004 was primarily administrative.
Legal Profession Act 2004 considered
(5) There was no error on behalf of the primary judge or the costs assessor in determining that the applicant was not a third-party payer.
Legal Profession Act 2004 considered
Beazley ACJ (McColl and Simpson JJA agreeing):
(6) It is well-established that a self-represented litigant is not entitled to professional costs for acting for herself or himself in proceedings. There is a recognised exception where a solicitor is self-represented in proceedings brought by or against her or him. [64], [111], [112]
London Scottish Benefit Society v Chorley (1884) 13 QBD 87; Guss v Veenhuizen (No 2) (1976) 136 CLR 47; [1976] HCA 57
(7) The Chorley exception, being a common law principle of practice and procedure, must be subject to the statutory and rule provisions of a particular jurisdiction. Section 98 of the Civil Procedure Act 2005 (NSW) does not, by its express terms, render the Chorley exception inapplicable. The exception continues to apply in New South Wales. [102]-[107], [111], [112]
Wang v Farkas (2014) 85 NSWLR 390; [2014] NSWCA 29; Atlas Corporation Pty Ltd v Kalyk [2001] NSWCA 10; Khera v Jones [2006] NSWCA 85; Guss v Veenhuizen (No 2) (1976) 136 CLR 47; [1976] HCA 57