Dunbier v Smith & Anor

Mr D Alexander (Plaintiff) COUNSEL : Mr M Orlov (Defendants) Baird & Associates (Plaintiff) SOLICITORS : Messrs Gray & Perkins (Defendants) CATCHWORDS : Appeal against costs assessor LEGISLATION CITED : Legal Profession Act 1987 Larsen v Vile [1999] NSWCA 397 Cachia v Isaacs (1985) NSWLR 367 CASES CITED : Donnelly & Anor v Ross Mining NL [1999] NSWSC 960 Chapmans Ltd v Yandell [1999] NSWCA 361 Coulter v Regina (1988) 166 CLR 350 CDJ v VAJ [1998] HCA 67 DECISION : See para 29

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11064/99 - RONALD ASHLEY DUNBIER v DAVID JOHN SMITH & ANOR

JUDGMENT (Appeal against a costs assessor's decision)

1 MASTER: The plaintiff by summons filed 5 May 1999 seeks firstly, declarations that the plaintiff was denied natural justice in the assessment of the bill of costs by costs assessor Leonard Hattersley made on 7 April 1999, and that the plaintiff is entitled to access the file material as described in paragraph 9 of the plaintiff's affidavit sworn 5 May 1999; secondly, an order that the certificate of determine of costs of the costs assessor be set aside and leave to appeal be granted pursuant to s 208L and s 208M of the Legal Profession Act 1987 (the Act); thirdly an order that the court fix the amount of costs payable by the defendants to the plaintiff or in the alternative that the matter be remitted to the costs assessor for redetermined; and fourthly, an order that the defendants produce to the plaintiff within 14 days documents (described in paragraph 9 of the plaintiff's affidavit). 2 At the hearing the plaintiff sought a further order that time to appeal under s 208M be extended. Also after a short adjournment on the day of the hearing of this appeal the plaintiff provided a statement of the grounds of appeal. They are: "(1) The costs assessor erred in law in determining that the respondents had not retained the applicant or had retained him but not in a manner which entitled him to claim the costs set out in the bill of costs. As to the question of a retainer, the applicant received instructions from and acted for the respondents over a period of 16 months. As to the entitlement to claim costs: the basis upon which costs were to be paid was contingent. That was an understanding shared by the applicant and respondents. The costs assessor failed to have regard to or gave insufficient weight to: 1.1 the nature of the contract, being an entire contract; 1.2 the nature of the contingency being the successful disposition of the matter; 1.3 the right of the plaintiff to claim costs upon the termination of the contract by the respondents. 2. The costs assessor erred in law in attaching weight to the conduct of Mr Dunbier. 3. The costs assessor erred in law in not providing reasons for disentitling Mr Dunbier to disbursements properly incurred. 4. The determination of the costs assessor that Mr Dunbier had no retainer with the respondents which entitled him to claim for costs was unfair and contrary to the evidence insofar as: 4.1 the respondents had instructed him from May 1995 until September 1996; 4.2 the respondents continued to instruct him after September 1996 until August 1997; 4.3 the respondents accepted that the applicant incurred costs; 4.4 the respondents accepted that costs were payable on the successful completion of the matter; 4.5 the matter was settled by the respondents in August 1997; 4.6 even had it not been settled favourably, it was a term of the retainer that upon termination of the contract by the respondents, the applicant was entitled to reasonable costs; 4.7 the respondents had acknowledged the retainer by payment of costs, the provision of instructions, express reference in their current affidavit and a request for a bill of costs. 5. The costs assessor erred in treating the claim of the plaintiff for the repayment of disbursements in the same manner as the claim for costs given the evidence before him that disbursements were payable in any event." 3 The plaintiff relied on his affidavit filed 5 May 1999. The defendant relied on the affidavits of the defendants sworn 2 September 1999 and Graham Rushforth sworn 1 November 1999. The issue to be determined is whether the costs assessor erred in law in deciding that there was no retainer between the plaintiff and defendants. 4 On 17 February 1998 Mr Dunbier (the plaintiff in these proceedings and costs applicant in the proceedings before the costs assessor) filed an application for assessment of costs together with the solicitor/client bill of costs in the sum of $114,039.90. This bill of costs relates to work done from May 1995 to 16 September 1996, (a date when Mr Dunbier closed his office). The defendants were involved in a dispute with a builder, Mado Constructions Pty Limited. The plaintiff commenced legal proceedings against the builder in the equity division of this court. On 30 April 1998 Mr and Mrs Smith (the defendants in these proceedings and respondents before the costs assessor - I shall refer to them in this judgment as the defendants), lodged a notice of objection to the bill of costs. The court referred the costs assessment to a costs assessor Mr Leonard Hattersley. On 20 July 1998 the plaintiff forwarded a response to the objections to the costs assessor. 5 In August 1997 the solicitor/client relationship between the plaintiff and defendants broke down. On 11 August 1997 Mr Dunbier (then of Baird and Associates) wrote to the defendants and referred to the defendants refusal to provide moneys on account of costs, disbursements and counsel's fees and noted that they had refused to acknowledge that work in progress stood at $105,418.42. The solicitor stipulated that: "… 1. We must be placed in funds to meet Counsel's fees. 2. All outstanding disbursements totalling (sic) $4,439.00 must be paid forthwith. 3. All expert's disbursements must be paid as and when they fall due. 4. We require a deed to be signed by you undertaking to pay all costs and disbursements from settlement/verdict moneys, including the outstanding work-in-progress and disbursements which stand at $105,418.42, as per out letter dated 29 July, 1997." 6 The letter concluded that unless these matters were attended to, the solicitors would not be in a position to continue to act and they would withdraw. 7 On 21 August 1997 after the defendants had received the letter informing them that the legal costs for work in progress was $105,418.42, the defendants entered into a deed with the builder. The builder was obliged to pay $28,000. Consent orders were made namely that the summons was dismissed, the reference made on 2 July 1996 was revoked, the cross claim was dismissed and there was no order for costs. At first glance it seems harsh that the solicitor who performed legal work in good faith, was not remunerated for any of it because the defendants aware that they owed $105,418.42 to the solicitors, chose to settle the matter with the builder without making any provision for the solicitor's costs. However, the issue to be decided is whether the costs assessor erred in law or whether leave should be granted under s 208M of the Act. 8 On 7 April 1999 the costs assessor gave his reasons for his decision. Relevantly the costs assessor stated: "In his application Mr Dunbier concedes that there is no costs agreement between him and the respondents. Having regard to certain correspondence I have had with him I take the view that this concession also extends to there having been no costs disclosures at all. The bill of costs contemplates that Mr Dunbier commenced to provide the respondents with legal services in or about May 1995, that is after the commencement of the Legal Profession Act 1993 which introduced Part 11. The respondents through their solicitors Gray & Perkins filed objections to Mr Dunbier's claims for costs. Those objections included objections going to the very basis of Mr Dunbier's retainer to act as the solicitor for the respondents in relation to the matters in respect of which charges were made by Mr Dunbier for services allegedly carried out by him for them. Whilst Mr Dunbier purported to file a response to those objections he did not specifically deal with or plead the terms and conditions of his retainer to act for the respondents and to charge them for his so called services. Shortly after the reference to me of this application by the Proper Officer of the Supreme Court of New South Wales I wrote to Mr Dunbier on 26 June 1998. Whilst the applicant acknowledged the receipt by him of that letter he did not reply to it with the information and material respecting the terms and conditions of his retainer I had sought from him. On December 4 1998 I wrote a comprehensive letter to Mr Dunbier. I refer to that letter as though I have fully set out the contents of it in these reasons. Whilst Mr Dunbier acknowledges receiving that letter he failed to furnish to me the submissions I requested from him. Certainly he failed to provide me with the Statutory Declaration I requested he make and furnish to me in pursuance of the provisions of Section 207(3) of the Act. I wrote again to Mr Dunbier on 2 February 1999 in peremptory terms. He did not acknowledge or reply to it. I attach much significance to the fact that I have not received from Mr Dunbier any submissions as to the matters I raised for his consideration and response in my letter to him of 4 December 1998. Having regard to this failure on his part especially when I wrote to him in the terms of my letter of 2 February 1999 I have come to the view that the evidence proffered by the respondents as to the terms and conditions of their arrangement with Mr Dunbier should be accepted by me without qualification. On this basis then I find that Mr Dunbier had no retainer with the respondents which entitled him to claim from them the costs described in the bill of costs filed for assessment. I therefore find that the respondents are not liable to pay to Mr Dunbier any costs. As stated previously Mr Dunbier acknowledged in his application for assessment that there was no costs agreement between himself and the respondents relating to the services for which he sought payment." 9 In the letter dated 14 December 1998, referred to in the reasons above, the costs assessor stated: "The respondents have provided objections and material including a statement made by Mr Graham Anthony Rushforth solicitor which tends to establish that you agreed to act for the respondents in connection with their disputes with Mado Constructions Pty Limited on the basis that you would not seek to recover costs from the costs respondents personally but would be satisfied with whatever costs you were able to recover from that building company. A term of the retainer may have been that the costs respondents would pay all proper out-of-pocket expenses incurred by you during the course of your conduct of those disputes. The costs respondents have spelt out their contentions as to the terms of the retainer in their objections filed with the court and with me. If I accept those contentions I believe it follows that in the events which have occurred the costs respondents may not be liable to pay to you the costs you now seek to have assessed." 10 The plaintiff failed to answer correspondence and failed to furnish the costs assessor with his version of the terms of the retainer. It is appreciated that the plaintiff did not have access to his files. However the costs assessor gave the plaintiff ample opportunity to give his version of the terms of the retainer agreement. If the plaintiff had real difficulties giving his version of the terms of the retainer he could have drawn it to the attention of the costs assessor. 11 In accordance with s 207(5) of the Act when the plaintiff failed to comply with the notice the costs assessor could have declined to deal with the application or deal with the application on the basis of the information provided. The plaintiff has not given a reasonable excuse as to why he did not furnish the statutory declaration requested by the costs assessor. The costs assessor was entitled to consider the bill of costs without Mr Dunbier providing his version of the retainer. He accepted the defendants' version of the basis upon which the solicitor was to carry out work on behalf of the defendants without qualification. There was no denial of natural justice. 12 The terms of the retainer are contained in a conversation between Graham Rushforth and the plaintiff. Mr Rushforth was and is a friend of the defendants and was employed by the plaintiff as a solicitor. Mr Rushforth's statement was before the costs assessor and referred to in his reasons. It relevantly stated: "I immediately approached Ron Dunbier and told him that David and Annette were my closest friends and I wanted to be able to help them but they would not able to afford to pay their own legal bills. I asked Ron if he was prepared to act on the basis that provided they covered out-of-pocket expenses (including any fees that might be payable to Barrister's properly briefed) whether he would take his legal costs from the Builder firstly by way of a condition of any settlement of the claim on the Builder by way of a separate amount for costs or secondly from any costs awarded to David and Annette from litigation." 13 Initially Mr Rushforth carried out the legal work for the defendants. At some later stage Mr Dunbier took over the handling of the matter. Throughout most of this period the barrister's fees incurred were paid by the defendants. 14 The approach that should be taken by the court in an appeal from a costs assessor was set out in Larsen v Vile [1999] NSWCA 397. An appeal under s 208L is confined to law. Whereas an appeal under s 208M (provided leave is granted) is a complete new hearing (at para 31).

15 Section 208L of the Act provides: "Appeal against decision of costs assessor as to matter of law

(1) A party to an application 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 Supreme Court, appeal to the Court against the decision.

(2) After deciding the question the subject of the appeal, the Supreme 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." 16 In deciding what was fair and reasonable the costs assessor had to consider the matters in s 208A(1) set out below and was entitled to have regard to the paragraphs in s 208B, also set out below. "Section 208A(1) obliged the costs assessor to consider:

(a) whether or not it was reasonable to carry out the work to which the costs relate, and

(b) whether or not the work was carried out in a reasonable manner, and

(c) the fairness and reasonableness of the amount of the costs in relation to that work." 17 Section 208A(2) provided:

"A costs assessor is to determine the application by confirming the bill of costs or, if the assessor is satisfied that the disputed costs are unfair or unreasonable, by substituting for the amount of the costs an amount that, in his or her opinion, is a fair and reasonable amount." 18 Section 208A(5) was as follows:

"A costs assessor may not determine that any part of a bill of costs that is not the subject of an application is unfair or unreasonable."

19 Section 208B provided that in assessing what was "a fair and reasonable amount of costs, a costs assessor may have regard" to any or all of the matters then listed in following paragraphs (a) to (j). For present purposes the following of those paragraphs are particularly relevant: " …

(a) whether the barrister or solicitor complied with any relevant regulation, barristers rule, solicitors rule or joint rule, (b) whether the barrister or solicitor disclosed the basis of the costs or an estimate of the costs under Division 2 and any disclosures made, (c) any relevant advertisement as to the barrister's or solicitor's costs or skills, (d) any relevant costs agreement (subject to section 208C),

..." 20 On the basic issue of the costs agreement the costs assessor, after referring to the lack of evidence by the plaintiff as to his version of the terms of the retainer, accepted without qualification the defendants' version of their arrangement with Mr Dunbier. On that version, there was no reference to fees being paid on a successful outcome. It was common ground that there was no written costs agreement. The legal work was to be done on the basis that out-of-pocket expenses which included the barrister's fees were to be covered by the defendants. Mr Dunbier would receive his costs in one of two ways namely, by way of a condition of settlement of the claim on the builder by way of separate amount or by costs awarded in the litigation in favour of the defendants. The litigation was settled by the defendants without making payment of the plaintiff's legal costs a condition of settlement. The plaintiff referred to Cachia v Isaacs (1985) NSWLR 367 at 376 and 377. This quoted passage refers to the rights of a solicitor to recover costs from a client where the solicitor has been negligent and allegations not raised in the appeal. 21 The bill of costs contained disbursements including court filing fees, transcript fees and photocopying amounting to the sum of $5,835.40 and outstanding counsel's fees of $3,747.30. These according to the Rushforth version of the retainer, formed part of the out-of-pocket expenses that should have been allowed upon assessment. After the costs assessor had considered the matters set out in s 208A(1) and s 208B and the material before him, stated that a term of the retainer may have been that the defendants would pay all proper out-of-pocket expenses. This was a general approach adopted by the costs assessor which discloses no error of law. 22 It was open to the costs assessor to consider that out-of-pocket expenses including counsel's fees of $9,582.70 were not properly incurred. It was within the boundaries of judgment to come to the conclusion that he did. Had Mr Dunbier made submissions to the costs assessor as he was invited to do, the costs assessor may well have arrived at a different conclusion. The costs assessor was entitled to decide that the plaintiff had no retainer with the defendants which entitled him to claim from them the costs described in the bill of costs. It is my view that the costs assessor did not err in law. The appeal under s 208L should be dismissed. 23 I turn to the application for an extension of time to file the application for leave to appeal under s 208M. In Donnelly & Anor v Ross Mining NL [1999] NSWSC 960, 23 September 1999 at para 33, Sully J held that the time within which an application for leave to appeal under s 208M of the Act is 14 days. The summons was filed within 28 days of the costs assessor's decision. The time for an appeal under s 208L is 28 days. The summons seeks both leave to appeal under s 208M and an appeal as of right under s 208L. The plaintiff's explanation for the delay in filing the summons was that he was under the misapprehension that he had 28 days in which to seek leave to appeal. While I find the plaintiff's explanation satisfactory I would not grant an extension of time because the application for leave is futile. 24 If I am wrong, I shall consider the application for leave to appeal under s 208M. Section 208M of the Act provides: "Appeal against decision of costs assessor by leave (1) A party to an application relating to a bill of costs may, in accordance with the rules of the Supreme 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 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 Supreme 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 Supreme 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." 25 In Chapmans Ltd v Yandell [1999] NSWCA 361, Fitzgerald JA (with whom Mason P and Davies AJA agreed) stated that it is important to keep in mind that the purpose of a requirement of leave to appeal is that it is intended to act as a filter to ensure that unsuitable appellant proceedings which are not able to be brought with the demands which that places upon the resources of the court and the burden which it places upon other parties and the delays which it causes to other litigants. - see Coulter v Regina (1988) 166 CLR 350 at 359. 26 Fitzgerald JA also stated that if leave to appeal should be granted where there is some other matter which in justice required that leave to appeal be granted to allow that matter to be relitigated, the party seeking leave to appeal obviously bears the burden of establishing that justice does require that leave to appeal be granted. Further, the Master when considering whether to grant leave to appeal obviously has a very wide discretion - see CDJ v VAJ [1998] HCA 67 (per McHugh, Gummow and Callinan JJ). 27 As previously stated the plaintiff had the opportunity to furnish his evidence about the terms of the retainer which may have been at odds with the version give by the defendants. He has never sought to explain why this was not done before the costs. Leave may be granted for the costs assessor's disallowance of counsel's fees, transcript fees and photocopying. 28 Because the plaintiff did not attempt to explain his version of the costs agreement to the costs assessor or the court, he should not be granted leave to appeal. I refuse leave to appeal. The sum of these items amounts to $9,582.70. It is my view that if the judgment is allowed to stand, there is no substantial injustice done to the plaintiff. The summons is dismissed. Costs followed the event. The plaintiff is to pay the defendants' costs. 29 The orders I make are:

(3) The costs assessor's decision of 7 April 1999 is affirmed.

(5) The plaintiff is to pay the defendants' costs. **********

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