eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd [2015] NSWCA 284 | Case summary

Court of Appeal (NSW)|2015-08-19|Before: Beazley P, Basten JA, Simpson JA

The application to this Court

In a highly detailed Amended Summons, eInduct asserted error of law in virtually every ruling made by the primary judge. These included the issues in respect of which the primary judge declined to permit amendment to the appeal as filed - that is, "the Indemnity Rule", and the form of the certificate. As mentioned above, although eInduct had raised an "indemnity principle issue" before the costs review panel, it was not the same indemnity issue as it sought to raise on appeal. The latter was an argument that, since an award of costs is intended to provide indemnity against a liability to pay costs, a determination cannot be made (and a certificate cannot validly issue) unless and until the person in whose name the determination has been made or the certificate issued has actually incurred such a liability. Since the invoices rendered by Henry Davis York were to 3D only, and not to the remaining four defendants, the second to fifth defendants had incurred no liability to pay, and the certificates issued in their favour were invalid.

The "form of certificate" issue

The second issue in the application concerned the primary judge's refusal to allow amendment to raise as an issue the form of the certificate.
The argument in support of this proposed ground depended upon the decision of this Court in Wende, to the effect that separate costs orders call for separate determinations, and the issue of separate certificates.

Resolution of the form of the certificate issue

As with the indemnity issue, no attempt was made to identify any House v The King error in the primary judge's approach to the question of amendment. This ground should be rejected for that reason alone.
Also as with the indemnity issue, this ground can be seen to be devoid of merit. It is true that the judgments in Wende appear to support the proposition that separate certificates should issue in respect of separate orders for costs. But it is also true that, in the passages extracted in the primary judgment from Wende, it was recognised that a costs review panel is required to determine the issues presented to it for determination by the parties. In this case, eInduct chose to advance, both to the costs assessor and the costs review panel, detailed objections to the bills of costs. It did not (even five months after delivery of the judgments in Wende) choose to take any point about the form of the certificate issued by the costs assessor, the manner of determination of the assessment or the review, or the form which the certificate (or certificates) to be issued by the costs review panel ought to take.
Notwithstanding the (somewhat extreme) position adopted on behalf of eInduct, that the costs assessor and the costs review panel were obliged to explore every item on the bill, and make a determination as to the reasonableness of each item, (even in the absence of specific objection) it remains a fundamental principle that decision makers make decisions based upon the issues presented to them for determination. That principle was found, in Wende, to be applicable to costs assessment. The costs assessor and the costs review panel were under no obligation to go beyond the issues that were presented to them for determination. There was no error identifiable in the approach taken by the costs review panel.
There was, accordingly, no error in the treatment of the issues by the primary judge.

The proportionality principle

The final matter raised was what was called the issue of "proportionality". This was raised, for the first time, before the primary judge, it not having been alluded to before the costs assessor or the costs review panel.

Resolution of the proportionality issue

The argument depended on what is, in my view, an erroneous interpretation of s 60 of the Civil Procedure Act, which is set out above.
On its face, s 60 is directed to the conduct of litigation by courts. It is not directed to the assessment of costs of litigation by cost assessors or costs review panels. There are, however, authorities to the contrary of that view.
In April Fine Paper Macao Commercial Offshore Ltd v Moore Business Systems Australia Ltd [45] White J rejected, in strong terms, an opinion expressed by a costs assessor that s 60 is not applicable to the function of a costs assessor. In doing so, his Honour relied upon an earlier decision of this Court, Skalkos v T & S Recoveries Pty Ltd. [46] Skalkos, however, was decided before the enactment of the Civil Procedure Act and had nothing to do with s 60.
In my opinion, s 60 is directed to control of the proportionality of costs of litigation by the court in which the litigation is conducted.
Further, in s 60, the requirement of proportionality is not tied to the quantum or value of the subject matter of the litigation. It is tied to the importance and complexity of the subject matter in dispute. Litigation that involves relatively small amounts of monetary value may nevertheless be important and highly complex.
It is correct that, in Skalkos, it was accepted that the concept of proportionality is relevant in a costs assessment. That was because the predecessor of s 364 of the LPA (s 208G of the Legal Profession Act 1987 (NSW)) provided, similarly to s 364(2), that, in assessing what is a fair and reasonable amount of costs, a costs assessor may have regard to specified matters, of which (again similarly to s 364(2)) one was "the outcome of the matter".
That was the basis on which Ipp JA (with whom Sheller JA and Grove J agreed) held that: [47] "… in determining whether costs have been reasonably and properly incurred, it is relevant to consider whether those costs bear a reasonable relationship to the value and importance of the subject matter in issue."
One thing that is noticeable is that "the outcome of the matter" is one of only six considerations specified as potentially relevant in s 364(2) (and s 208G), none of which is mandatory. Moreover, other circumstances besides the six specified are not excluded. One other relevant circumstance, depending on the facts of the case, is the reason that costs may have become disproportionate to the importance and complexity of the subject matter. In this case, counsel accepted that the costs had escalated by reason of the manner in which eInduct chose to conduct the litigation. Nevertheless, he submitted, the costs review panel ought to have limited the amount determined to be reasonable simply because the costs charged exceeded the amount ordered by way of security.
In considering this submission, it is relevant to have regard to its potential consequences. If it were accepted, there would be no disincentive to a litigant adopting an attitude to the litigation that unnecessarily increased the costs incurred by the other party. Such a litigant, in counsel's submission, would not be at risk of bearing those costs, simply because the amount in issue was relatively small.
Not only would there be no disincentive to conduct of the kind I have suggested, it may be seen by some as a positive invitation to engage in conduct that would increase the burden of costs on the opposing party. The possibility of an adverse costs order does (or ought to) operate as some kind of brake on excessive costs.
The applicant's argument as to proportionality cannot be accepted.
In my opinion the application should be dismissed - with costs.

Endnotes

The 2004 Act, ss 373 and 374.
(2006) 66 NSWLR 474; [2006] NSWCA 145.
Wentworth at [102].
Wentworth at [159]-[160]; cf Dyktynski v BHP Titanium Minerals Pty Ltd (2004) 60 NSWLR 203; [2004] NSWCA 154 at [3] (Mason P).
(2014) 86 NSWLR 674; [2014] NSWCA 170.
eInduct, 31/03/15, p 8.
2004 Act, s 353(1).
Interpretation Act, s 8(b).
Interpretation Act, s 5(2).
2004 Act, s 368(2).
Wende at [47].
Wende at [9].
Wende at [197].
Wende at [203].
Wende at [207].
Wende at [208].
Wende at [209]-[210].
Wende at [10] and [11].
Wende at [13].
Wende at [14] and [102].
Wende at [91].
(2010) 239 CLR 531; [2010] HCA 1.
Kirk at [50].
Kirk at [108].
Kirk at [51]; Evidence Act, s 17(2) and s 190.
Kirk at [52].
Wende at [49]-[53].
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [91] (McHugh, Gummow, Kirby and Hayne JJ).
2004 Act, s 390(4).
(2010) 75 NSWLR 619; [2009] NSWSC 867.
April Fine Paper at [11].
Legal Profession Act, s 390(4).
(2005) 65 NSWLR 151; [2004] NSWCA 281 (Ipp JA, Sheller JA and Grove J agreeing).
[2011] EWCA Civ 331; [2011] 3 All ER 743 (David Richards J, Black and Arden LJJ agreeing).
Brook at [4].
Brook at [36], par (6)(ii).
Brook at [50].
Uniform Law at s 172(1).
eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd [2013] NSWSC 410.
eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (NSWSC, unreported).
[1994] HCA 14; 179 CLR 403.
Wende v Howarth (NSW) Pty Ltd [2014] NSWCA 170; 86 NSWLR 674.
eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (NSWDC, 31 March 2015, unreported).
[1936] HCA 40; 55 CLR 499.
[2009] NSWSC 867; 75 NSWLR 619.
[2004] NSWCA 281; 65 NSWLR 151.
Skalkos v T & S Recoveries Pty Ltd at [8].

Amendments 18 September 2015 - typographical error [30], [43] 20 May 2016 - citation corrected - endnote 4 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: 20 May 2016

Legal Profession Act 2004(NSW)

Legal Profession Act 1987(NSW)

Legal Profession Regulation 2005(NSW)

HEADNOTE [This headnote is not to be read as part of the judgment] The appellant, eInduct Systems Pty Ltd ("eInduct"), commenced proceedings against the first respondent, 3D Safety Services Pty Ltd ("3D") in the Supreme Court of NSW asserting: breach of contract, breach of equitable duties of confidence arising out of the alleged use, by 3D, of eInduct's intellectual property, and claiming restraining orders, and an award of damages. Two further individuals and two additional corporations were later joined as defendants. Following determination of two Notices of Motion, the first brought by 3D (claiming security for costs) and the second by eInduct (seeking separate trials on the issues of liability and damages), Stevenson J made two orders for costs in 3D's favour. In respect of these costs orders the solicitors for 3D (and the other defendants) submitted a composite bill, of which part was attributable to disbursements. Pursuant to s 353 of the Legal Profession Act 2004 (NSW) ("the LPA"), the defendants applied to have the costs assessed by a costs assessor. eInduct made detailed written submissions to the assessor asserting that the costs claimed were "excessive and unreasonable" for the services provided; these submissions were expansive and included a detailed individual examination of more than 70 of the items charged. The costs assessor issued a single Certificate of Determination of Costs in relation to both costs orders fixing a fair and reasonable amount of costs to be paid to 3D by eInduct. The assessor later issued his reasons and a Certificate of Determination of Costs of Costs Assessment. Pursuant to s 373 of the LPA, eInduct applied for review of that determination by a costs review panel constituted under s 374 of the LPA. The review panel set aside the original Certificate of Determination of Costs and issued a new Certificate assessing the costs in relation to both costs orders, in a slightly higher amount than that fixed by the costs assessor. The panel also issued reasons and a Certificate for the costs of the review. Pursuant to s 384(1) of the LPA eInduct appealed to the District Court against the determination of the costs review panel. At the hearing of the appeal counsel for eInduct sought leave to amend the Notice of Appeal by raising two additional grounds, neither of which had been raised before the costs assessor or the review panel. A version of the "indemnity principle" had been raised before the costs assessor, but on a completely different basis to that sought to be raised in the District Court. The District Court refused leave to amend the Notice of Appeal and dismissed the appeal. eInduct sought judicial review in the Court of Appeal under s 69 of the Supreme Court Act 1970 (NSW). The principal issues on the review were: (1) Whether the primary judge erred in declining to permit amendment to the Notice of Appeal to raise an issue as to the liability of certain of the defendants for the costs ("the Indemnity Rule"); (2) Whether the primary judge erred in declining to permit amendment to the Notice of Appeal to raise an issue as to the form of the certificates issued by the review panel based on the judgments of this Court in Wende v Horwath (NSW) Pty Ltd ("Wende"); (3) Whether the primary judge failed to take into account the proportionality of the costs to the outcome of the proceedings. Held, dismissing the summons with costs: (1) The decision of the primary judge to reject the application to amend was a discretionary one. As such, an error of principle must be identified to permit review of such a decision. (2) With respect to the proposed reliance on the "indemnity principle" - legal liability does not depend upon the rendering of an invoice, but upon the costs agreement between the parties and their solicitors. All defendants were jointly and severally liable for their solicitors' fees; an invoice issued naming only one defendant did not affect the liability of the others: Basten JA at [24]-[26]; Simpson JA at [108] (Beazley P agreeing at [4]). Wentworth v Rogers [2006] NSWCA 145; 66 NSWLR 474 considered. (3) With respect to the attempt to invoke the ruling in Wende that there should be separate certificates for each costs order the primary judge accepted that reading of the Act but concluded that, in the absence of prejudice, the amendment should not be allowed to raise a point to relied not before the assessors. No error of principle was shown in that approach: Beazley P at [5]; Basten JA at [47]-[49]; Simpson JA at [108] (Beazley P agreeing at [4]) and [112]. House v The King [1936] HCA 40; 55 CLR 499 referred to. (4) per Basten JA (distinguishing Wende): it is not clear that Wende required that a single certificate be issued in circumstances in which a single application is made for costs assessment, and in which separate costs orders have been made in favour of the same successful parties: at [42]. As neither of the two costs orders was to be assessed on a purely ordinary or purely indemnity basis, separate determinations would have resulted in no different result: at [52]. Wende v Horwath (NSW) Pty Ltd [2014] NSWCA 170; 86 NSWLR 674 considered. (5) per Simpson JA: a costs review panel is required to determine the issues presented to it for determination by the parties. The failure of eInduct to raise any issue as to the form of the certificate prior to the hearing in the District Court meant that neither the costs assessor nor the costs review panel had been obliged to determine this matter: at [114]. (6) per curiam: with respect to proportionality - s 60 of the Civil Procedure Act is not directed to costs assessors or costs review panels under the LPA. Section 60 is expressed as a directive to the practice and procedure of courts and those practitioners who act before them. Costs assessors are not members of a court: Beazley P at [6]-[7]; Basten JA at [58]; Simpson JA at [118], [120]. Skalkos v T & S Recoveries Pty Ltd [2004] NSWCA 281; 65 NSWLR 151; April Fine Paper Macao Commercial Offshore Ltd v Moore Business Systems Australia Ltd [2009] NSWSC 867; 79 NSWLR 619 discussed (7) Section 364 of the LPA does not use the language of proportionality. The test is expressed in s 364(1)(c) as "fair and reasonable"; an assessment of which may, in some instances, involve some form of proportionality analysis: Beazley P at [8]; Basten JA at [63]. The "outcome" of a matter is one of only six considerations specified as non-mandatory considerations for a costs assessor under s 364(2). Failure to consider the proportionality of the costs against the outcome of the proceedings cannot be said to demonstrate error: Beazley P at [9]; Basten JA at [63]; Simpson JA at [124].

Judgment

BEAZLEY P: The applicant seeks relief pursuant to the Supreme Court Act 1970 (NSW), s 69 by way of judicial review of a decision of Bozic DCJ given on 31 March 2015, in which his Honour refused an application to amend the summons and dismissed the applicant's appeal brought pursuant to the Legal Profession Act 2004 (NSW), s 384 from a determination of a costs review panel. An appeal under s 384 is as to a matter of law arising in the proceedings.
On the hearing in this Court, the applicant contended that the primary judge erred in law in the exercise of his discretion in refusing the amendment to the summons initiating the appeal and in failing to take into account a relevant mandatory consideration, namely, the requirement that costs be proportionate.
I agree with the reasons of Simpson JA and substantially with the reasons of Basten JA that the summons for judicial review be dismissed. I wish to add some short observations of my own.
By its proposed amendment to the summons initiating the appeal in the District Court the applicant sought to raise two issues not raised by the applicant in the costs assessment process before either the costs assessor or the review panel. The first issue was described as the indemnity principle. I do not wish to add to the observations of Basten JA at [25]-[26] and of Simpson JA at [108], with which I agree.
The second issue raised the question of the invalidity of the costs certificate, as only one costs certificate had been issued by the costs assessor, whereas there were two separate orders for costs made by Stevenson J in respect of which the assessment had been sought. This aspect of the proposed amendment was based upon the decision of this Court in Wende v Horwath (NSW) Pty Ltd [2014] NSWCA 170; 86 NSWLR 674. Again, I agree with Basten JA and Simpson JA that no reviewable error has been demonstrated in the trial judge refusing the amendment to the summons sought by the applicant. I should record, however, that in Wende v Horwath it was my opinion that a global certificate could not be issued under the Legal Profession Act. My own view was not one limited to the circumstances that arose in Wende v Horwath: cf Basten JA's observations at [39].
That leaves the question of proportionality. To the extent that the applicant sought to rely upon the Civil Procedure Act 2005 (NSW), s 60, I join with the observations of Simpson JA that s 60 does not govern a costs assessment by a costs assessor or review panel under the Legal Profession Act. I note that Basten JA expresses significant doubt that s 60 has any application to a costs assessment.
The Civil Procedure Act, s 60 is contained within Pt 6: "Cost Management and interlocutory matters"; Div 1: "Guiding principles". Sections 56-60 fall within Div 1. Those sections provide for the overriding purpose of the Act and rules: s 56; the objects of case management: s 57; the requirement for the court to follow the dictates of justice: s 58; the stated object for the practice and procedure of the court in any proceeding to be the elimination of delay: s 59; and the object of the practice and procedure of the court in any proceeding to be implemented "in such a way that the cost to the parties is proportionate to the importance and complexity of the subject matter in dispute". Section 60, by its terms, does not purport to extend to any assessment of costs. It is a directive to the court and the parties as to their implementation of the practice and procedure of the court.
The Legal Profession Act, s 364 does not use the language of proportionality. Rather, the section specifies those matters that a costs assessor must consider: s 364(1); and those matters to which it may have regard: s 364(2), including the complexity, novelty or difficulty of the matter: subs (2)(b) and the outcome of the matter: subs (2)(f). The test, after determining whether it was reasonable to carry out the work: subs (1)(a); and whether the work was carried out in a reasonable manner: subs (1)(b); is what is a "fair and reasonable amount of costs for the work concerned": subs (1)(c).
Given that the only reference to the 'outcome' of the proceedings, which would include, but not be confined to, any monetary award made by the Court, is a non-mandatory consideration under subs (2), it cannot be said that a costs assessor must have regard to "proportionality". It is the text of the legislation to which regard must be had.
I agree with the orders proposed that the summons for judicial review be dismissed with costs.
BASTEN JA: In 2012 the applicant, eInduct Systems Pty Ltd, commenced proceedings in the Commercial List of the Supreme Court against the respondent, 3D Safety Services Pty Ltd and four other defendants. On 30 November 2012 the defendants sought an order for security for costs, to be provided by the plaintiff. On 1 March 2013 the plaintiff sought an order that issues of liability be determined separately and before questions of damages.
The respondents were successful in obtaining an order for security for costs; the plaintiff was unsuccessful in seeking a separate determination of the issues other than damages. In the result, the applicant was ordered to pay the costs of both motions. The relevant orders in respect of costs, both entered on 6 May 2013, were as follows: Order with respect to defendant's motion for security for the costs of the trial - "The plaintiff pay the defendants' costs of and in relation to the filing, service and determination of the defendants' notice of motion dated 30 November 2012 …, such costs to be payable on the ordinary basis until 26 February 2013 and on an indemnity basis thereafter either as agreed or assessed." Order with respect to the separate trial motion - "The plaintiff's Notice of Motion of 1 March 2013 is dismissed with costs."
The respondents sought an assessment of the costs of both motions, by an application under s 353 of the Legal Profession Act 2004 (NSW) ("the 2004 Act") as then in force. The applicant filed a notice of objection with respect to the respondent's bills, which were duly determined by a costs assessor, pursuant to s 367A of the 2004 Act. The determination substituted for the disputed costs the amount which, in his opinion, was a fair and reasonable amount. The costs assessor duly issued a certificate, pursuant to s 368, setting out his determination.
Being dissatisfied with the certificate, the applicant exercised its right of review by a panel of two costs assessors appointed by the Manager, Costs Assessment. [1] The panel in due course made its determination on the application for review and issued a certificate that set out the terms of the determination, pursuant to s 378.
Pursuant to s 384 of the 2004 Act, a party dissatisfied with a decision of a costs assessor "as to a matter of law arising in the proceedings to determine the application" was entitled to appeal to the District Court "against the decision." On 24 October 2014 the applicant filed a summons in the District Court exercising its right of appeal and identifying six grounds involving errors of law said to have occurred in respect of the determination by the review panel.
In a judgment delivered on 31 March 2015 Bozic DCJ dismissed the appeal. There is no right of appeal from that judgment, but the applicant sought judicial review in the supervisory jurisdiction of the Court, pursuant to s 69 of the Supreme Court Act 1970 (NSW).
Although the summons in this Court identified numerous grounds of review, the argument focused on three matters. Two involved fresh grounds sought to be relied on in the District Court appeal, but rejected by Bozic DCJ by refusing leave to amend the notice of appeal. The third matter concerned a ground raised and addressed in the District Court, but rejected, which alleged a failure on the part of the review panel to apply the "principle of proportionality."
For the reasons which follow the summons must be dismissed with costs.

Principle of proportionality

The notice of appeal contained a number of grounds, but the principal focus of submissions before the primary judge was an alleged failure on the part of the review panel to apply the "principle of proportionality". The judge rejected that ground, which constitutes the third and final issue relied on by the applicant in support of the present application for review.
The relevance of the principle to the assessment was said to be found in the language of s 364 which, so far as presently relevant provided: 364 Assessment of costs - costs ordered by court or tribunal (1) In conducting an assessment of legal costs payable as a result of an order made by a court or tribunal, the costs assessor must 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) what is a fair and reasonable amount of costs for the work concerned. (2) In considering what is a fair and reasonable amount of legal costs, a costs assessor may have regard to any or all of the following matters: … (b) the complexity, novelty or difficulty of the matter, … (f) the outcome of the matter.
Thus, the costs assessor was required to consider whether it was "reasonable to carry out the work" and was empowered to consider the "outcome" of the matter. From this combination of factors, the applicant derived a mandatory requirement to have regard to the "proportionality" between the costs incurred by undertaking certain work and the outcome.
At least before the primary judge, the applicant also placed reliance on s 60 of the Civil Procedure Act 2005 (NSW), which provides: 60 Proportionality of costs In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.
The application of this provision to a costs assessment was said to follow from the judgment of White J in April Fine Paper Macao Commercial Offshore Ltd v Moore Business Systems Australia Ltd. [30] After setting out a lengthy extract from an affidavit of Ms Nicole Armitage, a solicitor and costs consultant, White J stated: [31] "I set this out in full in case Ms Armitage's opinion that a costs assessor cannot apply or rely on s 60 of the Civil Procedure Act in a costs assessment has any adherents or support in the profession or amongst costs assessors. That opinion is wrong. It is contrary to authority (Skalkos v T & S Recoveries Pty Ltd … at 153)."
Although the primary judge referred to s 60 of the Civil Procedure Act in summarising the applicant's submissions, he did not expressly adopt that submission. In that regard he was correct. The proposition that s 60 of the Civil Procedure Act applies to a costs assessment is, to say the least, doubtful. It applies to the practice and procedure of "the court" in proceedings: as noted above, the costs assessors are not officers of the court. [32] Although part of the statement to which exception was taken in April Fine Paper alleged categorically that for a costs assessor to apply or rely upon s 60 would involve a failure to discharge his or her statutory function, it was correct to say that a test of proportionality arises from the terms of s 364. (There may well be overlap between the concepts contained in each provision.)
Like White J, the primary judge did, however, rely on the approach adopted by Ipp JA in Skalkos v T & S Recoveries Pty Ltd. [33] There, after noting a complaint that a master carrying out a review of a costs assessment failed to have regard to the principle of proportionality, Ipp JA stated: "[8] In my opinion, in determining whether costs have been reasonably and properly incurred, it is relevant to consider whether those costs bear a reasonable relationship to the value and importance of the subject matter in issue. See in this regard Szlazko v Travini [2004] NSWSC 610; Moore v Moore [2004] NSWSC 587, Gallagher v CSR Limited (Supreme Court of Western Australia, Ipp J, 21 March 1994, unreported). This conclusion is supported by s 208G(f) of the Legal Profession Act. [9] The failure on the part of the costs assessor and the Master to have regard to the principle of proportionality does not, however, in the circumstances of this case, alone warrant granting the relief sought by the claimant."
Skalkos applied the law as set out in the Legal Profession Act 1987 in which s 208F(1) was in similar (though not identical) terms to s 364(1) of the 2004 Act and s 208G(f) corresponded to s 364(2)(f) of the 2004 Act.
The applicant also sought to obtain assistance from principles stated with respect to costs incurred by a trustee in bankruptcy, referring to Brook v Reed (trustee in bankruptcy of Estate of Brook). [34] David Richards J (writing for the Court of Appeal) noted that the issue to be addressed concerned "the approach which has been adopted by the courts in relation to the remuneration of trustees in bankruptcy and other office-holders." [35] He further noted that the development of law and practice in that area was to be seen against "a background of public concern as to the levels sometimes reached by office-holders' fees and remuneration, together with a public interest in seeing that officer-holders' duties are competently and properly carried out." After indicating a number of developments, relevant to the approach to be adopted by the Court, David Richards J referred in some detail to a Practice Statement promulgated in 2004, setting out a number of principles to be applied in fixing the remuneration of trustees and other office-holders. In part that statement required that "the amount of remuneration to be fixed and approved by the court should be proportional to the nature, complexity and extent of the work to be completed …." [36] The judge then noted that the ground of appeal asked whether the remuneration allowed in the particular case was "disproportionately high in relation to the circumstances of the bankruptcy". [37]
Instructive as the judgment is in its area of operation, it has little bearing on the matters before the primary judge and this Court. Both the context and the legal framework discussed in that case were far removed from the costs assessments undertaken with respect to the fees of solicitors acting for parties in private litigation. Indeed, in part it demonstrates the breadth of the considerations which may need to be taken into account in considering whether costs are proportionate to the matters in dispute. The outcome is clearly only one of those factors.
The statutory scheme under which the costs assessments were undertaken did not use the language of proportionality; on the other hand, it did use the language of reasonableness, a concept which may, depending on the circumstances, involve (and even require) some form of proportionality analysis. Accepting that to be so, no error was demonstrated in the manner in which the primary judge dealt with this ground of appeal.
Further comment as to proportionality in the context of the 2004 Act is unnecessary and may be apt to mislead. The current legislative regime, found in part in the Uniform Law expressly requires that legal costs be no more than such as are "proportionately and reasonably incurred" and "proportionate and reasonable in amount." [38] Given the express adoption of such language in the Uniform Law, consideration of its meaning and effect should be left for a case in which the Uniform Law is applicable.

eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd

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