Ferella v Stomo

Ferella v Stomo - [2017] NSWCA 268 - NSWCA 2017 case summary — Zoe

Judgment

MACFARLAN JA: The reasons set out in the judgments of White JA and Sackville AJA reflect my reasons for joining in the making of the orders that the Court made on 13 October 2017.
WHITE JA: This is an application pursuant to s 69 of the Supreme Court Act 1970 (NSW) for judicial review of orders of the District Court (Gibson DCJ) made on 7 March 2017 (Ferella v Stomo [2017] NSWDC 34).
At the conclusion of oral argument the Court dismissed the summons for judicial review and ordered the applicants to pay the respondent's costs on the indemnity basis. These are my reasons for joining in the making of those orders. I also agree with the reasons of Sackville AJA.
The proceedings arise out of costs orders made by Young AJ in the Equity Division of the Supreme Court on 21 March 2014 (Riva NSW Pty Ltd v Key Nominees Pty Ltd [2014] NSWSC 389) and by this Court on 7 November 2014 (Riva NSW Pty Ltd v Key Nominees Pty Ltd [2014] NSWCA 381).
The Legal Profession Act 2004 (NSW) ("the LP Act") was repealed with effect from 1 July 2015 by s 167(a) of the Legal Profession Uniform Law Application Act 2014 (NSW) ("the Application Act"). (Section 167(a) was itself repealed on the following day pursuant to s 30C(1)(b) and (2) of the Interpretation Act 1987 (NSW) ("the Interpretation Act").)
It is common ground that on 21 August 2015 the first respondent filed an application for "Assessment of Party/Party Costs" in respect of the costs order made in his favour by the Supreme Court and an application for "Assessment of Party/Party Costs" in respect of the costs order made in his favour by the Court of Appeal.
It is also common ground that on 7 December 2015 a costs assessor, Ms K J Young, issued Certificates of Determination of Costs together with reasons in respect of each of the assessments. The assessor determined that a fair and reasonable amount of costs be paid in respect of the costs the subject of the order made by the Supreme Court was $22,860.65 and that the amount payable in respect of the costs order of the Court of Appeal was $21,000. The assessor also assessed the costs of each application.
It is also common ground that on or about 25 February 2016 the applicants lodged an application for review of those determinations with a Review Panel. On 18 April 2016 the Review Panel affirmed each of the assessor's determinations.
On 20 June 2016 the applicants filed a summons in the District Court purporting to appeal, but also seeking leave to appeal from the decisions of the Review Panel. Ultimately only one ground of appeal was relied upon, namely that: "The Review Panel erred in law by purporting to carry out the review in accordance with the Legal Profession Act 2004 (NSW) and the Legal Profession Regulation 2005 (NSW)."
The applicants failed in the District Court. The primary judge dismissed their summons. The applicants seek to have that order set aside.
In their written submissions before the District Court the applicants (plaintiffs in the District Court) contended that their appeal was brought either pursuant to s 89 of the Application Act or alternatively under ss 382 and 384 of the LP Act.
In oral submissions before the District Court counsel for the applicants relied upon s 89 of the Application Act. That section relevantly provides: "89 Appeal on matters of law and fact (1) A party to a costs assessment that has been the subject of a review under this Part may appeal against a decision of the review panel concerned to: (a) the District Court, in accordance with the rules of the District Court, but only with the leave of the Court if the amount of costs in dispute is less than $25,000. …"
Section 89 applies only to a costs assessment "that has been the subject of a review under this Part" (viz. Pt 7 of the Application Act). The primary judge held that the costs assessments had not been made under Pt 7 of the Application Act, but under Div 11 of Pt 3.2 of the LP Act (at [32]). If the LP Act applied, then the applicants had a right to appeal to the District Court as to a matter of law from the decision of the Appeal Panel (LP Act, ss 382(1) and 384). But as the only ground of appeal ultimately relied upon was that the Review Panel erred in proceeding under the LP Act rather than under the Application Act, such an appeal would be doomed. The applicants' argument was that the LP Act did not apply. They could not rely on a right of appeal conferred by that Act without contradicting their own argument.
The primary judge held that, as the Review Panel assumed, the LP Act did apply to its decision. The applicants say that this was an error of law on the face of the record. For the reasons below, I do not agree with that submission.
Regulation 59 of the Legal Profession Uniform Law Application Regulation 2015 (NSW) ("the Application Regulation") provides: "59 Ordered costs - transitional provision The provisions of the Legal Profession Act 2004 and the Legal Profession Regulation 2005 relating to ordered costs continue to apply to a matter if the proceedings to which the costs relate commenced before 1 July 2015."
The primary judge held that by reason of reg 59 the LP Act applied to the costs assessments that related to the costs that had been ordered to be paid by the orders of Young AJ and of the Court of Appeal.
The applicants submitted that the transitional provisions in cl 2 of Sch 4 to the Legal Profession Uniform Law (NSW) ("the Uniform Law") applied the provisions of the Uniform Law to costs determinations even though those costs determinations arose from proceedings commenced and orders made prior to 1 July 2015.
The provisions of Sch 4 to the Uniform Law have effect pursuant to s 476 of the Uniform Law. Clause 2 of Sch 4 relevantly provides: "2 General savings and transitional provision … (4) Without limiting subclauses (2) and (3), if a provision of the old legislation that corresponds to a provision of this Law as applied in this jurisdiction would, but for its repeal by the Legal Profession Uniform Law Act of this jurisdiction, have applied in relation to anything done or being done or in existence before the commencement day, the provision of this Law applies in relation to that thing, and so applies with any necessary adaptations. … (6) This clause does not have effect to the extent that other provision is made by this Schedule or that the context or subject matter otherwise indicates or requires, and has effect subject to the local regulations."
The LP Act is a statutory provision repealed by the "Legal Profession Uniform Law Act of this jurisdiction" (being the Application Act, see the definition of "Legal Profession Uniform Law Act of this jurisdiction" in s 6 of the Uniform Law). Hence, the LP Act is "old legislation" within the meaning of cl 2 of Sch 4.
Section 166 of the Application Act provides: "166 Local regulations (1) The Governor may make regulations (local regulations), not inconsistent with this Act or the Legal Profession Uniform Law (NSW), for or with respect to any matter that by this Act or that Law is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act or that Law. … (4) The local regulations may make provision for or with respect to any matters for or with respect to which costs assessment rules may be made."
Regulation 59 is set out at [15] above. The applicants submitted that that regulation is inconsistent with cl 2 of Sch 4 of the Uniform Law and accordingly is beyond power and is invalid. That is not so. Schedule 4 to the Uniform Law is not the relevant legislation. If it were, effect would have to be given to cl 2(6) of Sch 4 to the Uniform Law that provides that cl 2 "has effect subject to local regulations". It is unnecessary to pursue the questions of construction that would arise if that were the relevant provision. The relevant provisions are cll 1(1) and (4) of Sch 9 to the Application Act.
The Uniform Law (as distinct from the Application Act) does not apply to a costs assessment consequent upon the making of a costs order. Part 4.3 of Ch 4 of the Uniform Law is headed "Legal costs". Section 169 provides: "169 Objectives The objectives of this Part are - (a) to ensure that clients of law practices are able to make informed choices about their legal options and the costs associated with pursuing those options; and (b) to provide that law practices must not charge more than fair and reasonable amounts for legal costs; and (c) to provide a framework for assessment of legal costs."
Section 172 requires, in substance, that a law practice must not charge costs that are more than fair and reasonable in all the circumstances. Part 4.3 contains provisions regarding costs disclosure, costs agreement and billing.
Division 7 of Pt 4.3 is headed "Costs assessment". Division 7 applies to "legal costs payable on a solicitor-client basis" (s 196). Division 7 of Pt 4.3 of the Uniform Law could not apply to the assessment of the costs the subject of the orders of Young AJ and the Court of Appeal. The costs ordered to be paid were not to be assessed and were not payable on the "solicitor-client basis", but on the ordinary basis.
The relevant legislation that would be applicable to the costs assessments in question in the present case, but for reg 59 of the Application Regulation, was Pt 7 of the Application Act. Section 64 of the Application Act provides that that Part applies to "Uniform Law costs and ordered costs". "Uniform Law costs" means legal costs referred to in Div 7 of Pt 4.3 of the Uniform Law. "Ordered costs" means costs payable under an order or rule of a court or tribunal (s 63).
In determining whether Pt 7 of the Application Act applies, regard should be had to the transitional provisions for the Application Act. The transitional provisions are contained in Sch 9 to the Application Act. Schedule 9 is given effect by s 64A of the Interpretation Act. Schedule 9 relevantly provides: "Part 1 Preliminary 1 Savings and transitional regulations (1) The local regulations may contain provisions of a savings or transitional nature consequent on: (a) the enactment of this Act or any Act that amends this Act, or (b) the enactment of any Act of Victoria that amends the Legal Profession Uniform Law set out in Schedule 1 to the Legal Profession Uniform Law Application Act 2014 of Victoria. (2) Any such provision may, if the local regulations so provide, take effect from the date of assent to the Act concerned or a later date. (3) To the extent to which any such provision takes effect from a date that is earlier than the date of its publication on the NSW legislation website, the provision does not operate so as: (a) to affect, in a manner prejudicial to any person (other than the State or an authority of the State), the rights of that person existing before the date of its publication, or (b) to impose liabilities on any person (other than the State or an authority of the State) in respect of anything done or omitted to be done before the date of its publication. (4) Any such provision has effect despite anything to the contrary in this Schedule or Schedule 4 to the Legal Profession Uniform Law (NSW). (5) The local regulations may make separate savings and transitional provisions or amend this Schedule to consolidate the savings and transitional provisions. Part 2 Provisions consequent on enactment of this Act 2 Definition In this Part: repealed Act means the Legal Profession Act 2004. 3 General savings and transitional provisions (1) This clause has effect subject to this Act and the Legal Profession Uniform Law (NSW). (2) Each person, body, thing and circumstance appointed or created under the repealed Act or existing or continuing under that Act immediately before the commencement of relevant provisions of the Legal Profession Uniform Law (NSW) continues to have the same status, operation and effect as it would have had if this Act had not been enacted. (3) Any act, matter or thing subsisting immediately before the commencement of relevant provisions of the Legal Profession Uniform Law (NSW) that: (a) was done or omitted under the repealed Act, and (b) could have been done or omitted under that Law (with any necessary modifications) if that Law had been in force when it was done or omitted, is taken to have been done or omitted under that Law. …" (Emphasis added.)
Clause 3 of Sch 9 has a similar operation to cl 2 of Sch 4 of the Uniform Law. But both are subject to reg 59. The Application Regulation is a "local regulation" within the meaning of cl 1 of Sch 9 (ss 3 and 166). Regulation 59 is a provision of a savings or transitional nature consequent on the enactment of the Application Act. By reason of cl 1(4) of Sch 9 that regulation "has effect despite anything to the contrary in this Schedule or Schedule 4 to the Legal Profession Uniform Law (NSW)". Hence, the statute provides for the provisions of a savings or transitional nature contained in the regulation to prevail. It follows that the regulation is not inconsistent with the Uniform Law or the Application Act within the meaning of s 166. Rather it does the very thing that the Application Act provides it can do. Moreover, cl 1(1) of Sch 9 is a separate source of power for the making of the regulation.
The primary judge concluded that the regulation was valid and applicable. Although her Honour's attention was not directed to the relevant statutory provisions, her conclusion was correct. Her Honour applied the decision of Robertson J in Adelaide Bank Limited v Phontos [2016] FCA 824 at [41]-[45]. Robertson J was not called upon to consider an argument that reg 59 was invalid. But his Honour's conclusion was correct. In Cominos v Di Rico (No 2) [2016] NSWCATAP 138 the Appeal Panel of the NSW Civil and Administrative Tribunal (Wright J and Titterton Senior Member) reached the same conclusion (at [29], [34]).
Accordingly, the reasons of Gibson DCJ do not disclose an error of law. Even had they done so, it would not have been appropriate to quash the decision.
Gibson DCJ held that if s 89 of the Application Act applied, leave to appeal would be required because the amount of costs in dispute in respect of each assessment was less than $25,000. That is not challenged. It is clearly correct. Her Honour identified a number of factors that she described as being strong factors militating against the grant of leave. Her Honour said that if the Application Act were applicable she would not grant leave to the applicants to appeal under s 89(1)(a) and would dismiss the appeal. The summons contains as a ground of review that: "The primary judge made an error on the face of the record in holding that she would not, in the event the Legal Profession Uniform Law (NSW) applied, grant leave to appeal pursuant to s 89(1)(a) thereof." No reason was advanced as to why that was so.
The grounds upon which the primary judge said that she would not grant leave if s 89 of the Application Act applied were that: 1. not all of the costs the subject of the assessments had been the subject of objection and thus the sums challenged were very modest; 2. the "need for finality and for proportionality, having regard to the history of the legislation and the modesty of the amounts involved, is high"; 3. the issue as to which legislation was applicable had not been raised before the Review Panel; 4. neither party suggested that either statutory scheme contained any substantial difference in the way the costs assessor or the Review Panel should approach the assessments; 5. it was undesirable to entertain appeals on technical grounds that did not relate to the substantial merits of the dispute; and 6. no cogent argument for the grant of leave had been identified.
These were proper considerations to be taken into account in the exercise of the primary judge's discretion to grant or refuse leave under s 89 if that section were applicable. If s 89 applied, there is no error of law on the face of the record in the primary judge's exercise of her discretion not to grant leave that could lead to an order quashing the decision below.
Even if the applicants' submission as to the applicable legislation were correct, prerogative relief is discretionary. It would not be appropriate to set aside the decision under review on the ground of the alleged error where the result would have been the same, even had the primary judge proceeded on the basis of what the applicants contend was the correct legislation.
Neither the proceeding in the District Court nor in this Court had any underlying merit. The applicants did not suggest that there were any differences between the LP Act and the Application Act that could have led to the costs assessor or the Review Panel reaching different figures had they applied Pt 7 of the Application Act instead of the LP Act.
The applicants also sought an order setting aside costs orders made by the primary judge on 7 March 2017 (Ferella v Stomo (No 2) [2017] NSWDC 61). Her Honour ordered that the applicants pay the second respondent's costs on the indemnity basis and in a gross sum of $17,000, plus the costs of the application for indemnity costs in the sum of $1,000. The applicant did not identify any error of law in that decision. Counsel for the applicants said that that relief was sought only if the challenge to the order dismissing the summons succeeded. That challenge has failed.
The applicants' claim for relief by way of judicial review was hopeless. Even if the question of law raised had been answered in the applicants' favour, the application was bound to fail because the primary judge had given sound and unchallenged reasons as to why leave to appeal should be refused if s 89 of the Application Act applied. On this ground alone it was appropriate to order that costs of the summons for judicial review be payable on the indemnity basis. That conclusion was supported by offers from the respondent to accept materially less than what he was entitled to under the orders of the District Court. Those offers were unreasonably refused.
SACKVILLE AJA: Section 69 of the Supreme Court Act 1970 (NSW) provides a statutory framework for the grant of relief previously available to a person challenging decision by way of the prerogative writs. The legislation, building on the common law, provides a mechanism for ensuring, among other things, that certain categories of decision-makers perform their functions according to law and within the limits of their lawful authority. These categories include tribunals and courts of limited jurisdiction.
The institution of judicial review of decisions made or purportedly made under State law has been elevated to constitutional dimensions by the decision of the High Court in Kirk v Industrial Relations Commission of New South Wales. [1] In that case the High Court held that a State Parliament lacks the legislative power to remove from the Supreme Court of the State the power to grant relief for "jurisdictional error" committed by a relevant decision-maker.
The institution of judicial review is an important component of the rule of law as understood in Australia. This no doubt explains, at least in part, why the institution has been accorded constitutional status, albeit limited to cases of jurisdictional error. But there is another aspect to judicial review.
The availability of judicial review opens the way to a determined or obstinate litigant who has exhausted all rights of appeal to mount a further challenge by invoking the original (as opposed to the appellate) jurisdiction of the Court. As a general proposition the litigant can seek judicial review without having to satisfy a leave requirement and regardless of whether the cost of the proceedings is "proportionate to the importance and complexity of the subject-matter in dispute". [2]
The litigant perhaps may risk the application being dismissed on discretionary grounds and, if the application is baseless, may also be at risk of an order for indemnity costs. However a hearing is required and these orders are not made as a matter of course. In any event, the successful respondent may find the costs order difficult to enforce. Even if enforceable, the order will often not compensate for the stress, inconvenience and wasted effort associated with the unjustified prolongation of proceedings.
This case is an example of the misuse of judicial review proceedings. Two costs assessments were the subject of Certificates of Determination of Costs. The Certificates together involved costs amounting to about $44,000, plus the costs of the assessments themselves. Mr Newton, who appeared for the applicants, was unable to say what amount of costs was truly in dispute. It is a fair inference that the amount genuinely in dispute is very modest indeed.
The applicants pursued, as they were entitled to do, an application for review by the Review Panel and an application to the District Court for leave to appeal from the decisions of the Review Panel. Both applications were unsuccessful. The application to this Court, although challenging the decision of the District Court rather than that of the costs assessor or the Review Panel, is in effect a third appeal over a small sum of money.
The ground of the application for judicial review was that the District Court (like the Review Panel) erred in applying the provisions of the Legal Profession Act 2004 (NSW) (LP Act) rather than the provisions of the Legal Profession Uniform Law (NSW). Mr Newton was asked what difference it would have made had the Review Panel applied what the applicants said were the correct provisions. His answer was "On one view, it would make possibly not a lot of difference".
As White JA has explained, the applicants relied on s 89 of the Legal Profession Uniform Law Application Act 2014 (NSW), (Application Act) in their application to the District Court for leave to appeal. The District Court Judge dealt with the application on the basis presented to her and declined to grant the applicants leave to appeal. She gave cogent reasons for doing so and no error has been shown in her Honour's approach. This is enough to justify dismissing the summons for judicial review.
In any event, reg 59 of the Legal Profession Uniform Law Application Regulation 2015 (NSW) makes it clear that the District Court Judge and the Review Panel were correct to hold that the provisions of the LP Act applied to the costs assessments and to the proceedings before the Review Panel. As Mr Newton ultimately accepted, the contention that reg 59 is ultra vires or otherwise invalid cannot be sustained.
These are my reasons for joining in the orders made on 13 October 2017.

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