Ferella v Stomo

The relevant costs orders and assessment process

1. The costs are party/party costs arising out of litigation conducted in the Supreme Court of New South Wales in the Equity Division before Young AJA (proceedings number 2012/173688) and in the New South Wales Court of Appeal: Riva NSW Pty Ltd v Key Nominees Pty Ltd [2014] NSWCA 381 at [13]-[24].
2. The factual matrix underlying this dispute is a long and bitter one. The defendant is a barrister who advised the plaintiffs in proceedings which were litigated for some years; he was then the subject of an unsuccessful claim for professional negligence. The plaintiffs were ordered to pay the costs of the defendant, both at first instance and on appeal.
3. Following the handing down of the Court of Appeal judgment on 7 November 2014, the defendant applied to the Manager, Costs Assessment, for an assessment of the first instance costs ordered to be paid by the plaintiffs (file 2015/247108) and, in a separate application, for the costs payable in the Court of Appeal (file 2015/247117). In both matters, the costs assessor made a determination in favour of the defendant and an application was made for a review on 25 February 2016. The Review Panel's determination of 18 April 2016 rejected all grounds raised by the plaintiffs and the Summons referred to above was filed in this court on 20 June 2016.

An overview of the issues of law and findings

1. The changes to the grounds of appeal and relief sought and the manner of presentation of the appeal created some confusion during the hearing, so I summarise my findings as follows: 1. This court does not have jurisdiction to hear any application for leave to appeal under s 385 LPA, as leave from the court where the proceedings were heard is required: McCausland v Surfing Hardware International Holdings Pty Ltd (2010) 11 DCLR (NSW) 294 at [18]. The summons needed to delineate with clarity whether the grounds of appeal are brought pursuant to s 384 or s 385 LPA (Altaranesi v Sydney Local Health District (2012) 17 DCLR (NSW) 300). 2. The LPULAA savings and transition provisions are stated to be, and have been, applied by courts at all levels as applying only to actions commenced on or after 1 July 2015: Adelaide Bank Ltd v Phontos [2016] FCA 824 at [44]; Wende v Horwath (No 2) (2015) 91 NSWLR 588 at [12] per Beazley ACJ. 3. While a judge of this court has expressed the view that the LPULAA applies to a summons filed after the cut-off date of 1 July 2015 (presumably as proceedings commenced after 1 July 2015), this was an obiter view expressed in passing in proceedings involving the issuing of a subpoena: Giles Payne & Co v Penson [2016] NSWDC 72 (at [3]). If the LPULAA did apply to this appeal, the plaintiffs require leave to commence as the sums assessed fall below the s 89 threshold. I have set out below my reasons for refusing to grant leave.
2. The plaintiffs concede that it was never put to the Review Panel that the LPULAA applied to the assessment, rather than the LPA. The statement in the plaintiffs' written submissions (at paragraph 10) that the Review Panel "fell into legal error in so doing" is a mischievous. As noted above, as this question was never raised on assessment or with the Review Panel, it is not an error of law capable of an appeal: eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (2015) 90 NSWLR 451. Whether or not the new legislation applies, the same principles in relation to raising issues on appeal not raised at the assessment would apply.
3. Mr Newton sought to argue that the issue of the correct law to apply was so important, and so obvious, that the courts were obliged to correct the error. However, a summons to this court appealing (or seeking leave to appeal) the determination of the Review Panel is not the way to go about it. The plaintiffs could, for example, have sought appropriate relief from the Supreme Court by way of prerogative writ (cf B & L Linings Pty Ltd & Anor v Chief Commissioner of State Revenue (2008) 74 NSWLR 481 at [130] ff). This court has no such power, as its jurisdiction is limited to the hearing of an appeal under Part 50 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR").

Can the plaintiffs' challenge to the legislation amount to a ground of appeal?

1. The Review Panel's determination (paragraphs 4.1, 4.2 and 6.1) explicitly state that they were performing their task under the LPA and Legal Profession Regulation 2005 (NSW). The relevant legislation to apply was the subject of agreement and was never a disputed issue before the Review Panel or before the assessor at any time.
2. The first issue is whether the challenge brought by the plaintiffs to the applicable law is capable of forming part of an appeal under s 384 LPA or (if I have erred in holding the repealed legislation applies) under s 89 LPULAA. This ground must fail in limine under both statutory schemes, as an issue which has not been raised on assessment or appeal is not an "error of law" from which an appeal can be brought.
3. Mr Newton alternatively sought to argue that the error of law on the part of the Review Panel amounted to jurisdictional error (Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 at 171; Craig v State of South Australia (1995) 184 CLR 163 at 179) so fundamental as to override the requirement for the ground to have been raised before the Review Panel. To repeat my earlier observations, this submission misconceived the limited jurisdiction this court has under s 384 LPA (and, for that matter, under s 89 of the LPULAA), namely to determine appeals under the legislation. As I have set out in more detail below, I consider that the LPA was the correct law to apply and that the Review Panel did not err.
4. However, before determining this issue, there is a threshold to s 89 LPULAA which the plaintiffs, if successful in their arguments as to the correct law to apply, must get over, namely the requirement for leave to appeal. I set out my reasons for holding that, if the LPULAA did apply, leave under s 89(1) (a) LPULAA should not be granted.

The leave provisions of s 89 LPULAA

1. Section 89(1)(a) provides: "(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, or (b) the Supreme Court, in accordance with the rules of the Supreme Court, but only with the leave of the Court if the amount of costs in dispute is less than $100,000."
2. In each of the cases before me, the amount of costs in dispute is individually less than the prescribed amount of $25,000. The assessor's finding in relation to proceedings 2015/247108 was $22,860.65 and in relation to the appeal assessment (2015/247117) was $21,000. These amounts were affirmed on appeal by the Review Panel. These are separate costs assessments and cannot form part of the same costs assessment (Wende v Horwath (NSW) Pty Limited [2014] NSWCA 170). Although the appeals have been brought in one Summons, the amounts cannot be combined for the purpose of defeating s 89(1) (a). Although stating otherwise in his written submissions, Mr Newton agreed in the course of the hearing that the plaintiffs would need to seek leave under s 89(1)(a).
3. There are strong factors militating against the grant of leave in these circumstances. These are as follows: 1. Although grounds (4) and (6) of the orders sought in the Amended Summons were withdrawn during argument, it is apparent that not all of the costs are the subject of objection and that the sums challenged are 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 (eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd; Aktas v Westpac Banking Corporation Ltd [2013] NSWSC 1451 at [20] - [21]). Proportionality factors are one of the keystones of the new legislation and should be given proper weight. These proceedings are a good example of the appropriateness of refusal of leave on these grounds. 3. The issue of which legislation to apply was not raised before the Costs Assessor or before the Review Panel, and there is no evidence that it would have changed the assessment process if it had been. As was the case in Adelaide Bank Ltd v Phontos (at [41]), neither party suggests that either statutory scheme is substantially different in law, or that any different result would have occurred on assessment. To the contrary, s 76 LPULAA (criteria for costs assessments of ordered costs) is similarly based upon the determination of what is fair and reasonable. Even if the wrong legislation were applied, that is not an error sufficient to warrant the setting aside of the determination: Gorczynski v A W M Dickinson & Son [2005] NSWSC 277 at [22]). 4. I also note the observations of Johnstone DCJ as to the undesirability of appeals on technical grounds in Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2011] NSWDC 55 at [74]. Those observations would hold even greater weight under the new legislation. 5. Mr Newton was not able to articulate any cogent reasons for the grant of leave, although invited to do so, and there is no material in the affidavit of Mr Ferella of assistance on this issue.
4. Accordingly, if the LPULAA is applicable, I would not grant leave to the plaintiffs to appeal under s 89(1) (a) and would dismiss the appeal.
5. I propose, however, to make alternate findings as to the principal issue raised in the appeal, namely whether the LPULAA does in fact apply retrospectively to all costs appeals (and indeed generally) and not merely to proceedings commenced after the designated cut-off date of 1 July 2015.

The LPULAA replaces the LPA

1. The LPA was repealed by s 167(a) LPULAA (which is itself repealed by s 30C Interpretation Act 1987 (NSW)). From that date, the LPA was replaced by the LPULAA.
2. The precise history of the relationship between this new legislation and the Interpretation of Legislation Act 1984 (Vic) is explained by Sackville AJA in Griffin v The Council of the Law Society of New South Wales [2016] NSWCA 364 as follows: "[58] In addressing the operation of the transitional provisions, some background is necessary. The Interpretation Act 1987 (NSW) (Interpretation Act) does not apply to the Uniform Law; instead the Interpretation of Legislation Act 1984 (Vic) applies to the interpretation of the Uniform Law. However, the Interpretation Act does apply to the Application Act. Each of the Interpretation Act and the Interpretation of Legislation Act 1984 (Vic) contains a provision stating that the Act applies except insofar as the contrary intention is expressed in the relevant legislation. [59] Section 30(1) (c) of the Interpretation Act provides that the repeal of an Act does not affect "any right, privilege, obligation or liability acquired, accrued or incurred under the Act". Section 30(1) (e) provides that the repeal of an Act does not affect any legal proceeding in respect of any such right, privilege, obligation or liability. If these provisions of the Interpretation Act apply to the repeal of the 2004 Act, the repeal does not affect the proceedings instituted by the Council against the Solicitor. Accordingly, the proceedings would continue to be governed by the 2004 Act. In ADCO Constructions Pty Ltd v Goudappel, four members of the High Court stated that the protection of accrued rights provided by s 30(1)(c) of the Interpretation Act mirrors the common law as enunciated by Dixon CJ in Maxwell v Murphy. In that case his Honour said: "The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events.""
3. Griffin v The Council of the Law Society of New South Wales related to a disciplinary action against a solicitor, and the parties' submissions did not deal with the general transitional provisions. However, Sackville AJA went on to observe: "The Council's submissions did not direct attention to the relationship, if any, between the transitional provision in Sch 4 Pt 3 cl 26 of the Uniform Law and other transitional provisions, notably Sch 4 Pt 1 cl 2 of the Uniform Law and Sch 9 Pt 2 cl 3 of the Application Act. While the language of the two other transitional provisions is capable of applying to a disciplinary application pending in the Tribunal, (thereby rendering the Uniform Law applicable in the pending application), in my opinion, these general transitional provisions must yield to the more specific transitional provision contained in the Uniform Law Sch 4 Pt 3 cl 26." [Footnotes omitted]
4. I also note consideration of these transitional provisions in Council of the New South Wales Bar Association v Breeze [2015] NSWCATOD 152 at [41]-[50] and Council of the Law Society of NSW v Gallego [2017] NSWCATOD 29 at [8]. Although I was not referred to these decisions by the parties, and they relate to disciplinary actions against a solicitor rather than costs assessment issues, they are nevertheless of assistance.
5. More helpfully, in Adelaide Bank Ltd v Phontos, where the issue under consideration was the statutory scheme for costs assessments, Robertson J was satisfied (at [41] - [45]) that since the proceedings to which the costs related commenced before 1 July 2015 (whether before the primary judge or the Court of Appeal), the LPA applied: "[41] The first issue is whether the Legal Profession Act 2004 (NSW) or the Legal Profession Uniform Law Application Act 2014 (NSW) applied. Although no party suggested that either statutory scheme was substantially different from the other for the purposes of these proceedings, counsel for the Bank submitted it was the later Act while counsel for Mr Phontos submitted it was the earlier Act. [42] The savings provisions in Sch 9 to the Legal Profession Uniform Law Application Act provide that the local regulations may contain provisions of a savings or transitional nature consequent on the enactment of that Act. [43] The Legal Profession Uniform Law Application Regulation 2015 provides in cl 59 as follows: 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. [44] By s 63 of the Legal Profession Uniform Law Application Act 2014 "ordered costs" means costs payable under an order or rule of a court. [45] In my opinion, therefore, the earlier Act continued to apply since the proceedings to which the costs relate commenced before 1 July 2015, whether before the primary judge in the Supreme Court or the Court of Appeal."
6. I drew this judgment to the attention of the parties during oral argument as Mr Newton informed me that these provisions had never been the subject of judicial consideration. Mr Newton stated that Robinson J's findings were not binding upon me, and that the reasoning should be rejected as defective. However, I am satisfied that Robinson J's reasoning is consistent with the approach taken by Sackville AJA in Griffin v Law Society of New South Wales (although I note this and the other decisions I have set out above were also not referred to by the parties) and I propose to follow it.

Schedule 4 and regulation 59

1. Schedule 4 of the Legal Profession Uniform Law (NSW) ("LPUL") contains saving and transitional provisions as follows: "1 Definitions In this Schedule- "commencement day" means the day on which this Law (or the relevant provision of this Law) commences in this jurisdiction; "old Chapter 4" means Chapter 4 of the Act, or one of the Acts, comprised in the old legislation; "old Chapter 5" means Chapter 5 of the Act, or one of the Acts, comprised in the old legislation; "old fidelity fund" means the fund (whatever called) of this jurisdiction that was in existence immediately before the commencement day and is of the same or a similar nature as the fund referred to in section 222 of this Law as applied in this jurisdiction; "old legislation" means the statutory provisions repealed by the Legal Profession Uniform Law Act of this jurisdiction. 2 General savings and transitional provision (1) Except where the contrary intention appears, this Schedule does not affect or take away from the Interpretation of Legislation Act 1984 of Victoria as applying under section 7(1) of this Law. (2) If anything of a kind required or permitted to be done under a provision of this Law as applied in this jurisdiction was done under a corresponding provision of the old legislation and still had effect immediately before the commencement day, the thing continues in effect on and after that day as if- (a) this Law as applied in this jurisdiction had been in force when it was done; and (b) it had been done under this Law as applied in this jurisdiction. (3) If subclause (2) applies in relation to the execution, lodgement, issue or publication of a written instrument, any reference in the instrument to a provision of the old legislation is, for the purposes of that subclause, to be read as a reference to the corresponding provision of this Law as applied in this jurisdiction. (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. (5) If a provision of the old legislation continues to apply by force of this Schedule, the following provisions also continue to apply in relation to the provision- (a) any other provisions of the old legislation necessary to give effect to that continued provision; (b) any regulation made under the old legislation for the purposes of that continued provision. (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. 3 References to old legislation A reference to the old legislation in any Act (other than the Legal Profession Uniform Law Act of this jurisdiction or this Law as applied in this jurisdiction) or in any subordinate instrument, agreement, deed or other document is to be construed as a reference to this Law, so far as the reference relates to any period on or after the commencement day and is not inconsistent with the subject matter. 4 Time limits (1) If the time for doing any act was fixed by or under the old legislation, that time continues to apply on and after the commencement day in relation to any act that was required or permitted to be done, and could have been done, before that day and, unless the contrary intention appears, nothing in this Law has the effect of extending or abridging the time for doing that act. (2) The time for doing an act to which subclause (1) applies may be extended or abridged on or after the commencement day in accordance with any provision made by or under the old legislation as in force immediately before that day as if that provision had not been repealed, but subject to anything in this Schedule requiring a reference in that provision to be construed in a particular way. 5 Savings and transitional rules and regulations (1) The Uniform Rules may contain provisions of a savings and transitional nature consequent on the repeal of the old legislation. (2) The local regulations may contain provisions of a savings and transitional nature consequent on the repeal of the old legislation. (3) The provisions referred to in subclause (2) prevail over the provisions referred to in subclause (1) to the extent of any inconsistency. (4) Any such provision may, if the Uniform Rules or the local regulations (as the case may require) so provide, take effect from the commencement day or a later day. (5) To the extent to which any such provision takes effect from a day that is earlier than the date of its gazettal or publication, the provision does not operate so as- (a) to affect, in a manner prejudicial to any person (other than this jurisdiction or an authority of this jurisdiction), the rights of that person existing before the date of its gazettal or publication; or (b) to impose liabilities on any person (other than this jurisdiction or an authority of this jurisdiction) in respect of anything done or omitted to be done before the date of its gazettal or publication."
2. Regulation 59 provides: "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."
3. Mr Newton does not submit that there was a deliberate decision but rather that, due to muddled drafting, a regulation has accidentally prevailed over a statute. He submits that cl 2(2), 2(4) and 2(5) of Sch 4, when read together, can only mean that all pre-1 July 2015 costs matters are to be conducted under the LPULAA/LUPL, subject to "any necessary adaptation". This is because s 6 LPUL defines "local regulations" as "regulations made under the Legal Profession Uniform Law Act of this jurisdiction". In the same section, "Legal Profession Uniform Law Act" is defined as "the Act of that jurisdiction that applies this Law (whether with or without modification) as a law of that jurisdiction". The LPUL applies as an Act of New South Wales pursuant to s 4 LPULAA. The Legal Profession Uniform Law Application Regulation 2015 (NSW) was made pursuant to the LPULAA and hence falls within the above definition of "local regulations".
4. This is how Mr Newton arrives at his submission that r 59 cannot be read to override a provision of an Act of Parliament such as cl 2(2) and 2(4) of Schedule 4 of the LPUL. Regulation 59 merely provides a framework from which any necessary adaptation of the new legislation can be framed.
5. I do not accept that submission. I note Sackville AJA's explanation as to the correct legislation to apply (namely the Interpretation of Legislation Act 1984 (Vic), which was not referred to by the parties), and his observations that the repeal of the LPA does not affect any legal proceeding in respect of any such right, privilege, obligation or liability. If these provisions of the Interpretation of Legislation Act 1984 (Vic) apply to the repeal of the LPA, the repeal does not affect the proceedings already under foot or the parties' rights under the repealed legislation, as Mr Buterin notes at paragraphs 29 - 31 of his written submissions. That includes "ordered costs" (formerly party/party costs) under the new legislation of the kind the subject of these costs assessments.
6. Mr Buterin noted that the plaintiffs' submission does not take into account cl 2(6) of Schedule 4 of the LPUL, which provides that cl 2 "has effect subject to the local regulations", as well as the issue of language of retrospectivity in the legislation. Additionally, Regulation 59 provides the date for the relevant legislation cut-off, and does not override it.
7. Accordingly, the LPA was correctly applied to the costs assessment review by the Review Panel.

Conclusions and orders

1. It follows from my findings, as set out above, that the Summons (as to its sole remaining ground, namely ground (2), all other prayers for relief being withdrawn) must be dismissed.
2. As indicated in the course of argument, I have reserved the issue of costs. The parties have liberty to apply.

Orders 1. Summons dismissed. 2. Costs reserved. 3. Liberty to apply in relation to costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 March 2017