Firth v Kasumovic [2001] NSWSC 341 | Case summary

10345 of 2001 STEPHEN P FIRTH v YURI KASUMOVIC JUDGMENT 1 The plaintiff proceeds on an Amended Summons. The original Summons was filed on 7 February 2001. The plaintiff seeks to challenge what was done by a costs assessor (Mr Cockle) on 19 January 2001. He looks to s 208L of the Legal Profession Act 1987 (the Act) for relief. 2 Before proceeding further, it is convenient to briefly refer to the scheme provided by the Act enabling challenge to be made to what has been done by a costs assessor. 3 Subdivision 4A of the Act makes provision for a review of a determination by a panel. Section 208KA provides that a party to an assessment who is dissatisfied with a determination of a costs assessor, may, within 28 days after the issue of a certificate, apply to the Proper Officer of the Supreme Court for a review of the determination. Section 208KB provides that if an application for a review is duly made, the Proper Officer is to refer the application to a panel. Subdivision 4B makes provision for appeals. The provisions of s 208L and s 208M are to be found in that subdivision. Section 208L enables an appeal against a decision as to a matter of law arising in the proceedings to determine the application for assessment. Section 208M enables the granting of leave to appeal where there has been a determination. 4 The Act does not define either "decision" or "determination". However, the Act does draw a distinction. Section 208L has application only where there has been a "decision" in the relevant sense. Apart from references to a "determination", the word "determine" also appears in the Act. There are references to "determination" in relation to an application for assessment of costs (ss 208A and 208F). Such a determination requires the issue of a certificate (s 208J) and it has to be accompanied by inter alia a statement of reasons (s 208JAA). The term "determine" appears in a number of sections (inter alia ss 208A, 208D, 208E and 208F). Sections 208D and 208E empower a costs assessor to determine the matters referred to therein. 5 In this case, the plaintiff has not sought to take advantage of the review process provided by Subdivision 4A. Instead, there has been a direct approach to the court pursuant to s 208L. 6 Whether or not such a course is open to a party where there has been a determination may be an arguable question. It may be thought that the terms of the Act throw up some ambiguity as to whether or not sections 208L and 208M provide remedies that offer an alternative to a review in the case of a determination. Some reference to these matters was made in Croker v Commissioner of Taxation [2001] NSWSC 188 and Casaceli v Morgan Lewis, Alter and Anor [2001] NSWSC 211. 7 Whatever be the position, the review process is provided by the Act as an effective procedure for challenging a determination by a costs assessor. It can be used to ventilate questions of law and/or of fact. It was intended that it afford the parties an informal, expeditious and less expensive process which was not a proceeding in this Court. 8 Generally speaking, it seems to have been intended as the primary avenue of challenge to a determination and so as to relieve this Court of the workload that had been borne for some years in dealing with applications by way of appeal from determinations of costs assessors. Hitherto, this seems to have been the practice followed by dissatisfied parties. However, recently, there have been a number of cases where the court has been approached under either sections 208L or 208M in circumstances where a party has failed to apply for a review within time. 9 The question of the availability of s 208L as a remedy in this case was not argued. Accordingly, for present purposes, I shall proceed on the assumption that the court can grant relief under the section. However, before leaving this matter the observation should be made that where there has been a determination, the plaintiff's failure to utilise the review process may be a relevant circumstance in the consideration of whether or not relief should be given under either of sections 208L or 208M. 10 I now return to the Amended Summons. It identifies five grounds of appeal. These are as follows:- "1. The cost assessor erred as a matter of law in determining that the plaintiff had not satisfied his obligation pursuant to Section 175(1) of the Legal Profession Act 1987 to disclose to the defendant the basis of the costs of legal services. 2. The cost assessor erred as a matter of law in determining that the plaintiff had not satisfied his obligation pursuant to Section 175(2)(b) of the Legal Profession Act 1987when (sic) that paragraph had no application in this case. 3. The cost assessor erred as a matter of law in not determining that the plaintiff had satisfied his obligation pursuant to Section 175(1) of the Legal Profession Act 1987 on the basis that Section 175(2)(a) of the act (sic) applied and had been satisfied. 4. The cost assessor erred as a matter of law in determining that the fee agreement between the parties dated 10 March 1997 is unjust pursuant to Section 208D(2) of the Legal Profession Act 1987 on the basis that the plaintiff had not satisfied his obligation pursuant to Section 175 (1) of the Act by not making disclosure in accordance with Section 175(2)(a) of the Act when in fact the plaintiff did disclose the amount of the costs. 5. The cost assessor erred as a matter of law in determining the matter on the basis of an erroneous fee agreement which was not the fee agreement between the parties to the application before him. " 11 The plaintiff is a solicitor. He took over the conduct of a personal injury claim that had been brought by the defendant in the District Court. It had previously been in the hands of other solicitors for a period in excess of two years and during that period liability had been admitted. The proceedings were settled about 6 months later (a few days prior to the day on which it had been listed for arbitration). Subsequently, the plaintiff rendered a Memorandum of Professional Fees and Disbursements. He contends that the memorandum was drawn in accordance with a fees agreement made with the defendant. There may have been a dispute concerning costs between the defendant and his previous solicitor. In any event, the defendant made application to this Court for an assessment of costs. The application was contested. Submissions were made on behalf of the parties and the Costs Assessor made in effect a determination pursuant to s 208D. 12 The Costs Assessor has provided written reasons (see inter alia letter dated 19 January 2001). The fees agreement is a conditional costs agreement (a copy of which is an annexure to an affidavit sworn by Mr Firth). It contains a Schedule 1. It is referred to in paragraph 2 of the costs agreement which provides terms dealing with "charges and expenses". The Schedule sets out rates of charge. These are related to stages in the progress of the litigation. The rates include a premium of 25% of the costs which would otherwise be payable (see paragraph 2). The memorandum of fees and disbursements is in the total sum of $28,200 (the professional fees are in the sum of $25,000). The sum of $25,000 is the charge provided for stage 6 (case settled less than one week before hearing or at the hearing itself). 13 A principal issue agitated in the costs assessment was whether or not terms of the costs agreement were unjust. The Costs Assessor decided that there was injustice and he identified the terms relating to charges and expenses (including the Schedule as the source of the injustice). 14 I shall now briefly refer to certain of the provisions which are referred to in the grounds of appeal. Section 175 imposes an obligation to disclose the basis of the costs of the legal services to be provided. Section 184 provides for the making of costs agreements. Section 186 makes provision for the making of conditional costs agreements (these being agreements under which the payment of the costs is contingent on the successful outcome of the matter). Section 208C makes provision for the circumstances in which a costs assessor is to decline to asses a bill of costs (including the circumstance where the disputed costs are subject to a costs agreement which complies with Division 3). Section 208D concerns unjust costs agreements. Subsection (1) thereof enables a costs assessor to determine whether a term of a particular costs agreement is unjust in the circumstances relating to it at the time it was made. Subsection (2) thereof provides that for such purpose, the Costs Assessor is to have regard to the public interest and to all of the circumstances of the case. It also contains an enumeration of specified circumstances to which he may have regard. 15 Section 208L provides a narrow avenue of challenge. It is restricted to a decision as to a matter of law in the sense prescribed therein. The mere demonstration of error as to a matter of law does not necessarily mean that the plaintiff is thereby entitled to relief. The plaintiff bears the onus of satisfying the court that the decision itself should be disturbed. In my view, the plaintiff has failed to discharge that onus. 16 Largely, the grounds of appeal set forth in the Amended Summons are misconceived and do not reflect what was in fact done by the Costs Assessor. On the hearing of this appeal, counsel for the plaintiff provided written submissions. These submissions contained inter alia the following:- "6. The cost assessor refers to s 175 and states 'the costs agreement is required to disclose the basis of calculating the costs' and also states 'the consequences of compliance with this costs agreement causes injustice to the applicant client'. These two statements demonstrate the legal error. 7. Section 175(2)(b) limit the operation of s 175 to circumstances 'where the costs are not known'. The costs were known here. They were set out in Schedule 1 to the fee agreement. Section 175 is applicable in non lump sum quoted cases. The legislation creates lump sum quotedcases (sic). 8. The obvious second error is that s208D operates in respect of terms not 'the consequences of compliance with this costs agreement causes injustice to the applicant client' 9. It is also important to appreciate that Section 208D is written in rathersimilar (sic) form to Sections 7 and 9 of the Contracts Review Act . Threshold arguments as to whether the terms of the contract are unjust in the circumstances relating to the time that it was made need to be satisfied, see Nguyen v Taylor (1992) 27 NSWLR 48 at 55-57, and 71-72; and Younan & Anor v Beneficial Finance Corporation Ltd (Court of Appeal, 21 November 1994). No threshold circumstances in accordance with the law have been made out." 17 The Costs Assessor did refer to s 175 and to other sections of the Act. He made some observation in relation to s 175, which does not seem to disclose any error of law. However, it is unnecessary to explore the question of whether any error may be found in what was said by him concerning s 175. It was not determinative in the decision reached by him. 18 The power conferred by s 208D is to determine whether a term of a particular costs agreement is unjust in the circumstances relating to it at the time it was made (and it may be added that there is the potential for every term thereof to be the subject of a determination). In the making of such determination, the Costs Assessor is to have regard to the public interest and to all the circumstances of the case. The section contains an enumeration of specified circumstances to which he may have regard. These include the following:- "(a) The consequences of compliance, or non-compliance, with all or any of the provisions of the agreement". 19 I am not satisfied that the plaintiff has demonstrated legal error on the part of the Costs Assessor. In any event, in this case, even if some legal error had been found, it does not seem to me that it would have assisted the plaintiff. 20 The letter dated 19 January 2001 from the Costs Assessor identifies the issue that he was required to determine. It refers to the lengthy submissions made by the parties. The submissions draw his attention to the provisions of s 208D. In the submissions there was material relating to the work done by the previous solicitors. The reasons record that the plaintiff took over what was in effect an assessment of damages only. Despite this circumstance, the costs agreement provided for a premium to be included as part of the costs and charges. The submissions made by counsel for the plaintiff appear to accept that the claim for the contingency premium is not maintainable. 21 The written reasons do contain reference to the costs agreement itself and perhaps greater precision could have been employed in the letter. However, the substance of the reasoning expressed by him was a determination that the terms of the costs agreement relating to charges and expenses (including the Schedule) were unjust in the circumstances relating to the agreement at the time it was made. These were the terms which had relevance in the assessment application. He made specific reference to the circumstance of the plaintiff taking over the conduct of the matter after it had been in the hands of a previous solicitor for about two years. In effect, he saw the terms relating to charges and expenses (including the Schedule) as being unjust in the light of this and other relevant circumstances. 22 The Costs Assessor made a decision which was open on the material presented to him. Indeed, it seems to me that his decision was one that effected justice between the parties. I consider that the plaintiff has failed to demonstrate any basis for the disturbing of his decision. 23 The Summons is dismissed. The plaintiff is to pay the costs of the Summons. **********

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Firth v Kasumovic

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