Gadd v Kozlowski t/as Lou Baker and Associates - [2022] NSWDC 309 - NSWDC 2022 case summary — Zoe

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Gadd v Kozlowski t/as Lou Baker and Associates

[2022] NSWDC 309

District Court of NSW|2022-06-30

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At a glance

Source facts

Court

District Court of NSW

Decision date

2022-06-30

Catchwords

[2000] HCA 40 Gadd v Australia Business Executive Investments Pty Ltd [2019] NSWDC 798 Gazecki v McCabes Lawyers Pty Ltd [2020] NSWCA 98

Source

Original judgment source is linked above.

Catchwords

[2000] HCA 40 Gadd v Australia Business Executive Investments Pty Ltd [2019] NSWDC 798 Gazecki v McCabes Lawyers Pty Ltd [2020] NSWCA 98

Judgment (21 paragraphs)

[1]

Solicitors: Dunn Legal (Plaintiff) In Person (First Defendant) File Number(s): 2022/00084606

[2]

Judgment

Before the Court for determination is an appeal brought by way of Amended Summons by the plaintiff, Mr Mark Gadd, against determinations made by a costs Review Panel that certain amounts were owed by him to the defendant, Mr Wlodzimierz Kozlowski, who is a solicitor. Mr Kozlowski acted for Mr Gadd in litigation before the District Court which was determined in Mr Gadd's favour in 2019: see Gadd v Australia Business Executive Investments Pty Ltd [2019] NSWDC 798 (Taylor DCJ). In the orders made, this Court entered judgment for Mr Gadd in the sum of $244,249.75. A costs order was also made in Mr Gadd's favour.
The appeal was brought by Mr Gadd pursuant to s 89 of the Legal Profession Uniform Law Application Act 2014 (NSW) ("LPULAA"). That section permits a party to a costs assessment that has been the subject of a review, to appeal against the decision of the Review Panel to the District Court but only with leave if the amount of costs in dispute is less than $25,000. The amount in issue in the present case is more than $25,000. Under s 89(2) of the LPULAA, the District Court has all the functions of the Review Panel. Pursuant to his Amended Summons commencing an appeal filed on 18 May 2022, Mr Gadd claims that the Certificate of Determination of the Review Panel incorrectly stated the amount currently payable by the plaintiff. An appeal is also brought in relation to the cost determination by the Review Panel. A variation of the Certificate of Determination of the Review Panel dated 25 January 2022 is sought. A similar variation is sought to the Certificate of Cost Determination of the Review Panel, also dated 25 January 2022. Other consequential relief, including a costs order, is also sought.

[4]

Legislative regime applicable

The legislative regime applicable to the assessment and review of costs in New South Wales is complex. Different legislative provisions apply depending upon when the legal practitioner was first retained by the client. It was not in issue that the relevant legislation applicable in the present case was the Legal Profession Uniform Law (NSW) ("LPUL") and the LPULAA.
Section 198 of the LPUL provides that an application for an assessment of the whole or any part of the legal costs payable to a law practice may be made by various persons within certain times. Under s 199 of the LPUL, assessments of legal costs are to be conducted by costs assessors. Section 199(2) provides that on a costs assessment, the costs assessor must determine whether or not a valid costs agreement exists and determine whether legal costs claimed are fair and reasonable and, to the extent they are not fair and reasonable, determine the amount of legal costs (if any) that are to be payable.
Section 200 provides that in considering whether legal costs for legal work are fair and reasonable, the costs assessor must apply the principles in s 172 as far as they are applicable. Reasons are to be given: s 201. Part 7 of the LPULAA deals with costs assessments.
Section 70 of the LPULAA provides that on making a determination of costs, a costs assessor is to issue a certificate that sets out the determination and includes the amount of costs determined (including any GST component the costs assessor determines is payable) as well as other matters. If the client has already paid sums to the legal practitioner, then s 70(4) provides that the amount (if any) by which the amount paid exceeds the amount specified in the certificate, may be recovered as a debt in a court of competent jurisdiction. Section 70(5) of the LPULAA provides as follows: "70 Certificate as to determination of costs to parties … (5) In the case of an amount of money specified in a certificate that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid money. The rate of any interest payable in respect of that amount of money is the rate of interest in the court in which the certificate is filed."
Section 71 of the LPULAA provides as follows: "71 Certificate as to determination of costs of costs assessor and Manager, Costs Assessment (1) On making a determination of costs, a costs assessor is to separately determine - (a) the amount of the costs incurred by the costs assessor and the Manager, Costs Assessment, and (b) the costs related to the remuneration of the costs assessor, and (c) by whom those costs are payable and the extent to which they are so payable. (2) On making a determination under this section, a costs assessor is to issue a certificate that sets out the determined costs. (3) The certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court against the party to the assessment by whom the costs are payable in favour of - (a) a party to the assessment that has paid some or all of the amount to the Manager, Costs Assessment - for that amount, and (b) the Manager, Costs Assessment - for any amount of unpaid money."
Part 7 Division 5 of the LPULAA deals with reviews of costs assessments. Under s 82, Review Panels are established under the cost assessment rules and are each constituted by two costs assessors appointed under those rules. Under s 83, within a stipulated period, a party to a costs assessment may apply for a review of the determination of an assessor.
Sections 85, 87 and 88 of the LPULAA provide as follows: "85 Conduct of reviews (1) A review panel may, on an application made under section 83 or 84, review the determination of a costs assessor and may - (a) affirm the costs assessor's determination, or (b) set aside the costs assessor's determination and substitute the determination that, in its opinion, should have been made by the costs assessor. (2) The review panel has, in relation to the application for review, all the functions of a costs assessor in relation to the assessment concerned and is to determine the application, subject to this Part and the costs assessment rules, in the manner that a costs assessor would be required to determine an application for costs assessment. (3) Without limiting subsection (2), the review panel is not bound by the rules of evidence and may inform itself on any matter in the manner it thinks fit. (4) If the costs assessors who constitute the review panel are unable to agree on a determination in relation to an application, the panel is to affirm the determination of the costs assessor. 87 Certificate as to review panel's substituted determination of costs to parties (1) If, on review of a costs assessor's determination, a review panel sets aside and substitutes the determination, the panel is to issue a certificate that sets out its determination. The certificate is to include the amounts set out in section 70(1)(a)-(c). (2) Section 70(2)-(6) apply to a certificate issued by a review panel under this section in the same way as they apply to a certificate issued by a costs assessor under section 70. 88 Certificate as to determination of costs of review panel (1) On a review of a costs assessor's determination, a review panel may separately determine - (a) the amount of the costs incurred by the review panel or the Manager, Costs Assessment in the course of the review, and (b) the costs related to the remuneration of the costs assessors who constitute the review panel, and (c) by whom those costs are payable and the extent to which they are so payable. (2) If the review panel makes such a determination, the panel is to issue a certificate that sets out the determined costs. (3) Section 71(3) applies to a certificate issued by a review panel under this section in the same way as it applies to a certificate issued by a costs assessor under section 71."
As indicated above, s 89 of the LPULAA provides for appeals on matters of fact and law. That section governs the appeal before this Court. Section 89(4) of the LPULAA provides as follows: "89 Appeal on matters of law and fact … (4) An appeal is to be by way of a rehearing, and fresh evidence or evidence in addition to or in substitution for the evidence before the review panel or costs assessor may, with the leave of the Court, be given on the appeal."
Accordingly, an appeal is to be by way of "a rehearing". I will consider further below appellate authority in relation to the interpretation of that phrase.
As indicated, written submissions were provided on behalf of the parties. In the written submissions of counsel for the plaintiff in paragraph 32, it was submitted that the legislation governing the assessment of costs requires that an assessment of costs be an assessment of the costs that are actually "payable" to the law practice or are to be "payable" immediately upon completion of the assessment, and that a Certificate of Determination must set out the costs that are so determined to be "payable".
In support of that submission, counsel relied upon the reference to the word "payable" in the various provisions referred to above including in s 198(1) and s 199(2)(b) of the LPUL and in s 70(1)(a) and s 70(5) of the LPULAA. In particular, reliance was placed on the effect of a Certificate of Determination as set out in s 70(4) and (5) of the LPULAA, being that the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid money. That results in the serious effect that the Certificate of Determination once filed is taken to be a judgment and any amount can be recovered as a debt. It is submitted that it cannot have been intended by the legislature that a Certificate of Determination could be issued for an amount that is not payable (immediately and unconditionally), where the Certificate of Determination creates an immediate and unconditional liability, enforceable either as a judgment or a debt.
It is also submitted in paragraph 34 of the written submissions, that a certificate of a Review Panel's determination is no different because the Review Panel's role is confined by reference to the cost assessor's task. See also ss 85 and 87 of the LPULAA.
As will be set out further below, it is submitted that the Review Panel in the present case worked out the amount that was currently payable by the plaintiff but issued a Certificate of Determination for a different and greatly exceeding sum.

[5]

The legal principles relating to the review

As indicated, an appeal to the District Court is an appeal to be by way of "a rehearing": s 89(4) of the LPULAA.
In Gazecki v McCabes Lawyers Pty Ltd [2020] NSWCA 98; [2020] 102 NSWLR 259, the New South Wales Court of Appeal considered an application for judicial review against the decision of a District Court judge who refused an application for an extension of time to a person to appeal against a Review Panel's refusal to vary a cost assessor's assessment of legal fees payable by him to his former lawyers.
Basten JA (with whom Leeming JA and Simpson AJA agreed) considered from paragraph 25 of his Honour's reasons, the nature of a costs appeal. After setting out s 89 of the LPULAA, his Honour noted that an appeal was by way of "a rehearing". His Honour stated as follows in paragraphs 42 and 43: "42. Sixthly, the court is not given specific powers, but rather is said to have "all the functions of the review panel." The effect of this provision is by no means clear. The functions of the review panel are set out in s 85 of the Application Act, and involve reviewing "the determination of a costs assessor": s 85(1). For that purpose, the review panel has "all the functions of a costs assessor ... and is to determine the application ... In the manner that a costs assessor would be required to determine an application for costs assessment": s 85(2). The review panel is not bound by the rules of evidence and may inform itself on any matter in the manner it thinks fit: s 85(3). There is a degree of awkwardness in conferring on a court required to determine an appeal against a decision of a review panel all the functions of the review panel, which involve review of the decision of a costs assessor. That language may affect what is meant in s 89(4) by an appeal "by way of a rehearing". 43. No submissions were made in this Court on the scope and operation of s 89; accordingly, it is both unnecessary and inappropriate for the Court to resolve these questions in this case. What is clear, however, is that courts exercising jurisdiction under this provision must pay close attention to the terms of the statutory power and should not adopt statements from earlier cases dealing with different powers, unless persuaded that they remain applicable. Although the distinction between appeals on matters of law and appeals from the final determination of a costs assessment have been removed, it may, nevertheless, be appropriate to adopt different standards of scrutiny with respect to each. Thus, questions of law are inherently liable to review according to a correctness standard; a lower standard of scrutiny may well be applicable to an assessment of what costs are fair and reasonable in the circumstances of the particular case. Particularly is that so where a specific body of costs assessors, appointed solely for that function, reach evaluative judgments. Furthermore, costs assessors are expected to ensure consistency of approach, being a standard which cannot readily be applied by a reviewing court with limited experience of such matters."
Accordingly, his Honour stated that it may be appropriate to adopt different standards of scrutiny with respect to appeals on matters of law and on matters of review. His Honour stated that questions of law are "inherently liable to review according to a correctness standard" whereas lower standards of scrutiny may well be applicable to other assessments.
In Gilmore Finance Pty Ltd v Aesthete No 3 Pty Ltd [2020] NSWCA 114 Meagher JA (with whom Macfarlan and White JJA agreed) also considered an application for judicial review of a successful appeal to this Court. The issue came for consideration as to the meaning of "a rehearing" in s 89 of the LPULAA. Meagher JA made a distinction between an appeal by way of rehearing as compared to a hearing de novo and an appeal in the strict sense, relying on the decision of the High Court in Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40 at [23].
In paragraph 8, Meagher JA stated as follows: "8. The following passage from the judgment of Gageler J in Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30 at [31] makes clear that while it remains necessary to identify an error in the decision appealed from, in an appeal by way of rehearing that requirement may be satisfied by reason of further evidence adduced in the appeal or a change in the law which has the result that looked at in retrospect the decision appealed from was in one or more respects incorrect: For practical purposes, the difference between correction of error on an appeal in the strict sense and correction of error on an appeal by way of rehearing lies in the temporal perspective that the appellate court is required to adopt in examining the correctness of the judgment under appeal. An appellate court determining an appeal in the strict sense is required to determine the correctness of the judgment under appeal at the time that judgment was given: in an appeal from a final judgment of a judge sitting without a jury, the correctness of the judgment is to be determined on the evidence adduced at the trial and on the law as it then stood. An appellate court determining an appeal by way of rehearing, in contrast, is required to determine the correctness of the judgment under appeal in retrospect: in an appeal from a final judgment of a judge sitting without a jury, the correctness of the judgment is to be determined on the evidence adduced at the trial supplemented by any further evidence that the appellate court may allow to be adduced on the appeal, and on the law as it stands when the appellate court gives judgment on the appeal."
In paragraph 9, Meagher JA referred to the observations of Basten JA in Gazecki, above. His Honour noted that it was not submitted by either party that the effect of s 85(2) of the LPULAA (picked up by s 89(2) of that Act) was that the powers of the appellate court may be exercised whether or not there was error on the part of the Review Panel.
The comments of Basten JA in Gazecki have been cited with approval in later cases: see for example Lawrence v Sammut [2022] NSWSC 657 at [41]-[42]. Schmidt AJ also referred to Gilmore Finance, above, and at [46] stated that the powers of an appellate court on a rehearing are exercisable only where the appellant demonstrates on all the evidence that "the subject of the appeal was the result of some legal, factual or discretionary error, unless there is some statutory provision which indicates that the powers may be exercised whether or not there was an error at first instance". In that case, an error by the Review Panel was not put in issue. See also Ahern v Aon Risk Services Australia Ltd [2022] NSWSC 702 at [58]-[60] per Fagan J.
In the present case, the plaintiff submitted that the error of the Review Panel was a clear error of law.

[6]

The factual background

The factual background to the assessment and the appeal needs to be stated briefly. Unless otherwise indicated, what follows are my findings for the purposes of the appeal.
On 17 July 2018, Mr Kozlowski was first retained to act for Mr Gadd as his solicitor in relation to litigation in the District Court.
The legal services that were the subject of the costs assessment were provided by Mr Kozlowski to Mr Gadd over the period from 17 July 2018 to 10 March 2020. The latter date is determined as it is the date referred to in an invoice to Mr Gadd from Mr Kozlowski dated 11 March 2020: see Exhibit B pages 248 and 253.
On 3 January 2019, Mr Kozlowski sent a text message to Mr Gadd as follows: "dear Mark, this text is to confirm my discussion with you. 1. I shall complete the rest of this litigation from today for $5,000, regardless of the outcome. 2. you shall transfer $5,000 today. if the opportunity arises that you can claim costs, then I would accept the balance costs awarded after fees paid to me by you are deducted. please advise if I have expressed our arrangement as you understand it to be. i can amend this text, if I have not expressed the arrangement as you understand it to be. Thank you for your generous fooer [sic - offer] of payment today. kind regards Wlodek": Exhibit B pages 126-127.
The matter was in due course heard before Taylor DCJ in October-November 2019 and his Honour handed down his Reasons for Decision on 5 November 2019. As indicated above, judgment was given in favour of Mr Gadd against the defendants with costs.
Various steps were taken to enforce the judgment by Mr Kozlowski on behalf of Mr Gadd. It seems that the retainer continued until 30 March 2020 when it was terminated and Mr Gadd retained Dunn Legal: Exhibit B page 232.
There have been extensive attempts by the parties, and particularly Mr Kozlowski, to settle any liability of Mr Gadd for legal costs and disbursements owed to Mr Kozlowski, without success.
On 10 March 2021, Mr Gadd made an application to have the legal costs and disbursements of Mr Kozlowski assessed: Exhibit B page 185 and following. The application related to costs and disbursements claimed by Mr Kozlowski of $111,565.30 and $18,344.70: Exhibit B page 149 and following.
On 2 September 2021, Assessor R Webley issued a Certificate of Determination of Costs in the sum of $70,115.40. A Certificate of Determination of Manager's Assessment Costs was also issued on 2 September 2021.
Mr Gadd sought a review of the determinations by Assessor Webley.
On 25 January 2022, the Review Panel issued a Certificate of Determination of Review (Substitution) determining the costs payable by Mr Gadd to Mr Kozlowski to be $65,115.40. A further Certificate of Determination of Review Panel Costs payable by Mr Gadd in the sum of $4,018.01 was also issued. Reasons for Decision were given by the Review Panel dated 25 January 2022: Exhibit B page 107.

[7]

The Review Panel's Reasons

In its Reasons for Decision, the Review Panel set out the findings of the Assessor, the legislation relating to the conduct of reviews, the principles relating to the nature of a review and the submissions placed before the Panel. The various grounds of review were set out. A significant ground of review was the correct effect of the text of 3 January 2019 sent by Mr Kozlowski to Mr Gadd.
The Review Panel seemed to divide the retainer between the parties into three periods for the purposes of its analysis: 1. The period from the commencement of services being provided by Mr Kozlowski until the text message of 3 January 2019: 17 July 2018 to 2 January 2019 - period one; 2. The period from the text agreement until the date of judgment of the District Court in Mr Gadd's favour: 3 January 2019 to 5 November 2019 - period two; and 3. The period after judgment: 6 November 2019 to 10 March 2020 - period three.
In relation to the text, the Review Panel found as follows: "10. Ground 1 … The costs assessor interpreted the above [text] to mean that the costs payable by Mr Gadd would be $5,000 plus the amount of party/party costs recoverable by Mr Gadd if successful in his court proceedings) to the completion of the matter. The assessor interpreted completion to be 5 November 2019 (which was the date of the judgement entered in favour of Mr Gadd against Abei Pty Ltd and Alexander Erber). Mr Gadd submitted that completion of the matter included the costs of enforcing the judgement debt and the costs relating to recovering the party/party costs ordered against the judgement debtor. The Panel agree with the costs assessor's view that completion of the matter means the date on which Mr Gadd obtained judgement i.e. on 5 November 2019. In the Panel's opinion, the "$5,000 text" cannot reasonably be interpreted as meaning that Mr Kozlowski also agreed to do any work post judgment and that payment for this work would only be recoverable if these costs were recovered from Abei Pty Ltd and Alexander Erber pursuant to Mr Gadd's party/party costs order. However, the Panel do not agree with the assessor's view that the only costs recoverable pursuant to the 5 January 2019 agreement is $5,000 plus the amount of party/party costs that can be recovered from the Review Applicant. The text sent on 3 January 2019 contains the words "from today". In the Panel's view, any costs up to 2 January 2019 are also recoverable from the Review Applicant and recovery is not conditional upon these costs being recovered as party/party costs. Costs payable by the Review Applicant to the Review Respondent post judgement i.e. the work done in relation to attempting to enforce the judgement and recovering the party/party costs are also not conditional upon these costs being recovered by the Review Applicant pursuant to the party/party costs order. … 23. The Panel did not accept Mr Kozlowski's submission (paragraph 30 of submissions) that he is currently entitled to payment of his costs simply because a party/party costs order was made in favour of Mr Gadd. The words "the balance costs awarded" in the $5000 text can only reasonably mean the balance costs assessed. Assessment of Mr Gadd's party/party costs has not yet occurred and it appears that one of the reasons for this is that Mr Kozlowski has claimed a lien on his file because his fees have not been paid and he refuses to release the file to allow for assessment of these costs to take place. There are therefore currently appears [sic] to be a Catch-22 situation as Mr Kozlowski is currently not entitled to receive payment until the party costs have been assessed. Some arrangement or agreement will therefore need to be reached between the parties to allow Mr Gadd's party/party costs to be assessed so that Mr Kozlowski can require payment of these costs from him."
In addition, the Review Panel agreed with the determination of the Assessor of the amount of fair and reasonable solicitor/client costs except that the Review Panel did not agree with the Assessor adding $5,000 (referred to in the 3 January 2019 text) to the solicitor/client costs allowed. The Review Panel held that the $5,000 figure should be included in the amount of solicitor/client costs allowed as fair and reasonable for the period 5 December 2018 to 5 November 2019: paragraph 24 at Exhibit B page 115.
Two tables are set out in paragraphs 24-25 of the Review Panel's reasons. The references to "10/3/9019" and "10/3/19" in the tables appear to be in error. Both references should be to 10 March 2020, being the last day of the billed services by Mr Kozlowski.
The plaintiff points particularly to the wording in paragraph 25 of the Review Panel's reasons. Paragraph 25 commences: "In the Panel's view, the amount currently payable to Mr Kozlowski is …" (emphasis in the original). Further, at the top of the last page of the Reasons, the Review Panel states as follows: "Apart from the sum of $5,000 currently payable, payment for the work done for the period 3 January 2019 (the date of the $5,000 text) to 5 November 2019 (date of judgment) depends on recovery of Mr Gadd's party/party costs. The amount payable will be the amount of party/party costs recovered by Mr Gadd less the $5,000 currently payable - this total cannot exceed $63,913.00 (so that the costs indemnity rule is not breached)."
However, despite stating that the amount "currently payable" in paragraph 25 was $12,866.50, the Review Panel inserted the amount payable in its Certificate of Determination as being $65,115.40: see the last line in the table in paragraph 24 (Exhibit B page 116) and the Certificate of Determination of Review at Exhibit B page 105. It is not apparent why the Review Panel indicated an amount "currently payable" as being $12,866.50 but inserted the amount of $65,115.40 in the Certificate of Determination, particularly in the light of its reasoning at the top of page 11 of its Reasons for Decision that the payment for the work done from 3 January 2019 to 5 November 2019 "depends on recovery of Mr Gadd's party/party costs. The amount payable will be the amount of party/party costs recovered by Mr Gadd less the $5,000 currently payable…".
This determination by the Review Panel impacted upon its decision as to the costs of the review. Because the Panel had reduced the amount of costs assessed as fair and reasonable by less than 15%, the cost of the review was determined to be payable by Mr Gadd as the review applicant: see Reasons in paragraph 26 at Exhibit B page 117 and the Certificate of Determination of Review Panel Costs dated 25 January 2022 at Exhibit B page 106.
Since the determinations by the Review Panel, certain moneys have been paid by Mr Gadd: 1. $4,018.01 being the costs of the Costs Assessment Review Panel: affidavit of Mr Dunn dated 7 June 2022 paragraphs 4-5; Exhibit B page 106; and 2. $7,274.30: affidavit of Mr Hayes dated 10 May 2022, paragraph 30.

[9]

Submissions of Mr Kozlowski

Mr Kozlowski appeared for himself and provided detailed written and oral submissions. These submissions included the following: 1. Many offers to settle were made by Mr Kozlowski which were not taken up by Mr Gadd. There was a failure by Mr Gadd to explore mediation before filing the costs assessment application. Mr Kozlowski should not be held liable for the accumulating costs of the initial cost assessment, the application for review and the matter in this court: paragraphs 12 to 39 of the written submissions; 2. Mr Kozlowski achieved a successful outcome in the District Court proceedings for Mr Gadd. This resulted in Mr Gadd obtaining a substantial award for damages and an order for costs; 3. The assessment by Mr Webley and the subsequent assessment by the Review Panel was too low as to the amount payable in view of the cost escalation caused by the defendants in the underlying matter. The instruction to Mr Kozlowski by Mr Gadd not to brief counsel was relevant; 4. The hourly rate of $500 claimed by Mr Gadd was appropriate and not excessive; 5. The Court should order that the costs of the review be paid by Mr Gadd and order that Mr Kozlowski's costs to date with respect to the matter be paid by Mr Gadd having regard to all the circumstances set out in the written submissions.
At the commencement of his oral submissions, Mr Kozlowski (who appeared by audio visual link) forwarded to the Court a document entitled "Kozlowski aide memoire". This document raised a number of further submissions which were not in Mr Kozlowski's submissions filed on 23 June 2022.
Mr Kozlowski referred to the aide memoire in making oral submissions.
It is to be noted that only the plaintiff, Mr Gadd, filed a Summons or similar document in these proceedings. No cross-appeal was made by Mr Kozlowski in relation to the Review Panel's decision by a Cross-Summons filed pursuant to Part 50.10 of the Uniform Civil Procedure Rules. Similarly, Mr Kozlowski did not file a Notice of Contention if he wished to contend that the decision of the Review Panel should be affirmed on grounds other than those relied upon, pursuant to Part 50.11 of the Uniform Civil Procedure Rules.
In essence, formally the only grounds of appeal before the Court were therefore those in the plaintiff's Amended Summons.

[10]

Did the Review Panel make an error in the amount it included in its Certificate of Determination of Review dated 25 January 2022 having regard to its Reasons for Decision?

The plaintiff, Mr Gadd, submits that the Review Panel made a clear error of law in inserting in its Certificate of Determination of Review dated 25 January 2022 the amount of $65,115.40 instead of the amount of $12,866.50 referred to in paragraph 25 of the Review Panel's Reasons for Decision, for the reasons set out above.
Although it is not referred to in his written submissions dated 23 June 2022, Mr Kozlowski, when questioned by the Court, accepted that on the face of the Reasons for Decision, there was an error by the Review Panel in the amount determined.
In my view, there was clearly an error in the amount determined and it is apparent on the face of the Reasons for Decision of the Review Panel dated 25 January 2022. In paragraph 25 of its Reasons for Decision, the Review Panel determined that the amount "currently payable" by Mr Gadd to Mr Kozlowski was $12,866.50. In relation to the second period of legal work completed by Mr Kozlowski for Mr Gadd, the Review Panel stated as follows in paragraph 25 of its Reasons: "Apart from the sum of $5,000 currently payable, payment for the work done for the period 3 January 2019 (the date of the $5,000 text) to 5 November 2019 (date of judgment) depends on recovery of Mr Gadd's party/party costs".
In paragraph 23, the Review Panel stated: "There are therefore currently appears [sic] to be a Catch-22 situation as Mr Kozlowski is currently not entitled to receive payment until the party party costs have been assessed".
There appears to be a clear inconsistency within the Reasons for Decision of the Review Panel in paragraphs 23-25. The Review Panel set aside the decision of the Assessor and substituted its own view. Having regard to ss 85 and 88 of the LPULAA, the Certificate to be issued by the Review Panel must include the amounts set out in s 70 of that Act. In my view, s 70(1) and s 70(5) make clear that the amounts to be included are the amounts "payable" by the relevant party. I therefore accept the submissions of the plaintiff in relation to the legislative scheme, set out in paragraph 32 of his written submissions dated 7 June 2022.
Pursuant to s 70(5) of the LPULAA, in the case of an amount of money specified in a certificate that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of the unpaid money and interest in respect of that amount of money which is payable is the rate of interest in the court in which the certificate is filed. This provision makes clear that the consequence of a certificate is that it may be filed and enforced. That could only relate to an amount that is currently payable by the relevant party. Section 85(2) of the LPULAA makes clear that the Review Panel has, in relation to the application for review, all the functions of a cost assessor in relation to the assessment concerned, and is to determine the application in the manner that a cost assessor would be required to determine an application for cost assessment.
Accordingly, having determined the amount "currently payable" by Mr Gadd, the Review Panel should have determined that amount as being the appropriate amount to insert in its Certificate of Determination of Review. There was a clear legal error on the part of the Review Panel in inserting a different amount to the amount currently payable by Mr Gadd as determined by it. The error was an error of law having regard to ss 70, 85 and 87 of the LPULAA. It was also unreasonable of the Review Panel to insert a different sum.
Therefore, the grounds of appeal of the plaintiff are made out in relation to the approach taken by the Review Panel.
It should further be noted that there appears to be a clear error in the Certificate of Determination of the Review Panel. The six items referred to in that certificate are headed by the following phrase: "Costs payable by costs respondent to costs applicant". The costs respondent was Mr Kozlowski and on the face of the Certificate he was obliged to pay the sums referred to. However, the Reasons for Decision clearly indicate that it was the intention of the Review Panel that Mr Gadd pay an amount not Mr Kozlowski. This is a further error in the Certificate of Determination of Review of the Review Panel.

[11]

The effect of the text agreement

I have set out above the text message between Mr Kozlowski and Mr Gadd that gave rise to their agreement as to costs. As stated, the Review Panel did not accept Mr Kozlowski's submission that he is currently entitled to payment of his costs simply because a party/party costs order was made in favour of Mr Gadd by Taylor DCJ. The Review Panel was of the opinion that the words "the balance costs awarded" in the text message can only reasonably mean the balance of the costs assessed. The Review Panel in paragraph 23 of its Reasons noted that the assessment of Mr Gadd's party/party costs had not yet occurred. The Review Panel held that the text agreement related to the period from 3 January 2019 until judgment was handed down in the underlying proceedings on 5 November 2019.
It was submitted by the plaintiff, Mr Gadd, that there was no need for the Court to form its own view of the text agreement because that part of the Reasons for Decision of the Review Panel was not challenged by either Mr Gadd in his Amended Summons or by Mr Kozlowski in a Cross-Summons.
Mr Kozlowski was asked by the Court whether he disputed the interpretation of the Review Panel of this aspect of the text agreement. He said he did not.
I note that the evidence established that Mr Gadd paid the $5,000 referred to in the text message to Mr Kozlowski: Exhibit B page 453 paragraph 11. An agreement was thus reached between the parties.
In the light of the plaintiff's submissions and the position of Mr Kozlowski, the decision of the Review Panel was not disputed in relation to the text message agreement.
In my view, the interpretation of the Review Panel would appear to be correct. The phrase "the balance costs awarded" could only refer to an amount which is specific after an assessment. Otherwise, the amount of the "balance" could not be ascertained. It is unnecessary for me to decide whether I agree that the amount depends on the recovery of Mr Gadd's party/party costs as set out in paragraph 25 of the Review Panel's Reasons for Decision.

[12]

Was the text agreement nugatory?

In paragraph 4 of Mr Kozlowski's aide memoire handed up at the final hearing on 1 July 2022, Mr Kozlowski submitted that the email agreement of 5 January 2019 was made "nugatory" when viewed in the context of him being denied the opportunity to progress Mr Gadd's fee recovery of party/party costs.
This claim was first made by Mr Kozlowski in the aide memoire handed up on 1 July 2022. There was no Cross-Summons or Notice of Contention in relation to this point. It was therefore not formally an issue before the Court.
If Mr Kozlowski was of the view that Mr Gadd was not taking appropriate steps to progress the fee recovery by the preparation and filing of a cost assessment application against the defendants in the proceedings before Taylor DCJ in the District Court, Mr Kozlowski had possible remedies available to him such as seeking specific performance or a mandatory injunction in relation to the text agreement. Mr Finnane of counsel, who appeared for Mr Gadd in the hearing of the Amended Summons, conceded that there was a contractual obligation on Mr Gadd to arrange for an assessment of costs if costs could not be recovered on request from the defendants.
Mr Kozlowski submitted that he had taken all reasonable steps to seek the assessment and recovery of those costs. It appears from the text agreement, that it was probably contemplated by the parties that Mr Kozlowski would be acting for Mr Gadd as his solicitor and would therefore be in a position to seek the recovery of the costs, including by an assessment, against the defendants in the District Court proceedings. As it was, the retainer of Mr Kozlowski was terminated by Mr Gadd.
Mr Kozlowski states that on 4 June 2020 he served by post a copy of a draft cost assessment application on the solicitors for Mr Gadd to assist them in making a cost assessment application. He states that the bundle of documents served by him by post included 1059 pages being his case file: Exhibit B page 92 paragraphs 88-89.
The correspondence in evidence shows that Mr Kozlowski initially began preparing the costs application to recover the costs in the District Court proceedings: Exhibit B page 303. On the same day, 2 March 2020, Mr Kozlowski sent a letter to the solicitors acting for the defendants in the District Court proceedings seeking to settle the costs: Exhibit B page 304. It was indicated that if the offer to settle was not accepted, Mr Kozlowski had instructions to apply for a costs assessment. On 11 March 2020, Mr Kozlowski sent a letter to Mr Gadd seeking a lump sum of $50,000 from Mr Gadd to avoid further delay. It was indicated that the offer remained open to 1 April 2020: Exhibit B page 318.
If Mr Gadd had accepted this offer and the payment was made by him to Mr Kozlowski, then it would appear difficult for Mr Gadd to then seek to recover a higher amount for party/party costs and disbursements from the defendants in the District Court proceedings because of the indemnity principle in costs. Mr Gadd could not assert to recover a higher amount than the amount he was or had been liable to pay. Mr Kozlowski's instructions were withdrawn by Mr Gadd on 30 March 2020.
It seems from the evidence that in 2020 a number of steps were taken by Mr Gadd and Mr Kozlowski to attempt to settle their costs dispute.
However, Mr Kozlowski conceded in submissions that the documents sent by him on 4 June 2020 did not constitute his whole file in the District Court proceedings and, in particular, did not include his file notes. In their Reasons for Decision, the Review Panel stated that assessment of Mr Gadd's party/party costs had not yet occurred and that one of the reasons for that was that Mr Kozlowski had claimed a lien on his file because his fees had not been paid and he refused to release the file to allow for assessment of these costs to take place. This was said to be a "Catch-22 situation": Exhibit B page 115. This conclusion appears partly to be incorrect because of the material supplied by Mr Kozlowski to Mr Gadd's solicitors on 4 June 2020. However, it was correct to the extent that Mr Gadd had not supplied his whole file including his file notes. It appears to be apparent that all of the file would need to be supplied before an assessment could properly occur.
It should be noted that since 2020, there have been first, attempts to negotiate a resolution and, secondly, there have been the assessment disputes between Mr Gadd and Mr Kozlowski in 2021-2022 giving rise to the original assessment, the review and the appeal to this court.
For all of these reasons, I am not satisfied that the conduct of Mr Gadd in relation to assessing the costs in the District Court proceedings prevents the text agreement of 3 January 2019 taking effect in accordance with the Review Panel's determination. In my view, the text message agreement has therefore not been rendered "nugatory."

[17]

Costs before the Review Panel

Mr Gadd submits that the Certificate of Determination of Review Panel Costs in the amount of $4,018.01 should be set aside. This is challenged in the Amended Summons.
Reliance is placed by Mr Gadd on Regulation 53 of the LPULA Regulation 2015. It was submitted that if the determination of the Review Panel is set aside as sought by the plaintiff and a determination as sought is made (or even as the Review Panel determined as the amount "currently payable") then the decision of the Court standing as the Review Panel should be to decrease the total costs payable by an amount of more than 15% of the total costs payable as assessed by the Cost Assessor.
Therefore, in such circumstances, the Court has the power under Regulation 53(3) to require any party to an assessment that is reviewed to pay the costs of the review.
Reference was made to Regulation 53(4) of the LPULA Regulation 2015 which provides as follows: "53 Determination of costs of review (4) In determining by whom and to what extent the costs of a review are to be paid, a review panel may have regard to the following: (a) the extent to which the determination of the amount of fair and reasonable costs differs from the amount of those costs claimed in the application for review, (b) whether or not, in the opinion of the panel, either or both of the parties to the application made a genuine attempt to agree on the amount of the fair and reasonable costs concerned, (c) whether or not, in the opinion of the panel, a party to the application unnecessarily delayed the determination of the review."
No delay was asserted by anyone and therefore Regulation 53(4)(c) is not relevant.
In relation to Regulation 53(a), being the extent to which the determination of the amount of fair and reasonable costs differs from the amount of those costs claimed in the application for review, it was submitted that there would be a very significant difference if the grounds of appeal of Mr Gadd were accepted. This appears to be correct.
In relation to Regulation 53(b), as to whether either or both of the parties to the application made a genuine attempt to agree on the amount of the fair and reasonable costs concerned, the real issue here was the error by the Assessor and the Review Panel of the issue of the conditionality of the costs for the second period until a costs assessment was obtained by Mr Gadd.
Taking all of the matters into account, it seems that Mr Kozlowski did attempt to settle the dispute but for an amount well in excess of that recoverable having regard to the conditional nature of the text agreement.
In all those circumstances, in my view the Certificate of Determination of Review Panel Costs should be set aside and Mr Kozlowski should be liable for those costs. A substantial reduction in the amount of costs determined has been achieved by this appeal.
There is an issue as to the $270 filing fee before the Review Panel. Mr Gadd submits that Mr Kozlowski should have accepted that there was an error and the review was thus unnecessary.
I do not accept that submission. An error was made by the Assessor. In my view, it was appropriate to seek to review that error and the filing fee should not be paid by Mr Kozlowski. I refer to paragraph 25 of the Review Panel's decision: Exhibit B page 116.

[20]

Costs before this Court

Mr Kozlowski's written submissions did not indicate that he accepted that there was an error by the Review Panel in its approach as claimed by Mr Gadd. This acceptance was not apparent until the hearing of the appeal.
Further, the evidence establishes that upon receiving the Certificate of Determination of Costs of the Assessor dated 2 September 2021, Mr Kozlowski, as he was entitled, had filed the Certificate of Determination with the Local Court and had obtained a judgment in his favour for the relevant amount: Exhibit B page 378. That judgment was eventually stayed: Exhibit B page 384. There was also extensive correspondence between Mr Gadd's lawyers and Mr Kozlowski about the Review Panel determination. Following that being handed down, Mr Kozlowski filed it and obtained a judgment for the amount determined by the Review Panel: Exhibit B page 1163.
The error in the Review Panel's analysis was made clear by the solicitors for Mr Gadd to Mr Kozlowski: Exhibit B pages 1165, 1167 and 1168. The solicitors for Mr Gadd sought that the judgment based on the Review Panel's determination be set aside.
In my opinion, the error in the Review Panel's reasoning was clear. In my view, in the light of that error, the question of the costs of the appeal is to be considered.
Mr Gadd submitted that Mr Kozlowski had throughout, taken an "aggressive" approach to the assessment litigation and he should pay the costs of the appeal. It was submitted that it was unnecessary for the Summons even to be filed. Mr Kozlowski should have agreed to the Review Panel's determinations being set aside or not taken steps to enforce them.
In my view, once the Summons was filed, Mr Kozlowski should have realised that Mr Gadd intended to proceed with the appeal and should have agreed to consent orders setting the Review Panel's determinations aside.
Mr Kozlowski has otherwise failed in his arguments. Generally, costs should follow the event.
Accordingly, my view in the exercise of my discretion as to costs is that Mr Kozlowski should pay the costs of Mr Gadd of the appeal as agreed or assessed, apart from costs relating to the preparation and filing of the Summons (as opposed to the Amended Summons).
For the above reasons, I make the following orders: 1. Pursuant to ss 87 and 89 of the Legal Profession Uniform Law Application Act 2014 (NSW), the Certificate of Determination of Review dated 25 January 2022 is set aside. 2. Pursuant to ss 87 and 89 of the Legal Profession Uniform Law Application Act 2014 (NSW), the Certificate of Determination of Review Panel Costs dated 25 January 2022 is set aside. 3. Within seven days the plaintiff and the first defendant are to agree and forward to the Associate to Dicker DCJ draft Certificates of Determination of Review and Determination of Review Panel Costs consistent with these reasons. 4. The first defendant is to pay the plaintiff's costs of the appeal as agreed or assessed, apart from the costs relating to the preparation and filing of the Summons, but including the costs relating to the preparation and filing of the Amended Summons.

Gadd v Kozlowski t/as Lou Baker and Associates

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