Gilles v Palmieri

Court of Appeal (NSW)|2017-11-06|Before: McColl JA, White JA

190 CLR 513; [1997] HCA 38 Preston v Nikolaidis [2017] NSWSC 1527 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Re Dibbs and Farrell (1941) 41 SR (NSW) 249 Re Elgar Heights Pty Ltd [1985] VR 657 Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514; [1992] HCA 55 Wende v Horwath (NSW) Pty Ltd (2014) 86 NSWLR 674; [2014] NSWCA 170 Category: Principal judgment Parties: Joseph John Gilles - first applicant Gregory George Eliades - second applicant Vince Palmieri - first respondent DJZ Constructions Pty Ltd - second respondent Representation: Counsel: Mr L T Fermanis, Mr H R White - for the applicants Mr B Green - for the respondents

Solicitors: Giles Payne & Co - for the applicants Navado Lawyers & Solicitors - for the respondents File Number(s): 2017/89531 Publication restriction: No Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Citation: N/A Date of Decision: 27 February 2017 Before: Robison DCJ File Number(s): 2016/314629

Judgment

McCOLL JA: I agree with Barrett AJA's reasons and the orders his Honour proposes.
WHITE JA: I have had the advantage of reading in draft the reasons for judgment of Barrett AJA. Subject to one minor qualification, which is immaterial to the disposition of the appeal, I agree with his Honour's reasons. I agree with the orders his Honour proposes.
I adopt the terminology in the reasons of Barrett AJA at [12]. As his Honour explains, until the enactment of the 1993 Reform Act the 1987 Act (original form) prohibited a legal practitioner from commencing proceedings for the recovery of costs if the bill had been referred for taxation. The same prohibition was re-introduced by the 2004 Act and was continued by the Uniform Law. Neither the Second Reading Speeches, nor the Explanatory Memorandum to the 1993 Reform Act explain the reason for departing from the previous statutory prohibition on a solicitor's commencing proceedings for the recovery of costs if a bill had been referred to taxation. Presumably the reason was associated with the replacement of a system of costs assessment for the system of taxation, although why that difference should have prompted the change is unexplained.
I agree with Barrett AJA that the provisions of the 1987 Act do not preclude legal action for the recovery of costs while the assessment process is in train and that the appropriate course is likely to be that one process is stayed, pending the outcome of the other, but that this does not mean that the District Court action should be dismissed.
My only qualification to full concurrence with the reasons of Barrett AJA is in respect of his Honour's statement (at [44]) that it would be open to the costs assessor to entertain and deal with any argument that the applicants' right of recovery is time-barred. In my view that might or might not be the case depending upon the nature of the issue that is raised under the Limitation Act 1969 (NSW). In Wende v Horwath (NSW) Pty Ltd (2014) 86 NSWLR 674; [2014] NSWCA 170 Barrett JA said (at [222]) that: "In some cases … the fact that the alleged obligation to pay costs is non-existent or unenforceable will properly play a part in the assessment process. In Cockburn v Shehadie [2013] NSWSC 758, for example, a review panel made a 'nil' assessment of fees payable by a solicitor to a barrister where the barrister's cause of action for recovery was statute barred; and it was held on appeal that there had been no error of law."
It does not necessarily follow that in all cases a costs assessor can or should determine issues arising under the Limitation Act. That might depend upon the nature of the issue raised and whether the procedures for costs assessment and the powers of the costs assessor are inapt or inadequate to deal with such an issue (Doyle v Hall Chadwick [2007] NSWCA 159 at [61] per Hodgson JA).
However, the possibility that a costs assessor might not be able to entertain an argument that the applicants' right of recovery is time-barred only reinforces the conclusion that the District Court proceedings should not stand dismissed.
BARRETT AJA: This is the concurrent hearing of an application for leave to appeal from a decision of his Honour Judge Robison in the District Court and, subject to leave being granted, the appeal itself.
On 27 February 2017, the primary judge ordered that proceedings commenced by statement of claim filed on 21 October 2016 be dismissed pursuant to rule 13.4(1)(c) of the Uniform Civil Procedure Rules 2005 (NSW). His Honour was thus of the opinion that the proceedings were, in the words of that provision, "an abuse of the process of the court".
The plaintiffs named in the statement of claim (Joseph John Gilles and Gregory George Eliades) are solicitors who practise in partnership under the name "Giles Payne & Co". The defendants are Vince Palmieri and DJZ Constructions Pty Ltd, former clients of the solicitors. The solicitors claimed recovery of costs which, they said, were due and payable for legal services rendered by them.
Mr Gilles and Mr Eliades contend that the primary judge was in error in ordering that the proceedings be dismissed as an abuse of process. They seek to have the order of dismissal set aside and their debt recovery action reinstated. To that end, they seek leave to appeal, recognising that the order of the primary judge was an interlocutory order and that s 127(2)(a) of the District Court Act 1973 (NSW) imposes a requirement for leave to appeal.
The matters raised for consideration by this Court make it necessary to examine legislation, both current and repealed, concerning assessment and recovery of lawyers' costs. In the discussion that follows, I adopt the following terminology: "applicants" - Mr Gilles and Mr Eliades; "respondents" - Mr Palmieri and DJZ Constructions Pty Ltd; "1987 Act (original form)" - Legal Profession Act 1987 (NSW) as it stood before the commencement of the 1993 Reform Act; "1987 Act" - Legal Profession Act 1987 (NSW) as it stood after the commencement of the 1993 Reform Act "1993 Reform Act" - Legal Profession Reform Act 1993 (NSW); "2004 Act" - Legal Profession Act 2004 (NSW); "Uniform Law" - Legal Profession Uniform Law (NSW); "2014 Application Act" - Legal Profession Uniform Law Application Act 2014 (NSW). [1]

Facts

At the outset, certain uncontroversial facts (some conceded only for the purposes of the application determined by the primary judge) may be stated: 1. On 7 June 2005, Mr Palmieri entered into a costs agreement with the applicants. [2] 2. In May 2015, the applicants served on the respondents a bill of costs dated 1 May 2015 in assessable form in respect of costs for the period 1 July 2008 to 27 March 2009. 3. On 19 August 2015, the applicants filed an application for costs assessment headed "Legal Profession Act 2004". [3] 4. On 21 October 2016, the applicants filed the statement of claim by which they sued the respondents to recover costs due pursuant to the retainer.
It was the proceeding thus commenced by the applicants to recover costs they considered payable by their clients for legal services that the primary judge ordered be summarily dismissed as an abuse of process. His Honour considered the proceeding an abuse of process because of his conclusion that it was prohibited by a specific statutory provision, being s 533(b) of the 2004 Act. He rejected the proposition that the governing legislation was the 1987 Act.
This is not the first occasion on which a District Court proceeding brought by the applicants against the respondents in respect of the same legal costs has engaged the attention of this Court. On 23 August 2016, the Court dismissed an appeal against a District Court judge's refusal to extend the time for service of a statement of claim dated 27 November 2014 by which the applicants sued for those costs: Gilles v Palmieri [2016] NSWCA 219. One of the issues recognised but not addressed in that case was the issue now before us as to the applicable legislation.

Statutory provisions

It is necessary, at this point, to refer briefly to some matters of statutory history. The 1987 Act (original form) continued the system of taxation of lawyers' costs according to court scales that was, at that time, of very long standing. The 1993 Reform Act amended the 1987 Act (original form) by introducing a system of assessment of costs by costs assessors in place of the system of taxation by court officers. The new system applied to costs between practitioner and client as well as costs payable as between party and party under a costs order. The 1987 Act was repealed on 1 October 2005 and replaced by the 2004 Act which, in turn, was repealed on 1 July 2015 and replaced by the Uniform Law.
Both the 2004 Act and the Uniform Law continued, in a general sense, the system of costs assessment introduced by the 1987 Act. In relation to practitioner-client costs, that system involves, in broad outline, delivery of a bill of costs by the practitioner to the client, lodgement by either the client or the practitioner with the Manager, Costs Assessment of an application for assessment of the costs, referral of the application by the Manager, Costs Assessment to a costs assessor chosen by the Manager from a panel of assessors and action by that assessor to assess the costs in accordance with the legislation. [4] The assessor's task is to decide whether the costs as claimed in the practitioner's bill are fair and reasonable and, if they are not, to determine a sum that is fair and reasonable. The culmination of the process [5] is the issue by the assessor of a certificate setting out the assessor's determination and a statement of reasons. To the extent that the costs as determined and certified by the assessor have not already been paid, the assessor's certificate may be filed in the registry of an appropriate court and, upon being so filed, is taken to be a judgment of that court for the unpaid costs.
There was one difference of significance, for present purposes, between the system of costs assessment under the 1987 Act (as amended in 1993) and the like system provided for in the 2004 Act. The 1987 Act (original form) provided in s 201 that if, within one month after a bill of costs was given, an application for taxation of the bill of costs was made by a person liable to pay the costs, proceedings for recovery were not to be commenced until after the bill had been taxed. Such a provision is of considerable antiquity. [6] When the 1993 Reform Act caused the system of taxation of costs to be replaced by a system of costs assessment, s 201 was repealed and a new s 192 came to form part of the 1987 Act. That section 192 stated that proceedings for the recovery of costs by a practitioner were not to be commenced or maintained against any person unless at least 30 days had passed since a bill for those costs was given to the person in accordance with the Act. There was, however, no explicit prohibition upon the commencement of recovery action by the practitioner once 30 days had passed from the giving of the bill, even if an application for assessment had been made and the assessment had not been completed.
The 2004 Act contained, as s 331, a provision substantially the same as s 192 of the 1987 Act. But the 2004 Act went further. It provided in s 355: If an application for a costs assessment is made in accordance with this Division: (a) the costs assessment must take place without any money being paid into court on account of the legal costs the subject of the application, and (b) the law practice must not commence or maintain any proceedings to recover the legal costs until the costs assessment has been completed.
There was thus, through s 355(b) of the 2004 Act, what amounted to a reinstatement, in relation to the costs assessment system, of the embargo upon recovery action after the costs quantification process had been set in train, that had long existed under the taxation system but had been discontinued when the assessment regime was introduced through the 1993 Reform Act. The embargo is continued by s 198(7) of the Uniform Law, a matter to which it will be necessary to return.
The applicants accept that, if the 2004 Act applies to questions of costs liability and recovery as between them and the respondents, s 355(b) of that Act precludes continuance of their District Court action. They maintain, however, that those questions are in truth governed by the 1987 Act and that, given the absence from that legislation of any prohibition of the s 355(b) kind, they should be permitted to prosecute that action to its conclusion. The primary judge held that the 2004 Act applied. The applicants say that his Honour was in error and that, upon a proper construction of the statutory provisions, the applicable legislation is the 1987 Act.
The applicants' application for costs assessment was made on 19 August 2015, that is, a little more than ten years after the applicants were first instructed by the respondents on 7 June 2005. The Uniform Law was in force when the application for assessment was made. The 1987 Act was in force when the first instruction was given on 7 June 2005. Having regard to the time at which the first instruction was given, it was common ground between the parties that issues concerning legal action by the applicants to recover costs were not governed by the Uniform Law [7] and had to be determined by reference to the 2004 Act and, in particular, clause 18 of schedule 9 to the 2004 Act. That clause, as originally enacted, was in this form: (1) Subject to subclauses (2) and (3), Part 3.2 of this Act applies to a matter if the client first instructs the law practice on or after the commencement day, and Part 11 of the old Act continues to apply to a matter if the client first instructed the law practice in the matter before that day. (2) Part 3.2 of this Act does not apply in respect of a law practice that is retained by another law practice on behalf of a client on or after the commencement day in relation to a matter in which the other law practice was retained by the client before that day, and in that case Part 11 of the old Act continues to apply. (3) Any assessment commenced under Part 11 of the old Act before the commencement day but not completed by that day may be completed under Part 11 of the old Act as if it had not been repealed. (4) Any bill that, immediately before the commencement day, was awaiting commencement of assessment under Part 11 of the old Act may be dealt with under Part 3.2 of this Act.
By the Legal Profession Amendment Act 2005 (NSW), clause 18(4) was omitted and clause 18(3) was replaced with effect from 1 October 2005 (the day fixed for commencement of the 2004 Act) so that the clause as a whole came to read: (1) Subject to subclauses (2) and (3), Part 3.2 of this Act applies to a matter if the client first instructs the law practice on or after the commencement day, and Part 11 of the old Act continues to apply to a matter if the client first instructed the law practice in the matter before that day. (2) Part 3.2 of this Act does not apply in respect of a law practice that is retained by another law practice on behalf of a client on or after the commencement day in relation to a matter in which the other law practice was retained by the client before that day, and in that case Part 11 of the old Act continues to apply. (3) If: (a) an application for assessment of costs was referred to a costs assessor for assessment under Part 11 of the old Act, and (b) the assessment was not commenced or completed before that day, the application may be dealt with under that Part as if that Part had not been repealed. (4) Repealed.
In this clause 18, "the old Act" means the 1987 Act as in force immediately before its repeal by the 2004 Act; and the "commencement day" means 1 October 2005. Part 11 of the 1987 Act runs to 92 sections and deals with all aspects of the costs assessment system as briefly outlined at [17] above.
These provisions of the 2004 Act (as well as provisions of the Uniform Law which will be mentioned later) refer to a "matter" in which a client instructs a law practice and to the time at which the first instruction is given. There was discussion in Cross v Certain Lloyds Underwriters Subscribing to Contract No IH00AAQS [2011] NSWCA 136 at [19]-[20] about the meaning of "matter" in this and other areas of the 2004 Act. The view expressed by Basten JA was that, in clause 18(1) of schedule 9, "matter" refers to "the scope of any advice or assistance in respect of which a client seeks legal services from a law practice" - in general terms, therefore, the task or assignment that flows from the giving of the instruction. In the present case, the "matter" is that in which instructions were first given on 7 June 2005 and for which the applicants rendered the fees covered by their bill served in May 2015.

The decision of the primary judge

In holding that the 2004 Act applied to the situation before him, the primary judge was persuaded that: "cl 18 as a whole provides that pt 11 of the old Act [ie, 1987 Act ] does not govern the procedure and mechanisms for a costs assessment of an old Act matter when an application for costs assessment of an old Act matter is referred for assessment after the commencement of the new Act [ie, 2004 Act], on 1 October 2005."
His Honour noted that the application for assessment was not made - and could not have been made - "during the currency of" the 1987 Act. He said that there was: "no other process to be engaged other than a costs assessment to be dealt with under the costs assessment procedure and mechanisms of the Legal Profession Act 2004 which is precisely what the respondents' solicitors did. They engaged the provisions of that Act in order to commence the costs assessment process."
He reasoned, in part, that, unless clause 18(3) was construed in the way that commended itself to him, it would add nothing to clause 18(1) and would therefore have no work to do.

The applicants' contention

The applicants contend that the decision of the primary judge fails to give effect to the clear terms of clause 18(1) of schedule 9 to the 2004 Act. That provision, they say, makes it plain that, if a law practice was first instructed before 1 October 2005, Part 11 of the 1987 Act continues to apply to the matter, regardless of the time at which an application for costs assessment was made. [8] The applicants also say that Part 11 of the 1987 Act applies in such a way that s 198(7) of the Uniform Law as in force at the time they commenced their District Court action does not preclude continuance of that action.

Discussion

Clause 18(1) of schedule 9 in both its original and its amended form is expressed to operate "subject to" clause 18(3). This indicates in a general sense that, if and to the extent that clause 18(3) interferes with the operation of clause 18(1), clause 18(1) is to yield. The respondents' argument is that there is no interference requiring resolution by resort to the "subject to" formulation unless clause 18(3) operates in some way that is inconsistent with the clause 18(1) statement that Part 11 of the 1987 Act "continues to apply to a matter if the client first instructed the law practice in the matter" before 1 October 2005. According to that argument, inconsistency will exist and the words "subject to" will have work to do only if clause 18(3) is seen as conveying an implied message that the 2004 Act applies to a case such as the present.
It may be accepted that statutory provisions must be construed in a way that causes the statute to operate as a coherent whole. In an often quoted passage in their judgment in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28, McHugh, Gummow, Kirby and Hayne JJ said (at 381-382): A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other". Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme. [citations omitted].
In the present case, it is necessary to consider the approach to be taken where one statutory provision says that it has effect "subject to" another. It is pertinent, in that connection, to recall what was said by Megarry J in C & J Clark Ltd v Inland Revenue Commissioners [1973] 1 WLR 905 at 911: [9] In my judgment, the phrase "subject to" is a simple provision which merely subjects the provisions of the subject subsections to the provisions of the master subsections. Where there is no clash, the phrase does nothing: if there is collision, the phrase shows what is to prevail. The phrase provides no warranty of universal collision.
The last sentence is important. The fact that one provision says that it is "subject to" another does not indicate that there is, but for the effect of "subject to", a conflict or collision between the two provisions. By submitting that "subject to" in clause 18(1) will have no work to do unless clause 18(3) applies to a case such as the present, the respondents impermissibly adopt an approach that casts "subject to" in the role of a "warranty of universal collision". Instead of resolving or forestalling conflict where it would otherwise occur, "subject to" may serve merely to emphasise that a special and narrow provision is to have effect according to its terms even though it co-exists with a general and wide provision.
As used in clause 18(1), the words "subject to" indicate that the special case described in clause 18(3) is to be dealt with in the manner specified in that clause 18(3), regardless of the provision made by clause 18(1) for that special case. The special case is, of course, that in which an application for assessment was referred to an assessor for assessment under Part 11 of the 1987 Act and that application either had not been commenced or had not been completed before 1 October 2005. Clause 18(3) says that such an application "may be dealt with under" Part 11 of the 1987 Act as if Part 11 had not been repealed. Clause 18(3) is thus, in practical terms, a direction or assurance to costs assessors as to the way in which they are to deal with a particular type of application. An assessor is not to be concerned with the time at which the client first instructed the law practice, being the matter upon which clause 18(1) focuses. If the referral for assessment was made under the 1987 Act (which could only have happened at a time when the 1987 Act was in force) and the assessment required by the referral was, on 1 October 2005, pending (in the sense of either not commenced or not completed), the assessor has permission to proceed under Part 11 as if it had not been repealed and to undertake and complete the process of the assessment on that footing, regardless of all other attributes of the case at hand.
Clause 18(3) is of no direct relevance to the present case. There had been no referral for assessment before 1 October 2005 and no assessment was pending, in the sense just mentioned, as at that date. That being so and bearing in mind that the first instruction was given on 7 June 2005, clause 18(1) has the twofold effect of causing Part 3.2 of the 2004 Act (which contains the s 533(b) prohibition on recovery proceedings) not to apply to the "matter" initiated by that instruction and causing Part 11 of the 1987 Act (which contains no such prohibition) to apply to that "matter". In the result, therefore, Part 11 of the 1987 Act applies to the assessment required in consequence of the application for assessment made by the applicants on 19 August 2015 and no applicable statutory provision prohibits maintenance of the proceedings commenced by the applicants on 21 October 2016.
I do not think that this conclusion is in any way called into question by comparing the original form of clause 18(3) with the current form. That original form stated that an assessment commenced under Part 11 of the 1987 Act before 1 October 2005 but not completed by that day may be completed under that Part 11 as if it had not been repealed. The scheme of this provision was, in concept, the same as that of the current clause 18(3). A particular type of assessment was identified by reference to its status as at 1 October 2005 and an instruction was given that that assessment could be completed in accordance with Part 11 of the 1987 Act. Like the current version, the subclause conveys no message about the correct approach to a case such as the present where the first instruction was given before 1 October 2005, no application or referral for assessment had been made before that date and no process of assessment was in train at that date.
Any instinctive unease there may be about the proposition that costs the subject of an application for assessment made in August 2015 after the commencement of the Uniform Law (on 1 July 2015) are governed by and to be dealt with according to the 1987 Act despite its repeal in 2005 is resolved when one has regard to clause 18(1) of schedule 4 to the Uniform Law. Being a provision of the Uniform Law as brought into operation by the 2014 Application Act, clause 18(1) of schedule 4 is in force today. It states that Part 4.3 of the Uniform Law (which deals with costs disclosure, costs assessment and related matters) "applies to a matter if the client first instructs the law practice on or after the commencement day". Part 4.3 therefore does not apply to the matters in contention here. Clause 18(1) also states (so far as relevant) that "the provisions of the old legislation relating to legal costs . . . continue to apply to a matter if the client first instructed the law practice in the matter before the commencement day" (that is, 1 July 2015). By virtue of a definition in clause 1 of schedule 4, "old legislation" means "the statutory provisions repealed by" the 2014 Application Act. The provisions so repealed were those of the 2004 Act (and the Legal Profession Regulation 2005 (NSW)) [10] but not provisions of the 1987 Act (that Act was repealed by the 2004 Act [11] ). It follows that, while clause 18(1) of schedule 4 to the Uniform Law does not operate in a direct way to give continuing force to Part 11 of the 1987 Act, it achieves that result indirectly by continuing the operation of clause 18(1) of schedule 9 to the 2004 Act (being a provision of the 2004 Act "relating to legal costs" in a matter where the client first instructed the law practice before 1 July 2015) notwithstanding the repeal of the 2004 Act by the 2014 Application Act. In this way, a provision of the Uniform Law in force today (clause 18(1) of its schedule 4) preserves and sustains the operation of a provision of the repealed 2004 Act (clause 18(1) of its schedule 9) which, in turn, preserves and sustains the operation of the provisions of Part 11 of the repealed 1987 Act relevant to the costs issues between the present parties.

Conclusion on the construction question

In my opinion, the primary judge was, as a matter of statutory construction, in error when he concluded that the 2004 Act applied to assessment of the applicants' costs and related issues concerning those costs and, therefore, that s 355(b) of that Act precluded the action that the applicants sought to pursue in the District Court. His Honour should have held that the applicable provisions were those in Part 11 of the 1987 Act which, as has been noted, contain no provision comparable with s 355(b).
It should also be noted that s 198(7) of the Uniform Law does not operate to preclude court action to recover the costs in question. Section 198(7) is within Part 4.3 of the Uniform Law. For the reason stated at [37] above, the fact that the client instructed the law practice before 1 July 2015 means that none of the Part 4.3 provisions applies to the "matter" involving the costs at issue in this case.

Consequences

It therefore becomes necessary to address the question of leave to appeal. Because this is a case in which there was more than merely arguable error on the part of the primary judge, the central issue is whether injustice in need of correction will result if the error in the decision below is not corrected: Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 26 at [13]. That leads to a consideration of the position the applicants will occupy if their District Court action is reinstated and allowed to proceed to trial, compared with the position if the primary judge's order continues to preclude them from pursuing that action.
If the District Court action is reinstated, the applicants will be permitted to pursue their claim without any barrier under s 355(b) of the 2004 Act or s 198(7) of the Uniform Law. But will other obstacles stand in their path so as to make pursuit of the litigation futile?
Two possible obstacles were canvassed briefly in oral submissions, mainly in response to questions from the bench. One concerns the Limitation Act 1969 (NSW) and the possibility that the applicants' claim to recover costs is statute barred. The other concerns the implications of the applicants' concurrent pursuit of the District Court recovery action and the application for costs assessment lodged by them on 19 August 2015, even in the absence of a statutory barrier. The two matters are, to some extent, related.
When the parties were previously before the Court of Appeal, [12] there was brief reference to the limitation issue. The Court noted an allegation that there had been, by reason of conduct in 2012 and 2013, an acknowledgement such as to avoid operation of the Limitation Act adversely to the applicants as plaintiffs in the action commenced in 2014. The same issue is doubtless central to the proceedings commenced in 2016. As a general proposition, particular caution must be exercised in deciding limitation issues at an interlocutory stage. That step should be taken only in the clearest of cases: Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514; [1992] HCA 55 at [31]. For the reason stated, this is not a clear case and, on the material available to this Court, it is impossible to reach a conclusion that any limitation issue will inevitably cause the action to fail.
There is then the point that the applicants have embarked on parallel courses of suing for their costs and applying for assessment of those costs. The assessment process under the 1987 Act will produce a quantification of costs. It will be open to the costs assessor to entertain and deal with any argument that the applicants' right of recovery is time-barred: Cockburn v Shehadie [2013] NSWSC 758 at [40]; Wende v Horwath (NSW) Pty Ltd (2014) 86 NSWLR 674; [2014] NSWCA 170 at [222]. If the recovery action commenced on 21 October 2016 is extant when the costs assessor makes the determination, the fact that it was commenced on that day will no doubt be taken into account by the assessor in evaluating the limitation issue. [13]
The costs assessment process is, first and foremost, a means of quantifying the amount properly payable to a lawyer. The provisions of the 1987 Act do not preclude legal action for the recovery of costs while the assessment process is in train. But since the result of both an action for recovery and the assessment process itself is a judgment of the court (or more precisely, in the latter case, a deemed judgment created by filing of the assessor's certificate), the appropriate course is likely to be that one process is stayed pending the outcome of the other so that the possibility of inconsistent judgments is avoided. Even if, in the present case, it were thought, in the abstract, that the District Court action should be stayed pending completion of the costs assessment, that would not form a rational basis for declining to order that the order of dismissal made by the primary judge be set aside. The question of a stay would be one to be addressed and argued once the action had been reinstated.
In summary, therefore, no sound basis has been shown for allowing the orders of the primary judge to stand and not remedying the injustice flowing from error in the court below.

Orders

I propose orders as follows: 1. Grant leave to appeal. 2. Direct that the applicants do within seven days file a notice of appeal in the form of the draft in the white folder. 3. Appeal allowed. 4. Set aside the following orders made in the District Court on 27 February 2017: 1. Order that the statement of claim filed in 21 October 2016 be dismissed pursuant to rule 13.4 subrule (1)(c) of the Uniform Civil Procedure Rules 2005 (NSW). 2. Order that the plaintiffs pay the defendants' costs of the notice of motion and the proceedings as agreed or assessed. 1. Make the following orders in lieu thereof: 1. Order that the notice of motion filed by the defendants on 18 November 2016 be dismissed. 2. Order that the defendants pay the plaintiffs' costs of the notice of motion. 1. Order that the respondents pay the applicants' costs of the application for leave to appeal and the appeal.

Endnotes

The central provision of the Legal Profession Uniform Law Application Act 2014 (NSW) is s 4 which states that the Legal Profession Uniform Law set out in Schedule 1 to the Legal Profession Uniform Law Application Act 2014 of Victoria applies as a law of New South Wales and as so applying may be referred to as the Legal Profession Uniform Law (NSW).
As will be seen, certain statutory provisions direct attention to the time at which a client "first instructed" a law practice in a "matter". It was common ground for the purposes of the application determined by the primary judge that the respondents first instructed the applicants in the relevant "matter" on 7 June 2005, the date on which Mr Palmieri entered into a costs agreement.
The application was referred to Assessor John Bartos who, according to the primary judge, "has effectively been waiting in the wings" to discover the status of the applicants' District Court action.
A suggestion in the course of submissions that the Manager, Costs Assessment, when referring an application to an assessor, specifies a particular statutory regime and directs assessment according to that regime has no foundation in the legislation. The Manager, Costs Assessment makes no decision as to applicable law. The task of the assessor is to assess according to the provisions made applicable by statute to the particular case.
Ignoring review and appeal.
Statutory provisions to like effect were first enacted in New South Wales by the Act 11 Vict. No.33 (1847) ("An Act to regulate the taxation of Attorney's Bills of Costs and the practice of conveyancing") and later consolidated as part of the Legal Practitioners Act 1898 (NSW): Re Dibbs and Farrell (1941) 41 SR (NSW) 249 at 253. While Jordan CJ there noted that the earliest provision of this kind in England was s 23 of 2 Geo 2 c 23 (1729) ("An Act for the better regulation of attorneys and solicitors"), Ormiston J pointed out in Re Elgar Heights Pty Ltd [1985] VR 657 at 672 that a "not dissimilar provision" appeared in s 1 of 3 Jac 1 c 7 (1605) ("An act to reform the multitudes and misdemeanours of attornies and solicitors at law and to avoid unnecessary suits and charges in law"). Section 23 of the 1729 statute stated that no action could be brought by an attorney or solicitor to recover costs until one month after delivery of a bill of costs. It also provided for referral of a bill and the practitioner's demand on it for taxation by a court officer and stated that pending such taxation "no action shall be commenced or prosecuted touching the said demand". The Act of 1605 did not go to those lengths. It merely required the giving of a signed bill before charging the client fees or charges.
This is because of Clause 18 of schedule 4 to the Uniform Law discussed at [37] below.
The applicants say (correctly) that the legislation does not confer on an applicant for assessment any ability to choose the statutory regime that is to apply. To the extent that the primary judge referred to the applicants having actively "engaged" the provisions of the 2004 Act (the application form itself referred to the 2004 Act), he introduced a concept that finds no part in the statutory scheme.
Cited in Newcrest Mining (WA) Ltd v Commonwealth (1997) 190 CLR 513; [1997] HCA 38. .
2014 Application Act, s 167.
2004 Act, s 735 and schedule 1.
Gilles v Palmieri [2016] NSWCA 219.
As McCallum J pointed out in Coshott v Barry [2012] NSWSC 850 at [21], the fact that s 355(b) of the 2004 Act precludes recovery action pending completion of a costs assessment already commenced raises "an exciting question for another day" as to how a practitioner should proceed when faced with the impending expiration of a limitation period (her Honour was in fact dealing with a matter under the 1987 Act). The same question arises under s 198(7) of the Uniform Law. In Preston v Nikolaidis [2017] NSWSC 1527 (17 November 2017) at [290], Slattery J endorsed the conclusion of McCallum J that resort by a lawyer to the costs assessment system under the 1987 Act does not amount to the bringing of an action for the purposes of the Limitation Act 1969 (NSW).

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: 12 December 2017

Legal Profession Act 2004(NSW)

Legal Practitioners Act 1898(NSW)

Legal Profession Act 1987(NSW)

Legal Profession Amendment Act 2005(NSW)

Legal Profession Reform Act 1993(NSW)

Legal Profession Regulation 2005(NSW)

By the Legal Profession Amendment Act 2005(NSW)

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