Hughes v Geraldine Daley trading as Colin Daley Quinn, Solicitors And Barristers

Supreme Court of NSW|2013-06-17|Before: Davies J

Judgment 1This is an appeal by the client of solicitors under s 208L Legal Profession Act 1987 in relation to a costs assessment. There is a cross-appeal by the solicitors. 2The costs assessment arose out of a retainer of the solicitors by the Plaintiff on or about 17 July 2003. The Plaintiff's claim was one under the Motor Accidents Compensation Act 1999 (MACA). 3Ordinarily costs relating to claims under the MACA are regulated by the regime in the Motor Accidents Compensation Regulation 2005. Relevantly, Table A governs the regulated costs which are capped. However, clause 11 of the Motor Accidents Compensation Regulation (No. 2) 1999 provides: 11 Contracting out-solicitor/client costs (1) This clause applies in respect of costs in a motor accidents matter if a legal practitioner: (a) makes a disclosure under Division 2 of Part 11 of the Legal Profession Act 1987 (sections 180 and 181 excepted) to a party to the matter with respect to the costs, and (b) enters into a costs agreement (other than a conditional costs agreement, within the meaning of that Part, that provides for the payment of a premium on the successful outcome of the matter concerned) with that party as to those costs in accordance with Division 3 of that Part, and (c) before entering into the costs agreement, advises the party (in a separate written document) that, even if costs are awarded in favour of the party, the party will be liable to pay such amount of the costs provided for in the costs agreement as exceeds the amount that would be payable under the Act in the absence of a costs agreement. (2) Schedule 1 does not apply to the costs concerned to the extent that they are payable on a solicitor and client basis. 4The issue in this case is whether the solicitors successfully contracted out pursuant to clause 11.

GST may also be payable on the above expenses. Many of these expenses may never be incurred. 13There was attached an estimate of the fees that might be charged, such estimate being related to the amount achieved at verdict or settlement. The costs agreement also informed the Plaintiff that she had the right to obtain independent legal advice about the agreement should she choose to take that course. 14Clause 16 dealing with termination of the agreement provided: Termination 16. We will not continue to do your legal work if you: · fail to pay our bills when rendered, or · fail to provide us with adequate instructions, or; · indicate to us that we have lost your confidence. We will give you at least fourteen (14) days' notice of our intention to terminate our Agreement, and of the grounds on which the notice is based. You will be required to pay our charges for work done, and for expenses incurred and barristers' fees, up to the date, of termination. You may terminate this agreement in writing at any time. If you do so, you will pay our professional costs and expenses and any barristers' fees, up to the time of termination. 15It is to be noted that nowhere in the estimate of charges and expenses was the estimate of fees provided by Mr Jones of counsel although his second costs agreement and estimate had been provided to the Defendant only a little less than a week beforehand. His first costs agreement containing the estimate had been provided some ten months earlier. 16Various conferences were conducted in the ensuing years. It is not necessary to detail the full extent of these. Matters that should be mentioned are these. 17On 17 June 2009 in a conference with counsel the Plaintiff agreed that Furzer Crestani should be retained to provide an expert report on economic loss. 18On 1 September 2010 and 1 September 2011 notice was sent by the Defendant updating their hourly rates. 19On 15 November 2011 a conference was held with counsel prior to an informal settlement conference. The Defendant had prepared a settlement sheet and she discussed with the Plaintiff the figure that the Plaintiff would receive in her hand from the offer that was to be put. Particular costs of the solicitors, the counsel and Furzer Crestani and other disbursements were advised to the Plaintiff. She asked for a copy of the settlement sheet containing those figures and it was provided to her. This was acknowledged by the Defendant as being the first time that Mr Jones' estimate of fees had been disclosed to the Plaintiff in a way which was said to have complied with the Legal Profession Act. 20The claim was ultimately settled on 19 December 2011 at an assessment conference. The final settlement figure was $750,000 from which the Plaintiff was informed by the Defendant that she would receive $500,000 clear in her pocket. The money appears to have been paid to the Plaintiff on or about 1 February 2012. 21The Plaintiff then retained new solicitors who wrote to the Defendant requesting an itemised bill of costs.

The costs assessment 22On 1 August 2012 an application was made by the Plaintiff for a costs assessment. The assessment was referred to the costs assessor, Mr John Hope Gibson. 23In submissions to Mr Gibson dated 14 August 2012 the Plaintiff said this: Preliminary determination In order to avoid incurring unnecessary costs of preparing itemised objections to the solicitor's bill of costs comprising 2,735 items and to avoid incurring unnecessary costs of assessment generally, the applicant requests that a preliminary determination be made by the costs assessor in relation to the applicant's submissions that the costs charged by the solicitor exceed the maximum costs prescribed by Schedule 1 of the MACR. 24The Defendant's solicitors filed what were entitled "Preliminary submissions of the costs respondent in response to amended application for assessment and submissions filed on 20 August 2012". Those submissions provided some explanations about why no costs agreement was forwarded until 14 July 2005. The submissions conceded that they did not provide a written costs disclosure to the Plaintiff as soon as reasonably practicable. 25Submissions in reply were filed by the Plaintiff. 26On 18 February 2013 Mr Gibson forwarded a letter enclosing a document headed "Draft Reasons". The letter said this: I am required to determine whether or not the cost respondent contracted out of the provisions of the Motor Accident's Act and have carefully considered the submissions by both parties on this issue. I enclose* Preliminary Reasons. I refer to paragraphs 51 to 58 of these Reasons and note my request that the parties submit amended assessments (see paragraph 55 of the Reasons). On receipt of the above submissions by the parties as to the assessment of costs on the basis proposed above I hope to finalise this assessment. The submissions requested by me should be forwarded within twenty-one (21) days from the date of this letter and copied to the other parties. 27In the Draft Reasons the following appeared: 48. I accept the submission on behalf of the CR [scil CA] that the CR had not contracted out of the provisions of the Motor Accident's (sic) Act by the disclosures and letter contracting out forwarded prior to 14 July 2005. 49. I accept the submissions of the CR that the costs incurred after 14 July 2005 should be allowed on the basis set out in the cost agreement dated the same date and in the updated disclosures. ... 54. From the above the parties will note I propose to assess costs as being regulated by the Motor Accident's (sic) Act up to 14 July 2005. The costs are then to be assessed thereafter on the basis that the contracting out provisions apply. 55. To assist and expedite the assessment I invite the parties to submit amended assessments on this basis. 56. The CA objects to the report by Furzer Crestani claimed $28,655. 57. This accounting forensic report was prepared at the request of the CA's solicitors in support of her claim for economic loss. 58. Given that the CA was self-employed in the conduct of Advance Studio and supplemented her income with driving jobs, the costs of this report appear excessive. I note there was some difficulty in obtaining tax records on behalf of the CA and her brother apparently adapted some fairly creative accounting to assist in the preparation of the report. I note numerous attendances were made by the solicitors with the accountants for the purpose of this report. Notwithstanding the above, however, I am of the opinion that an $11,000 conceded by the CA is reasonable. 28After receipt of the letter and Reasons the solicitors for the Plaintiff wrote to the costs assessor on 28 February 2013 in these terms: We are instructed to file an appeal pursuant to s.384 of the Legal Profession Act 2004. As you are aware such appeal must be filed within 28 days of receiving notice of the decision. On our undertaking to proceed to file this appeal expeditiously, we ask that you suspend operation of your decision and the further matters proposed (paragraph 52 of your Preliminary Reasons and following) pending the determination of this appeal. Would we please let us have your confirmation that you are in agreement with this course. Additionally, although your letter of 18 February 2013 sending the reasons clearly refer to "Preliminary Reasons" and determines that aspect with directions as to future progress, the reasons are headed "Draft Reasons". Please confirm that it is intended that the Reasons are final and determine the preliminary issue. It may be appropriate to reissue the document under the heading "Reasons for Determination of Preliminary Issue" rather than "Draft Reasons" but of course that is a matter for you. 29On 23 April 2103 Mr Gibson wrote to the Plaintiff's solicitors relevantly saying: In the letter dated 13 March 2013 (sic) Mr Edelstein (sic) requests I should confirm that:

The statement of Reasons are now intended to be in final form; and
In the event that an appeal is lodged by 18 March 2013, no further steps will be taken in regard to processing the assessment, pending the determination of the appeal. I confirm that the statement of Reasons being "Draft Reasons" dated 18 February 2013 are the only draft Reasons and/or Reasons prepared by myself in this matter. I do not propose to make any further determination in the event that an appeal was lodged by 18 March 2013. ... In view of the Appeal I am closing my file pending the determination of the Appeal matter and have advised the Manager, Cost Assessments accordingly. 30I note that no letter dated 13 March 2013 was put into evidence. This letter from Mr Gibson appears to contain the answers to what was asked in the letter of 28 February 2013.

The appeals and the issues 31The Plaintiff seeks that the decision of the costs assessor that costs incurred after 14 July 2005 be assessed and allowed in accordance with the costs agreement dated 14 July 2005 be set aside. In lieu the Plaintiff seeks, in effect, that the costs be assessed in accordance with the MACA Regulation, alternatively, that the matter be remitted to the costs assessor to assess the costs in that way. 32The Defendant in her cross-summons seeks orders in the nature of certiorari and mandamus, alternatively a declaration, with the result that the assessment should be on the basis of fair and reasonable costs up to 14 July 2005 and thereafter in accordance with the costs agreement. 33There are said to be two broad issues in relation to the appeal. The first is whether the Plaintiff has any right of appeal particularly because the costs assessor headed his reasons as "Draft Reasons", referred to them as "Preliminary Reasons" and has not made a determination pursuant to the Legal Profession Act. In that regard the Defendant submitted that if the Plaintiff's appeal was dismissed as incompetent in this way the Defendant would not pursue its cross-summons. If she was to pursue it the Defendant would ask that it be regarded as an appeal rather than relief by way of prerogative writs. The reason for that appears to derive from s 208K Legal Profession Act 1987 - see also Einstein J in Currabubula & Paola v State Bank NSW [2000] NSWSC 232 at [61] and [65]. 34The second issue deals with the merits of the appeal and concerns whether the Defendant successfully contracted out of the provisions of the Regulation. This involves consideration of whether there has been compliance with clause 11 in that (a) the costs disclosure and agreement was not given as soon as practicable after the retainer came into being, (b) counsel's fees had not been estimated in the costs disclosure, (c) the Furzer Crestani fees had not been estimated in the costs disclosure and (d) there had been a failure to give updated estimates pursuant to s 177(3) of the 1987 Act.

The Legal Profession Act 1987 35The provisions of the Legal Profession Act 1987 apply in relation to this costs assessment by virtue of the transitional provisions in Schedule 9 clause 18 Legal Profession Act 2004. 36To understand the arguments raised in the case it is necessary to set out a number of provisions of the 1987 Act. 37The provisions of the Act dealing with disclosure of costs are found in Division 3 of Part 11 of the 1987 Act. Those provisions are relevantly these: 175 Obligation to disclose to clients basis of costs (1) A barrister or solicitor must disclose to a client in accordance with this Division the basis of the costs of legal services to be provided to the client by the barrister or solicitor. (2) The following matters are to be disclosed to the client: (a) the amount of the costs, if known, (b) if the amount of the costs is not known, the basis of calculating the costs, (c) the billing arrangements, (d) the client's rights under Division 6 in relation to a review of costs, (e) the client's rights under Division 4 to receive a bill of costs, (f) any other matter required to be disclosed by the regulations. (3) The disclosure to a client is not required to be made by a barrister or solicitor who is retained on behalf of the client by another barrister or solicitor. However, the disclosure to the client is to include the costs of the barrister or solicitor so retained. 176 Obligation to disclose basis of costs to instructing practitioner (1) A barrister or solicitor who is retained on behalf of a client by another barrister or solicitor must disclose to that other barrister or solicitor in accordance with this Division the basis of the costs of legal services to be provided to the client by the barrister or solicitor. ... 177 Obligation to disclose estimated costs (1) A barrister or solicitor must disclose to a client in accordance with this Division an estimate of the likely amount of the costs of legal services to be provided to the client by the barrister or solicitor, if the amount of the costs is not disclosed under section 175. (2) A barrister or solicitor who is retained on behalf of a client by another barrister or solicitor must disclose to that other barrister or solicitor in accordance with this Division an estimate of the likely amount of the costs of legal services to be provided to the client by the barrister or solicitor, if the amount of the costs is not disclosed under section 176. (3) A barrister or solicitor who has disclosed to a person an estimate of the likely amount of the costs of legal services is to disclose to that person any significant increase in that estimate. 178 When disclosure to be made (1) A disclosure under this Division is to be made before the barrister or solicitor is retained to provide the legal services concerned, unless this section otherwise provides. (2) If it is not reasonably practicable to make the disclosure before the barrister or solicitor is retained, the disclosure is to be made as soon as practicable after the barrister or solicitor is so retained. (3) A disclosure under this Division to a client as to the costs of a barrister or solicitor who is retained on behalf of the client by another barrister or solicitor is to be made as soon as practicable after the other barrister or solicitor becomes aware of the costs. (4) A disclosure under this Division as to any significant increase in the estimated costs of legal services is to be made as soon as practicable after the barrister or solicitor becomes aware of the likely increase in costs. 179 Disclosure to be in writing (1) A disclosure under this Division must be made in writing and be expressed in clear plain language. (2) The disclosure may be made separately or in a costs agreement or in any other contract relating to the provision of the legal services concerned. 180 Exception to disclosure A disclosure is not required to be made under this Division when it would not be reasonable to be required to do so. 181 ... 182 Effect of non-disclosure of matters related to basis of costs (1) If a barrister or solicitor fails to make a disclosure to a client in accordance with this Division of the matters required to be disclosed by section 175 in relation to costs, the client need not pay the costs of the legal services unless the costs have been assessed under Division 6. (2) A barrister or solicitor who fails to make a disclosure in accordance with this Division of the matters required to be disclosed by section 175 or 176 in relation to costs may not maintain proceedings for the recovery of the costs unless the costs have been assessed under Division 6. (3) The costs of any assessment referred to in this section (including the costs of the costs assessor) are payable by the barrister or solicitor seeking to recover costs. (4) Any failure referred to in this section does not of itself amount to a breach of this Act. However, the failure is capable of being unsatisfactory professional conduct or professional misconduct. 183 Effect of non-disclosure of estimated costs (1) A failure by a barrister or solicitor to make a disclosure in accordance with this Division under section 177 of an estimate of the likely amount of the costs of legal services to be provided by the barrister or solicitor (or any significant increase in the estimate) does not of itself amount to a breach of this Act. (2) However, the failure is capable of being unsatisfactory professional conduct or professional misconduct. 38Assessment of costs is dealt with in Division 6 of Part 11 of the 1987 Act. The relevant sections are these: 206 Referral of matters to costs assessors (1) The Manager, Costs Assessment is to refer each application for assessment to a costs assessor to be dealt with under this Division. (2) A costs assessor who has an interest in an application must, as soon as practicable after becoming aware of that fact, refer the application to the Manager, Costs Assessment for referral to another costs assessor. (3) If the Manager, Costs Assessment is satisfied that it is inappropriate for a costs assessor to determine a particular application that has been referred to the costs assessor, the Manager, Costs Assessment may: (a) revoke the referral of the application, and (b) refer the application for assessment to another costs assessor. (4) An application that has been referred to another costs assessor under this section is to be dealt with as a new assessment or, if the Manager, Costs Assessment so directs, by continuing the assessment. (5) When a referral has been revoked, the costs assessor to whom the application was initially referred must return all documents relating to the assessment of the application to the Manager, Costs Assessment. This includes documents relating to any work done on the assessment and a statement of the amount calculated for costs in respect of any work done on the assessment. 207 Costs assessor may require documents or further particulars (1) A costs assessor may, by notice in writing, require a person (including the applicant, the barrister or solicitor concerned, or any other barrister, solicitor or client) to produce any relevant documents of or held by the person in respect of the matter. (2) The costs assessor may, by any such notice, require further particulars to be furnished by the applicant, barrister, solicitor, client or other person as to instructions given to, or work done by, the barrister or solicitor or any other legal practitioner in respect of the matter and as to the basis on which costs were ascertained. (2A) If the notice referred to in subsection (1) or (2) so directs, and if it is practicable for the person to whom the notice is given to comply with such a direction, the document or particulars required by the notice must be provided in electronic form in addition to, or instead of, in paper form (as the notice may specify). (3) The costs assessor may require any such particulars to be verified by statutory declaration. (4) A notice under this section is to specify the period within which the notice is to be complied with. (5) If a person fails, without reasonable excuse, to comply with a notice under this section, the costs assessor may decline to deal with the application or may continue to deal with the application on the basis of the information provided. (6) A barrister or solicitor who fails, without reasonable excuse, to comply with a notice under this section is guilty of professional misconduct. 208 Consideration of applications by costs assessors (1) A costs assessor must not determine an application for assessment unless the costs assessor: (a) has given both the applicant and any barrister, solicitor or client or other person concerned a reasonable opportunity to make written submissions to the costs assessor in relation to the application, and (b) has given due consideration to any submissions so made. (2) In considering an application, a costs assessor is not bound by rules of evidence and may inform himself or herself on any matter in such manner as he or she thinks fit. (3) For the purposes of determining whether an application for assessment may be or is required to be made, or for the purpose of exercising any other function, a costs assessor may determine any of the following: (a) whether or not disclosure has been made in accordance with Division 2 and whether or not it was reasonably practicable to disclose any matter required to be disclosed under Division 2, (b) whether a costs agreement exists, and its terms. 208A Assessment of bills generally (1) When considering an application relating to a bill of costs, the costs assessor must consider: (a) whether or not it was reasonable to carry out the work to which the costs relate, and (b) whether or not the work was carried out in a reasonable manner, and (c) the fairness and reasonableness of the amount of the costs in relation to that work. (2) A costs assessor is to determine the application by confirming the bill of costs or, if the assessor is satisfied that the disputed costs are unfair or unreasonable, by substituting for the amount of the costs an amount that, in his or her opinion, is a fair and reasonable amount. (3) Any amount substituted for the amount of the costs may include an allowance for any fee paid or payable for the application by the applicant. (4) If the barrister or solicitor is liable under section 182 (3) to pay the costs of the costs assessment (including the costs of the costs assessor), the costs assessor is to determine the amount of those costs. The costs incurred by the client are to be deducted from the amount payable under the bill of costs and the costs of the costs assessor are to be paid to the Manager, Costs Assessment. (5) A costs assessor may not determine that any part of a bill of costs that is not the subject of an application is unfair or unreasonable. ... 208C Costs agreements not subject to assessment (1) A costs assessor is to decline to assess a bill of costs if: (a) the disputed costs are subject to a costs agreement that complies with Division 3, and (b) the costs agreement specifies the amount of the costs or the dispute relates only to the rate specified in the agreement for calculating the costs. (2) If the dispute relates to any other matter, costs are to be assessed on the basis of that specified rate despite section 208A. The costs assessor is bound by a provision for the payment of a premium that is not determined to be unjust under section 208D. (3) This section does not apply to any provision of a costs agreement that the costs assessor determines to be unjust under section 208D. (4) This section does not apply to a costs agreement applicable to the costs of legal services if a barrister or solicitor failed to make a disclosure in accordance with Division 2 of the matters required to be disclosed by section 175 or 176 in relation to those costs. 208D Unjust costs agreements (1) A costs assessor may determine whether a term of a particular costs agreement entered into by a barrister or solicitor and a client is unjust in the circumstances relating to it at the time it was made. ... 208E Interest on amount outstanding (1) A costs assessor may, in an assessment, determine that interest is not payable on the amount of costs assessed or on any part of that amount and determine the rate of interest (not exceeding the rate referred to in section 190 (4)). (2) This section applies despite any costs agreement or section 190. (3) This section does not authorise the giving of interest on interest. (4) This section does not apply to or in respect of the assessment of costs referred to in Subdivision 3 (party/party costs). 208F Assessment of costs - costs ordered by court or tribunal (1) When dealing with an application relating to costs payable as a result of an order made by a court or a tribunal, the costs assessor must consider: (a) whether or not it was reasonable to carry out the work to which the costs relate, and (b) what is a fair and reasonable amount of costs for the work concerned. (1A) An assessment must be made in accordance with the operation of the rules of the relevant court or tribunal that made the order for costs. (2) A costs assessor is to determine the costs payable as a result of the order by assessing the amount of the costs that, in his or her opinion, is a fair and reasonable amount. (3) If a court or a tribunal has ordered that costs are to be assessed on an indemnity basis, the costs assessor must assess the costs on that basis, having regard to any relevant rules of the court or tribunal. (4) The costs assessed are to include the costs of the assessment (including the costs of the parties to the assessment, and the costs assessor). The costs assessor may determine by whom and to what extent the costs of the assessment are to be paid. (5) The costs of the costs assessor are to be paid to the Manager, Costs Assessment. Note. Section 208JA provides for the recovery of the costs of a costs assessor. ... 208J Certificate as to determination (1) On making a determination, a costs assessor is to issue to each party a certificate that sets out the determination. (1A) A costs assessor may issue more than one certificate in relation to an application for costs assessment. Such certificates may be issued at the same time or at different stages of the assessment process. (2) In the case of an amount of costs that has been paid, the amount (if any) by which the amount paid exceeds the amount specified in any such certificate may be recovered as a debt in a court of competent jurisdiction. (3) In the case of an amount of costs 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 costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed. (4) For this purpose, the amount of unpaid costs does not include the costs incurred by a costs assessor in the course of a costs assessment. (4A) To avoid any doubt, this section applies to or in respect of both the assessment of costs referred to in Subdivision 2 of this Division (practitioner/client costs) and the assessment of costs referred to in Subdivision 3 of this Division (party/party costs). (5) If the costs of the costs assessor are payable by a party to the assessment (as referred to in section 208JA), the costs assessor may refuse to issue a certificate relating to his or her determination under this section until the costs of the costs assessor have been paid. (6) Subsection (5) does not apply: (a) in respect of a certificate issued before the completion of the assessment process under subsection (2), or (b) in such circumstances as may be prescribed by the regulations. 208JAA Reasons for determination (1) A costs assessor must ensure that a certificate issued under section 208J that sets out his or her determination is accompanied by: (a) a statement of the reasons for the costs assessor's determination, and (b) such supplementary information as may be required by the regulations. (2) The statement of reasons must be given in accordance with the regulations. 208JB Correction of error in determination (1) At any time after making a determination, a costs assessor may, for the purpose of correcting an inadvertent error in the determination: (a) make a new determination in substitution for the previous determination, and (b) issue a certificate under section 208J that sets out the new determination. (2) Such a certificate replaces any certificate setting out the previous determination of the costs assessor that has already been issued by the costs assessor, and, on the filing of the replacement certificate in the office or registry of a court having jurisdiction to order the payment of the amount of the new determination, any judgment that is taken to have been effected by the filing of that previously issued certificate is varied accordingly. 208K Determination to be final A costs assessor's determination of an application is binding on all parties to the application and no appeal or other review lies in respect of the determination, except as provided by this Division. 208L Appeal against decision of costs assessor as to matter of law (1) A party to an application who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the Supreme Court, appeal to the Court against the decision. (2) After deciding the question the subject of the appeal, the Supreme Court may, unless it affirms the costs assessor's decision: (a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or (b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application. (3) On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given. 208M Appeal against decision of costs assessor by leave (1) A party to an application relating to a bill of costs may, in accordance with the rules of the Supreme Court, seek leave of the Court to appeal to the Court against the determination of the application made by a costs assessor. (2) A party to an application relating to costs payable as a result of an order made by a court or a tribunal may, in accordance with the rules of the court or tribunal, seek leave of the court or tribunal to appeal to the court or tribunal against the determination of the application made by a costs assessor. (3) The Supreme Court or court or tribunal may, in accordance with its rules, grant leave to appeal and may hear and determine the appeal. (4) An appeal is to be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given. (5) After deciding the questions the subject of the appeal, the Supreme Court or court or tribunal may, unless it affirms the costs assessor's decision, make such determination in relation to the application as, in its opinion, should have been made by the costs assessor. 208N Effect of appeal on application (1) If a party to an application has appealed against a determination or decision of a costs assessor, either the costs assessor or the court or tribunal to which the appeal is made may suspend, until the appeal is determined, the operation of the determination or decision. (2) The costs assessor or the court or tribunal may end a suspension made by the costs assessor. The court or tribunal may end a suspension made by the court or tribunal. (emphasis added)

Is the appeal competent? 39The Defendant first submitted that there is no final decision in "Draft Reasons", nor is the issue of draft reasons a procedure recognised by the LPA. Accordingly, there is no right of appeal under s 208L. 40The Defendant also submitted that there was no statutory basis for doing what the costs assessor did. In support of this submission the Defendant pointed to the various rulings that a costs assessor can make as provided for in Division 6 of Part 11 of the Act. Those rulings were said to be found in ss 206(2), 206(4), 207(3), 207(5), 208C(1), 208C(3) and 208E. In that way it is said that the "decision" must be one that finally determines an issue or claim between the parties. 41The Defendant further submitted that there can be no right of appeal against any interlocutory ruling of a costs assessor simply because it involves a question of law. Such a ruling would not be a decision for the purposes of s 208L. The plain language of the legislation does not require such a construction of the section and of that part of the Act. It would cause inconvenience because of the need to appeal within 28 days of the material date even where the costs assessment was not completed. 42Reliance was placed on two cases which discussed the meaning of the word "decision" in the context of an appeal or review, those cases being Director-General of Social Services v Chaney (1980) 47 FLR 79 and Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321. Attention was drawn particularly to the passage in Chaney at 100 and in Bond at 337 which suggested that ordinarily a "decision" will be the final determination in the matter from which the appeal or review comes to the court concerned. 43A similar issue arose in Currabubula. In that case a costs assessor accepted the submission by the Defendant (the party required to pay the costs) that there was an established principle of taxation that where an order for costs is made in favour of only one of two jointly represented parties, the successful party can recover only half its costs for common work. The Plaintiff sought to set aside that decision of the costs assessor by way of an appeal under s 208L. The Plaintiff also sought a declaration about what it was entitled to from the costs assessment. 44It was submitted by the Defendant that no appeal was available because no determination had been made. Einstein J first discussed the meaning of the word "decision" in a number of cases including Chaney and Bond. He then referred to the distinction made in the 1987 Act between a "determination" and a "decision" and said this: [80] This distinction is clear enough from the terms of s 208L(1): the right of appeal on a question of law is given to a party dissatisfied with a 'decision of a costs assessor...arising in the proceedings to determine the application.' It is re-inforced by s208M which provides a separate right of appeal against the determination of the application. If s208L(1) only permits an appeal on a question of law after a final determination of the costs assessor, then the section is otiose, for an appeal under s208M is an appeal de novo: see s208M(4). The distinction the Act draws between the appeal procedures is not sufficiently explained, as Ms McCallum sought to do, upon the ground that one (s208L(1)) contains a right of appeal while the other (s208M) contains only an avenue of appeal upon leave. In my view, the different appeal procedures direct themselves to different situations. To my mind, the Act clearly contemplates that a decision is something different from and anterior to a determination of the assessment. The use of the present tense in s208L(1) - 'arising in the proceedings to determine' - rather than the past tense - 'arose in the proceedings to determine' - demonstrates that the statute intended to create an appeal right while proceedings to determine the application were extant. Section 208K in effect provides that a costs assessor's determination is to be final except as appealed from under the Legal Profession Act. Thus, here it is true to say, as Moffitt JA said 'a decision can be a decision whether final or not:' Dickinson v Perrington (supra at 78). [81] The Bank relies on subsection (2) of s208L and points out that that sub-section does not appear to contemplate that the Court may allow an appeal against a cost assessor's decision in the course of a determination, but only permits it to make such a determination as should have been made (paragraph (a)), or to remit the decision on the question to the costs assessor to re-determine the application (paragraph (b)). Although one reading of paragraph (b) would suggest that the Court can only remit a matter to the costs assessor once it has been determined, in my view, the better interpretation is to view the 're-determination' of the assessor as a determination as corrected on the question of law by the Court. 45The Defendant in the present case acknowledged that the decision in Currabubula was contrary to the submissions it was putting. It submitted, however, that not all of the arguments it had put forward in the present proceedings were put to Einstein J and that I should decline to follow it, presumably because it was decided per incuriam. 46A reading of paragraphs [32], [33] and [75] of the judgment in Currabubula shows that, with the exception of the inconvenience argument put by the Defendant in the present case, the other arguments that the present Defendant put forward were all put to Einstein J. It is true that counsel in Currabubula did not apparently identify all of the sections which provide a method of concluding the assessment process (as counsel put in the present matter) but it was argued in Currabubula that no appeal under s 208L was available except from a completed assessment. 47Nothing about the convenience argument suggests that Currabubula was wrongly decided. It is not inevitably the case that a need to appeal within 28 days of an allegedly wrong decision is inconvenient, Indeed, the present case demonstrates why that is so. It is in neither party's interest for the costs assessor to finalise the assessment until this Court determines the correct basis for the assessment. There is a considerable advantage in having a procedure for appeal to determine the correctness of a preliminary decision on a point of law such as the present point. 48In any event, I do not consider that Einstein J is wrong in the conclusion he reached. There is a clear distinction made in the Act between appeals from a decision and appeals from a determination. The two words are not used interchangeably and their juxtaposition in s 208N highlights the fact that the legislature was making a clear distinction between them. 49As noted earlier, Einstein J made reference to both Chaney and Bond when considering the meaning of "decision". He said: [76] ... The word 'decision' is, as Deane J once said, a word of indeterminate meaning: Director General of Social Services v Chaney (1980) 47 FLR 80 at 100. In the context of a curial decision, its meaning is settled: it refers to a formal decision of a Court which disposes of the matter before it, not a conclusion of law included in the reasons for the making of an order - see David Syme & Co Ltd v Lloyd (1985) 1 NSWLR 416 at 428 per Glass JA. The word 'decision' also has currency in the context of the judicial review of administrative action in the Federal sphere, where the leading authority is to be found in the judgment of Mason CJ in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, where the Chief Justice took the view that in the context of the Administrative Decisions Judicial Review Act 1977 (C'th) the word 'decision' meant a decision which is 'final, or operative and determinative' and not 'merely a step taken in the course of reasoning on the way to the making of the decision' (at 336, 337). One matter which exercised the mind of the Chief Justice in that case was the undesirability of the fragmentation of administrative decision making attended by a broader interpretation; much the same consideration that occurred to Ireland J in Ganke v Somerset (supra). [77] Nevertheless, as was made clear by Mason CJ in Bond, the meaning of the word 'decision' must be determined by the context in which the word is found (at 335). A statutory context contrasting with that found by Mason CJ in Bond confronted the Court of Appeal in Bruce v Cole (1998) 45 NSWLR 163 where Spigelman CJ interpreted the word 'decision' in the Judicial Officers Act 1986 as 'encompassing all forms of deliberative process, including the formation of an opinion'. 50I respectfully agree with this reasoning. The context is the significant matter for the proper construction of the word. 51It is also clear that the final costs assessment is the determination. The assessor might make decisions along the way some of which, such as the decision in the present case and the decision in Currabubula, will involve questions of law and provide the basis upon which the assessment will proceed. That was no doubt why the facility was provided in s 208L to test the correctness of the decision on law before the final determination was made. 52The fact that it is possible to identify various ways that the assessment process can conclude by virtue of specific statutory provisions does not throw any light on what constitutes a "decision" from which an appeal can be brought. Nothing suggests that they are the only decisions that can be appealed. Although the Defendant submitted that there was no procedure contained in the Act analogous to a separate decision under Part 28 UCPR, the distinction made between "determination" and "decision" appears to facilitate such a process. The issue to be determined in the present matter is a good example of what essentially amounts to a preliminary decision on a question of law. So too would a decision about the matter raised in Currabubula and a decision whether a solicitor had entered into a costs agreement at all. I accept that in the last mentioned case such a decision is one expressly contemplated by the Act: s 208C(1), but that only reinforces the view that the appeal process provided by s 208L enables consideration of what might be thought to be a preliminary point. 53The decision in Currabubula has been followed by Hidden J in Peter Francis Gorczynski v Leichhardt Council & Anor [2007] NSWSC 202 at [21]. Further support for the same approach is found in the judgment of Master Malpass in Firth v Westbury [1999] NSWSC 372 at [19]. 54Although the costs assessor referred to his Reasons as "Draft Reasons" and "Preliminary Reasons" there is nothing in those Reasons to suggest that the issue he decided, and which is now the subject of these proceedings, was not his final decision on that issue. The Reasons could aptly be called Preliminary Reasons because they dealt with a preliminary point. They were not the reasons referred to in s 208JAA. 55Despite the description of the Reasons as "Draft Reasons" it seems perfectly clear from the course of events that these Reasons were intended to be the decision in relation to the approach to the assessment that the assessor would take. I do not place much weight on what he says in his letter of 23 April that he intended because the matter needs to be judged objectively. 56There is no suggestion, however, in the Reasons and the covering letter to conclude that anything but a decision had been made on this particular point and that what the assessor was seeking further submissions about was what costs flowed from this particular decision. 57The challenge to the competency of the appeal fails.

Was there compliance with clause 11? 58The Plaintiff's submissions on the substantive issue placed emphasis on two matters. The first was what was said to be the requirement to conform strictly with Division 2 of Part 11 of the Act to take the matter outside the Regulation. In that regard it was said that the disclosure was not made as soon as practicable after the retainer (in breach of s 178), that the disclosure did not contain an estimate of the barrister's fees and other disbursements (in breach of s 177) and did not subsequently disclose significant increases in the estimate of costs (in breach of s 177). 59The second matter was the submission that a solicitor's retainer is an entire contract unless the parties agree otherwise with the result that, because the Defendant did not remove the charging of costs from the control of the Regulation by failing to comply with clause 11, the Defendant incurred a contractual and professional obligation to carry on the Plaintiff's case to completion with the costs limited under the Regulation. 60The Defendant submitted that where clause 11(1)(a) speaks of a "disclosure under Division 2 of Part 11" it does not say or mean that there must be a disclosure which complies strictly and in all respects with the requirements of Division 2. Rather, the clause requires that the disclosure be one which is sufficient to be identified as a disclosure for the purposes of Division 2. 61I do not consider that the Plaintiff's submission concerning the retainer being an entire contract provides any assistance to a determination of the matter. In the ordinary case the parties could agree to change the basis upon which they did business during the course of a retainer. The retainer could commence with no costs agreement but be varied so that costs from a particular point were governed by a costs agreement. Similarly, the parties could agree that the solicitor would charge a particular rate and then at a later time vary that rate. 62The fact that in the present case there was no written costs agreement for the first two years of the arrangement does not mean that the parties were not free to reach a costs agreement at a later time. Whilst there might not have been a costs agreement from the outset that does not mean that there was not a retainer. That retainer might have imposed upon it the requirement to charge only in accordance with the Regulation but that of itself would not prevent the parties later changing the arrangements. 63The real enquiry in the present case is what is the extent of the compliance with Division 2 of Part 11 required by virtue of clause 11. 64I do not consider that a failure in every respect to comply with Division 2 of Part 11 will mean that clause 11 does not operate to take the assessment of costs outside the Regulation. There are difficulties in an approach that requires strict compliance with all aspects of the Division. Under clause 11(1)(a) what is required is the making of "a disclosure". Yet s 178(4) requires a further disclosure as soon as practicable after the lawyer becomes aware of a likely significant increase in the estimated costs. If that second disclosure is somehow required by the provisions of clause 11 it would not be a fair or sensible approach to conclude that, although a proper disclosure had been made at the outset, the failure to make the further disclosure required by s 178(4) resulted in the matter again becoming subject to the Regulation. Indeed, on one view of clause 11, if a further disclosure was even required there would be a need to enter into a further costs agreement whether or not there was to be any change to what was agreed because compliance with each of the paragraphs in clause 11(1) is conjunctive. 65Similarly, for the reasons given in paragraphs [61] and [62] above a mere failure to enter into the costs agreement before the retainer, or as soon as practicable thereafter, would not necessarily mean that clause 11 had not been complied with. The result is likely to be that the costs would be subject to the Regulation until the costs agreement is made and clause 11 complied with. However, the parties must be free to change their arrangements by consent. The parties might agree, for example, that because what appeared at first to be a simple claim became very much more complicated the fair and proper approach would be for costs to be charged outside the provisions of the Regulation. 66But for what follows in relation to counsel's fees, my opinion would have been that the result of making the costs agreement some years after the retainer commenced meant that capped costs applied up until the making of the costs agreement (regardless of when the costs were billed) and that thereafter costs were payable under the costs agreement. The Plaintiff submitted that there was no proper basis on which that could be achieved. However, Schedule 1 to the Regulation provides for costs on a staged basis. Costs would be payable on a capped basis for the stages completed prior to the making of the costs agreement. 67I acknowledge difficulties could arise if stage 6 had been reached before the costs agreement was made. I am inclined to the view that if stage 6 had been reached it would be too late to make a costs agreement that had the effect of taking the costs outside the capped costs under the Regulation. By reason of what follows it is not necessary to decide this. 68However, in the present case I consider that the failure to provide an estimate of the barrister's fees until shortly before the matter was settled means that clause 11 has not been complied with. The Defendant had two estimates, the latest of which was received by the Defendant only days before the costs agreement with the Plaintiff. No explanation was offered for the failure to pass that estimate on to the Plaintiff. Indeed, the Defendant accepts that the first time a disclosure of the barrister's estimate of fees was made was a month before final settlement of the matter. 69Unlike ss 178 or even possibly 179, where there is scope for differing views concerning compliance, s 177 is expressed in mandatory terms on the basis of facts which would be (one would think) unassailable. If the amount of the costs is not disclosed pursuant to s 175(2)(a) and 176 (2)(a) an estimate must be provided (s 177(1)) and the barrister's estimate must also be provided (s 177(2)). It is not, here, necessary to consider the position where the barrister had not, at the time of the costs agreement and disclosure, provided an estimate of his or her costs to the solicitor. A disclosure had twice been made. No attempt was made by the Defendant to pass that disclosure on to the Plaintiff at any reasonable time following the making of the costs agreement. 70Indeed, it might be thought that the page of the costs agreement headed "Estimate of Professional Costs" was misleading because it says "PLUS expenses and barrister's fees (if any)" [emphasis added] in circumstances where the Defendant had received two estimates of the barrister's fees at the time the costs agreement was sent to the Plaintiff. 71The Defendant submitted that there was disclosure of the barrister's fees because the costs agreement set out the barrister's rates of charging. However, that is a compliance only with s 175(2)(b) as referred to in s 175(3). There still remains a failure to comply with s 177. 72The further submission by the Defendant that clause 11 can be considered in relation to each disclosure separately is completely unworkable and, as a matter of construction, must be rejected. Assume, as here, that disclosure is made of the solicitor's estimate but not the barrister's. Clause 11 would then be satisfied for the solicitor's costs but not the barrister's. The result would then be (at best) that the solicitor's fees would be assessed independently of the Regulation whereas the barrister's fees would be subject to the Regulation. Yet the fees prescribed under the Regulation are for all legal fees incurred to that point in the litigation. Further, the barrister, who has complied with his or her obligations under Division 2 Part 11 would be denied their fees as a result of the solicitor's failure to comply with clause 11 by not disclosing the barrister's fees. 73Further clause 9 of the Regulation allows for an apportionment of the capped costs where there has been a change in the legal practitioner during the currency of the claim. That express provision coupled with the provision in clause 1 of the 2005 Regulation that the amounts specified are the "maximum costs payable for all legal services" points strongly to the conclusion that the disclosures of the solicitor and the barrister cannot be regarded separately for the purposes of clause 11. 74The obligation under clause 11 is on the solicitor. Paragraph (a) requires a disclosure under (relevantly) s 177. Section 177(2) has not been complied with. Accordingly, paragraph (a) has not been complied with. The costs remain governed by the Regulation. The assessor erred in the decision he reached on the preliminary point. 75That makes it strictly unnecessary to consider the asserted failure of disclosing the fees for the Furzer Crestani report. However, that reports appears not to have been in contemplation until the Plaintiff's brother provided some figures to the Defendant in June 2009, almost four years after the costs agreement. If the Plaintiff's point is that there was an obligation for a further disclosure at that point with implications for clause 11 the point suffers from the same difficulty as the one concerning the obligation under s 177(3). If clause 11 had been successfully complied with in 2005 it is difficult to see how a failure in 2009 to disclose a further estimated expense, and one that concerned an unregulated cost in any event, could invalidate what had been earlier achieved.

What relief should be granted? 76The Plaintiff submitted that I should follow the course referred to in s 208L(2)(a) and make such determination as should have been made by the costs assessor rather than remitting the matter. The Defendant submitted that the matter should be remitted to the costs assessor because of an issue regarding the Furzer Crestani fees. 77The Furzer Crestani fees are unregulated by virtue of clause 7A of the 1999 Regulation. The fees amounted to $28,655. The Plaintiff conceded before the costs assessor that $11,000 was reasonable, and for the reasons given by the costs assessor in paragraphs 56 to 58 of his reasons (see paragraph [27] above) he allowed that amount. The Defendant submitted before me that it did not expect that the costs assessor would deal with those fees in his reasons on this preliminary point and the Defendant wishes to make further submissions to the costs assessor about those fees. That submission does not sit well with the terms of paragraphs 51 to 66 of the Defendant's submissions to the costs assessor. It would have to be asked why the Defendant bothered putting in such detailed submissions about the report if it was not expecting the costs assessor to make a decision about it. 78However, I note the correspondence behind Tab 5 of Exhibit GAD2. Despite the Defendant's submissions to the costs assessor dealing with the Furzer Crestani fees it appears that matters were left outstanding as a result of a further request for information about those fees from the costs assessor. In those circumstances it would not be fair to the Defendant to preclude, by the relief I order, the making of further submissions about these fees. 79I note in this regard that the Plaintiff said that if I was of the view that the matter should be remitted she should be given the opportunity to reach an accommodation with the Defendant concerning the Furzer Crestani fees, acknowledging that the Defendant should be allowed to make further submissions in relation to those fees. 80In its submissions to the costs assessor the Defendant calculated the regulated costs at $33,313.19 for the whole of the period of the retainer. The Plaintiff calculated them at $29,261 but is content to adopt the Defendant's figure in the event that the appeal was upheld and I made the determination under s 208L(2)(a). 81There are a few other outstanding matters. First, there is the filing fee of $2,405.79 for the costs assessment. A costs assessor may make allowance for such a fee: s 208A(3). In my opinion, the assessment should include that fee - the application for the assessment was justified by the result the Plaintiff has achieved in this Court. 82Secondly, the Plaintiff claims the costs incurred in preparing primary submissions and submissions in reply to the costs assessor. S 208A(4) provides that those costs are deductible from the bill if the solicitor is liable under s 182(3). That involves a failure to comply with s 175. I have determined that the Defendant failed to make the disclosure required by s 177. There was no failure to make a disclosure of the matters required to be disclosed by s 175. S 208A(4) is not engaged to make these costs deductible from the bill. 83The Plaintiff also claims interest on the amount of costs overpaid to the Defendant from 2 February 2012, the date when they were paid. The right to obtain the overpaid costs themselves is expressly provided for in s 208J(2). 84In my opinion the Plaintiff is entitled to interest on the overpaid costs. There is no reason why the general principles enunciated by Mason P (with the agreement of Beazley JA and Ipp AJA) in Heydon v NRMA Ltd (No 2) [2001] NSWCA 445; 53 NSWLR 600 at [12]-[21] should not apply in the present circumstances. If the costs had been paid after, and by reason of, the assessment by the costs assessor, the determination on the filing of the certificate is taken to be a judgment: s 208J(3). The principles in Heydon would have applied. It cannot matter for the application of those principles that the costs were paid in advance of the assessment with the ultimate result (by virtue of this appeal) that the costs were not properly payable. As Heydon makes clear, the interest rate is the same as that payable on judgments. 85This outcome means that it is not necessary to consider the Defendant's cross-appeal. What was sought in the cross-summons was a declaration that the costs assessor was required to proceed on the basis that costs up to 14 July 2005 were assessed on a fair and reasonable basis and thereafter pursuant to the costs agreement. Even if I had found that the Defendant satisfied the requirements of clause 11 by 14 July 2005 the effect of that would not be retrospective. By reason of my findings the cross-summons entirely fails. 86This case provides another example of the danger of importing by reference into an Act or Regulation the provisions of another Act where the two provisions do not sit easily together in all circumstances. It is not at all clear how, for example, a failure to comply with s 177(3) can sensibly impact on the opting out provisions of clause 11 of the Regulation. What effect does the failure to comply with s 177(3) have where clause 11 has otherwise been complied with? What is the position, for the purposes of Clause 11, of a barrister who strictly complies with Division 3 of Part 11 but where the solicitor does not - precisely the position here? Is he deprived of his fees by that failure or will the solicitor be bound to pay them even if the client is not? 87The outcome of this matter is unfortunate from the Defendant's perspective. The Plaintiff achieved a very good outcome in the MAA claim - far more than had originally been thought. There can be no doubt that the Defendant undertook a great deal of work to achieve that result. Despite that the Defendant is confined to the capped costs under the Regulation. Nevertheless, the reason for that is the Defendant's failure to ensure that clause 11 was complied with. The failure was no technical failure but the unexplained failure of providing to the Plaintiff the estimate of counsel's costs with which the Defendant had been provided on two separate occasions. 88The parties should bring in Short Minutes to reflect these reasons. This should be done within 28 days which will allow the parties time to negotiate on the Furzer Crestani fees. If agreement about those fees cannot be reached the Short Minutes should provide for the matter to be remitted to the costs assessor for him to determine in accordance with these reasons (s 208L(2)(b)). If agreement is reached the Short Minutes should provide for the re-determination of the costs assessor's decision (s 208L(2)(a)). The Defendant should in either event pay the Plaintiff's costs of this appeal.

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: 25 July 2013

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