James Hardie v Stevenson

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11538/99 - JAMES HARDIE & CO PTY LIMITED v GEOFFREY RUPERT STEVENSON

1 MASTER: The plaintiff James Hardie & Co Pty Limited (JHC) by summons filed 29 June 1999 seeks firstly, an order for an extension of time for leave to appeal the determination of a costs assessor Philip W Hill dated 3 June 1999; secondly, that the determination in respect of the assessment of party/party costs in Dust Diseases Tribunal (DDT) proceedings be set aside and in lieu thereof an order that the determination be varied; or thirdly, that the determination be remitted to the costs assessor for redetermination. JHC relied on the affidavit of Lynne Maree Harman sworn 3 September 1999. The defendant relied on the affidavit of Thady Arnold Andrew Blundell sworn 24 September 1999. Two notices to produce addressed to the defendant dated 19 November 1999 and 23 November 1999 and a subpoena addressed to Turner Freeman were set aside (see separate judgment). 2 In relation to the first order sought, it appears that the appeal was lodged in time so an extension of time for leave to appeal is not required. 3 A short history of the events that gave rise to the costs assessment is as follows:

(a) On 3 September 1997 Mr Stevenson commenced proceedings against James Hardie & Company Pty Limited (JHC) and Seltsam Pty Limited (Seltsam) alleging that he had contracted pleural mesothelioma as a result of being negligently exposed to asbestos, dust and fibre emanating from the asbestos cement products manufactured and supplied by JHC and Seltsam.

(b) On 13 December 1997 Judge O'Meally of the Dust Diseases Tribunal gave judgment. His Honour found that Mr Stevenson's mesothelioma was caused by exposure to asbestos products manufactured by JHC and Seltsam. His Honour awarded damages to the plaintiff in the sum of $373,207 and ordered that the defendants pay the plaintiff's costs and apportioned 97.5% of those costs against JHC and 2.5% of those costs against Seltsam.

(c) On 4 April 1999 Mr Stevenson filed an application for an assessment of party/party bill of costs, together with the plaintiff's notice of objection and response to Mr Stevenson's notice of objection. The court referred the application for assessment to a costs assessor Mr Philip W Hill.

(d) The bill of costs sought payment of $150,209.20 to be paid by JHC. JHC conceded items to the value of $93,000. The amount left in dispute was approximately $55,070.08.

(e) On 3 June 1999 the costs assessor issued a certificate of determination of costs. He assessed the JHC's and Seltsam's costs at $143,742.55, together with the certificate of his costs in the amount of $2,100. The costs assessor deducted about $7,000 from the disputed costs of $55,070.08.

(f) In relation to Seltsam's liability to pay 2.5% of the costs the solicitors for Mr Stevenson settled on the amount to be paid by Seltsam. 4 The grounds of appeal from the determination of the costs assessor stated in the summons are as follows:

(1) The costs assessor erred by declining to call for the defendant's costs agreement with his solicitors, wrongly held that the workers compensation legislation was relevant to the exercise of his discretion and that the costs agreement ought to have been available to enable the costs assessor to properly consider the determination.

(2) The costs assessor erred in holding that the question of whether or not the defendant should have retained senior counsel was a matter which should have been raised by the plaintiff with the trial judge.

(3) The costs assessor erred in holding that there was a scale fixed by the costs board which regulated photocopying and facsimile rates.

(4) The costs assessor misdirected himself by failing to take into account matters relevant to the determination, in particular - (i) that the defendant's solicitors are experienced practitioners in the particular jurisdiction;

(ii) that the defendant was capable of travel; (iii) that the defendant's solicitors had an office in Sydney and regularly had a representative of its firm appearing in the DDT on a number of matters; and (iv) that the defendant had put forward a number of conflicting bases for his costs.

(5) The costs assessor misdirected himself as to whether it was reasonable to carry out the work to which the costs claimed in the application relate.

(6) The costs assessor misdirected himself as to what constituted a fair and reasonable amount of costs for the work concerned.

(7) The costs assessor failed to have regard to submissions and objections put before him on behalf of the plaintiff. 5 Section 208L of the Act provides: "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." 6 The costs assessor under the Act 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 submission to the costs assessor in relation to the application; and (b) has given due consideration to any submission so made." 7 Section 208A(1) obliged the costs assessor to 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." 8 and "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." (s 208A(2)) 9 Section 208B provides that in assessing what was "a fair and reasonable amount of costs, a costs assessor may have regard" to any or all of the matters then listed in the following paragraphs (a) to (j). Section 208B states: "Additional matters to be considered by costs assessors in assessing bills of costs

In assessing what is a fair and reasonable amount of costs, a costs assessor may have regard to any or all of the following matters:

(a) whether the barrister or solicitor complied with any relevant regulation, barristers rule, solicitors rule or joint rule,

(b) whether the barrister or solicitor disclosed the basis of the costs or an estimate of the costs under Division 2 and any disclosures made,

(c) any relevant advertisement as to the barrister's or solicitor's costs or skills,

(d) any relevant costs agreement (subject to section 208C),

(e) the skill, labour and responsibility displayed on the part of the barrister or solicitor responsible for the matter,

(f) the instructions and whether the work done was within the scope of the instructions,

(g) the complexity, novelty or difficulty of the matter,

(i) the place where and circumstances in which the legal services were provided,

(j) the time within which the work was required to be done." 10 In relation to the first ground of appeal, JHC's counsel referred to "the indemnity principle" and submitted that for the costs assessor to comply with the indemnity principle he should have examined the costs agreement between the defendant and defendant's solicitors. 11 In 1910 the then Master of the Rolls, Sir H H Cozen-Hardy asked the rhetorical question - "What are party and party costs?". He then supplied the answer in these terms in Gundry v Sainsbury (1910) 1 KB 645 at 649: "They are not a complete indemnity but they are only given in the character of an indemnity. I cannot do better than read the opinion expressed by Bramwell, B. In Harold v Smith: 'Costs as between party and party are given by the law as an indemnity to the person entitled to them; they are not imposed as a punishment on the party who pays them, nor given as a bonus to the party who receives them. Therefore if the extent of the damnification can be found out, the extent to which costs ought to be allowed is also ascertained.'" 12 The JHC's argument is that if the client had not been charged for some of the work done by his solicitor these amounts could not be claimed as party/party costs. Similarly if Mr Stevenson's solicitor had charged the client a lesser amount for an item of work than in the party/party bill, then the costs assessor should only allow the lessor amount. Hence, the argument goes that the costs assessor should have had recourse to the costs agreement between the solicitor and client. However, from the reading of the notice of objections the only reference I can find to the need for a production of a fee agreement is in paragraph 7 of the general submissions. Paragraph 7 states: "The applicant and his solicitor have not been entirely straight forward in relation to the negotiations on the question of costs. Initially, and in response to a request for a copy of the costs agreement between the applicant and his solicitor, the applicant's solicitor asserted that "the costs were charged based on an hourly rate of approximately $250.00 per hour". When pressed as to the meaning of the expression "approximately $250.00 per hour" the applicant's solicitor responded "we are not obliged to forward to you any costs agreement between ourself and our client". This bill of costs is based on a rate considerably less than $250.00 per hour and yet, ironically, the total amount of costs claimed ($86,850.36) is more than $10,000 more than (sic) the amount cited on page 6 of the applicant's solicitor's letter dated 6 April 1998 (which appears to be item 423) in the bill of costs and the bill of costs has been prepared not on an hourly rate basis but on the basis of the deregulated scale. Accordingly, it is open to the assessor to conclude, in the absence of production of a fee agreement, that there was no fee agreement." 13 The gravamen of JHC's submission is that the costs assessor should have determined that there was no fee agreement between solicitor and client. I accept that letters were written between JHC's and Mr Stevenson's solicitors concerning the production of the costs agreement and the costs assessor had copies of these letters. However, the notice of objection did not clearly raise the indemnity principle as an issue to be determined by the costs assessor. As the indemnity principle was not raised before the costs assessor this ground of appeal fails whether it be an error of law or one requiring leave under s 208M (s 208M is referred to later in this judgment). 14 The costs assessor gave very detailed reasons for his determination and in some areas stipulated certain item numbers and gave reasons why he disallowed them. In any event, in relation to the fee agreement the costs assessor stated: "Although I am entitled to see a fee agreement, (Section 208 H) I cannot rely on it. I consider Dust Disease a matter like Workers Compensation matters as regard solicitor/client costs." 15 Section 208H provides: "Effect of costs agreements in assessments of party/party cost (1) A costs assessor may obtain a copy of, and may have regard to, a costs agreement.

(2) However, a costs assessor must not apply the terms of a costs agreement for the purposes of determining appropriate fair and reasonable costs when assessing costs payable as a result of an order by a court or tribunal." 16 It is my view that it was a matter entirely for the discretion of the costs assessor as to whether or not he called for the Mr Stevenson's costs agreement. He decided not to do so. This does not give rise to an error of law. 17 If I am wrong, and the costs assessor should have had regard to the indemnity principle, it is instructive to refer to a passage from Re Marsland and Marsland (1902) Queensland Reports 219 (88 years ago). At p 235 Sir Samuel Griffith, the then Chief Justice of the Supreme Court of Queensland, made this statement of general principle to which reference is often made. "There has been a good deal of discussion before the court, as to supposed different principles of taxation on taxations as between party and party and as between solicitor and client. In my judgment the rule is that for the same work there must be the same remuneration on which ever basis the taxation is heard; but there is much work properly chargeable as between solicitor and client, which ought not be allowed as between party and party. For that additional work the client is bound to pay his solicitor a proper remuneration; but for the same work there should be the same measure of remuneration. The item "instructions for brief", is only an allowance for work done, which includes a great number of attendances and numerous interviews, the taking of the depositions of witnesses and general work necessarily done by a diligent solicitor in looking after the interests of his client. It is work that cannot be very easily particularised in minute detail, and is, therefore, in the discretion of the taxing officer; but it is simply remuneration for work done. There may be many things which a solicitor thinks proper to do, and to charge for as "Instructions for Brief", which ought not to be allowed as between party and party, but which might, nevertheless, be allowed as between solicitor and client. I do not see any objection to different charges in the two bills, but if more is allowed on one than on the other, it must be on the ground of more work done. The Registrar, this morning, mentioned a taxation, within the last day or two, of an item "Instructions for Brief" between party and party. A sum was charged which represented the solicitors' attendance in getting information as to the evidence which five or six persons could give on the trial. They were not called, and on the taxation between party and party there was a disallowance of the amount which it was thought represented the expenses of interviews with those witnesses; but on the taxation between solicitor and client the amount was allowed. It is an excellent example, and shows the principle on which taxation should be made." 18 Although this passage refers to the taxation of costs where there was a different test for party/party costs to those of solicitor/client costs, it is my view that this passage does also apply to the assessment. There may be work done by a solicitor for his client which is assessed to be fair and reasonable but it may not be thought that those costs are fair and reasonable in relation to a party/party bill. A difference might be that a client may wish a particular senior counsel to be involved in a case yet it is not the type of case that would normally require the services of a senior counsel. The costs assessor may consider that senior counsel's fees should not be allowed in relation to the party/party bill. This of course is not necessarily the case here but I use it by way of example. However, as previously stated, the notice of objection did not raise the issue that the costs agreement should have been produced so the indemnity principle could be applied. 19 I am not sure what the costs assessor meant by his comment that the Dust Disease matters are "like Workers Compensation matters as regard to solicitor/client costs", but his reasoning that although he was entitled to see the fee agreement, he could not rely on it, can be discerned. As previously stated, it is my view that the costs assessor has not erred in law. 20 The second ground of appeal is that the costs assessor was in error when he held the question of whether or not Mr Stevenson should have retained senior counsel is a matter which should have been raised by JHC with the trial judge. The costs assessor stated at paragraph 6: "The submission that the plaintiff should not have Senior Counsel should have been made to O'Meally J. I have a cost order and my job is to consider fair and reasonable costs to be assessed. The respondent was well aware of this and could have addressed His Honour at this point but did not do so." 21 The costs assessor allowed senior counsel's fees. The costs assessor's statement that the issue of whether senior counsel's fees should have been allowed should have been drawn to the judge's attention, is not critical to the costs assessor's reasoning. He stated that his job is to consider what are fair and reasonable costs to be assessed. This ground of appeal would seem to be an issue of fact for which leave would be required. On this particular issue, it is my view that it was a matter of discretion as to whether the costs assessor allowed senior counsel's fees and it was within his discretion to allow them. The fees set out in the bill of costs (p 40) indicate a reasonable level, bearing in mind that the matter ran for extended hours of hearing. The costs assessor allowed counsel's fees in full and stated that he was sure that JHC had paid more for its senior counsel. The costs assessor further noted that there was no junior appearing for the applicant and that this role was assumed by the applicant's solicitor. The costs assessor considered that senior counsel's fees were fair and reasonable costs. There is no error of law, nor is it a matter where leave to appeal should be granted. 22 The third ground of appeal is whether the costs assessor erred in holding that there was a scale fixed by the costs board which regulated photocopying and facsimile rates. In paragraph 9 of the general objections JHC submitted that it did not object to the basis on which the bill had been drawn at scale. However, it objected to the charges for photocopying and facsimile transmissions. It then raised a number of issues namely that there was bulk copying and the rate should be less than the scale rate. These were matters which the costs assessor considered. He reduced some photocopying expenses where it was done in bulk. The costs assessor commented that he believed the urgency of the case and the expedience in which it was handled, justified the way in which it was handled. He said that in regard to photocopying, he had allowed the rate of one dollar per page for small quantities of copying and the commercial rate for large quantities. There has been no error of law nor is it a matter where leave to appeal should be granted. 23 The fourth ground of appeal refers to the amounts allowed for travelling expenses. JHC's counsel referred by way of example, to items 10 and 12 in the bill of costs. These items concerned a meeting which occurred at Cairns airport, JHC submitted took place at that location to fit in with the counsel's work commitments. The costs assessor said at point 3, "Travelling is satisfactory." The costs assessor then specifically referred to items 10 and 12. He stated that the case involved an urgent application and referred to O'Meally J's comments that "The plaintiff is suffering mesothelioma and will die soon" (p 1); and "On 3 July 1997 a diagnoses of incurable cancer was conveyed to the plaintiff. He was informed that his life expectancy was between one and two years and there was no treatment available". As previously said, the costs assessor then referred to the urgency of the case and the expediency in which it was handled. Items 10 and 12 amounted to the sum of $1,200. It is my view that the costs assessor had a discretion as to whether or not he would allow these costs and decided to do so. There is no error of law nor is it one for which leave to appeal should be granted. 24 JHC objected to the costs of Mr Stevenson's solicitor travelling to and from the Parramatta office to attend the DDT when they had a Sydney office. In fact it was the Parramatta office which was handling this matter and the Parramatta office appeared on court documents. Once again this was a matter within the discretion of the costs assessor and no error has been shown. 25 JHC's solicitor also complained that a rate allowed for non-qualified staff was too high. JHC's counsel submitted that there were other complaints raised in the notice of objections which had not been dealt with, and that the costs assessor had not covered all items relating to photocopying. 26 In relation to 5, 6 and 7 as referred to earlier in this judgment, when the reasons for decision are read it is clear that the costs assessor applied himself to assessing which of the disputed costs were unfair or unreasonable and substituted an amount of costs that represented a fair and reasonable amount. It was not alleged that the costs assessor did not give the parties a reasonable opportunity to make written submissions. (see s 108 and Ex 1). The costs assessor in his reasons stated that he took into account the objections and responses and dealt with a number of those matters specifically. As previously stated, the costs assessor gave reasons for amounts he assessed for photocopying. There is nothing to indicate that the costs assessor failed to take into account any matters put before him, nor was my attention directed to conflict in the costs assessor's reasons. Accordingly, he has not erred in law. The appeal pursuant to s 208L of the Act fails. Although I have canvassed whether each ground of appeal is a matter for which leave should be granted, I turn now to consider whether leave under s 208M should be granted. 27 Section 208M of the Legal Profession Act provides: "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." 28 In Chapmans Ltd v Yandell [1999] NSWCA 361, Fitzgerald JA (with whom Mason P and Davies AJA agreed) stated that it is important to keep in mind that the purpose of a requirement of leave to appeal is that it is intended to act as a filter to ensure that unsuitable appellant proceedings which are not able to be brought with the demands which that places upon the resources of the court and the burden which it places upon other parties and the delays which it causes to other litigants. - see Coulter v Regina (1988) 166 CLR 350 at 359. 29 Fitzgerald JA also stated that if leave to appeal should be granted where there is some other matter which in justice required that leave to appeal be granted to allow that matter to be relitigated. The party seeking leave to appeal obviously bears the burden of establishing that justice does require that leave to appeal be granted. Further, the Master when considering whether to grant leave to appeal obviously has a very wide discretion - see CDJ v VAJ [1998] HCA 67 (per McHugh, Gummow and Callinan JJ). 30 I have read Master Greenwood's decision in Busuttil v Holder & Anor (NSWSC, unreported 9 August 1996). In particular I agree with his comments on the applicable test for leave. He says: "Thus whilst each application for leave to appeal is to be determined on its merits and I heed the statement of the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 that it is "unnecessary and unwise to lay down rigid and exhaustive criteria" for the grant of leave to appeal, as the circumstances of different cases are "infinitely various" I can see nothing in what is before me that leads me to a conclusion that I ought to look to the question of leave other than to apply the criteria of an obvious error on the face of the record and substantial injustice done to the appellant if the determination of the costs assessor is allowed to stand." 31 It is my view that there is no obvious error contained in the costs assessor's reasons. The chances of JHC's success on the grounds of appeal are slight. There is no substantial injustice done to JHC if the determination of the costs assessor is allowed to stand. For these reasons leave to appeal is refused. 32 The decision of the costs assessor of 3 June 1999 is affirmed. The summons filed 29 June 1999 is dismissed. Costs should follow the event. The plaintiff is to pay the defendant's costs. 33 The orders I make are:

(3) The decision of the costs assessor of 3 June 1999 is affirmed.

(5) The plaintiff is to pay the defendant's costs. **********

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