Jazairy v Malouf t/as Gerard Malouf & Partners

Legal Profession Act 1987 (NSW) - s 208 LEGISLATION CITED : Legal Profession Regulation 2002 - Reg 68

Advanced Gaming Technologies Pty Limited v Julieann P Ahern & 88 Ors [1999] NSWSC 45 Chapmans Ltd v Yandell (t/as Yandells) [1999] NSWCA 361 CASES CITED : Coulter v Regina (1988) Larsen v Vile [1999] NSWCA 397 Malouf v Jazairy [2003] NSWSC 762

Haifa Jazairy (Plaintiff) PARTIES : Gerard Francis Malouf t/as Gerard Malouf & Partners (Defendant)

Mr R Horsley (Plaintiff) COUNSEL : Mr M J Heath (Defendant)

Malouf & Partners SOLICITORS : (Defendant)

LOWER COURT JUDICIAL OFFICER : Member John Sharpe & Member Ian Dwyer

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

12455/2004 - HAIFA JAZAIRY v GERARD FRANCIS MALOUF t/as GERARD MALOUF & PARNTERS

JUDGMENT (Appeal decision of costs review panel; s 208D: "unjust") 1 HER HONOUR: This litigation has a history. The defendant, a firm of solicitors, acted for the plaintiff in a motor accident matter in the District Court. There were two trials in the District Court, the plaintiff was successful in her appeal against the verdict in the first trial. The costs between the plaintiff and the solicitor who acted for her in these trials has been the subject to a number of determinations. There has been a determination of a Costs Assessor, a determination by the Costs Review Panel, an appeal to this court and a redetermination of the Costs Review Panel. This is an appeal from the redetermination of the Costs Review Panel. 2 By summons filed 3 August 2004, the plaintiff seeks in relation to costs assessment file No 92001/2001 that orders 1(i) and 2A of the determination of the Costs Review Panel dated 8 July 2004 be set aside, and firstly, in lieu of order 1(i) substitute the following orders: (i) the Amended Determination of costs of Costs Assessor Leonard Hattersley in accordance with certificate issued on 9 October 2002 for the sum of $6,724.30 is affirmed; secondly, in lieu of order 2A, an order that the amount of $6,245.70 is determined as a fair and reasonable amount of costs to be repaid by the practitioner to the review respondent and is affirmed for the amount determined by the Costs Assessor; and thirdly, an order that the first defendant pay the costs of these proceedings. In 92004/01 the plaintiff seeks similar orders. Leave to extend time to appeal is sought. 3 The plaintiff is Haifa Jazairy. The defendant is Gerard Francis Malouf t/as Gerard Malouf & Partners. The plaintiff relied of her affidavit, Haifa Jazairy affirmed 1 February 2005 and that of her husband, Nabih Jazairy also affirmed on 1 February 2005.

Grounds of appeal 4 In relation to costs application No 92001/2001, the plaintiff appeals from orders 1(i) and 2A. In relation to costs application No 92004/2001 the plaintiff appeals from the whole of the determination. The grounds of appeal are that the Costs Assessors erred in law in (a) failing to consider whether the amendment dated 19 August 1996 (the second costs agreement) to the costs agreement made on 13 August 1996 (the conditional costs agreement) was unjust in the circumstances relating to it at the time it was made, pursuant to s 208D of the Legal Profession Act 1987 (NSW) (LPA); (b) treating the judgment of this court in Malouf v Jazairy [2003] NSWSC 762 as determining that issue; (c) failing to find that the second costs agreement was unjust in the circumstances relating to it at the time it was made; and (d) failing to affirm the determination of the Cost Assessor made on or about 9 October 2002.

Leave for an extension of time to lodge an appeal 5 The plaintiff has sought an extension of time in relation to costs assessment file number 92004/2001. The defendant opposed leave being granted. 6 In Chapmans Ltd v Yandell (t/as Yandells) [1999] NSWCA 361, Fitzgerald JA (with whom Mason P and Davies AJA agreed) stated that it is important to keep in mind the purpose of a requirement of leave to appeal. It is intended to act as a filter to ensure that unsuitable appellant proceedings are not able to be brought with the attendant 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 [11] - see Coulter v Regina (1988) 164 CLR 350 at 359. 7 Fitzgerald JA in Chapmans also stated that in considering whether leave to appeal should be granted, it is important to ascertain whether there is some other matter which, in justice, requires 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. 8 On about 21 April 2004 the plaintiff received the certificates of determination of costs in both matters, namely 92001/2001 and 9200420/01 (being the costs resulting from the first and second District Court trials), and Amended Statements of Reasons by the Review Panel in both matters. The plaintiff deposed that as she is not fluent in English, she had her husband read those documents to her and then explain them. He explained that the certificates indicated that, after offsets (including in relation to application no 92005 of 2001) the solicitor would be paying her about $3,000 (at [4]). The plaintiff was prepared to live with the net result and have finality. 9 On about 8 July 2004 the plaintiff received a letter from Ian Dwyer, of the Costs Review Panel, explaining that the certificate in application number 92001 of 2001 had been amended, and enclosed a copy of the amended certificate (affidavit at [8]). Once again the plaintiffs husband explained the documents and explained that the sum of $39,167.35 was to be paid by her to the solicitors. She decided that she was not "prepared to live with that net result and I decided at that stage to appeal from the amended and further amended determinations of the Costs Review Panel in applications no 92001 and 92004 of 2001" (affidavit at [10]). 10 The defendant submitted that in April 2004 when the reasons were read to the plaintiff she would have been aware that there was an error in the certificate yet chose to do nothing about it. However, these April documents were translated by her husband who also told her that the net result was that the solicitors would pay her $3000. There is vast different between $3000 payable to her and her being obliged to pay $65,000 to her former solicitors. On 3 August 2004 the appeal was filed. This was shortly after the plaintiff became aware of her altered position. In these circumstances, it is my view that leave ought to be granted to extend time to file the appeal and I do so.

The Law 11 Section 208L reads: "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." 12 By virtue of s 208KI LPA this appeal provision and s 208M apply to the Review Panel. 13 The approach that now should be taken by the court in an appeal from a Costs Assessor (and Review Panel) was set out in Larsen v Vile [1999] NSWCA 397 and Chapmans. It is incumbent upon the applicant to establish, in relation to any relief claimed under s 208L of the LPA that there has been some error of law in respect of the determinations made by the Costs Assessor and subsequently the Costs Review Panel. As such, an appeal under s 208L of the LPA is confined to law. 14 Leaving aside the decision of the initial Costs Assessor, the Review Panel during its first constitution at paragraph (xii) of its reasons dated 17 February 2003 stated: "The Review Panel considered in the light of the above, that requiring the Cross Respondent to enter into an unconditional Costs Agreement on 19 August 1996, being the morning of the hearing, was unjust being in breach of Section 208D(2) subsections (b), (c) and (d) and contrary to the public interest in that the Costs Respondent was put under undue pressure to change the basis of her agreement as to costs. The Review Panel determined that the term of the Costs Agreement on 19 August 1996 that the Costs Respondent would be fully liable for Barristers' fees and Solicitors' costs and disbursements whether the case is successful or not is unjust" 15 Thus the Costs Review Panel decided that requiring the Cross Respondent to enter an unconditional costs agreement on 19 August 1996 was unjust. 16 Master Malpass (as he then was) in his decision on appeal from the Costs Review Panel stated: "[17] It seems to me that there has been misdirection by both the Costs Assessor and the panel. The dealing with the applications has seen the wrong questions being addressed, right questions not being addressed and misconception as to relevant statutory provisions.

[18] The making of the costs agreement (if it be a valid agreement) would have had the effect of either impliedly bringing the conditional costs agreement to an end or at least effecting a variation in relation to the terms concerning payment of fees. The new inconsistent arrangement was intended as a substitution for what had been originally agreed (Cheshire, Fifoot & Furmston's Law of Contract 14th Ed p622). It was not a case of the plaintiff purporting to exercise an express power of termination (on any of the specified grounds after the giving of reasonable notice).

[19] Section 208D of the Act enables a costs assessor to determine whether a term of a particular costs agreement is unjust in the circumstances relating to it at the time it was made. Subs(2) identifies both a matter to which a costs assessor is to have regard (the public interest) and other matters to which he may have regard when considering whether a term is unjust in the relevant sense (those specified in (a) to (j)). It is erroneous to regard the matters specified in (a) to (j) as giving rise to breaches of the section. There seems to be a misconception as to the consequences that flow from a determination that a term is unjust. A reading of the reasons suggests that regard was not had to all of the relevant circumstances of the case when looking at the question of whether or not the term was unjust. In the light of all of the material, the finding of "undue pressure" may have the potential to be regarded as manifestly unreasonable". 17 Thus the original costs agreement was not terminated but varied. It is common ground between the parties that the last sentence, namely "In the light of all of the material, the finding of "undue pressure" may have the potential to be regarded as manifestly unreasonable", is obiter dicta. Master Malpass held that there had been an error of law, the determinations made by the Panel should be set aside and that the Panel should be given the opportunity to have a further look at each assessment. Master Malpass ordered that the Panel redetermine the applications. 18 On 21 April 2004, the Review Panel during its second constitution gave reasons. Relevantly it stated: "4(b)(i)The Review Panel considered that the costs prior to the Costs Agreement of 13 August 1996 as varied by the Costs Agreement of 19 August 1996 are not covered by the terms of the Costs Agreement and accordingly the costs from 19 October 1994 to 13 August 1996 are the fair and reasonable costs pursuant to the Legal Profession Act. (ii) Costs after 13 August 1996 are costs in accordance with the Costs Agreement as varied by the Costs Agreement of 19 August 1996. The Review Panel is bound by the amount of the costs set out in the Costs Agreement but still determined whether it was reasonable to carry out the work and whether the work was carried out in a reasonable manner". 19 The reasons then went on to consider specific items such as photocopies and faxes. 20 The plaintiff submitted that there was an error of law in that the Panel did not give reasons for the statement in paragraph 4(b)(i) or alternatively that the Panel's reason's contained no reference to the question of whether the second costs agreement was unjust within s 208D of the LPA. In other words, the Panel initially found the terms of the agreement unjust and then determined that the terms of the varied agreement were not unjust. 21 The defendant submitted that the plaintiff did not put on any evidence or further submissions to the Panel to the effect that the terms of the agreement of 19 August 1996 was unjust. The defendant further submitted that Regulation 68(f)(ii) Legal Profession Regulation 2002 requires the Panel to give the basis upon which it determines that a term of a costs agreement is unjust and if the determination is to the contrary, ie the terms of the agreement are just, then it is not obliged to give reasons. 22 It is my view that when the Panel changes its view on whether a term or terms of an agreement is or are unjust after appeal to this Court, it must give its reasons for doing so. It has not done so. 23 In a similar case, Advanced Gaming Technologies Pty Limited v Julieann P Ahern & 88 Ors [1999] NSWSC 45, Levine J stated: "51 The more difficult area adverted, to in the course of submissions is whether or not the finding by the assessor that the Costs Agreement was not " unjust " was a finding of fact or law: there being an appeal as of right on a question of law and an appeal by leave otherwise (ss208L and 208M). One would be inclined to view that a decision by a person who may be acting either judicially or in the performance of an administrative function as to whether an " agreement " between parties is " unjust " could be characterised as a decision on a matter of law, but one founded upon findings of fact made in the light of evidence tendered before the decision maker. It is the absence of reasons that makes the resolution of this aspect difficult if not impossible". 24 Levine J held that an assessor is obliged to give reasons in respect of a finding that a costs agreement is not "unjust" [56]. Levine J adopted the course of remitting the application for assessment of costs to the costs assessor for the purposes of providing his reasons for his determination that the costs agreement was not unjust. I would respectfully adopt that approach in this case. This court on appeal should not be obliged to conduct a factual review in order to decide whether, in all the circumstances, the agreement was or was not unjust by virtue of s 208D. The application for redetermination is remitted to the Costs Review Panel for the purpose of its providing of reasons for its determination of 21 April 2004 that the costs agreement is not unjust. The appeals are upheld.

Costs 25 The defendant submitted that the appropriate order for costs is that there be no order for costs. The plaintiff seeks her costs. Costs are discretionary. Costs usually follow the event and this principle should be followed. The defendant is to pay the plaintiff's costs as agreed or assessed.

(1) In costs assessment file No 92004/01 leave to extend time to file an appeal is granted.

(3) The application for redetermination is remitted to the Costs Review Panel for the purpose of its providing of reasons for its determination of 21 April 2004 that the costs agreement is not unjust.

(4) The defendant is to pay the plaintiff's costs as agreed or assessed. **********

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