The plaintiff, by summons filed on 27 March 2020, brought an application for approval of settlement of proceedings for damages arising from a collision between his trail bike and a motor vehicle on 22 January 2016, in which he suffered a traumatic brain injury. This summons was defective, in that the plaintiff was not represented by a tutor, and the proceedings were adjourned on 30 April and 29 May 2020 to rectify this and other deficiencies. Another solicitor (Mr Kheir) was retained by the plaintiff and his tutor. A Consent to Act as Tutor was not filed until 23 June 2020.
Contrary to the practice of this court, the settlement sum was expressed to be inclusive of costs. The general practice is for the parties to agree upon the costs as a separate sum to the damages and for the solicitors for the plaintiff to advise the court of the parameters of any solicitor/client costs. This was not done in the present case. As to quantum, the parties jointly commissioned reports for which the defendant (a report by Dr Rolden is the only medical report provided). The plaintiff is a permanent member of the Lifetime Care and Support Scheme.
Unsurprisingly, no personal injury proceedings were commenced, presumably because of the straightforward nature of the liability and quantum issues. However, that does not entitle the plaintiff's former solicitors to avoid their obligations to their client and to the court to be frank about their costs. The offer being inclusive, concise information (as well as a bill in appropriate form) should have been provided not only to the court but also to the plaintiff's current solicitors. The only information provided as to those costs is the statement in the confidential Advice that these amounted to $110,000 "for solicitor/client costs", $22,000 for counsel and $6,356.68 for disbursements.
The settlement sum was considered by me to be within reasonable parameters and the subject of a confidential Advice to this effect from counsel. There was, however, insufficient information about costs, an undesirable situation for the court to be in on 29 May 2020, given the continued failure to appoint a tutor.
The court has fortunately received a great deal of assistance with this problem from the plaintiff's new solicitor, Mr Mohammed Kheir, who wrote to the court on 28 May advising that, in addition to having to prepare fresh approval documents to appoint a tutor, a stumbling-block in the settlement was that Gorman Law's costs were not merely unacceptable in a global form but also "excessive" and that it was in the interests of his client to consider having these assessed. Accordingly, I made the following orders:
"Pursuant to ss 75-77 Civil Procedure Act 2005 (NSW), approve in principle the contents of the settlement set out in the Consent Judgment filed on 29 April 2020, noting the special orders in relation to the claim for "inclusive" costs made by the former solicitors for the plaintiff, The Gorman Law Practice, and make orders as follows:
1. Judgment for the plaintiff for the sum in paragraph 2, but only inclusive of such costs as are ordered by this court.
2. As to costs, I direct the former solicitors for the plaintiff to provide to the court an itemised bill to enable the court to determine their entitlement of what costs, if any, the formers solicitors for the plaintiff are entitled to, such itemised bill of costs to be provided to the court by Friday 31 July 2020, and the matter be listed for further directions (costs only) on 7 August 2020.
3 The current solicitors for the plaintiff are at liberty to apply the court with an estimate of their costs at any time between now and 7 August 2020.
4 Note the provisions of paragraphs 3-8.
5 Direct the defendant, after deductions of the expenses set out in 2(a), 2(b), 3, 5 and 7 is to be paid into court for investment pending further order of this court or the NCAT, with liberty to apply.
6 Direct the plaintiff to file a Consent to Act as Tutor in 7 days.
7 Noting in addition the agreement of the defendant to forward the sum of $10,000 from the settlement monies to the plaintiff's tutor upon her undertaking inter partes (to be provided in writing by the current solicitors of the plaintiff) to costs of living expenses for the plaintiff until such time as this settlement can be finalised.
8 Direct the Associate to Judge Gibson to provide a copy of these orders by email to the current solicitors on record, as well as the plaintiff's former solicitors."
Gorman Law was accordingly notified of these orders.
[2]
The costs information provided to the court
I have now received what purports to be an itemised bill of costs from Gorman Law, but it raises even more questions than the bare information previously supplied. These range from minor issues, such as consultations with the plaintiff's "tutor" (although a tutor was not appointed until after the approval of the settlement, in circumstances where the plaintiff's new solicitor had to step in) to issues of significance. The most problematic of these are the very substantial sums charged by Mr Gorman for file review and for perusing simple documents such as hospital notes and medical reports.
Two examples of these perusal entries, from 29 November 2017 to 1 March 2018, demonstrate that lengthy periods of time were spent by Mr Gorman perusing medical records, including during the court vacation:
Item Perusal Amount
92 LTCS documents 1,020.00
94 Westmead Hospital 1,600.00
95 Westmead Hospital 2,040.00
99 Westmead Hospital 1,720.00
102 Westmead Hospital 1,760.00
104 LTCS care report 900.00
105 Westmead Hospital 1,320.00
107 Westmead Hospital 1,800.00
112 Westmead Hospital 1,760.00
113 Westmead Hospital 1,720.00
114 Westmead Hospital 1,880.00
307 LTCS 2,000.00
[3]
Interspersed with these entries are charges for sending these documents to counsel. However, counsel has charged only two modest fees totalling $625 over the period mid-November to 7 March 2018, for telephone and email attendances.
Other substantial perusal fees for Mr Gorman and his staff include perusing Dr Ng's report and clinical notes ( item 183, $400.00), Westmead Brain Injury (item 198, $1,400.00, including typing a summary), perusing Dr Roldan's report (item 266, $560.00), perusal of the plaintiff's Centrelink file (item 144, $160.00), perusing Dr Cummine's report (item 337, $1,020.00), perusing Dr Dalton's report (item 380, $900.00), perusing Dr Chaudhary's notes and report (item 407, $1,140.00; 417, $420)
The purpose for charging for some entries is unclear. For example, there are claims for "research" into medical practitioners nominated by the defendants, which is apparently a Google search (item 117, item $120.00, 118, $320.00). There are frequent claims for file reviews (e.g. item 205 for $600.00, item 341 for $360.00, item 342 for $720.00, item 382 for $1,080.00 and item 434 for $3,600). There are also substantial claims for the preparation of the defective summons and supporting documents (items 455 - 506).
Some puzzling entries are set out, such as the information that the claimant's "tutor" had obtained a guardianship order made on 25 June 2019, although not apparently as a result of any work by the plaintiff's solicitor. Perhaps this is a mistake; it is certainly contrary to the information I was given by the solicitors for the plaintiff, as may be seen from the orders that I made, in that they foreshadowed an application to the Supreme Court or to the NCAT. There is no reference in the affidavit of the plaintiff's mother (sworn on 18 December 2019) to her having obtained such an order. Nor is it referred to in the Confidential Advice from Counsel. In fact, the work charged for by the solicitor for the plaintiff includes an NCAT application (items 509 - 512, 517 - 518).
As to disbursements, previously estimated at $6,356, those identified in the bill consist of photocopy/scan/fax costs of $5882, postage of $825, the court filing fee of $693 and trifling sums for copies of clinical notes and the police reports. That is an extraordinarily high sum for copying documents which appear to have been provided electronically.
Counsel's fees totalling $22,000 (a sum said to be "reduced" from the actual total of $21,850) consist of perusals and emails about "tactical progression" and chambers conferences on 1 and 15 June 2017, 5 October 2018, 3 March 2019 and 29 October 2019. This includes settling the defective summons.
Unfortunately, Mr Kheir was unable to assist in relation to any of these issues as Gorman Law, despite his requests to provide an itemised bill of costs either to him or to their former client, did not do so. I read out some of the contents of the document sent to the court and he submitted that these were not only excessive but (in relation to certain items) contrary to his client's instructions.
Mr Kheir submitted to the court that these fees are excessive and should be the subject of assessment. I agree, but I consider that the supervisory obligation this court owes to the plaintiff and his tutor under ss 75 - 77 of the Civil Procedure Act 2005 (NSW) (Permanent Trustee v Mills [2007] NSWSC 336) means that the expense and delay in such a process should not be matters left for them to bear. What steps should the court take to assist the disabled party and his tutor in such circumstances?
[4]
Court-appointed costs assessors
The Civil Procedure Act 2005 and Uniform Civil Procedure Rules ("UCPR") contain provisions for the appointment of a costs assessor where issues of this nature arise. UCPR r 20.14 provides:
"20.14 Orders of referral (1) At any stage of the proceedings, the court may make orders for reference to a referee appointed by the court for inquiry and report by the referee on the whole of the proceedings or on any question arising in the proceedings. (2) The court must not make an order under subrule (1) in respect of a question to be tried with a jury."
Such an order may be made of the court's own motion, irrespective of whether parties agree: Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2012] FCA 558. In those proceedings, Rares J observed that orders of this kind may be the most effective way of resolving proceedings where the parties were "entrenched" in "hard fought" litigation which would exceed court time estimates, or where the costs issues were technical in nature. (See also Newell; Muriniti v De Costi [2018] NSWCA 49, where similar litigious excesses resulted in a variation of costs orders on appeal, the Court noted (at [236]) the advantages of referral under UCPR r 20.14, but remitted the case to the District Court so that the trial judge could determine if this was the best way to deal with the costs issues.)
This is but one example; the court may refer matters to a referee on a broad range of factors pursuant to the overriding principles of s 56. It may do so after the hearing has commenced: Stockland (Constructors) Pty Ltd v Darryl I Coombs Pty Ltd [2004] NSWSC 333, so I see no reason why such orders may be made even where the hearing is effectively resolved.
In particular, where solely a technical issue such as the assessment of costs is involved, a referral of this kind may be desirable: Attard v James Legal Pty Ltd [2010] NSWCA 311. In Attard v James Legal Pty Ltd, the first instance judge had been reluctant to make a referral to a costs assessor because of perceived conflict with the costs assessment process. The Court of Appeal set aside this order and noted the usefulness of the procedure in cases which I consider applicable to the facts here.
There is no "open justice" issue arising where the matter referred out is a costs assessment: CPB Contractors Pty Limited v Celsus Pty Limited (formerly known as SA Health Partnership Nominees Pty Ltd) (No 2) [2018] FCA 2112 at [92].
How should a costs assessor be appointed by the court?
[5]
The machinery for the appointment of a referee
The procedure is set out in Attard v James Legal Pty Ltd as follows:
"[183] In my opinion it follows that her Honour's exercise of her discretion having miscarried, it falls to this Court to re-exercise it. In my view this Court should favour an order that the question of the fairness and reasonableness of the costs the subject of the cross-claim be referred to assessment by an appropriately qualified assessor. The consideration of the referee's report should be by a judge of the Common Law Division of the Court.
[184] However, the respondents submit that this should occur only on condition that the appellants pay 85% of the outstanding costs and disbursements as found by her Honour together with interest as well as the costs of the reference.
[185] In my view, such a condition should be imposed with respect to 60% of the costs the subject of her Honour's orders. I would make no order as to the costs of the referral: that should be determined after the referee's report is returned to the primary judge for her adoption or otherwise pursuant to UCPR 20.24. In the event that the assessment of costs ultimately embodied in judgment on the cross-claim is less than the 60%, the Court has power to order the return of the excess.
[186] It will be necessary for the parties to agree on a referee (if they cannot, the Court can nominate the referee), and for a more detailed order for reference to be made. Orders 3 and 4 made by Simpson J, dealing with costs the subject of the cross-claim being less than 60% of the whole, should be stayed consequent upon payment of the 60%, until the whole of the costs have been assessed."
I have accordingly made orders to enable the parties to approach the Costs Assessment Manager in the Supreme Court, Mr Bellach, for an appropriate referral, with the caveat that if they cannot agree, Mr Bellach is to select a referee.
The question of liability for the referee's costs is one which I will determine after hearing submissions and receiving any relevant advice from the referee, as well as hearing from the parties as to whether the referee's findings should be adopted.
I am aware there is a potential overlap between work done by the solicitors with current carriage of the matter and Gorman Law but trust that the referee will be able to resolve this issue. The referee will be ably assisted by the plaintiff's current solicitors in this regard, as Mr Kheir has generously indicated his firm's flexible approach to these issues.
The court file will be provided to the costs assessor. I have provided a return date by way of review only, to enable me to determine the issue of what costs (if any) Gorman Law should be entitled to charge after the assessor's report is received.
[6]
Other Issues
I was concerned to learn that the memorandum of costs sent to the court on 17/7/20 was not provided to Mr Kheir, despite his requests to Gorman Law, for this documentation. Documents should not be sent to the court unless they are sent to the relevant interested party as well. I will consider what further steps are necessary in relation to this and other issues when this matter is next before the Court.
[7]
Orders
1. Pursuant to UCPR r 20.14, I refer the determination of the reasonable legal costs (including disbursements) to a costs assessor, to be nominated by Mr B Bellach, the Manager, Costs Assessment, Supreme Court of NSW), for assessment (if possible), inquiry and report by the costs assessor on the costs questions arising from these proceedings and from the issues adverted to in this judgment;
2. Gorman Law is directed to provide a copy of the following documents to the plaintiff's current solicitor, Mr Kheir, within 7 days:
1. Letter to Mr Mok dated 17/7/20.
2. Tax Invoice dated 17/7/20
3. Costs Agreement dated 2/5/16.
4. Letter to claimant's tutor dated 13/9/19.
5. Tax Invoice of Andrew Hourigan dated 19/5/20
1. Liberty to apply to Gibson DCJ in relation to costs and other issues arising from this appointment, including provision of documents;
2. These proceedings listed for directions on Friday 30 October 2020 for further directions and orders.
[8]
Amendments
10 August 2020 - Paragraph [3] - inserted 'injury' within first sentence.
Paragraph [14] - inserted ', did not do so' at end of first sentence.
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: 10 August 2020