Mohareb v Horowitz & Bilinsky Solicitors

The relevant provisions of the Legal Profession Act 2004 (NSW) 6I shall first set out the relevant provisions of the Legal Profession Act 2004 (NSW) which govern appeals from a Cost Assessor's Certificate of Determination of Costs and Statement of Reasons. 7Appeals against a costs decision of a Costs Assessor are brought under ss 384 and 385 of the Legal Profession Act 2004 (NSW), which provide as follows: " 384 Appeal against decision of costs assessor as to matter of law (1) A party to an application for a costs assessment 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 District Court, appeal to the Court against the decision. (2) After deciding the question the subject of the appeal, the District 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. 385 Appeal against decision of costs assessor by leave (1) A party to an application for a costs assessment relating to a bill may, in accordance with the rules of the District 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 for a costs assessment 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 District 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 District 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." 8This is an application for leave to appeal under s 385. The distinctions between ss 384 and 385, and the necessary elements to establish where a s 385 application seeking leave to appeal (Part 50) is brought (as is the case here), are explained by Johnstone DCJ in Randall Pty Ltd v Willoughby City Council [2009] NSWDC 118 at [29]. Where there is an appeal as of right under s 384, it is limited to matters of law; an an application for leave to appeal is not restricted to legal issues, but leave will only be granted in cases where justice requires it. The procedure to follow is set out in Division 4, Part 50 Uniform Civil Procedure Rules 2005 (NSW). 9A problem identified by Johnstone DCJ in Randall at [29] concerning s 385 is that leave to appeal on grounds other than matters of law arising in the proceedings (i.e. s 384 applications) may only be sought from the Court that made the order for costs: Frumar v The Owners of Strata Plan 36957 [2006] NSWCA 278 at [17] and [40]. No court has made any costs orders here. The subject matter of the proceedings are costs in a solicitor's bill, not costs pursuant to a costs order by a court. 10The provisions for a retainer for costs being entered into between a solicitor and client are set out in ss 309 - 316 Legal Profession Act 2004 (NSW). The required contents of a costs agreement are set out in s 322. Section 361 requires that a costs assessor assess any disputed costs that are the subject of a costs agreement. This includes whether or not it was reasonable to carry out the work (s 363). In the absence of a binding costs agreement, the fairness and reasonableness of the amount of legal costs sought may also be considered under this section. 11The burden lies on the applicant for leave to appeal or to appeal: Larsen v Vile [1999] NSWCA 397 (see also Gorczynski v AWM Dickinson & Son [2005] NSWSC 277 at [14]).

The facts in dispute 12The plaintiff's company, NM Structural Engineers Pty Ltd, obtained judgment in the Local Court against Leduva Pty Ltd. The company did not have legal representation in these proceedings; the plaintiff represented the company. Leduva Pty Ltd then appealed to the Supreme Court and the plaintiff was concerned that the time and effort he had expended over the last three years on behalf of the company, of which he was a director, should not be lost in the appeal process (written submissions, paragraph 7). He decided to consult solicitors, but was keen to ensure that they would provide "a response that would be suited to my individual need" (paragraph 7). 13In or about early July 2010, the plaintiff had a discussion with Mr Bilinsky, a partner in the legal firm which is the defendant in these proceedings, concerning the appeal to the Supreme Court brought by Leduva Pty Ltd. According to the plaintiff's submissions, his decision to retain (or not to retain) the defendant would depend upon his approval of the barrister involved and the manner in which he or she proposes to conduct the case. The plaintiff, in his written submissions, says that Mr Bilinsky agreed to this (written submissions, paragraph 4), but that Mr Bilinsky told him, in addition, that before he could arrange a meeting with the barrister, he would need a copy of all relevant documents to pass on, so that the barrister could give advice about the plaintiff's prospects on appeal. The plaintiff then provided the defendant with documents, first by email and then by hard copy. 14I note that an appeal from the Local Court may be brought without leave on a question of law (s 39(1) Local Court Act 2007 (NSW)) or, where the grounds of appeal involves a mixed question of law and fact, with leave from the Supreme Court (s 40(1)); such appeals may be by way of rehearing and there may be an application for the court to receive further evidence in special circumstances (s 75A Supreme Court Act 1970 (NSW)). Any barrister or solicitor advising in relation to an appeal of this kind would therefore need to read documents dealing with both facts and the law if this was the kind of appeal that had been brought. 15On 20 July 2010 the defendant sent a letter enclosing a Disclosure and Costs Agreement, which the Assessor found (at paragraph (xi)) satisfied the requirements of the Legal Profession Act 2004 (see in particular s 322). None of the grounds of appeal challenge the findings that the Costs Assessor made about this document constituting a Costs Agreement. This is important because under s 327 Legal Profession Act a Costs Agreement which contravenes any provisions of the Division is void. 16The Costs Assessor having found that the Costs Agreement sent on 20 July 2010 satisfied the requirements of the Legal Profession Act, he then looked at its purpose, finding that it was for the purpose of briefing counsel, and stated that the plaintiff continued to instruct the firm of solicitors after receipt of the Costs Agreement. This included sending a Costs Agreement from a barrister and asking for copies of the other side's written submissions. 17It is not in dispute that retainer was not challenged at this time. According to the plaintiff's submissions: "And as Mr Bilinsky had ignored my pleas in relation to my need to have a preliminary meeting with his barrister I hence saw no reason why I should be required to extend him the courtesy of letting him concretely know that I did not intend to retain his firm. I simply ignored his written communications and did not respond to any of them." (Plaintiff's written submissions, paragraph 11). 18A tax invoice for $1,287 was sent by the defendant on 4 February 2011. On 17 February 2011, the plaintiff wrote challenging the retainer. On 8 March 2011, the defendant wrote enclosing an itemised bill for $2,967.14. 19The Costs Assessor has set out a history of what was observed from the documents provided for costs assessment. At (v) he notes: "(v) The Costs Applicant's file reveals no correspondence from the Costs Respondent which indicates that the Costs Respondent does not retain the Costs Applicant and is only seeking information on the Barrister to be Briefed. The correspondence commences with an email dated 9 July 2010 from the Costs Respondent to the Costs Applicant enclosing various documents." 20The appeal grounds specifically challenge the fact findings of the Costs Assessor at paragraph (xii), namely: "I am satisfied particularly having regard to the wording of the letter dated 20 July 2010 enclosing the Costs Agreement and the terms of the Costs Agreement that the Costs Applicant was retained by the Costs Respondent in relation to briefing Mr Horowitz of Counsel with respect to the Appeal by Leduva Pty Ltd. In this regard I noted that the Costs Respondent continued to instruct the Costs Applicant after receipt of the Costs Agreement. Further, the allegation the Costs Applicant was not retained was not made until after the Costs Applicant sought repayment money. The work, the subject of the retainer, by that stage had certainly gone beyond preliminary discussions." The Grounds of Appeal 21Grounds 1 and 2 relate to the statement by the Costs Assessor at (xii) that the assessor has failed to point out which wording he refers to and how this makes retainer "indisputably clear". 22This is incorrect, as the Costs Assessor goes on to refer to that portion of the letter which refers to the plaintiff's wish to brief counsel and to note that work was carried out after this Costs Agreement was performed. In any event, this is a grounds of appeal based solely upon the Costs Assessor's determination of an issue of fact. In addition, it is not necessary for facts of this kind to be proved to a level that is "indisputably clear". 23Similarly, Grounds 3 - 6 relate to the Costs Assessor's finding that after this agreement was sent, the plaintiff continued to instruct the defendant. The plaintiff asserts the costs assessor has "failed to point out any fact or evidence he has relied upon and which would lead him to make such an assertion" that the subject of the retainer had certainly gone beyond preliminary discussions. 24Both these grounds complain, therefore, of inadequate reasons, and reasons which go against the evidence, which is essentially the complaint made by the plaintiff in Grounds 6 and 7. 25Firstly, what is the obligation of a Costs Assessor to provide such "fact or evidence"? It is clear, by reason of the documentation attached, that the Costs Assessor is referring to the work set out in the costs he has assessed. Is the Costs Assessor obliged to repeat and analyse in detail these facts and matters in his assessment, or is it sufficient for him to summarise this material in this fashion? I consider his summary to be sufficient, because the extent to which reasons must be given by the Costs Assessor need only be sufficient to disclose how he came to the findings that he has made: Levy v Bergseng [2008] NSWSC 294 at [78] - [81]. Rothman J, rejecting an appeal by a barrister from a costs Review Panel concerning the adequacy of reasons for reduction of his fees, stated that it was sufficient for the Tribunal to disclose "the process by which it arrived at its conclusions", noting that these reasons need not be compelling, or even logical. 26The Costs Assessor, in the assessment appealed from, is clearly referring to the costs he has assessed, and to the chronology implicit from their contents. That is sufficient for the purposes of a costs assessment, which functions as a summary of issues, rather than a series of findings of fact. 27I am satisfied that those facts upon which the reasons are based arise from the documents in the assessment for the purpose of assessing costs. No error is identified in the facts; the plaintiff objects (Grounds 1, 3 and 5 - 7) to the conclusion the Costs Assessor has drawn from them. The plaintiff's alternate complaint, that the evidence relied upon has not been pointed to (Ground 2, 4 and 6 - 8), must also fail, for the reasons set out above. 28I note some additional matters raised in the plaintiff's written submissions, to which I should address specific findings. First, reference is made in the plaintiff's written submissions to the fact that he disputes signing the costs agreement. Section 322 Legal Profession Act 2004 provides that a method of accepting the agreement includes continuing to provide instructions after receiving the Costs Agreement. It is clear, from the correspondence in July and August referred to by the Costs Assessor, that this occurred. 29As to the challenge to the defendant sending the second bill, which is higher than the original bill, the entitlement of a solicitor to replace a bill of costs with a subsequent bill for a higher amount is explained in Gorczynski v AWM Dickinson & Son [2005] NSWSC 277. I note the Costs Assessor refers to this decision in his Statement of Reasons, so I do not propose to repeat what has already been explained. 30For the reasons set out above, I am satisfied that the findings are not contrary to the evidence, and that the Costs Assessor has given sufficient explanation of the facts and matters relied upon to lead him to arrive at the conclusions set out in the Statement of Reasons. Leave to appeal under s 385 is accordingly refused. 31Although I have found in favour of the defendant, if I had found in favour of the plaintiff, I would not have awarded the plaintiff the costs he seeks for the time he has spent in connection with these proceedings. An order for costs is intended to operate as reimbursement for the actual costs and expenses incurred by the litigant and not as recompense for time spent. While a litigant in person can seek reimbursement for actual legal costs incurred for representation by persons who assist him along the way (Cachia v Hanes (1994) 179 CLR 403), or for complying with a subpoena by searching for documents or otherwise in accordance with the rules of court (Australian International Academy of Education Limited v Dr Nirmal Taluja & Ors (No 2) [2011] NSWSC 880 at [9]), "suitable compensation" for "the time and effort" (written submissions, paragraph 19) a litigant in person expends disputing the claim may not be the subject of an order. 32However, the plaintiff may be entitled, in any costs order in the Supreme Court, to claim the party/party component of these costs in any costs order made by that court and, since these proceedings relate to his and his company's business activities, he may be entitled to claim legal costs (including the costs of this appeal) as a tax deduction: The Herald and Weekly Times Ltd v The Federal Commissioner of Taxation (1932) 48 CLR 113.

Orders 33The orders I make are as follows: (1)Plaintiff's summons filed on 19 August 2011 dismissed. (2)Plaintiff pay defendant's costs. 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: 11 November 2011