Extrinsic material called in aid
20 It is convenient at this stage to examine statements made in parliamentary debate referable to the portion of the Bill that introduced Division 5B. This material is undoubtedly available to identify the purpose or object of the legislation (Interpretation Act 1987, ss33, 34(2)(h)). However, not everything said in Parliament during debate referable to a Bill provides "relevant material" (cf s34(2)(h)). For example, an opinion stated as to the meaning or application of a clause would not be relevant in the current sense, unless more were established.
21 The Division was proposed for insertion into the Legal Profession Act 1987 by a Schedule to the Civil Liability Bill 2002. The Second Reading speech in the Legislative Assembly was given by the Premier, Mr Carr, who introduced the Bill to "implement stage 1 of the Government's tort law reform program". The Bill covers a wide range of amendments affecting rights and remedies touching "common law" claims.
22 The Premier made specific reference to the amendment to the Legal Profession Act. He said (Legislative Assembly, Parliamentary Debates (Hansard) 28 May 2002, p2087):
These provisions have been amended since the Government released the consultation draft of the bill. The cap on plaintiff lawyers' costs for claims under $100,000 will be the greater of $10,000 or 20 per cent of the amount recovered by the plaintiff. The cap has been extended to the defendant lawyers' costs where it will be the greater of $10,000 or 20 per cent of the amount claimed by the plaintiff. Importantly, the bill now makes it clear that the cap applies to solicitors' and barristers' fees and the fees of their agents or employees. It does not apply to any other disbursements, such as medical reports, investigation reports and filing fees. The cap will not be a standard fee for lawyers to charge their clients. It is the maximum fee which applies unless there is a costs agreement. In many cases the Government expects lawyers to charge significantly less. Bills of costs will still be subject to the normal costs assessment rules in the Legal Profession Act. Lawyers will not be permitted to inflate their costs up to the cap.
The cap on fees will promote efficiency on the part of the legal profession and help to contain claims costs. The cap on costs will be the most that can be recovered from the other party in proceedings, unless the exceptions in clauses 198F and 198G apply. Clause 198F will enable the courts to award indemnity costs against a party if that party refuses an offer of compromise where the eventual outcome of the claim is no less favourable than the terms of the offer. The indemnity costs would apply for the period after the offer is made. Clause 198G will enable the court to order that some costs are not covered by the cap if it is satisfied that the costs are for legal services that were required because the other party took action that was not reasonably necessary for the advancement of its case.
For example, a defendant might make a number of pre-trial applications to the court, requiring the plaintiff's representatives to attend court and argue the various points. If the court finds these applications were not reasonably necessary for the defendant's case or they were intended to unnecessarily delay or complicate determination of the claim, the court can order the defendant to pay the plaintiff's costs of those applications in addition to the capped costs. The bill does not prevent a client agreeing to pay a lawyer extra fees in addition to the cap. However, extra fees can be paid only if there is a costs agreement between the lawyer and the client.
23 Identification of the purpose or purposes of legislation as wide ranging as the Civil Liability Act is difficult once one moves beyond recognising that references to "tort law reform" generally meant restricting plaintiff-focussed developments in the common law. The Premier's statement that the cap on fees "will promote efficiency on the part of the legal profession and help to contain claims costs" was a plain and, with respect, obvious purpose of the amendment. But it provides no assistance in the resolution of the problem at hand, unless (contrary to the arguments from other than the Council) it were taken as a green light to prefer an expansive view of the provision.
24 Mr Garling SC, representing the Council, correctly pointed out that a consequence, and undoubted intent, of the capping provision was that the lawyers representing both plaintiff and defendant in small personal injury claims within the scope of the Division would know from the outset that recoverable fees as between the parties would be capped as provided in s198D if the amount ultimately recovered on the claim did not exceed $100,000. The lawyers could protect themselves and their clients in three broad ways: first, by negotiating a costs agreement as between lawyer and client (s198E); secondly, by making a reasonable offer of compromise (s198F) and thirdly, by seeking a limiting order at the end of the process in a proper case (s198G). Beyond this, the legal services garment would have to be cut to suit the cloth. I accept this extrapolation of legislative purpose from the combination of the text and the Second Reading speech.
25 I also recognise that the legislation must be construed on the basis that Parliament understood the obvious fact that personal injury claims are various in their complexity. It is also known universally that the capacity of one party to contain legal costs may be affected by the conduct of the other side and its lawyers. Of course, that conduct is subject to judicial oversight and professional regulation. It was no accident that Division 5B was inserted into the Legal Profession Act. Sections 198F and 198G also provide a substantial degree of protection against this risk. An additional aspect of the scheme is the greater level of certainty it brings to parties anxious to know their maximum exposure in the event of losing the proceedings.
26 The legislation reflects recent legislative and judicial recognition of the principle that legal costs should be proportionate to the importance and complexity of the subject-matter in dispute (Civil Procedure Act 2005, s60; TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333 at 364-5).
27 Parliament's clearly expressed dictates require no justification. But these lastmentioned factors do serve to identify the policies underpinning the Division and to explain the blunt edges of the scheme.
28 There is another factor of possible relevance. It is probably speculative to infer that it was part of the legislative purpose, although it may well have been. For many years in this State a large proportion of personal injury work has been done by specialist solicitors and specialist members of the Bar. In the highest tradition, these practitioners have often acted at reduced fee or for no fee in certain categories of plaintiffs' work. Their expertise and experience is brought to bear in decision-making as to which cases to pursue to trial and on appeal. There has also been cross-subsidisation with certain types of claims being assisted by lawyers working at reduced fee in return for more remunerative work in other areas.
29 In these and other areas of the "market" for legal services, the repeat players have become used to costing the risks of being left unpaid by their client or even by the other party depending on the outcome of the litigation. These considerations link in with the point made by the Attorney General during debate on the Bill when he observed that only a very low proportion of litigated small claims go on appeal (see below).
30 It is possible to view the introduction of Division 5B as legislative regulation of that market. The exercise of that market control will affect clients and their lawyers in the area of smaller claims for personal injuries, but it is undoubtedly intended to do so. This Court must take no position as to whether the policy scales have been weighted fairly or unfairly in the interests of lawyers, plaintiffs or defendants (and defendants' insurers). Mr Rowe's submission that the legislation must be construed strictly so as to exclude appeal costs because its effect is to wind back the common law rights of injured plaintiffs is therefore unpersuasive both as to its premise and its intended goal.
31 I have endeavoured to explain why the Parliamentary debates are ultimately unhelpful in resolving the present issue.
32 I am also unassisted by the answer given by the Attorney General when, in answer to a request to clarify the costs provision in s189D with reference to an appeal after a hearing, he said (Legislative Assembly, Parliamentary Debates (Hansard) 30 May 2002, p2256):
The cap on legal costs will apply to appeals. However, only a very small proportion of matters is litigated at all and an even smaller proportion of matters worth less than $100,000 is likely to be appealed.