Rayhill v Cooper

B&L Linings Pty Limited v Chief Commissioner of State Revenue [2008] NSWCA 187 Doyle v Hall Chadwick [2007] NSWCA 159 CASES CITED: Frumar v The Owners of Strata Plan 36957 [2006] NSWCA 278 Madden v New South Wales Insurance Ministerial Corporation (1999) NSWSC 196 Muriniti v Lyons [2004] NSWSC 135 Randall Pty Ltd v Willoughby City Council [2009] NSWDC 118

PARTIES: Michael Norman Rayhill (Plaintiff) Colin Joseph Cooper t/as Barkell & Peacock

COUNSEL: Plaintiff in person Mr Rollinson (Defendant)

1. The plaintiff is the former client of the defendant, a solicitor who performed certain legal work for the plaintiff and his former wife between 1994 and 2003 in connection with certain legal proceedings.

2. The defendant's solicitor rendered a bill of costs in respect of the legal work undertaken by him in an amount of $62,547.75 made up of professional fees and disbursements.

3. The plaintiff or his wife failed to pay the bill of costs. The defendant solicitor therefore applied for his bill of costs to be assessed under the Legal Profession Act 1987 (LPA). A costs assessor was appointed under the Act who assessed the solicitor's fair and reasonable costs in the sum of $55,301.88, made up of professional fees of $52,458.22 and disbursements of $2,843.22. A Certificate of Determination dated 21 August 2007 was issued.

4. The plaintiff client sought a review of the costs assessor's determination by an Application for Review dated 20 September 2007.

(a) failed to properly consider and apply the legal principles of estoppel and unconscionability to the costs assessment;

(b) failed to have proper regard to s 208B(b) of the LPA;

(d) failed to properly assess what costs were fair and reasonable in the whole circumstances of the case;

(e) denied the plaintiff (as the costs respondent) procedural fairness;

(f) denied the plaintiff (as the costs respondent) natural justice.

These grounds were not elaborated nor did the plaintiff seek leave to make any additional submissions or tender any fresh or additional evidence to the review panel.

A review panel was appointed consisting of two other costs assessors. This panel reviewed the determination of the original costs assessor and affirmed it. The plaintiff now appeals against the determination of the review panel affirming the decision of the original costs assessor and seeks an order setting aside the determination of the review panel.

The grounds of appeal set out in the Amended Summons assert that the review panel erred in law by:

(1) failing to provide sufficient reasons for its determination;

(2) finding that there was no basis for the assertion that the costs assessor had not failed to properly apply the principles of estoppel;

(3) finding that there was no basis for the assertion that the costs assessor had not failed to properly apply the principles of unconscionability;

(4) and (5) finding that the assessor had not denied the plaintiff procedural fairness and natural justice.

The defendant solicitor opposes any order setting aside the determination of the review panel and asks this court to dismiss the appeal on a number of bases.

The defendant says firstly that the appeal was filed out of time and that no extension of time should be granted.

The defendant says secondly that the appeal, which is brought as if right under s 384 of the LPA, discloses no error as to a matter of law on the part of the review panel.

I turn now to discuss the applicable legal principles.

13 A party who is dissatisfied with the determination of a review panel may appeal as of right on a decision as to a matter of law. The function of the court exercising jurisdiction in relation to such an appeal is limited to the identification of an error as to a question of law. A court is not authorised to engage in fact finding on the merits of the decision appealed from or a review of the decision beyond what is necessary to address the identified matter of law: B&L Linings Pty Limited v Chief Commissioner of State Revenue [2008] NSWCA 187. The error of law alleged must appear on the record as no fresh evidence is permissible: Madden v New South Wales Insurance Ministerial Corporation (1999) NSWSC 196. If no question of law is identified the appeal will be dismissed.

The review pursuant to which a decision to affirm or set aside the determination of a costs assessor involves the review panel in having regard to the material that was before the costs assessor and the reasons for his or her determination.

Ultimately the nature and extent of the review required will depend upon the exigencies in circumstances of any particular matter but the examination should be critical and not perfunctory. It will involve, as a minimum, an evaluation of the costs claimed, an analysis of the objections to the costs claimed and any submissions in reply as well as an independent consideration of whether the costs assessor adequately considered and dealt with the issues that arose before him or her. That includes an examination of the adequacy of the reasons of the costs assessor to address those issues: Randall Pty Ltd v Willoughby City Council [2009] NSWDC 118

The question of the adequacy of reasons of a review panel will vary from case to case depending upon the nature of the dispute. The extent of the obligation was discussed in detail by the Court of Appeal in Frumar v The Owners of Strata Plan 36957 [2006] NSWCA 278 at [43] to [45] where it said that the balancing act in considering the sufficiency of a statement of reasons "involved the adoption of at the least, a minimum standard which places the parties in a position to understand why the decision was made sufficiently to allow them to exercise any right of appeal".

Against this legal background I proceed to a consideration of the grounds of appeal. The plaintiff complains firstly that the reasons of the review panel were inadequate such that he has been impeded in his ability to exercise his right of appeal. I will consider this ground in the context of the specific matters relied upon by way of appeal.

Those specific matters or grounds relied upon by way of appeal may be grouped under the following headings:

The essence of the plaintiff's complaint as may be distilled from his written submissions and the oral submissions before me today is that he alleges an agreement or an understanding between the defendant and himself and his former wife, and in the event of them being unsuccessful in the litigation in which the solicitor was acting, no legal fees or just a nominal amount would be charged, and on the basis of this agreement or understanding, he and his former wife continued with that litigation to their detriment.

The costs assessor rejected the plaintiff's contentions. In his Reasons for Determination, the costs assessor noted the plaintiff's objections to the bill of costs, including an assumption by the plaintiff that the defendant would only charge a nominal amount if the case was unsuccessful: (see para 4.2(ii) on page 5). The costs assessor went on to conclude as follows (at para 4.4): "The costs respondents have not specifically objected to any other item in the bill nor specifically objected to any other particular item, otherwise, on the basis (misconceived as I have said) that the costs applicant used the wrong scale or applied the scale incorrectly or alternatively had agreed to limit his charges in the event the litigation failed. Further or in the alternative that a reasonable fee would not exceed $10,000 for the reasons set out in 4.2(ii)(p5)."

The wording of the reasons may in hindsight have been more clearly expressed but there can be little doubt that the costs assessor was rejecting the concept of any agreement or understanding on the part of the solicitor to limit his charges in the event the litigation failed.

The plaintiff submits to this court that the costs assessor did not have the power to make that finding and he should have either declined to proceed with the assessment or alternatively allow the plaintiff an opportunity to make further submissions pointing to the evidence in support of his contention that such an agreement or understanding existed.

As a consequence the review panel also erred in not finding that the plaintiff had been denied natural justice or that an error of law had been made by the costs assessor.

It was submitted that in its turn the review panel failed to identify the error of law and erred in law in finding that there was no basis for the assertion that the assessor had not failed to properly apply the principles of estoppel and unconscionability, and in finding that the costs assessor had not denied the plaintiff procedural fairness and natural justice.

These propositions have found expression for the first time today in the plaintiff's written submissions. They do not appear in the Summons. There is no evidence before me that there was any submission made to the costs assessor that he lacked jurisdiction or that he should have determined not to proceed with the assessment or that he should have given the plaintiff some opportunity to present further material, nor do they appear in the Review Application.

The plaintiff relies upon a decision of the Supreme Court in Muriniti v Lyons [2004] NSWSC 135 in which Dunford J held at para 19.1: "It is no part of the function of costs assessors to determine matters which relate to the terms of a costs agreement (particularly if oral) and whether any condition precedent to payment has been fulfilled and on being notified of the dispute as to the plaintiff's liability to pay costs, the costs assessor should have declined to make a determination or issue a certificate, unless and until such issue was resolved."

The defendant, however, contends that the decision in Muriniti v Lyons needs to be read in the light of a more recent decision in the Court of Appeal in Doyle v Hall Chadwick [2007] NSWCA 159. In that case, the Court of Appeal considered the issue of the jurisdiction of a costs assessor to construe a costs agreement and determine its effect. Hodgson J expressed the opinion that a costs assessor does indeed have that jurisdiction (see para 56).

Hodgson J went on to say this at para 61: "In my opinion Davies AJ was correct to say that a costs assessor assessing costs between a lawyer a client can determine disputes as to the terms of the costs agreement and Dunford J was wrong to say otherwise. However, where the existence of the terms of the agreement are in dispute, in a way that would require the hearing of evidence to resolve, it may be appropriate for the costs assessor to decline to resolve the dispute; and the Muriniti litigation, it would in my opinion have been open and reasonable for Davies AJ to have permitted the question to be determined in the proceedings before him. As it turned out, the costs assessor did decline to resolve this question; and in my opinion, in those circumstances, the costs assessor should not have issued a certificate which could be converted into a judgment that is, in a case where there is a real dispute on substantial grounds as to whether any costs are payable a costs assessor should not complete an assessment by issuing a certificate unless satisfied that the costs are payable because the certificate can be filed so as to take effect for the judgment."

Applying these statements of principle to the present matter the question becomes whether the costs assessor made an error of law in proceeding to determine the issue before him and consequently, whether the review panel also erred in law in not determining that he did.

From my part, I am not satisfied that the costs assessor made an error of law.

Firstly, on the basis of the material before him, as evidenced by his reasons, there was no real dispute on substantial grounds about the terms of the costs agreement that would require the hearing of evidence to resolve and secondly because there was no matter of law upon which he made a determination.

Nor was there any material before the review panel to alert it to any substantive dispute about the costs agreement that might require the hearing of evidence to resolve. The review panel was at pains to point out that having been through all the material before it, including the files of the solicitor, it could find no basis for an assertion that there was any estoppel or any unconscionable conduct on the part of the solicitor or any basis for the assertion that the plaintiff was denied procedural fairness.

The plaintiff submitted that the review panel was alerted to the issues by the Review Application and that it was obliged to invite the plaintiff to elucidate his complaints whereupon he would have made further submissions and pointed to the evidence relied upon to demonstrate the agreement for which he contends.

But even before me today the plaintiff is unable to point to any material that was before either the costs assessor or the review panel in support of his contention.

I am not satisfied that the plaintiff has demonstrated any error of law on the part of either the costs assessor or the review panel.

I am satisfied the reasons of the review panel were sufficient and adequate to place the plaintiff on notice of their reasons for their determination such that he was in a position to understand the decision sufficiently to allow him to exercise his right of appeal.

For these reasons the appeal is destined to fail.

It follows that in my discretion I should not extend the time limit for the filing of the appeal.

40. It seems to me that there is no basis, none that has been articulated, upon which I should exercise my discretion to make some other order other than the usual order for costs required by r 42.1. I therefore order the plaintiff to pay the defendant's costs of the appeal.

41. I note the undertaking that the defendant that he won't seek to execute the judgment or take any further steps pursuant to it for a period of say 14 days. There will be a stay of my order for costs for 14 days as well.

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