Rickard Constructions v Doyle [2002] NSWSC 882 | Case summary

4 The defendant contends that at or about this time a legally binding arrangement was made with the plaintiff relating to the payment of the costs claimed in those invoices (inter alia it is said that they were accepted as costs of the administration). He relies on inter alia various documents. 5 A report as to affairs was made by the directors. It acknowledged the indebtedness of the plaintiff to the defendant in the sum of $29,325.47. 6 A Deed of Company Arrangement was made on 22 December 2000. Clause 16.1 of the Deed refers to debts which are accepted in the Directors Report. Those debts are described as debts that shall be accepted by the Administrator at the value accepted by the Director without further proof. 7 There is also correspondence further evidencing the said arrangement (see inter alia correspondence dated 25 October 2000 and 7 February 2002). It can be described as a commercial arrangement made in the course of the administration and one of its purposes was to facilitate the continuation of the legal services. 8 The plaintiff made application for assessment of the costs claimed for the three periods. The application stated that objection was made to each invoice on grounds of quantum and work done. It provided information as to the total of the invoices ($242,978.47), the total of the payments ($127,488.40) and the balance unpaid ($115,490.07). The application was referred to a costs assessor (Mr Hattersley). 9 The assessment process occupied a period from about August 2001 to April 2002. Questions of amendment of the application were explored. A Certificate as to Determination of Costs was issued on 24 April 2002 under cover of a letter of the same date. The determination required the payment of the sum of $51,667.79. The written reasons of the Costs Assessor were also an enclosure to the said letter. Disclosure of the reasoning process may also be found in earlier correspondence from him. 10 The assessment process saw the creation of a considerable body of documentation (including submissions from the parties). Fortunately, for the purposes of dealing with the present proceedings, it is unnecessary to become embroiled in much of the detail of the process. 11 The determination of the Costs Assessor brought about a result whereby he declined to assess costs for the first and second periods and made an assessment in respect of the third. 12 These proceedings were commenced by Summons filed on 3 May 2002. The process propounds an appeal pursuant to s 208L of the Legal Profession Act 1987 (the Act). The plaintiff has elected to bypass the review process provided by the Act as the primary challenge to a costs assessor's determination. 13 A Statement of Grounds Relied Upon In Support of Appeal was filed on the same day. It contains inter alia the following:- "3. (a) The Costs Assessor failed to review the costs for the period 1 January 2000 to 19 October 2000. (b) The Costs Assessor erred in finding there was no dispute in relation to the sum of $29,325.47. (c) The Costs Assessor failed to carry out his duties pursuant to section 208A and 208B of the Legal Professions (sic) Act in that he failed to review the costs even though they had been paid or partly paid. 4. The Costs Assessor erred in not granting access to the Plaintiff and its costs consultant the files of the Defendant for the purposes of the Plaintiff preparing its Notice of Objection to the prejudice of the Plaintiff and in particular in relation to the matters set out in section 208A of the Act."

These are the only grounds pressed by the plaintiff. 14 On 17 July 2002, the appeal was specially fixed for hearing on 17 September 2002. The hearing of the appeal took place on that day. 15 Subsequent to the obtaining of the special fixture, the defendant brought an application for security for costs on 23 August 2002. This application was dismissed by Senior Deputy Registrar Whitehead. The defendant also filed a motion seeking leave to bring a Cross-Appeal and a motion seeking a review of the decision of the Registrar. Contrary to well established practice, the defendant managed to have both applications made returnable on the date of the special fixture. 16 At the commencement of the hearing, it was sought by him to have both applications heard together with the appeal. After discussion lasting about half an hour, agreement was reached whereby the court proceeded to hear the appeal and thereafter decide what action, if any, should be taken in relation to the two applications. 17 The appeal was heard and judgment was reserved. The two applications were then stood over generally, to abide the result of the appeal. 18 At the outset, it may be observed that the Costs Assessor was faced with a difficult task. As was said by him in his reasons, he had inter alia the problem of reaching "some order out of the loosely prepared application for assessment". 19 I now turn to the first issue raised by the appeal (see ground 3). It related to costs claimed in certain of the invoices issued for work done during the first period and saw emphasis being placed on the provisions of s 199 (2) of the Act. This is a provision which enables an application for an assessment to be made even though there has been payment of costs. It is a provision which does not address the problems confronting the plaintiff. 20 In opposing the plaintiff's case on this issue, the defendant relied on a number of arguments. Two of them were in reality in the alternative. The paramount submission was that by reason inter alia of the provisions of the Deed and of the Corporations Law a legally binding result had been brought about both as to liability and quantum for the costs of the first period which put these costs beyond assessment. On the material placed before the Costs Assessor, it was open to him to find that such a legally binding arrangement had been made between the parties. Unfortunately, the submission attracted less than full argument and was not really addressed by the plaintiff. It threw up various questions (including questions of statutory construction) upon which the court was not assisted. For present purposes, the issue can be disposed of by brief observations. Section 208A (2) contains an assessment restriction ("the disputed costs"). Section 208C renders certain costs agreements not subject to assessment. Apart from statute, there are other grounds upon which the Costs Assessor can decide not to proceed with an assessment (including cases in which an applicant is not entitled to make an application for assessment or the respondent otherwise has what might be described as a good defence to the application). There are a number of decided cases (see inter alia Hook v Simpsons Solicitors [1999] NSWSC 667; Wollongong Council v Smith [1999] NSWSC 473 and Baker & Anor v Kearney [2002] NSWSC 746). In the present case the legally binding arrangement as to payment was made subsequent to the providing of the services and the rendering of the invoices. It inter alia quantified the amount of the costs that were payable. It saw a commercial resolution of a question of costs which, in the circumstances of this case, could be said to provide a good defence to the application for assessment of those costs. I do not read the Act as intending to inhibit parties from being able to finally resolve by agreement matters relating to questions of costs (be they matters of liability or quantum). It was also argued that this arrangement was a costs agreement. As I have said, this is really a submission in the alternative. Any such agreement must satisfy the requirements of s 208C (which refers to Division 3 (which includes s 189) and to the disclosure that has to be made in accordance with Division 2). It may be that this submission was not agitated before the Costs Assessor and in the circumstances of this case, it is unnecessary to give consideration to it. 21 It may be added that the Costs Assessor concluded that there was no dispute between the parties in respect to these costs. On the material, it was not open to contend that there was any real dispute. If a different view had been taken and he had embarked on an assessment, a similar quantification could be expected. 22 The correspondence makes it clear that a decision to decline to assess these costs was conveyed to the parties on about 19 February 2002. It was then open to the plaintiff to appeal against that decision. Instead of taking that course, the plaintiff elected to proceed with what remained of the assessment process. 23 As has been said many times before, s 208L provides a narrow avenue of appeal. It is restricted to an error of law arising in the proceedings to determine the application. The onus rests with the plaintiff. It is not sufficient to merely show some error of law, the error of law must justify the disturbing of the decision. In my view, the plaintiff has failed to discharge the onus in relation to the first issue. 24 I now proceed to the second issue raised by the appeal (see ground 4). In support of this issue, the plaintiff relied on the provisions of s 207 of the Act and submitted that there had been a denial of natural justice. 25 The thrust of this submission seems to be that the Costs Assessor failed to use the powers conferred by s 207 and so require the defendant to give access to documents (including the defendant's file) to the plaintiff and its costs assessors. It was said that this access was required to enable the plaintiff to make submissions (including objections and the like) and accordingly it was denied natural justice. 26 For the purposes of dealing with this submission, I will initially put aside questions of fact upon which the submission is founded. I shall return to that aspect in due course. 27 Section 207 is intended as a weapon available to the Costs Assessor to facilitate the conduct of the assessment. It is a provision which confers powers on the Costs Assessor for the purposes of enabling him to perform his statutory functions. The powers are exercisable at his or her discretion when required for those purposes. The section does not confer rights or powers on any party to the assessment. In particular, it does not empower a party to require the Costs Assessor to give access to documents. 28 The Costs Assessor did not have the defendant's file. He had the material (including information the source of which may have been the files) provided to him by the parties. As has been said by him, if his directions had been carried out, this material should have been available to all parties. The material could be expected to be that which the Costs Assessor regarded as being required to properly carry out the assessment. 29 In a letter dated 12 March 2002, the Costs Assessor conveyed his decision as to lack of authority pursuant to s 207. In that letter he also referred to material which had been provided to the plaintiff and to the considerable opportunity that had by then been extended to it to make submissions. Further, he fixed a deadline for the making of objections or points of dispute. 30 Again, it was then open to the plaintiff, if it chose to do so, to bring an appeal against the decision. It did not do so. What it did do, was advise the Costs Assessor that its new solicitors were taking action to compel production of the files. It transpired that the contemplated action was for purposes relating to the proceedings in respect of which the costs had been incurred (not for purposes relating to the assessment). 31 A notice of objection was made on 27 March 2002 under cover of a letter which contained the following:- "It is indeed unfortunate that you advise that you do not have the power to order the files be made available for inspection under the Act". 32 It may be observed that the objection has the appearance of both an extensive and detailed document. Leaving aside questions of his powers, it was open to the Costs Assessor to take the view that the plaintiff did not need access to the files to put its case. Indeed, what was sought to be achieved by the plaintiff could be regarded as highly unusual. 33 In my view, the plaintiff was afforded a reasonable opportunity to make submissions (including objections or the like) in relation to the application. I am not satisfied that there was any denial of natural justice. In any event, I am not satisfied that access to the documentation would have arguably produced a different result. 34 Accordingly, I am not satisfied that the plaintiff has discharged the onus in relation to the second issue. In the circumstances, the appeal is unsuccessful. 35 The Summons is dismissed. The plaintiff is to pay the costs of the Summons. **********

Rickard Constructions v Doyle

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Judgment (10 paragraphs)

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