The Issues Before the Costs Assessor
49 A costs assessor obviously had no jurisdiction to hear a cross claim based upon negligence, or to award damages. However, the High Court (in Anshun) emphasised the need to look at the substance of the issues raised in the later proceedings rather than the form (cf Bryant v Commonwealth Bank, supra, p 139).
50 Mr Ryan certainly asserted that the appellant should have been the company rather than himself. It is unclear from the pleadings whether he also asserted that Hansens' client was RPT Investments, not himself. If he was making that claim, it could have been raised before the assessor. It is implicit in the assessor's task that he, or she, must determine that there existed, relevantly, a solicitor/client relationship between the parties to the bill. The certificate of Mr Wills, which was then registered as a judgment, presupposes such a relationship. Were the cross claim pursued, and that issue ventilated, there is the risk of a finding which contradicts that in the costs assessor's certificate.
51 Now, Mr Ryan's complaint in the cross claim does not depend upon an assertion that RPT Investments was the client. He may have been the client, responsible to the solicitor for their costs, and yet given instructions to appeal in the name of the company.
52 Did the costs assessor have jurisdiction to determine the issues of negligence raised by Mr Ryan in the cross claim? The answer turns on the proper construction of s208P (supra p 15). The costs assessor may disallow costs claimed by the solicitor against the client, either upon the basis of fairness and reasonableness (s208A(1)), or upon being satisfied (s208P(1)):
"… that costs have been incurred improperly or without reasonable cause, or have been wasted by undue delay or by any other misconduct or default."
53 In such circumstances, the assessor may also direct the solicitor to repay to the client costs which the client has been ordered to pay another party by a court (s208P(2)(b).
54 Section 208P contemplates two situations. Either may cause an assessor to disallow costs, or direct the solicitors to shoulder the client's liability to pay another party's costs. The two situations are these:
· First, where costs have been incurred improperly and without reasonable cause.
· Secondly, where costs have been wasted, and such waste has come about in one of three ways. Either by undue delay or by any other misconduct, or by default on the part of the solicitor.
55 The terms of s208P suggest something more than mere negligence. To characterise something as improper suggests conduct inconsistent with the proper discharge of a person's duties, obligations and responsibilities (R v Brynes & Hopwood (1995) 183 CLR 501; Willers v The Queen (1995) 125 FLR 221 at 225). The first category (costs incurred improperly and without reasonable cause) would typically arise where there is over-servicing, which is not Mr Ryan's case. Misconduct, likewise, suggests behaviour that reflects gravely upon a lawyer's character or capacity (cf Kennedy v Council of the Incorporated Law Institute of New South Wales (1939) 13 ALJ 563; Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279).
56 However, the concept of impropriety, in the context of costs, has been given a somewhat broader definition. In Re Massey & Carey (1884) 24 Ch. D. 459, Messrs Massey & Carey acted as the solicitors for Mr Wood, himself a solicitor. Mr Wood had been named defendant in an action. The plaintiffs filed a reply to the statement of defence. A copy was furnished to Mr Wood. He did not thereafter communicate with his solicitors. In the meantime the time for rejoinder had passed. Counsel advised that a rejoinder should be filed. An application was made to file such a document out of time. The affidavit in support by the solicitors stated that the failure was due to "inadvertence". Later the solicitors prepared a bill of costs. It included the costs of the application. The Registrar disallowed such costs. The solicitors appealed to the Court of Appeal. The headnote is instructive. It is in these terms:
"The Taxing Master in taxing a bill of costs between a solicitor and his client has power to disallow the costs of proceedings in an action conducted by the solicitor which were occasioned by the negligence or ignorance of the solicitor. But if the negligence goes to the loss of the whole action, he ought not to disallow them, but to leave the client to bring an action for negligence against the solicitor."
57 The source of that statement is the judgment of Cotton LJ where he said this: (at p642)
"Probably at Common Law if the objection was that the whole action had failed by reason of the negligence of the solicitor that would be considered a question proper to be decided not by the Master but in an action by the client for negligence."
58 Cotton LJ added: (at p642)
"…for both at Common Law and in Chancery the Taxing Master will entertain the objection that a certain step in the action would not have been necessary if the solicitor had done his duty in the ordinary way, and would hold that the costs of such a step were not properly chargeable to the client. No doubt in the case of Matchett v Parkes (9 M & W 767, 768) Baron Parke said, 'The Master had certainly no authority to entertain the question of negligence; that is a matter for the consideration of a jury.' But any expression of a Judge must be taken with reference to the facts of the case before him, and in that case it was not a question of particular steps in the action, but the whole action had been rendered useless to the client by the negligence of his solicitor. Therefore it was a question which ought properly to be left to a jury in an action. In the present case I am of opinion that the Registrar had power to disallow, and was right in disallowing, the items in question."
59 The reasons provided by Bowen LJ were similar. He said this: (at p463/464)
"He seems to me to have been right in disallowing these items. It is true that at Common Law the Taxing Master has not the power to decide the question of negligence in all cases. If the negligence goes to the loss of the whole action he cannot entertain the question; but if it relates only to certain proceedings in the action he can. Otherwise the unfortunate result would be that if there was a question as to the propriety of a particular step in the action, as to which no man is better able to decide than the Taxing Master, you place the client in the position that he would have to pay the charge and then bring an action to get it back from the solicitor. It seems to me that the Taxing Master has the power to decide, and that he ought to decide such questions without prejudice to the right of the client to bring an action."
60 Fry LJ made the following statement, which has been taken up in later cases, and which gives definition to the word "improper": (at p.464)
"To my mind it is very clear that the Taxing Master has power to decide whether any particular items charged are proper, and to disallow them if they are improper. It is equally clear that no item can be proper which is due to the negligence or ignorance of the solicitor. Therefore, the only question is, are these items proper charges, or do they arise from the negligence of the solicitor?"
61 In Re Windeyer, Fawl & Co: Ex parte Foley (1930) 31 SR 145, the Court (Street CJ, Innes and Halse Rogers JJ) considered a claim by a solicitor, Mr Windeyer, against his client. Expenditure had been incurred as a consequence of "bad advice" given by the solicitor. Mr Windeyer acted for Mrs Foley in a divorce. Mr Foley, in his defence, made serious accusations against his wife. The accusations concerned persons resident in Batavia. To rebut the allegations, Mr Windeyer obtained an order to take evidence on commission in Batavia. The husband responded by stating that he could not afford to travel to Batavia. He instead withdrew the allegations. Mr Windeyer, in these circumstances, warned his client that the cost of travelling to Batavia to take the evidence may not be recoverable. He nonetheless advised Mrs Foley that it was necessary that he should go.
62 The Prothonotary disallowed the costs of Mr Windeyer's visit to Batavia. He said they were unnecessary and improperly incurred. Street CJ (with whom other members of the Court agreed), upheld that ruling, saying this: (at p149)
"It is a well recognized principle in taxations between party and party that only such costs can be allowed as are necessary or proper for the attainment of justice or the protection of the rights of the party by whom they were incurred; and it is an equally well recognized principle in the taxation of costs between solicitor and client that, in the absence of special circumstances, a solicitor cannot charge for work which is useless towards accomplishing the object his client has in view."
63 Street CJ added: (at p151)
"That brings me to what in my opinion is the vital question in the matter, and that is whether the warning given to Mrs Foley and Mrs Larkin by Mr Windeyer was vitiated by what must be taken to be the bad advice that he gave them. I think that it was. It was his duty to give his client advice and protection against unnecessary expense. If he had contented himself with warning her of the risk and had left it to her to decide, the position might have been different; but it is apparent that she looked to him for advice and guidance in the matter, and I think that by advising her that his personal attendance on the commission was necessary he neutralized the effect of the warning that he gave her, and that he cannot now rely upon it as a justification for the expenditure."
64 See also Rath J in Silver v Consumer Claims Tribunal (1978) 2 NSWLR 313 at 322.
65 In Mason-Jones v Jones (1987) 11 NSWLR 583, a situation arose which has some parallels with the present case. The facts are complicated. The plaintiff, Mr Mason-Jones, was a solicitor. He acted for Mrs Shirley Jones on the conveyance of a home unit. He made a number of enquiries and thereafter arranged for the exchange of contracts. A problem then emerged in respect of the drainage system. The conveyance ultimately did not proceed. The solicitor ceased to act. He rendered an account. Mrs Jones sought taxation of the bill of costs under Pt 52 of the Supreme Court Rules.
66 In the meantime, Mrs Jones made a complaint to the Consumer Claims Tribunal. The solicitor was named as the respondent. She asserted that he had been negligent, in that he had failed to advise her as to the presence of certain valves in the drainage diagram. The solicitor unsuccessfully sought to have the proceedings in the Consumer Claims Tribunal dismissed.
67 Before those proceedings had been concluded, however, the taxing officer in the Supreme Court notified the parties that he would, in accordance with the rules, tax the bill in the absence of the parties unless there was a request for an appointment by a nominated date. One gathers that no such request was made. The taxing officer then certified the bill. Later Mrs Jones unsuccessfully sought to have the certificate of taxation set aside. The Master directed judgment for the solicitor.
68 Mrs Jones then proceeded with her action before the Consumer Claims Tribunal. Yeldham J summarised what occurred in these words: (at p588/589)
"Judgment was entered in this Court on 17 November, 1986 for the amount set out in the certificate of taxation, after the plaintiff's bill of costs had been taxed in accordance with the Supreme Court Rules . Subsequently a decision of a Consumer Claims Tribunal purported to order that the bulk of the amount for which judgment was entered 'is not owing to' the person who obtained the judgment in this Court. This conclusion was based upon a finding that the solicitor was negligent."
69 His Honour then said this: (at p589)
"…there is no doubt that the question of any negligence on the part of the plaintiff could and should have been raised before the taxing officer: Re Massey and Carey (1884) 26 Ch D 459; Silver v Consumer Claims Tribunal [1978] 2 NSWLR 313 at 321-322; Cachia v Isaacs (1985) 3 NSWLR 366 at 371, 376 ff."
70 The judgment obtained by Hansens in this case is not necessarily inconsistent with the maintenance of an action for negligence against such solicitors. A solicitor, although negligent, will be entitled to costs in certain circumstances. The relevant principle was stated by the President (Kirby P) in Cachia v Isaacs (1985) 3 NSWLR 366 at 371:
"The result of the authorities (which are reviewed by Hope JA) and of the principles of contract law of which this is but a special species is that a solicitor, who has been found to be negligent, may nonetheless recover from his client those costs which are severable, untainted by negligence and which relate to matters distinct from those upon which the solicitor has been found negligent. He may not recover fees in respect of the very proceedings in which he has been found negligent, unless he can show (the onus being on him) that, despite the negligence, some real advantage has accrued to the client from those services, or some of them, which would render it unjust for the client to escape liability for those fees or part of those fees."
71 What emerges from this analysis?
· First, I should state the obvious lest it be overlooked. A costs assessor's task is to determine a bill of costs. Items on the bill may be allowed or disallowed. There is no power to determine the validity or otherwise of a cross claim, or to award damages.
· Second, a costs assessor may disallow items claimed by a solicitor because they are unfair or unreasonable (s208A), or outside the specific instructions given by the client (s208B(f)).
· Third, costs may be disallowed if they have been incurred improperly, or without reasonable cause (s208P(1)).
· Fourth, if through the solicitor's negligence or ignorance, expenditure has been incurred, the assessor may disallow such expenditure on the basis that it has not been properly incurred (Re Massey & Carey).
· Fifth, if, through negligent advice, work has been done or expenditure has been incurred, the assessor may disallow such expenditure, or the cost of that work (Re Windeyer).
· Sixth, work performed by the solicitor which is useless in accomplishing the objective which the client had in view may also be disallowed by the assessor (Re Windeyer).
· Seventh, if costs have been wasted by undue delay, or any other misconduct or default on the part of the solicitor, the costs assessor may disallow such costs (s208P(1)).
· Eighth, if a court or tribunal makes an order for costs against the client, and the circumstances which brought about that order were, in truth, the responsibility of the lawyer, not of the client, then (subject to the default being characterised as one falling within s208P(1)), the costs assessor may direct the lawyer to repay such costs.
· Ninth, where a solicitor is negligent, there may be a number of consequences for the client. The client may be disadvantaged in having work done for which he is later charged, where there has been no benefit from that work. The consequences for the client, however, may go beyond that. The negligence may bring about the failure of the action. The client then loses what he sought to gain by the litigation. Or the client may be disadvantaged in some other way. He may, for instance, alter his position to his detriment as a result of poor advice. Where the solicitor's negligence has consequences beyond the cost of the work performed, the matter is properly one for a cross action.
· Tenth, that is not to say that the client, in such circumstances, can afford to ignore an application by the solicitor to have a bill of costs assessed. The client, in such circumstances, not only has a right to claim damages in a cross claim, but the right to resist (upon the grounds set out above) a claim for the cost of the work performed. A negligent solicitor, in such circumstances, can only recover for services which, notwithstanding his negligence, were of some real advantage to the client (Cachia v Isaacs).