SD Commercial Lawyers Pty Limited v Lecos Corporate Pty Limited & Anor

Relief Sought

1. The defendants filed a submitting appearance. Because of the nature of that submitting appearance, it is important to note the relief sought. The relief sought is this: "1. That the plaintiff be given leave, pursuant to s 89(4) of the Legal Profession Uniform Law Application Act, 2014…to give additional evidence on the appeal to that which was before the costs review panel. 2. Appeal allowed. 3. That the determination of: (a) The costs review panel as set out in the certificate of determination of review dated 1 June 2021 and sent to the parties on 18 June 2021; (b) The costs review panel as set out in the certificate of determination of the review panel costs dated 1 June 2021 and sent to the parties on 18 June 2021; (c) The Costs Assessor as set out in certificate of determination of the costs dated 27 June 2020 and sent to the parties on 11 August 2020; and (d) The Costs Assessor as set out in certificate of determination of the manager's assessments costs dated 27 July 2021 and sent to the parties on 11 August 2020, be set aside. 4. Following the delivery of judgment in respect of the appeal grounds relied upon by the plaintiff, the Court refer the question of the quantum of fair and reasonable costs payable to the plaintiff by the defendants for inquiry and report, or in the alternative, the Court determine the question. 5. That the certificates of determination be issued by the Court in substitution for those set aside pursuant to Order 2, following receipt of the referee's report or the Court's determination of the question, as the case may be. 6. Costs. 7. Any such further order as the Court thinks fit." The submitting appearance filed on 6 September 2021 is in this form: "Lecos Corporate Pty Limited and Leonardo Da Costa e Costa, the first and second defendants, appear and submit to the making of all orders sought, and the giving or entry of judgment in respect of all claims made, save as to costs."

Submitting Appearance

1. The first question which arises is the significance of the submitting appearance. The first judgment to be considered in that regard is that of Young J in Trust Co of Australia Limited v Perpetual Trustees WA Limited (No P2) (1995) 36 NSWLR 654. Commencing at 659G, his Honour said this: "Mr Gleeson then argues that the rule does no mean the reintroduction of the old equity practice as to submitting defendants. He says that the words 'Submits to the making of all orders sought and the giving or entry of judgment in respect of all claims made' make it quite clear that the defendant is not entitled to contest the plaintiff's claim. He is not entitled, as under the old equity rules, to be given any notice of hearing, nor is he allowed to file an affidavit so that he cannot even speak as to the form of order without leave. After a lot of reflection, it seems to me that Mr Gleeson's proposition should be accepted. I should point out that it makes quite a difference in the instant case because if this procedure was not available, then there would have to be an application for summary judgment under Pt 13 [of the then Supreme Court Rules] or alternatively, there would have to be an ex parte trial. There are in Court, some 50 lever arch files of documents which would have to be read and proved and the hearing would take some little time, even on an ex parte basis. I am told that if a summary judgment application is necessary, there is somebody who would be prepared to swear that the person knew of no defence to the plaintiff's claim, but it is submitted that that is not required. However, even though I accept Mr Gleeson's submission, it does not seem to me that it follows as night follows day, that the plaintiff is entitled to a decree or order. I think this is clear when one looks at the authorities decided in equity under rules such as Pt 18, r 3." His Honour went on to discuss the equity practice. The head note then sums-up what his Honour effectively said: "The Court is not obliged to grant relief in favour of a plaintiff against a submitting defendant. Although the Court may, in an ordinary case, grant relief sought by the plaintiff, without looking into the facts of the case it has a discretion to refuse to do so if to grant relief without further examination might cause injustice."
2. That is particularly so if the order eventually made, might affect another party. The decision of Young J was followed by Bignold J in Develtor Property Group Pty Limited v Newcastle City Council [2001] NSWLEC 47. His Honour said this: "40. Although Young J at 660 ultimately accepted the plaintiff's argument that where a submitting appearance has been filed pursuant to Pt 11 r 4(3) the defendant is not entitled to contest the plaintiff's claim, his Honour went on to hold that a plaintiff is not automatically entitled to the relief. In this respect, his Honour stated at 660 Courts of Equity have adopted a practice over a long period of time not to make certain types of orders on admissions or without proper examination. This practice manifests itself in many ways. For instance, equity does not make declarations without a proper contradictor. However, this is a discretionary rule as is made clear by Territory Insurance Office v Kerin (1986) 42 NTR 15; 89 FLR 257. Again, a declaration will not be made by consent, at least in a situation where rights other than the rights of the parties might be affected. An affectation will occur if the Court considers that other people might be induced by the fact that the Court has made a declaration in a particular matter to assume that that declaration has been made after full consideration: Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corporation (1975) 11 SASR 504 at 509-510. This passage (which says nothing of costs consequences of a submitting appearance) is more obviously relevant to my later consideration of the necessity for the Applicant to establish its entitlement to the declaratory relief it obtained, notwithstanding the existence of the Respondent's submitting appearance. 41. Of greater relevance to the costs implications of the filing of a submitting appearance is the illustration provided by the Court of Appeal's decision in McColl v Ryan (1968) 89 WN Pt 1 (NSW) 74 where the Court, in granting the declaratory relief claimed in a suit where the Defendant (the Registrar of Companies) had appeared only to submit both at trial and on appeal, ordered the successful plaintiff to pay the defendant's costs "as a submitting defendant" in the Court below and in the Court of Appeal - see at 78. This decision is to the same effect as is now provided by SCR Pt 52A r 12. 42. In my judgment, the effect of the Respondent's submitting appearance in the present case, where that appearance has not been challenged or impugned, is that the submitting party is generally to be regarded as immune from any liability for costs incurred in the proceedings after the filing of the submitting appearance save as to costs (although conformably to principle and case law, the submitting party will be liable for costs incurred by the plaintiff up to the date of the filing of the submitting appearance)."
3. The problem with the current case, of course, is that it is an appeal where a Costs Assessor made a determination and the review was unsuccessful. It appeared to me to be incumbent upon the plaintiff to demonstrate that there had been an error made by the Costs Assessor that was not corrected by the Review Panel, which would cause me to grant the plaintiff the relief which it claims. This is particularly so when one considers the current costs regime. In Gazecki v McCabes Lawyers Pty Limited [2020] NSWCA 98; (2020) 102 NSWLR 259, there was a discussion by Basten JA, with whom Leeming JA and Simpson AJA agreed, concerning the role of the Court in an appeal of this nature. His Honour said this: "42. Sixthly, the court is not given specific powers, but rather is said to have "all the functions of the review panel." The effect of this provision is by no means clear. The functions of the review panel are set out in s 85 of the Application Act, and involve reviewing "the determination of a costs assessor": s 85(1). For that purpose, the review panel has "all the functions of a costs assessor … and is to determine the application … in the manner that a costs assessor would be required to determine an application for costs assessment": s 85(2). The review panel is not bound by the rules of evidence and may inform itself on any matter in the manner it thinks fit: s 85(3). There is a degree of awkwardness in conferring on a court required to determine an appeal against a decision of a review panel all the functions of the review panel, which involve review of the decision of a costs assessor. That language may affect what is meant in s 89(4) by an appeal "by way of a rehearing". 43. No submissions were made in this Court on the scope and operation of s 89; accordingly, it is both unnecessary and inappropriate for the Court to resolve these questions in this case. What is clear, however, is that courts exercising jurisdiction under this provision must pay close attention to the terms of the statutory power and should not adopt statements from earlier cases dealing with different powers, unless persuaded that they remain applicable. Although the distinction between appeals on matters of law and appeals from the final determination of a costs assessment have been removed, it may, nevertheless, be appropriate to adopt different standards of scrutiny with respect to each. Thus, questions of law are inherently liable to review according to a correctness standard; a lower standard of scrutiny may well be applicable to an assessment of what costs are fair and reasonable in the circumstances of the particular case. Particularly is that so where a specific body of costs assessors, appointed solely for that function, reach evaluative judgments. Furthermore, costs assessors are expected to ensure consistency of approach, being a standard which cannot readily be applied by a reviewing court with limited experience of such matters."
4. That authority was cited with approval by Meagher JA in Gilmore Finance Pty Limited v Aesthete No 3 Pty Limited [2020] NSWCA 114 at [9] where his Honour said: "As Basten JA recently observed in Gazecki v McCabes Lawyers Pty Ltd [2020] NSWCA 98 at [42] by s 89(2) the Court determining the appeal by way of rehearing is said to have "all the functions of the Review Panel". By s 85(2) the Review Panel in turn had "all the functions of a costs assessor in relation to the assessment concerned and is to determine the application, subject to Pt 7 of the Act and the costs assessment rules, in the manner that a costs assessor would be required to determine an application for costs assessment." It was not submitted by either party that the effect of this provision is that the powers of the appellate court may be exercised whether or not there was error (in either of the senses referred to above) on the part of the Review Panel."

Grounds

1. It can be seen therefore that this Court in exercising the powers of the Review Panel, must act as a Costs Assessor itself, because that is what the Review Panel is required to do. The easiest way of approaching the issue is to consider the matters discussed by the Review Panel. The Review Panel identified six grounds for the application to the review. The first ground identified was that the Costs Assessor made a number of errors in relation to disclosure, which infected his determination. Ultimately, those errors led to the Costs Assessor's conclusion at [38] of his reasons that the applicant failed to comply with s 174(1)(b) Legal Profession Uniform Law Application Act 2014 (NSW) no 16, in that, the applicant for costs review failed to disclose a significant in the estimate of the total legal costs. The Review Panel considered that grounds in pars [16] to [24] of its reasons, which significantly incorporated what was said in pars [33] to [38] of what the Costs Assessor had said.
2. I have reached the view that both the Costs Assessor and the Review Panel fell into error. There were two relevant costs disclosures, one bearing date 1 February 2017 and the second bearing date 14 May 2018. The disclosure document of 1 February 2017 is Exhibit L. The first part of the document is headed "Costs Agreement" and the second part of it is headed "Costs Disclosure". The parts of the "Costs Agreement" are numbered with capital letters. B contains this: "The work we have been instructed to do is: (1) Proceed with the mid and prosecute the NSW Federal Court proceeding against the franchisors, namely Nestle; (2) Try to resolve the proceedings as soon as possible, including by participating in a mediation; (3) Defend any cross-claim filed by the franchisors; (4) If necessary, prepare the proceeding for final hearing; (5) Correspond and advise you accordingly; (6) Correspond and meet with the required experts; (7) Correspond with counsel and the other side; (8) Comply with and carry out all orders of the Court; and (9) Attend at all directions hearings and the final hearing." That acknowledges that the proceedings were on foot in the Federal Court and that the plaintiff had been retained to prosecute those proceedings. The "Costs Disclosure" part of the document has its principle paragraphs identified by numbers. Paragraph 2.1 provided this: "We will charge you professional fees for the work we do at: (a) An hourly rate of $450.00 (plus 10% GST) for Stephen D'Emilio; (b) An hourly rate of $250.00 to $400.00 (plus 10% GST) for a solicitor/senior associate; (c) An hourly rate of $150.00 to $250.00 (plus 10% GST) for a Law Clerk/paralegal. These rates will be proportionately charged for work involving shorter periods less than an hour. Our charges are structured in six minutes units. For example, the time charged for an attendance of up to six minutes will be one unit and the time charged for an attendance between six and 12 minutes will be two units." Paragraph 2.2 provided for the payment of disbursements and other expenses. Paragraph 2.3 was this: "We will charge you an Expense Recovery Charge equivalent to 2% of the cost of the legal services provided. This expense recovery charge is in lieu of charging for expenses such as minor photocopying, printing, international calls and faxes. Please note that we will still charge for the recovery of other out of pocket expenses and disbursements such as large internal or external photocopying tasks, counsel's fees, company searches, registration and Court filing fees." In the bills which were delivered, I understand this item to have been categorised as "sundries".
3. Paragraph 2.4 bears a heading "Estimate of Costs". It contains this matter: "2.4.1 At this stage we estimate that our costs and disbursements to complete the tasks identified at paragraph B(1) to (9) on page 2 of this letter, will be approximately $300,000 (exclusive of GST); 2.4.2 Please note this estimate: (a) Commences from the time spent preparing and filing the application and statement of claim; (b) Includes counsel's fees; (c) Is provided on the basis that the respondents comply with Court orders in a timely fashion and do not cause the proceedings to get delayed by filing multiple applications which require to be defended; (d) Excludes Court based fees, including hearing allocation fees and transcript costs; and (e) Excludes the costs of an expert accountant." There was clearly a disclosure that the estimate of costs for carrying out all the work described under B of the Costs Agreement was $330,000. That estimate of course was subject to the notes contained in 2.4.2. It is unfortunate that 2.4.2(a) referred to the time spent preparing and filing the application and statement of claim when those activities had already been completed by the earlier practitioner. However, one cannot be misled, because it is clear from what is contained in par B of the Costs Agreement that the work to be done was not the commencement of the proceedings in the Federal Court, but in fact their continuation. It appears that someone forgot to amend the appropriate precedent. However, when one looks at what had been done and what the defendants knew had been done, one could not be misled by the unfortunate 2.4.2(a) of the "Costs Disclosure".
4. The Costs Assessor in making his finding about adequate disclosure, said in [37] of his reasons this: "Secondly, although the first 7 invoices were not given by the [plaintiff], I think that account should be taken of the costs in those invoices in considering whether a significant change had occurred to the matters disclosed by the [plaintiff]. At the very least, the ongoing involvement of Mr D'Emilio obscured the distinction between the [plaintiff] and the law practice who issued those 7 invoices. If account is taken of those 7 invoices, the total legal costs over the period from August 2016 through to October 2018 approaches $557,000 as against an updated estimate to complete the proceedings of $661,500. Given the costs incurred to October 2018 and the evident complexity, the proceedings have assumed, it must have been readily apparent to the [plaintiff] well before October 2018 (and possibly even when the May 2018 costs agreement was given) that the estimate total legal costs, however understood, was inadequate." With the utmost respect to the learned Costs Assessor, such reasoning is unsustainable. The work done by the earlier law practice was irrelevant. No doubt, there was a estimate provided by that earlier law practice. The work done by the earlier practice could not be taken into account in the work that the current plaintiff undertook to do for the defendants commencing on 1 February 2017. Furthermore, they were required to disclose the cost of the work that they would do, not the work that someone else had done, plus the work that they would do.
5. Furthermore, the reasoning process of the Costs Assessor ignores what happened in April and May 2018 which required some prescience on the part of the plaintiff about the eventual road which the litigation would take in the Federal Court. That was foreseen in April 2018 and provision for it was made. The reasoning process adopted by the Costs Assessor was unsupportable, in particular by taking into account the work that had been done by the earlier firm.
6. I turn then to what happened in April and May 2018. Exhibit M is an email sent by Mr Leonardo Da Costa e Costa to Mr D'Emilio. The first part of that concerned certain offers being exchanged. That is presently irrelevant. The relevant part of the email is this: "What I really need, urgently is the draft that I requested to you on the previous emails with the future costs and actions. Do you have a forecast of when you're going to be able to prepare it and send it to me?"
7. On 24 April, that is the following day at 10.48 in response to the email sent on the previous afternoon at 4.35, Mr D'Emilio replied that he was working on the assessment of future costs at that time and that he would try to get that to him on that day, but he was then out of the office until the following Monday. He did not get back with the costs estimate on that day but did on Monday, 30 April 2018 at 8.25am. The email and its attachments are Exhibit M. The substance of the email is this: "See attached costs estimate as requested. I am sorry for the delay in sending this to you, but I was out of the office from last Tuesday. I will work towards answering all of your previous emails asap."
8. The annexure is headed "Costs Estimate for First and Second Applicants". It contains a number of categories of activity. The first activity was Nestle's security for costs application. There was an estimate as to the cost if the application was contested and an estimate as to the cost of the application were it not contested. If contested, the application would cost $44,500 plus GST. After making that estimate, Mr D'Emilio put in this note: "If we lose, there is a possibility that the Court may order Leo and his company to pay Nestle's costs of their application."
9. The next category was headed "Discovery" and dealt with a number of items regarding that activity leading to a further charge of $85,000 plus GST. There were then costs estimated for the preparation and issue of subpoenas and the review of documents returned on subpoena. There was an estimate of costs for case management conferences. There was an estimate of costs for expert evidence. There was an estimate of costs for preparing any lay evidence and reviewing any evidence in response to that lay evidence. There was then a cost of preparation for trial. There was then a cost of attending at a five-day trial. There was then a cost for experts' reports and expert witness fees, and there was then the Federal Court hearing fees based on a five day hearing.
10. If the security of costs application were contested, the total of the work to be done was $361,500, but if the security for costs application was not contested, the costs would be reduced to $334,500. I should have stated that those sums were all plus GST. After giving the totals, the estimate contains this note: "It is important to note that what is set out above is an estimate of fees based upon the best case scenario. It is possible that the actual fees incurred may be up to 35% more or 15% less than the estimates set out above. Further, there may be additional tasks required to be undertaken, which have not been listed above." [emphasis in the quote]. In other words, what this document does is to estimate the cost of work to be done from 30 April onwards to be $361,500 plus GST which takes that sum to $397,650. On any view of it, this appears to be an attempt to estimate the future cost of the proceedings to be charged by the plaintiff to the defendants for work to be done from that time.
11. The heading to the email of 30 April 2018 at 8:25am, that is sent by Mr D'Emilo to Mr Da Costa e Costa was headed this: "Claim against Nestle - costs estimate from now to a final hearing." It does not purport to be an estimate of the entire costs of the proceedings from their commencement to date. It was only an estimate of costs from 30 April 2018.
12. On Monday 14 May 2018, the law practice sent to the defendants an email attaching a number of documents. They were a costs agreement letter, a cost estimate and tasks, a statement of account and a trust account statement. That document is exhibit P1. Exhibit P2 is a letter sent under cover of that email, addressed by the plaintiff to the defendants with a proposed costs agreement and a costs disclosure. The costs agreement is, as I understand it, in exactly the same form as that earlier sent to the defendants by the plaintiff. The costs disclosure is in terms almost identical to the one sent on 1 February 2017 with this exception. Clause 2.4 with the heading "Estimate of Cost" is in these terms: "2.4.1 At this stage we estimate that our costs and disbursements to complete the tasks identified at paragraph B(1) to (8) on page 2 of this letter will be approximately $361,500 (exclusive of GST); 2.4.2 Please note in relation to this estimate, please see attached summary and breakdown of the relevant tasks and estimated costs." That breakdown and estimated costs is a further copy of the cost estimate that had been provided to the defendants by the plaintiff under the cover of the email of 30 April 2018. In other words, it was merely an estimate of future costs which had been previously advised by the plaintiff to the defendants. It clearly does not purport to be an estimate that includes the cost of work already done. It is an estimate of work to be done from on or about 30 April 2018. There is no valid argument that the disclosure contained in the costs disclosure part of the costs agreement sent on 14 May 2018 was anything other than an estimate of costs for work to be done that did not include the cost of work that had been done.
13. Unfortunately, that was an error committed by both the Costs Assessor and the Review Panel. The following is included in the reasons given by the Review Panel: "20. The panel agrees with the assessor, both as to his reasoning and as to his conclusions. The review applicant's submission is that the 'estimate total legal costs' referred to in s 174(1) LPUL means only the costs which would be incurred after the updated disclosure. It may well be that such a form of disclosure is compliant with the obligation in s 174(1)(b) to provide a further estimate of the total legal costs where the law practice makes it clear that the estimate is being made on that basis, so that the client can add the two figures together to get a total. For any practice, by far the better course when making an updated assessment is to refer to the earlier assessment, make a further assessment of the total legal costs to the stated end point of the legal services, and then do the arithmetic for the client by subtracting the one from the other to provide an estimate of what is yet to be incurred. The costs agreement of 18 May 2018 did not make it clear that the client should take into account accounts already rendered." A more felicitous way of expressing the last sentence would be that "The costs agreement of 18 May 2018 did not make it clear that the client should take into account bills already rendered." I agree with the Review Panel that it is envisaged by s 174(1)(b) that the law practice provide a further estimate of the total legal costs yet to be incurred, where it is made clear that that is what was being provided. Here it is abundantly clear that that was the case. It appears that I am in a better position to judge this because of the further evidence adduced at the hearing before me than was adduced before either the Costs Assessor or the Review Panel.
14. Clearly, I cannot accept the last sentence, even with the more felicitous wording that I have used as being correct. When one looks at the correspondence addressed by the plaintiff to the defendants, it becomes abundantly clear that the estimate provided on 30 April 2018 contained in the disclosure letter of 14 May 2018 was such an estimate that is for work yet to be done and did not include the costs of work that had been done. The estimate that was given by the plaintiff to the defendants on 1 February 2017, had not been exceeded. That estimate was, as I said, $330,000 and the cost that had been rendered up until the second costs assessment, was $313,205.93 inclusive of GST. That is less than $330,000. The difference between the two sums would be quite insufficient to cover a contested hearing in the Federal Court, estimated to go for five days. But clearly, there was a major escalation in the legal proceedings, after the disclosure of 1 February 2017. However, when the further estimate was given of $397,650 inclusive of GST, the defendants could not have been in any way misled as to what it extended. The total of the two estimates supplied by the plaintiff to the defendants was $727,650 including GST.
15. The total legal costs charged by the plaintiff to the defendant amounted to $413,071.33 inclusive of GST. In other words, from the time that the plaintiff ceased to act for the defendants because the defendants terminated the plaintiff's retainer, there were still "unused" $314,579 which could go a substantial way to the completion of the litigation in the Federal Court. Accordingly, I have no hesitation in holding that the cost disclosure was adequate and complied with the plaintiff's obligations under the law. Therefore, there was no reason to set aside, on that basis that there had been a failure to comply with the disclosure obligation, the costs agreement entered into between the plaintiff and the defendants. It was binding.
16. The second ground of review considered by the costs Review Panel concerned errors in relation to discovery. The grounds recited on p 4 of Exhibit H are these: "12.2 The cost assessor erred in failing to find that only the respondent Lecos Corporate and not the other two costs applicants were in the process of completing discovery. The other two costs applicants settled the proceedings before any orders in relation to discovery were made, or they were required to undertake and complete discovery, or the Review Applicant was not required to complete their discovery, and furthermore it was Lecos Corporate solely who agreed to eLaw's contract in relation to Lecos Corporate's discovery. 12.3 Furthermore, the Costs Assessor erred in failing to find that the review applicant did not undertake any part of Task 2, which was done solely by eLaw. 12.4 These errors resulted in substantial reductions being made to the invoices." In discussing this ground, the Review Panel quoted extensively from what was said by the assessor. In particular, they recite [43] to [51] of the assessor's reasons. The Review Panel then said this: "25. The Panel's view of these paragraphs of the assessor's reasons is that they accurately set out the process by which discovery by the use of an electronic platform is to be carried out by which such software, such as RelativityOne may be deployed; the stage of the process at which senior solicitor's supervision is properly dictated, the stage at which the platform operator can carry out work and to what end, and the stage at which legal staff needed to be employed. The strategy of a party in undertaking discovery is clearly understood by the Assessor from his examination of the process, to locate, if there are any, documents in the possession or control of the opposing party, relevant to the matter under litigation and which might be of assistance to the party reviewing discovered documents. The Assessor plainly understands the processes required if a purposeful and useful inspection of a significant volume of discovered documents is to be undertaken. The Assessor's reasons in the paragraphs above demonstrate that far from not understanding that the Review Applicant may have created various folders to house documents of a particular type, so that they could be more quickly examined and left be, if of no assistance or highlighted for later retrieval is thought to assist the client's case and the role of the software RelativityOne in assisting this process by for instance, a process of search and save by data qualifiers. He is clearly aware of the division of labour in conducting the various steps required in discovery process. He has had regard to the discussions with the platform operator and discussion as to what work of that required would be carried out by the platform operator, E-Law. 26. The panel accepts that the Assessor may not have directly addressed the issue raised by the Review Applicant to him that the lack of funds and delays in instructions added to the costs, which he refers to as a 'cryptic claim'. The Panel finds, nonetheless that even if there was this delay and this lack of funds, whilst the Review Applicant was retained, he had a professional obligation to carry out the work or, after the mandated warnings, determine the retainer. If he chose to carry on without warning the Review Respondents, he was responsible for continuing to carry out the work in the manner of a reasonably competent solicitor, even though clearly enough he had no obligation to pay for disbursements to be incurred or for which he had requested payment."
17. There are two further paragraphs, each numbered 27 in this section of the Review Panel's reasons, but I do not believe it necessary to cite them. There is something of a disconnect between the grounds identified by the Review Panel and the reasons relating thereto. It is abundantly clear that an expert software company, eLaw was retained to marshal electronically the discovered documents. The contract was entered into between eLaw and the first of the two defendants. However, it is clear that eLaw was well aware of the position of the plaintiff as the solicitor for the first defendant and the plaintiff was in fact billing the defendants as if the fees payable to eLaw were a disbursement. Nothing great hinges on that fact.
18. However, in doing what the Costs Assessor and the Review Panel did, it is implicit that they were looking at the matter as if there was no binding fee agreement. The key to this ground is really contained in two different exhibits. The first is Exhibit A, an affidavit of Mr D'Emilio sworn on 21 October 2021. It contains this matter: "53. Discovery in the franchise proceedings was so voluminous it was required to be housed in an electronic database which was agreed to by the Defendants and was case managed by eLaw which was a third-party document management company. 54. Discovery in the franchise proceedings comprised of a total 40,498 documents which were required to be reviewed by the Plaintiff. Of these documents: a. 2,215 were confidential; b. 10,777 were discovered by the First Respondent in the franchise proceedings; c. 14,219 ultimately discovered by the Defendants (reduced down from 21,981 documents provided to the Plaintiff by the Defendants); d. 5,214 were discovered by the Second Respondent in the franchise proceedings. 55. The Defendants entered into a contract with eLaw to house its electronic discovery. A copy of the contract between the Defendants and eLaw is at pages 524 to 536 of Exhibit SD-1 and at pages 51 to 64 of Exhibit SD-2. 56. At all relevant times the other Applicants in the franchise proceedings did not have discovery orders made against them and no discovery was undertaken in relation to their claims by SD Lawyers. As a consequence, the other Applicants in the franchise proceedings did not have a contractual relationship with eLaw and were not responsible for the cost of housing the documents discovered by the Defendants or the Respondents in the franchise proceedings. To be clear, the other Applicants at no stage: a. Entered into any contract with eLaw; b. Were aware of any contractual relations with eLaw; c. Ever agreed to pay eLaw any money; d. Entered into any discussions with me in relation to paying eLaw any money; e. Ever requested my advice or explanation in relation to eLaw's role and responsibilities. 57. It is the case that an agreement was reached between the Plaintiff, Defendants and other Applicants in the franchise proceedings in relation to sharing the costs of reviewing the Defendants' and Respondents' discovery. This was agreed to because at the relevant time we were just about to participate in a mediation with all the Applicants and the other two Applicants would have and did benefit by this work being undertaken as there was a commonality of issues with all Applicants in the proceeding. There was no agreement however, to share the cost of housing the discover documents using eLaw, for which the Defendants were wholly contractually liable. 58. In relation to the discovery in the franchise proceedings, the Costs Assessor did not inspect the eLaw database, even though he was invited to do so. 59. In accordance with the eLaw contract, eLaw carried out the task of loading the documents into the eLaw database managed by Relatively software and supplied the basic information (metadata) about each document via data entry into the database. 60. It was appropriate and cost effective in all the circumstances of this matter for a senior associate employed by the Plaintiff to categorise documents into the relevant sub-folders on the eLaw database as legal skill and intimate knowledge of the issues in the proceeding was required to allocate the documents into the appropriate sub-folder. In doing do, the senior associate was able to gain a detailed understanding of the evidence which was directly relevant to the Defendants' claim, which understanding was able to be deployed in the conduct of the Defendants' claim generally, including the mediations. This understanding and learning of relevant facts and information was conveyed to me, generally on a daily basis whilst the documents were being reviewed (Plaintiff's review of discovery documents). 61. Based on my 18 to 19 years' experience as a commercial litigator at around 2019 and 2018, it was totally: a. appropriate for the Plaintiff's review of discovery documents to be undertaken in the way that we did it. b. inappropriate for the Plaintiff to request a third-party document management company to arrange for their para-legals to undertake the review of the discovered documents, based on the complexities of issues in the proceeding and voluminous amount of discovered documents. 62. In relation to the Plaintiff's review of discovery documents: a. The Defendants instructed us to undertake and complete discovery in the way that we did it and they had full knowledge of the way in which we were undertaking this work; b. At no stage did the Defendants request us to arrange for a third-party document management company to arrange for their para-legals to undertake the review of the discovered documents; and c. I, nor senior partners which I have previously worked for during my career, have ever arranged for a third-party document management company to arrange for their para-legals to undertake the review of this discovered documents, or have I ever been instructed to do so." That is hard evidence of what was done in connection with discovery. It is also the evidence of an experienced practitioner in the field as to what he would normally do to make sure that the discovery process was accurate. It is also clear that in doing that, he exercised his professional judgment and in doing so, was relying upon his extensive experience and was not acting in opposition to any instruction given to him by either of the defendants. Such evidence must be given weight.
19. The other relevant facts are in the chronology, which is Exhibit C. That records that on 23 May 2017, the first defendant entered into a contract with eLaw to house its electronic discovery and that only around 12 December 2017, did the plaintiff, the defendants and other franchisees for whom the plaintiff had also agreed to act, agree on sharing of the costs of reviewing the defendants' and the respondents' discovery in the Federal Court, that is in particular, Nestle's discovery solely for the purpose of an impending mediation. In other words, most of the work concerning discovery had been done between 23 May 2017 and 12 December 2017, solely when the only referable parties giving discovery were the defendants as applicants in the Federal Court and the respondents in the Federal Court, Nestle and any subsequent owner of the Movenpick intellectual property.
20. This ground appears to have arisen because it was argued by the defendants before the Costs Assessor that the work of assigning discovered documents into certain categories could have been done by a clerk and ought not have been done either by a principal in the law practice or a solicitor employed by that practice, up to the grade of a senior associate. Rather than relying upon the general experience of the Costs Assessors, the Court must be guided by sworn evidence and bearing in mind that every piece of litigation is different. I reject the contention that in some fashion or other, the plaintiffs acted irresponsibly in the way they dealt with the discovery. Furthermore, it appears to me that they acted in accordance with the fee agreement which had been reached and which was binding.
21. The third ground considered by the Review Panel was this: "The Cost Assessor erred in disallowing a substantial amount of work on the basis that the costs ought to have been apportioned with the other two applicants. In many cases, the amount claimed was the apportioned amount. In other instances it would have been inappropriate and wrong to apportion the costs of the other two applicants, as it would have caused the other two applicants to bear the burden of costs which did not benefit them, or which did not relate to them, or which they had not previously [agreed] to or [consented] to pay for." That ground overlaps to a large extent with the second ground and in my view, what I have already said deals with that ground as well.
22. The fourth and fifth grounds of the Review Application are summarised in this fashion by the Review Panel: "Ground 4. Costs of Assessment 12.6 The Costs Assessor erred in ordering the Review Applicant to pay the costs of assessment. 12.7 The Review Applicant contends that it complied with disclosure obligations and should not be required to pay any costs of the assessment. Ground 5. Filing fee 12.8 The Costs Assessor erred in ordering the Review Applicant to pay the filing fee. 12.9 The Review Applicant maintains that it properly provided disclosure and should not be required to pay the filing fee. 12.10 However, if the Review Panel disagrees, then the Review Applicant maintains that it should not have to pay the filing fee attributable to the seven invoices which were issued by another law firm." At [13] of its reasons, the Review Panel said this: "Grounds for review (Grounds 4 and 5) were advanced in respect of the determination under s 71, which is to be 'separately determined' but the Application did not apply for a review of that determination (which relates to the Costs Assessor's costs and the Manager Costs Assessments, costs), whether as to the determination as to who was to pay the costs, or as to the quantum determined to be paid. The Panel does not need to consider the determination of the Assessor in this respect as it is not the subject of an application for review. The Panel notes however, that the costs of a party (s 204 LPUL) are implied to the extent that ground 4 is a ground that the Assessor was incorrect in the manner in which he decided that the Review Applicant was to pay the costs, but these were to be limited to the Costs Assessor's remuneration and the filing fee."
23. At [30] of Review Panel's reasons dealt briefly with grounds 4 and 5. It is this: "The Panel discussed these matters at [13] above. On the result which for consideration of the submissions by the Panel above required the Review Applicant should pay the costs of the assessment and the filing fee. The Panel does not interfere with the determination that the parties should bear their own costs of the assessment with the Panel affirming the Assessor's finding in each respect." In one way, this is a triumph of form over substance. When one looks at the Application for Review, it is clear that although the correct section of the Act was not included in the formal part of the application, it is clear that what the Review Applicant, the current plaintiff, was seeking was a change in the orders made concerning the costs of the application and the filing fee. Bearing in mind my view that there was adequate disclosure and therefore the costs agreement was binding, these grounds should have been upheld by the Review Panel.
24. The final ground identified by Review Panel amounts to a linguistic quibble. The Review Panel summarised the final ground of review as this: "The Costs Assessor took an uncommercial and unrealistic view of the practice of commercial litigation in making his determination. In so doing, he erred in the application of the test of what was 'fair and reasonable' in the context of a law practice and client costs dispute where the relevant proceedings were complex, multi-party commercial litigation." There may well have been such a complaint by the plaintiff to the Review Panel. The quibble really is that the words "commercial" and "realistic" are not terms of art in the law relating to costs. They have no legal significance on the question of costs. Their use appears to result from frustration on the part of the plaintiff, which considering the approach taken by the Costs Assessor, can be accepted. However, nothing in my view turns at all on the use of those words and this really is not a separate ground of appeal.

Relief

1. Having determined error, the question then becomes what the Court does. This morning Learned Counsel for the plaintiff submitted a form of orders which she proposed the Court should make. That document is MFI 1. I have taken the liberty of amending that document by striking out the final paragraph placed in it by learned Counsel. That was an order that the defendants pay the plaintiff's costs of the proceedings in this Court. To me, the only controversial issue is whether the amount of costs assessed inclusive of GST were $282,833.43. That brings me to another area of the law.
2. Section 199 of the Legal Profession Uniform Law (NSW) No 16a of 2014 provides this: "(1) Assessment of legal costs are to be conducted by costs assessors, and are to be conducted in accordance with this Part, the Uniform Rules and any applicable jurisdictional legislation. (2) On a costs assessment, the Costs Assessor must - (a) determine whether or not a valid costs agreement exists; and (b) determine whether legal costs are fair and reasonable and, to the extent they are not fair and reasonable, determine the amount of legal costs (if any) that are to be payable."
3. Section 200 of the same Act is in these terms: "(1) In considering whether legal costs for legal work are fair and reasonable, the costs assessor must apply the principles in section 172 so far as they are applicable. (2) In considering whether legal costs for legal work are fair and reasonable, the costs assessor may have regard to the following matters - (a) whether the law practice and any legal practitioner associate or foreign lawyer associate involved in the work complied with this Law and the Uniform Rules; (b) any disclosures made, including whether it would have been reasonably practicable for the law practice to disclose the total costs of the work at the outset (rather than simply disclosing charging rates); (c) any relevant advertisement as to the law practice's costs or the skills of the law practice or any legal practitioner associate or foreign lawyer associate involved in the work; (d) any other relevant matter. (3) The costs assessor must take into account the incidence of GST in a costs assessment. (4) In conducting an assessment of legal costs payable by a non‑associated third party payer, the Costs Assessor must also consider whether it is fair and reasonable in the circumstances for the non-associated third party payer to be charged the amount claimed."
4. Section 172 of the same Act is lengthier. It contains these provisions: "172 Legal costs must be fair and reasonable (1) A law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are - (a) proportionately and reasonably incurred; and (b) proportionate and reasonable in amount. (2) In considering whether legal costs satisfy subsection (1), regard must be had to whether the legal costs reasonably reflect - (a) the level of skill, experience, specialisation and seniority of the lawyers concerned; and (b) the level of complexity, novelty or difficulty of the issues involved, and the extent to which the matter involved a matter of public interest; and (c) the labour and responsibility involved; and (d) the circumstances in acting on the matter, including (for example) any or all of the following - (i) the urgency of the matter; (ii) the time spent on the matter; (iii) the time when business was transacted in the matter; (iv) the place where business was transacted in the matter; (v) the number and importance of any documents involved; and (e) the quality of the work done; and (f) the retainer and the instructions (express or implied) given in the matter. (3) In considering whether legal costs are fair and reasonable, regard must also be had to whether the legal costs conform to any applicable requirements of this Part, the Uniform Rules and any fixed costs legislative provisions. (4) A costs agreement is prima facie evidence that legal costs disclosed in the agreement are fair and reasonable if - (a) the provisions of Division 3 relating to costs disclosure have been complied with; and (b) the costs agreement does not contravene, and was not entered into in contravention of, any provision of Division 4."
5. The important sub-section is the last. A costs agreement is prima facie evidence that the legal costs disclosed in the agreement are fair and reasonable. Here, Division 3 has been complied with and there is no suggestion that the costs agreement contravenes or was entered into in contravention of any provision of Division 4. Therefore, the costs agreement is prima facie evidence that the legal costs disclosed are in fact fair and reasonable. Learned counsel for the plaintiff, Ms McDonald referred me to G E Dal Pont, Law of Costs, 4th edition, 2018, LexisNexis, Butterworths. [5.20] of that work provides this: "The Legal Profession Uniform Law, as it applies in New South Wales and Victoria from 1 July 2015, contains no precise equivalent to the above. It does, however, require a Costs Assessor, on a costs assessment, to determine whether or not a valid costs agreement exists, and whether the legal costs are fair and reasonable. And it states that: 'a cost agreement is prima facie evidence that legal costs disclosed in the agreement are fair and reasonable if the costs disclosure agreements have been complied with, and the costs agreement does not contravene any of the statutory requirements for costs agreements. As what is prima facie is different from what is conclusive, there may be evidence to rebut the prima facie position or there may be evidence of infelicities in meeting the statutory disclosure and costs agreement requirements, which may translate to the assessor altering the effect of the provisions in costs agreements to reflect what are fair and reasonable costs.'" Again, it is important to note that fees calculated in the costs agreement are prima facie evidence that they are fair and reasonable.
6. I have looked at some length at the application made to the Costs Assessor by the defendants which initiated the costs proceedings. It is Exhibit Q. It is contained on pp 64 to 116 of vol 2 of the eight volumes of the "court book". It mainly reiterates matters to which I have already averted, in particular relying upon allegations that there had been inadequate disclosure, arguments which I have rejected. The last part of the application amounts to itemising each charge and making a submission in regard to it, as if this were a taxation of costs. There is much to be said about taxation of costs, where the taxation is in the hands of an officer of a Court, not in the hands of the legal profession. I shall not say more about that. However, there is no evidence to support any of the submissions contained in itemised objections to various costs charged. In other words, there is no evidence to rebut the prima facie evidence that is to be given to the costs which have been calculated in accordance with the costs agreements which are in my view, valid. I therefore accede to the submission put to me by Learned Counsel for the plaintiffs that I ought to allow the costs as assessed in the amount of $282,833.43.

Additional Remarks

1. Before I go further, I should just say this. I commenced these reasons by setting out at some length the background to the proceedings as outlined in the application made by the defendants for the assessment of costs. I did that in order to show the nature of the proceedings and the extent to which they could become complex. As anticipated by the defendants themselves and as anticipated in fact by the plaintiff, the substance of the litigation in the Federal Court was to be greatly added to by directions made by the Court on 8 May 2018.
2. On that day, the orders made can be found in Exhibit O, orders which bear the seal of the Federal Court. There are six orders related to pleadings. There are a further five orders relating to the application for security for costs. There are five orders relating to further disclosure, the first of those five orders making orders that had been made on 5 February 2018. There were three orders concerning evidence in the main proceedings, three orders relating to evidence on any cross-claim and two orders relating to expert evidence and then three additional orders granting liberty to apply on three business days' notice, an order that the costs be reserved and an order that the parties were to properly notify the Court of any "material slippage" concerning compliance with the orders set out in that order made on 8 May 2018.
3. By that stage, there were three respondents. That is, Nestle, Australasian Food Group Pty Limited trading as Peters Ice Cream and Emerald Foods (Australia) Pty Limited and five additional respondents. In addition to the current defendants, there were Bagel & Cooper Pty Limited, followed by two personal applicants who were probably the guarantors of an agreement between the respondents and the third applicant. Then a sixth applicant, Dashiel Investments Pty Limited, and a seventh personal applicant, being no doubt the guarantor of the agreement between the respondents and the sixth applicant.
4. In other words, the proceedings had become very complicated. There is one further piece of evidence which I should have cited earlier and that is this. As I said, I looked through Exhibit Q at some length to try to find some evidence as to whether there was any real allegation that the bills delivered by the plaintiff to the defendants and contained in the document submitted by the defendants to the Costs Assessor for the assessment of costs, do not comply with the fee agreement. I could not find any and learned counsel for the plaintiff referred me to Exhibit C, an affidavit of Mr Siddharth Mahabal sworn on 30 September 2021 annexing and verifying an earlier affidavit which he swore on 5 March 2021 for the costs assessment. That contains this matter: "11. In late May to early June 2018, I had a conversation with Mr Da Costa e Costa where Mr Da Costa e Costa advised me that he was meeting with his prospective new solicitors, LegalVision, about taking over his matter. Mr Da Costa e Costa said words to me to the following effect: 'I am looking at getting new solicitors involved in my matter, LegalVision. I am not going to respond to Stephen [Mr D'Emilio] on purpose. I am doing this so that Stephen can do the work for the security for costs application and I won't have to pay him. I'll just go to different lawyers and he can get stuck with my fees. I have no intention to pay his bills. In my country [he was referring to Brazil] I don't have to pay for phone calls or emails, so I don't understand why I get charged for these by Stephen'."
5. Furthermore, there is in Exhibit Q this statement, after setting out in [83] the rates of charge of the lawyers at the plaintiff practice, this: "86. The client has no objection to the rates themselves but takes issue in the manner in which they have been applied." In other words, there was no dispute between the parties that the rates being charged by the plaintiff were fair and reasonable.
6. Now do you want any further reasons Ms McDonald? MCDONALD: No, I don't think so, I think you covered-- HIS HONOUR: I haven't made the orders yet, but do you want any further reasons? MCDONALD: I don't think so your Honour. No, I think that's fine your Honour. HIS HONOUR: Now I have just had another thought about the form of the orders sought. It all looks fine and dandy, but the other thing is we don't issue certificates of determination that's the point, I just make orders. MCDONALD: Yes, I understand that your Honour. I think the way that it actually works, because you step into the shoes of the Review Panel, that these orders should be provided to the manager of costs assessment, who can issue a certificate. HIS HONOUR: Okay, I understand all right. MCDONALD: I understand that's the process.

Orders

1. HIS HONOUR: For those reasons, I make orders in accordance with short minutes of order marked for identification 1. I direct the Registrar to forward to the Manager, Costs Assessment at the Supreme Court, a copy of my orders. I note that the plaintiff seeks an order for costs of these proceedings against the defendants, notwithstanding the fact that they have filed a submitting appearance. I stand that matter over to Friday, 18 March 2022 at 10am. It can be noted that the solicitor for the defendants has agreed to that listing.

Amendments 25 March 2022 - Representation added: "Hoskinson, I." 28 March 2022 - Removed representation: "Hoskinson, I." Adjust paragraph. 31 March 2022 - Added in legislation "Legal Profession Uniform Law (NSW) No 16A of 2014" Removed "a" from "Legal Profession Uniform Law Application Act 2014 No 16a" 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: 31 March 2022