Skalkos v Assaf [2002] NSWSC 1221 | Case summary

JUDGMENT 1 MASTER: There were earlier proceedings in the court between the parties. The proceedings saw the making of certain costs orders. For present purposes, the relevant order is as follows:- "The defendants pay the plaintiffs' costs on a party and party basis until and including 16 August 1994 and thereafter on an indemnity basis. Such order is to include the costs reserved on 26 August 1994, 16 December 1994, 3 February 1995, 17 February 1995 and 11 December 1998." 2 The defendants in those proceedings are the plaintiffs in the proceedings presently before the court (the plaintiffs). The present proceedings are brought against the defendants (the defendants) as an appeal pursuant to s 208L of the Legal Profession Act 1987 (the Act). The Summons was filed on 18 November 2002. 3 The defendants made an application for assessment of the costs. An assessment was made and determined by a Costs Assessor (Mr Browne). 4 In performing the assessment task, the Costs Assessor gave the parties both a "PRELIMINARY OPINION" and "REASONS" for his determination. 5 In the course of the assessment, the plaintiffs took objection to hourly rates charged by the solicitors for the defendants. In determining the party/party costs component of the costs, the Costs Assessor made decisions on questions of hourly rates that were different to what had been charged (inter alia an hourly rate of $360 had been charged for partners and he allowed $250 per hour for partners/highly skilled solicitors). 6 The present appeal concerns what was allowed as indemnity costs (such costs were incurred during the period from 16 August 1994 to 5 October 2000). 7 As has been said many times, s 208L of the Act provides a narrow avenue of appeal. It is restricted to a matter of law arising in the proceedings to determine the application for assessment. The onus rests with the plaintiff. The mere demonstration of error itself does not necessarily mean that there is an entitlement to relief. The court must be satisfied that the decision of the Costs Assessor should be disturbed. 8 The appeal raises a short point. It is encapsulated in the written submissions prepared by counsel for the plaintiff. The submissions contain inter alia the following:- "4. In his preliminary opinion, the assessor said: '…without an indemnity costs order the hourly rate claimed by the Costs Applicant is not fair and reasonable but with the benefit of an indemnity costs order those rates should be allowed as there has been no proof from the Costs Respondents - which is different from a mere assertion - that the rates themselves produce costs which are for an unreasonable amount.' 5. In his reasons, the assessor said: 'The Costs Applicant has the benefit of an indemnity costs order for this period, the effect of which reverses the onus and requires the Costs Respondent to show that the work was unreasonable or that the charges were not fair and reasonable. Because the onus has been reversed, I consider that the mere raising of an assertion by the Costs Respondent does not establish the proposition. I consider there must be positive material or an overwhelming inference available before work is considered unreasonable or the charge is considered not fair and reasonable.' 6. The plaintiffs say that the assessor's approach to this question is incorrect. The assessor appears to believe that unless he is satisfied by proof provided by the Costs Respondents that a charge is not fair and reasonable, that conclusion cannot be reached. That, the plaintiffs say, is an error. What is relevant is the conclusion, not its cause or source. Whatever the basis, once the assessor is satisfied that a charge is not fair and reasonable, he is obliged to act on that conclusion. Such a conclusion may well derive from previous experience or knowledge otherwise gained. ….." 9 The Act imposes a regime for the assessment of costs payable as a result of an order made by a court or tribunal (see inter alia ss 208F and 208G). The words "reasonable" and "fair and reasonable" are used in those provisions and take their meaning inter alia from their statutory context. The Costs Assessor is required to determine the costs payable by assessing the amount of costs that, in his or her opinion, is a fair and reasonable amount. The regime specifies what must be considered and matters to which regard may be had. The regime requires that the assessment be made in accordance with the operation of the relevant rules (subsection (1A) of s 208F). It distinguishes an assessment to be made where the costs have been ordered on an indemnity basis (subsection (3) of s 208F). The Act provides that costs must be assessed on that that basis. 10 Accordingly, in assessing indemnity costs, the Costs Assessor must have regard to Pt 52A r 37 (b) of the Supreme Court Rules 1970. Rule 37 is headed "Indemnity costs" and is in the following terms:- "37 Where, in any proceedings, costs are payable to a person by or under the rules or any order of the Court on an indemnity basis - (a) if that person is a party to the proceedings in the capacity of trustee, legal representative of a deceased estate or other fiduciary and the costs are payable out of property held or controlled by that person in that capacity - all costs incurred by that person shall be allowed except to the extent that it appears that they were incurred in breach of that person's duty in that capacity; and (b) otherwise all costs incurred by that person shall be allowed except to the extent that it appears that they are of an unreasonable amount or have been unreasonably incurred." 11 The rule requires that all costs incurred be allowed except to the extent that it appears that they are of an unreasonable amount or have been unreasonably incurred. The words "unreasonable amount" and "unreasonably incurred" are set in the context of Pt 52A and the rules of the court. There is no specification as to what must be considered or as to matters to which regard may be had. 12 The Costs Assessor has approached his task of assessing indemnity costs on the basis that the onus of showing that costs were either of an unreasonable amount or have been unreasonably incurred was borne by the plaintiffs (see inter alia Melo v Coulter [1999] NSWSC 666). For present purposes, that question can be put to one side as it has not been argued in this appeal. The plaintiffs have not disputed that they had such onus. 13 The determination of whether or not costs appear to be of an unreasonable amount or have been unreasonably incurred requires decisions to be made by the Costs Assessor on questions of fact. The decisions will turn on the circumstances of the particular case being assessed (see inter alia Madden v NSW IMC [1999] NSWSC 196). In the making of those decisions, he or she may have regard to material that has been placed before the Costs Assessor in the assessment. He or she is not bound by rules of evidence and may inform himself or herself on any matter in such manner as he or she thinks fit (see s 208 (2) ).

14 In considering the disclosure of reasoning process by a costs assessor, it seems to me that the court should be primarily concerned with the substance of what has been said and the effect of what has been done. It is not an occasion for the subjecting of the words of the Costs Assessor to the type of detailed analysis that may be given to a judgment of the High Court. 15 In determining the party/party costs, the substance of what was said and the effect of what was done by the Costs Assessor was an application of the statutory regime. In determining indemnity costs, he sought to apply the provisions of r 37 (b). 16 In performing the latter task, the Costs Assessor disallowed certain costs. In so doing, he may have had regard inter alia to his own knowledge and experience. Also, it appears that he did have regard to specific material other than that placed before him in the course of the assessment (including assessments made by other assessors). The expression of reasoning process also makes it clear that he saw his task as doing what was considered to be correct in the circumstances of this particular case. 17 The terminology used in the expression of his reasoning process could be said to indicate some confusion. For present purposes, it is unnecessary to dwell on these matters. It suffices to say that although he did appear to express the need for "positive material, or an overwhelming inference", it seems to me that his determination turned on his view that the mere raising of an objection of unreasonableness did not thereby establish it. I accept that he reached his determination bearing in mind the circumstances of the particular case being assessed. Whilst there has been an attack on the expression of the reasoning process, it has not been shown that the determination itself was erroneous and should be disturbed. 18 I consider that this appeal can be disposed of without expressing any view on the question of whether or not there has been error on the part of the Costs Assessor. Whether or not there be any error, I am not satisfied that the plaintiffs have demonstrated that his decision should be disturbed in any way. The onus borne by them has not been discharged. 19 For completeness, I should add that the terms of the objection taken by the plaintiffs included the following:- "…..The rates charged…..are 30% in excess of the relevant market rates for solicitors in Sydney". 20 It seems to me that the nature of such a particular objection may well be said to require material to sustain it. The lack of such material was a point taken by the defendants in their response to the objection. The "PRELIMINARY OPINION" alerted the plaintiffs to the lack of proof. Despite this, the plaintiffs did not seek to further address the question.

Skalkos v Assaf

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Judgment (10 paragraphs)

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