Albarouki v Prime Lawyers Pty Ltd
[2013] NSWDC 130
•08 August 2013
District Court
New South Wales
Medium Neutral Citation: Albarouki v Prime Lawyers Pty Ltd [2013] NSWDC 130 Hearing dates: 30 July 2013 Decision date: 08 August 2013 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) Summons dismissed.
(2) Plaintiff pay defendant's costs.
(3) Liberty to apply in relation to costs.
(4) Exhibits retained for 28 days.
Catchwords: COSTS ASSESSMENT - costs assessor overlooks plaintiff's submissions when assessing costs and issues a substitute Certificate of Determination to correct the error - whether functus officio - whether substitute certificate possible under s 371 Legal Profession Act 2004 (NSW) - procedural fairness - whether a person who is not a party to proceedings can be a party to a costs agreement - whether plaintiff, who did not sign the costs agreement, was bound by it - whether costs assessor's error in mistaking the plaintiff's solicitor's signature as being the plaintiff's vitiated his finding that the plaintiff was bound by the costs agreement - whether costs could be assessed for the period following the expiry of the costs agreement Legislation Cited: Legal Profession Act 1987 (NSW), ss 208JB and 208KHA
Legal Profession Act 2004 (NSW), ss 349A, 371, 384 and 385
Uniform Civil Procedure Rules 2005 (NSW), rr 28.2 and 36.17Cases Cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2011] NSWDC 55
Branson v Tucker [2012] NSWCA 310
Castano v Ashglow Pty Ltd [2009] NSWSC 919
Chapmans Ltd v Yandell [1999] NSWCA 361
Commonwealth Bank of Australia v Clune [2008] NSWSC 1125
Deveigne v Askar (2007) 239 ALR 370
Ford v Greer [2008] NSWSC 1181
Ghose v Cx Reinsurance Company Ltd and Ors [2010] NSWSC 110
Gorczynski v AWM Dickinson & Son [2005] NSWSC 277
Griffith v Australian Broadcasting Corporation [2013] NSWSC 750
Honest Remark Pty Ltd v Allstate Explorations NL [2008] NSWSC 439
Johnson v Madden [2000] NSWSC 463
Lange v Back and Schwartz [2009] NSWDC 180
Madden v New South Wales IMC [1999] NSWSC 196
McCausland v Surfing Hardware International Holdings Pty Ltd (2010) 11 DCLR (NSW) 294
Minister for Immigration and Cultural Affairs (MIMA) v Bhardwaj (2002) 187 ALR 117
Nabatu Pty Ltd v Crawley t/as Aubrey F Crawley & Company (Supreme Court of New South Wales, Harrison M, 9 April 1998)
Pentelow v Bell Lawyers Pty Ltd trading as Bell Lawyers [2013] NSWSC 111
re Brougham [1926] SASR 423
Reynolds v Whittens [2002] NSWSC 155
Smith v Binet [2000] NSWSC 464
Starlink International Group Pty Ltd v Coles Supermarkets Australia Pty Ltd [2011] NSWSC 1154
Swaab v Sayed [2013] NSWSC 887
Taylor v Walker [2006] NSWSC 279
TCN Channel 9 Pty Ltd v Mahony (1993) 32 NSWLR 397
Wentworth v Rogers [2006] NSWCA 145Texts Cited: Professor Dal Pont, Law of Costs, 2nd Ed., 2009 (LexisNexis, Australia)
Second Reading Speech (Hansard, 16 September 1993, p 3277)
Ritchies Uniform Civil Procedure NSW (LexisNexis, Australia)Category: Principal judgment Parties: Plaintiff: Nidal Albarouki
Defendant: Prime Lawyers Pty LtdRepresentation: Plaintiff: Mr T Boyd
Defendant: Mr D Feller SC / Mr P Folino-Gallo
Plaintiff: Kheir Lawyers
Defendant: Prime Lawyers Pty Ltd
File Number(s): 2012/234378 Publication restriction: None
Judgment
The plaintiff by Further Amended Summons filed on 7 December 2012 seeks orders setting aside a Certificate of Determination of Costs dated 4 June 2012, or alternatively the setting aside of the Substitute Certificate of Determination of Costs issued on 29 June 2012.
The summons identified 14 grounds of appeal, of which eleven were identified as errors of law (s 384 Legal Profession Act 2004 (NSW) ("the Act")), and the remaining three as errors of mixed fact and law, or errors of fact (s 385 of the Act). In the course of submissions, these have been narrowed down to four grounds, each of which is brought pursuant to s 384 of the Act:
(1) The Costs Assessor erred in exercising power under s 371 of the Act in making a new determination (resulting in the Substitute Certificate of Determination of Costs of 29 June 2012) when he had no power to do so;
(2) The Costs Assessor failed to accord the plaintiff procedural fairness or natural justice by the overlooking of the submissions which resulted in the error giving rise to the preparation of the Substitute Certificate of Determination of Costs of 29 June 2012;
(3) The Costs Assessor erred in failing to set aside the costs agreement pursuant to s 328 of the Act and in finding that the plaintiff was a party to the costs agreement and thereby liable to the defendant for the costs of the legal services provided to a third party, namely a company of which the plaintiff is the sole director and secretary;
(4) The Costs Assessor erred in finding that the defendant had complied with ss 309, 316 and 317 of the Act, in that he allowed for costs following the first day of the hearing when the costs agreement was limited to costs up to the end of the first day of the hearing.
The procedural history of this costs appeal
When this appeal was first returnable before the District Court on 30 August 2012, the defendant complained there was a failure to identify ss 384 and 385 grounds of appeal separately. Orders for the filing of an Amended Summons were made, as were orders for the filing of evidence in relation to the serious allegations the plaintiff made against his former solicitor. On 9 April 2013 the appeal was fixed for hearing commencing on 30 July 2013, for three days, the length of hearing being attributable to requirement for witnesses to attend for cross-examination. An application by the plaintiff to vacate this hearing date, heard on 19 July 2013, was dismissed with costs.
When the hearing commenced, the first application made by the plaintiff was for a determination of a question of law separately from other questions, namely the entitlement of the Costs Assessor to issue a Substitute Certificate of Determination of Costs on 29 June 2012. Mr Boyd's submission was that, as this issue would dispose of the whole of the proceedings, it was appropriate to deal with the issue first. If I had acceded to this request, and the plaintiff was unsuccessful in the application, Mr Boyd foreshadowed that he was likely to seek an adjournment of the remaining grounds of appeal, as neither the plaintiff nor his witness were available for cross-examination.
I rejected the application by the plaintiff for a separate trial of the s 317 issue for the following reasons:
(a) The application was made on the basis that this would be the sole issue to be determined by me. If so, it amounted to another application for an adjournment, which I was not prepared to grant, given the refusal of an adjournment by another judge of this court on 19 July 2013.
(b) If the remaining grounds of appeal were to proceed, Mr Boyd has confirmed that all would now be brought pursuant to s 384, and as such would relate to issues of law. To sever one of those grounds for separate determination would not result in any saving of time and would be contrary to the provisions of s 56 Civil Procedure Act 2005 (NSW), which must govern applications of this nature: Ritchies Uniform Civil Procedure NSW (LexisNexis, Australia) at [28.4.5], citing Ford v Greer [2008] NSWSC 1181 at [25] and Commonwealth Bank of Australia v Clune [2008] NSWSC 1125 at [6].
(c) The Substitute Certificate of Determination of Costs of 29 June 2012 is for a sum of $53,478.37. Mr Feller SC informed me that, when the plaintiff's application for an adjournment had been before the court on 19 July 2013, the plaintiff's legal representatives stated that the plaintiff was not in a position to pay money into court.
(d) The application is brought late and without explanation: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.
Although r 28.2 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") refers to the determination of a question of law "at" or even "after" a trial, the ordinary position is that all issues should be tried together, especially if the parties have prepared for the hearing on that basis. There may be separate determination of an issue during defamation proceedings, where a jury may be asked to retire more than once to determine issues such as defamatory meaning before other evidence is given: TCN Channel 9 Pty Ltd v Mahony (1993) 32 NSWLR 397. Whether or not Mr Boyd was intending to ask for an adjournment of the remainder of the case, no saving of time or advantage to the parties could be achieved by the division of one issue of law from the other three, in circumstances where the subject of the appeal is the determination of four s 384 issues.
Having noted these reasons for refusing the application to hear the s 371 argument separately, I now consider the issues in the appeal.
The issues in the appeal
Appeals under s 384(1) relate to errors by a costs assessor on a matter of law. They are brought as of right. The court does not receive fresh evidence to determine whether the facts were wrongly or incorrectly decided, or otherwise inadequate or incomplete: McCausland v Surfing Hardware International Holdings Pty Ltd (2010) 11 DCLR (NSW) 294 at [47]-[49], referring to Madden v New South Wales IMC [1999] NSWSC 196; Johnson v Madden [2000] NSWSC 463 and Wentworth v Rogers [2006] NSWCA 145.
There is an additional requirement that a party under s 384(1) must not only establish an error of law but demonstrates that the error in question justifies disturbing the assessment: Gorczynski v AWM Dickinson & Son [2005] NSWSC 277 at [22]. In Honest Remark Pty Ltd v Allstate Explorations NL [2008] NSWSC 439 Malpass AsJ observed (at [24]):
"[24] The onus borne by the plaintiff is not merely to demonstrate error as to a matter of law arising in the proceedings to determine the application but also to demonstrate that any such error is material to the determination."
If the court determines that the costs assessor has made an erroneous decision on a matter of law, s 384(2) provides two options:
(a) The court can determine the application itself; or
(b) The matter can be remitted, on the question of law, to the costs assessor for redetermination.
A determination by the court is made on the evidence before the costs assessor, whereas a redetermination may permit further evidence (this being by reason of the use of the word "redetermination" in s 384(3) as opposed to "determination" in s 384(2)).
By contrast, where the issue on appeal is one of mixed fact and law (or of fact alone) the application must be brought under s 385 of the Act, and leave to appeal is required under s 385(1). As Fitzgerald JA explained in Chapmans Ltd v Yandell [1999] NSWCA 361 at [11]-[12], this is to act as a filter, to ensure that the resources of the court and the parties are not burdened with what Fitzgerald JA called "unsuitable" proceedings. The Court of Appeal has warned against the costs assessment process becoming trammelled by unnecessary litigation if leave to appeal is granted too readily: Wentworth v Rogers, supra, at [65] per Santow JA.
The question of whether leave should be given should be approached on the broad basis of whether or not justice so requires: Wentworth v Rogers, supra, at [202]. This is because the costs assessment process differs fundamentally from court proceedings. The costs assessment process is "neither wholly judicial, nor wholly adversarial, as there is a strong element of an inquisitorial nature involved" (Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2011] NSWDC 55 at [31] per Johnstone DCJ). The purpose of the system, as the Attorney-General stated in his Second Reading Speech (Hansard, 16 September 1993, p 3277), is to avoid the unnecessarily complex, artificial and adversarial procedure of taxation of costs and replace it with a "faster, easier and cheaper system of review of bills of costs".
As Mr Feller SC noted in his submissions, the costs assessment process should not be conflated with the judicial process. Costs assessors are not judicial officers. Their costs are paid by the parties, the system is paper-driven (a process where error or oversight may more readily occur), there are no rules of procedure, and there is no formal system of pleadings. The assessment process is not a court hearing, and the costs assessor's reasons remain a private ruling between the parties. These differences are of particular relevance in relation to Ground 1.
Ground 1: The Substitute Certificate of Determination of Costs was not permissible under s 371
One of the areas in which costs assessors differ in the performance of their duties from judicial officers relates to the circumstances in which costs assessors are given powers to correct "inadvertent error" in their determination. Section 371 of the Act provides:
"371 Correction of error in determination
(1) At any time after making a determination, a costs assessor may, for the purpose of correcting an inadvertent error in the determination:
(a) make a new determination in substitution for the previous determination, and
(b) issue a certificate under section 368 (Certificate as to determination) or 369 (Recovery of costs of costs assessment) that sets out the new determination.
(2) Such a certificate replaces any certificate setting out the previous determination of the costs assessor that has already been issued by the costs assessor and, on the filing of the replacement certificate in the office or registry of a court having jurisdiction to order the payment of the amount of the new determination, any judgment that is taken to have been effected by the filing of that previously issued certificate is varied accordingly."
Counsel for the plaintiff submitted that s 371 should be construed narrowly and as being comparable to the correction of clerical error under the "slip rule".
The "slip rule", set out in r 36.17 UCPR, provides:
"36.17 Correction of judgment or order ("slip rule")
If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error."
Counsel for the plaintiff submitted that s 371 should be interpreted by applying Smith v Binet [2000] NSWSC 464 at [35]-[37], where Malpass M stated:
"[35] There has been debate as to the status of the amended certificates. The arguments have been less than full.
[36] The original certificates had been issued prior to the introduction of s 208JB (it came into force on 18 December 1998). This provision enables a Costs Assessor to correct error in a determination. This section has no application in the present case (it applies only to a determination made after 18 December 1998). Prior to its application, the view has been taken that a Costs Assessor had no power to correct error in a determination. He was taken to be functus officio upon issue of the certificate (see s 208K).
[37] If it be necessary to make a decision on this matter, it is my view that the Costs Assessor had no power to issue the amended certificates and, if it had been necessary to take any action in respect of them, that they were liable to be set aside. It seems to me that this follows inter alia from the statute itself."
However, Master Malpass was describing the limited power of correction before the enactment of s 208JB, which came into force after the relevant certificates were issued in Smith v Binet, supra. Section 208JB was in substantially the same form as s 371, as O'Keefe J explained in Reynolds v Whittens [2002] NSWSC 155:
"[71] However, it is necessary to examine whether or not the amount of $2072.50 referred to in para67 involves any substantial injustice to Mrs Reynolds. I do not think that it does. I have reached this conclusion for two reasons: because the amount is only a small percentage of the total costs, and because s208JB empowers a Costs Assessor "at any time after making a determination" to correct an inadvertent error in a prior determination. The power to correct an inadvertent error is akin to the power conferred on courts by the slip rule. That power may be exercised in circumstances in which the error is obvious and is such as would, had it been drawn to the attention of the assessor at the time, undoubtedly have been corrected by him at that time."
This new provision was "akin" (Reynolds v Whittens, supra) to the slip rule, but was intended to enable a costs assessor "to correct error in a determination" (Smith v Binet, supra, at [36]).
Prior to its enactment, the costs assessor had no such power. Nabatu Pty Ltd v Crawley t/as Aubrey F Crawley & Company (Supreme Court of New South Wales, Harrison M, 9 April 1998) is an example of the unfairness this caused. The costs assessor in those proceedings amended his reasons after discovering he had made an error as to who had paid the filing fee. Harrison M accepted the submissions that the Legal Profession Act 1987 (NSW) contained no slip rule, and that after the costs assessor made his ruling he was functus officio.
It is by reading cases such as Smith v Binet, supra, and Nabatu Pty Ltd v Crawley t/as Aubrey F Crawley & Company, supra, that this difference between the former and the present legislative schemes can be appreciated. The wording of s 371, which enables a costs assessor to replace the original determination with a "new determination", is indicative of the power not merely to "vary" (s 371(2)) but to include "new" reasons for determination, which vary the previous findings.
Professor Dal Pont, Law of Costs, 2nd Ed., 2009 (LexisNexis, Australia) at [18.39] sets this out in his explanation of the functioning of s 371 and its equivalent where the costs assessment is made by a panel (s 381, previously s 208KHA). Professor Dal Pont goes on to note:
"The jurisdiction in question is not extinguished by the effluxion of time, or even by the fact that the court may have affirmed the relevant assessment by dismissing the appeal under s 384 (see [18.74]) or refused leave to appeal under s 385 (see [18.74]): Reynolds v Whittens [2002] NSWSC 155; (2002) 57 NSWLR 271 at [72] per O'Keefe J."
Professor Dal Pont notes slightly different provisions in the Australian Capital Territory and Queensland, as well as the court's general power to exercise jurisdiction in the case of error or delay due to a change in legislation or, as occurred in re Brougham [1926] SASR 423, where the taxing master made an error which was no fault of any of the parties. In those cases, however, the courts in question were exercising an inherent jurisdiction which this court does not have and which I have been careful not to apply.
The problem is that the costs assessor went much further than merely correcting a clerical error, or an adding mistake. He had effectively overlooked the entirety of the plaintiff's objections, and reassessed the costs completely as a result.
Is this an appropriate case for the application of s 371? Professor Dal Pont does not cite any cases where either s 371 or s 381 has been applied. In Deveigne v Askar (2007) 239 ALR 370 at [49] the Court of Appeal noted a decision of the manager of the costs assessment section that corrected the name of a deceased person did not amount to "inadvertent error" under s 208JB, but the court did not discuss this finding further. In Taylor v Walker [2006] NSWSC 279 a series of errors was made by a costs assessor, which were compounded by errors made by the Panel. These were of a mathematical nature, and unjustly disentitled the plaintiff of the sum of $7,332.60. Malpass M remitted the matter to the Costs Panel for a further certificate to be issued. In that case, however, no replacement certificate had been provided, as it would appear that the errors had not been conceded by the costs assessor or the Panel. That is not the case here, as the costs assessor has in fact already performed this task.
What should be done where the costs assessor has recognised the error and sought to correct it under s 371, in circumstances where the way in which he has gone about correcting the error is not in dispute?
Mr Boyd's submissions is that the substituted costs assessment, having been made at a time when the costs assessor is functus officio, is not only invalid in itself but invalidates the previous costs assessment which it purports to replace. Both decisions therefore become a nullity, and there is effectively no costs assessment at all. The costs assessment must thus be returned for a complete redetermination.
I do not accept this submission, which in my view misconceives the law in relation to functus officio and judgments claimed to be a nullity, which I address in more detail below. If the substitute costs assessment were made functus officio, or otherwise fell outside s 371, the step that this court would take would be to remit the original assessment for the costs assessor to carry out the task he has in fact now carried out, namely to consider the submissions of the costs respondent, in the manner adopted by Malpass M in Taylor v Walker, supra. Alternatively, it is then open to the court to determine the application itself, or to remit the matter to the costs assessor to redetermine the costs assessment (s 384(2)).
This brings me to the issue of whether the error in question would justify disturbing the assessment: Gorczynski v AWM Dickinson & Son, supra, at [22]. In Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd, supra, Johnstone DCJ said at [16]:
"[16] Not only must a party who is appealing under s 384(1) establish an error of law, that party must also demonstrate that the error made justifies disturbing the assessment: Gorczynski v AWM Dickinson & Son [2005] NSWSC 277 at [22]. Thus it has been said by Associate Justice Malpass:
The onus borne by the plaintiff is not merely to demonstrate error as to a matter of law arising in the proceedings to determine the application but also to demonstrate that any such error is material to the determination": Honest Remark Pty Ltd v Allstate Explorations NL [2008] NSWSC 439 at [24].
... [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 ... The onus borne by [the plaintiffs] has not been discharged": Skalkos v Assaf [2002] NSWSC 1221 at [17]-[18]."
If the costs assessor's correction of his own error falls outside the concept of "inadvertent error" for the purposes of s 384(1), there would be no point in remitting the matter to the costs assessor, as occurred in Taylor v Walker, supra, for reconsideration in circumstances where the costs assessor has already performed this task of his own volition. This is all the more the case in that the grounds of appeal do not include specific challenges to the basis upon which the revised calculations were carried out. Remitting the matter to the costs assessor, who would presumably send it back with his substituted assessment, would be an exercise in futility.
Mr Feller SC drew my attention in this regard to Lange v Back and Schwartz [2009] NSWDC 180, where Norrish QC DCJ explained:
"[31] If 'procedural unfairness' has been demonstrated by not expressly adverting to the plaintiff's objection the appeal should not be granted in any event because the decision of the Assessor was inevitable, notwithstanding the terms of the objection, (CSR v Eddy (at [38]-[40]) per Basten JA). Assuming a matter of law arises it has not been demonstrated to vitiate, or call into question, the ultimate determination of the Assessor or to suggest that the Assessor's determination would have been any different to that ultimately made even if he had considered directly the plaintiff's objection of 21 February 2008. In Levy v Bergseng, Rothman J pointed out unless the material not taken into account had, or would have no effect, if there was error, that should be remedied under the legislation [76]. Here the material not taken into account would have had no effect. No 'practical injustice' is demonstrated or shown (CSR v Eddy ibid). Further, a discretion may be exercised against making an order by this court would otherwise come to the same view on issues of law and fact as the fact finder appealed. Both objectively, and by regard to the finding of the Costs Assessor, the defendants have satisfied the court that the submission of 21 February 2008 would have had no effect. If the plaintiff bears the 'onus' to establish the objection would have had an effect, clearly then the plaintiff has failed to discharge it."
However, how can I make such a finding if the costs assessor's first and/or substitute certificate is functus officio? The error made by the costs assessor was a substantial one. Does this mean that either the first, or the second, or both certificates of assessment of costs should be set aside, or that the correction of the error falls outside s 371?
First of all, as Mr Feller SC pointed out in his submissions, s 371 must be viewed in the context of the legislation when determining whether the costs assessor was functus officio after his first decision. Due to an administrative error, the costs assessor failed to implement his own intention, and failed to comply with the Act's requirement to give the plaintiff an opportunity to be heard. When learning of the administrative error, the costs assessor realised he had not performed his functions and proceeded to do so, as was the case in Minister for Immigration and Cultural Affairs (MIMA) v Bhardwaj (2002) 187 ALR 117 (at [6] and [14] per Gleeson CJ). The facts in that case were very similar, in that the Immigration Review Tribunal decided to cancel a visa without hearing from the visa holder because, due to administrative error, the letter she had sent was mislaid. On realising the error, the Tribunal held a further hearing, and the decision to cancel her visa was revoked. The Minister appealed from this decision, arguing the Tribunal's power was spent after its first decision; it was functus officio. The Federal Court, Full Federal Court and High Court all rejected this argument; not only was the Tribunal functus, but it was obliged to carry out the rehearing.
The second issue, as Mr Feller SC pointed out, is that decisions of this kind can be revisited where a statutory provision akin to a slip rule is inserted to ensure this (a point Gleeson CJ noted in Minister for Immigration and Cultural Affairs (MIMA) v Bhardwaj, supra, at [6]).
The main point Mr Feller makes, however is to draw my attention to what Norrish QC DCJ called "practical injustice". The costs assessor has corrected his error and provided a substitute certificate. The error was not one of the parties' making and if set aside will involve both parties in further costs assessment procedures, as well as further expense. There will be little or no difference in the result; neither party addressed me as to problems with the manner and method of assessment of costs in the revised certificate. To remit the matter in such circumstances would be a triumph of form over content, and contrary to the intentions of s 56 Civil Procedure Act.
Mr Feller SC also submitted that, by reason of the fact that the material is in fact before the court, in that the decisions have been tendered by the plaintiff, it would be open to the court to determine the application, since the question of further evidence would not arise. If so, it would be open to me, under s 384(2)(a), to make a determination on the evidence before the costs assessor, namely that the amount contained in the initial costs assessment should be replaced by the amount contained in the substitute costs assessment, which is before the court as part of the evidence (s 384(3)).
I am satisfied that the concept of "inadvertent error" provided for in s 371 goes well beyond the concept of "slip rule" in that it enables the costs assessor, in the words of Professor Dal Pont at [18.39], to "make a new determination so as to correct an inadvertent error in an existing determination". (Given the nature of the error, namely the failure to consider the entirety of the plaintiff's objections on costs, the better view is that, for the reasons explained by the High Court in Minister for Immigration and Cultural Affairs (MIMA) v Bhardwaj (2002) 187 ALR 117, supra, that the first decision was not a decision at all, but in view of my acceptance of s 371 as a basis for the revised decision, that is not a matter I need to determine.)
If I have erred in making this finding then, as the costs bill has been re-assessed, I would not be satisfied that an error has been made remitting the matter for a fresh determination when I can make such orders myself under s 384(2). The orders sought by the plaintiff on the basis that the revised assessment was functus officio and thus the previous assessment a nullity meaning that the plaintiff does not have to pay costs at all, misconceives the nature of functus officio. My determination under s 384(2)(a) would be the same as that arrived at by the costs assessor.
If I were in error in making such a finding, in that I accepted new material not before the costs assessor (namely the objections of the plaintiff to the defendant's bill of costs), it would have been open to the defendant either to make submissions, or formally to cross-appeal the original and/or substituted ruling under s 385, and to ask the court to consider that new evidence. Where the revised bill was not the subject of mathematical objection, as is the case here, a strong case for leave would be made out.
I appreciate that the plaintiff is indignant about the costs assessor's oversight but, as the facts of this case show, circumstances can arise where a rigid approach to the principles of functus officio is inconsistent with good administration and fairness (Minister for Immigration and Cultural Affairs (MIMA) v Bhardwaj, supra, at [8] per Gleeson CJ).
Consequently, this ground of appeal must fail.
Ground 2: Absence of procedural fairness or natural justice
Mr Boyd stated that this ground is essentially a restatement of the matters in ground 1.
Mr Boyd made in clear he does not point to any specific failure or omission by the costs assessor other than the overlooking of his client's submissions. Conformably with my findings in relation to ground 1, this ground of appeal must also fail.
Ground 3: Was the plaintiff was a party to the costs agreement?
Two costs agreements were provided. These are attached to Exhibit 1, the affidavit of Keiko Togami sworn 14 January 2013, and to Exhibit B, the affidavit of the plaintiff, Nidal Albarouki, sworn on 29 October 2012.
The costs agreement of 9 August 2011 is directly addressed to Nidal Albarouki (in bold letters) and to Starlink International Group Pty Ltd. This costs agreement relates to the Supreme Court proceedings which formed the bulk of the costs the subject of this claim. There is space at the end for "Client (Nidal)", namely the plaintiff, to sign on his own behalf. In addition, Clause K contains a personal guarantee that any person purporting to sign on behalf of the company warrants to indemnify the solicitors for payment of all costs and loss in the event of any breach of this costs agreement by the company. I was not addressed on this clause by either of the parties. I note, the charge clause in Clause L goes on to refer to "you and any guarantor".
The second costs agreement, attached to the affidavit of Keiko Togami (Exhibit 1), relates to Fair Work Australia proceedings. This version of the contract was signed in the spot marked "solicitor" which was just below the words "client (Nidal Albarouki)", and this led the costs assessor into the error of believing that this was Mr Nidal Albarouki's signature. The covering letter, which attaches both the costs agreement and retainer fee agreement, states that it is necessary to "receive from you both the costs agreement and retainer fee". This phrase "you both" is ambiguous, but I find it only refers to both these documents, rather than identifying two signatories.
It is not in dispute that neither the company nor the plaintiff ever executed these documents. The question is whether, by continuing to instruct the defendant, the plaintiff, by his conduct, accepted the terms of the contract.
The first issue for determination is whether this is capable of amounting to an error of law at all. It is not the existence of the costs agreements, or their terms, which are challenged, but whether the plaintiff is a party to them. This amounts to seeking to disturb factual findings made by the costs assessor. Senior Counsel for the defendant draws my attention to Simpson J's statement in Castano v Ashglow Pty Ltd [2009] NSWSC 919 at [12]:
"[12] ... While it may, in some circumstances, be the case that a ground concerning the identity of parties to a contract raises questions of law, or questions of mixed fact and law, that is here not the case. Here there was no issue that a contract existed, nor what were the terms of the contract. Accordingly, who the contracting parties were is a question of fact."
I acknowledge that this is the case, but where the error of fact is glaringly obvious, such an error may amount to an error of law or mixed fact and law. Notwithstanding the submissions of the defendant, I accept the submissions of Mr Boyd that the cost assessor's error of thinking the plaintiff had signed the agreement when he had not was capable of amounting to an error of law, or mixed fact and law. However, this error needs to be seen in the context of the facts as a whole.
The principal argument put forward on behalf of the plaintiff is that he did not sign the agreement that he was given. The plaintiff is not in court and is unavailable for cross-examination. It is clear from the plaintiff's own affidavit that he received the costs agreement, and the correspondence discussing the issues in those costs agreements.
Any person reading those costs agreements would have seen the plaintiff's name at the head of the contract, and a position at the end of the contract for him to sign the agreement in his capacity as a "client" (in the case of the Fair Work Australia costs agreement). The same is the case for both the Fair Work Australia costs agreement and the 9 August costs agreement for the Supreme Court proceedings.
It is not in dispute that, after these costs agreements were provided, the work in question was done. The liability of the company is not disputed. Neither Mr Boyd nor Mr Feller SC addressed me about the provision for the personal guarantee to be given by any person signing on behalf of the company.
While the costs assessor made an error in believing that one of the costs agreement had been signed by the plaintiff, the real issue was what the costs agreement said, and what the parties did afterwards. I am satisfied that the specific reference to the plaintiff and the terms of the agreements were sufficient to warrant the costs assessor's finding that the plaintiff's subsequent conduct amounted to acceptance of the costs agreements.
The second asserted error of law is that the plaintiff cannot be liable for a party to the costs agreement because he is not the plaintiff in either of the proceedings, and is therefore incapable of being a "client".
It is not a necessary precondition for the person to be liable to pay legal costs that he/she should be a client, let alone a plaintiff who is consulting the legal practitioners who are sending him a contract for the provision of legal services. An agreement for the costs of provision of legal services is distinct from a contract for the provision of legal services. It may form part of such a contract, or it may be a stand-alone contract: Branson v Tucker [2012] NSWCA 310; Pentelow v Bell Lawyers Pty Ltd trading as Bell Lawyers [2013] NSWSC 111 at [53]. Legal practitioners may be called upon to provide services for persons who are not their clients, but for whom an existing client may have an obligation, such as a co-plaintiff (Ghose v Cx Reinsurance Company Ltd and Ors [2010] NSWSC 110 at [38] per Austin J) or co-defendant (Griffith v Australian Broadcasting Corporation [2013] NSWSC 750), or as a director giving a personal guarantee for a corporation who is party to proceedings, or as a tutor or trustee, as Mr Feller SC suggested.
The definition of "client", for the purposes of Div 11 of the Act, is contained in s 349A which provides:
""client" means a person to whom or for whom legal services are or have been provided."
In Swaab v Sayed [2013] NSWSC 887 Kunc J noted at [26]-[27]:
"[26] As contemplated by s 304(2A)(c) of the Act, cl 2 of the Terms specifies how the engagement of Swaab could be accepted. While it is perhaps not as clear as it might otherwise be, in my view on its proper construction cl 2 of the Terms is to be understood as providing for acceptance of the engagement to be evidenced by, inter alia, instructions continuing to be given by Mr Sayed after he had received the Letter. That is precisely what occurred.
[27] The ultimate issue in a case such as this is "whether a reasonable bystander would regard the conduct of the offeree, including his silence, as signalling to the offeror that his offer has been accepted": Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 at 535E per McHugh JA (as his Honour then was); Samuels JA agreeing."
I reject the submission that the plaintiff cannot be liable under the costs agreement in the absence of express concessions to the contrary (such as signing the agreement) because he is not the plaintiff in the proceedings, or a "client" for the purposes of the Act.
I am satisfied, from the form of the costs agreement and the information before the costs assessor, that the costs assessor was entitled to find that the plaintiff was bound by the costs agreement. If the costs assessor's error in identifying the plaintiff as the person who signed is an error of law, I am not satisfied that there is practical injustice. If the error in identifying the plaintiff were an error of fact or combined fact and law, I would not have granted leave to the plaintiff under s 385 had this been sought.
This ground of appeal also fails.
Ground 4: The limitations on the costs agreement terms
The costs agreement of 9 August 2011 provided as follows:
"This costs agreement does not include work we do after the one day hearing. A new costs agreement will be sent to you if the matter is not finalised after the end of the first day."
The hearing before Bergin CJ in Eq ran for three days: Starlink International Group Pty Ltd v Coles Supermarkets Australia Pty Ltd [2011] NSWSC 1154. Contrary to the provision set out above, no further costs agreement was provided.
The plaintiff's submissions were that the first defendant was under an obligation, pursuant to s 316 of the Act, to disclose to its client "any substantial change to anything included in the disclosure already made" (paragraph 14 of outline of submissions). The costs disclosure agreement dated 9 August 2011 disclosed a costs estimate of $20,000 plus GST, filing fee, court hearing fee plus barristers' fees. After the hearing went beyond the first day, the costs increased and final amount claimed in assessment in excess of $46,000 plus GST was sought.
The plaintiff submits that the costs assessor erred in allowing costs past 29 August 2011, in that costs up to 30 September 2011 were allowed, on the basis that while the solicitors had not done so, the barristers had disclosed changes in their estimates, and that there was a short timeframe for the work involved. It is submitted that the disclosure of a substantial change by the barristers was "no answer for the first defendant's default in performing its obligation" (written submissions, paragraph 18). The costs claimed are the defendant's costs, not the barristers' costs, and the defendant is required by the Act to disclose a substantial change to its estimate.
Precisely what order the plaintiff seeks as a result is unclear. Mr Boyd's submissions appear to be that no charges should have been allowed past the figure in the costs agreement, namely $20,000. However, as Mr Feller SC pointed out in his submissions, failure to provide a costs agreement at all would result in costs being assessed on a quantum merit basis. Failure to provide a further costs agreement to reflect the additional costs should be no different.
In Pentelow v Bell Lawyers Pty Ltd trading as Bell Lawyers, supra, at [50]-[54] observed:
"[50] It follows, in my view, that it must be concluded that the 2004 Act is not structured in the way for which Bell Lawyers contends. The construction urged requires reading into s 326 a limitation which does not there appear; and which is not necessary to read in, in order to correct any apparent drafting oversight; and which is not necessary, in order to give effect to the legislative purpose revealed in s 301. It also overlooks other provisions of the legislative scheme, including critically, the relevant definitions.
[51] They reveal that a costs agreement may be made in respect of amounts that a person 'has been or may be charged' or 'is or may become liable to pay'. That can plainly encompass an agreement about what is to be paid for services already provided, even if provided on a conventional non-contractual basis. While at common law such past consideration may not be adequate, this statutory scheme not only permits such an agreement to be made under s 322, it permits it to be enforced under s 326.
[52] Section 351(1) in its terms regulates applications by a solicitor for assessment of a barrister's fees. It is this section which permitted Bell Lawyers to seek an assessment of Ms Pentelow's costs, within 60 days of receipt of her bills. Had such an assessment been sought, under s 361 the costs assessor would have been bound to undertake the assessment by reference to the costs agreements. That course was not pursued, with the result that Ms Pentelow was entitled to enforce the costs agreement, if she wished, as s 326 provides and s 319 and s 355 also contemplate, notwithstanding that the parties had not also entered a contract for the provision of legal services.
[53] As Campbell JA discussed in Branson v Tucker, the 2004 Act does not require a s 322 costs agreement to be a contract for the provision of legal services. It may form a part of such a contract, or it may be a stand-alone contract. In either case, a costs agreement must be written or evidenced in writing, in terms which may specify 'the type of conduct that will constitute acceptance'. Circumstances can readily be imagined where such a costs agreement is entered, which settles a dispute between the parties, the conduct signifying acceptance being specified to be the withdrawal of an application for a costs assessment.
[54] On Bell Lawyers' approach, even a costs agreement entered in such circumstances, would be one which could not be enforced, as s 326 contemplates. That, it seems to me, is not what this statutory scheme contemplates."
The error of law made by the costs assessor, in coming to the conclusions that he did, was not identified by Mr Boyd. If the error in question lay in viewing the circumstances in which no revised estimate was provided, as opposed to a guillotine order for any costs after the 29 August cut-off date, I am satisfied that this was not an error of law. Nor is it an error of fact, in my view.
I would not have been prepared to grant leave under s 385 because the entitlement of the solicitors to continue to charge, and to recover in a costs assessment on a quantum merit basis, would have been factors of sufficient weight for me not to exercise my discretion.
This was a complex and urgent case, and the period of time covered after the expiry of the first agreement was short. I am satisfied that the finding of the costs assessor was a realistic appraisal of the circumstances.
This ground of appeal must also fail.
Costs
These proceedings were listed for a three-day hearing but have been able to be concluded in one day. I am indebted to counsel for the parties for reducing the twenty grounds of appeal to four during the course of the hearing.
Mr Feller SC has asked me to note that there were four witnesses under subpoena to be called by the plaintiff, all of whom were sitting outside the court, and that the absence of the plaintiff and the witness he proposed to call were matters not known to the defendant until the morning of the hearing.
The plaintiff has failed on all grounds of appeal, so I have made an order for the plaintiff to pay the defendant's costs, with liberty to apply.
Orders
(1) Summons dismissed.
(2) Plaintiff pay defendant's costs.
(3) Liberty to apply in relation to costs.
(4) Exhibits retained for 28 days.
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Decision last updated: 03 September 2013
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