Clayton Utz v Ceccon Transport Pty Ltd - [2023] NTSC 76

CITATION:Clayton Utz v Ceccon Transport Pty Ltd & Ors [2023] NTSC 76
PARTIES:CLAYTON UTZ
(ABN 35 740 217 343)

v
CECCON TRANSPORT PTY LTD
(ACN 009 595 911)

And

CECCON, Suzanne Yoko
And
PERRY, Robert

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT exercising Territory jurisdiction
FILE NO:2021-02436-SC
DELIVERED:  31 August 2023
HEARING DATE:  Written submissions filed:
16, 25 and 31 May 2023

JUDGMENT OF: Brownhill J
CATCHWORDS:

COSTS – Costs assessment – Legal Profession Act 2006 (NT) s 362(2)(a) – Appeal against decision of costs assessor as to matter of law – Whether the Court has power and jurisdiction to determine costs assessment application as in its opinion should have been made by the costs assessor – Where such determination requires facts to be found and inferences to be drawn – Where power of the Court limited to correction of legal error – No power or jurisdiction of the Court to determine costs assessment application
Wende v Horwath (No 2) [2015] NSWCA 416, applied

Bailey v Marinoff (1971) 125 CLR 529; Minister Administering the Crown Lands Act v Bathurst Local Aboriginal Land Council [2009] NSWCA 138; University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481, referred to
Legal Profession Act 2004 (NSW) s 384

Legal Profession Act 2006 (NT) ss 332, 335, 337, 339-341, 344-349, 351-363
REPRESENTATION:
Counsel:
Appellant:B Ilkovski
First & Second Respondents:      P Maher
Third Respondent:  No appearance
Solicitors:
Appellant:Clayton Utz
First & Second Respondents:      Maher Raumteen Solicitors
Third Respondent:  No appearance
Judgment category classification:    B
Judgment ID Number:  Bro2315
Number of pages:  20

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Clayton Utz v Ceccon Transport Pty Ltd & Ors [2023] NTSC 76

No. 2021-02436-SC

BETWEEN:
CLAYTON UTZ
(ABN 35 740 217 343)

Appellant
AND:
CECCON TRANSPORT PTY LTD
(ACN 009 595 911)

First Respondent
CECCON, Suzanne Yoko
Second Respondent
PERRY, Robert

Third Respondent

CORAM: BROWNHILL J
REASONS FOR JUDGMENT
(Delivered 31 August 2023)

This case concerns an appeal to this Court from a determination of a costs assessment application under the Legal Profession Act 2006 (NT) (‘LPA’). The issue is whether, given the grounds of appeal and the circumstances of this case, the Court has power and jurisdiction under s 362(2)(a) of that Act to make the determination in relation to the application as in its opinion should have been made by the costs assessor.
Background
This proceeding has a lengthy and somewhat complex procedural history. A brief version of that history is as follows.
An appeal was brought by the appellant (‘Clayton Utz’) under s 362(1) of the LPA from a determination made on 6 July 2021 of the third respondent, a costs assessor appointed under s 366 of the LPA. The determination related to a costs assessment application made by the first and second respondents (‘Ceccon parties’) pursuant to s 332 of the LPA.
The parties were in agreement that the costs assessment determination and the costs of the costs assessment determination made by the third respondent were infected by error of law. They were also in agreement that the appropriate orders to be made were that the appeal be allowed and the costs assessment determinations and any certificates thereof be set aside. Those orders were made by consent on 6 May 2022.
The parties sought that the Court make the determination in relation to the costs assessment determination application as, in its opinion, should have been made by the costs assessor under s 362(2)(a) of the LPA. That order was made by consent on 6 May 2022, along with an order that the determination be made by the Associate Judge.
For the purposes of that determination, the parties filed various affidavits containing documents and information, some of which was not before the costs assessor. They also provided numerous written submissions and there were a number of oral hearings before the Associate Judge.
The Associate Judge became aware of the decision of the New South Wales Court of Appeal in Wende v Horwath (No 2) [2015] NSWCA 416 (‘Wende v Horwath’), a decision which the parties had not put before the Court. The decision concerned s 384 of the Legal Profession Act 2004 (NSW), which was at the time of that decision in virtually identical terms to s 362 of the LPA. The decision in Wende v Horwath raises questions about this Court’s power, on this appeal, to make a determination of the costs assessment that should have been made by the costs assessor.
The proceeding was referred back to me by the Associate Judge for further consideration. At a directions hearing on 6 April 2023, I ordered that there be determined a preliminary issue, namely whether the Court has power and jurisdiction to determine the costs assessment application under s 362(2)(a) of the LPA or whether the Court is obliged to remit the matter to the costs assessor pursuant to s 362(2)(b) of the LPA. Orders were made for the filing and service of written submissions and that the preliminary issue be determined on the papers.
Clayton Utz submitted that the Court has the power and jurisdiction under s 362(2)(a) of the LPA to determine the costs assessment application. The Ceccon parties submitted that the Court does not and the matter must be remitted to the costs assessor for re-determination.
Provisions of the LPA
Division 8 of Part 3.3 of the LPA deals with costs assessments. Under that Division, a client may apply to a costs assessor for an assessment of the whole or any part of legal costs (s 332(1)). The Ceccon parties were clients of Clayton Utz in relation to a legal dispute and litigation.
An application for a costs assessment is made in accordance with the regulations, and must authorise a costs assessor to have access to, and to inspect, all documents of the applicant that are held by the applicant or any law practice in relation to the matter to which the application relates (s 335(2)).
A costs assessor must give notice of the application to any law practice or client concerned and they are entitled to participate in the costs assessment process, are taken to be a party to the assessment and, if the assessor determines, are bound by the assessment (s 337).
A costs assessment is made by reference to the provisions of any costs agreement, unless the costs assessor is satisfied of specified matters or the parties agree (s 339). If costs are fixed by an Act or statutory instrument, the assessment must be made accordingly (s 340). In conducting an assessment of legal costs, the costs assessor must consider: (a) whether or not it was reasonable to carry out the work to which the legal costs relate; (b) whether or not the work was carried out in a reasonable way; and (c) the fairness and reasonableness of the amount of legal costs in relation to the work except to the extent that ss 339 or 340 apply to any disputed costs (s 341(1)). Various criteria are prescribed for the consideration of what is a fair and reasonable amount of legal costs (s 341(2)).
A costs assessor must determine an application for a costs assessment relating to a bill by: (a) confirming the bill; or (b) if the assessor is satisfied the disputed costs are unfair or unreasonable – by substituting for the amount of the costs an amount that, in the assessor’s opinion, is a fair and reasonable amount (s 344(1)). Similar provision is made if the legal costs have been paid without a bill (s 344(1A)).
On making a determination of costs, a costs assessor must issue to each party a certificate that specifies the determination (s 345(1)). The certificate is not to include the costs of the costs assessment (s 345(4)). Where the legal costs have been paid, an excess of what has been paid over the amount in a certificate is recoverable as a debt in a court of competent jurisdiction (s 345(5)). Where the legal costs have not been paid, a certificate filed in a court of competent jurisdiction is taken to be a judgment of the court for the amount of unpaid costs (s 345(6)).
The costs assessor must also determine the costs of the costs assessment, ie the costs incurred by the costs assessor in the costs assessment, including their remuneration (s 346(2), (8)). The assessor may issue to each party a certificate specifying the costs of the costs assessment (s 346(5)). If filed in a court of competent jurisdiction, this certificate is taken to be a judgment of the court for the amount of unpaid costs (s 346(7)).
A costs assessor must provide a statement of the reasons for the costs assessor’s determination (s 347). A costs assessor can correct an inadvertent error in their determination and make a new determination and issue a new certificate (s 348).
A costs assessor’s determination of an application is binding on all parties to the application and no appeal or other assessment lies in relation to the determination, except as provided by Division 8 (s 349).
Subdivision 5 permits, and sets out the process for, a review of a costs assessment determination (ss 351-361).
Subdivision 6 permits, and sets out the process for, appeals to the Supreme Court from a decision of a costs assessor. Section 362 provides as follows:
362 Appeal against decision of costs assessor as to matter of law
(1)   A party to an application for a costs assessment who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the Supreme Court, appeal to the Court against the decision.
(2)   After deciding the question the subject of the appeal, the Court may, unless it affirms the costs assessor’s decision:
(a)make the determination in relation to the application as, in its opinion, should have been made by the assessor; or
(b)remit its decision on the question to the assessor and order the assessor to re-determine the application.
(3)   On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given.
A party to an application for a costs assessment relating to a bill may seek leave to appeal to the Supreme Court against the determination made by the costs assessor (s 363(1)). If leave is granted, the Supreme Court may hear and decide the appeal, which must be by way of a new hearing in which fresh or additional evidence may be given (s 363(3), (4)). On such an appeal, the Supreme Court may, unless it affirms the costs assessor’s determination, make the determination in relation to the application as, in its opinion, should have been made by the assessor (s 363(5)).
Wende v Horwath
In Wende v Horwath, awards of costs were made in the Local Court, the Supreme Court and the Court of Appeal, and a costs assessment was made under the New South Wales equivalent of the LPA, which provided, on a single certificate, an assessment of the total costs in all of the proceedings. The certificate was appealed to the District Court and then an application for judicial review was made to the New South Wales Court of Appeal. The Court set aside the certificates as the Act did not permit a global costs assessment for multiple costs orders. The matter was remitted to the District Court. On remittal, amongst other things, the District Court, in reliance on the equivalent of s 362(2)(a) of the LPA, determined the sums payable under each of the three costs orders by calculating which of the items recorded in the reasons of the costs assessor (and review panel) related to which costs order. The applicants sought judicial review of that decision. The Court of Appeal held that, on an appeal as to a matter of law pursuant to the equivalent to s 362, there was no power to make findings of fact or to exercise a re-hearing function, as the District Court did in disaggregating the sums payable under each of the costs orders.
The Court held as follows:
(a)The power to receive fresh evidence or evidence in addition to or substitution for the evidence received in the original costs assessment application in the equivalent of s 362(3) of the LPA is confined to a re-determination of an application made by a costs assessor upon remitter from the Court.[1]
(b)On the appeal, being an appeal limited to a question of law, there is no power in the Court to make findings of fact or draw inferences of fact, let alone embark upon a hearing of the subject matter of the dispute.[2]
(c)On the appeal, the power of the Court is limited to the correction of the legal error and the Court cannot make final orders disposing of the proceedings unless, on the findings made by the costs assessor unaffected by legal error, only one conclusion is open.[3]
The parties accept that the decision in Wende v Horwath is plainly correct and that it should be followed.
Are there facts to be found or inferences to be drawn?
Clayton Utz argued that the two grounds of its appeal related only to the assessment required by s 341(1)(c) of the LPA, namely the fairness and reasonableness of the amount of legal costs in relation to the work except to the extent that s 339 or s 340 applies to any disputed costs. The consequence of that was said to be that this Court could determine the costs assessment by applying the rates agreed by the Ceccon parties under the costs agreements to the work performed by Clayton Utz, which was a mechanical task not requiring fact finding or additional evidence because the parties were agreed that: (a) Clayton Utz performed the work claimed in its invoices; and (b) the per unit rates charged accorded with those in its costs disclosure statements. Clayton Utz submitted that the Ceccon parties did not, and could not now because they should be bound by the way they conducted their case,[4] dispute the correctness of the costs assessor’s findings under s 341(1)(a) and (b).
Clayton Utz’s notice of appeal set out the grounds of its appeal as follows:
1. The Costs Assessor erred in assessing the legal costs in that he assessed them by considering whether the legal costs were reasonable and proportionate in the circumstances and not by considering the criteria for costs assessment required by s 341(1) of the [LPA].
2. The Costs Assessor erred in assessing the legal costs in that, contrary to section 341(1)(c) of the [LPA], he assessed the fairness and reasonableness of the amount of the legal costs:
(a)other than by reference to the provisions of a complying costs agreement; and
(b)by reference to Supreme Court Taxation Guideline rates.
While ground (2) is confined to an error in respect of what was required by s 341(1)(c), ground (1) is not, in its terms, so confined.
The Ceccon parties did not understand that the appeal was confined to the issue of s 341(1)(c). They filed a statement of issues and contentions (‘Statement’) which identified the issues on the appeal as: (a) whether or not it was reasonable for Clayton Utz to carry out the work to which the legal costs claimed relate (that is, the matter in s 341(1)(a)); and (b) whether or not the work was carried out by Clayton Utz in a reasonable way (that is, the matter in s 341(1)(b)). In the Statement, they made the following general contentions:
(a)It was not reasonable for Clayton Utz to carry out a large proportion of the work to which the legal costs claimed relate. Alternatively, a large proportion of the work carried out by Clayton Utz was not carried out in a reasonable way.
(b)The total costs claimed by Clayton Utz in respect of the invoices listed in the tables in the Statement are ‘manifestly excessive’ in circumstances where:
(i) Clayton Utz had, throughout, the assistance of competent counsel.
(ii) That counsel’s fees totalled $294,281.64, commensurate with the fees charged by counsel for the other parties to the litigation ($296,082.25).
(iii) The fees charged by experts for each party were commensurate with each other.
(iv) The other parties brought a counterclaim against the Ceccon parties in the litigation.
(v) The total fees charged by Clayton Utz to the Ceccon parties in the original litigation were $1,461,737.21, more than five times greater than the fees charged by the solicitors for the other parties ($277,376.22).
In the Statement, the Ceccon parties contended that Clayton Utz had not provided itemised bills of costs, and made specific contentions about various items in the invoices issued by Clayton Utz including that claims for work done were for multiple activities effectively in a lump sum, claims for internal conferring between solicitors of Clayton Utz were unreasonable, claims for multiple solicitors attending to the same task were unreasonable, and claims for imprecisely defined activities, activities already claimed for, and administrative tasks were not claimable.
Clayton Utz’s response (‘Response’) to the Statement:
(a)agreed that the Statement accurately described the issues to be addressed by the Court in making the costs assessment determination under s 362(2)(a) of the LPA;
(b) accepted that the matters contended by the Ceccon parties were raised in the Ceccon parties’ costs assessment application and addressed by Clayton Utz in its correspondence to the costs assessor;
(c)maintained that it was both reasonable to carry out the work to which the legal costs related and that the work was carried out in a reasonable way;
(d)disputed that they had not provided itemised bills, and if they had not, contended that they were not required to provide itemised bills, and contended the Court had no power to order Clayton Utz to provide itemised bills; and
(e)disputed, with one exception, the specific contentions made by the Ceccon parties about the invoiced amounts for legal work charged by Clayton Utz.
The parties signed a statement of agreed facts (and, subsequently, an amended statement of agreed facts which differed only as to the total amount of legal costs invoiced by Clayton Utz) (‘Agreed Facts’) by which they recorded their agreement that: (a) the costs to be assessed by the Court are those claimed in the invoices listed in an attached schedule; (b) Clayton Utz had provided the Ceccon parties with costs disclosure statements which satisfied the requirements of the LPA;
(c) the per unit rates charged by Clayton Utz accorded with those disclosed in the costs disclosure statements; and (d) Clayton Utz performed the work claimed in its invoices. The Agreed Facts were filed before Clayton Utz filed the Response.
It is clear from the parties’ submissions filed before the Statement, the Response and the amended Agreed Facts that the parties were seeking the Court to undertake a full costs assessment determination on the basis of all of the matters set out in s 341(1) of the LPA. Clayton Utz submitted that the Court was to ‘stand in the shoes of the assessor who originally determined the costs assessment application and exercise de novo the authority to determine the costs assessment application’. It also submitted that ‘the evaluative criteria of the Court’s task is framed by reference to the mandatory considerations referred to in section 341(1)(a) and (b) [and] the amount of legal costs for the purposes of section 341(1)(c) is determined by reference to the rates set out in the costs agreement’ between the parties. Clayton Utz submitted that ‘the Court is not to enquire about or give any consideration to the fairness and reasonableness of those rates’. The Ceccon parties made submissions consistent with its contentions in the Statement to the effect that, notwithstanding that reasonable work carried out by Clayton Utz is payable at the rates specified in the costs agreement, it was not reasonable for Clayton Utz to carry out a great deal of the work to which the costs relate, and a great deal of the work was not carried out in a reasonable way.

It is abundantly clear that, until it filed its written submissions on the preliminary issue on 16 May 2023, Clayton Utz were seeking a new hearing of the costs assessment application, which would require the Court to make findings of fact in relation to the matters in s 341(1)(a) and (b). Until that point, it had never submitted that the parties were bound by the costs assessor’s findings in respect of the matters in s 341(1)(a) and (b).
Two things flow from this. First, if a party should be bound by the conduct of its case, Clayton Utz should be bound by the way it conducted its case. Secondly, and more importantly, Clayton Utz’s submission that its grounds of appeal do not require or permit the Court to consider anything other than matters arising under s 341(1)(c) is inconsistent with its own interpretation and approach to the resolution of the appeal. That interpretation and approach confirm that the grounds of appeal are properly to be construed as extending to all matters arising under s 341(1).
Clayton Utz submitted that the costs assessor made findings that, under s 341(1)(a), the work carried out to which the legal costs relate was reasonable in the circumstances of the matter as litigated and, under s 341(1)(b), the work overall was carried out in a reasonable way. While the costs assessor used words to that effect in his statement of reasons, he also said that costs involving ‘doubling up’, duplication of work, in-house lawyer conferencing and file review on handover were not ‘claimable’, and that he did not believe that duplication, in-house conferencing and other costs billed were reasonable. It cannot be concluded therefore that the costs assessor made the findings as recited by Clayton Utz in relation to the legal costs claimed in the invoices. This is supported by Clayton Utz’s submission that the Court would have to undertake the ‘mechanical task’ it said is not fact finding (as to which, see below) to ‘the charges for the two categories of items of work [the costs assessor] incorrectly determined were not claimable’. That submission appears to acknowledge that the costs assessor’s findings under s 341(1)(a) or (b) were wrong to an extent, and would need to be corrected (ie remade) by the Court.
For the reasons set out above, I reject the submission that the only matter to be determined by the Court on this appeal is the matter in s 341(1)(c) of the LPA.
As to Clayton Utz’s submission that all the Court has to do is the ‘mechanical task’ of applying the rates agreed by the Ceccon parties under the costs agreements to the work performed, that ‘mechanical task’ would nevertheless require the Court to make the following findings or inferences of fact:
(a)that Clayton Utz had provided costs disclosure statements to the Ceccon parties;
(b)as to what those costs disclosure statements said in terms of the rates applicable to the work in the invoices;
(c)as to which costs disclosure statement applied to which period, and consequently to which invoices; and
(d)as to which rates were applicable to which items of work in the invoices.
Those findings were not made by the costs assessor. The Court would be required to make them. In accordance with the decision in Wende v Horwath, to do so would be beyond the constraints on the Court’s power in s 362 of the LPA.
This ‘mechanical task’ is not unlike the task which the District Court undertook, found to be outside the scope of its power, in Wende v Horwath. In that case, there was no challenge to the assessment of the individual items. All that was required was a disaggregation of the various items into separate bills, and the Court was readily able, with the assistance of unchallenged evidence from an appropriately qualified costs consultant, to make findings as to the costs payable pursuant to the costs orders of each of the three courts.[5] While it is not proposed in this case that evidence be received to, in effect, apply the relevant rates to each item of work in the invoices and do the maths, Clayton Utz submitted that the Court could do so. Even if the issues in this appeal were confined in the way asserted by Clayton Utz (which has been rejected above), to adopt the words of Basten JA in Wende v Horwath (at [112]), at a pragmatic level there may be much to be said for the approach pressed by Clayton Utz, but if the power to approach the matter in that way was unavailable, pragmatism cannot dictate the result. For the reasons set out above, there was no power to approach the matter in that way.
The orders made on 6 May 2022
It follows from the above that the orders made by consent on 6 May 2022 that, pursuant to s 362(2)(a) of the LPA, the Court will make the determination of the assessment of costs raised by the Ceccon parties’ application dated 9 July 2020, and the costs of that assessment, as in its opinion should have been made by the third respondent, and that the determination be made by the Associate Judge, must be vacated. The Court simply does not have the power to make the determination of the application for the assessment of costs and the costs of that assessment.
Clayton Utz submitted that, in the event the Court came to the conclusion that it had no power and jurisdiction to make the determination, the parties should be heard as to the consequential orders to be made. It submitted that the orders made on 6 May 2022 were made by consent and represent a compromised position, which impacts any consequential orders the Court should make about the orders made on 6 May 2022. It also submitted that Clayton Utz has ‘concerns’ about there being apprehended bias on the part of the costs assessor, which impacts any consequential orders the Court should make remitting the application to the costs assessor under s 362(2)(b).
Notwithstanding some doubt about how the parties’ consent to the orders can affect the absence of power and jurisdiction to do what the orders of 6 May 2022 provide, and about how bias on the part of the costs assessor can affect that, the only two options available to the Court are those contained in s 362(2), one of which is not available in the circumstances of this case, I will hear the parties as to the consequential orders to be made.

Disposition

On the preliminary issue, the Court declares that it does not have power and jurisdiction to determine the Ceccon parties’ costs assessment application or the costs of the costs assessment under s 362(2)(a) of the LPA.
I will hear the parties as to the consequential orders to be made in the proceeding.

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[1] Wende v Horwath at [57] per Beazley ACJ, [111] per Basten JA (Adamson J agreeing with both).

[2] Ibid at [65] per Beazley ACJ, [110]-[111] per Basten JA (Adamson J agreeing with both).

[3] Ibid at [61] per Beazley ACJ (Adamson J agreeing), citing Minister Administering the Crown Lands Act v Bathurst Local Aboriginal Land Council [2009] NSWCA 138 at [195] per Basten JA.

[4] Citing University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 483 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ and Bailey v Marinoff (1971) 125 CLR 529 at 531 per Barwick CJ.

[5] Wende v Horwath at [112] per Basten AJ (Adamson J agreeing).