Falzon Legal Pty Ltd v Manager, Costs Assessment and Ability One Financial Management Pty Ltd

[2024] NSWSC 1202

Supreme Court

New South Wales

Medium Neutral Citation:

Falzon Legal Pty Ltd v Manager, Costs Assessment and Ability One Financial Management Pty Ltd [2024] NSWSC 1202

Hearing dates:

5 September 2024

Date of orders:

25 September 2024

Decision date:

25 September 2024

Jurisdiction:

Common Law

Before:

Stern J

Decision:

(1)   Further amended summons filed 5 September 2024 is dismissed.

(2)   The plaintiff is to pay the second defendant’s costs.

Catchwords:

COSTS – Costs assessment – application for assessment – timing – where application for costs assessment lodged out of time – where Manager, Costs Assessment allowed application to proceed – whether Manager, Costs Assessment erred by failing to have regard to a mandatory relevant consideration

Legislation Cited:

Courts Suppression and Non-publication Orders Act 2010 (NSW)

Legal Profession Uniform Law (2014) (NSW), s 198

NSW Trustee and Guardian Act 2009 (NSW), s 41(1)(a)

Cases Cited:

eSafety Commissioner v X Corp (2024) 303 FCR 354; [2024] FCA 499

FC v SC (No. 2) [2023] NSWSC 376

FC v SC [2022] NSWSC 1780

Lin v WJ Legal (Aust) Pty Ltd [2023] VSC 52

LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2024] HCA 12

Malek Fahd Islamic School v Minister for Education and Training (No 2) [2017] FCA 1377

Minister for Immigration and Citizenship v Khadgi (2010) 190 FCR 248; [2010] FCAFC 145

Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594; [2011] HCA 1

Public Service Board of NSW v Osmond (1986) 159 CLR 656; [1986] HCA 7

Category:

Principal judgment

Parties:

Falzon Legal Pty Ltd (Plaintiff)

Manager, Costs Assessment (First Defendant)

Ability One Financial Management Pty Ltd as Financial Manager for the person
identified as “JC” (Second Defendant)

Representation:

Counsel:

D H Southwood (Plaintiff)
K Hooper (Second Defendant)

Solicitors:

BWT Legal (Plaintiff)
Crown Solicitor for NSW (First Defendant)
ICL Lawyers (Second Defendant)

File Number(s):

2024/00023614

Publication restriction:

Non-publication order preventing publishing the identity or any information that might reveal the identity of JC pursuant to s 7 of the Court Suppression and Non-publication Orders Act 2010 (NSW).

JUDGMENT

1. By way of further amended summons filed with leave on 5 September 2024, the plaintiff, Falzon Legal Pty Ltd (Falzon), seeks judicial review of a decision of the Manager, Costs Assessment (the first defendant: Manager), on 7 December 2023, to extend the time for the second defendant, Ability One Financial Management Pty Ltd (Ability One) as financial manager for JC, to apply for an assessment of costs (the Decision). The single issue raised is whether, in making its decision, the Manager erred by failing to have regard to a mandatory relevant consideration being the reasons for the delay in making an application for an assessment of costs. Falzon seeks both an order in the nature of certiorari quashing the decision and an order in the nature of mandamus compelling the Manager to make the decision in accordance with law.

2. In order to protect the identity of a protected person, in the interests of justice, on 5 September 2024 the Court made an order under the Courts Suppression and Non-publication Orders Act 2010 (NSW) precluding the publication of any material which would tend to reveal the identity of a protected person, referred to as JC.

3. For the reasons set out below, the further amended summons is dismissed with costs.

Background

4. The costs sought to be assessed relate to Falzon’s engagement to act for JC in proceedings commenced in the Guardianship Division of the New South Wales Civil and Administrative Tribunal (NCAT), which were transferred to this Court, relating broadly to the issue of whether orders should be made for financial management in relation to JC. In the proceedings in this Court, the Court made orders including that, pursuant to s 41(1)(a) of the NSW Trustee and Guardian Act 2009 (NSW), the estate of JC be subject to management under that Act: FC v SC [2022] NSWSC 1780 (FC v SC). On 15 February 2023, the Court amended its orders of 15 December 2022, to order that Ability One be appointed manager of the estate of JC, subject to the orders and direction of the New South Wales Trustee and Guardian (NSWTAG). The 15 February 2023 orders also required that NSWTAG take such steps as may be necessary or expedient to transfer management of the estate of JC from itself to Ability One and otherwise ordered:

“Costs assessment

12. Order that Ability One, within 30 days of assuming the position of financial manager of the estate of [JC], shall make an application pursuant to s 198(1) of the Legal Profession Law (NSW) for an assessment of legal costs paid from the assets of [JC] to [Falzon] or Paul Falzon.

13. Order that Ability One be authorised to take all steps reasonably necessary in the bringing and prosecution of that application and to engage any suitably qualified costs consultant or other professional in taking those steps.

14. Direct that, subject to the review and supervision of NSWTAG, the costs of the bringing of the costs assessment application be paid from the assets of the managed estate of [JC].”

5. Some flavour of the extent of the costs incurred by JC in these proceedings can be derived from Slattery J’s finding in FC v SC at [185] that most of a sum of $360,000, which was at one point refunded by a nursing home to JC, was “consumed in the NCAT litigation in legal fees and on Mr Falzon’s legal services”.

6. It was common ground between the parties that the 15 February 2023 orders did not in any way circumscribe the provisions of s 198 of the Legal Profession Uniform Law 2014 (NSW) (Uniform Law), which govern applications for a costs assessment. I return to s 198 below. In his judgment, Slattery J identified some concerns about the legal fees which JC had paid to the Falzon:

“185   After JC left Genesis, it refunded the sum of $360,000 to him. This was managed by SC and paid to Mr Falzon and kept in his trust account for JC. But it has now been mostly consumed in the NCAT litigation in legal fees and on Mr Falzon’s legal services. This sum has been spent without JC having any real understanding of the details of how and on what it was spent. This is an indication of JC’s vulnerability to exploitation. He had a tendency when challenged about this subject to say “ask SC”, indicating a want of understanding on his part.

186   The matter is complicated by the fact that Mr Falzon produced documents late in the proceedings. But even despite that it was difficult to attempt to reconcile the fees Falzon Legal had invoiced to JC to the deductions made from monies held in trust for JC. [The Court does] not presently need to make final findings about this subject to reach a conclusion in these proceedings. But the Court has decided that it will give Mr Falzon a further opportunity to try and reconcile the fees charged with the invoices issued. In the absence of a satisfactory explanation and reconciliation, the Court may order a separate solicitor – client assessment of those costs. The Court has not made specific directions about this subject but expects Mr Falzon to take advantage of this opportunity before the next directions date.

187   All that can be said is that the fact that the billing is in such an unsatisfactory state and does not clearly differentiate the legal work done for JC and SC supports the case of JC’s vulnerability and his need for a financial manager.”

7. In a subsequent judgment in the proceedings on 14 April 2023: FC v SC (No. 2) [2023] NSWSC 376 (dealing with residual issues), Slattery J gave a summary of matters relevant to the proceedings which had arisen since December 2022. These included the following, which gave some context to the orders made on 15 February 2023:

“14. Finally, the Court remained unsatisfied as to the reasonableness of the legal costs charged by Falzon Legal Pty Limited to JC on the state of the evidence. Therefore, on 15 February 2023 the Court ordered that Ability One apply under Legal Profession Law NSW, s 198(1) for an assessment of the legal costs paid from the assets of JC to Falzon Legal.”

8. Whilst it is not clear that the date of this direction was before the Manager at the time of the Decision, it was agreed between the parties that Ability One was appointed pursuant to Directions and Authorities issued to it by NSWTAG on 23 March 2023. Those directions enabled Ability One to obtain legal advice and to make an application for a costs assessment.

9. On 1 November 2023, Ability One made an application for an assessment of costs. I consider that application, and the material in support, below.

10. On 24 November 2023, Falzon filed submissions, relevantly submitting that:

1. the application for an assessment of costs was significantly outside the 12-month period in s 198(3) of the Uniform Law as the last invoice was issued on or around 22 April 2021;

2. Ability One had not offered any submissions going to the delay or reasons for the delay; and

3. without any reasonable and satisfactory explanation to explain the delay it would not be just and fair to allow additional time.

11. On 7 December 2023, by email from the Senior Deputy Registrar and Acting Manager, Costs Assessment, the parties to the costs assessment were notified of the following:

“The Manager, Cost Assessment was of the view that despite the application being out of time and lacking the supporting documentation for an application, the Court’s intention was for a cost assessment to occur and was important for the proceedings.

On that basis, this matter will be shortly assigned. A copy of your application, submissions and this email will be provided to the assessor.”

The Uniform Law

12. Section 198 of the Uniform Law relevantly provides that:

198   Applications for costs assessment

(1)   Applications for an assessment of the whole or any part of legal costs payable to a law practice may be made by any of the following—

(a)   a client who has paid or is liable to pay them to the law practice;

(b)   a third party payer who has paid or is liable to pay them to the law practice or the client;

(c)   the law practice;

(d)   another law practice, where the other law practice retained the law practice to act on behalf of a client and the law practice has given the other law practice a bill for doing so.

…

(3)   An application under this section must be made within 12 months after—

(a)   the bill was given to, or the request for payment was made to, the client, third party payer or other law practice; or

(b)   the legal costs were paid if neither a bill nor a request was made.

(4)   However, an application that is made out of time may be dealt with by the costs assessor if the designated tribunal, on application by the costs assessor or the client or third party payer who made the application for assessment, determines, after having regard to the delay and the reasons for the delay, that it is just and fair for the application for assessment to be dealt with after the 12-month period.

…

13. For present purposes, it is s 198(4) that is determinative.

Falzon’s contentions

14. As already discussed, Falzon alleges that the Manager fell into jurisdictional error in failing to have regard to the reasons for the delay in Ability One making the costs application. It was common ground that delay and the reasons for the delay is a mandatory relevant consideration.

15. Falzon’s first contention is that the Manager had no power under s 198(4) of the Uniform Law to deal with the application for an assessment because the application did not include any statement of the reasons for the delay. More particularly, Falzon contends that the power under s 198(4) of the Uniform Law to deal with an application which is filed late is conditional upon there being reasons for the delay before the relevant decision-maker. Falzon contends that this follows from the language and purpose of s 198(4), in particular the primacy given in that subsection to the consideration of reasons for the delay, and from the subsection requiring that reasons for the delay be considered. Falzon relied upon Lin v WJ Legal (Aust) Pty Ltd [2023] VSC 52 (John Dixon J) at [17], where his Honour described an explanation of the reasons for delay as “the legislative requirement”, in support of this contention.

16. Second, Falzon contends that as s 198(4) identifies only one mandatory consideration, being the delay and the reasons for the delay, that consideration is “fundamental” and the relevant decision-maker must “exhibit a high degree of interaction with [it] in order to carry out their statutory function”. In this regard, Falzon relies upon the decision of the Full Court of the Federal Court in Minister for Immigration and Citizenship v Khadgi (2010) 190 FCR 248; [2010] FCAFC 145 at [60], where the Court said that:

“In some cases it may be apparent that amongst the factors to which a decision-maker is bound to have regard, there is one factor (or perhaps more than one) which is critical or fundamental to the making of the decision in question.”

17. Third, although Falzon accepts that there was material before the Manager which explained some of the period of delay, Falzon contends that there was no material before the Manager explaining the delay prior to the appointment of Ability One as financial manager.

18. Fourth, Falzon submits, in effect, that the court should construe the email of 7 December 2023 as the totality of the Manager’s reasons for the decision. Falzon accepts that it bears the onus of persuading the Court that the Manager failed to have regard to the explanation for the delay: Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594; [2011] HCA 1 at [67]; LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2024] HCA 12. In this regard, Falzon contends that, as there is no mention in that email of the reasons for the delay in making the application for an assessment, the Court should infer that the Manager failed to consider the reasons for the delay. In support of that inference, Falzon also relies upon the absence in the material before the Manager of any explanation for the delay in making the application for an assessment of costs. Falzon accepts that there is a need for caution when drawing inferences from omissions in a statement of reasons that has voluntarily been provided by a decision-maker: see eg Malek Fahd Islamic School v Minister for Education and Training (No 2) [2017] FCA 1377 at [42] (Griffiths J). However, it contends that in this case the inference should be drawn that the Manager failed to consider the explanation for the delay having regard to the fact that this is the one mandatory consideration identified in s 198(4) of the Uniform Law and Falzon’s submissions squarely raised the issue before the Manager.

Determination

19. Whilst there were no detailed submissions before the Manager seeking to explain the delay, I am satisfied that there was material before the Manager which provided reasons for the delay in making an application for a costs assessment. That material was to be found in various places.

20. First, the judgments and orders of Slattery J, described at [4]-[7] above, were before the Manager. These made it clear that Ability One was not appointed as financial manager until some time after 15 February 2023, in circumstances where previously others had been responsible for JC’s financial affairs. This material also explained that, from around January 2021 JC had experienced varying levels of cognitive capacity, cycling through good and bad periods of capacity and his insight into his financial affairs had slowly declined (FC v SC at [226], [228], [288]). That provided some explanation as to why JC had not applied for a costs assessment himself, albeit that it did not explain why the NSWTAG, appointed in March 2021 (which appointment was extended in April 2021) as interim financial manager of JC, did not itself apply for a costs assessment.

21. Second, the application for costs assessment made it clear that, despite multiple requests, Ability One had been unable to access documentation which was necessary to make an application for costs assessment. That inability to access documentation provided a reason for the delay in making the application. By way of example, the application included the following:

1. Under text asking that bills of costs be attached, it was written: “TBA – PLEASE SEE ATTACHED CORRESPONDENCE FORWARDED TO THE COSTS RESPONDENT – HOWEVER TO DATE NO RESPONSE HAS BEEN RECEIVED”.

2. Under text asking how much the costs applicant said is the proper amount for the costs, it was written: “OBJECTIONS TO FOLLOW ON RECEIPT OF REQUESTED DOCUMENTATION”.

3. Under text asking about any costs agreement, it was written: “TBA – PLEASE SEE ATTACHED CORRESPONDENCE FORWARDED TO THE COSTS RESPONDENT – HOWEVER TO DATE NO RESPONSE HAS BEEN RECEIVED”.

4. Under text asking for any other relevant information to be set out, it was written:

“ON 31 DECEMBER 2023 THE COURT ORDERED THAT ABILITY ONE BE APPOINTED FINANCIAL MANAGER OF [JC] IN PLACE OF THE NSW TRUSTEE AND GUARDIAN.

FURTHER ON 10 FEBRUARY 2023 AT 12 (order attached), ABILITY ONE PTY LTD WAS ORDERED TO MAKE AN APPLICATION PURSUANT TO S 198(1) OF THE LEGAL PROFESSION LAW (NSW) TO ASSESS THE COSTS PAID FROM THE ASSETS OF [JC] TO FALZON LEGAL PTY LTD OR PAUL FALZON.

DESPITE ENQUIRIES WITH THE NSW TRUSTEE AND GUARDIAN AND FALZON LEGAL ABILITY ONE HAS NOT BEEN ABLE TO OBTAIN THE RELEVANT DOCUMENTATION TO PREPARE THE APPLICATION AND REQUIRE:

• ORDER BY THE MANAGER OF COSTS ASSESSMENT TO EXTEND TIME FOR THE MAKING OF THE APPLICATION, IF SUCH AN ORDER BE REQUIRED;

• DIRECTIONS FROM THE APPOINTED ASSESSOR FOR THE PROVISION OF ALL RELEVANT MATERIAL INCLUDING INVOICES, TRUST ACCOUNT STATEMENTS AND COSTS AGREEMENTS FROM THE COSTS RESPONDENT TO ENABLE THE COSTS TO BE ASSESSED”.

22. Third, correspondence attached to the application for costs assessment provided further details of Ability One’s attempts to access the documentation required to make an application for costs assessment, and thus again provided a reason for the delay in making the application. This relevantly comprised:

1. An email from Ability One to the NSWTAG on 10 July 2023 that set out that Ability One was “again on the quest for additional information” and stated “as you know [we] have had our difficulties accessing information throughout the changeover and I have now been requested by our legal representative to request the following information…”.

2. A response to this email from NSWTAG on 24 July 2023 attached “corres Re Falzon Legal sent to TAG”.

3. An email from Ability One to Pattison Hardman, Ability One’s solicitors, on 24 July 2023 explained “I chased my contact again this morning and they have sent me some files this included the bill of costs dated 11.02.2021 from Falzon to NSWTAG”.

4. A letter dated 8 September 2023 (sent by email it appears on 13 September 2023) from Pattison Hardman to Falzon seeking various documents within 14 days.

5. A response to this letter from Falzon, dated 6 October 2023, which, on its face, did not attach any documents. In this letter, Falzon contended that Ability One had not complied with the order of Slattery J to make an application for costs assessment within 30 days (at [4] above), that the order was thus “currently invalid and unenforceable”, and that any application for costs assessment would be refused. The letter also made reference to earlier correspondence, dated 19 June 2023, from Attwood Marshall solicitors who were previously instructed by Ability One in relation to the assessment of costs, but who had to then decline to act by reason of a conflict of interest. As is apparent from this email of 19 June 2023 (which was attached to Falzon’s submissions before the Manager) Attwood Marshall was at that time seeking Falzon’s consent to act notwithstanding the conflict of interest. I would infer that Falzon declined to give that consent.

1. A further letter, dated 16 October 2023, from Pattison Hardman to Falzon again seeking documentation and indicating that Pattison Hardman had instructions to file an application for an assessment of costs.

2. A response from Falzon dated 23 October 2023, notifying that it objected to Ability One seeking an assessment of costs.

23. Fourth, it was clear from Falzon’s submissions before the Manager that the period of delay was from around April 2021, when Falzon’s outstanding invoices were issued. Both the application for costs assessment and Falzon’s submissions before the Manager made direct reference to the delay in making the application. The email of 7 December 2023, notifying the Decision, also directly referenced the application “being out of time”. In these circumstances, it is clear that the Manager considered the delay in making the application.

24. Having regard to this material, I am also satisfied that the Manager acted consistently with the obligation, under s 198(4) of the Uniform Law, to consider both the delay and the reasons for the delay when deciding whether an application for costs assessment should be dealt with notwithstanding that it is out of time.

25. The reference in the email of 7 December 2023 to the application “lacking the supporting documentation for an application” indirectly refers to the text in the application (at [21] above) explaining that documentation had been requested but not provided. That, in turn, references the correspondence (at [22] above) giving further details of the attempts that Ability One had made to access the documentation necessary to make an application for costs assessment. In these circumstances, I am satisfied that the Manager considered the material in and attached to the application for costs assessment that, as set out above, provided some explanation for the delay in making the costs assessment.

26. I would not, in any event, have inferred from the email of 7 December 2023 that the Manager did not consider the material in and attached to the application that provided an explanation for the delay in making the application for costs assessment. The email did not purport to be a comprehensive statement of reasons and the Manager was under no statutory obligation to provide reasons. Nor would the Manager have been under any common law duty to give reasons: Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 662-3, 665 (Gibbs CJ); [1986] HCA 7. The email was merely a shortform notification to Falzon and Ability One of the administrative decision that the costs assessment would proceed notwithstanding the delay in making the application, and informing them that the application, submissions and the email itself would be provided to the costs assessor. Both the form of notification, by way of shortform email, and the text of the email, which suggests that this merely notifies the outcome and the key factor which militated in favour of the decision, stand against the contention that it was intended to comprehensively state the reasons of the Manager. In these circumstances, the omission of any direct reference to “the reasons for the delay” does not suggest that this was not considered by the Manager: eSafety Commissioner v X Corp (2024) 303 FCR 354; [2024] FCA 499 at [31] (Kennett J).

27. Whilst the email did make reference to a factor that weighed in favour of the costs assessment proceeding, being the Court’s intention that this occur and that this was important for the proceedings, that is readily explicable on the basis that an attempt was made to explain to the parties the key matter which militated in favour of the decision made by the Manager. That does not give rise to any inference that no other matters were considered. Indeed, the most natural inference is that the Manager considered the delay and the explanation for the delay, but nonetheless determined that the application should proceed having regard to the matters referenced in the email.

28. I would reject Falzon’s contention that the Manager was required to “exhibit a high degree of interaction” with the reasons for the delay in making the application. Subsection 198(4) of the Uniform Law requires that a decision-maker consider both the delay and the reasons for the delay, and also to consider whether it is just and fair for the application to be considered notwithstanding that it is out of time. There is nothing in s 198(4), or in the Uniform Law more generally, that suggests that consideration of a particular level of intensity is required.

29. I am also satisfied that the Manager properly considered the reasons for the delay in making the application, notwithstanding that, save for the material going to JC’s fluctuating capacity, those reasons did not address the period of delay prior to the appointment of Ability One as financial manager of JC. The period of delay in making the application covered the entirety of the period from April 2022 (being 12 months after the invoices were issued). The reasons before the Manager went to that period of delay, notwithstanding that they did not offer an explanation for each sub-period of delay. That did not preclude them being reasons for the delay within the meaning of s 198(4) of the Uniform Law.

30. Given my findings, it is unnecessary to address the question of statutory construction raised by Falzon’s first contention (at [15] above). It is also unnecessary to consider Ability One’s contention that the summons should be dismissed in the exercise of the Court’s discretion having regard to the availability of an alternative remedy of merits review.

Conclusion

31. It follows that the further amended summons filed 5 September 2024 should be dismissed. Costs should follow the event.

32. The orders of the Court are:

1. Further amended summons filed 5 September 2024 is dismissed.

2. The plaintiff is to pay the second defendant’s costs.

**********

Decision last updated: 25 September 2024