GB v EB

[2022] NSWDC 322

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

GB v EB [2022] NSWDC 322

Hearing dates:

28 July 2022

Date of orders:

10 August 2022

Decision date:

10 August 2022

Jurisdiction:

Civil

Before:

Gibson DCJ

Decision:

Order:

(1) Refuse leave to appeal pursuant to s 89 of the Legal Profession Uniform Law Application Act 2014 (NSW) and dismiss the appeal.

(2)   Costs reserved with liberty to apply.

Catchwords:

COSTS ASSESSMENT APPEAL – appeal to the District Court from a Review Panel assessment of costs below the leave threshold of $25,000 contained in s 89 of the Legal Profession Uniform Law Application Act 2014 (NSW) – Summons fails to seek leave to appeal under s 89 or to include the grounds upon which leave was sought – plaintiff’s submissions on appeal fail to canvass the issue of leave or to answer the defendants’ submissions in reply in which the defendants set out the basis upon which leave, if sought, should be refused – plaintiff serves amended summons seeking leave to appeal the evening before the hearing – whether the appeal grounds involved issues of principle and/or matters of public interest – whether there were manifest errors in the determination of the Costs Assessors – application for leave refused – appeal dismissed

Legislation Cited:

Legal Profession Uniform Law Application Act 2014 (NSW) s 89

Legal Profession Uniform Law Application Regulations 2015 (NSW) r 40

Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) rr 40 and 50.12(4)(b)

Cases Cited:

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175

Armand-Iskak v Attorney-General of New South Wales [2019] NSWCA 145

Asuzu v Council of the New South Wales Bar Association [2012] NSWCA 406

Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2011] NSWDC 55

Director-General, Family and Community Services Re Felicity [2012] NSWCA 272

EB v GB [2020] NSWSC 1291

Ferella v Stomo [2017] NSWCA 268

Ferella v Stomo [2017] NSWDC 34

Ferella v Stomo (No 2) [2017] NSWDC 61

Fordyce v Leung [2022] NSWCA 55

Gazecki v McCabes Lawyers Pty Ltd (2020) 102 NSWLR 259

Lawrence v Sammut (No 3) [2022] NSWSC 657

Vok v DPP (NSW) [2019) NSWCA 242

Wende v Horwath (NSW) Pty Ltd (2014) 86 NSWLR 674

Windsor v Health Care Complaints Commission [2020] NSWCA 110

Wollongong City Council v Papadopoulos [2019] NSWCA 178

Woollahra Municipal Council v Sved (New South Wales Court of Appeal, unreported, 24 July 1998)

Young v Royal Society for the Prevention of Cruelty to Animals New South Wales [2020] NSWCA 360

Category:

Principal judgment

Parties:

Plaintiff:
GB

Defendants:
First Defendant:
EB
Second Defendant:
SB
Third Defendant:
RB

Representation:

Counsel:
Plaintiff:
Mr A Fernon SC
Defendants:
Ms J McDonald

Solicitors:
Plaintiff:
Yates Beaggi Lawyers
Defendants:
Bartier Perry Lawyers

File Number(s):

2021/00316950

Publication restriction:

Court Suppression and Non-Publication Orders Act 2010 (NSW)

Judgment

Introduction

1. This is an appeal against determinations made by a costs assessment Review Panel that an assessed amount, interest and costs were payable by Mr GB, a solicitor, to the defendants, who were the beneficiaries of an interlocutory costs order against him. The costs order made by Robb J (in EB v GB [2020] NSWSC 1291) arose from a Notice of Motion filed by Mr GB(hereafter “the plaintiff”) in those proceedings on 3 June 2020 in relation to a request by the defendants to be released from an undertaking in order to use certain documents obtained in the proceedings for the purpose of a complaint against the plaintiff to the Legal Services Commission. The costs in question are small, as the principal issue of dispute on assessment was when the costs order should commence.

2. The costs assessment application lodged by the defendants on 5 May 2021 resulted in an assessment, on 27 June 2021, in the sum of $22,233.23 (including GST), being $14,301.38 legal costs and $7,931.85 for disbursements. Interest of $1,044.76 was also awarded. In arriving at this sum, the assessor allowed items totalling $6,303.84, which represented a reduction of approximately 48.5% of the amount sought on the costs application. The principal reason for this large reduction was not because of overcharging or any form of misconduct, but because the costs assessor accepted the date at which the costs order would commence to have effect as being a later date to that advocated by the costs order beneficiary (the defendants in these proceedings, hereafter referred to as “the defendants”).

3. The reason for this reduction is significant because the plaintiff complains that “despite the 48% reduction (and upholding many of Mr GB's objections)” (11 April 2022 submissions by the plaintiff), the assessor also determined that the filing fee of $431.84 (which is 1% of the costs sought in the costs application) and the fees of the assessor ($1,802.63) should be borne by the plaintiff in these proceedings. The reason given for awarding the costs to the defendant in the determination was the absence of an offer from the plaintiff to settle the costs sought pursuant to the costs order; no reference was made to the 48% reduction.

4. The plaintiff also complained about the contents of the offer that the defendants had made on 27 November 2020, which was for a sum even larger than the costs they went on to claim in the costs assessment and which had been reduced so significantly by the assessor.

5. The plaintiff, on 4 August 2021, accordingly filed an application for review of the determination.

6. By a Certificate of Determination of Review sent by the Manager, Costs Assessment, on 11 October 2021, the Costs Review Panel set aside the Costs Assessor’s earlier determination and substituted its determination that the total costs payable by the plaintiff to the defendants pursuant to the costs order were $23,704.93. The challenges by the plaintiff to payment of the filing fee of $431.84 and to the assessor’s fee of $1,802.63 were rejected. Some adjustment was made in relation to a challenge to the amount of $771.75, which resulted in a reduction of $5.93 to the total amount awarded; this included a small figure for interest but otherwise the challenge to the payment of interest was dismissed.

7. There was an additional determination on this appeal, namely in relation to the costs of the Review Panel for the conducting of its review. By a certificate of determination of Review Panel costs, the Review Panel determined that the plaintiff was liable to pay the Review Panel’s costs in the sum of $4,598. (The defendants have in fact paid those costs to the Manager, Costs Assessment, and that is now payable by the plaintiff to the defendants, as is endorsed on the certificate).

8. There is a third certificate of determination in relation to the costs assessor’s costs of $1,802.63 which, as is noted above, was affirmed by the Review Panel. This means that there are three costs certificates forming the subject of this appeal.

The legislation

9. The appeal is brought pursuant to s 89 of the Legal Profession Uniform Law Application Act 2014 (NSW) (“the LPULAA”). Section 89 permits a party to a costs assessment that has been the subject of a review, to appeal against the decision of the Review Panel to the District Court, but with a threshold qualification that is of particular importance to these proceedings. That qualification is that an appeal may only be brought with leave if the amount of costs in dispute is less than $25,000. As is set out in more detail below, the plaintiff now concedes that the amount in issue in the present case is less than $25,000.

10. When hearing the appeal under s 89(2) of the LPULAA, the District Court has all the functions of the Review Panel. The appeal is by way of a rehearing (s 89(4)) and error must be established (Gazecki v McCabes Lawyers Pty Ltd (2020) 102 NSWLR 259 at [41]); it is not a hearing de novo. The error in question may be legal, factual or discretionary (Lawrence v Sammut (No 3) [2022] NSWSC 657). In those circumstances, while additional evidence may be permitted because the Court no longer refers matters back to the Review Panel, the contents of the Review Panel decision are of great importance as, unless error is demonstrated, the appeal will fail. Where the error is asserted to be one of law rather than fact, the level of scrutiny may be higher (Gazecki at [43]) and this may also be the case where the error is one of discretion. However, the requirement to demonstrate a significant error as a ground of appeal under the repealed legislation (Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2011] NSWDC 55) is, counsel in these proceedings consider (and I agree), no longer a factor.

11. In the present case, errors of both fact and law are asserted as well as the exercise of discretion, and I have considered these conformably with the approach in Gazecki v McCabes Lawyers Pty Ltd.

12. The parties’ submissions state that the issue of whether leave should be granted turns on general principles of law applicable to the granting of leave to appeal generally but, since there is authority on this issue (to which neither counsel referred in their written submissions), I consider it is perhaps more helpful to start with a focus on leave to appeal issues directly involving s 89 of the LPULAA.

The plaintiff files a Summons in this court

13. The Summons filed on 8 November 2021 appealing the decision of the Costs Review Panel was not a Summons Seeking Leave to Appeal, although the quantum for each of these three certificates individually falls below the threshold of $25,000 set out in s 89 of the LPULAA.

14. The first issue for determination would ordinarily be whether such leave should be granted. That caused difficulties for the hearing of this appeal because:

1. The plaintiff did not address the issue of leave in the written submissions provided for in case management orders made by the List Judge, although this issue was explicitly raised and discussed by the defendants in their submissions in reply dated 11 May 2022.

2. The plaintiff elected not to use his entitlement under the timetable to file any submissions in reply to the defendants’ submissions of 11 May 2022.

3. Nor did the plaintiff respond when the defendants foreshadowed a Notice of Motion returnable for the hearing, seeking orders for the appeal to be struck out as incompetent by reason of the failure to seek leave.

4. The plaintiff took no steps in relation to the seeking of leave until the evening before this hearing, when a proposed amended Summons for Leave to Appeal and some submissions in support, as well as an affidavit by the plaintiff, were sent without prior warning.

5. The submissions sent the night before this hearing were, in my view, deficient, in that they failed to refer to appellate authority concerning grounds for leave to appeal under s 89.

6. Even when the hearing commenced, the plaintiff’s primary position was that leave was not necessary, and some time was spent on a novel argument (later abandoned) that the plaintiff’s costs in relation to the assessment could somehow be factored in.

15. Dealing with these very late amendments and submissions created significant time problems as the application for leave effectively took the whole of the day set aside for hearing the appeal. This meant that the hearing of the appeal could not take place on the same day.

What should the court hear first: the application for leave to appeal, or the appeal?

16. In Woollahra Municipal Council v Sved (New South Wales Court of Appeal, unreported, 24 July 1998), Mason P and Sheller JA both stated that, where an appellant intended to seek leave to appeal, then such an application should be made at the beginning of the hearing. I inquired of the parties, and both agreed that the issue of leave should be dealt with first.

17. Appellate courts have at times taken a firm view of the requirement for leave to appeal to be addressed in pleadings, evidence and submissions before the hearing starts. An oral application for leave to appeal made during the hearing of an objection to the competency of the appeal was refused in Director-General, Family and Community Services Re Felicity [2012] NSWCA 272 (see also Asuzu v Council of the New South Wales Bar Association [2012] NSWCA 406 at [39] - [41]). However, a court should not take an unduly rigid view about such a failure. In Asuzu v Council of the New South Wales Bar Association Ward JA stated at [42]:

“In Tomko v Palasty (No 2) [2007] NSWCA 369, Basten JA considered (at [58]) that it would generally be sufficient for the applicant to demonstrate a fairly arguable case (at least assuming there is a reasonable explanation for the delay and no significant prejudice to the opposing party). (It may be necessary to show more than fairly arguable prospects of success in circumstances where there is no, or no satisfactory, explanation for the delay or where there is prejudice to the opposing party.)

18. Before addressing the leave application, and whether these additional factors noted by Basten JA can be established, it is necessary to set out the grounds of appeal.

The grounds of appeal

19. The contents of the ten grounds of appeal confirm the small sums, repetitive nature and narrow issues involved in this appeal. The grounds are as follows:

1. The Review Panel erred in affirming the Costs Assessor’s determination that the Plaintiff should be liable for the costs assessment filing fee of $431.84 (at [10]) and in so doing:

1. Erred in rejecting ground 1 of the Review before it;

2. Failed to apply the “costs follow the event” rule;

3. Failed to determine that the Plaintiff won “the event”, being the costs assessment proceedings;

4. Erred in determining that the absence of an offer of settlement from the Plaintiff on the quantum of costs, the Plaintiff should be liable for such costs;

5. Erred in failing to consider or find that given the 48.5% reduction made in the Defendants’ claimed costs, the Defendants should be liable for such costs.

2. The Review Panel erred in affirming the Cost Assessor’s determination that the Plaintiff should be liable for the Costs Assessor’s fee of $1,802.63 (at [13]) and in so doing:

1. Erred in rejecting ground 4 of the Review before it;

2. Failed to apply the “costs follow the event” rule;

3. Failed to determine that the Plaintiff won “the event”, being the costs assessment proceedings;

4. Erred in determining that the absence of an offer of settlement from the Plaintiff on the quantum of costs, the Plaintiff should be liable for such costs;

5. Erred in failing to consider or find that given the 48.5% reduction made in the Defendants’ claimed costs, the Defendants should be liable for such costs;

6. Erred in failing to find that, having regard to the matters the subject of appeal Ground 5, the assessed costs should have been reduced by 61.3%; and

7. Erred in failing to consider or find that given the 61.3% reduction that should have been made in the Defendants’ claimed costs, the Defendants should be liable for such costs.

3. The Review Panel erred in rejecting Ground 5 of the Review before it and in so doing:

1. Erred in finding there was no evidence that the Costs Assessor had failed to consider the reduction of 48.5% in the assessed costs when considering the effect of the absence of an offer from the Plaintiff;

2. Erred in finding there was no evidence that the Costs Assessor had failed to consider the scope and effect of the offer from the Defendants;

3. Erred in finding there was no evidence that the Costs Assessor had failed to consider emails between Tamara Abadi for the Plaintiff and Rebecca Renshaw for the Defendants;

4. Erred in failing to find that the Defendants’ offer left no room for compromise of the Defendants’ costs;

5. Erred in considering the date the costs order applied from was a relevant consideration to this ground;

6. Erred in failing to find that, having regard to the matters the subject of appeal Ground 5, the assessed costs should have been reduced by 61.3%; and

7. Erred in failing to consider or find that given the 61.3% reduction that should have been made in the Defendants’ claimed costs, the Defendants should be liable for such costs.

4. The Review Panel erred in affirming the Cost Assessor’s determination that the Plaintiff is liable for the Defendants’ costs of the costs assessment (at [15]) and in so doing:

1. Erred in rejecting so much of ground 6 of the Review before it that applied to this issue;

2. Failed to apply the “costs follow the event” rule;

3. Failed to determine that the Plaintiff won “the event”, being the costs assessment proceedings;

4. Erred in determining that the absence of an offer of settlement from the Plaintiff on the quantum of costs, the Plaintiff should be liable for such costs;

5. Erred in failing to consider or find that given the 48.5% reduction made in the Defendants’ claimed costs, the Defendants should be liable for such costs;

6. Erred in failing to find that, having regard to the matters the subject of appeal Ground 5, the assessed costs should have been reduced by 61.3%;

7. Erred in failing to consider or find that given the 61.3% reduction that should have been made in the Defendants’ claimed costs, the Defendants should be liable for such costs; and

8. Erred in finding that “The Assessor allowed an amount that she considered fair and reasonable for the costs claimed by the Review Respondent in the itemised bill of costs (items 129 – 147 in the bill of costs)”.

5. The Review Panel Erred in failing to reject as part of the amount of the costs assessed, items numbered 119, 120, 121, 123, 126, 127, 129,130, 131, 134, 135, 136, 137, 141, 142, 143, 144, 146 and 12 totalling $5,532.09 as they were costs of the costs assessment application/process and in so doing:

1. Erred in rejecting so much of ground 6 of the Review before it that applied to this issue;

2. Erred in including this amount as part of the Defendants’ costs assessed;

3. Erred in failing to consider this further reduction of the costs assessed in determining who should pay the costs of the costs assessment and review;

4. In so far as this amount would otherwise form part of the costs of the costs assessment process, erred in failing to disallow this amount in the quantification of interest payable to the Defendants.

6. The Review Panel erred in affirming the Costs Assessor’s determination.

7. The Review Panel erred in finding that the Plaintiff and not the Defendants are liable for the costs of the remuneration of the Review Panel (at [21]) being $4,598.00.

8. The Review Panel erred in failing to find that the Defendants should be liable for the whole of:

1. the costs assessment filing fee;

2. the Costs Assessor’s fee;

3. the Defendants’ costs of the costs assessment;

4. the Plaintiff’s allowable costs of the costs assessment; and

5. the Review Panel’s fee.

9. The Review Panel erred in finding that the Plaintiff should be liable for the interest of $1,038.93.

10. The Review Panel erred in failing to find that the Costs Assessor gave no reasons for ordering the Plaintiff to pay the Defendants’ costs of the costs assessment.

The absence of any application for leave to appeal in the Summons

20. Contrary to the requirements of Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 50.12(4)(b), the Summons is not described in the heading of the document (which is form 84) as a Summons for Leave to Appeal. Nor is there any reference to s 89 of the LPULAA, or any setting out of the grounds upon which leave to appeal would be sought.

21. The plaintiff’s preferred position was, at first, that no application for leave to appeal was necessary. However, if the court was of the view that leave was necessary, the plaintiff next argued that orders 2 and 3, as set out in the “Orders sought” section of the Summons, could amount to a request for leave to appeal.

22. The terms of those orders are as follows:

“2. To the extent necessary, leave to appeal from the whole of the decision below.

3. Appeal allowed.”

23. The plaintiff’s final position, if this submission is not accepted, was that leave should be granted to the plaintiff to file in court the Amended Summons seeking Leave to Appeal served the evening before the hearing, and to grant leave for the reasons set out at paragraphs 11 - 13 of the Amended Summons.

24. Where there is a belated application to amend pleadings - and an amendment could not be made much later than on the date of the hearing - it is helpful to look at the procedural history of the appeal, in order to determine why the issue the subject of the amendment was not dealt with earlier conformably with the principles discussed in Aon, as well as to determine if the requirements set out by Basten JA, in relation to explanations and prejudice issues, in Tomko v Palasty (No 2) at [78] can be satisfied.

The procedural history of the appeal

25. As noted above, the plaintiff’s submissions of 11 April 2022 made no reference whatsoever to s 89 or to the seeking of leave. These had been served before the Summons came before the List Judge on 2 May 2022, when a timetable for the provision of written submissions in response to the plaintiff’s submissions of 11 April 2022 was made, with the plaintiff to file and serve any written submissions in reply by 24 May 2022. It was on that basis that the matter was listed for hearing on 28 July 2022, with an estimate of one day.

26. Unlike the plaintiff’s written submissions of 11 April 2022, to which they were replying, the defendants’ written submissions of 6 May 2022 not only noted the requirement under s 89 and the failure to seek leave, but set out the basis upon which leave should not be granted. These submissions were as follows:

“7. As the amount of costs in dispute in less than $25,000 the plaintiff requires leave to appeal: Legal Profession Uniform Law Application Act 2014 (NSW) (LPULA Act), s 89(1)(a). Contrary to the requirements of r 50.12(4)(b) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), the Summons does not contain a statement of the reasons why leave should be given. Nor do the plaintiff’s submissions filed on 11 April 2022 (PS) identify any basis upon which leave should be granted for a dispute about such a small amount of money. The defendants oppose leave being granted and reserve the right to make further submissions in relation to any argument advanced as to why the Court should grant leave to hear the appeal.

8. Prima facie, there is no basis whatever for leave to be granted. Historically, in matters concerning the taxation of costs, absent an error of principle or error of law, the courts would in general interfere in matters concerning the exercise of the taxing officer’s discretion, “only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will only do so in an extreme case.”

9. In the present case there is no issue of principle at stake and, given the small sums involved, no substantial injustice. Further, the public interest considerations plainly outweigh any injustice occasioned to the plaintiff by the ‘loss’ of less than $13,000, namely the public interest in achieving finality in litigation and in parties not incurring costs in litigation that are out of proportion to the amount in dispute and the importance of the claim. This is especially so where the subject matter of the claim is legal costs incurred in earlier litigation. It may be said that this applies even more so when the costs were incurred in respect of an interlocutory application, as they were here.”

27. This clear and careful submission gave an opportunity for the plaintiff to respond by filing and serving any written submissions by the due date of 25 May 2022, given in the case management orders made by the List Judge. As noted above, no further submissions were provided.

28. A third opportunity to seek leave arose when, in the absence of any submissions from the plaintiff as to leave, the defendants served a Notice of Motion returnable at the hearing, seeking the following relief:

1. This notice of motion be returnable on 28 July 2022 when this matter is otherwise listed for hearing.

2. Pursuant to UCPR 18.4 the time for service of this notice of motion and affidavit of Rebecca Renshaw sworn 26 July 2022 be abridged to 5.00pm on 26 July 2022, or alternatively, pursuant to UCPR 18.2(c), the requirement that this notice of motion be served be dispensed with.

3. The defendants be given an extension of time pursuant to UCPR 1.12 to file this notice of motion to the extent it seeks orders pursuant to UCPR 50.16A(1).

4. Pursuant to UCPR 50.16A, the Summons filed 8 November 2021 be dismissed as being incompetent.

5. The plaintiff to pay the defendants’ costs of the motion and of the proceeding.

6. Such further or other order as the Court thinks fit.

29. There the matter rested until the night before the hearing on 28 July 2022.

A late application to amend

30. On 27 July 2022, at 4:58 PM, the plaintiff, without any prior notice, emailed the defendants and the court an amended summons and written submissions dealing (for the first time) with leave. These documents did not come to the attention of counsel for the defendants (who was attending a work function), or to myself (as my associate was on leave) until the following morning.

31. The late service of this material caused delay at the commencement of the hearing. This was not only because late amendments to pleadings generally require explanation (Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175) but because of the time necessary to absorb and respond to the new material.

32. The explanation for late service volunteered by Mr Fernon SC was that the issue was raised in response to the defendants’ submissions and for the purposes of dealing with them orally during the hearing (T 19). Mr Fernon SC explained his earlier decision not to provide submissions in reply to the plaintiff’s submissions of 6 May 2022 as being a position his client was entitled to take, as opposed to amounting to a failure to comply. He accepted that the material should have been put on earlier (T 20) while at the same time asserting that a prayer for relief in relation to leave had in fact been provided (T 22), even though s 89 was not referred to in terms. He added that the decision to provide not only an amended Summons but also written submissions the night before the hearing was motivated solely by a wish to assist the court. However, courts have been increasingly critical of the practice of sending “unilateral written submissions without leave” to the court: Wollongong City Council v Papadopoulos [2019] NSWCA 178 at [48] - [53] per Leeming JA (see also Young v Royal Society for the Prevention of Cruelty to Animals New South Wales [2020] NSWCA 360 at [32] and Windsor v Health Care Complaints Commission [2020] NSWCA 110 at [140]).

33. Mr Fernon SC submitted that there was no prejudice to the parties from the lateness of the new grounds and submissions. This is not correct. The late service of the material and the plaintiff’s changing position as to whether leave was necessary meant that the argument took most of the day, with the result that I will have to rule upon the issue of leave only, as there was no time to hear the parties on the substantive grounds of the appeal. The result is that, if leave is granted, the hearing of the appeal will have to proceed on another day.

34. As to the requirement for an explanation referred to by Basten JA in Tomko v Palasty (No 2), the explanation given was that Mr Fernon SC had come back into the matter and reconsidered his earlier view (as expressed in the submissions he prepared on behalf of his client in April 2022) that no submissions on leave were necessary. While I have some sympathy for counsel changing his mind, the fact remains that submissions for leave were always necessary, and Mr Fernon SC now concedes this.

35. In reply, Ms McDonald added emphasis to her objections, in her earlier written submissions, as to the granting of leave, by pointing out that the failure to seek leave to appeal until the actual day of the hearing was of itself sufficient grounds for the court to refuse leave: Asuzu v Council of the New South Wales Bar Association at [39] - [43]. The failure of even the amended Summons to seek appropriate orders, or to delineate with any precision the reasons why leave should be granted, was also relevant (I note that failure to provide affidavit evidence or cogent reasons for a grant of leave had been a significant reason for refusal of leave under s 89 of the LPULAA in Ferella v Stomo [2017] NSWDC 34 at [17.5]).

36. Courts must, however, seek to do justice between the parties. The circumstances in which the plaintiff considered he was entitled to serve amended pleadings and submissions the evening before the hearing need to be seen in context. If the plaintiff does have a compelling argument for leave to appeal, that would need to be taken into account, and it is important to examine with care the grounds proffered.

37. The first difficulty the plaintiff faces is that the generalised claims of “significant issues of principle” and “public interest” and claims of “manifest errors” in the reasons appealed from, to quote the language of the amended Summons, first needed to be identified and then considered in light of the granting of leave, not only on general principles, but also in light of specific consideration of s 89 by the Court of Appeal in Ferella v Stomo [2017] NSWCA 268.

Is leave necessary and, if so, what are appropriate grounds?

38. The plaintiff’s initial position was that leave to appeal was not necessary. Mr Fernon SC spent some time explaining the basis for this, namely for the reasons summarised at paragraphs 3 - 5 of the outline of submissions he handed up to the court. It is not necessary for me to set out why as, during argument, Mr Fernon SC conceded that leave was required and withdrew these submissions.

39. Mr Fernon SC next submitted that the form of Orders 2 and 3 of the original Summons (set out above) were sufficient. Alternatively, he relied upon the following three reasons (set out in the amended Summons) why leave should be granted “if leave [sic] necessary” (heading to paragraphs 11 – 13 of the amended Summons), namely:

“11. The appeal grounds and submissions in reply involve significant issues of principle in respect of the assessment of costs.

12. There is a public interest to ensure matters of principle in respect of the assessment of costs are clarified.

13. There are manifest errors in both the assessment and review.”

40. The next difficulty I have is in determining what are these “significant issues of principle in respect of the assessment of costs” would be. Mr Fernon SC identified the matters set out in paragraphs 10, 11 and 13 of his written submissions as being these “significant issues of principle”:

“10 The operation and application of Rule 40 of the Legal Profession Uniform Law Application Regulation 2015 (NSW) (LPULAR) to the exercise of the assessor’s discretion on costs also arises. An issue arises as to the extent to which the use of “may” within its terms means that it lists mere discretionary matters that may be ignored. The operation of Rule 40 was relied upon by the Panel in its determination. The plaintiff contends that Rule 40 was not properly applied. Again, the operation of principle applies to the various grounds of appeal.

11 The appeal also raises issues of principle in respect of the role of offers of settlement and whether, consistent with Rule 40, that it is the reasonableness of such offers that should be considered and not the mere fact of making an offer, no matter what its terms are. This is an issue of principle that permeates the costs assessment process.

13 In Appeal grounds 4 and 10, it is asserted that the Panel ignore submissions made by the plaintiff. Ignoring a party’s contention in a court is generally seen as an error of law or a failure of procedural fairness (see The Husband v The Public Guardian [2016] NSWSC 1720 at [76] per Slattery J). the appropriateness of the Panel ignoring submissions is an issue of principle that applies generally in all assessment matters.”

41. Issues 1 and 2 are asserted to be the proper interpretation of Rule 40 of the Legal Profession Uniform Law Application Regulations 2015 (NSW) (“LPULAAR”), the terms of which are as follows:

“40 Determination of costs of ordered costs assessment

In determining under section 71 (1) (c) of the application Act by whom and to what extent the costs of the assessment of ordered costs are to be paid, the costs assessor may have regard to the following:

(a) the extent to which the determination of the amount of fair and reasonable ordered costs differs from the amount of those costs claimed in the application for assessment,

(b) whether or not, in the opinion of the costs assessor, either or both of the parties to the application made a genuine attempt to agree on the amount of the fair and reasonable costs concerned,

(c) whether or not, in the opinion of the costs assessor, a party to the application unnecessarily delayed the determination of the application for assessment.”

42. Essentially, what the plaintiff complains of is that the sole reason recorded by the costs assessor for awarding the costs was the failure to make an offer. The costs assessor did not refer to the significant discrepancy of a 48.5% reduction of the costs, although this is specifically stated as one of the grounds that the assessor “may” take into account under Rule 40.

43. However, as noted above, the principal reason for the large discrepancy is that the parties argued that the assessment process should commence at different dates, and not because of overcharging or other timewasting conduct by the costs order beneficiary. When the assessor selected the date argued for by the plaintiff, the costs before that date fell by the wayside. That would be a relevant factor to take into account when considering what role the large discrepancy actually played in the assessment.

44. The plaintiff’s next complaint is that the costs assessor and Review Panel did not set out a full list of the relevant factors to take into account in relation to Rule 40. Mr Fernon SC submitted that the failure to do so meant that these issues (especially the 48.5% disparity) were not taken into account.

45. In Wende v Horwath (NSW) Pty Ltd (2014) 86 NSWLR 674, the Court noted the entitlement of the Review Panel (whose reasons are the reasons appealed from) to adopt a costs assessor’s reasoning (at [179]). The question is whether what they have adopted is itself in error (at [156] - [161]).

46. The costs assessor was clearly aware of Rule 40; the real complaint is that the costs assessor did not specifically refer to the role of the 48.5% discrepancy could (or did) play. The failure to expose the reasoning is under challenge as inadequate, but this submission is misconceived, because the reasons for determination should not be construed in the same manner as a judgment.

47. The third issue on the appeal is asserted to the errors made by the costs assessor which were corrected by the Review Panel. I was not addressed on the “manifest errors” the Review Panel made but I assume that this is covered by its reconsideration of the costs as set out in Ground 5, as the remaining 9 grounds relate to asserted legal error (and principally to the claim that the discrepancy of 48.5% meant that the plaintiff won “the event” and should not have been ordered to pay costs or interest).

48. Are these grounds sufficient to warrant a grant of leave?

What are appropriate grounds for leave to appeal being granted or refused?

49. In the course of submissions Mr Fernon SC told the court (T 9) that there were no prior judgments on requests for leave under s 89 and in particular that there were no decisions of the Court of Appeal as to factors relevant to the granting or refusal of leave.

50. That is incorrect. In Ferella v Stomo [2017] NSWCA 268 considered the basis upon which leave could be refused in the circumstances of what could have been a significant legal issue, namely whether the LPULAA or the repealed legislation was the relevant legislation under which the costs should have been assessed. The Court noted and described what were described at first instance as “strong factors”, which were as follows:

“30. Gibson DCJ held that if s 89 of the Application Act applied, leave to appeal would be required because the amount of costs in dispute in respect of each assessment was less than $25,000. That is not challenged. It is clearly correct. Her Honour identified a number of factors that she described as being strong factors militating against the grant of leave. Her Honour said that if the Application Act were applicable she would not grant leave to the applicants to appeal under s 89(1)(a) and would dismiss the appeal. The summons contains as a ground of review that:

“The primary judge made an error on the face of the record in holding that she would not, in the event the Legal Profession Uniform Law (NSW) applied, grant leave to appeal pursuant to s 89(1)(a) thereof.”

No reason was advanced as to why that was so.

31. The grounds upon which the primary judge said that she would not grant leave if s 89 of the Application Act applied were that:

(a) not all of the costs the subject of the assessments had been the subject of objection and thus the sums challenged were very modest;

(b) the “need for finality and for proportionality, having regard to the history of the legislation and the modesty of the amounts involved, is high”;

(c) the issue as to which legislation was applicable had not been raised before the Review Panel;

(d) neither party suggested that either statutory scheme contained any substantial difference in the way the costs assessor or the Review Panel should approach the assessments;

(e) it was undesirable to entertain appeals on technical grounds that did not relate to the substantial merits of the dispute; and

(f) no cogent argument for the grant of leave had been identified.

32. These were proper considerations to be taken into account in the exercise of the primary judge’s discretion to grant or refuse leave under s 89 if that section were applicable. If s 89 applied, there is no error of law on the face of the record in the primary judge’s exercise of her discretion not to grant leave that could lead to an order quashing the decision below.

33. Even if the applicants’ submission as to the applicable legislation were correct, prerogative relief is discretionary. It would not be appropriate to set aside the decision under review on the ground of the alleged error where the result would have been the same, even had the primary judge proceeded on the basis of what the applicants contend was the correct legislation.”

What is the “event” which an order for costs must follow?

51. Mr Fernon SC’s submission is effectively that the disallowing of 48.5% of the costs means that his client has been successful, and that this factor should outweigh other Rule 40 factors such as whether offers were made. He submits that in those circumstances, costs must follow the event conformably with UCPR r 40.1, citing the judgment of Basten JA (in relation to the repealed legislative provision, namely s 369(3)(c)) in Wende v Horwath (NSW) Pty Ltd at [87]:

“87. On balance, the first two considerations, favouring the conclusion that s 369(3)(c) is directed to solicitor/client assessments, not assessments of costs awarded by court order, should be accepted. Nevertheless, the standard adopted is not irrelevant in the latter situation. The broad principle as to the award of costs is that they "follow the event": UCPR, r 42.1. To apply that rule to a costs assessment requires a standard to identify success or failure by an objector. The 15% reduction is a standard which may readily be applied. A costs assessment will only result from the refusal of the person liable to accept the amount of the bill rendered. If the assessment results in a significant reduction in the bill (as to which, 15% provides a standard) there is good reason to consider whether the costs should be borne in part or in whole by the party raising the objections.”

52. Mr Fernon SC submits that given the significant reduction and the reference to discrepancies of this kind in Rule 40 of the LPULAAR, “such issue should have been considered by the Panel and the Assessor in their respective determinations” (submissions 11 April 2022). This is also relevant to the filing fee, which is 1% of the costs claimed (not the costs awarded).

53. Mr Fernon SC also complains of lack of procedural fairness, in that “no consideration was given by the Panel (or the Assessor) as to [the $38,949.78 offer’s] reasonableness and genuineness”. This failure to accept that the plaintiff had in fact “won” the costs assessment (and that the offer “left no room for compromise”) is asserted to vitiate most if not all of the findings of both the Panel and the Assessor.

54. These submissions fail to take into account a wide range of rules of statutory interpretation, the legislative intent of the threshold requirements in s 89 of the LPULAA, the wide discretion afforded to the Assessor and the Panel in relation to costs and the role played by statutory provisions warning of potential costs consequences for failure to make an offer in the determination of costs. These matters have been very ably set out by Ms McDonald in her submissions of 6 May 2022 and it is not necessary for me to repeat them.

55. I also note the Court of Appeal’s observations as to the importance of the leave requirement in Ferella v Stomo, where an application which purported to raise a significant question of law, but which involved sums under the threshold, was brought under the repealed legislation but in circumstances where the LPULAA was asserted to be the correct legislation. The Court of Appeal, in dismissing the appeal, expressed concerns about appeals over trifling sums and grounds, views that have been repeated in Fordyce v Leung [2022] NSWCA 55 at [19]; in fact, in both Vok v DPP (NSW) [2019) NSWCA 242 and Armand-Iskak v Attorney-General of New South Wales [2019] NSWCA 145 the Court actually suggested that a requirement of leave for judicial review be introduced, to overcome the problems caused by litigants seeking relief “regardless of whether the cost of proceedings is proportionate to the importance and complexity of the subject-matter in dispute” (Ferella v Stomo at [40]). This is a very strong indication of the importance placed on leave requirements, particularly in costs matters.

56. The decision of the Review Panel on the relevance of the plaintiff’s offer was no mere rubber stamp to the Assessor’s reasons. The Review Panel noted that, in addition to not making any offer in reply, the plaintiff sought assessment “conducted in the usual course”, which meant that the defendants “had no other option but to proceed with the assessment application” (CB 186). Observations of this kind fall well within the wide discretion afforded to orders made by the Panel.

Conclusion: Leave under s 89 should not be granted

57. Stripped of their generalised language, the claims of “significant” issues of “public interest” are complaints about the exercise of discretion in relation to costs orders of a very small nature.

58. As to the first two reasons for leave set out at paragraphs 11 and 12 of the Amended Summons, taking all of the above into account, I do not consider that any of the asserted “significant issues of principle” in respect of the assessment of costs are made out at all. Nor is there any public interest in ensuring any such matters of principle are clarified. The reasons given fall well within the parameters of discretion and, even if the sums involved were larger, would not warrant interference on appeal.

59. The asserted “manifest errors” of the Review Panel are either for trifling amounts or are a reformulation of the grounds on which the plaintiff’s “significant issues of principle” argument was put.

60. There are additional reasons why leave should not be granted, namely the reasons set out in Ferella v Stomo at [30] - [33], the relevant extract of which is set out above. While each of the grounds for refusal of leave under s 89 in those proceedings would operate here, the final ground is of particular relevance, in that the plaintiff in those proceedings, while acknowledging that leave was necessary, did not do so until part way through the hearing, after not referring to this requirement in his Summons or submissions. The same is the case here.

61. Additionally, nearly the whole day was spent on the leave application. This means that, if I grant leave, the parties would have to return for a fresh hearing, as Mr Fernon SC has indicated that he needs to speak to his outline of submissions at some length.

62. For the above reasons, leave should not be granted and the appeal, being incompetent, should be dismissed.

Costs

63. I was not addressed on costs. I am mindful of the costs concerns expressed by the Court of Appeal in Ferella v Stomo at [35] - [36] and that these were reflected in an order for indemnity costs on appeal as well as being confirmed from the decision appealed from. (I note, incidentally, an error in the LexisNexis Caselaw basis which describes the first instance costs decision of Ferella v Stomo (No 2) [2017] NSWDC 61 as being overturned; in fact, as the Court of Appeal noted at [35], the application for leave to appeal from the indemnity costs order would only have been heard if the main appeal succeeded, which it did not. What is more, the Court of Appeal continued the indemnity costs order in relation to the costs of the appeal (at [3]).) I express no concluded view about these costs but, given the concerns expressed by the Court of Appeal, consider that this decision must be referred to in any consideration of the appropriate costs order to make.

64. I have granted liberty to apply in relation to costs and any application for a gross sum costs order.

Order:

1. Refuse leave to appeal pursuant to s 89 of the Legal Profession Uniform Law Application Act 2014 (NSW) and dismiss the appeal.

2. Costs reserved with liberty to apply.

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Amendments

11 August 2022 - Anonymised the parties' name

Decision last updated: 11 August 2022