George Nassour v Anthony Mark Malouf t/as Malouf Solicitors
[2011] NSWSC 356
•03 May 2011
Supreme Court
New South Wales
Medium Neutral Citation: George Nassour v Anthony Mark Malouf t/as Malouf Solicitors [2011] NSWSC 356 Hearing dates: 7 September 2010 Decision date: 03 May 2011 Jurisdiction: Common Law Before: Harrison AsJ Decision: (1) The decision of the Review Panel dated 24 April 2009 is set aside.
(2) It is determined that for the disputed costs, the fair and reasonable amount of costs to be paid to Mr Malouf is nil.
(3) The defendant is to pay the plaintiff's costs as agreed or assessed.
Catchwords: Appeal decision of costs review panel -jurisdiction of the review panel to determine issues of waiver and estoppel - whether a residual category or waiver exists at common law - waiver by election - waiver by estoppel - abandonment - termination of agreement - misleading or deceptive conduct Legislation Cited: Civil Procedure Act 2005
Competition and Consumer Act 2010
Fair Trading Act 1987
Fair Trading Amendment (Australian Consumer Law) Act 2010
Legal Profession Act 2004
Legal Profession Regulation 2002
Limitations of Actions Act 1958 (Vic)
Trade Practices Act 1974Cases Cited: Agricultural and Rural Finance Pty Limited v Gardiner [2008] HCA 57; 238 CLR 570
Australian Crime Commission v Gray & Anor [2003] NSWCA 318
Australian Securities Commission v Marlborough Goldmines Ltd [1993] HCA 15; (1993) 177 CLR 485
Commonwealth v Verwayen (1990) 170 CLR 394
Doyle v Hall Chadwick [2007] NSWCA 159
Dunn v Jerrard & Stuk Lawyers [2009] NSWSC 681
Evans v Bartlam (1936) 1 KB 202
Hall Chadwick v Doyle [2006] NSWSC 1195
Helicopters Pty Ltd v Bankstown Airport Limited [2009] NSWSC 889
Kostopoulos v G E Commercial Finance [2005] QCA 311
Larsen v Vile [1999] NSWCA 397
Levy v Bergseng [2008] NSWSC 294; (2008) 72 NSWLR 178
Muriniti v Lyons [2004] NSWSC 135
Nikolaidis v Legal Services Commissioner [2007] NSWCA 130
Noroton Holdings Pty Ltd v Sydney Land Corp Ltd [1999] NSWSC 192
Sargent v ASL Developments (1974) 131 CLR 634
Oliver Ashworth (Holdings) Ltd v Ballard (Kent) Ltd [1999] 2 All ER 791
Yogesh Enterprises Pty Ltd v Jury & Anor [2011] NSWSC 131
Waltons Stores (Interstate) v Maher [1988] HCA 7; (1988) 164 CLR 387
Waterman v Gerling Australia Insurance Cp Pty Ltd (2005) 65 NSWLR 301
Wentworth v Rogers; Wentworth & Russo v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474
Woodhouse AC Israel Cocoa Limited SA v Nigerian Produce Marketing Company Limited [1972] AC 741Texts Cited: Australian Consumer Law (ACL)
The Macquarie Dictionary, 3rd ed
Jeannie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law, 3rd ed (2009) Thomson Reuters
John Carter, Elisabeth Peden and Greg Tolhurst, Contract Law in Australia, 5th ed (2007) Lexis Nexus ButterworthsCategory: Principal judgment Parties: George Nassour - Plaintiff
Anthony Mark Malouf - DefendantRepresentation: Counsel:
J O'Connor - Plaintiff
R W Tregenza - Defendant
Solicitors:
Legal Aid NSW - Plaintiff
Malouf Solicitors - Defendant
File Number(s): 2010/53202
Judgment
HER HONOUR: The main issue raised in this appeal is whether the Costs Review Panel provided adequate reasons on the issues of abandonment and estoppel. The plaintiff, Mr Nassour, was the former client of Mr Malouf, who is a solicitor trading as Malouf Solicitors. Mr Malouf the defendant acted for Mr Nassour in relation to a medical negligence claim.
By amended summons filed 14 April 2010, the plaintiff seeks firstly, a declaration or order pursuant to ss 208L and 208KG of the Legal Profession Act 1987 ('the Act') and clause 68 of the Legal Profession Regulation 2002 that in its determination dated 6 November 2009 in Assessment Proceedings No 2008/00010995 ("the determination") the Costs Review Panel ('the Review Panel') erroneously decided: that the defendant did not waive its right to receive payment of the costs the subject of the determination; and the defendant is not estopped from claiming the costs the subject of the determination.
Secondly, the plaintiff seeks that the determination be set aside on the grounds that he was not afforded procedural fairness and the Review Panel failed to give adequate reasons for its determination.
Thirdly, the plaintiff seeks an order pursuant to s 208L(2) of the Act that the Court's decision is remitted to the Review Panel for redetermination.
Fourthly, the plaintiff seeks an order pursuant to s 208M of the Act for leave to appeal the determination on the grounds that the Review Panel erroneously awarded the defendant the costs and disbursements claimed in respect of the period following the defendant's alleged termination of its retainer agreement with the plaintiff and it miscalculated the amount of costs awarded.
Finally, the plaintiff makes a claim that the defendant engaged in misleading or deceptive conduct, or both, in his dealings with the plaintiff in breach of s 42 of the Fair Trading Act 1987 and the defendant is liable to the plaintiff in damages pursuant to s 68 of the Fair Trading Act for an amount equal to the costs awarded to the defendant by the Review Panel in its 6 November 2009 determination.
The Legal Profession Act 1987 applies to this case even though it has since been replaced by the Legal Profession Act 2004: see Dunn v Jerrard & Stuk Lawyers [2009] NSWSC 681 at [22].
The plaintiff relied on the affidavit of John Moratelli dated 17 December 2009, his affidavit dated 19 January 2010 and two affidavits of Susie Breuer dated 20 January 2010 and 3 February 2010. Mr Nassour was cross examined during the hearing of this appeal. The defendant relied on the affidavit of Anthony Mark Malouf dated 29 January 2010 and the affidavit of Gregory Laurence Martin dated 28 January 2010.
The plaintiff before the Cost Assessor was Mr Nassour. The defendant before the Costs Assessor was Mr Malouf. The plaintiff before the Review Panel was Mr Malouf and Mr Nassour was the defendant. In these proceedings, the plaintiff is Mr Nassour and the defendant is Mr Malouf. To avoid confusion, I have referred to the parties by name throughout this judgment.
Extension of time to appeal
On 24 April 2009, the Review Panel issued its determination. On 6 November 2009, the Supreme Court gave notice of the Review Panel's determination to the parties. On 1 March 2010, the summons was filed. The appeal was filed 10 days out of time. Mr Nassour submitted that having regard to the delay in Mr Malouf applying for an assessment of costs and the delay in the Supreme Court giving notice, the delay in lodging of the appeal does not cause Mr Malouf to suffer any prejudice. Mr Malouf does not oppose the extension of time in which to file the appeal. Hence, leave for an extension of time to file the appeal is granted.
Appeal and leave to appeal in this Court from the decision of the Review Panel
Section 208L of the Act provides:
"Appeal against decision of costs assessor as to matter of law
(1) A party to an application 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 Supreme Court may, unless it affirms the costs assessor's decision:
(a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or
(b) remit its decision on the question to the costs assessor and order the costs 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."
Section 208M of the Act reads:
"Appeal against decision of costs assessor by leave
(1) A party to an application relating to a bill of costs may, in accordance with the rules of the Supreme Court, seek leave of the court to appeal to the court against the determination of the application made by a costs assessor.
(2) A party to an application relating to costs payable as a result of an order made by a court or a tribunal may, in accordance with the rules of the court or tribunal, seek leave of the court or tribunal to appeal to the court or tribunal against the determination of the application made by a costs assessor.
(3) The Supreme Court or court or tribunal may, in accordance with its rules, grant leave to appeal and may hear and determine the appeal.
(4) An appeal is to be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given.
(5) After deciding the questions the subject of the appeal, the Supreme Court or court or tribunal may, unless it affirms the costs assessor's decision, make such determination in relation to the application as, in its opinion, should have been made by the costs assessor."
The approach that should be taken by the court in an appeal from a costs assessor was set out in Larsen v Vile [1999] NSWCA 397. An appeal under s 208L is confined to law. An appeal under s 208M (provided leave is granted) is a complete new hearing.
Section 208KI provides that the provisions of ss 208L and 208M apply to a decision or determination of a Review Panel: ( Nikolaidis v Legal Services Commissioner [2007] NSWCA 130 at [19]).
Before I deal with the grounds of appeal and leave to appeal, it is necessary, firstly, to give some background as to the costs dispute; and secondly, summarise the decisions of the Costs Assessor and Review Panel and then examine the grounds of appeal.
The parties have filed a list of agreed facts. It is only necessary to reproduce some of them for the purposes of this judgment.
Agreed facts
In 1987, Mr Nassour was involved in a motor vehicle accident that caused the plaintiff to suffer multiple injuries to his eyes, lips, nose, forehead and head.
From about 1992 to 2000, Dr William Pouw performed a number of operative procedures on Mr Nassour to improve the appearance of the damage caused to Mr Nassour's face and head. Mr Malouf alleged that as a result of the medical procedures carried out by Dr Pouw, he suffered permanent scarring and damage to his forehead, eyes and face.
In about April 1999, after Mr Nassour received advice from Mr Malouf in relation to a claim for damages against Dr Pouw, Mr Nassour instructed Mr Malouf to act on his behalf in a medical negligence claim against Dr Pouw.
From about April 1999, Mr Malouf acted on behalf of Mr Nassour in his claim against Dr Pouw.
In 2001, Mr Nassour commenced proceedings in the District Court against Dr Pouw.
Retainer and costs agreement
The following documents were before the Costs Assessor and the Review Panel.
On or about 15 May 2002, Mr Malouf prepared a Retainer and Costs Agreement in relation to acting for Mr Nassour in his claim against Dr Pouw. On 20 May 2002, it was signed by the parties and it included terms to the effect, as follows:
(a) The defendant would charge the plaintiff professional fees only upon obtaining "a successful outcome of the work" , which was defined as a verdict, award or settlement in favour of the plaintiff (clauses 2, 3 and 4).
(b) Expenses would be paid by the plaintiff at the end of the case irrespective of whether the plaintiff won or lost (clause 4).
(c) An estimate of $30,000 to $70,000 was provided for proceedings to a full hearing (clause 5).
(d) A bill for charges, payable only on the successful outcome of the work, would be provided after completion of the work (clause 7).
(e) In the event that Mr Nassour failed to provide Malouf Solicitors with adequate instructions, or if Mr Nassour indicated that he had lost confidence or if Mr Nassour terminated the agreement in writing, Malouf Solicitors would not continue to do work for Mr Nassour and Mr Nassour would be required to pay Malouf Solicitor's charges for work done and for expenses incurred up to the date of termination of the agreement (clause 13).
[my emphasis added]
From May 2002 to May 2003, Mr Malouf continued to act on behalf of Mr Nassour in his claim against Dr Pouw.
On 4 December 2002, Mr Paul Watts of Malouf Solicitors, the solicitor handling Mr Nassour's file, wrote to Mr Nassour and said:
"Dear Mr. Nassour,
I had a very encouraging phone call from Dr. Pouw on Friday 29 November 2002.
He suggests that firstly you should obtain an opinion upon what more work can be done to improve your appearance and secondly, he may refund you all monies paid by you over and above what Medicare has paid.
I think that is a very sensible couple of suggestions and as to the first I shall need to obtain a further medical opinion. ..."
On 12 May 2003, Mr Nassour received a letter from Mr Watts that relevantly stated:
"Dear Mr Nassour,
You recently rang me to advise that you cannot get the opinion of a plastic surgeon upon rectification work undertaken by Dr. Pouw.
You suggest that we put an offer of settlement to Dr. Pouw and I informed you that our costs will be in the order of $40,000.00. I have since checked our ledgers and I expect that our costs will not exceed $30,000.00 including our outlays of $3,321.56, that is monies we have spent on your behalf.
The offer put by Dr Pouw as set out in my letter of 4 December 2002 is one way of dealing with the matter which is advantageous to the doctor but will leave you with very little compensation in my estimation. But on the other hand your prospects of success in your litigation are very low. As your main concern is to improve your appearance there is nothing more I can suggest to you other than that you find a plastic surgeon who believes he can help.
There is nothing else I can do for you Mr Nassour as this firm has already outlaid a great deal of time on your behalf and I regret to say that basically it is up to you to help yourself."
On 29 October 2003, Mr Nassour received a letter from Mr Malouf. It relevantly stated:
"As stated previously, we are unable to assist you further. I have closed our file and written off our costs and disbursements.
...
Should it become necessary our file can be returned from storage."
[ the critical letter ]
On 16 December 2003, Mr Malouf wrote to Mr Nassour stating:
"We are moving offices and I shall take the opportunity to place your file in storage. We shall retain the file for seven (7) years and then it will be destroyed.
...
There is your photograph album which I shall keep in my office for a while. Please call in and collect it in the next few weeks.
..."
On 17 January 2004, Mr Malouf again wrote to Mr Nassour stating:
"Mr Nassour, I can't help you anymore. Please come and pick up your photographs."
On 27 January 2004, Mr Malouf wrote to Mr Nassour stating:
"Dear Mr Nassour,
You rang me on 20 January 2004 to advise you have been looking for a surgeon to help you but you don't really trust doctors in Australia. You wanted to go to the US and find a surgeon there and you want Dr. Pouw to fund your travel to the US and surgery there.
... Dr. Pouw rang me on 29 November 2002 and my notes of that conversation are recorded.
...
When you rang me on 20 January 2004 you asked me to put the same proposal as I put to Dr. Pouw when I spoke to you on the phone. He is not interested in the proposal.
Mr Nassour, I can't help you anymore. Please come and pick up your photographs."
Nevertheless, on 9 February 2004, at the request of Mr Nassour, Mr Malouf sent a letter to Dr Pouw requesting assistance on behalf of Mr Nassour for travel to the United States for surgery. Mr Watts wrote to Mr Nassour on that day and stated:
"Dear Mr Nassour,
I attach a copy of my letter of today to Dr. Poew [sic]. As you have requested I have made this "one last request" on your behalf.
I shall cease acting once I hear back from Dr. Poew [sic], if I do."
On 23 March 2004, Mr Malouf wrote to Mr Nassour stating:
"For reasons referred to in past letters to you we can no longer seek to assist you in this matter.
I propose ceasing to act on your behalf and I shall file a Notice with the Court after seven (7) days from the date of this letter, informing the court and Dr. Pouw that we have ceased to act.
We wish you well in the future."
On 31 March 2004, Mr Malouf appeared by his Sydney agent before the District Court in connection with the proceedings against Dr Pouw.
On 5 April 2004, Mr Malouf wrote to Mr Nassour advising:
"...I confirm that your matter was recently before the Court. I had our Sydney agents, Turner Whelan attend...
If it is your wish to continue the proceedings I confirm my advice in our telephone conversation you must immediately retain another firm of solicitors as I am in the process of disengaging this firm from acting for you.
Your new solicitor will advise you what is required to enable your matter to continue.
We wish you and yours well."
On 14 April 2004, Mr Malouf served Dr Pouw with his notice of ceasing to act for Mr Nassour in the District Court proceedings.
From October 2003 to October 2004, Mr Nassour sought new solicitors to act on his behalf in the District Court proceedings against Dr Pouw.
On 9 September 2004, Mr Malouf prepared a detailed Bill of Costs for the work claimed by him against Mr Nassour in connection with Mr Nassour's claim against Dr Pouw. A copy was forwarded by post to Mr Nassour However, Mr Nassour had not resided at that address for over five years. Mr Nassour gave evidence that he did not receive this bill of costs and I accept his evidence.
Mr Nassour's new solicitors and the exchange of correspondence with Mr Malouf
In or about September/October 2004, Mr Nassour instructed Benjamin & Khoury solicitors (the new solicitors) to act on his behalf in the District Court proceedings against Dr Pouw.
On 1 October 2004, the new solicitors wrote to Mr Malouf informing him that they [Benjamin & Khoury] had been retained to act on Mr Nassour's behalf in the District Court proceedings against Dr Pouw. Mr Khoury also requested Mr Nassour's file. The letter also stated:
"We refer to the proceedings filed by your Office on 4 July, 2001 and to our telephone conversation today.
....
He [Mr Nassour] "has told us you have been acting for him on the basis of 'no win no pay.' That is the same basis on which this firm will be conducting the proceedings."
On 14 October 2004, Mr Malouf wrote to the new solicitors as follows:
"Thank you for your letter of 1 October 2004.
Our papers are attached as is our tax invoice dated 9 September 2004. Your undertaking is noted and from time to time we shall write to you respectfully enquiring upon your progress."
Mr Malouf included in the letter the tax invoice dated 9 September 2004 for his fees he claimed in relation to having acted for Mr Nassour in his claim against Dr Pouw.
On 26 November 2004, Mr Malouf's firm wrote to Mr Nassour's new solicitors reminding Mr Nassour that the account of 9 September 2004 had not been paid. The correspondence was written in the following terms:
"We would be pleased if you would kindly advise us as to whether this matter has been completed and when we might expect payment of our outstanding fees."
On 23 March 2005, Mr Malouf wrote to the new solicitors asking whether the matter had been completed and when it was expected that their outstanding fees might be paid.
On 13 July 2005, the new solicitors wrote to Mr Malouf as follows:
"We refer to your letter of 13 July 2005 concerning work done by your Firm in relation to the above plaintiff, your previous client.
Enclosed is a copy of your letter of 29 October 2003 (the critical letter), which is self explanatory."
On 10 August 2005, Mr Malouf wrote to the new solicitors stating that:
"We advise the letter to client dated 29 October 2003 was issued without either approval or confirmation of management. In any event there is no consideration at law or otherwise for us waiving our fees. Accordingly we have not waived our fees.
...
As conduct of this matter has been assumed by your office we respectfully ask that our Memorandum of Account dated 9 September 2004 be recovered upon completion of this matter. We assert and confirm rights to recover our outstanding fees..."
Mr Nassour, during cross examination at the hearing of this appeal, gave evidence that he was not aware of the correspondence between his old and new solicitors until recently. He also gave evidence that the new solicitors had not told him about it. I accept Mr Nassour's evidence on this topic.
On 12 October 2005, Mr Nassour executed an Authority to Settle his claim against Dr Pouw. It stated:
" AUTHORITY TO SETTLE
George Nassour -v- Dr William Powu [sic]
( District Court of New South Wales Matter 6807 of 2001 )
I, George Nassour, of xx xxxx xxx xxxxxxxx, xxx authorise my Solicitors and Attorneys, Benjamin & Khoury, of Sydney to settle the above proceedings in the sum of $70,000 all inclusive.
It has been explained to me both by my Solicitors and Senior Counsel that it is in my best interests to accept this offer.
I accept $47,500.00 as full & final settlement from the above and I authorise my solicitors to apply the balance of $22,500.00 in payment of their costs and disbursements including HIC in the amount of $2,226.70. I understand that no other payments will be deducted from the $47,500.00."
By letter dated 9 January 2006, Mr Malouf informed Benjamin & Khoury solicitors that:
"...Whilst we terminated the agreement with your client under the terms of that agreement, we again respectfully, submit that we are entitled to charge for work done and for expenses incurred up to the date of termination of the agreement."
The Costs Assessor's decision
Both parties made submissions to the Costs Assessor, Robbert Fox ("the Costs Assessor"). Relevantly Mr Nassour, in his submissions dated 8 September 2008, stated:
"... [Mr Malouf] terminated the Costs Agreement with [Mr Nassour] and refused to continue to carry out the work. Clause 13 of the Costs Agreement provides that [Mr Malouf] may terminate the agreement if [Mr Nassour] failed to provide adequate instructions or if [Mr Nassour] indicated that he had lost confidence in [Mr Malouf]. [Mr Nassour] did not fail to give instructions or lose confidence in [Mr Malouf]. We refer to the attached letter from Paul Watts ('Mr Watts'), sent for and on behalf of [Mr Malouf] to [Mr Nassour], dated 29 October 2003 ('the letter dated 29 October 2003') which stated:
'As stated previously, we are unable to assist you further.'
Therefore, [Mr Malouf] should not be entitled to rely on the Costs Agreement to claim the costs sought in the Bill dated 9 September 2004.
[Mr Malouf] informed [Mr Nassour] by the letter dated 29 October 2003 (the critical letter) that it had written off the costs and disbursements. The letter dated 29 October 2003 sent by Mr Watts to [Mr Nassour] states that:
'I have closed out file and written off our costs and disbursements.'
Following receipt of the letter dated 29 October, [Mr Nassour] subsequently instructed Benjamin & Khoury solicitor to act on his behalf in his claim for damages against Dr Pouw. [Mr Nassour] relied on [Mr Malouf's] decision to write off the costs and disbursements in deciding to proceed with the claim against Dr Pouw. Benjamin & Khoury accepted instructions from [Mr Nassour] on the basis that no costs were owed to [Mr Malouf]. In this regard we refer to the attached letter from Benjamin & Khoury solicitors to our office dated 15 August 2008.
Having regard to the letter from [Mr Malouf] to [Mr Nassour] dated 29 October 2003, [Mr Nassour] says that:
(a) [Mr Malouf] waived all rights to claim any of the legal fees particularised in the Bill of Costs.
(b) [Mr Malouf] is estopped from claiming any of the legal fees particularised in the Bill of Costs.
..."
Mr Nassour firstly, objected to all of the fees and costs claimed by Mr Malouf between 12 April 1999 and 20 May 2002 having regard to the letter dated 29 October 2003 (the critical letter) and the fact that no costs disclosure and/or costs agreement was issued by Mr Malouf to Mr Nassour before about 20 May 2002; and secondly, objected to all of the fees and costs claimed by Mr Malouf between 29 October 2003 to 7 September 2004 having regard to the letter dated 29 October 2003 which confirmed that from that date, Mr Malouf could not assist Mr Nassour further in the matter, Mr Nassour's file was closed and placed in storage and the costs and disbursements were written off.
These submissions were also before the Review Panel. Shortly stated, in these submissions, Mr Nassour raised issues of termination, waiver and estoppel and if these submissions were accepted Mr Nassour did not owe Mr Malouf any fees, or alternatively, Mr Nassour did not owe Mr Malouf any fees subsequent to the letter dated 29 October 2003. There was no mention of abandonment in these submissions.
In Mr Malouf's submissions, he acknowledged that there was no disclosure in accordance with s 175 of the Act and that costs were assessable under ss 208A and 208B of the "old" Act, but the rates set out in the agreement are both fair and reasonable. Mr Malouf also acknowledged that Mr Nassour terminated the costs agreement and that the termination was in accordance with paragraph (13) of the agreement.
So far as waiver and estoppel were concerned, Mr Malouf had this to say, firstly, Mr Nassour had not put forward any evidence to support his contention that Mr Malouf waived all rights to claim any of the legal fees particularised in the bill of costs; and secondly, Mr Nassour had not put forward any evidence to support his contention that Mr Malouf was estopped from claiming any of the legal fees particularised in the bill of costs and finally that Mr Nassour did not show that there had been a promise and that Mr Nassour acted to his detriment in relying on the promise made by Mr Malouf.
The Costs Assessor in his reasons dated 18 November 2008 stated:
"It seems to me that the letter of 29 October 2003 is fatal to [Mr Malouf's] claim - to "write off" costs and disbursements means to abandon them. Had [Mr Malouf] wished to reserve its position, it should have done so by appropriate comments, either in the letter of termination, or subsequently when submitting the file to Benjamin and Khoury [the new solicitors].
I acknowledge that the inclusion of a note of outstanding fees with the letter submitting the file to Benjamin and Khoury indicates a desire to be paid on successful settlement, but I am not satisfied that that is sufficiently clear to establish a payment basis for submission of the file. This is an aspect which [Mr Malouf] did not further clarify in its submissions of 17 September 2008.
[Mr Nassour] has raised the obvious issue of an estoppel along the lines of Waltons v Maher , and the [Mr Malouf] has responded to that, saying that there is no evidence of any reliance by [Mr Nassour] upon whatever representation may have been made by the waiver.
It seems to me that it is not my function to further seek to investigate this aspect of the matter, having reached the conclusion that the [Mr Malouf's] correspondence amounted to a waiver.
I note that the instructions predate the current Legal Profession Act , and consequently my determination is, pursuant to the Legal Profession Act 1987.
For the sake of clarity, I determine that, in view of the Costs Applicant's waiver there is no Costs Agreement."
On 2 December 2008, the Costs Assessor issued a Certificate of Determination in the following terms, "The Application is determined by substituting for the disputed the costs as a fair and reasonable amount of costs to be paid to [Mr Malouf] in the sum of nil."
While the Costs Assessor's decision is not strictly relevant to this appeal, I have included his reasoning so that the decision of the Review Panel can be properly understood.
The relevant statutory provisions and decision of the Review Panel
Section 208KC of the Act provides:
"(1) A panel constituted under this Subdivision may review the determination of the costs assessor and may:
(a) affirm the costs assessor's determination, or
(b) set aside the costs assessor's determination and substitute such determination in relation to the costs assessment as, in their opinion, should have been made by the costs assessor who made the determination that is the subject of the review.
(2) For the purposes of subsection (1), the panel has, in relation to the application for review, all the functions of a costs assessor under this Part and is to determine the application, subject to this Subdivision and the regulations, in the manner that a costs assessor would be required to determine an application for costs assessment.
(3) However, the review is to be conducted on the evidence that was received by the costs assessor who made the determination that is the subject of the review and, unless the panel determines otherwise, the panel is not:
(a) to receive submissions from the parties to the assessment, or
(b) to receive any fresh evidence or evidence in addition to or in substitution for the evidence received by the costs assessor.
..."
Section 208KF(1) provides:
"On making a determination in relation to an application for review of a costs assessment under this Subdivision, a panel is to issue to each party concerned a certificate that sets out the determination."
and s 208KG provides:
"(1) The panel must ensure that a certificate issued under section 208KF that sets out the determination of the panel is accompanied by:
(a) a statement of the reasons for the panel's determination, and
(b) such supplementary information, in relation to the determination, as may be required by the regulations.
(2) The statement of reasons must be given in accordance with the regulations."
Clause 68 of the Legal Profession Regulation 2002 governs the requirements of the Statement of Reasons for the Review Panel. It relevantly provides:
"(1) A Statement of Reasons for a costs review panel's determination that is required by s 208KG of the Act to accompany a certificate issued under s 208KF of the Act must be accompanied by the following information:
(a) the total amount of costs for providing legal services determined to be fair and reasonable,
(b) the total amount of disbursements determined to be fair and reasonable,
(c) each disbursement varied by the determination,
(d) in respect of any disputed costs, an explanation of:
(i) the basis on which the costs were assessed, and
(ii) how the submissions made by the parties were dealt with,
(e) a statement of any determination as to the person by whom and the extent to which either the fee paid or payable for the application for review or the costs of the costs assessor, or both, are to be paid,
..."
(i) Whether there was a denial of procedural fairness by the Review Panel
Mr Nassour submitted that Mr Malouf's grounds for review argued and made representations as to facts, as well as recited the ground or error said to arise from the Costs Assessor's assessment. Mr Nassour submitted that the Review Panel failed to allow him to respond to the submissions contained in the grounds of appeal and therefore he was denied procedural fairness.
By letter dated 7 April 2009, the Review Panel requested Mr Nassour's solicitor provide copies of documents relating to any verdict, award or settlement entered into by Mr Nassour and Dr Pouw in relation to the District Court proceedings. The Review Panel advised Mr Nassour's solicitor that:
"It is the present intention of the Review Panel to determine the Application for Review as soon as is possible after 21 st April 2009, on the material that was placed before the Assessor and the additional material (if provided) referred to above."
By letter dated 16 April 2009, Mr Nassour's current solicitors, Legal Aid NSW, responded to the Review Panel by providing it with a copy of the Authority to Settle executed by Mr Nassour dated 12 October 2005. This letter advised the Review Panel that they did not have any documents the Review Panel had requested nor did the new solicitors. In lieu, the solicitors sent a copy of an authority to settle.
The content of Legal Aid's letter only addressed the points raised in the Review Panel's letter. The solicitors were not asked to and did not make any further submissions in response to Mr Malouf's further submissions.
On 24 April 2009, the Review Panel issued its Certificate of Determination and Reasons. The Review Panel set aside the Certificate of Determination issued on 18 November 2008 by the Costs Assessor on the basis that, Mr Malouf, by his letter dated 29 October 2003, did not waive its right to and was not estopped from claiming the costs and disbursements contained in the Bill of Costs dated 9 September 2004.
The Review Panel then listed the nine grounds of appeal submitted by Mr Malouf that were contained in the Application for Review. At paragraph 8 of the grounds for review, Mr Malouf submitted to the Review Panel that:
"The amount of costs set out in [Mr Malouf's] bill dated 9 September 2004 was fair and reasonable in terms of section 208A of the Legal Profession Act 1987 and the Costs Applicant is entitled to the full amount of their costs set out in the said bill of costs."
At paragraph 34 of its Reasons, the Review Panel held:
"Accordingly, in determining this application for review the Review Panel has had regard to the necessity for it to carry out its own review as opposed to conducting an appeal and has acted accordingly."
At paragraph 35 the Review Panel determined that "having reviewed the whole of the material in this matter" there was no waiver or estoppel.
At paragraph 36 the Review Panel stated:
"Thus it falls upon the Review Panel to determine [Mr Malouf's] fair and reasonable costs."
The Review Panel determined that the fair and reasonable costs Mr Malouf was entitled to were $19,945.91.
In Levy v Bergseng [2008] NSWSC 294; (2008) 72 NSWLR 178, Rothman J considered his previous decision in Hall Chadwick v Doyle [2006] nswsc 1195 and at [50] held that the issue of the denial of procedural fairness was a ground of appeal that raises decisions as to a matter of law arising in the proceedings . In Levy v Bergseng the relevant facts were:
(a) A costs assessor assessed that the defendant ("Bergseng") owed the plaintiff ("Mr Levy") the sum of $420,139.19 (including interest).
(b) Bergseng applied for the decision of the Costs Assessor to be reviewed by a Costs Review Panel.
(c) The grounds for making the application for review were set out in the application for review.
(d) The Review Panel stated in its reasons that it did not determine to receive any submissions from the parties and carried out the review on the basis of the documents before the Assessor. The Review Panel therefore did not consider submissions lodged by Mr Levy in response to the submissions lodged by Bergseng in its application for review.
(e) The Review Panel set aside the Certificate of Determination of the Costs Assessor.
(f) One of the grounds upon which Mr Levy appealed the determination of the Review Panel was on the basis that he was denied procedural fairness in not having his submissions in reply considered by the Review Panel.
Rothman J held that there was a denial of natural justice because the Review Panel took into account submissions by Bergseng, despite making it clear that it would not receive any submissions, but did not allow Mr Levy an opportunity to deal with those submissions and his Honour stated at [52]:
"Jurisdiction of the Costs Assessor and Review Panel
[52] Counsel on behalf of Mr Levy originally submitted that neither the Costs Assessor nor the Review Panel had jurisdiction to determine the construction of the costs agreement. He also submitted that they did not have jurisdiction to determine the question raised in the cross-claim, namely, whether GST is payable. Counsel relied upon comments of mine in Hall Chadwick v Doyle (at [72]) and following. There are at least two reasons why that submission is not open. The first, and most obvious, is that to the extent that my judgment in Hall Chadwick takes the view that the Costs Assessor and/or Review Panel does not have jurisdiction to decide the construction of the contract and/or issues of law of that kind, it was overturned by the judgment of the Court of Appeal in Doyle v Hall Chadwick . Secondly, the passage on which the plaintiff relies was not, notwithstanding its infelicitous terminology, intended to expose a view that construction of documents, or questions of law, could not be decided by Costs Assessors. The very terms of s 208L of the 1987 Act would suggest otherwise. It was rather that, in the context of a submission that the Costs Assessor's Determination was final and could not be overturned by the Supreme Court, that the assessment of the Costs Assessor on the question of law was not a final determination but rather a determination in the course of the exercise of jurisdiction conferred by the Legal Profession Act as to the amount of the costs that could be charged, what were reasonable and/or what were not unjust. In other words, the passage upon which the plaintiff relies in the proceedings from my earlier judgment in Hall Chadwick was a passage confined to the question of the jurisdiction of a costs assessor to determine finally a question of law, in the face of an appeal to this Court."
His Honour continued at [64] to [68]:
"[64] Those "grounds" from time-to-time used the term "submissions" to describe the document. The applicant for review used the term "costs review applicant submits" or "it is submitted" or "in addition to the submission above" etc. The reliance on those words, if the nature of the document were otherwise, would not itself make the attachment a submission. But the attachment made representations, put argument, and made representation as to facts, as well as reciting the ground or error said to arise from the assessment. An analysis of the entirety of the attachment to the application for review of costs assessment is that it represents, predominantly, a submission by MBP as to the manner in which the error of the Costs Assessor, otherwise identified briefly, has been made and how it ought be rectified.
[65] The Determination of the Review Panel does not suggest that the document was not, in its entirety, taken into account. Even if the Review Panel were to have discounted any reliance upon the submission, there would be an appearance of unfairness and a real, if subconscious, risk of prejudice: Kioa v West [1985] HCA 81; (1985) 159 CLR 550 at 629.
[66] The Review Panel, in a little less than two pages, extracted the true grounds of appeal. In order to extract those grounds, the Review Panel would have been required to read the whole of Attachment A, including the submissions in support of the application. The Appeal Panel does not, expressly or impliedly, disavow any regard to the remainder of the Attachment. As a consequence, it is a necessary inference that Attachment A was read and taken into account. Attachment A is a submission.
[67] The provisions of subs 208KC(2) of the 1987 Act provide that the review is to be conducted on the evidence that was before the Costs Assessor and, "unless the Panel determines otherwise, the Panel is not to receive submissions from the parties to the assessment" or receive fresh evidence.
[68] A proper analysis of the character of Attachment A to the application is that it is, predominantly, a submission. The Panel has not determined to receive submissions and it was not entitled to take account of Attachment A."
Turning to the appeal proceedings before this Court, the Review Panel did not say that it would consider submissions from the parties but it did say that it would seek further evidence. In its letter dated 7 April 2009, the Review Panel stated that it intended to determine the application on the material that was placed before the costs assessor and it requested evidence of any verdict, award, settlement, deed of agreement, or correspondence. The Review Panel also stated, "Please note that the Review Panel does not require any further submissions from either of the parties."
Counsel for Mr Nassour submitted that if Mr Malouf's grounds of appeal can be construed as submissions then natural justice will have been denied if Mr Nassour was not given an opportunity to reply to those submissions (see Levy v Bergseng at [74] to [75]).
The letter dated 16 April 2009 from Legal Aid NSW shows that Mr Nassour 's solicitors could not strictly comply with the request from the Review Panel for documents relating to any relevant verdict, award or settlement entered into. However, the letter quoted the terms of settlement letter dated 12 October 2005. I do not consider that supplying details of the terms of settlement at the request of the Review Panel amounts to a submissions being made on behalf of Mr Nassour.
The Review Panel stated at [29] to [34] of its reasons for determination:
"[29] [Mr Malouf] provided a number of grounds of appeal which may be summarised as follows:
(a) [Mr Malouf] provided legal services from 12 April 1999 to 7 September 2004 as set forth in the Bill of Costs dated 9 September 2004.
(b) [Mr Malouf] terminated his retainer on the basis that there was a failure to provide adequate instructions and/or indication that [Mr Malouf] had lost the confidence of the Client in that the Client would not accept [Mr Malouf's] advice to obtain an opinion from a plastic surgeon. It is asserted that termination in accordance with clause 13 overrode the no win/no fee provisions of the agreement.
(c) [Mr Malouf] did not waive his entitlement to costs.
(d) [Mr Malouf] did not, either by waiver or estoppel, lose his entitlement to costs.
(e) [Mr Nassour] had the benefit of legal services provided by [Mr Malouf] as set out in the bill.
(f) The costs claimed by [Mr Malouf] were not unfair or unreasonable.
(g) That after 20 May 2002 the costs were governed by the costs agreement, which is binding under s208C of the Legal Profession Act 1987 .
(h) The amount of costs set out in [Mr Malouf's] bill dated 9 September 2004 was fair and reasonable in accordance with s208A
(i) [Mr Nassour's] submissions to the Assessor should have been accepted.
[30] The Review Panel had before it the whole of the Assessor's file, the Certificates of Determination and Reasons of the Assessor, the application for review and affidavit of service. The Client has not produced the Practitioner's file, which is still said to be with Benjamin & Khoury.
[31] Section 375(3) of the Act provides that the review is to be conducted on the evidence that was received by the Assessor, unless the panel otherwise determines.
[32] In the present case, the Panel determined to seek further evidence... However, the following information was provided [the Review Panel inserted an excerpt of the plaintiff's settlement letter].
[34] Accordingly, in determining this application for review the Review Panel had regard to the necessity for it to carry out its own review as opposed to conducting an appeal and has acted accordingly."
Following Levy v Bergseng , the grounds of appeal submitted by the defendant were submissions because they " put argument, and made representation as to facts". In order to extract Mr Malouf's grounds of appeal, the Review Panel would have been required to read the whole of Mr Malouf's application for review, which included submissions. It also raised a more elaborate expos as to the principles of estoppel and waiver and their applicability. Mr Nassour should have been given an opportunity to meet them. He was not given that opportunity. Therefore, i t is my view that there has been a denial of procedural fairness and the decision of the Review Panel should be set aside.
The reasons for determination issued by the Review Panel failed to comply with Clause 68(1)(d)(ii) of the Legal Profession Regulation 2002 in that it failed to contain an explanation of how the Review Panel dealt with Mr Nassour's contention that Mr Malouf, by his letter dated 29 October 2003, waived its right to and is estopped from claiming its costs and disbursements. Fo r the purpose of s 208L of the Act , the Review Panel's failure to give adequate reasons in respect of its finding that Mr Malouf did not waive his right to, and is not estopped from claiming, his costs and disbursements is an error as to a matter of law arising in the proceedings.
The Review Panel in so far as abandonment and waiver are concerned stated at [35]:
"35 The Review Panel having reviewed the whole of the material in this matter determines that:
(i) [Mr Nassour] did obtain a successful outcome in the settlement that was made in his favour.
(ii) There was no waiver of [Mr Malouf's] fees by the Practitioner.
(iii) There is no estoppel which might affect [Mr Malouf's] recovery of his fees and [Mr Malouf] is entitled to his fees on a fair and reasonable basis until the Retainer and Costs agreement was signed in May 2002, and thereafter is entitled to his fees in accordance with the terms of the Retainer and Costs Agreement which appears to have been completed by [Mr Nassour] on 20 May 2002."
The Review Panel then went on to determine Mr Nassour's fair and reasonable costs. The Review Panel did not provide any further reasons in relation to the issues of waiver and estoppel.
Whether the matter should be remitted?
Rather than remit this matter to the Review Panel for redetermination I will pursuant to s 208L(2)(a) make a determination available to the Review Panel.
(ii) Jurisdiction of Costs Assessor and Review Panel to deal with the assessment
The Review Panel was established as a statutory tribunal under the Act and had only the jurisdiction given to it by the Act pursuant to s 208KC. The Review Panel had, in relation to the application for review, all the functions of a Costs Assessor and it was to determine the application in the manner that a Costs Assessor would be required to determine an application for costs assessment . The powers of the Costs Assessor and the Review Panel were co-extensive.
The first and most important issue to be decided is whether the Review Panel had jurisdiction to determine the review. Counsel for Mr Malouf submitted that there was no allegation by Mr Nassour that Mr Malouf was estopped from denying the making or the existence or otherwise of the costs agreement; secondly, that Mr Nassour's assertions that Mr Malouf should not have applied for a review was misconceived and not supported by the Court of Appeal decision in Doyle v Hall Chadwick [2007] NSWCA 159; and thirdly, the decision in Doyle v Hall Chadwick does not restrain Mr Nassour in the exercise of his statutory right pursuant to s 208KA.
Mr Nassour submitted that, Mr Malouf should have commenced his appeal proceedings in the Supreme Court rather than with the Review Panel because the Review Panel's decision converted a Certificate of Determination into a judgment in circumstances where there was a real dispute on substantial legal grounds; following Doyle v Hall Chadwick , the issue of waiver and estoppel were matters that could be considered by the Costs Assessor in the exercise of his equitable jurisdiction and pursuant to ss 208(2) and (3) of the Act; and finally, t he Costs Assessor was justified in issuing a Certificate with a nil assessment because that certificate could not be converted into a judgment in favour of Mr Malouf. Mr Nassour's last two submissions refer to the Costs Assessor's decision. They are not the subject of review in this Court. It is the Review Panel's decision that is the subject of this review.
The issues of estoppel and waiver were raised in submissions by Mr Malouf to the Costs Assessor and hence the Review Panel. Mr Malouf addressed Mr Nassour's submissions of waiver and estoppel by stating that Mr Nassour had not put forward any evidence to support his contention that the Mr Malouf waived all rights to claim any of the legal fees particularised in the bill of costs; nor had Mr Nassour put forward any evidence to support his contention that the Mr Malouf was estopped from claiming any of the legal fees particularised in the bill of costs.
The costs assessment regime
Section 208S provided:
"208S Costs Assessors
(1) The Chief Justice of New South Wales may appoint persons to be costs assessors under this Act.
(2) A costs assessor has the functions that are conferred on the costs assessor by or under this or any other Act.
...
(4) A costs assessor is not an officer of the Court when acting as a costs assessor."
Section 201(1) permitted Mr Malouf to apply for assessment of the whole or any part of the costs. Upon application there was a referral pursuant to s 206 to a Costs Assessor.
Section 208 dealt with how the Costs Assessor was to consider the application. He or she was not bound by the rules of evidence (s 208(2)). The Costs Assessor was expressly authorised to determine whether or not a disclosure had been made, whether a costs agreement existed and its terms (s 208(3)).
Section 208A(1) prescribed the matters which the Costs Assessor must consider. They are, firstly, whether it was reasonable to carry out the work; secondly, whether it was carried out in a reasonable manner; and finally, the fairness and reasonableness of the amount of the costs in relation to the work.
Section 208A(2) prescribed the method by which the Costs Assessor was to determine the application. The Costs Assessor either confirmed the bill or if the amount was unfair or unreasonable, substituted his or her opinion. Section 208B identified other matters to which a Costs Assessor may have regard in assessing the reasonableness of the bill.
Section 208D gave the Costs Assessor a specific jurisdiction to determine the fairness of a particular term of a costs agreement. In order to decide whether a term of a particular costs agreement was unjust in the circumstances in which it was made, the Cost Assessor must have considered the public interest and all the circumstances of the case. In making this determination the Costs Assessor may have regard to a number of discretionary elements including the consequences of compliance, or non-compliance, with all or any of the provisions of the agreement (s 208D(2)(a)); and whether or not it was reasonably practicable for the applicant to negotiate for the alteration of, or to reject, any of the provisions of the agreement (s 208D(2)(d)); the form of the agreement and the intelligibility of the language in which it is expressed (s 208D(2)(h)); the extent to which the provisions of the agreement and their legal and practical effect were accurately explained to the applicant and whether or not the applicant understood those provisions and their effect (s 208D(2)(i)).
Both parties agreed before the Costs Assessor and the Review Panel that the Costs Assessor had jurisdiction to construe the costs agreement and determine its effect. This does not necessarily give the Costs Assessor and the Review Panel jurisdiction to determine the costs dispute. Mr Nassour submitted, on the one hand, that the Costs Assessor had jurisdiction to consider the construction of the costs agreement and questions of waiver and estoppel. On the other hand, it is suggested by Mr Nassour that once the Cost Assessor issued the certificate of assessment, a court, rather than the Review Panel, should have determined the same issues because there was a real dispute on substantial legal grounds. I do not agree with this submission. If the Costs Assessor had the jurisdiction to construe the costs agreement so too did the Review Panel. Conversely if the Costs Assessor did not have the jurisdiction to construe the costs agreement, neither did the Review Panel.
Judicial opinion has varied as to the extent of a Costs Assessor's power. In particular there are different approaches as to whether Costs Assessors have jurisdiction to interpret a costs agreement or authority to decide whether a costs agreement existed. Cases supporting the view that the role of the Costs Assessor is limited to determining purely the cost of the work done are the decisions of Dunford J in Muriniti v Lyons [2004] NSWSC 135 and Rothman J in Hall Chadwick v Doyle .
The contrary view was expressed in Wentworth v Rogers; Wentworth & Russo v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474 where Santow JA stated (at [38]-[43]; 484-486):
"[40] The Court of Appeal [in Wentworth v Rogers ] implicitly accepted that with these powers, though falling short of curial, the costs assessor was not only empowered in the first instance to determine the terms of the retainer of counsel and solicitor but should do so. That approach recognises the expeditious administrative process for assessing costs under the Act. For most cases determination by the costs assessor should suffice without necessity for curial review. It would be unusual that the content of the costs agreement was not self-evident from its written record, or its interpretation so problematic that a costs assessor could not, in practice, reach a sufficiently reliable result. But the discretion to order curial review remains as a safeguard for the exceptional cases that warrant it.
[41] Section 208(3)(b) expressly empowers the costs assessor to ascertain "whether a costs agreement exists, and its terms" . That, in my view, necessarily includes determining whether such agreement is within the definition of "costs agreement" in the Act and whether it is rendered void by s 184(4).
[42] I consider that the Court of Appeal decision in Wentworth v Rogers [1999] NSWCA 403 must be followed. To the extent that the decision of Dunford J in Muriniti v Lyons [2004] NSWSC 135 is inconsistent, it should not be followed.
[43] In Muriniti v Lyons , Dunford J concluded (at [56] to [58]) that the costs assessor, who set out to determine under s 208A and s 208B whether certain preconditions for the payment of costs had been fulfilled, should have declined to make a determination or issue a certificate. This was until the issue of whether or when the relevant costs were payable had been resolved by a court with power to require sworn evidence and have it tested by cross-examination. That reasoning, though not in relation to court-ordered costs, was inconsistent with the reasoning of the Court of Appeal to which I have referred and should not be followed."
In the same decision Basten JA expressed doubts about this and (at [185]; 515-516) left the question open, and Hislop AJA (at [216]; 512) preferred to express no opinion on it, as the case could be disposed of without resolving it.
On appeal, in Doyle v Hall Chadwick the Court of Appeal disagreed with Rothman J's view in Hall Chadwick v Doyle as to the powers of Costs Assessors. The Costs Assessor took a wider view. In Doyle v Hall Chadwick, Hodgson JA (with whom Mason P and Campbell JA agreed) said (at [55]-[62]):
"JURISDICTION OF COSTS ASSESSOR
[55] Both parties submitted that a costs assessor does have jurisdiction to construe a costs agreement and determine its effect.
[56] In my opinion, s 208(3) of the 1987 Act makes it clear that this is so, at least where the assessment is between the lawyer and the client.
However, I do not entirely agree with either of the opposing views expressed in the Muriniti litigation, that is, the view of Davies AJ in Muriniti v. Lyons [2000] NSWSC 680 and that of Dunford J in Muriniti v. Lyons [2004] NSWSC 135.
...
[61] In my opinion, Davies AJ was correct to say that a costs assessor, assessing costs between a lawyer and client, can determine disputes as to the terms of the costs agreement, and Dunford J was wrong to say otherwise. However, where the existence of the terms of the agreement are in dispute in a way that would require the hearing of evidence to resolve, it may be appropriate for the costs assessor to decline to resolve the dispute; and in the Muriniti litigation, it would in my opinion have been open and reasonable for Davies AJ to have permitted the question to have been determined in the proceedings before him. As it turned out, the costs assessor did decline to resolve this question; and in my opinion, in those circumstances, the costs assessor should not have issued a certificate which could be converted into a judgment. That is, in a case where there is a real dispute on substantial grounds as to whether any costs are payable, a costs assessor should not complete an assessment by issuing a certificate unless satisfied that the costs are payable, because the certificate can be filed so as to take effect as a judgment.
[62] In my opinion, this approach is consistent with the views of the Court of Appeal in Graham v. Aluma-Lite Pty. Limited (NSWCA, unreported, 25/3/97) and Wentworth v. Rogers [1999] NSWCA 403. In so far as there is a divergence of opinion in Wentworth v. Rogers [2006] NSWCA 145 as to the power of a costs assessor, in assessing party and party costs, to determine the terms and effect of the costs agreement of the party against whom the costs are sought, it is not necessary to address that divergence of opinion in this case."
In my view a costs assessor can, and at least ordinarily should, determine disputes as to liability to pay costs, as an incident of determining whether the costs are "fair and reasonable", even where there is a dispute as to whether costs are payable at all. The outcome of a finding that costs are not payable will be a determination that the fair and reasonable costs are nil.
The recent Court of Appeal decision in Doyle v Hall Chadwick now supports a broader view of the Costs Assessor's remit (see also Levy v Bergseng , discussed earlier in this judgment) . The Costs Assessor and by extension the Review Panel had jurisdiction to construe the construction of the costs agreement, whether it was terminated and if so, on what terms. Further it is clear Mr Malouf had a statutory right to apply to the Review Panel pursuant to s 208KA(1), which provides that a party to an assessment who is dissatisfied with a determination of a Costs Assessor may apply to the Manager, Costs Assessment for a review of the determination.
But was there a real dispute or substantial grounds?
In his submissions Mr Nassour argued that it was inappropriate for Mr Malouf to seek a review of the Cost Assessor's decision by the Review Panel as there was a real dispute on substantial grounds as to whether costs are payable. Instead, Mr Nassour submitted that this complex dispute should have been determined in proceedings in the Supreme Court. In this case, the complex grounds raised by Mr Nassour related to the existence of waiver and estoppel brought about by the critical letter. In Mr Malouf's submissions they also related to abandonment and election.
Although in some cases there may be a need to refer an issue in dispute from the Cost Assessor or Review Panel to the Supreme Court for determination, albeit in the most exceptional of cases, it is neither necessary nor appropriate to decide in this matter whether issues of waiver and estoppel fall within this category ( Wentworth v Rogers; Wentworth & Russo v Rogers, S antow JA at [40]). As this is matter is now before this Court it is more expedient and cost effective if this Court resolves these matters of waiver by estoppel, election and abandonment ( Civil Procedure Act 2005: s 56).
Waiver by abandonment, estoppel and election
Mr Malouf, in his application for review of determination of a costs assessor stated at grounds (3) and (4):
"3. [Mr Malouf] did not (contrary to the opinion of the learned costs assessor) waive his entitlement to costs. There is no doctrine of waiver separate from (a) election between inconsistent rights and (b) estoppel ( Freshmark Ltd v Mercantile Mutual Insurance (Australia) Ltd [1994] 2 Qd R 390, 403-4)
4. [Mr Malouf] did not (whether by waiver or estoppel) lose his entitlement to costs by advising, by letter dated 29 October 2003, that he had written off his costs in circumstances where:
(a) there was no bargain between [Mr Malouf] an [Mr Nassour] that the costs would not be recoverable, and no consideration was provided by the Costs respondent for waiving or cancelling the costs;
Reliance
The representation of Mr Malouf in the critical letter had induced Mr Nassour to assume that costs and disbursements were no longer owed to Mr Malouf. The expression "writing-off" was disputed by Mr Malouf and as such needs to be addressed. What is significant in this instance is if the reliance by Mr Nassour that all debts were no longer outstanding was in fact a reasonable reliance. Clearly an unreasonable reliance upon a representation will deny an estoppel: Waltons Stores at 397 per Mason CJ and Wilson J; Commonwealth v Verwayen at 414 per Mason CJ; Australian Securities Commission v Marlborough Goldmines Ltd [1993] HCA 15; (1993) 177 CLR 485 at 506 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ.
Although Mr Malouf in his submissions colours the "writing-off" as a removal from accounting records on the expectation that Mr Nassour's claim would be successful, it was reasonable that with the noted letters (29 October 2003, 16 December 2003, 27 January 2004, 23 March 2004, and 5 April 2004) Mr Nassour would come to the conclusion that the debt was no longer outstanding. It is reasonable to accept this meaning as one of several expressed in the definitions mentioned above. In addition to its connection to accountancy practices it also means: to treat as an irreparable non-recoverable loss or to consider as dead". In light of the tone of the correspondence to Mr Nassour and the critical letter, Mr Nassour's assumption the debt was no longer outstanding was reasonable.
In accepting the reasonableness of this assumption it follows that Mr Nassour had suffered a detriment by instructing his new solicitors. In such circumstances he would be liable to pay them if he succeeded in his claim against Dr Pouw. Financial detriment or a reliance loss had accordingly resulted from Mr Malouf's representation and inducement.
Unconscionability
Unconscionability has been referred to as the "driving force" behind promissory estoppel ( Commonwealth v Verwayen at 407). As a separate element in estoppel it is taken as a broad inquiry into all circumstances of a prevailing matter. In support of this Deane J said in Commonwealth v Verwayen at 445:
"Ultimately, however, the question whether departure from the assumption would be unconscionable must be resolved not by reference to some preconceived formula framed to serve as a universal yardstick but by reference to all the circumstances of the case, including the reasonableness of the conduct of the other party in acting upon the assumption and the nature and extent of the detriment which he would sustain by acting upon the assumption if departure from the assumed state of affairs were permitted."
From the circumstances of this particular matter it may be argued that it is unconscionable for Mr Malouf to receive his costs and disbursements after sending the critical letter was sent to Mr Nassour. Accepting that Mr Nassour had been induced by Mr Malouf's representation, that it was reasonable for Mr Nassour to rely upon the interpretation that the debts were no longer outstanding. Although as noted Mr Malouf proffered an alternative meaning. As Ipp JA observed in Australian Crime Commission v Gray & Anor [2003] NSWCA 318 at [200]: "Unconscionability is usually difficult to establish when the representation is ambiguous or unclear." In referring to Woodhouse AC Israel Cocoa Limited SA v Nigerian Produce Marketing Company Limited [1972] AC 741 his Honour at [201] referred to the following remarks of Lord Denning MR with approval (at 60):
"If the representation is put forward as a variation , and is fairly capable of one or other of two meanings, the judge will decide between those two meanings and say which is right. But if it is put forward as an estoppel , the judge will not decide between the two meanings. He will reject it as an estoppel because it is not precise and unambiguous. There is good sense in this difference. When a contract is varied by correspondence, it is an agreed variation. It is the duty of the court to give effect to the agreement if it possibly can: and it does so by resolving ambiguities, no matter how difficult it may be. But, when a man is estopped , he has not agreed to anything. Quite the reverse. He is stopped from telling the truth. He should not be stopped on an ambiguity. To work an estoppel, the representation must be clear and unequivocal".
In referring to this principle his Honour at [204] did acknowledge that there could situations where an ambiguous or unclear representation may give rise to an unconscionable result. As such, a promissory estoppel may then arise. It may be the case that the representor is responsible for the ambiguity. If this is the case "unconscionability of the situation would not be negated by the ambiguity. Equity would intervene by fashioning relief based on the concept of "minimum detriment" ( Australian Crime Commission v Gray per Ipp JA at [205]). Although there was ambiguity within meaning of writing-off costs and disbursements, it was reasonable for Mr Nassour to interpret those terms in the way that he had. Having relied on such an interpretation and suffering detrimental reliance it would be unconscionable for Mr Malouf not to keep his promise to write-off all costs and disbursements incurred by Mr Nassour. On this basis I consider that promissory estoppel has been established.
I also consider that Mr Malouf had no entitlement to terminate the retainer. He has abandoned his costs.
Termination of retainer
Clause 13 of the retainer and costs agreement between the parties stated:
"13. Termination:
We shall not continue to do the work if you fail to provide us with adequate instructions, or if you indicate to us that we have lost your confidence. We shall give you at least fourteen (14) days' notice of our intention to terminate our Agreement and of the grounds on which the notice is based. You will be required to pay our charges for work done and for expenses incurred up to the date of termination of the Agreement."
Malouf Solicitors gave notice of its intention to terminate the retainer with Mr Nassour on 12 May 2003 when the firm wrote to Mr Nassour, stating, "... basically it is up to you to help yourself." This termination was confirmed in the letter of 29 October 2003. However, on 9 February 2004, at the request of Mr Nassour, Mr Malouf appeared to move from this position and made "one last request" to Dr Pouw on Mr Nassour's behalf.
The evidence shows that Mr Malouf provided notice to Mr Nassour and terminated the retainer pursuant to clause 13 of the contract, but he did not stipulate either that Mr Nassour had failed to provide instructions or that Mr Nassour had lost confidence in Mr Malouf. In my view Mr Malouf was not entitled to terminate the retainer. I accept that after the critical letter was written, Mr Malouf undertook to make contact with Dr Pouw, that work was solely undertaken so as the solicitor could ensure that he disengaged himself from acting for Mr Nassour. He is not entitled to any costs for this work.
Misleading and deceptive conduct
Counsel for Mr Nassour submitted that when viewed objectively, the conduct of Mr Malouf in advising him that it had "written off its costs and disbursements" mislead and deceived him into believing that Mr Malouf had abandoned its costs and disbursements. It is submitted this conduct is a breach of s 42 Fair Trading Act 1987 .
The Fair Trading Amendment (Australian Consumer Law) Act 2010 commenced on 1 January 2011 and omitted s 42 of the Fair Trading Act . Section 42 has been replaced by Schedule 2 Part 21 section 18 of the Australian Consumer Law (ACL) which is set out in of the Competition and Consumer Act 2010 (this is the new Trade Practices Act 1974 (TPA)). However for transactions that occurred up to 31 December 2010, the previous national, State and Territory consumer laws apply. Section 42(1) Fair Trading Act , as it then was, prohibited a person, in "trade or commerce", from engaging in conduct that was misleading or deceptive.
In his affidavit dated 19 January 2010 and at [17] to [19] Mr Nassour stated:
"17. ... I understood from reading the letter dated 29 October 2003 that the defendant had closed the file and written off its costs and disbursements. Based on the letter, I believed that the defendant did not intend to require me to pay the costs and disbursements in any circumstance, including if I settled the claim against Dr Pouw. I held this belief as I received the letter dated 29 October 2003 after I had received the letter dated 13 May 2003 and spent about 5 months trying to convince the defendant to continue acting on my behalf in the claim against Dr Pouw. However as I believed the defendant had decided to write off and not claim its costs and disbursements, I decided to find another solicitor to act for me in the claim.
18. ...
19. ... Had I believed that the defendant intended to claim its costs and disbursements I would not have decided to proceed with the claim against Dr Pouw and I would not have instructed Benjamin Khoury to act on my behalf."
The right to damages for breach of s 42 was conferred by s 68(1) of the Fair Trading Act . It read:
"(1) A person who suffers loss or damage by conduct of another person that is in contravention of a provision of Part 3, 4, 5 (section 43 excepted), 5A, 5B, 5C, 5D, 5E, 5F or 5G may recover the amount of the loss or damage from the other person or from any person involved in the contravention, in a court of competent jurisdiction."
The costs assessment provisions in the Act do not provide for the bringing of cross claims in the costs assessment process. The jurisdiction for the assessment of costs was pursuant to ss 199 - 202.
The claim for damages under the Fair Trading Act was not referred to in the amended summons. These further amendments are disallowed.
Mr Nassour further submitted that since the Review Panel miscalculated the defendant's costs and disbursements claim and awarded costs and disbursements to the defendant for the period after the defendant terminated the retainer agreement on 13 May 2003, the Court should grant leave to the plaintiff pursuant to section 208M of the Act to appeal the determination. However, as I have previously stated, the costs agreement was not properly terminated by Mr Malouf and he is not entitled to his costs. Therefore I do not grant leave under s 208M.
As I have decided that the Review Panel denied Mr Nassour procedural fairness, its decision should be set aside. Mr Malouf is estopped from claiming his costs and disbursements from Mr Nassour having abandoned them in the critical letter. Further, it is clear that Mr Malouf wrongly terminated the retainer. For these reasons I determine that for the disputed costs, the fair and reasonable amount of costs to be paid to Mr Malouf is nil. The decision of the Review Panel dated 24 April 2009 is set aside.
Costs are discretionary. Costs usually follow the event. Mr Malouf is to pay Mr Nassour's costs as agreed or assessed.
The Court orders that:
(1) The decision of the Review Panel dated 24 April 2009 is set aside;
(2) It is determined that for the disputed costs, the fair and reasonable amount of costs to be paid to Mr Malouf is nil; and
(3) The defendant is to pay the plaintiff's costs as agreed or assessed.
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Decision last updated: 09 May 2011
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