Honest Remark Pty Ltd v Allstate Explorations NL

[2008] NSWSC 439

CITATION:	Honest Remark Pty Ltd v Allstate Explorations NL [2008] NSWSC 439
HEARING DATE(S):	8 May 2008
JUDGMENT DATE :	13 May 2008
JUDGMENT OF:	Malpass AsJ
DECISION:	Proceedings dismissed; plaintiff to pay the costs of the proceedings.
CATCHWORDS:	ADMINISTRATIVE LAW - costs assessment - view by panel - statutory functions of review and determination - reasons
LEGISLATION CITED:	Legal Profession Act 2004
CATEGORY:	Principal judgment
CASES CITED:	Kells v Mulligan [2002] NSWSC 769
PARTIES:	Honest Remark Pty Ltd (Plaintiff) Allstate Explorations NL (Subject to Deed of Arrangement) (First defendant) Michael Ryan (Second defendant) Antony Woodings (Third defendant)
FILE NUMBER(S):	SC 30143/07
COUNSEL:	MBJ Lee (Plaintiff) JR Clarke (Defendants)
SOLICITORS:	Piper Alderman (Plaintiff) Mallesons Stephen Jaques (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
ADMINISTRATIVE LAW LIST

Associate Justice Malpass

Tuesday 13 May 2008

30143/07 Honest Remark Pty Ltd v Allstate Explorations NL (Subject to Deed of Arrangement)

JUDGMENT

1 HIS HONOUR: On 3 December 2007, a review panel made a determination in costs assessment proceedings. The plaintiff has brought a challenge to that decision both by way of appeal pursuant to s 384 of the Legal Profession Act 2004 (“the Act”) and/or by way of application for leave pursuant to s 385 thereof.

2 An appeal lies as of right in respect of a matter of law arising in the proceedings to determine the application for costs assessment. Leave is a discretionary remedy granted having regard to the dictates of justice.

3 The Summons was filed on 21 December 2007. It identifies appeal grounds. It had two grounds of appeal relevant to s 384. There are numerous matters raised in respect of s 385.

4 The hearing took place on 8 May 2008. An Amended Summons was filed in court. It added a third ground of appeal (which was put in the alternative). The parties have been represented by counsel. Counsel have made written submissions. These have been supplemented by oral argument.

5 The plaintiff’s written submissions are directed to the three grounds relevant to s 384. The view was taken therein that it was unnecessary to address the s 385 matters. The three grounds are as follows:

“Ground 1
The Costs Review Panel erred in law by substituting its determination as set out in the Certificate of Determination of Costs sent on 3 December 2007 (the determination) in accordance with Section 375(1)(b) on material other than the material specified in Section 375(3) being the Certificate of Determination dated 3 July 2007 and the reasons by the Costs Assessor.
Ground 2
The Costs Review Panel erred in law in making the determination in accordance with Section 375(1)(b) by taking into account an irrelevant consideration being ‘ the approach and reasons ’ of the Costs Assessor except where it disagreed with the approach and reasons of the Costs Assessor.
Ground 3
In the alternative to grounds 1 and 2, the Costs Review Panel erred in law in failing to comply with its obligations under Section 380 by providing a statement for reasons for the Panel’s determination which complied with Regulation 134(d) in that the statement for reasons did not, with respect to any disputed costs, provide an adequate explanation of the basis upon which those costs were assessed.”

6 The first two grounds are interrelated and raise a narrow issue. They are founded on the content of s 375 of the Act. Although no point was taken, argument was put that may be regarded as falling outside their ambit. What was said concerned the general function of a panel in relation to a review application. The section is as follows:

“375 General functions of panel in relation to review application

(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 assessment, 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 assessment is to be conducted on the evidence that was received by the costs assessor who made the determination that is the subject of the assessment 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.
(3A) A panel reviewing the determination of a costs assessor may determine that the amount of fair and reasonable costs is the amount agreed to by the parties to the review if during the course of the review the parties notify the panel that they have agreed on the amount of those costs.
(4) If the costs assessors who constitute the panel are unable to agree on a determination in relation to an application, the panel is to affirm the determination of the costs assessor who made the determination that is the subject of the review.”

7 For present purposes, this section has been the subject of little consideration. It was briefly addressed in Kells v Mulligan [2002] NSWSC 769.

8 Subsection (1) enables a panel to review the determination of a costs assessor. In so doing, it may either affirm the determination or set it aside. If it takes the second of the two options, it may substitute its determination (being a determination which, in the opinion of the panel, was one that should have been made by the costs assessor).

9 Subsection (2) thereof confers upon the panel, in relation to the application for assessment, all the functions of a costs assessor (given under Part 3 of the Act). It also requires the panel to determine the application (subject to Subdivision 5 of that Part and Regulations) in the manner that a costs assessor would be required to determine it.

10 Subsection (3) provides that the assessment process is to be conducted on the evidence that was received by the costs assessor. It is not to receive submissions from the parties or any, inter alia, fresh evidence unless it determines otherwise.

11 For present purposes, the provisions of subs (3A) and (4) have no significance. I will later make a brief reference to them.

12 This structure reveals an intention that the first task for the panel is to conduct the review. Subject to any relevant statutory provision, rule or regulation, this is generally done by way of having a “second look” at the determination of the costs assessor. Such a process will see the panel having regard to the material that was before the costs assessor and the reasons for the determination.

13 After the review has been undertaken, the panel then has the two options set forth in (a) and (b) of subs (1).

14 If the panel decides on the second option, it is to conduct an assessment in the manner required by subs (3). Subsections (3A) has relevance to the determination of the amount of fair and reasonable costs. Subs (4) has application where the costs assessors who constitute the panel are unable to agree on a determination.

15 Section 376 inter alia confers powers on the panel for exercise should the panel make an otherwise determination pursuant to subs (3).

16 Section 377 inter alia brings about a suspension of the operation of the costs assessor’s determination upon a referral by the manager, costs assessment. It also empowers the panel to end such a suspension.

17 Before proceeding further, I should refer briefly to some of the background material. Proceedings were brought in the Equity Division of this Court by the plaintiff. They were novel in nature. There were complex questions of law and fact. The proceedings subsisted for a period of about six months. After a hearing in excess of one day, the proceedings were determined by a successful application for summary dismissal. The hearing took place before Brereton J. He made an order that the plaintiff pay the costs of the proceedings.

18 The costs claim propounded by the defendant was in the order of $970,000.00. The costs assessor (Mr Scammell) reduced the claim to a sum in the order of $690,000.00. A further reduction was effected by the determination of the Panel (Messrs McGruther and Bartos), both in respect of costs and disbursements.

19 The written reasons given by the Panel occupy almost seven pages. The content thereof is divided into a number of subheadings (“Grounds for Review”, “Basis of Review”, “Documents considered”, “Background”, “Discussion”, “Senior Counsel”, “Junior Counsel”, “Other disbursements”, “Costs of the Assessment”, “Determination” and “Costs of Review”).

20 I shall now mention certain of the content that was referred to during submissions.

21 Under the subheading “Discussion”, inter alia, the following appeared:

“5.1.5 The Panel conducted its own assessment. The Panel carefully considered the bill of costs on an item by item basis after taking into consideration all the material before it. However, the Panel has also adopted the global approach to assessment.
5.1.6 The amount of such costs that the Panel determined to be fair and reasonable is $310,000.
5.2 Approach to assessment of costs
5.2.1 General observations
(a) Having perused the Costs Assessor’s reasons, we do not accept the Review Applicant’s grounds of review that he Costs Assessor failed to give sufficient weight to its submissions or to the nature and the factual matrix of the case, as stated in grounds 1 – 4.
…
5.2.1 (h) Although the Panel has determined to reduce the amount of profit costs allowed by the Costs Assessor, the Panel broadly agrees with his approach and reasons. The Panel therefore does not intend to reiterate his reasons, except to indicate where the Panel may differ or provide further reasons why it has decided to further reduce the costs.
(i) As the costs assessor approached the assessment on a global basis, it was not possible to analyse the items in relation to which the Panel differs. In any event the assessment is by its nature, to a degree, subjective.”

22 5.2.2 sets out reasons for the reduction in the amount of costs. 5.3, 5.4 and 5.5 deal with what was done in relation to Senior Counsel, Junior Counsel and other disbursements.

23 Under the heading “Determination”, the following appears:

“6.1 The Panel sets aside the determination of costs made by the Costs Assessor and substitutes the following determination:
The Panel determines the application by assessing as fair and reasonable solicitors costs in the sum of $310,000.00 and disbursements in the sum of $292,566.20, that is, a total sum of $602,566.20.”

24 The onus borne by the plaintiff is not merely to demonstrate error as to a matter of law arising in the proceedings to determine the application but also to demonstrate that any such error is material to the determination.

25 In my view, the plaintiff has failed to make out grounds 1 and 2. I am not satisfied that the Panel did other than perform the prescribed statutory function. Under the heading “Basis of Review” the Panel set forth its understanding of the task imposed upon it by s 375. It is not said that the expression of such understanding demonstrated error. The Panel has said that it conducted its own assessment and that it made its determination. I am not satisfied that this was not the case.

26 Inevitably, there is an overlapping between the processes of review and assessment. These will be considerations that are relevant to both processes. It was conceded that these two processes cannot be confined to airtight compartments and that there was no need for two separate sets of reasons.

27 It seems to me to be unrealistic to contend that a Panel would embark on the making of a fresh determination prior to having reached the decision that the determination of the costs assessor should be set aside. The reasons were not intended to perform a chronological function. The function was to disclose why the determination of the costs assessor was set aside and how the determination of the Panel was reached.

28 It was said that the Panel must start from scratch. In my view, a panel can be regarded as having conducted its own assessment even though it might have proceeded by way of adopting some of the decisions made by the costs assessor and disturbing others.

29 It is contended that the costs assessor’s reasons were taken into account in the assessment process in breach of the provisions of subs (3) of s 375. In my view, assuming that such action would constitute such a breach, that contention was not made out.

30 The reasons were relevant to the review process. If any of the content is capable of being read as suggesting that the reasons were treated as evidence or material upon which the assessment was based, it seems to me that that is merely reflective of looseness of language (see 5.2 and 5.2.1(a)).

31 What was earlier set out concerning the contents of the reasons reveals that there were references to the reasons of the costs assessor under a paragraph which commenced with “5.2 Approach to assessment of costs”. In my view, these references do not assist the plaintiff’s case. The references were made to refute contentions that the costs assessor had failed to either deal with or deal adequately with grounds of review, or as part of the Panel’s own expression of its reasoning process.

32 It might be added that even if a different view had been taken on these matters, there was a failure to demonstrate that any reference to the reasons of the costs assessor and / or reliance upon them had any materiality to the determination made by the Panel.

33 I will now turn to ground 3. Again, I take the view that this ground was not made out.

34 There may be debate as to whether or not a complaint as to inadequacy of disclosure of reasoning process falls within the scope of s 384. (One view is that it does not because the disclosure of reasoning process cannot be a matter of law arising in the proceedings to determine the application for costs assessment.) For present purposes, I shall proceed on the assumption that it does.

35 This ground was the subject of brief submissions. There was reference to paragraph (h) of 5.2.1. Otherwise, the Court was not taken to alleged specific inadequacies.

36 It is well established that what will suffice by way of disclosure will vary from case to case. The circumstances of each particular case will be material.

37 In the circumstances of this case, I am not satisfied that there has been any failure to comply with either s 380 or regulation 134(d). In particular, I am not persuaded in the circumstances of this case that an adoption of what was said by the costs assessor (by way of broad agreement with his approach and reasons) falls short of being sufficient. The disclosure is not advanced by a mere repetition of the costs assessor’s reasoning process. This disclosure was supplemented by the Panel’s reasons for further reduction in costs and disbursements. I am not persuaded that this supplementation was inadequate. It may be added that it was not suggested by the plaintiff that it was hindered in the bringing of this appeal by reason of the alleged inadequate disclosure.

38 Finally, I turn to the remaining matter of leave. I have already referred to the approach taken by this matter in the written submissions. Little was added by way of oral submissions. It might be said that the application for leave was but faintly put.

39 Accordingly, I propose to deal with that matter in a fashion similar to its presentation. In my view, no case for leave has been made out. It may be added that the written submissions made on behalf of the defendant effectively answer what is alleged in the Amended Summons.

40 The proceedings are dismissed. The plaintiff is to pay the costs of the proceedings. The exhibits may be returned.

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