Insurance Australia Limited v Muhammad
[2021] ACTSC 220
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Insurance Australia Limited v Muhammad |
Citation: | [2021] ACTSC 220 |
Hearing Date(s): | 30 August 2021 |
DecisionDate: | 10 September 2021 |
Before: | Crowe AJ |
Decision: | See [105] |
Catchwords: | APPEAL – PERSONAL INJURY CLAIM – plaintiff recovers amounts of $50,000 or less – Magistrate orders increase in maximum costs recoverable under s 181 of Civil Law (Wrongs) Act 2002 (ACT) –appeal allowed in part. |
| COSTS – OPERATION OF S 184 OF CIVIL LAW (WRONGS) ACT 2002 (ACT) – distinction between solicitor and client and party and party costs – need for court or taxing officer to identify by reference to principle or amount ‘stated additional costs’ | |
Legislation Cited: | Civil Law (Wrongs) Act 2002 (ACT) ss 180, 181, 184 Civil Law (Wrongs) Bill 2002 (ACT) |
Cases Cited: | Cleary v Rinaudo [2013] ACTCA 32; 278 FLR 231 Eggins v Knaus [2007] ACTSC 17 Yogini v Eveille [2006] ACTSC 23 |
Texts Cited: | Gino Dal Pont, Law of Costs (LexisNexis, 4th ed, 2018) Explanatory Memorandum, Civil Laws (Wrongs) Bill 2002 Jon Stanhope MLA, Debate, Hansard, 26 September 2002 |
Parties: | Insurance Australia Limited t/as NRMA Insurance ACN: 000 016 722 (First Appellant) Mohammad Maroof (Second Appellant) Muhammad Adeel (Third Appellant) Hazrat Muhammad (Respondent) |
Representation: | Counsel W Fitzsimmons SC (Appellants) A Muller (Respondent) |
| Solicitors Sparke Helmore Lawyers (Appellants) United Legal (Respondent) | |
File Number(s): | SCA 14 of 2021 |
Decision under appeal: | Court/Tribunal: Magistrates Court Before: Magistrate Stewart Date of Decision: 24 March 2021 Case Title: Muhammad v Maroof Court File Number(s): CS 67 of 2020 |
Crowe AJ
Background
The respondent in the appeal had the misfortune to be involved in three motor vehicle accidents in the ACT. The first occurred on 2 November 2017 when he was struck by a reversing vehicle (which was driven by the second appellant) while standing in a carpark in Charnwood. The second occurred on 6 November 2018. On that occasion the respondent was the driver of a vehicle which had stopped behind another vehicle. The motor car driven by the third appellant collided with the rear of the plaintiff’s vehicle. It appears that the impact was at a relatively low speed. The third accident was on 6 March 2019. The driver of a vehicle who was attempting to park in front of the respondent’s parked vehicle reversed into the front of that vehicle. Again, it was a low impact collision.
The respondent claimed that he had injured his low back in the first accident, and that that injury had been aggravated by the subsequent accidents. He consulted his solicitor shortly after the first accident. Claim notices were issued pursuant to the Road Transport (Third-Party Insurance) Act 2008 (RTTPI Act). The first appellant was the compulsory third-party insurer of each of the drivers alleged to have been at fault in the first two accidents. I gather that the driver said to be at fault in the third accident was insured by a different insurer.
The pre-court procedures required under the RTTPI Act resulted in the resolution of the respondent’s claim in relation to the third accident on 28 January 2020. However, the claims in relation to the first and second accidents were not resolved at the compulsory conference and on 9 April 2020 the respondent commenced proceedings in the Magistrates Court of the ACT. The respondent sued the three appellants in relation to both accidents in the one proceeding. In June 2018, in correspondence with the respondent’s solicitor, the first appellant denied liability in relation to the first accident. However, in the defence filed on 1 July 2020, the first appellant admitted a breach of the second appellant’s duty of care in the circumstances of that accident.
A hearing date was allocated in early 2021 and the parties were required to attend mediation before the hearing. That mediation occurred on 14 October 2020. In the course of the mediation the first appellant, which had management of the claims on behalf of the second and third appellants, made a final offer to settle the claims for $44,000 plus costs in relation to the first accident and $18,000 plus costs in relation to the second. The respondent, through his legal representatives, accepted the offer.
A dispute subsequently arose as to whether the parties had agreed on a lump sum settlement figure of $62,000, or on the settlement of the two claims for the amounts stated in the offer referred to in paragraph [4] above. On 15 December 2020 the respondent filed an application in proceeding in the Magistrates Court proceeding. In that application he sought the following orders:
1.Judgment in the proceeding is given for the plaintiff in the amount of $62,000.00 plus costs.
2.The relevant amount for the purpose of Rule 1722 is not less than $50,000.00.
3.In the alternative, that the maximum costs allowable for legal services provided to the plaintiff be increased pursuant to s 184(1) of the Civil Law (Wrongs) Act 2002.
4.Any other orders that the Court considers appropriate.
The application came before the Magistrate for hearing on 24 March 2021. At the hearing the respondent relied on affidavits sworn by his solicitor Mr N Farooq on 14 December 2020 and 22 February 2021. The appellants did not tender any evidence. The respondent did not press the application for Orders 1 and 2. The issue for decision by the Magistrate was thus whether an order should be made under s 184 of the Civil Law (Wrongs) Act 2002 (ACT) (CL(W)A) to increase the costs which might be recovered by the respondent’s solicitor in relation to the claims made consequent upon the first and second accidents.
After hearing the submissions of the parties, the Magistrate indicated that he would deliver his decision later that day. A little over an hour later his Honour delivered brief oral reasons and ordered:
1.Pursuant to S184 of the Civil Law (Wrongs) Act the maximum costs for services allowed under Part 14.1 be increased because of the complexity of the matters.
2.The ceiling for the maximum for legal services will be $77,000.00 plus costs of today.
3.Costs are to be agreed or taxed.
The Magistrate’s Reasons for Decision
After referring briefly to the circumstances of the first two accidents, and the terms of the settlement reached at the October 2020 mediation, his Honour said (at pages 22-24 of the transcript):
The plaintiff applicant says that the court should use its discretion pursuant to section 184 of the Civil Law (Wrongs) Act to allow additional costs. Both limbs of such action were relied upon. That is, the complexity of the claim and the behaviour of the defendant in the matter. In my view the application would fail on limb 1(b) of section 184 because in my view the behaviour of the defendant was not such that by itself it should allow additional costs.
That doesn’t mean though that the behaviour is not relevant to the complexity of the claim. The plaintiff applicant says that this matter was an unusually complex one because of the fact of two claims both with personal injury, late admission of liability on the party of the defendant. Notably, in relation to the claim where the plaintiff was struck as a pedestrian by a reversing motor vehicle, causing significant extra preparation.
Also, the unusual diversity of medical expert opinions including two reports served on the plaintiff just prior to mediation. The parties provided one case which was said to be peripheral use, that being Bethany Eggins v Alexander Knaus [2007] ACTSC 17. I’ve read that case and formed the view that it really doesn’t assist me on this application.
The plaintiff has provided, by affidavit, a schedule of what it says reasonably incurred costs. That’s in the form of an affidavit filed 22 February 2021. The total of the sums that are set out in some detail are total professional fees of $44,284.56 and total disbursement of $32,698.57. I hasten to add that counsel fees are about 20 per cent of disbursements.
If section 181 would operate as intended there would be a significant cost shortfall in the tens of thousands of dollars but that’s not the test. The respondent says that this was an unusual complex matter and costs of any complexity cannot be identified in amongst the morass of all of the individual fee items in the affidavit filed 22 February 2021.
They also query the individual components of the professional fees pointing out what they say are not matters that would survive the test of taxation. They also say that a number of reports were ordered after the compulsory conference and the finger should not be pointed solely at the defendant in essence because of late provision of expert reports.
I have been able to find a different decision of the Supreme Court, that is, the matter of Yogini v Eveille, and Heritage. Its decision of Marshall J of the Supreme Court, obviously, of this jurisdiction where a claim for personal injuries that was dealt with in the Supreme Court resulted in an award of damages reduced from $148,000 to $37,000 odd because of contributory negligence.
What then arose was an argument as to whether – and what sort of costs should be awarded in those circumstances where the – had the matter proceeded in this court it would have fallen foul of section 181 of the Civil Law (Wrongs) Act in terms of costs. There was the Supreme Court rules to consider in that decision.
So, it was not entirely based on section 184 in terms of discretion to increase costs, however, section 184 it was a feature of his Honour’s decision. He said this at paragraph 23 in relation to complexity, and I acknowledge that this is not just relevant to section 184 of the Civil Law (Wrongs) Act but this was said:
In this proceeding both quantum and liability were in dispute. The plaintiff lead expert medical evidence on the question of quantum and similarly detailed evidence from complex submissions on the current state of the law and the question of liability.
While I consider those issues are within the experience and competence of the Magistrates Court, I find that the issues before me were sufficiently complex to lead to an exercise of discretion in favour of the plaintiff.
And in that matter, if I read it correctly, party and party costs were awarded to the plaintiff. That assists me in how I should read section 184. It was clear that prior to the mediation that resulted in settlement, the plaintiff in this matter had undertaken complex work in my view. They had obtained several legal expert reports in an attempt to try and disentangle the injuries from the first and second collision.
They were prepared until just before the mediation to have to prove liability until that was admitted, but towards the end of the proceedings as they are. This was done in the absence of medical reports from the defendant until also late in the piece. So, whilst, as I said earlier, I do not accept that additional costs should be allowed because of the behaviour of the defendant.
In my view it has added to the complexity of the claim. And as a result, I will allow the application. So, these are the orders that I make; pursuant to section 184 of the Civil Law (Wrongs) Act the maximum costs for legal services allowed under part 14.1 should be increased because of the complexity of the matters. The ceiling setting the maximum for legal services will be $77,000 plus costs of today.
And three, costs are to be agreed or taxed. If it’s not clear, my intention is that if the amount of costs cannot be agreed it should be taxed and I would anticipate it to be less than $77,000.
Grounds of Appeal
By notice of appeal filed on 21 April 2021, the appellants seek the setting aside of the orders made in the Magistrates Court, and an order dismissing the respondent’s application in proceeding filed on 15 December 2020.
The grounds pleaded in the notice of appeal are:
i.His Honour erred in finding that the proceedings were complex in accordance with s 184(1) of the Civil Law (Wrongs) Act 2002 (‘the Act’).
ii.His Honour erred in find that the need to obtain expert reports to disentangle injuries from the first and second collision constituted complexity in accordance with s 184(1) of the Act.
iii.His Honour erred in finding that liability was admitted towards the end of the proceedings.
iv.His Honour erred in finding that the timing of the liability admission constituted complexity in accordance with s 181(1) of the Act.
v.His Honour erred in finding that the timing of service of medical reports by the appellant constituted complexity in accordance with s 184(1).
vi.His Honour erred in ordering that the maximum costs for legal services be increased to a maximum of $77,000 in that:
a. His Honour erred in determining there were additional costs incurred by reason of the complexity of the claim;
b. His Honour failed to determine the additional costs arising from the complexity of the claim;
c. His Honour failed to determine whether the respondent had discharged the evidentiary onus that additional costs were incurred as a result of the complexity of the claim;
d. His Honour erred in failing to determine whether the plaintiff had discharged his onus of establishing the quantification of the additional costs arising from the alleged complexity of the claim;
e. His Honour determined that a maximum for legal costs should be $77,000 in the absence of evidence as to the additional costs incurred by reason of the complexity of the claim.
Part 14.1 of the CL(W)A
Part 14.1 appears in Chapter 14 of the CL(W)A. The chapter heading is ‘Limitations on legal costs’, and the heading of Part 14.1 is ‘Maximum costs for certain personal injury damages claims’. The provisions which appear to be relevant here are:
180Definitions–pt 14.1
In this part:
costs do not include–
(a)disbursements that are charges for services other than legal services; or
(b)disbursements that are counsel’s fees on a brief to appear in an action; or
(c)any other disbursements.
court includes a tribunal or arbitrator.
personal injury damages means damages that relate to the death of, or injury to, a person caused by someone else’s wrongful act or omission (whether or not an offence).
181 Maximum costs for claims of $50 000 or less
(1) This section applies if the amount recovered on a claim for personal injury damages is $50 000 or less.
(2) If this section applies–
(a)a lawyer is not entitled to be paid; and
(b)a court (or a taxing officer) must not decide that a lawyer is entitled to be paid; and
(c)a court must not order anyone to pay to a lawyer;
an amount for legal services in relation to the claim that (or that together with other amounts) is more than the maximum costs allowable under this section.
(3) Subsection (2) is subject to the following sections:
·section 182 (Costs incurred after offer of compromise not accepted)
·section 183 (Exclusion of costs unnecessarily incurred etc)
·section 184 (Court discretion to allow additional costs).
(4) The maximum costs allowable for legal services provided to the plaintiff in relation to the claim are the greater of–
(a)the relevant percentage of the amount recovered; and
(b)the relevant amount.
(5) The maximum costs allowable for legal services provided to the defendant in relation to the claim are the greater of–
(a)the relevant percentage of the amount sought to be recovered by the plaintiff; and
(b)the relevant amount.
(6) In this section:
amount recovered, on a claim–
(a)Includes an amount paid under a compromise or settlement of the claim, whether or not an action has been begun; but
(b)Does not include an amount attributable to costs or to the addition of interest.
amount sought to be recovered by a plaintiff means, if an action is begun–
(a)The amount sought to be proved by the plaintiff at the hearing of the claim; or
(b)If the claim is for unliquidated damages–the amount that the court (or a taxing officer) decides is, for this section, the amount sought to be recovered by the plaintiff on the claim.
relevant amount means $10 000 or, if another amount is prescribed by regulation for this definition, the prescribed amount.
relevant percentage means 20% or, if another percentage is prescribed by regulation for this definition, the prescribed percentage.
184 Court discretion to allow additional costs
(1) This section applies if a court, or a taxing officer, decides (on the court’s or taxing officer’s own initiative or on the application of a party to the claim) that the maximum costs for legal services allowable under this part in relation to a claim for personal injury damages should be increased because of–
(a)the complexity of the claim; or
(b)the behaviour of 1 or more of the parties to the claim.
(2) The court or taxing officer may order that the lawyer who provided the services is entitled to stated additional costs.
(3) If the court or taxing officer makes an order under subsection (2), the court or taxing officer may state who is to pay the additional costs.
(4) A regulation may make provision in relation to the making of orders under this section.
Submission for the Appellants
Mr Fitzsimmons SC appeared for the appellants. He provided a written outline of submissions and also made oral submissions in support of the orders sought on appeal. In those submissions, Mr Fitzsimmons distilled the grounds of appeal to the propositions that:
1.There was no basis on which the Magistrate could find that the complexity of the claim warranted an increase in the costs beyond the $10,000 maximum stipulated in s 181 of the CL(W)A. Accordingly, the Magistrate made an error in law in concluding that the complexity justified such an increase.
2.Correctly interpreted, ss 184(1) and (2) required the Magistrate, if he was satisfied that an increase should be allowed, to identify with precision the additional costs referable to the complexity relied upon.
In relation to the first of these propositions, the appellants argued that there was no real need to ‘disentangle’ the medical consequences for the respondent of the two accidents. That could be seen from the way in which the respondent put single settlement offers (to resolve both claims) at the mediation.
Moreover, the obtaining of medical reports to address relative causation was not unusual. It was a routine task in personal injury claims in circumstances where there was an interplay between causal events, be they tortious or otherwise. If the finding of complexity was to stand here it would entitle a plaintiff to an exceptional costs order under s 184 in virtually every personal injury claim involving more than one medical condition.
The respondent’s solicitor here had the advantage of having one set of reports addressing two claims. This was in circumstances where the appellants had conceded that the respondent could recover separate costs in relation to the claim made in relation to each of the first two accidents. It was thus unlikely that the costs would have been increased by the obtaining and consideration of such reports.
In relation to the issue of liability for the first accident the appellant argued that the Magistrate erred as a matter of fact in concluding that the admission of liability had only occurred ‘towards the end of the proceedings’. In fact, the admission of a breach of the duty of care had been made in the defence which was filed a few months after the proceedings commenced in the Magistrates Court.
In any event, the issue of liability was routinely one to be addressed in personal injury claims. It was far from complex in the circumstances of this case, which involved an impact between a pedestrian and a motor vehicle.
In relation to the second proposition, the appellants submitted that ss 184(1) and (2) required that the Court (or taxing officer) to conclude that the relevant complexity (or behaviour) had caused the costs incurred by a plaintiff to have escalated beyond the statutory maximum figure by some identified amount. The Magistrate had failed to make such a finding here. Indeed, the evidence relied upon by the respondent did not specifically address the additional costs said to have been incurred as a consequence of the complexity found by the Magistrate.
The conclusion of his Honour that there should be a cap of $77,000 did not comply with the requirement implicit in the text of s 184(2) that any order for additional costs be made with precision. There was no proper basis on which the respondent’s solicitors could be allowed additional costs of up to $57,000 in addition to those which they were entitled to charge under s 181.
The failure to correctly apply ss 184(1) and (2) was, it was submitted, an error of law.
Submissions of the Respondent
Mr Muller, who appeared for the respondent, also provided a written outline of submissions which he supplemented by oral argument.
The respondent’s starting point was that this was an appeal from the exercise of a broad discretion which engaged the principles stated in House v The King (1936) 55 CLR 499, and as elaborated by Mason and Dawson JJ in Norbis v Norbis (1986) CLR 513 at 518. Mr Muller relied on the approach taken by Marshall J in Yogini v Eveille [2006] ACTSC 23 to support the submission that the broad discretion under s 184 allows for a wide range of opinions as to whether the complexity of a particular case should warrant an increased costs order. Here, it was said, the appellants’ case relies upon an attack on a decision which was within the range of decisions open to the Magistrate. The respondent contended that the appellants failed to demonstrate any of the specific errors required by the authorities sufficient for a valid attack, on appeal, on the exercise of discretion.
In relation to the issue of complexity the respondent accepted that relevantly, under s 184, the issue was to be determined by reference to circumstances that may reasonably have caused a party to undertake additional legal work, and thus incur additional costs.
As to the asserted factual error as to when liability was admitted in relation to the first accident, Mr Muller pointed out that the accident had occurred in November 2017 and that the first affidavit of Mr Farooq demonstrated that considerable work had been done between then and the date when a breach of duty was finally admitted in the defence filed on 1 July 2020, some two and a half years later. In relative terms, it was in fact towards the end of the claim which was settled on 14 October 2020 at the mediation. In that sense, the Magistrate had not erred in making that comment.
Mr Muller denied that the management of the respondent’s claims was merely routine. He submitted that the involvement of two (and initially three) separate accidents in relatively close proximity to each other with overlapping injuries required substantial additional work compared to that required in the context of a single accident claim.
The ‘disentangling’ exercise was particularly important here because of the legislative scheme governing motor accident personal injury claims for the three accidents in which the respondent had been involved. Pursuant to RTTPI Act, the plaintiff was required to engage in a pre-court negotiation process and to put ‘mandatory final offers’ in relation to each separate claim. There were, potentially, drastic costs consequences for the respondent depending on the interplay between such offers and the amount ultimately recovered in relation to each accident. In that context, it was submitted that the assessment of the likely range of recoverable damages in relation to each separate claim was a critical part of the task to be undertaken by the respondent’s legal representatives.
Having regard to that legislative framework, it was, it was argued, not to the point that lump sum settlement offers had been put on behalf of the respondent in negotiations.
Mr Muller makes the point that the circumstances of these claims, including the legislative scheme, created an additional element of complexity that did not apply to other personal injury claims which would fall within the ambit of s 184 of the CL(W)A.
In relation to the proposition that ss 184(1) and (2) required the Magistrate to identify the additional costs with precision Mr Muller argued that the discretion granted under the subsections was broad enough to extend to the orders made by the Magistrate here. Mr Muller relied on the reference to a taxing officer in both subsections as permitting, in effect, the delegation, or reference, by the Magistrates Court of the quantification of the relevant additional costs to a taxing officer.
Appellants’ Submissions in Reply
Mr Fitzsimmons took issue with the submission summarised in paragraph [29] above. He pointed to the words ‘The court or taxing officer’ in s 184(2) in the context of the opening words of s 184(1). He argued that the text could only mean that the power to make an order under s 184(2) was conferred upon the specific judicial or taxing officer who had made the decision under s 184(1). Thus, in the circumstances of this case, it was not open to the Magistrate to delegate the power to make an order under subsection (2) to a taxing officer. The Magistrate was obliged to make the order himself. As submitted previously, it was necessary for such an order to state with some particularity what the additional costs were, which the Magistrate had failed to do.
Nature of Appeal
The appellants referred me to a number of decisions of Refshauge J in which his Honour elucidated the principles to be applied to an appeal as of right made to this Court pursuant to s 274 of the Magistrates Court Act 1930 (ACT). In particular, I was referred to what his Honour said at [11]-[14] of Malek v Remondis Australia Pty Limited [2015] ACTSC 135.
I accept the general statements of principle stated by his Honour. In particular, I accept that the appeal is in the nature of a rehearing. In Theodorelos v Nexus Products Pty Ltd [2009] ACTSC 149 (Theodorelos), Refshauge J said, in an appeal from a discretionary decision of the Master:
84.His Honour’s conclusions were that, contrary to Rothwells Ltd (in liq) v Entity Group Ltd and Ors, the principles were those enunciated by Cross J in Do Carmo v Ford Excavations Pty Ltd [1981] 1 NSWLR 409. Thus, in an appeal from the learned Master:
1. Where no fresh evidence is called, the court’s powers to substitute its own view of the facts is limited by the principles expressed in Edwards v Noble (1971) 125 CLR 296 (at 304) as expanded by Warren v Coombes (1979) 142 CLR 531, which importantly state that it is not whether the court can substitute its view of the facts (for it has power to do so) but whether it should do so.
2. Whether the decision the subject of the appeal is a discretionary decision, the principles in House v The King (1936) 55 CLR 499 apply. See also Gronow v Gronow (1980) 144 CLR 513.
85.The admission of fresh evidence, is, as the court held in Re Milosevic, governed by s 9(3)(c) of the Supreme Court Act 1933 (ACT), though without the criteria applicable in appeals from the Magistrates Court as considered by Miles CJ in Campbell v Fortey (1987) 85 FLR 462. Such decisions now appear to be governed by the principles enunciated in CDJ v VAJ (1998) 197 CLR 172 and Allesch v Maunz.
86.The principles set out above as to the nature of the appeal and the powers of the court on appeal have now been accepted in a number of decisions of this court: Anutech Pty Ltd v Latent Energy Systems Pty Ltd (unreported, ACTSC, Gallop J, 3 February 1987), Martin v NRMA Insurance Ltd [1998] ACTSC 52. I accept that these are the principles to be applied.
87.In particular, and relevantly to this appeal, I can accept evidence of what occurred at the date listed for the hearing on 21 September 2009 and I also must not merely determine whether the learned Master was in error but, if his Honour was, determine the application to the circumstances as they now exist.
The provisions applicable to an appeal under s 274 are (which include r 5052 of the Court Procedures Rules 2006 (ACT) (CPR)), in my view, make it clear that the substantive principles to be applied here are the same as those discussed by Refshauge J in Theodorelos.
Consideration
The first issue for determination here is essentially one of statutory interpretation. How is s 184 intended to operate? The second question to be answered is whether the Magistrate complied with the requirements of ss 184(1) and (2), or, as submitted by the appellants, did he fall into appellable error in making the orders which are under challenge?
The scheme of costs regulation introduced by Part 14.1 involves a number of complexities which may not be apparent on a casual reading of the provisions. It is important to note the definitions in s 180. Thus, the ’costs’ which are capped under s 181(4) and (5) are, in essence, the cost of the provision of legal services in relation to a personal injury claim as defined to a plaintiff and defendant respectively. The only legal service excluded from the cap are the fees rendered by counsel in a fee on brief to appear in the action. Otherwise, disbursements are not capped. (It would follow that disbursements which consist of fees owing to counsel for any work other than that relating to a brief to appear would fall within the cap).
It should also be noted that the definition of ‘personal injury damages’ is very broad. It includes the full range of tortious causes of action where damages are sought for personal injury or death. Thus, it would include intentional torts, such as assault, as well as the spectrum of unintentional torts which include claims based on negligence. It is immediately apparent that claims for damages arising from motor accidents are but a subset of the range of claims falling within the definition.
Section 181(1) provides that the cap is to be applied if the amount recovered on ’a claim for personal injury damages’ is $50,000 or less. The parties in this matter approached the operation of the subsection on the basis that ’claim’ meant each claim arising from a separate cause of action. Having regard to the text, and the detailed procedures introduced under Chapter 5 of the CL(W)A suspending the right to commence court proceedings until claim notices had been given and the responding party has had an opportunity to investigate and assess the claim (as to which see per Katzmann J (Burns and Nield JJ agreeing) in Cleary v Rinaudo [2013] ACTCA 32; 278 FLR 231 at [12]-[28]), it seems to me that the parties were correct in so doing.
Section 181(2) imposes a potentially draconian limitation on the contract of retainer between a party and his/her or its lawyer. The terms of the provision operate by direct reference to the amount of costs which a lawyer might be able to recover from that lawyer’s client in return for having provided legal services in relation to a claim.
It is important to understand the context in which this provision was designed to operate. Traditionally under the system of law in this country, there has been a distinction between what are referred to as ‘solicitor and client’ costs and ‘party and party’ costs. There is a helpful description of that distinction given by Professor Dal Pont in Law of Costs (LexisNexis, 4th Ed, 2018) at pages 2 and 3:
‘Solicitor and client’ costs
1.5 The term ‘costs’ can refer to ‘the remuneration of a solicitor for professional services rendered to a client’, known as costs ‘as between solicitor and own client’ or simply ‘solicitor-client’ costs/’solicitor and client’ costs. They represent the amount a client is obliged to pay his or her lawyer as the price of professional work, the lawyer’s entitlement thereto having its genesis in the retainer agreement between the lawyer and client. The amount of ‘costs’ in this context may include what are otherwise termed ‘disbursements’.
‘Party and party’ costs
1.6 As most civil litigation conducted in Australia operates on a ‘loser pays’ basis so far as costs are concerned – that is, the unsuccessful litigant is liable for the costs of the successful litigation – the notion of costs is not limited to ‘solicitor-client costs’. Sometimes termed the ‘costs indemnity rule’, in this context the term ‘costs’ refers to ‘the amount which the person to whom the order is directed must pay to some party to the litigation as partial indemnity for the professional legal fees and expenses incurred by that party in the course of litigation’. Costs of this kind are referred to as costs ‘as between party and party’, or more simply, ‘party and party’ costs, and usually include disbursements (provided that these related to the proceeding in which the costs order is made).
Importantly, the duty to pay ‘party and party costs’ is ordinarily sourced not from a contract but from an order of a court or tribunal. In this respect, the term ‘costs’ relates not to the relationship between a client and his or her lawyer, but to the relationship between a client and another person who is customarily another party to the proceedings in which the costs have been awarded; and represents an indemnity against the costs of the client has incurred in those proceedings.
The apparent purpose of s 181(2) is to limit the component of solicitor and client costs relating to work done by lawyers (including counsel) in relation to personal injury claims for $50,000 or less. Because of the nature of party and party costs, that is, that such costs are in the nature of an indemnity, the limitation of the solicitor and client costs of a successful party in relevant litigation must necessarily limit the party and party costs.
Section 181(3), relevantly for current purposes, provides that s 181(2) is subject to s 184.
Section 181(4) stipulates the maximum amount recoverable by the plaintiff’s lawyer from the plaintiff for legal services provided in relation to a relevant personal injury claim. By reference to the definitions in s 181(6), it can be seen that effectively that maximum figure is $10,000. (The reference to 20 per cent of the amount recovered is a relic of the process by which the Civil Law (Wrongs) Bill 2002 (CL(W) Bill) came to be passed into law by the Legislative Assembly of the ACT: see [74] to [76] below).
Section 181(5) stipulates the maximum amount recoverable by the defendant’s lawyer in relation to a relevant claim.
It is necessary to consider the position in this case prior to the potential operation of s 184. The respondent had recovered the amounts of $44,000 and $18,000 in relation to his claims for personal injury in relation to the first and second accidents respectively. These amounts clearly fell within the definition of ‘amount recovered’ for each claim having regard to the definition in s 181(6). Ordinarily, pursuant to the contract of retainer between the respondent and his lawyer (here, his solicitor) the lawyer would be entitled to charge for legal services at the rates agreed in that contract. (There are detailed disclosure provisions required of lawyers in that regard under Part 3.2 of the Legal Profession Act 2006 (ACT) (LPA). The client is also given the right to challenge a costs agreement if it is not fair and reasonable. That person may also require a bill of costs and an assessment of the costs in this Court. I note that under s 300B, in the absence of a costs agreement, the Court may assess disputed costs by reference to the scale of costs made under the CPR).
The evidence before me does not include the details of the retainer agreement between the respondent and his solicitor. The affidavit of Mr Farooq, sworn on 22 February 2021, does annex a bill of costs drawn by a costs consultant in relation to the legal work done for the respondent in relation to the claims for the first and second accidents. It appears that it also includes at least some of the work done in relation to the third accident. As far as I can determine from the amounts specified for individual items, the bill has been drawn at the scale applicable under the CPR scale of costs (see Schedule 4 Part 4.2). The amount for professional costs, including the costs of the preparation of the bill, totals $44,284.56. The amount claimed for counsel’s fees is just under $7,000. This includes amounts for appearing at a compulsory conference on 28 January 2020 and at the mediation on 14 October 2020. The component not relating to either of those appearances $1,237.50. The amount claimed for other disbursements made on behalf of the respondent total $25,740.
I infer from the basis on which the bill has been drawn that the respondent’s solicitor was entitled to charge at the CPR scale for professional costs pursuant to the retainer between those parties.
In relation to counsel’s fees, I did not hear argument as to precisely what was meant by the words ‘fees on a brief to appear in an action’. It may be that those words exclude from the cap only fees on brief in relation to the final hearing of a claim. It may be that they would extend to exclude from the cap a fee on brief to appear at a compulsory conference and/or mediation. Unfortunately, the legislation does not provide clear guidance. In the absence of argument on the point, I do not propose to express a concluded view.
It follows from the above that the ambit of the claim for costs of providing legal services to the respondent here was about $52,000.
If the exclusion from the cap of counsel’s fee on brief to appear is limited to that for a final hearing the total professional costs recoverable by the respondent’s solicitor in relation to the two claims would be $20,000 (i.e. $10,000 in respect of each claim). The solicitor would also be able to recover the “other” disbursements of $25,740.
If the exclusion from the cap of counsel’s fees did include the fees for appearing at the conference and mediation the respondent’s solicitor would be able to recover up to another $5,720.
Although the Magistrate did not set out the detail of the above analysis, it seems to me that his Honour must, at the least, have conducted a similar exercise in concluding as he did that ‘If section 181 would operate as intended, there would be a significant shortfall of tens of thousands of dollars…’”. I will return to that conclusion below.
Of course, the above discussion concerns the solicitor and client costs as between the respondent and his solicitor. The costs as between the respondent and the appellants fell to be determined pursuant to the CPR. There was no issue here that the effect of r 1722 was that on assessment (and subject to Part 14.1 CL(W)A) the respondent would be entitled to recover from the appellants the costs incurred to his solicitor on a party and party basis at 90 per cent of the CPR scale in relation to the first accident and 66 per cent of the scale in relation to the second accident (see also r 1751 of the CPR).
I turn to s 184 of the CL(W)A. At the outset, I should note that no regulation has been made pursuant to s 184(4) to make provision for the making for orders under the other subsections.
The clear purpose of this section is to provide a relief mechanism to ensure that some injustice is not occasioned due to the circumstances of a particular case. Thus, where complications arise in relation to a claim that result in the reasonable need for additional legal work the legislature intended that the lawyers for the relevant party have the means, through the lawyer’s client, of seeking some relief, either from the court or a relevant taxing officer.
It is implicit in the section that the decision maker must be satisfied that the maximum amount prescribed under s 181 will result in a more than trivial shortfall against the costs amount that would otherwise represent a fair and reasonable compensation for the client’s lawyer for the work performed on the client’s behalf. Absent that satisfaction, it seems to me, there would simply be no point to the power to increase the costs above the maximum.
However, that satisfaction is not a sufficient condition for the exercise of the power under s 184(1). The subsection explicitly requires the decision maker to conclude that the prescribed maximum should be increased because of one or both of the considerations set out in paragraphs (a) and (b). In the present case, the second of these considerations is no longer relevant.
The concept of the ‘complexity of the claim’ is somewhat amorphous. The perception of complexity, in my view, is very much a matter of judgment as to which minds might reasonably differ. Mr Fitzsimmons submitted that the claims brought by the respondent here were perfectly routine and straight-forward. I do not accept that submission. While the oral reasons given by the Magistrate were not as clear as they might have been, I make some allowance for the circumstances under which his Honour was dealing with the application and the fact that he, effectively, gave an ex tempore decision. Having regard to the submissions made before his Honour, it seems likely that, having reached the conclusion referred to at [51] above he decided that the prescribed maximum should be increased because of the combination of the denial of liability in relation to the first accident until July 2020, and the need for the respondent’s lawyers to obtain evidence, analyse that evidence and advise the respondent as to the implications for each claim of the causal relationship between the injury suffered in each accident (and indeed, the third accident). It seems to me that those implications included the potentially complex costs consequences which could arise under the RTTPI Act as it applied at the time of the accidents.
I do not accept the appellants’ submission that there was no real need for the respondent’s lawyer to ’disentangle’ the medical consequences of the accidents. While lump sum settlement offers may have been made at the mediation, the reality was that the respondent’s claims had to be prepared for the hearing which was listed for March 2021. His lawyers could not assume that the matter would settle. At the hearing it is clear, having regard to the terms of the RTTPI Act, and the potential costs issues which could arise separately in relation to each claim, that the appellant would have quite properly insisted upon the entry of separate judgments in relation to each claim. (Indeed, I note from the record of offers at the mediation that every offer made by the appellants specified a separate amount for each of the accident claims).
Nor do I accept the submission that a conclusion that an increase in the prescribed maximum in the circumstances of this case would demonstrate that such an order should be made in virtually every claim involving more than one medical condition. I have assumed that, in making this submission, the appellants’ focus upon circumstances where it becomes necessary for the claimant to deal with the issue of multiple causes of a relevant injury. However, each case must turn on its own circumstances. There are very many cases in which some evidence is obtained to, for example, suggest that one of the causes of ongoing symptoms might be a pre-existing degenerative condition. In most such cases the nature and degree of such contribution can be easily dealt with by reference to the medical records, and the age and level of function of the claimant prior to the injury the subject of the claim. In such cases, it is difficult to see how the claimant might be able to satisfy that it was appropriate for an order to be made under s 184(1).
The circumstances here were not, in my view, routine. The reports of Drs Champion and Patrick (who were qualified for the plaintiff) and Drs Nair, Banda and Powell express differing conclusions as to the relative causation of the accidents, and indeed, a pre-existing low back condition. In my view, the potential complications arising from the multiple accidents and the divergence of medical opinions provided a sufficient basis for the Magistrate to reach the conclusion which he did under s 184(1).
While it is true, as submitted by the appellants, that the respondent’s lawyers were able to obtain some reports dealing with the issue of causation in both the first and second accidents, which may have in fact led to lower costs than might otherwise have been the case, I do not see that as being to the point. The reality is that, on the face of it, the professional costs assessed on a solicitor and client basis on any view significantly exceed the statutory maximum which could be recovered by the respondent’s solicitor. It was open to the Magistrate to conclude that a more than trivial part of the difference was caused by the need to deal with the causal consequences of the multiple accidents.
It is difficult to see how the denial of liability in relation to the first accident would, by itself, have provided a sufficient basis for an order under s 184(1). It may be, as submitted by Mr Fitzsimmons, that the denial only added around $1,100 to the solicitor and client costs assessment. However, it seems to me that the Magistrate was entitled to take that issue into account in making his overall evaluation under s 181(1). The denial certainly created extra work. It was a complication of the claim in relation to the first accident which required the provision of legal services.
The reference by the Magistrate to the admission of liability having occurred ’towards the end of the proceedings’ did not, in my view, amount to an erroneous factual finding. I accept the submission of the respondent that the Magistrate had in mind the whole period from the initiation of the claim in relation to the first accident (in November 2017). He used the word ‘proceedings’ in a broad way to refer to the claim process which had indeed continued for over 2 and a half years before liability was admitted. I do not accept that his Honour was using proceedings in the narrow technical sense of legal proceedings. On that basis, the comment made by his Honour was unexceptional.
The text of s 184(2) creates some difficulties. The process of assessing the costs payable by a client to his or her lawyer, or the costs payable by one party to another after litigation has traditionally been referred to as ‘taxation’. That process involved the drawing of a bill of cost which set out each item of work performed by the lawyer by reference to some scale. The items would usually be set out in chronological order. In the case of major litigation, a bill of costs could well run to thousands, or even tens of thousands, of items.
Once the bill of costs was served, a client or party wishing to dispute the costs would be required to provide a schedule of objections identifying the disputed items and the basis for the objection. The matter would then be listed before a “taxing officer” (usually a Registrar or Deputy-Registrar of the relevant court). The taxing officer would consider each disputed item and would rule on the objections made by the disputing client or party. At the end of the process, the taxing officer would certify the amount to be allowed. That certificate would allow the lawyer or party (as the case might be) to recover the allowed amount as if judgment had been given by the Court for that amount.
A great deal of judge-made law has built up dealing with the issues which can arise in relation to costs assessments between clients and lawyers, and as between parties to litigation. Indeed, it is fair to say that the assessment of costs has become something of a specialised area within the practice of the law. The taxation of a large bill where many items are disputed could take many days of work as the objection to each item is ventilated and a determination made one way or the other. It would be most unusual for a judicial officer to be asked to perform the task of a taxing officer, although rules of court would permit appeals against a decision certifying the amount to be allowed on a range of bases.
Over time the term ’taxation’ in relation to costs appears to have fallen out of favour. Thus, the process which was formally referred to as a taxation is now called a costs ‘assessment’: See the LPA (Div 3.2.7) and the CPR (Div 2.17.5). It is notable that both these changes have occurred since Part 14.1 of the CL(W)A came into force in 2002. At that time, the assessment of a disputed bill between lawyer and client was still referred to as a ‘taxation’ in the relevant legislation (see s 180 of the Legal Practitioners Act 1970 (ACT), and similarly in relation to costs as between party and party (see Order 65 of the Supreme Court Rules 1937 (ACT)).
It seems to me that there is some force in the submission of the appellants that the text of s 184(2), having regard to the enabling decision vested in a particular judicial or taxing officer under s 184(1), requires that the power to make an order under subsection (2) is vested in the same officer who made the order under s 184(1). If the intent had been to confer the power on the relevant court to make an order that the prescribed maximum should be increased to a higher figure determined on some broad discretionary basis, and then refer the matter for taxation (or assessment), it would have been very easy for the section to have been drafted in that way.
However, read literally, it might be said that the requirement for, relevantly, the court to allow the lawyer to recover ‘stated additional costs’ could impose the obligation on the court itself to carry out the taxation or assessment process. In this case, the bill of costs contained 691 items relating to professional costs. The detailed assessment process would have the real potential to be quite complex. It would involve, it seems to me, both the assessment of what should be allowed overall for solicitor and client costs, and as part of that process the amount referable to the items related to the matters which the court had found to justify the s 184(1) order. It would clearly be in the interests of efficiency for the party and party costs to be determined in that same process. As noted at [52] above, the amounts recoverable by the respondent against the appellants would be only a percentage of the relevant scale item figure. Moreover, the test for the assessment of party and party costs is somewhat narrower than that applicable to solicitor and client costs (cf r 1751(2) and r 1752(3) of the CPR).
It is difficult to believe that the legislature here intended that a Magistrate (or a Judge) who made a decision under s 184(1) would then be required to embark on the painstaking and time-consuming process of assessing the relevant bill of costs.
Having regard to the lack of clarity of the language of s 184(2), it is, in my view, appropriate to consider the explanatory statement and the content of the presentation speech in the Legislative Assembly in relation to the CL(W) Bill: see ss 141 and 142 of the Legislation Act 2001 (ACT).
In the former (at that time referred to as the Explanatory Memorandum), the outline of the changes proposed to be introduced by the CL(W) Bill commenced with the following:
The Civil Law (Wrongs) Bill 2002 (the Bill) addresses legal issues arising from the recent insurance crisis and aims to improve the ACT civil justice system, by reforming tort law.
A little later in the outline it is stated that the CL(W) Bill was to serve three main purposes. The third of these was described in these terms at page 2:
The Bill serves three main purposes. Firstly, the Bill consolidates the tort law provisions in ACT legislation and sets up a structure for continuous reforms to the civil justice system. Secondly, the Bill adopts a range of technical and procedural changes to ensure that the law reflects current ACT practice. These changes include abolishing civil juries, which were abolished in defamation actions from 1 July 2002 and have not been empanelled in other civil matters in living memory, and provisions permitting neutral evaluation. Thirdly, the Bill adopts various measures that will have a positive impact on civil procedure and access to justice, with a view to quicker and cheaper resolution of disputes.
Part 10.1 of the CL(W) Bill contained the substance of what is now Part 14.1. The following appears at page 16 of the Explanatory Memorandum to that Part:
This Part limits the maximum costs for legal services in personal injury cases. The maximum costs for the legal services are linked to the amount of personal injury damages received by the plaintiff in the matter.
This Part provides that if the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs recoverable for legal services provided to the plaintiff or defendant is 20% of the amount recovered or claimed or $10,000, whichever is greater (with provisions for the regulations to vary these amounts and percentage). These costs that are capped do not include disbursements. Provision is made for higher costs where the complexity of a case or the behaviour of a party so requires.
So far as I can see there is no further elaboration of the purpose of Part 10.1 of the CL(W) Bill in the presentation speech. On 26 September 2002, the Attorney-General moved an amendment to the CL(W) Bill to reduce the amounts of $100,000 wherever appearing in the Part to $50,000. In giving notice of that amendment the Attorney-General (Mr Stanhope) said in Hansard at page 3339 (Jon Stanhope MLA, Debate, Hansard, 26 September 2002):
In relation to costs, the government does not propose to allow parties to contract out of the proposed scheme. The legislation already gives the court a discretion to increase the amount of costs because of the complexity of a matter or the behaviour of a party to the claim. We should not amend it to allow costs to routinely exceed a reasonable amount without scrutiny. However, the government is prepared to focus the provisions more precisely on the area where this is perceived to be a problem–claims under $50,000. I foreshadow that I will be moving amendments to this effect.
In moving the amendment, Mr Stanhope went on to say between pages 3351-2:
The bill provides that if the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs recoverable for legal services provided to the plaintiff or defendant would be 20 per cent of the amount recovered or claimed, or $10,000. As we have just discussed in relation to the previous amendment, the government received a number of representations in relation to these provisions around legal fees. It was argued that the government should amend the provision to allow contracting out, but if this was done, the benefit of the provision would be lost as contracting out would become the norm; that the definition of "costs" should not include barristers' fees, an issue we have just debated and voted on; and that the trigger should be reduced from $100,000 to $50,000.
Having regard to those submissions, the government has agreed to reduce the trigger from $100,000 to $50,000 in these amendments. The reason for the reduction is that the intention of the government in presenting the bill was to impose a cost discipline in relation to small claims. The bill does not prevent a solicitor from claiming a reasonable return from acting for a client. It requires them to justify the costs when they reach a particular threshold. The amendment better focuses the operation of these provisions on small claims.
The reduction to $50,000 better aligns the bill with the jurisdictional split between the Magistrates Court and the Supreme Court. The jurisdiction limit at the Magistrates Court is $50,000 and the same amount is proposed for that in the amendment. Better focusing of the provision on small claims will tend to reduce the number of matters that require counsel attention or the type of process in the Supreme Court that might otherwise reasonably increase legal costs.
As can be seen from the Act as passed the amendment was successful.
There can be no doubt that the purpose of the limitation on costs was to prevent what the legislature saw as the risk of overcharging by lawyers in small personal injury claims. However, it is equally apparent that the Assembly was concerned to allow for some flexibility where the circumstances warranted the recovery of costs above the prescribed maximum. Although this historical material does not shed light on the practical difficulties which arise in this case it is important to note the statement in the Explanatory Memorandum that one of the purposes of the CL(W) Bill was to achieve a quicker and cheaper resolution of disputes.
In my view the circumstances in which the CL(W) Bill was introduced, and the nature of the changes made to civil procedures in the Act as a whole, support a pragmatic interpretation of s 184 to accord with the purpose expressed in the Explanatory Memorandum. That is, a result which could see a Magistrate (and in rare cases, a Judge of this court) bogged down in an item-by-item assessment of costs would result in unacceptable delays, and almost certainly increase the cost of resolving the dispute over costs. On that basis, I reject the very narrow interpretation of subsection (2) discussed in [69] above.
In fairness, Mr Fitzsimmons, for the appellants, ultimately did not press such an interpretation. He did, however, insist that the Magistrate had to do more than was done here. In oral submissions he said:
In other words, the learned Magistrate didn’t need to go through pages and pages of an assessment and undertake what is ultimately the task of the taxing officer. But we say, your Honour, it was incumbent upon his Honour in the court below to make some attempt – or to not only make but in fact undertake that exercise of identifying what those additional costs were.
Having regard to the purposes for which s 184 was passed into law, I am satisfied that the text of s 184(1) and (2) should be interpreted as requiring that the order under subsection (2) should be made by the judicial officer or taxing officer (as the case may be) who makes the order under subsection (1). It seems to me that best accords with the purpose of ensuring close scrutiny of the costs to be charged by a claimant’s lawyer. It also accords with the ordinary meaning of the words used in the subsections. To find otherwise would, in my view, require an undue straining of the words ‘The court or taxing officer...’ in subsection (2).
I should say that I do not accept the appellants’ submission that it is implicit from the text of the subsections that the discretion to order an increase in the statutory maximum requires a finding that the relevant additional costs escalate the amount otherwise recoverable by the lawyer above the prescribed maximum. It seems to me that the text of the subsections tells against such an interpretation. The only considerations enlivening the power to make the order increasing the maximum are those stated in subsection (1). If it was intended that the power to increase should only be exercised in the limited circumstance contented for by the appellants, it would have been very easy for that to have been stated in subsection (1).
Also, it seems to me that such a limitation would impose an undue restriction in the flexibility of the remedy intended to have been given in s 184. It is easy to conceive of cases in which reasonable solicitor and client professional costs might be generated in relation to a particular claim, which well exceeded the figure of $10,000, before taking into account specific additional costs relating to a particular complexity of the matter, or particular conduct of an opposing party. I can see no reason in principle, or arising from the ordinary words of the subsections, why the discretion under s 184(1) would not be enlivened in such circumstances.
However, it does seem to me that the logic of the powers given under ss 184(1) and (2) requires that any order for ‘stated additional costs’ be limited to the additional costs related to the consideration(s) which satisfied the decision maker under subsection (1) that an increase order should be made. It would be quite contrary to the purposes of Part 14.1, for example, for a particular complication which resulted in an additional cost of $5,000 to justify an order increasing the prescribed maximum to a figure above $15,000.
In that context, it seems to me that the Magistrate did fall into error here in ordering the increase of the prescribed maximum to a figure of no more than $77,000, plus the costs of the application made by the respondent. As submitted by the appellants, in making that order his Honour made no attempt to identify by principle or amount the additional costs referable to the issues of complexity which he relied upon in making the s 184(1) order.
In my view, s 184(2) required that step to be undertaken.
I should say that I did not find the two matters in which s. 184 has arisen in this court of much assistance. In Eggins v Knaus [2007] ACTSC 17, a matter had been removed into the Supreme Court from the Magistrates Court. The plaintiff was alleged to have suffered injuries in a motor vehicle accident. His damages were said to be up to $100,000 at full value; however, there was a real and live issue of contributory negligence. Ultimately, the case settled for a judgment figure of $40,000 plus costs. Faced with the statutory maximum, the plaintiff applied for an order under s 184 increasing the maximum by the cost of counsel’s advice in relation to an expert report obtained by the defendant.
In the above case, Higgins CJ said:
12. I note that s 181 purports to control costs as between a solicitor and his or her own client as well as costs recoverable as between the parties. I am asked to make an order only in respect of costs recoverable as between the parties. I make no decision as to the validity of a law imposing control of fees chargeable and payable as between solicitors and their own clients greater than the traditional professional obligation, recognised by the Legal Profession Act 2006 (ACT), to charge no more than fair and reasonable fees (see, for example, s 279 of that Act).
13. I should also note that the limit of $10,000 is not necessarily the sum to be allowed. It is merely a maximum that may not be exceeded, whether the matter had proceeded in this Court or the Magistrates Court, insofar as s 181 applies.
His Honour concluded that the ground for an increase under s 184(1) had not been made out. However, he did find that there were other bases on which the discretion to increase the maximum should be exercised. He said:
20. However, the very fact that the Report did little to help the case of either party underlines the view I have formed that it was neither necessary nor helpful.
21. Having said that, I do not think it made the case more complex in any relevant sense but it did effectively add unnecessarily to the plaintiff’s costs.
22. I consider therefore that whilst that enlivens s 184(1)(b) CL(W) Act it is more appropriate to apply s 183 to achieve the same objective.
23. I would, therefore, order that the costs of the plaintiff in considering and seeking counsel’s advice on the “Report” so far as that advice related to that “Report” are to be excluded from the application of s 181.
It appears that there were no submissions made to his Honour in relation to the interpretation of s 184(2). That is hardly surprising given the very limited additional cost in question in that case. In any event, the decision sheds no light on the issues which have arisen before me.
I should say that no submission was made in the matter before me challenging the validity of s 181 of the CL(W)A.
The other matter in which the section received some attention was Yogini v Eveille [2006] ACTSC 23. In that matter, the plaintiff had suffered personal injury when she tripped and fell on building material protruding onto a public footpath. The matter was heard by Marshall J who found the defendant occupier to have been negligent. However, his Honour also found contributory negligence and reduced the plaintiff’s damages of $148,096.60 by 75 per cent on that basis. This resulted in a judgment figure for the plaintiff of $37,024.65.
The plaintiff applied for an order that the defendant pay her costs on a party and party basis at the Supreme Court scale. The plaintiff relied on s 184 of the CL(W)A to support that order, on the basis that the matter was sufficiently complex to justify the exercise of discretion under s 184(1). (An issue also arose under Order 65 r 7A of the Supreme Court Rules 1937 (ACT) as in force at that time. It is not necessary to address that issue here).
The defendant submitted that Part 14.1 of the CL(W)A did not apply to the costs in issue. This was because it related to solicitor and client costs, not party and party costs.
After concluding that it was appropriate to make the order sought by the plaintiff under Order 65 r 7A, his Honour said
25. I do not see that the discretion to be exercised pursuant to the Wrongs Act should necessarily be more narrowly confined than the discretion available to me under the Rules. Section 184 of the Wrongs Act emphasises two matters. They are: the complexity of the claim and the behaviour of one or more parties to the claim. The Rules provide no such internal guidance. I acknowledge the valid policy reasons which underlie the broad discretion given to the courts of this Territory, and I do not intend to narrow that discretion. I am of the view that the discretion to be exercised pursuant to the Rules, at the very least, encompasses those considerations contemplated by the Wrongs Act.
26. Therefore, I do not think it necessary to decide the issue of whether the discretion I am exercising is pursuant to the Wrongs Act. I am content to decide the matter upon the application of the Rules. Order 65 r 7A(5) of the Rules unambiguously gives me the discretion to make the order that I propose. The defendants do not dispute this point.
It again appears that no submissions were made to his Honour as to the effect of s 184(2). Indeed, it seems that the position adopted by the defendant led to the acceptance by his Honour that s 181 did not apply according to its terms. Having regard to the interrelationship between party and party costs and the costs recoverable by a solicitor from his or her client in a matter the subject of s 181 I consider that his Honour was led into error in disregarding the operation of the section. In any event, it is clear that his Honour did not consider the issues which I have to determine.
It is thus necessary for me to decide what, in the circumstances of this case, does s 184(2) require of a court which has exercised the power to increase costs under s 184(1). The parties did not refer me to any authority directly on point, nor have I been able to find such authority in my own research.
I do not accept that the words ‘stated additional amount’ require a court dealing with an application such as that brought before the Magistrate here to actually identify a specific sum attributable to the consideration(s) which led to the s 184(1) order. Contrary to the argument of the appellants, it seems to me that such an interpretation would have led to the need for the Magistrate to be taken through the bill of costs here in considerable detail to identify not just the items relating to the denial of liability issue, but also each item said to have been incurred due to the multiple accidents and the interplay of medical consequences. Having performed that role, it would then have followed that, in the absence of agreement, the bill would have to be referred for assessment by a taxing officer. That assessment would require the assessment of what should be allowed for the solicitor and client amount (up to the maximum as determined by the Magistrate) and also the assessment of what should be allowed as between party and party. Overall, such a process would add to the time and cost involved in resolving the dispute over costs. It would also, in my opinion, waste valuable court resources.
In my view, having regard to the purpose of s 184 in the context of the Act as a whole I consider that the words ‘stated additional amount’ require the Court to state with particularity the issues of complexity or behaviour which caused the judicial officer to conclude that it was appropriate for an order to be made under s 184(1). Such a statement would allow a bill to be drawn (if it had not already occurred) which clearly identified the items which the claimant’s lawyer asserted to have been incurred in relation to the relevant issues. The determination of which items should be allowed by way of solicitor and client costs, and which should also be allowed as party and party costs, and the amount to be allowed in respect of each, could then (in the absence of agreement) be determined by a taxing officer.
I consider that such a process complies with the substance of the requirement for the court making the increase order to state the additional costs that the claimant’s lawyer should be entitled to.
Conclusion
I have found against the challenge by the appellants to Order 1 made by the Magistrate on 24 March 2021. However, I accept that his Honour fell into error in making Order 2. Given that the matter is a rehearing, and having regard to my conclusion as to the correct interpretation of s 184(2), I propose to allow the appeal and to set aside Order 2 made by his Honour. I will substitute for that order an order which I see as according with the requirements of the subsection.
I should say that I see the operation of Part 14.1 as creating the potential for a real conflict of interests for the solicitor for a claimant. Because s 181 operates primarily on the level of costs recoverable between solicitor and client in circumstances where the client has obtained what is now a very modest amount of damages in relation to the personal injury which he or she has suffered, it is not difficult to conceive of a situation where the application for an order under s 184 could bring the interest of the solicitor (in maximising the order for additional costs) into conflict with the interest of the client (who might wish to see no order for additional costs). That risk would of course be avoided if the contract of retainer entitled the solicitor to recover from the client only that part of any additional costs then recoverable as party and party costs.
It seems to me that lawyers dealing with small personal injury claims in the Territory may be working in an ethical minefield when it comes to the operation of s 184 CL(W)A. It is necessary for all involved to be astute to the issues which I have highlighted above.
I will hear the parties as to costs.
Orders
The orders of the Court are:
1.The appeal is allowed in relation to Order 2 made by Magistrate Stewart on 24 March 2021.
2.The appeal is otherwise dismissed.
3.Order 2 made by Magistrate Stewart on 24 March 2021 is set aside.
4.In substitution for Order 2, the following order is made:
2. The plaintiff’s solicitor is entitled to recover in respect of legal services provided to the plaintiff in addition to the amount of $20,000 the fair and reasonable charges for professional costs attributable to
(i)Liability in relation to the motor accident on 2 November 2017 having been in issue until 1 July 2020;
(ii)The issue of causation of the injuries claimed by the plaintiff having regard to the consequences of the motor accidents on 2 November 2017, 6 November 2018, and 19 March 2019; and
(iii)The application in proceeding dated 14 December 2020.
| I certify that the preceding one-hundred-and-five [105] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Crowe. Associate: Jake Hester Date: 10 September 2021 |
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