Junn v McBride

[2018] NSWDC 325

District Court

New South Wales

Medium Neutral Citation:

Junn v McBride [2018] NSWDC 325

Hearing dates:

27 – 28 April 2017

Date of orders:

01 November 2018

Decision date:

01 November 2018

Jurisdiction:

Civil

Before:

Neilson DCJ

Decision:

(1) Appeal allowed.

 

(2) Remit the matter to the Review Panel to be re-determined in light of these reasons.

 (3) Order the defendant to pay half the plaintiff’s costs.

Catchwords:

COSTS – Appeal from decision of Review Panel – Appeal limited to error of law – Failure of Review Panel to provide any or any sufficient reasons – Remitted to Review Panel to re-determine

Legislation Cited:

Legal Profession Act 2004
Legal Profession Regulation 2005

Cases Cited:

Cassegrain v CTK Engineering; Cassegrain v Cassegrain [2008] NSWSC 457
Dunn v Jerrard & Stuk Lawyers [2009] NSWSC 681
Frumar v Owners of Strata Plan 36957 [2006] NSWCA 278; (2006) 67 NSWLR 321
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
Whitehaven Coal Mining v Pain [2018] NSWCA 229

Category:

Principal judgment

Parties:

Donald Martin Junn (Plaintiff)
Louise McBride (Defendant)

Representation:

Counsel:
Mr SJ Philips (Plaintiff)
Mr FM Douglas QC (Defendant)

  Solicitors:
Dixon Holmes Lawyers (Plaintiff)
Self-represented (Defendant)

File Number(s):

2016/344836

Publication restriction:

Nil

Judgment

Curia advisari vult

Introduction

1. This statutory appeal concerns legal costs. By an amended Summons filed on 26 April 2017, the plaintiff appeals as of right pursuant to the Legal Profession Act 2004 s 384. It is common ground that that Act governs these proceedings. The section provided:

“(1) A party to an application for a costs assessment 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 District Court, appeal to the Court against the decision.

(2) After deciding the question the subject of the appeal, the District 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.”

Pursuant to s 382 of the same Act, section 384 applied to an appeal from a decision of a Review Panel which reviewed the decision of the costs assessor.

2. Like many appeals concerning legal costs, in these proceedings:

1. the amount in issue is not particularly large,

2. the arguments raised are largely technical, and

3. they are marked by the amount of emotional involvement of those concerned.

In this case the last consideration has led to a number of unseemly allegations being made by the plaintiff and similar (although more moderately expressed) comments being made by the defendant. In a dispute between members of the legal profession, even though they be from different branches of that profession, such conduct ought be eschewed.

The parties

3. The plaintiff, Donald Martin Junn, is a solicitor. He is a partner in the firm Dixon Holmes of Elizabeth Street, Sydney. In an affidavit sworn on 10 February 2017, he said in [3]:

“I was admitted as a solicitor in New South Wales in 1993. About 90% of my practice has been in civil litigation since my admission.”

4. The defendant, Louise McBride, is a barrister. Her chambers were at relevant times on the ground floor of Wentworth Chambers, 180 Phillip Street, Sydney. A letter in evidence from her Clerk (dated 4 August 2015) tells me this:

“Ms McBride has over 30 years’ experience specialising in taxation law and has been a partner in major law firms, a partner in a major accounting firm and a director of a boutique merchant bank and a trustee. I believe her fee rate … is consistent with someone at the Bar with her experience that specialises in taxation.”

The defendant was called to the Bar on 13 October 2006. At the time she was retained by the plaintiff (30 April 2015), she had over eight years’ experience at the Bar, specialising in taxation law.

The lay clients

5. The plaintiff had accepted instructions to act for two brothers, Leonard Zeitouni (“Leonard”) and Habib Zeitouneh (“Habib”). The difference in the spelling of their surname represents different ways of transliterating Arabic into English used by their father at the time of the registration of each birth. The brothers were in dispute with the Australian Taxation Office (“ATO”). The brothers had previously used two different law firms, consecutively, to act for them. The plaintiff was their third solicitor. The plaintiff’s first attendance upon his clients’ business was on 3 December 2014. His Memorandum of Fees of 17 February 2015 records these initial attendances:

“03.12.14

Receiving, perusing and considering email from Mohammed Najjar of Cor Cordis attaching correspondence on matter background

04.12.14

Conference with Mohammed Najjar and Luma Sherif of LS Law re matter background

05.12.14

Perusing documents provided by Najjar. Conference with Alex Assaf and Ali Assaf of Quest Business, Mohammed Najjar and Luma Sherif re matter history

08.12.14

Receiving, perusing and considering email from Alex Assaf attaching letter of appointment signed by client Leonard Zeitouni

09.12.14

Receiving, perusing and considering email from client Habib Zeitouneh attaching signed letter of appointment and forwarding to Luma Sherif”

It can, accordingly, be seen that he had been instructed to act for both brothers by 9 December 2014.

The basal litigation

6. In the brothers’ dispute with the ATO, there were proceedings in the Federal Court of Australia (“FCA”) and in the Administrative Appeals Tribunal (“AAT”). In her submissions to the Costs Assessor (13 August 2015), the defendant provided this summary of the background of the brief the plaintiff delivered to the defendant:

“The Commissioner of Taxation issued the Taxpayers with Notices of Assessment and Penalty Notices following the completion of a three year audit of the Taxpayers and their associated entities without notice.

2. Leonard’s audit covered the income tax years ending 30 June 2007, 30 June 2010, 30 June 2011 and 30 June 2012. Habib’s audit covered the income tax years ending 30 June 20017, 30 June 2008, 30 June 2009, 30 June 2011 and 30 June 2012.

3. Eleven Australian entities associated with the Taxpayers were also included in the audit material:

I.    MROC Entertainment Pty Ltd (MROC Entertainment);

II.    MROC Car Wholesalers Pty Ltd (MROC Car);

III.    Plush Services Pty Ltd (Plush);

IV.    Mozzart Investments Pty Ltd as trustee for the Mozzart Investments Trust (Mozzart);

V.    Zegna Holdings Pty Ltd as trustee for the Zegna Holdings Trust (Zegna);

VI.    Eagle Trust (Eagle);

VII.    MROC Consulting Australia Pty Ltd (MROC Consulting);

VII.    MROC Investments Pty Ltd (MROC Investments) as trustee for the Zeit Family Trust;

IX.    Region Australia Fine Arts Logistics Pty Ltd;

X.    Mow “N” Blow Pty Ltd;

XI.    Red Eagle Holdings Ltd.

Two entities incorporated in Indonesia and controlled by the Taxpayers were also the subject of the audit:

I.    PT Legian Fave which had 2 bank accounts in its name and had received deposits from Australian companies allegedly associated with the Taxpayers of $10,773,583 in 2011 and 2012;

II.    PT Zeit Bali.

4. Australia Transfer Reports and Analysis Centre (AUSTRAC) reports show that the large cash deposits remitted to PT Legian Fave were ultimately repatriated to Australia to one of the entities controlled initially by Leonard. After a transfer of control of the companies by Habib, they were included in the ATO reasons for the decision to issue section 167 Income Tax Assessment Act 1936 (1936 Act) default assessments. There funds were used to purchase assets that either Leonard or Habib had the use and enjoyment of, or the funds went to pay Leonard’s credit card debts.

5. Ten Australian bank accounts under the control of Habib, four American express accounts issued in the name of Leonard, and a visa card issued in the name of Leonard were also analysed and included in the ATO Reasons for decision together with the numerous bank accounts held with St George, Westpac and ANZ in the names of the Australian companies associated with or controlled by Leonard and Habib.

6. The audits found that assessable income had been derived in each of the above income years by Leonard and Habib and their associated Australian companies and entities. However, no tax returns had been lodged by the Taxpayers in any of those years for any of the entities or for the Taxpayers’. The Commissioner formed the view under s 167 1936 Act that despite not lodging income tax returns, the taxpayers had derived taxable income in each of the income tax years in question. The Commissioner subsequently issued default assessments under s 166 1936 Act. The Commissioner also assessed the Taxpayers for penalties for tax related liabilities under s 2684-75 at the base rate of 75% and increased the base penalty amount by 20% under s 284-100 of Schedule 1 to the Taxation Administration Act (TAA) because of the seriousness of the Taxpayers’ behaviour.

7. The Taxpayers lodged objections to these decisions but they were rejected. They subsequently filed appeals to the AAT after the ATO had successfully had Freezing Orders imposed on all of the Australian assets of the Taxpayers’. It was imperative for the Taxpayers’ that the substantive proceedings before the AAT were successful otherwise the Freezing Orders would allow the ATO to sell all of the assets and apply the proceeds towards the Taxpayers’ and the related entities unpaid tax debt.

8. The AAT made a series of orders on 5 March 2015 to the effect that each of the Taxpayers was required to file and serve their witness statements, any other evidence and a Statement of Facts, Issues and Contentions (SFIC) by 8 May 2015. The deadline was later extended to 5 June 2015. The Costs Applicant advised the Costs Respondent that a further extension had been granted until 19 June 2015, but this was incorrect: [see Transcript 25 June Trans P-2/21-45, behind Tab 1; Transcript for 2 July behind Tab 2].

9. On 30 April 2015, the Costs Applicant briefed the Costs Respondent to “Advise in relation to the Taxpayers’ evidence to be filed in the AAT”. He chose to brief the Costs Respondent because she is a recognised specialist in taxation litigation and taxation advice and she was recommended to the Costs Applicant because of her experience and expertise in those fields. The Costs Respondent provided the Costs Applicant with a copy of her Legal services and costs agreement on 2 May 2015 which clearly set out the Costs Respondents charge out rate of $550 plus GST. At the time the Costs Respondent was briefed, it was not possible for her to provide a meaningful estimate of her expected fees because she had not been briefed with a complete copy of the s 37 Administrative Appeals Tribunal Act (AAT) (Tribunal) documents (T Documents) for either of the Taxpayers. On 17 June 2015 the Costs Respondent advised the Costs Applicant that she estimated it would approximately take another 10-12 days to draft and settle the SFIC for each Taxpayer, settle the Taxpayers’ witness statements, and finalise the evidence required to address the Commissioner’s position: [see letter behind Tab 3].

10. The Taxpayers’ dispute with the Commissioner was also the subject of Federal Court proceedings: (P) NSD 1772/2013. The Federal Court had ordered Freezing Orders to be made with respect to the assets of Leonard (valued at $8,499,574.39), Habib (valued at $5,808,941.55), and their associated entities, Zegna Holdings (valued at $463,193.96), MROC Car (valued at $14,308,515.97), Mozzart Investments (valued at $14,308,515.97), MROC investments (valued at $14,308,515.97), MROC Entertainment (valued at $14,308,515.97), Plush Services (valued at $14,308,515.97) and Red Eagle Holdings Pty Ltd (valued at $14,308,515.97). The Costs Respondent was not initially briefed in relation to the Freezing Orders, but the Freezing Orders became central to the Costs Respondent’s brief. The Costs Respondent was required to provide advice to the Costs Applicant in relation [to] the Freezing Orders and how they operated.

11. In the brief, the Costs Applicant informed th[e] Costs Respondent that his was the third firm of solicitors to have acted for the Taxpayers in the matter. He commenced acting in December 2014 and was substantially unfamiliar with the issues, the history of the matter, and the difficulties the Taxpayers faced in their disputes with the ATO. The involvement of the earlier solicitors had, for example, caused the taxpayers to lodge objections to the notices of assessment and penalty notices. However, these objections were invalid in accordance with Part IV C of the Taxation Administration Act (TAA). The involvement of the earlier solicitors also involved objections being made to the Notices of Assessment to the Freezing Orders as both the Taxpayers had left Australia and were residing in Indonesia. In this respect, the Court found that the revenue was subject to the risk that the assets would be dissipated and the proceeds transferred offshore without payment of tax.”

Dealings between the parties

7. On 30 August 2015, the plaintiff delivered a brief to the defendant on 2 May 2015, the defendant wrote the plaintiff a letter headed:

“DISCLOSURE OF COSTS AND LEGAL SERVICES AGREEMENT”

The letter constituted an offer to enter into a costs agreement within the meaning of Legal Profession Act 2004 (hereafter, “LPA”) s 322(1)(c) and, according to its author, a costs disclosure.

8. The defendant advised that her fees were:

1. $550 per hour for all preparatory work, including reading, conferring and short interlocutory court attendances;

2. $4,200 per day (8am to 5pm) for days set aside for longer interlocutory attendances and hearings, plus the hourly rate for time spent outside those hours;

3. Disbursements;

4. Plus GST.

The plaintiff was required to acknowledge that he was retaining the defendant as a principal and not as an agent of his clients.

9. As to the extent of the work when she might be required to do, the defendant said this:

“The final costs will ultimately depend upon the factual and legal complexity of the matter and these I am not yet in a position to determine. The rate at which I calculate my fees is fixed having regard to the complexity and difficulty of matters in which I am ordinarily instructed and (while reserving advocacy immunity) by reference to the level of responsibility associated with the nature and value of the issues and transactions concerned.

The amount of time involved in providing services in the nature of barristers work in any matter depends on a number of uncertain variables, including the number of witness [sic] the volume of documents to [be] read, the stage of the proceedings where the barristers involvement commences and the approach taken by the other parties to the litigation. I charge only for time productively or necessarily (by reason of the demands of courts or my clients) actually spent in a matter and endeavour to be as productive and expeditious as possible, although you will appreciate that my ability to respond promptly to instructions is affected by the exigencies to obtain further information.”

10. The plaintiff’s Application for Costs Assessment dated and filed on 21 June 2015 acknowledged that there was a costs agreement between the plaintiff and defendant: par 2(c).

11. The size of the brief needs to be considered. There is no dispute that the “T documents”, documents filed by the ATO in the AAT, comprised 659 pages for Leonard and 937 pages for Habib, providing a total of 1596 pages, “about 3 full binder folders” according to the plaintiff. The plaintiff also said that there was “a further binder folder of instruction documents called “brief to counsel” which duplicated many of the documents contained in the T documents. According to the defendant, that brief contained 356 pages. According to the plaintiff there were “a further 3 binder folder[s] of documents” which were to be the exhibits to affidavits of the clients, which were to be prepared by the defendant. The defendant said this:

“additional documents forwarded on 21 May 2015 comprise a further 607 pages of text, and the Taxpayers’ objections to the assessments were 298 pages of text (all cover pages and pages with little or no text have been excluded from the calculations of pages).”

On the information supplied to the Costs Assessor by the defendant the brief contained 2,857 pages, although there may have been many duplications. However, one must read a document (albeit that this can be done quickly) to ensure that it is a duplicate, before continuing one’s reading.

12. On 12 May 2015, the plaintiff hand delivered a letter to the defendant which is in the following terms:

“As discussed in conference last Wednesday, please find enclosed the following supporting documents to our brief:

1. Draft affidavit of Leonard Zeitouni;

2. Draft affidavit of Habib Zeitouneh;

3. Letter of advice from Peter Bobbin of Rockwell Olivier dated 18 November 2014 in relation to family trusts;

4. Floor plans and design documents for Favehotel in Legian, Bali;

5. Chronology of events with supporting documents (two folders); and

6. T-documents in relation to the Administrative Appeals Tribunal application by Leonard Zeitouni (separate folder).

We note we are unable to obtain T-documents for Habib Zeitouneh’s AAT application from the clients’ previous solicitors. We have written to the ATO to request these documents and will deliver a copy to you once they are received by us. However, the T-documents for Habib are expected to be 99% identical to those of Leonard’s.

Lastly, I can now confirm that the Tribunal just made orders by consent extending time for our evidence, issues and contentions to 5 June 2015.”

Relations were still cordial at this time. The letter is addressed “Dear Louise” and ends “Kind regards”. The letter is instructive as to the types of documents being delivered to the defendant and some of the difficulties encountered in obtaining them.

13. The defendant sent to the plaintiff four fee notes:

DATE	PERIOD COVERED	TOTAL FEES	FEES PLUS GST
25 May 2015	5 May to 25 May	$20,500.00	$22,550.00
01 June 2015	25 May to 28 May	$11,150.00	$12,265.00
17 June 2015	1 June to 17 June	$12,925.00	$14,217.50
03 July 2015	22 June to 2 July	$12,650.00	$13,915.00

These were “lump sum” bills, not itemised accounts. They provide the dates on which work was done, a brief description of the type(s) of work done and the total number of hours spent on the work on that day. Although the plaintiff made an Application for Assessment of the costs charged by the defendant, he made no application to the defendant to provide an itemised bill of costs, which would have made the tasks of each of the Costs Assessor, of the Review Panel and of me easier.

14. The plaintiff paid to the defendant money in full satisfaction of her fee notes dated 25 May 2015 and 1 June 2015 ($34,815) on 10 June 2015.

Termination of the defendant’s retainer

15. The last work done by the defendant, as itemised in her fee note of 3 July 2015, was this:

“2/07/2015   Read the Affidavit of Donald Junn. Preparation for directions hearing. Research of cases in support of the Tribunal exercising its discretion to order the ATO to produce further T Documents. Attend directions hearing before Deputy President Constance. Conference with instructing solicitors after the directions hearing. Preparation of draft application to [FCA] to vary the freezing orders. Telephone attendance on the associate to the duty Judge, Justice Yates, regarding the making of an urgent application. Telephone attendance on associate to Justice Nicholas regarding the need to have the matter listed before the next return date of 30 July to prevent the Tribunal or the Respondent seeking to have the substantive proceeding struck out. Telephone conference with instructing solicitors to discuss the application and the content of a supporting affidavit – 7 hours      $3,850.00 ”

The need to vary the freezing orders initially made by FCA (Katzmann J) on 29 August 2013 was to obtain funds to pay the clients’ legal bills. Annexed to the plaintiff’s affidavit of 10 February 2017 (exhibit A before me) is an email from the defendant to the plaintiff of 1 July 2015 at 2.42pm:

“Hi Donald,

If you have had no joy re payment of the bills – we need to ring the judge’s associate and make an urgent application to vary the freezing orders – we need affidavit from you that delay in funding is preventing the clients preparing the case and Deputy President Constance is threatening to strike the substantive matter out because the applicants have not complied with the timetable to file the evidence and the SFIC. We need to file interlocutory application to vary the orders so we can say tomorrow we have done this.

Louise”

16. On Friday 3 July 2015, the defendant sent to the plaintiff another email containing a “slightly revised application” to vary the freezing orders and advising a practical way of putting the application before the FCA and tactics to be employed when dealing with the legal representatives of the ATO.

17. On Monday 6 July 2015 at 7.33pm, the plaintiff sent this email to the defendant:

“Dear Louise,

I was in utter dismay over 3 aspects of recent developments:

1. At the hearing for our application for the ATO to produce documents pursuant to s.37, there were two key areas of documents to be provided by the ATO under our application: (1) the three companies (Max Traders, PATL and Omega) and (2) Mr Sedaghati. You could not point to the specific parts of the T documents over either of the two key aspects, and it was the Tribunal member that noted the key words “source of funds” in relation to the three companies that saved the day for our clients in relation to the three companies; and as to Sedaghati, the opportunity was lost completely as you could not point to anything in the T documents. My grievances were made worse by the fact that you have now charged more than 100 hours over less than two months for reading precisely documents such as the T documents and you could not locate the right references at the hearing which showed to me a simple failure: you did not read the material you should’ve read; you had no preparation for the hearing; you prepared no submissions containing references to these documents.

2. At the very outset of my briefing you at our initial conference, I expressly informed you that there would not be enough money for both of us to travel to Indonesia to meet with the clients in preparing evidence – only one of us could do so and you responded that you would not go without your instructing solicitor; and in that case, that I needed you to put structures of evidence in my draft affidavits for clines to address and for me to obtain instructions from the clients on so that I continue drafting the affidavits. And yet, 7 weeks into the matter and $60,000 of your invoiced fees later, you have not done so, and instead you told me in your email of 29 June 2015 “I am not prepared to do the affidavits for clients I have never met affidavits are the facts – I am happy to settle the affidavits by you after interviewing your clients – but I am not going to put in heading to affidavits.” How could we work together? If you told me this at the outset, I would not have briefed you.

3. Your three drafts of the application for variation of the freezing orders contained full of errors and non-sensical syntax. That was the last straw. I lost confidence in your role as my client’s counsel completely.

As to your fees, unless you could make a compromise in recognition of these grievances, I was instructed over the weekend to have you all 4 bills assessed. In this regard, I particularly draw your attention to lavish amounts charged for “consideration”, “review”, 6 hours for directions hearing with a 3 hour preparation charge to top it off. Et cetera, et cetera. I will also rely on the transcript of the AAT hearing to determine what was fair and reasonable in view of the work done and the manner in which it was done. If we could reach agreement by this Wednesday, I will proceed to file an assessment application.

In my 22 year career as a litigation solicitor, this is the first time I have clients instructing me to have counsel’s fees assessed and I feel compelled to agree.

With deep regret,

Donald”

18. On Tuesday 7 July 2015 at 5.19pm, the defendant replied:

“Donald,

Please provide me with a copy of the transcript for the last directions hearing – which from the terms of your email I understand you already possess.

An examination of the transcript will show that you are quite mistaken in your recollection: it was me who took the Deputy President to the document that referred to unknown sources. It was also me who had the references to the lack of information in respect of the bank statements.

You are correct that I could find no reference to Mr Sedagarti being the cloak or alter ego of our clients, because there isn’t such a reference in the T Documents. It is implicit in the ATO reasons for decision but is not specially [sic] articulated.

You allegations in point 1 of your email are offensive and false; it is quite improper for you to make such a serious allegation as a “grievance” device to seek to obtain a reduction in fees, which it is clear that you are seeking to do. If you wish to seek a review of my memorandum of fees in accordance with the Legal Profession Act that is a matter for you, but I will not respond as you wish to an improper threat made to obtain a financial benefit for yourself or your client. I invite you to withdraw those comments immediately.

In regard to your point 2 of your email I was never going to Indonesia with you; you made that clear at the outset. My understanding at all times was that you were to draft the affidavits and I would settle them, if necessary by telephone call or via Skype with the clients. As you are aware counsel settle affidavits they do not draft them.

I never put words into client’s mouths: affidavits are evidence, and you will be aware of that from your twenty-two years of litigation experience. I told you at the directions hearing that I might have misunderstood your request and if it were just a skeleton outline of uncontested facts I would do that, but not the evidence nor a suggestion of what the evidence should be. You will also be aware, given your extensive litigation experience, that in this case credibility is a critical issue. Affidavits drafted with my or your significant assistance would be torn to shreds. You are aware of the issues and questions to ask: we discussed this at length in conference. As you took-over the matter in December 2014 you are intimately familiar with the issues. It is essential that the clients tell their story in their own words. Please note in this regard that I sought ethical advice from senior counsel following your request to have me sketch the affidavits; in abstract. Senior counsel confirmed my view that I should not do so and that it was not in the clients’ interests that the affidavits be prepared in other than the usual manner.

In regard to point 3 of your email, you perpetuate the claim that I settled three drafts of the variation. I did not, as I have explained fully. There is nothing wrong with the application for freezing orders, but I am happy for your to show me precisely what are your complaints. In any event, in the ordinary course it is the solicitor who drafts the freezing orders, which are then settled by counsel. It would be grossly misleading for you to assert to the assessor that the draft that I sent accidentally to you was a settled draft. The application for a variations of the freezing order did not purport to be in final form, they were working drafts which I understood you were to comment on.

I am sorry you feel this way about the bills. My narrations are detailed and I have done the work to support it. I am happy to discuss the matter with you in the interests of achieving a commercial resolution. I maintain I have done no more than reasonably required taking into account the complexities of the matter. In the interests of maintaining a professional relationship and avoiding a protracted disputes I would be prepared to settle the outstanding invoices (provided you withdraw the allegations in point 1 of your email) by discounting the outstanding fees by 15%, and provided the invoices are paid immediately. Once the invoices are paid, I will return the brief so that you have time to brief another counsel, if you are of the view that this is the course that should be taken.

If you feel this is unacceptable you are entitled to file for an application of assessment. Please send me a notice of your application as soon as possible.

Louise”

19. Later that day, at 6.01pm, the plaintiff sent this email to the defendant:

“I made no “threats” in “point 1” referred to in your email. I will let the transcript speak for what occurred at the hearing which I will obtain if the matter proceeds to assessment.

As to “point 3”, you emailed me the first version at 6:06pm on 2 July; second version at 6:59pm on 2 July; third version at 11:07am on 3 July 2015; all of the three versions contain extensive problems in typos and syntax. I do not have confidence in a counsel who seems prone to making extensive errors in documents as important as orders we seek form the court, particularly in view of the amount of time charged for the task.

As to a compromise sum, my instructions are that my clients will accept a compromise of 25% of all four invoices issued for purposes of settlement only, with payment for the balance outstanding to be paid forthwith upon acceptance by you and the release of the brief documents by you forthwith upon receipt of payment by you.

If this offer is not accepted by you by 2pm tomorrow, it will lapse and we will file for assessment, as we will need to prepare brief documents for new counsel without delay.”

20. On 8 July 2015 at 11.36am the defendant sent an email to the plaintiff referring to a counter-offer concerning fees and an offer “to work with you to comply with the [AAT’s] timetable”. This was not accepted by the plaintiff when, on the same day at 1.28pm, he advised the defendant that he would seek an assessment of the plaintiff’s fee notes.

The Costs Assessment

21. As I stated at [10] above, the plaintiff filed an “Application by Legal Practice for Assessment of Costs” on 21 July 2015. That Application is before me. It annexes the defendant’s fee notes, her letter of 2 May 2015 which constitutes the fee agreement, and certain documents which the defendant prepared. The defendant prepared “Submissions of Costs Respondent in response to Costs Applicant’s Notice of Objection”. That document is dated 31 August 2015. It is lengthy: 26 numbered pages including the cover-sheet, containing 72 numbered paragraphs and to which are attached a large number of documents comprising about 200 pages (an estimate only). On 23 September 2015, the plaintiff filed a “Response to Notice of Objections filed by the Costs Respondent”. That contains 10 pages, including the cover-sheet and annexes a number of documents, all of which, as far as I can ascertain, had already been put before the Costs Assessor.

22. The Costs Assessor appointed was John Levingston, Esq. Firstly, he considered that the defendant had not made adequate disclosure to the plaintiff. Disclosure of a solicitor to his or her client was provided by LPA section 309. Under s 309(1)(c) the solicitor was required to disclose to his or her client “an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs”. Under s 310(2), a barrister retained on behalf of a client by a solicitor was “not required to make disclosure to the client under section 309, but must disclose to the [solicitor] the information necessary for the [solicitor] to comply with subsection (1).” That subsection provided that “[i]f a [solicitor] intends to retain a [barrister] on behalf of the client, the [solicitor] must disclose to the client details specified in section 309(1)(a), (c) and (d) in relation to the [barrister] in addition to any information required to be disclosed to the client under section 309.” In short, a solicitor should provide to his or her client an estimate of the barrister’s fees and the barrister should provide to the solicitor an estimate of the barrister’s fees. Mr Levingston thought the defendant should have been able to provide such an estimate or a range of estimates by the time of her first fee note of 25 May 2015. Accordingly, he reduced what he thought the defendant ought to have charged by 10% pursuant to LPA section 317.

23. At [14] of his reasons, Mr Levingston provided a synopsis of the defendant’s fee notes and used those fee notes to provide Table B to his reasons and analysis showing the general classes of work type claimed and an assessment of the “fair and reasonable amount.” That table can be summarised thus:

ITEM	HOURS CLAIMED	HOURS ALLOWED
Conference, phone call, correspondence	3.5	5.1
Consideration	41	31
Directions hearings	6	2
Drafting	4	3.5
Freezing orders	2	1
Preparation for conference	0	1
Preparation for directions hearings	10	2
Reading, review	30	14.3
Research	5	1
SFIC	4	4
TOTALS	105.5	64.9

24. Between [18] and [25] of his reasons, Mr Levingston summarised the contentions of the parties. He then commenced to provide his explanation of what was fair and reasonable. At [29], Mr Levingston said this about the rate of charge of the defendant:

“Ms McBride carries the onus of proof. She has satisfied the proof of her hourly rate ($550 plus GST or as Mr Junn puts it $605 including GST), as this was the agreed rate set out in the Agreement and as there was no application to set aside the Agreement in whole or part: LPA s328. Accordingly it follows that the agreed hourly rate is fair and reasonable.”

25. The essence of the Costs Assessor’s findings are these:

“33. This work type classification is not entirely accurate as the tax invoices did not provide proper LPR cl 111B(2) particulars. In “Work Types Claimed” I have identified what appears to be the main work type on that date and identified other works types with “0”. In Table B “Work Types Assessed” I have re-allocate some of the work to other categories based on my own experience of what time a task might usually take. The total time allowed is 64.9 hours or $39,264.50 including GST.

34. The principle I have adopted in arriving at this outcome is to do the best I can to slender evidence provided by Ms McBride, to arrive at a broad estimate, is the principle applied in quantification of damages where the evidence is slender, and which I adopt in this costs assessment: see Enzed Holdings Ltd v Wynthea Pty Ltd [1984] FCA 373; FCR 450 at [68]; Biggin & Co Limited v Permanite Limited (1951) 1 KB 422, at pp 438-439 per Devlin J (as he was); Callaghan v Williams C Lynch Pty Limited (1962) NSWR 871 (Full Court) at p [sic]

… conclusions on matters, on slender material; and to make allowance for contingencies, even to the extent of guess-work or speculation … many cases illustrate that uncertainty in the quantification of damage, either in cases of contract or tort, does not prevent an assessment; provided that some broad estimate can be made.

35. In general, the claims have been reduced where I have determined the claim to be excessive, or the claim should be disallowed for other reasons, for example:

a.    The claim on 25/6/15 for familiarization with the AAT Practice Direction cannot be claimed as it should be familiar to Ms McBride. There were also 2 x associated phone calls to the AAT. This is also work of an administrative nature usually done by the instructing solicitor’s secretary or perhaps a clerk, and is not the professional work of a solicitor, and it is certainly not counsel’s work. Experienced counsel should be asking the instructing solicitor to arrange an enquiry: disallow 4.8 hrs;

b.    Excessive time was claimed for consideration which has been reduced to 31 hours; the Directions hearing reduced to 2 hours; drafting time reduced by 0.5 hours; the Freezing Order by 1 hour; preparation for Directions hearings reduced by 8 hours;

c.    Reading and reviewing has been reduced by 14.7 hours. This had a cross-over with Consideration. Reviewing is generally dis-allowed it should be sufficient to read and remember the papers the first time, and review or re-reading is regarded as duplication of the work already. As a rule of thumb, experienced counsel should be able to read at least 250 pages in an hour (one ream of 500 pages in 2 hours). Experience knows what to look for in the papers and is able to scan through the documents to find the relevant material, and the papers involved two involved in the same facts and dispute with the Tax Office. This should have resulted in some economy by reducing the need for a detailed reading of the same material in both matters. There were about 1600 pages in the brief so allow 7 hours as fair and reasonable;

d.    Research has been reduced by 4 hours as Ms McBride is a taxation specialist and should already have the information available to her. In addition, the knowledge gained from research is part of counsel’s intellectual capital for which a client should not have to pay, unless counsel proves that the work is specific to this matter, which Ms McBride did not prove;

e.    Excessive time was claimed for preparation to attend Directions hearings which each took about 1 hour. Experienced counsel should be able to grasp the issues quickly, which in a Directions hearing are concise. The claims for this preparation were not fully particularized for LPR cl 111B(2) as they were bundled in with other claims for work. I allow 1 hour preparation for each Directions hearing, total 2 hours.”

26. A little later, Mr Levingston said this:

“39. Taxation law and disputes are notoriously complex and difficult, including in this matter as both Mr Junn and Ms McBride appear to have come into the matters some-time after the proceedings commenced and those who went before them do not appear to have grasped the extent of what was required for the clients. Mr Junn contends that Ms McBride was required to provide an advice but did not. In a complex and difficult matter experienced counsel will always provide a formal advice as soon as possible to identify the relevant facts, law, issues, and an action plan for the future conduct of the matter. However, Mr Junn has not identified any costs which have been unnecessarily incurred because Ms McBride did not provide a formal advice.”

27. Leaving aside issues to do with the costs of the Costs Assessment, Mr Levingston’s decision was this:

Costs claimed (incl GST)         $62,947.50

Less amounts disallowed         $24,563.00

Costs that ought to have been charged   $38,384.50

Less 10%                $3,838.45

Costs properly payable         $34,546.05

Less paid               $34,815.00

- $268.95

His decision required the defendant to pay to the plaintiff $268.95 plus certain costs of the Costs Assessment. The net result was that the defendant was to pay to the plaintiff $2,498.43. The costs assessor’s Certificate and Reasons were issued on 5 November 2015 and sent on 26 November 2015.

The Costs Review

28. The defendant applied for a review of the determination of the Costs Assessor on 16 December 2015. The grounds on which the defendant sought the review were these:

“Disclosure

1. The Costs Assessor erred in determining that the Review Applicant had failed to meet disclosure obligations pursuant to Division 3 of Part 3.2 of the Legal Profession Act 2004 (LPA) at paragraphs 8, 10, 11, 12, 13, 20, 37, 38, 40 and 41 to 46 of his Statement of Reasons.

2. The Review Applicant is counsel instructed by the Review Respondent law practice to act for clients of the law practice. Disclosure obligations in Division 3 are owed by the law practice instructed by a client to that client; not by a law practice retained by another law practice to the first law practice or to the client.

3. The Review Applicant complied with the provisions of section 310 of the LPA and provided updated estimates of her fees during the course of the retainer. The Review Applicant has no other prescribed obligations in relation to disclosure.

4. The Costs Assessor erred at paragraph 40 of the Reasons in awarding the Review Respondent his costs of the assessment on the basis that the Review Applicant had not complied with mandatory disclosure obligations.

5. The Costs Assessor also erred at paragraphs 41 to 45 in making a reduction of the costs in accordance with section 317(4) of the LPA.

6. The Costs Assessor erred at paragraph 46 of the Reasons by requiring the Review Applicant to pay the costs of the assessment on the basis of a failure to comply with the mandatory disclosure obligations.

The Tax Invoices/Bills

7. The Costs Assessor erred in determining that the tax invoices did not comply with Regulation 111B of the Legal Profession Regulation 2005 (LPR).

8. Section 332 of LPA provides that a bill issued by law practice may be either a lump sum bill or an itemised bill. There is no requirement that a bill must be itemised unless a request for the same is made pursuant to section 332A of the LPA. The Review Respondent made no such request and the Review Respondent submitted the bills issued by the Review Applicant for Assessment.

9. The Costs Assessor erred in determining that costs in the bills for work performed by the Review Applicant at the instruction of the Review Respondent were not fairly and reasonably incurred having regard to the particular facts and circumstances of this matter.”

29. The Costs Review Panellists were Mr Ian Francis Dwyer and John Lawrence Sharpe, Esq. They issued their Certificates and Reasons on 29 February 2016. They were not sent until 20 October 2016.

30. The Review Panel said this of the level of fees charged by the defendant:

“The Review Panel considered that the charge out rate of the Review Applicant of $550.00 per hour plus Goods and Services Tax although on the high side was fair and reasonable and noted that this was the amount disclosed by the Review Applicant in the Costs Disclosure/Costs Agreement dated 2 May 2015. The Review Panel also noted the Review Applicant claimed expertise in taxation law. The Review Panel allowed attendances at that rate provided that the attendance was otherwise fair and reasonable.”

The observation that the defendant’s rate of charge was “on the high side” is inconsistent with this evidence:

1. The plaintiff himself was charging his clients at the rate of $540 per hour plus GST and was “assisted by Special Counsel Luma Sherif”. The charge rate for “Special Counsel” was $425 per hour plus GST. Ms Sherif (having the same street address as the plaintiff) rendered Fee Notes to the plaintiff as if she were an independent law practice: LS Law, ABN 41 741 102 252.

2. The defendant’s Clerk (then of almost 14 years’ experience as such) said that part of her role as Clerk was ‘to regularly compare barristers fee rates on and off the floor to ascertain market rates to ensure the fee rates of my barristers are regulated.” She knew the defendant’s hourly rate and said that it was “consistent with other barristers who have eight to nine years’ experience at the Bar who specialise in taxation law”. She also stated that other members of the Bar of similar seniority in the same area of expertise charged between $595 and $875 per hour plus GST.

3. In her Submission to the Costs Assessor, the defendant said this:

“21. The Costs Respondent’s rate of $550 an hour is entirely consistent with her expertise, skill and seniority as a taxation barrister. The Costs Applicant noted in the initial conference on 5 May 2015 that the Costs Respondent’s hourly rate was low in comparison to the rates charged by other taxation practitioners. Some solicitors specialising in taxation advice often charge $1000 per hour or more, and Counsel specialising in taxation litigation usually charge more.”

I have noted these matters in fairness to the respondent and to set it in contrast to the statement of the plaintiff (which completely ignores his own rate of charge):

“The Barrister’s hourly rate is $605 per hour including GST, which is a rate as high as many senior counsel’s hourly rate and which can only be justified by the highest level of skill and expertise.”

31. As to the duty to disclose, the Review Panel said this:

“4.2.20 The Review Panel considers that the Review Applicant was in the position to and failed to give disclosure as required by Section 310(2) of the Legal Profession Act 2004 in relation to the likely costs or a range of costs with relevant variables and failed to give disclosure as to the intervals during which costs would be billed.

4.2.21 The Review Panel did not consider that the Review Applicant could have corrected the omission of the failure to disclose by issuing ongoing disclosure pursuant to Section 316 of the Legal Profession Act 2004 as this Section relates to disclosure by a law practice to a client. There is no provision in the Act covering ongoing disclosure by a retained law practice to a retaining law practice. The Review Applicant could and should have issued and amended Disclosure when in a position to do so being shortly after receipt of the further two volumes of documents on 12 May 2015 and shortly after receipt of the additional two volumes of T documents on 21 May 2015.

4.2.22 There is no evidence that the Review Respondent sought further information from the Review Applicant as to any estimate of her likely costs or a range of costs with relevant variables in relation to the dispute.

4.2.23 The Review Panel noted that costs in taxation disputes are notoriously difficult to estimate an estimate or estimates of a range of costs could have been additionally difficult in respect to the Retainer between the Review Applicant and the Review Respondent having regard to the involvement of other law practices prior to the Review Respondent, the lodging of documentation by those law practices and the inability of the Review Applicant to discuss the taxation issues directly with the clients of the Review Respondent in view of their unwillingness to return to Australia and their unwillingness to use electronic video conferencing such as Skype.

4.2.24 The Review Panel considered that whilst the Review Applicant could and should have given disclosure of a range of estimates and relevant variables because of the nature of the taxation dispute any such disclosure was likely to be largely meaningless.

…

4.2.33 The Review Panel considered that whilst the Review Applicant could and should have issued an Amended Disclosure because such Amended Disclosure was likely to be largely meaningless in practice as the range of costs and the relevant variables were likely to be large a nominal amount only should be deducted from the fair and reasonable costs and disbursements pursuant to Section 317(4) of the Legal Profession Act 2004 by 2.5% to $56,869.31.”

32. One of the criticisms made by the Costs Assessor concerned the form of the defendant’s fee notes. At [30] of his reasons, Mr Levingston said:

“… Ms McBride’s costs claimed in the tax invoices face a number of difficulties. The tax invoices are not lump sum invoices: LPA s 302. However, the description of the work is mostly general and does not include the particulars for each piece of work as required by LPA, clause 111B(2) …”

I expressed my view at [13] above that the defendant’s fee notes were lump sum bills. The Review Panel was of the same view:

“4.2.25 Section 332 of the Legal Profession Act 2004 provides that a law practice may issue a bill in the form of a lump sum bill or an itemised bill. A lump sum bill is defined in Section 302 of the Legal Profession Act 2004 as a ill that describes the legal services to which it relates and specifies the total amount of legal costs. Section 332A of the Act provides that if a bill is given by a law practice in a lump sum form any person who is entitled to apply for an assessment of the legal costs to which the bill relates may request the law practice to give the person an itemised bill. The law practice must comply with the request within 21 days after the date on which the request is made. The bills, the subject of this Application for Assessment, are in the form of lump sum bills. There is no evidence that the Review Respondent requested pursuant to Section 332A of the Act that the costs the subject of the lump sum bills be given in the form of an itemised bill.”

33. There is a factual error made by the Review Panel, but it does not assist the plaintiff. In her letter of 2 May 2015 to the plaintiff, the defendant said, on page 2:

“I will render my Memorandum of Fees when nothing more remains to be done by the me for the time being or, if the matter is or becomes a continuing matter, from time to time (approximately fortnightly) during the preparation of the matter and at the conclusion of the hearing.”

The fee notes sent are roughly consistent with fortnightly billing. The Review Panel overlooked this as can be seen in [4.2.13], [4.2.19] and [4.2.20] quoted in [31] above.

34. The core of the Review Panel’s decision is this:

“4.2.30 The Review Panel carried out a reassessment of the costs claimed by the Review Applicant. The Review Panel allowed the costs charged as fair and reasonable subject to the following variations:

Date      Comment               Time Allowed

27.5.15   Excessive time in light of other attendances   4 hours

25.6.15   Excessive time            4 hours

2.7.15      Excessive time            5 hours

4.2.31 Having regard to the risk of the AAT proceedings being struck out and the effect on the clients’ assets the preparation time for the directions hearings including the preparation for proposed oral Submissions was reasonable. Similarly research was reasonable. Similarly it was reasonable for the Review Applicant to review the clients’ documentation from time to time.

4.2.32 The Review Panel noted that the Costs Assessor allowed 8 hours for claims of one day ($4,400.00 plus Goods and Services Tax) when $4,200.00 only was claimed. This resulted in a distortion of the amount claimed by the Review Applicant. The Review Panel assessed costs on the basis of the amounts claimed.”

The relevant claims for understanding [4.2.30] of the reasons are:

27.5.15   1 day      $4,200.00

25.6.15   6 hours   $3,300.00

2.7.15      7 hours   $3,850.00

As stated in [8](b) above, one day was from 8 am to 5 pm (9 hours) but, allowing for the traditional luncheon hour, probably 8 hours and perhaps a further discount for the morning tea adjournment.

35. The result of the Review Panel’s assessment was this:

Costs claimed incl GST         $62,947.50

Less amount disallowed          $4,620.00

Costs that ought to have been charged   $58,327.00

Less 2.5%                $1,458.19

Costs properly payable         $56,869.31

The Form 9, “Certificate of Determination of Costs by Review Panel” issued on 29 February 2016 gave credit to the plaintiff for the sum of “$54,815.00 paid on account.” That is an obvious error for $34,815.00 actually paid by the plaintiff to the defendant. The error ought be easily corrected by asking the Review Panel to correct it or the Manager of Costs Assessment.

36. The final paragraph of the Review Panel’s reasons is mangled. It concerns costs of the cost assessment process. Replacing the term “Review Applicant” with “defendant” and the term “Review Respondent” with “plaintiff” and seeking to “untangle” the paragraph, it ought be this:

“The Review Panel considered that, as the plaintiff (Costs Applicant) was largely unsuccessful on the Review, the plaintiff should only be entitled to $100.00 of the filing fee on the Application for Assessment and $400.00 costs associated with the Application for Assessment. The defendant, however, should pay the Costs Assessors costs of the Application for Assessment as she failed to give disclosure as required by the LPA. Further, as the defendant has improved her position by more than 15%, pursuant to LPA section 379(3) the costs of the Application for Review including the filing fee should be paid by the plaintiff.”

37. The Review Panel issued a Form 11, “Certificate of Determination of Costs Review”, on 29 February 2016 and sent on 20 October 2016. Its four clauses are these:

“1. The Application for Review was determined on 29 February 2016. A Certificate of Determination was issued.

2. The costs incurred in the course of the review of legal practice/legal practice costs are $2,354.00 (inclusive of GST)

3. The costs of the Review (section 379 of the Act) to be paid by the Review Respondent are in the sum of $2,354.00 comprising the following:

3.1 The Lodgement Fee paid by the Review Applicant on filing the Review Application in the sum of $275.00

3.2 The fees of the Review Panel of $2,079.00

4. The fees of the Review Panel have been paid by the Review Applicant to the Manager Costs Assessment to obtain the release of the Certificate of Determination of Costs and this Certificate (section 378(5) of the Act.”

38. The Review Panel also issued a Form 12, “Certificate of Determination of Review Panel of Costs of Costs Assessment” also issued on 29 February 2016 and sent on 20 October 2016. The substance of that Certificate is this:

“1. The Review Panel sets aside the Determination of Costs Assessor John Levingston and determines that the costs of the Costs Assessment are payable to the Manager, Costs Assessment by the Review Applicant in the sum of $3,580.00 inclusive of GST.

(Note    The party to pay will be the party entitled to collect the costs and register the Judgment.)

Note 1    The amount of $3,180.00 includes the sum of $100.00 being a proportion of the fee paid for the application (Section 379 of the Act).

Note 2   Costs incurred by the Review Respondent are determined at $400.00.”

39. According to the Costs Assessor’s Reasons, the filing fee for the Application for Assessment of Costs was $629.48 and the plaintiff’s costs of the Application were $1,600.00. The Costs Assessor said that both those sums were payable by the defendant. His Form 3, Certificate of Determination of Costs Assessment, issued on 5 November 2015 says this:

“The Costs of the Costs Assessment (Section 369 of the Act) to be paid by the Costs Respondent are in the sum of $3,080.00.

Note 5:

The amount of $3080.00 includes the costs of the Costs Assessor paid by the Costs Respondent to the Manager of Costs Assessment to obtain the release of the Certificate of Determination of Costs and this Certificate (Section 369(8) of the Act).”

It appears that the Costs of the Costs Assessment, referred to in [46] of the Costs Assessor’s reasons do not include either the filing fee or the plaintiff’s costs of this Application for Assessment of Costs referred to in [47] of his reasons.

40. This allows me to interpret the Form 12 referred to in [38] above. The Costs Assessor allowed:

1. Filing Fee:   $624.48 in his substantive decision

2. Plaintiff’s costs of cost assessment decision:   $1600 in his substantive decision

3. Assessor’s Fee:   $3080.00 in his Form 3.

The Review Panel only allowed for the Costs Assessment:

4. Filing Fee:      $100

5. Plaintiff’s costs:   $400

6. Assessors costs:   $3080

The total of those sums is $3,580.00. Note 1 of the Form 12 is also correct in that both the $100 allowed for the actual filing fee of $629.48 was allowed, and when added to the Costs Assessor’s costs amounts to $3,180.00. Note 2 represents the costs allowed by the Panel for the plaintiff’s costs of the costs application. As the defendant had paid the Costs Assessor’s costs, the net result of the Form 12 is that the defendant was liable to pay to the plaintiff $500 for the costs assessment, and that sum could obviously be offset against the costs of the Review, which the Panel ordered the plaintiff to pay (the Form 11, supra at [37]).

The grounds of appeal

41. Aggrieved by the decision of the Review Panel, the plaintiff has appealed to this Court. The grounds of appeal are:

“3. The Review Panel erred in:

(a) taking into account irrelevant factors of how much others other than the defendant charged when assessing the costs assessment review application and;

(b) failing to give any, or any sufficient, reasons for its reassessment of costs claimed and determination of the defendant’s fair and reasonable costs, and thereby failed to comply with s 380 LPA or cl 134(d) of the Legal Profession Regulations (“LPR”)

4. The Review Panel erred in finding that the compliance by the Defendant with her duty of disclosure would have been meaningless in applying the legal principles for determining a proper rate of reduction pursuant to section 317(4) of the LPA.

5. The Panel erred in:

(a) finding that the costs of the review be paid by the review respondent, contrary to the provisions of section 369(1)(a) and 379(4) of the LPA; and

(b) wrongly, and contrary to s 369(3) LPA, overturning the determination of the Costs Assessor with respect to the costs of the costs assessment and wrongly including the plaintiff’s costs of the cost assessment in the Form 12 Certificate rather than the Form 9 Certificate.

6. The defendant accepts that the registration of Certificates of Determination issued by the Local Court of New South Wales on 21 October 2016 was erroneously entered and should be set aside.”

The last ground of appeal is hardly such, but in due course I shall address the problem identified. As the gist of the appeal is the appeal ground 3(b), I shall deal firstly with that ground.

Ground 3(b): Failure to give any or any sufficient reasons

42. LPA 2004 section 370 requires a Cost Assessor to provide a statement of the reasons for the Cost Assessor’s determination. The statement must be given in accordance with the regulations. That provision is replicated in section 380 of the Act for a Review Panel:

“380 Reasons for determination

(1) The panel must ensure that a certificate issued under section 378 (Certificate as to determination of panel) or section 379 (Recovery of costs review) 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 as may be required by the regulations

(2) The statement of reasons must be given in accordance with the regulations.”

Legal Profession Regulation 2005, clause 128 provides for the reasons required to be given under section 370. Clause 134 provides for the reasons to be given under section 380:

“134 Statement of reasons—section 380 of the Act

(1) A statement of reasons for a panel’s determination that is required by section 380 of the Act to accompany a certificate issued under section 378 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,

(f) if the determination relates to costs other than party/party costs and the panel declines to deal with an application for review of a bill of costs—the basis for doing so,

(g) if the determination deals with any matter of the kind referred to in section 328 (1) or (4) of the Act (relating to the setting aside of a costs agreement), a statement as to the panel’s reasons for its decision on that matter.

(2) A statement of reasons to which this clause applies may be accompanied by such further information as the panel concerned considers necessary to clarify the review of a costs assessor’s determination.”

As there are rights of appeal from both determinations of a Costs Assessor and of a Review Panel, the law would, in any event, require both a Costs Assessor and a Review Panel to give reasons such that the rights of appeal would not be frustrated: see Frumar v Owners of Strata Plan 36957 [2006] NSWCA 278; (2006) 67 NSWLR 321 per Giles JA at [32] to [38]. His Honour was there dealing with the Legal Profession Act 1987, but the LPA 2004 continued the scheme initially provided under that Act: see Frumar at [26]. In Frumar, Giles JA (with whom Beazley JA (as her Honour then was) and Ipp JA agreed) went on to say this about the duty of a Costs Assessor/Review Panel to give reasons:

“43. The extent of the obligation, whether by explication of reg 68(1) or by giving content to s 208KG, is informed by the general law concerning the duty of judicial officers to give reasons for their decisions discussed in cases such as Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, Mifsud v Campbell (1991) 21 NSWLR 725 and Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430. The extent of a judicial officer’s duty depends on the circumstances. Whether or not a costs assessor and a panel are acting administratively or judicially, which was left open in Attorney-General of New South Wales v Kennedy Miller Television Pty Ltd, the extent of their duties must take into account the different nature of their task and their roles as legal practitioners bringing to bear their experience and judgment in evaluation of what work was reasonable and what is a fair and reasonable amount of costs; but it is also moulded by the basis for the obligation to give reasons in Attorney-General of New South Wales v Kennedy Miller Television Pty Ltd, thereafter taken up by the legislature.

44. The reasons must be such that a party dissatisfied with the costs assessor’s or panel’s determination “should have a real and not largely illusory right of appeal”. These words in Attorney-General of New South Wales v Kennedy Miller Television Pty Ltd at 735 were qualified by “in regard to questions of law at least”, but in my respectful opinion they apply equally to questions of fact: questions of whether the time engaged or an hourly rate are reasonable can be very important, and although subject to leave s 208M permitted an appeal on those questions. The filter for an appeal as to fact is the Court’s decision as to leave, not the cost assessor’s or panel’s expression of reasons, and whether leave should be granted can only be decided if it is known why the determination was made.

45. The delay and expense of an excessively onerous obligation to provide reasons is material, particularly when assessment of costs by costs assessors was intended to provide a faster, easier and cheaper system. In my opinion, however, the observations of Meagher JA in Beale v Government Insurance Office of New South Wales at 444 are applicable; that the balancing act in considering the sufficiency of a statement of reasons “involves the adoption of, at the least, a minimum standard which places the parties in a position to understand why the decision was made sufficiently to allow them to exercise any right of appeal”.”

In Whitehaven Coal Mining v Pain [2018] NSWCA 229, White JA (with whom Emmett and Simpson AJJA agreed) said this:

“28. A failure to provide sufficient reasons is an error of law if the failure demonstrates that the judge has constructively failed to exercise his or her jurisdiction to decide a necessary question (Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [9]; State Super SAS Trustee Corporation v Cornes [2013] NSWCA 257 at [11]-[12]; Goodwin v Commissioner of Police [2012] NSWCA 379 at [20]; Tudor Capital Australia Pty Ltd v Christensen [2017] NSWCA 260 at [298]). Where an appeal lies on an error of law, there is an error of law if the decision-maker does not disclose his or her path of reasoning to enable the court or tribunal on appeal to determine whether the decision-maker did make an error of law in reaching the decision (Wingfoot Australian Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43 at [55]; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 274, 281-2).

29. A finding of fact for which there is no probative evidence is an error of law (Bruce v Cole (1998) 45 NSWLR 163 at 188-9; [1998] NSWCA 45; Haider v JP Morgan Holdings Aust Ltd t/as JP Morgan Operations Australia Ltd [2007] NSWCA 158 at [33]; Ormwave Pty Ltd v Smith [2007] NSWCA 210 at [14]). It has been said that drawing an inference from facts that are not reasonably capable of supporting the inference is an error of law (Haider v JP Morgan Holdings at [33] and cases cited; cf. Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 156 and 157). If the evidence or the facts found only admit of one conclusion, a failure to draw that conclusion raises a question of law. But where a finding depends upon the decision-maker’s assessment of the relative importance and significance of facts found the ultimate determination is one of fact (Currie v The Commissioner of Inland Revenue [1921] 2 KB 332 at 336; Dennis v Watt (1942) 43 SR (NSW) 32 at 32; Tritton v Clarke [2018] NSWCCA 31 at [26]-[30]).”

43. Ten years earlier, his Honour, sitting in the Equity Division, decided Cassegrain v CTK Engineering; Cassegrain v Cassegrain [2008] NSWSC 457, which concerned legal costs. At [77] his Honour quoted LPA 2004 section 370 and at [78] Legal Profession Regulation 2005, clause 128. His Honour then said:

“79. The key requirement is that in respect of “any” disputed costs the assessor must provide an explanation of the basis on which the costs were assessed and how the submissions of the parties were dealt with.

80. Whilst the assessor is required to identify each disbursement varied by the determination, there is no express requirement that where the assessor proceeds by way of allowing, reducing or rejecting individual items of costs, that in respect of each item of disputed costs he or she explain the quantum of costs allowed or disallowed.

81. Of course, the regulation is not an exclusive statement of a costs assessor’s obligation to give reasons. That is clear from s 370(1). The regulation prescribes such supplementary information as is required in addition to the provision of a statement of reasons for the determination. A statement of reasons must be sufficiently precise to give meaningful content to the rights of appeal (either as of right or by leave) in ss 384 and 385.”

His Honour then recited clause 134 of the Regulation, the background to that provision and then referred to Frumar:

“85. In Frumar, the relevant legislation was s 208KG of the Legal Profession Act 1987 which required a determination of a costs assessment panel to be accompanied by “a statement of the reasons for the panel’s determination”. Regulation 68 was in materially the same terms as the current reg 134. In Frumar, a bill of costs was submitted for assessment claiming profit costs of $79,492.20. The costs assessor assessed profit costs at $65,000 and the panel on review assessed profit costs at $63,833. In his reasons, the costs assessor indicated that he had made an adjustment to professional costs where he considered that meetings of the respondent’s legal team had led to charges that were on occasions not reasonable and that there were some excesses in relation to reporting to the client. He did not specify what items of such work claimed in the bill of costs were thought to have been unreasonably carried out. The costs assessor proceeded on a different basis. He assessed “an overall fee for professional costs” as $65,000 being about 215 hours at the partner’s hourly rate. The panel endorsed the costs assessor’s reasons but did not explain how it had arrived at the different figure of $63,833.”

His Honour then quoted [59] to [63] of Frumar and continued:

“88. The present is not so extreme a case as was Frumar. It appears from the assessor’s reasons at page 2 quoted in [44] above that he formed his own view of the work which was reasonable to be carried out and did so using the bill of costs as a guide. However, it appears from later in his reasons that he reached his ultimate assessment by making reductions to items claimed in the bill. One can identify from the assessor’s reasons what hourly rates were considered to be reasonable and one can identify the kinds of work (classified by description, but without individual itemisation), where the charges claimed have been reduced. By recourse to the bill of costs and the parties’ submissions, coupled with the assessor’s statement as to the extent to which he preferred the submissions for the plaintiffs, one can identify the parameters of the reductions made. There remains uncertainty as to whether any reduction was made for the solicitors’ costs on attendance at the hearings before Windeyer J. It is also not possible to say by what amounts there was a reduction from the costs claimed in respect of:

(a) attendances to file documents; (b) attendances at conferences attended by the senior solicitor and the paralegal together; (c) the derivative action; (d) the security for costs application; (e) attendances to send non-urgent facsimile transmissions; and (f) preparation of the bill of costs. 

89. It is also not clear whether any reduction was made in response to the objection to duplication of work between solicitors and counsel, excessive consultation with counsel and unnecessary attendances on the plaintiffs’ father. The assessor said that “in the main” he rejected the submissions made on behalf of Claude Cassegrain in these respects. That implies that to some extent the submission was accepted. It is not possible to say how this was reflected in the costs allowed.

90. If the obligation to give reasons requires the specification of items which have been reduced, by what amount, and for what reason, in each instance (Kennedy Miller Television Pty Ltd v Lancken per Sperling J), then it is clear that the reasons were inadequate. Mr Beech-Jones SC for the plaintiffs submitted that it was never intended when the system of taxation of costs was replaced with a system of assessment that a costs assessor should act as a taxing officer upholding, reducing or rejecting individual items of bills of costs. So far as that submission goes, I agree with it. It was not necessary for the assessor to indicate by reference to each of the 1,313 items in the bill of costs which was accepted, which rejected and which varied, and in the latter case, by what amount. However, it was incumbent on the assessor to specify the amount of the reductions for the matters in [88] above, whether costs were reduced for attendances at the hearing before Windeyer J, and if so by what amount, and whether any, and if so what, costs were reduced by reference to the three submissions which were rejected only “in the main”. By way of example, it would have been sufficient in my view for the costs assessor to say that instead of the amount claimed of $597 for attendances to file documents he allowed $200 (if that were the figure). It would have been sufficient for him to have said that he reduced the costs claimed by a particular amount where he considered there had been duplication in attendances of the senior solicitor and the paralegal at conferences. Likewise, it would have been sufficient to say that he reduced costs by a particular amount in respect of the derivative action or the security for costs application. Without such specificity neither Claude Cassegrain nor the plaintiffs can know how their submissions on these areas of disputed costs were ultimately dealt with (reg 128(1)(d)(ii)).

91. The costs assessor referred to Turner v Pride [1999] NSWSC 850. That case was a decision of Master Malpass (as his Honour then was). Apart from an observation (at [23]) that the assessment process replaced the taxation process which had involved an item by item consideration and that there would be cases where the assessment task could be properly performed using a global approach, that judgment does not bear upon the question of the adequacy of the assessor’s reasons. In Frumar, Giles JA noted that that case provided no warrant for a panel (or assessor) making little more than a statement of the amount which was considered to be fair and reasonable (at [64], 335-336).

92. Both the costs assessor and the panel considered that the reasons were sufficient because in Frumar the Court of Appeal recognised the legitimacy of the approach of an assessor making his or her own assessment of what work was reasonable to be carried out without undertaking a taxation or a point-by-point analysis of an itemised bill of costs. However, in Frumar (at [62]), Giles JA emphasised that where an assessor proceeds by coming to his or her own view as to the work reasonable to be carried out, rather than by allowing, disallowing or adjusting items in an itemised bill of costs, it is necessary, in order that both parties be able to exercise rights of appeal, that they be informed what work the costs assessor thought to be reasonable and how he or she costed the carrying out of the work. The same applies to a panel. Where the costing of such work is made by reference to adjustments to items in a bill of costs, it is essential for the assessor or the panel to quantify the adjustments made in respect of costs that are disputed. That does not necessarily entail a line-by-line taxation of a bill. But it does require specification of what are disputed costs, for example, by reference to costs of a certain kind, and an explanation of what costs were allowed, or what was the amount of reduction from claimed costs, in respect of costs of that kind. In my view, the costs assessor’s reasons and the panel’s reasons for allowing solicitors’ profit costs in the sum of $119,859.95 are inadequate.”

44. The plaintiff also referred me to Dunn v Jerrard & Stuk Lawyers [2009] NSWSC 681, a decision of Davies J. His Honour quoted extensively from Cassegrain, declined to follow a decision of Johnstone DCJ and continued:

“55. The bills on which the assessment was made were not bills of costs in the old terminology. That is to say, they were not itemised bills but they merely listed what was done on each day with the total at the end.

56. The approach of the Plaintiffs when preparing the Submissions and Objections to the Costs Assessor was to go through each item listed by reference to the date of the item and to put alongside it a code (a number from 1 to 6) which had been given a specific meaning. The code was set out in the section headed “Objections” as follows:

“The Tax Invoices are not prepared in a Taxable Form and are not referenced by an item number so the objections have been referenced to the date for each item billing.

The items of work as listed on the Tax Invoices have no reference as to time spent or the rate applicable to the person completing the work therefore there is no actual cost for each listed in the bill.

The basis of disputing the item of work is as follows:

1 = no instructions were given to perform the work.

2 = there was no requirement to perform the work.

3 = the work could have been performed by secretarial staff rather than a legal practitioner.

4 = the amount of time taken to perform the work was excessive and therefore the amount charged was excessive.

Work not disputed.

5 = Not disputed conceded at six minutes per item.

Disbursements

6 = Copy of tax invoice required in order to assess the charge.”

57. Item 5, which assumed some importance, was intended to mean that the identified work was done but should not have taken any more than one unit of six minutes. Pages 4-28 of the Submissions and Objections consisted of the application of the code to each date item in the eleven disputed bills.

58. As the Costs Assessor noted, because of the specific objections filed by the Plaintiffs, there was no difficulty in identifying the disputed costs and the Cost Assessor noted further that he had no difficulty in taking the objections into account. However, precisely how he did that is shrouded in the generality of such statements as:

“I have disallowed a number of items” of duplication (para 3);

“I have disallowed a number of items” relating to settling correspondence objected to by the Plaintiffs (para 5);

“I have allowed a reasonable number” of attendance as to security for costs “and have disallowed others.” (para 6); 

“I have disallowed a number of the items” concerning “some attendances” and “reduced others (para 7); 

“I have made some reductions” relating to conferences and court attendance (para 9).

59. This approach does not accord with what Sperling J said in Kennedy Miller (paras 39 and 40 above) nor with what Giles JA said in Frumar at [60] to [63] (para 43 above) is required.

60. To compound the error the Costs Assessor then went on to say that although he had individually assessed each bill of costs, he simply reached a total figure for both costs and disbursements to avoid what he said would have lengthened the process by issuing individual determinations and reasons. Identifying how he dealt with each bill would have been a useful step along the way of elucidating his reasoning.

61. In short, therefore, the Plaintiffs do not know from the reasons of the Costs Assessor:

(a) which instances of duplication were disallowed;

(b) which items entitled “settling correspondence” were disallowed; 

(c) which items entitled “attendances to security for costs” were disallowed; 

(d) which items in relation to excessive time concerning some attendances were disallowed; 

(e) what the reductions were in relation to conferences and court attendance times; 

(f) how much each bill was reduced by.”

45. The plaintiff’s written submissions contain this:

“24. At [4.2.30] of its Statement of Reasons, the Panel stated simply that it had carried out a reassessment of the costs claimed by the Plaintiff and allowed (the entirety of) the costs charged as fair and reasonable subject to three (modest) variations. The Panel did not provide any reasons for the need for such reassessment, or why the approach of the Costs Assessor should not be followed, or identify and errors by the Costs Assessor, or indeed provide any clue or guidance as to the basis upon which the reassessment of the costs had been conducted. Despite having referred (in [4.2.27] of the Statement of Reasons) to its consideration of the Costs Assessor’s file, including the voluminous submissions and objections of the parties, the Panel did not make any attempt to identify which (if any) of these objections and submissions had been considered and allowed (or rejected) or give any reasons for such allowance or rejection.

25. In short, the Plaintiff (and indeed any reader of the Panel’s Statement of Reasons) is left completely in the dark as to the process of reassessment of costs undertaken or the reasons why the Panel apparently determined that virtually all of the costs claimed by the Plaintiff were fair and reasonable, notwithstanding the Plaintiff’s detailed objections to many aspects of such costs. The Panel’s Statement of Reasons in this regard is manifestly deficient in that it does not meet even the minimum standard of putting the Plaintiff in a position to understand why the Defendant’s costs as charged were (almost entirely) assessed as fair and reasonabl[y] sufficient to enable him to properly exercise his right of appeal.”

Analysis

46. It is convenient at this point to reconsider the table that I set out in [23] above, based on the analysis made by the Costs Assessor of the work claimed by the defendant. The relevant reasons of the Panel are set out at [34] above. The total number of hours of work claimed by the defendant were 105.5. The Panel allowed those subject to 3 reductions, which can be tabulated thus:

DATE	CLAIM	ALLOWED	REASON
27-5-15	Review the T documents for Habib… considered the issue of residency for Habib and residency of the PT Legian Fave – 1 day	4 hours	Excessive in light of other attendances
27-6-15	Attend directions hearing at the AAT. Read and consider the application s33 and s37 of AAT Act and the practice direction in relation to the orders made by Deputy President Constance. Telephone conference with AAT registry to discuss making the application for the Respondent to produce further section 37 documents. Telephone conference with Matthew Harker, Deputy President Constance’s associate to clarify the orders and seek guidance on what would be required in making the request of the Tribunal. Telephone conference with Donald Junn to discuss sending invoices to the banks requiring immediate payment of the outstanding legal fees, and the directions made regarding the request for additional s37 documents – 6 hours	4 hours	Excessive time
02-7-15	Read the Affidavit of Donald Junn. Preparation for directions hearing. Research of cases in support of the Tribunal exercising its discretion to order the ATO to produce further T Documents. Attend directions hearing before Deputy President Constance. Conference with instructing solicitors after the directions hearing. Preparation of draft application to [FCA] to vary the freezing orders. Telephone attendance on the associate to the duty Judge, Justice Yates, regarding the making of an urgent application. Telephone attendance on associate to Justice Nicholas regarding the need to have the matter listed before the next return date of 30 July to prevent the Tribunal or the Respondent seeking to have the substantive proceeding struck out. Telephone conference with instructing solicitors to discuss the application and the content of a supporting affidavit – 7 hours	5 hours	Excessive time

Thus it can be seen in short form:

DATE	CLAIM	ALLOWED	REDUCED
27-5-15	1 day	4 hrs	4 hrs
27-6-15	6 hrs	4 hrs	2 hrs
02-7-15	7 hrs	5 hrs	2 hrs
TOTAL REDUCTION	8 hrs

47. The defendant annexed to her Submissions to the Costs Assessor transcripts of the directions hearings on both 25 June 2015 and 2 July 2015. The record the duration of the directions hearing as:

25-6-2015   9.08 am to 9.35 am      i.e. 27 mins

02-7-2015   10.20 am to 11.18 am      i.e. 58 mins

It appears from [55] of those submissions that the directions hearing on 2 July 2015 was due to commence at 10 am. It may well be that the directions hearing on 25 June 2015 was scheduled to commence at 9 am.

48. The claim for 27 May 2015 was for “review” and “consideration”, essentially perusing the documents and considering their effect on an issue of domicil. The reason given for the reduction is completely inappropriate: “excessive in light of other attendances”, as this was not an “attendance”, a word apt to describe attending at Court, attending at a Registry to peruse documents on subpoena, attending at a solicitor’s office to inspect discovered documents, attending on a witness at his or her home or e.g. at hospital to take a statement or attending upon a view. Perhaps what was meant was merely “excessive time” as for the other reductions.

49. The problem with the reduction for 25 June and 2 July is that a large number of activities were claimed yet the reduction is for “excessive time”. “Excessive time for what?” one must ask rhetorically. Neither the plaintiff nor the defendant knows what exactly has been disallowed: cf Dunn at [61].

50. I do know from the Panel’s reasons that they allowed:

(i) preparation for directions hearings,

(ii) preparation of oral submissions for directions hearings,

(iii) research, and

(iv) reviewing the client’s documentation from ‘time to time’:

see par 4.2.31 of the reasons quoted at [34] above. Applying those findings to the work as analysed by the Assessor, one can see this:

ITEM	HOURS CLAIMED	FINDING
Conference, Phone call, Correspondence	3.5	Assessor allowed 5.1 hours – so 3.5 hours must be reasonable
Consideration	41
Directions Hearings	6
Drafting	4
Freezing Orders	2
Preparation for Conference	0
Preparation for Directions hearings	10	Allowed by Panel
Reading, Review	30	Allowed by Panel
Research	5	Allowed by Panel
SFIC	4	Allowed by Assessor

51. Of the five items that remain without a finding, the Assessor made these reductions

ITEM	HOURS CLAIMED	HOURS ALLOWED
Consideration	41	31
Directions Hearings	6	2
Drafting	4	3.5
Freezing Orders	2	1
Preparation for Conference	0	1

The Directions Hearings actually took 1 hr 25 mins. If one allow the (probable) scheduled start times, they should be seen to have occupied 1 hr 53 mons, or the 2 hours allowed by the Assessor. If one allow 10 minutes walking time between the defendant’s chambers and the AAT premises (either Market Street or Clarence Street) that would add a further 40 minutes to the time allowed for both attendances. Allowing travelling time, the amount allowed by the Assessor was inadequate but, again rhetorically, how much did the Panel allow? No one knows. If one assume that the 8 hours disallowed by the Panel is taken off “Consideration”, then what findings did the Panel make about the claim for the Directions Hearings, Drafting and Freezing Orders?

52. Put bluntly, the decisions of the Assessor and the Panel are like ships passing in the night: the Panel made no attempt to deal with the reasoning of the Costs Assessor nor made any comment on his methodology. One is left to speculate as to what the Panel may have or may not have allowed. Quite frankly, the reasons given by the Panel are inadequate to enable anyone to understand their decision. This ground of appeal must be allowed. Paragraph 25 of the plaintiff’s written submissions quoted in [45] above is entirely appropriate.

Ground 3(a): Taking into account irrelevant factors

53. In the quotation I made in [42] above from Whitehaven Coal Mines Ltd v Pain, White JA pointed out that the authorities say that drawing an inference from facts that are not reasonably capable of supporting the inference is an error of law. Similarly, making a finding from facts that are not reasonably capable of supporting the finding may be an error of law. However, one must be careful to ensure that one does not use this principle to turn a question of fact into one of law – see Whitehaven Coal Mines Ltd v Pain at [26]. At [28] of his written submissions the plaintiff said this:

“28. The Panel’s failure to give any, or any adequate, reasons for its determination is compounded by the fact that, in undertaking its assessment of the reasonableness of the costs charged by the Defendant. It appears to have taken into account irrelevant considerations, namely the amount of the costs charged by the Plaintiff with respect to the matter. In [4.2.29] of its Statement of Reasons, the Panel sets out various amounts charged by the Plaintiff (and other solicitors) with respect to the matter at various points in time, with no consideration given to the difference in the volume and nature of work undertaken. The purpose in setting out these amounts can only be to use as a comparison with the amounts charged by the Defendant and thereby imply that the costs charged by the Defendant were somehow fair and reasonable, given the amount of costs charged by the Plaintiff (and other solicitors). This involves the Panel taking into account irrelevant considerations, as the amounts charged by the Plaintiff (and other solicitors) can have no bearing on the reasonableness or otherwise of the costs charged by the Defendant, which should have been assessed according to the standards expected of an experienced barrister specialising in taxation matters.”

54. In her submissions to the Costs Assessor, the defendant said this:

“The degree of complexity in the matter is illustrated by the Costs Applicant’s invoices for his own work in this matter. The Costs Applicant charged for 66.5 hours from 3 December 2014 to 16 February 2015 (valued at $40,465.70) and 89.7 hours from 18 February 2015 to 25 March 2015 (valued at $48,438.00). Copies of these invoices are behind Tab 8. The Costs Assessor will note that the Costs Applicant retained a second law firm, LS Law, to assist him in preparing the matter for hearing in the AAT. That firm billed for 75 hours from 4 December 2014 to 16 February 2015 for a total of $33,386.50.”

The submission concerned not only the amount of the charges rendered by the plaintiff to his clients but also the underlying basis for those charges – the amount of time spent by the plaintiff in doing his work which, for example, included time spent reading documents forwarded to him. The amount of time spent doing what might be considered similar work is hardly irrelevant. In his summary of the defendant’s submissions, Mr Levingston said this (at [21]):

“In addition, Ms McBride contends that her costs are justified by the complexity of the work and provides a comparative reference point based on 75 hours of work done by another law firm, LS Law, engaged by Mr Junn to assist with the work load.”

55. The Review Panel dealt with this matter in par 4.2.29 of their reasons, after dealing with the defendant’s charge rate, which I dealt with in [30] above, where I quoted par 4.2.28 of their reasons. The Review Panel said this on the current issue:

“4.2.29 The Review Respondent commenced acting on behalf of the clients on or about 3 December 2014. As a result of delays in obtaining the clients’ file from previous Solicitors the Review Respondent did not receive documentation until 20 April 2015. From that date until 17 June 2015 the Review Respondent charged 97.6 hours at $540.00 per hour, namely $52,866.00 together with paralegal time and sundries of $2,721.00. the Review Panel noted the Review Applicant’s Submissions that in addition the Review Respondent charged 66.5 hours from 3 December 2014 to 16 February 2014 ($40,465.70) and 89.7 hours from 18 February 2015 to 25 March 2015 ($48,438.00) and that the Review Respondent retained LS Law to assist and that firm charged 75 hours from 4 December 2014 to 16 February 2015 ($33,386.50).”

Again, there is reference not only to the charges rendered by the plaintiff to his clients, but the underlying basis for those charges – the amount of time spent doing relevant work. Whilst the amount of the charges made by the plaintiff might be considered irrelevant, the underlying basis for those charges, the amount of work, was not. I do not accept that this raises any question of law.

Ground 4: The duty of disclosure and the proper rate of reduction of the defendant’s charges

56. I discussed the Costs Assessor’s treatment of this issue at [22] above and the Review Panel’s treatment of the same topic at [31] above. In his written submissions, the plaintiff stated that the finding of the Review Panel was “perverse, without foundation and not reasonably open to the Panel.” With the utmost respect, this raises no error of law. In Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 McHugh JA (as he then was) said this at 282D:

“An erroneous or perverse finding of fact raises no question of law and cannot be challenged by way of appeal [limited to error of law]. What is decisive is that his Honour’s judgment reveals the ground for, although not the detailed reasoning in support of, his finding of fact.”

No submission was made that the Panel incorrectly interpreted the law. What is challenged is the finding that proper disclosure by the defendant “was likely to be largely meaningless in practice as the range of costs and the relevant variables were likely to be large.” That is not a question of law.

Ground 5: Costs

57. I dealt with considerations of costs at some length at [36] to [40]. Once one fully understands the decisions of the Costs Assessor and the Review Panel concerning the costs of the Costs Assessment and of the Review of that Assessment, it is impossible to discern any error of law. Costs of the Costs Review followed the event – there is nothing unusual about that, let alone legally erroneous. This ground of appeal results from a misunderstanding of the two decisions in question. It is not a valid ground of appeal where the appeal is limited to error of law.

Ground 6: Judgment entered erroneously in the Local Court

58. As I have already stated, this is not an error of law made by the Review Panel. On 21 October 2016 the current defendant obtained judgment against the current plaintiff in the Local Court at Sydney for:

“$22,054.31 + $2,354.00 + $3,180.00 = $27,588.31”

To that sum was added $90.00 for “# Registration # Filing Fee” giving a total judgment debt of $27,678.31, albeit that the notes to the form itself indicate that the $90 fee ought not to have been added.

59. The plaintiff’s written submissions contain this matter:

“33. By affidavit and Notice of Motion filed in the Local Court on 7 April 2017, the Defendant accepts that, because of an error by her assistant, the amount of the judgment arising from the Panel’s Certificates of Determination which she caused to be registered in the Local Court on 21 October 2016 was incorrect and should have been $24,408.81 rather than $27,588.31. While this error has now been corrected by orders made by the Local Court on 18 April 2017, it should be noted that this only occurred well after the Plaintiff filed the Summons in this appeal in November 2016 and the error was drawn to the attention of the Defendant in paragraph 30 of the Plaintiff’s first affidavit.”

Since the problem was corrected on 18 April 2017, this is not a matter which ought to have been raised in the Amended Summons filed on 26 April 2017 or at the hearing on 27 and 28 April 2017. This Court has no power to make an order in the nature of certiorari. Any incorrectly entered judgment in the Local Court is a matter to be dealt with by that Court in accordance with its Act and the UCPR.

Disposition

60. Of the five pleaded grounds of appeal, only one has been successful: a failure by the Review Panel to give adequate reasons. Nevertheless, the appeal must be allowed. Under LPA 2004 s 384(2) I have the power to make such determination as the Review Panel ought to have made or to remit the matter to the Review Panel to re-determine the matter. I had hoped to determine the matter myself, to observe the principle that interest rei publicae ut finis sit litium, to bring this unfortunate litigation to an end. Unfortunately I cannot do so, as issues arise in which I have been given no guidance either by the Costs Assessor, the Review Panel or counsel before me. I have certain views about certain principles that ought be applied but I do not express them as to do so might fetter the Review Panel on its re-determination.

61. The remaining questions concerns costs. Costs ought follow the event. However, many grounds were raised unsuccessfully, and one unnecessarily. The successful party ought only have half of his costs. In making that decision I bear in mind the fact that the plaintiff abandoned his first two grounds of appeal by the Amended Summons filed on 26 April 2017.

Orders

1. Appeal allowed.

2. Remit the matter to the Review Panel to be re-determined in light of these reasons.

3. Order the defendant to pay half the plaintiff’s costs.

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Decision last updated: 02 November 2018