Kells v Mulligan
[2002] NSWSC 769
•29 August 2002
CITATION: Kells v Mulligan & Anor [2002] NSWSC 769 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S): SC 11601 of 2002 HEARING DATE(S): 21 August 2002 JUDGMENT DATE: 29 August 2002 PARTIES :
John Jervis Kells (Plaintiff)
v
Kevin Patrick Mulligan & Anna Lucia Mulligan (Defendants)
JUDGMENT OF: Master Malpass
LOWER COURT
JURISDICTION :Costs Assessment LOWER COURT
FILE NUMBER(S) :91746 of 2001 LOWER COURT
JUDICIAL OFFICER :Christopher Phillip Wall
COUNSEL : Mr M J Watts (Plaintiff)
Mr S A Benson (Defendants)SOLICITORS: John J Kells (Plaintiff)
David H Cohen & Co (Defendants)
CATCHWORDS: Appeal from panel - function of panel - failure to correct error of law - discretionary power to determine that interest is not payable. LEGISLATION CITED: Legal Profession Act 1987, s 190, s 208E,
s 208KC, s 208KC (3), s 208L.
Supreme Court Act 1970, s 94.CASES CITED: Australian Broadcasting Tribunal v Bond & Ors
(1990) 170 CLR 321.DECISION: See paragraph 28.
IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISIONMaster Malpass
Thursday 29 August 2002
JUDGMENT11601 of 2002 John Jervis Kells v Kevin Patrick Mulligan & Anor
1 Master: The plaintiff is a solicitor. He provided legal services for the defendants.
2 He did work in relation to proceedings in the Children’s Court (concerning a matter of custody in relation to a child of the defendants). Also, he did work in relation to Supreme Court proceedings (concerning declaratory relief in relation to the proceedings in the Children’s Court). There is dispute between the parties as to whether or not he was instructed to commence the Supreme Court proceedings.
3 Costs have been paid in the sum of $3,400. The plaintiff rendered a bill of costs. It sought a sum in the order of $14,000. The court has been told that there was issue between the parties on the question of interest on unpaid costs. The plaintiff made an application for assessment of costs and the assessment was referred to a Costs Assessor (Mr Wall).
4 He was provided with certain documentation (including solicitor’s files). After receiving objections and answers thereto, the Costs Assessor completed the assessment. The Costs Assessor determined the costs in a sum in the order of $11,000 (this left a balance of $7,691 to be paid). His certificate was issued on 8 March 2002. In a letter dated 8 March 2002, the Costs Assessor set out his reasons.
5 It suffices at this stage to refer merely to certain of the matters set forth in the reasons. The Costs Assessor found against the plaintiff on questions of disclosure and this led him to assess the costs on the basis of what was fair and reasonable. He determined an hourly rate. He made a decision that there be no interest on the amount of costs. He determined that the defendants had not instructed the plaintiff to commence the Supreme Court proceedings and disallowed all costs for those proceedings.
6 The plaintiff made an application for review to a Panel. A review was undertaken and the Panel affirmed the determination of the Costs Assessor. A certificate was issued on 24 May 2002.
7 The plaintiff has brought proceedings in this Court by way of appeal. Relief is now sought under s 208L of the Legal Profession Act 1987 (the Act), even though the process had been drafted in terms of an application for leave to appeal. The defendants did not object to this course but reserved their position as to costs. A challenge is now made only in respect of two matters (the decision made concerning interest and the Supreme Court proceedings). A challenge to other matters was abandoned.
8 Before proceeding further, I should mention certain things. It appears that the court file has gone astray. The court now has before it only some of the documentation. This documentation had been made available as part of a dummy file. The content of this material could have been seen as indicating an intention to rely on matter that had not been placed before the Costs Assessor. Fortunately, it was not sought to tender any such material and the court had placed before it the material made available to the Costs Assessor (Exhibit A).
9 I have carefully considered the documentation and the submissions made to the court on the hearing of the appeal. The plaintiff bears the onus of demonstrating an entitlement to relief.
10 In an appeal brought pursuant to s 208L the plaintiff must demonstrate an error of law which justifies the disturbing of a decision made by the Costs Assessor.
11 I shall firstly deal with the question of whether or not the plaintiff was instructed to commence the Supreme Court proceedings. The defendants raised this as an issue in their objections.
12 What the Costs Assessor said on this matter appears in paragraph 8 of his reasons. He said that the clients say that they did not give instructions and he said inter alia that there was nothing in the solicitor’s files that he could find indicating the clients’ instruction to commence proceedings in the court at the time those proceedings were commenced. He saw no advice and commented on the prospects of success. This latter comment was not a matter raised by the objections and seems to have been treated by the parties as a matter not going to his decision.
13 It may be observed that it would seem inappropriate to describe as a “version” that which had been only raised on objection. However, I now put that consideration aside.
14 The solicitor’s file has been placed before this Court. It is not disputed that it contains material relevant to the matter of instructions. Indeed, it may not be in dispute that such evidence was at the very least of considerable weight.
15 I shall briefly mention certain of the material. There was a file note dated mid June 01. It records inter alia receiving instructions by telephone to proceed to file Summons in the Supreme Court. The file contained the Summons which commenced the proceedings (it was filed on 22 June 2001) and two affidavits sworn on 19 June 2001 in support of the Summons. The defendants were the deponents of the affidavits. Also, there was a statement from the plaintiff recording his instructions to commence the proceedings and an affidavit sworn by Mr McKerrall supporting that statement.
16 In addition to these matters, there was also correspondence from the solicitors who subsequently acted for the defendants (David H Cohen & Co). A letter dated 27 February 2002, alleged that no instructions had been provided by the defendants. A subsequent letter dated 8 April 2002 presented a contrary stance. It appears that the defendants had paid moneys to the plaintiff for filing fees to enable the commencement of the Supreme Court proceedings. In the subsequent letter, it was said that it was not disputed that these moneys were to cover the filing fee for the Supreme Court proceedings.
17 It is well established that a wrong finding of fact does not constitute an error of law. As I understand the position taken by the defendants in this hearing, issue was not joined on whether or not there had been a wrong finding of fact. Their case was that there was no error of law.
18 In this case, the Costs Assessor merely had the objection raised by the defendants. This was inconsistent with what had been said by their subsequent solicitors concerning the money provided for filing fees. In support of the plaintiff’s submission, he had inter alia the evidentiary material that has been referred to. In my view, the decision made by the Costs Assessor concerning the matter of instructions to commence the proceedings in the Supreme Court was not reasonably open (Australian Broadcasting Tribunal v Bond & Ors (1990) 170 CLR 321). What there was before him did not provide any basis for his decision. I am satisfied that there was an error of law which justifies the disturbing of this decision.
19 I now turn to the decision made on the question of interest. The reasons of the Costs Assessor contain inter alia the following:-
“ 12. INTEREST :
There is no reference to interest on the bill, nor in the document of 18 April 2001, and I note in any event that there was no disclosure pursuant to section 175, no satisfactory estimates of costs, and no binding costs agreement.
In the circumstances I think it appropriate that there be no interest on the amount of costs I have assessed prior to the date of my Certificate.”
20 The power that was sought to be exercised by the Costs Assessor is to be found in s 208E. It is a discretionary power which enables the Costs Assessor, in an assessment, to determine that interest is not payable on the amount of costs assessed or on any part of that amount. The section is expressed to apply despite any costs agreement or s 190 (which enables a barrister or solicitor to charge interest on unpaid costs for legal services). This discretion is to be exercised having regard to the relevant circumstances of the particular case. The onus rests with a party seeking the exercise of the discretionary power.
21 The purported exercise of the discretion suffers from error. I shall merely mention some of the problems. Contrary to what was said by the Costs Assessor in his reasons, the letter dated 18 April 2001 (which purported to be a costs agreement), did contain a provision concerning interest. The objections to the bill of costs did not put in issue the question of whether or not the costs agreement was binding. The matter that was placed in issue was whether or not there had been a variation of the hourly rate specified therein. The reasons express a conclusion that there was no satisfactory estimate of costs. At an earlier stage in the assessment, he had expressed an interim view that he was inclined to accept that it would not have been possible to make an estimate in the circumstances. The plaintiff was not given any indication of intention by the Costs Assessor to change his mind on this matter and he was not given any reasonable opportunity to make submissions on the matter. There are also questions as to the relevance of matters that were taken into account but for present purposes I need not dwell on them. Whilst is has not been argued, it might be thought that some guidance could be gleaned from the approach taken to s 94 of the Supreme Court Act 1970. Be that as it may, it seems to me that the purported exercise of the power miscarried.
22 In the circumstances, I have come to the view that there has also been error of law which vitiates the decision made by the Costs Assessor to determine that interest was not payable.
23 As I have earlier said, the Panel affirmed the decision of the Costs Assessor. The errors that have been mentioned were not observed and so left uncorrected.
24 The function of the Panel is to conduct a review (as opposed to entertaining an appeal). The statutory functions of the Panel may be found in s 208KC. It has all the functions of a Costs Assessor and is to determine the application as and in the manner required by the section.
25 The plaintiff makes two attacks on what was done by the Panel. Firstly, it is said that it did not conduct the review in compliance with s 208KC (3). Secondly, it is said that it misconceived its function.
26 Section 208KC (3) requires that the review is to be conducted on the evidence that was received by the Costs Assessor. This was not done in this case. It appears from the statement of reasons (and it is not in dispute), that the Panel did not have the solicitor’s file. It is unnecessary to explore why this came to pass. It suffices to say that the review process was inevitably flawed because the Panel did not have before it material evidence.
27 The Panel concluded that the Costs Assessor “fairly and competently conducted his assessment”. This is seen by the plaintiff as a misconception of function. Whilst other minds may have expressed the conclusion it had reached using different language, it seems to me that in substance the Panel was really saying that after reviewing the material no basis had been found to justify the disturbing of the determination made by the Costs Assessor.
28 In the circumstances of this case, I am satisfied that the plaintiff has demonstrated an entitlement to relief. I set aside the determinations made by the Costs Assessor and the Panel. The decisions on the two questions are remitted back to the Costs Assessor for re-determination. I reserve the question of the costs of these proceedings. The Exhibits may be returned.
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