Kiwi Munchies P/L v Thai Airways International

[2004] NSWSC 89

CITATION:	Kiwi Munchies P/L v Thai Airways International [2004] NSWSC 89
HEARING DATE(S):	19 February 2004
JUDGMENT DATE:	27 February 2004
JURISDICTION:	Common Law
JUDGMENT OF:	Master Harrison
DECISION:	(1) The appeal is dismissed; (2) The determination of costs assessor Ms Wendy Strathdee dated 20 June 2003 is affirmed; (3) The plaintiff's amended summons filed 21 October 2003 is dismissed; (4) The plaintiff is to pay the defendant's costs costs on a party/party basis up until 31 July 2003 and then on an indemnity basis from 1 August 2003.
CATCHWORDS:	Appeal from decision of costs assessor - fee agreement - waiver
LEGISLATION CITED:	Civil Aviation (Carriers Liability) Act 1959 (Cth) Legal Profession Act 1987 (NSW) - ss 207 & 208L Legal Profession Regulation 2002 - Reg 61 Local Court (Civil Claims) Rules 1998 - Part 1 OA r 3(1)(a)
CASES CITED:	Freeman v McNally & Anor [2003] NSWSC 780 James Hardie and Co v Yeomans [2000] NSWSC 539
PARTIES :	Kiwi Munchies Pty Ltd (Plaintiff) Thai Airways International Public Limited (Defendant)
FILE NUMBER(S):	SC 11929/2003
COUNSEL:	Mr A Radojev (Plaintif) Mr J Sharpe (Defendant)
SOLICITORS:	KM Legal (Plaintiff) Ebsworth & Ebsworth (Defendant)

LOWER COURTJURISDICTION:	Costs Assessor
LOWER COURT FILE NUMBER(S):	N/A
LOWER COURT JUDICIAL OFFICER :	Ms Wendy Strathdee

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

MASTER HARRISON

FRIDAY, 27 FEBRUARY 2004

11929/2003 - KIWI MUNCHIES PTY LTD v
THAI AIRWAYS INTERNATIONAL PUBLIC
LIMITED

JUDGMENT (Appeal from decision of costs assessor
- fee agreement - waiver)

1 MASTER: By amended summons filed 21 October 2003 the appellant, seeks: firstly, to appeal the determination of costs assessor Wendy Strathdee pursuant to s 208L of the Legal Profession Act 1987 (NSW) (the Act); secondly, an order that the determination dated 30 June 2003 be set aside; thirdly, an order that the certificate as to assessment of party/party costs dated 30 June 2003 be set aside; fourthly, an order that the assessment of party/party costs – assessor’s fee dated 30 June 2003 be set aside; and fifthly, an order that the respondent pay the appellant’s costs in this court and of the costs assessment proceedings. The appellant relied on two affidavits of Sophia Paras sworn 12 August 2003 and 14 October 2003. The defendant relied on the affidavit of Matthew Dudley Brooks sworn 15 September 2003.

2 The applicant before the costs assessor is the defendant in these proceedings. The respondent before the costs assessor is the plaintiff in these proceedings. For convenience, I shall refer to Thai Airways International Public Limited as the defendant and Kiwi Munchies Pty Ltd as the plaintiff.

3 The grounds relied on in support of the appeal are:

(1) The assessor erred in law in failing to allow the plaintiff access to the costs agreement made available by the defendant to the cost assessor during the assessment proceedings.

(2) The assessor erred in law in awarding costs and disbursements to the defendant in relation to the notice of motion for security for costs in absence of such an order from the court.

(3) The assessor erred in law in that the Determination fails to comply with the requirements of Regulation 61 of the Legal Profession Regulation 2002.

Background

4 These proceedings arise out of local court proceedings heard at the Downing Centre. On 2 March 2001, the defendant’s solicitors wrote to the plaintiff advising that the local court proceedings were defective. Following the plaintiff’s refusal to discontinue proceedings. The defendant filed a notice of motion and affidavit in support seeking to have the plaintiff’s claim against the defendant dismissed pursuant to Part 1 OA Rule 3(1)(a) of the Local Court (Civil Claims) Rules 1998 on the basis that plaintiff’s claim was not pleaded under the correct act, namely the Civil Aviation (Carriers Liability) Act 1959 (Cth).

5 On 7 June 2001, the matter came before Dillon LCM at the Downing Centre local court. The magistrate made orders dismissing 6 of the 7 claims brought by the plaintiff. On 25 October 2001, the magistrate ordered that the plaintiff pay the defendant’s costs in relation to the parts of the proceedings dismissed on 7 June 2001 in a sum agreed or assessed on an indemnity basis.

6 On 11 December 2001, the plaintiff filed an appeal against the decision of Dillon LCM. By notice of motion filed on 24 January 2002 the plaintiff sought an extension to file out of time to lodge an appeal against the decision of Dillon LCM. In response to the plaintiff's summons, the solicitor for the defendant filed a notice of contention and a notice of motion seeking security for costs together with relevant affidavits in support its claim.

7 On 11 February 2002 before Sully J, the plaintiff filed an amended summons. The matter was stood over for hearing to 15 February 2002. Justice Sully ordered the plaintiff to serve the amended summons by 4.00 pm on 11 February 2003 as the hearing on 15 February 2002 was intended to deal with both the notice of motion seeking an extension of time and the amended summons should the notice of motion for an extension of time be successful.

8 On 15 February 2002, Sully J heard the extension of time motion. On 22 February 2002 Sully J gave judgment in favour of the defendant and the plaintiff was refused leave to file the amended summons out of time and was ordered to pay the defendant’s costs.

9 On 4 March 2003, an application for an assessment of party/party costs (Supreme Court proceedings 90329 of 2003) was filed on behalf of the defendant in relation to the costs order of Sully J made on 22 February 2002.

10 On 31 March 2003, Wendy Strathdee, the cost assessor, was appointed to assess the party/party costs. A bill of costs, fee agreements and related information was forwarded to the cost assessor by the defendant’s solicitors. The plaintiff filed a notice of objection to the defendant’s bill of costs. The defendant filed submissions in response.

11 On 30 June 2003, the cost assessor provided reasons in respect to the assessment of party/party costs and disbursements.

12 Section 208L of the Legal Profession Act 1987 (the Act) provides:

"Appeal against decision of costs assessor as to matter of law

(1) A party to an application who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the Supreme Court, appeal to the Court against the decision.

(2) After deciding the question the subject of the appeal, the Supreme Court may, unless it affirms the costs assessor's decision:


(a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or

(b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application.

(3) On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given."

(1) The assessor erred in law in failing to allow the plaintiff access to the costs agreement

13 On 3 April 2003, the costs assessor wrote to the both parties stating that the applicant should within 21 days forward, inter alia, any fee agreement and any fee agreement with counsel. On 17 April 2003, the defendant’s solicitor wrote to the costs assessor stating that as requested they provided the following information and then listed correspondence. As part of paragraph (c) the defendant stated that “it is our understanding that correspondence between ourselves and our client’s cost consultants is subject to legal profession privilege and accordingly, we have not included copies of such correspondence.”

14 On 19 May 2003, the plaintiff wrote to the defendant’s solicitor and requested copies of fee agreements dated 11 April 1988, 16 February 2001, 17 September 2001 and 2 June 2002 which have been made available to the costs assessor in the interest of natural justice. On 22 May 2003, the defendant’s solicitor replied that the costs agreement was confidential and they were not prepared to release it to them.

15 The costs assessor, in her reasons dated 30 June 2003 stated that she had had regard to the costs agreement between the costs applicant and its solicitors and she was satisfied that the costs applicant is only recovering its solicitor’s costs to the extent that it is required to pay and that the indemnity principle has not been breached. The costs assessor also noted the extensive submissions by the costs respondent asking her to compel the cost applicant to produce the agreement to them. She stated that as it was a confidential document, the costs respondent is not entitled to access it. In support, she cited James Hardie and Co v Yeomans (2000) NSWSC 539.

16 Counsel for the plaintiff submitted that the expression “should” in the costs assessor’s letter read together with the plaintiff’s reply (which forwarded the fee agreement which did not refer to the fee agreement but did refer to other documents where privilege had been claimed,) meant that the defendant had in fact waived confidentiality. As the costs assessor correctly points out, the issue of whether confidentiality still remains with the fee agreement was addressed by Master Malpass in Yeomans.

17 Section 207 of the Act provides:

“(1) A costs assessor may, by notice in writing, require a person (including the applicant, the barrister or solicitor concerned, or any other barrister, solicitor or client) to produce any relevant documents of or held by the person in respect of the matter.

(2) The costs assessor may, by any such notice, require further particulars to be furnished by the applicant, barrister, solicitor, client or other person as to instructions given to, or work done by, the barrister or solicitor or any other legal practitioner in respect of the matter and as to the basis on which costs were ascertained.

(3) The costs assessor may require any such particulars to be verified by statutory declaration.

(4) A notice under this section is to specify the period within which the notice is to be complied with.

(5) If a person fails, without reasonable excuse, to comply with a notice under this section, the costs assessor may decline to deal with the application or may continue to deal with the application on the basis of the information provided.

(6) A barrister or solicitor who fails, without reasonable excuse, to comply with a notice under this section is guilty of professional misconduct.”

18 At paragraphs [25] to [28] Master Malpass stated:

“25 Section 207 has to be seen in the context of the assessment process implemented by the Act. The statutory regime makes no provision for interlocutory processes (such as discovery, interrogatories, subpoenas and notices to produce) which are available to parties in proceedings in the court.

26 The section is intended to arm the Costs Assessor with certain powers. The powers are given to the Costs Assessor to enable performance of the statutory functions imposed by the Act. In its terms, it enables the Costs Assessor to require certain things to be done.

27 Subsections (5) and (6) have been said to prescribe sanctions where there has been failure, without reasonable cause, to comply with notice given under the section. On one view, subsection (5) confers express powers as to what may be done by the Costs Assessor in dealing with the application in the prescribed circumstances. The expression “without reasonable excuse” is not defined in the Act. There was some argument as to its meaning. However, in this case, it is unnecessary to explore that consideration.

28 For present purposes, the relevant subsection is subsection (1). This provision empowers the Costs Assessor, by notice in writing, to require the production of “relevant documents of or held by a person in respect of the matter”. This was the process used by the Costs Assessor to compel production of the documents. It may be said to create a statutory compulsory process (see inter alia Woollahra Municipal Counsel v Westpac (1992) 33 NSWLR 529).”

19 Section 208 of the Act specifically states that a costs assessor may obtain a copy of, and may have regard to, a costs agreement.

20 I agree with the above statements of Master Malpass. As in Yeomans, the defendant was asked to produce the documents under the threat of compulsory statutory process as provided by s 207 of the Act. The fee agreements were provided to the costs assessor. Later when the defendant requested the plaintiff provide copies of fee agreements to them the plaintiff maintained that the documents were confidential. It is my view that there has been no waiver of privilege. These documents remained confidential. The decision of the costs assessor is correct.

(2) The assessor erred in law in awarding costs and disbursements to the defendant in relation to the notice of motion for security for costs in absence of such an order from the court.

21 This issue can be shortly dealt with. In her reasons the costs assessor stated:

“I have seen the transcript of the proceedings and the costs order. I note that the Cost Applicant does not press the costs associated with the Notice of Motion for security for costs.”

22 The costs assessor did not allow costs and disbursements incurred in relation to the notice of motion seeking security for costs.

(3) The assessor erred in law in that the Determination fails to comply with the requirements of Regulation 61 of the Legal Profession Regulation 2002.

23 Regulation 61 of the Legal Profession Regulation 2002 states:

“61 Certificate of determination of costs and statement of reasons

(1) A costs assessor is to give to the Manager, Costs Assessment a copy of the certificate required to be given under section 208J of the Act.

(2) A statement of reasons for a costs assessor’s determination that is required by section 208JAA of the Act to accompany a certificate issued under section 208J 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) if the costs assessor declines to assess a bill of costs under section 208C of the Act—the basis for doing so,

(f) if the costs assessor determines that a term of a costs agreement is unjust—the basis for doing so,

(g) a statement of any determination under section 208E of the Act that interest is not payable on the amount of costs assessed or, if payable, of the rate of interest payable.

(3) A statement of reasons to which this clause applies may be accompanied by such further information as the costs assessor concerned considers is necessary to clarify the determination of the application for a costs assessment .”

24 The plaintiff submitted that the costs assessor allowed costs that were incurred solely in relation to the appeal and not in relation to the motion for an extension of time to appeal. There would however, be some overlap in the work done, for example as a solicitor could not appear to defend the motion if he or she was not cognisant with whether the grounds of appeal had any chance of success. The costs assessor stated:

“I have had regard to the Cost Respondent’s submissions as to the narrow ambit of the order, however the order relates to the costs of the motion not just that days hearing. There was no submission on behalf of the Cost Respondent that those costs should be restricted to any particular day. I have allowed some of the Cost Applicant’s claims in relation to work done in preparation of the hearing of the motion. To the extent that various amounts have been varied, I find that that was the fair and reasonable amount.”

25 The costs assessor limited the work done and disbursements incurred to the notice of motion to extend the time to file an appeal. There is no error of law.

26 The defendant submitted that the plaintiff should have been obliged to have its complaints determined by the Review Panel prior to lodging this appeal. I agree with the comments of Master Malpass in Freeman v McNally & Anor [2003] NSWSC 780 at paragraph [8] where he stated:

“8. The appeal does not raise any novel or difficult questions of law. It seeks to ventilate questions which a panel of experienced practitioners could be considered more than well equipped to handle. It was the intention of the legislature that cases such as this (if a challenge must be brought), should be taken to the panel.”

27 That forum is best placed to determine the type of complaints raised here.

28 The appeal is dismissed. The decision of the costs assessor dated 30 June 2003 is affirmed. The amended summons is dismissed.

29 Costs are discretionary. Costs normally follow the event. The plaintiff is to pay the defendant’s costs on a party/party basis up until 31 July 2003 and then on an indemnity basis from 1 August 2003.

Orders

30 The court orders that:

(1) The appeal is dismissed.

(2) The determination of costs assessor Ms Wendy Strathdee dated 30 June 2003 is affirmed

(3) The plaintiff’s amended summons filed 21 October 2003 is dismissed.

(4) The plaintiff is to pay the defendant’s costs on a party/party basis up until 31 July 2003 and then on an indemnity basis from 1 August 2003.
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Last Modified: 03/01/2004