Macquarie International Health Clinic Pty Ltd v Sydney Local Health District - [2024] NSWDC 233

District Court

New South Wales

Medium Neutral Citation: Macquarie International Health Clinic Pty Ltd v Sydney Local Health District [2024] NSWDC 233
Hearing dates: 30 May and 20 June 2024
Date of orders: 21 June 2024
Decision date: 21 June 2024
Jurisdiction: Civil
Before: Gibson DCJ
Decision:
(1) Appeal dismissed; Summons struck out and dismissed.
(2) Plaintiff to pay defendant’s costs, with liberty to apply, such liberty to include the bringing of any application pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) for a gross sum costs order.

Catchwords:
COSTS – “Mega-litigation” over a 20-year period concluded after a 5-day hearing in the Court of Appeal – assessment of costs for appeal – appeal from Costs Assessor to Review Panel on multiple grounds – appeal from Review Panel to District Court on two grounds only (consultants’ invoices and multiplicity of solicitors) – Summons dismissed

Legislation Cited:
Civil Procedure Act 2005 (NSW), s 98(4)
Legal Profession Act 2004 (NSW), s 4(1)
Legal Profession Uniform Law 2014 (NSW), ss 6, 172
Legal Profession Uniform Law Application Act 2014 (NSW), ss 76, 85
Uniform Civil Procedure Rules 2005 (NSW), r 20.4

Cases Cited:
A.C.N. 627 087 030 Pty Ltd t/as Yates Beaggi Lawyers v Poche [2024] NSWCA 145
Amirbeaggi v EB [2023] NSWCA 108
Australian Blue Metal Ltd v Hughes [1970] 2 NSWR 119
Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621; [1953] HCA 25
Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) (2008) 225 FLR 1
Cachia v Hanes (1994) 179 CLR 403
Clay v Kurelic [2001] WASC 318
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21
Gazecki v McCabes Lawyers Pty Ltd (2020) 102 NSWLR 259; [2020] NSWCA 98
GBT Corporation Pty Ltd v Scott (1994) 116 FLR 266
Giannarelli v Wraith [No 2] (1991) 171 CLR 592; [1991] HCA 2
Gibson v Drumm & Others [2016] NSWSC 570
Gilmore Finance Pty Ltd v Aesthete No 3 Pty Ltd [2020] NSWCA 114
Honest Remark Pty Ltd v Allstate Explorations NL [2008] NSWSC 439
Hughes Tool Co v Trans World Airlines (1972) 409 US 363
In the matter of the Queensland Law Society Act 1952 and in the matter of an application of Watling Roche against Stephen Collins (Supreme Court of Queensland, 22 February 1999, Williams J, unrep)
Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153
Lewis v Doran [2008] NSWSC 186
Macquarie International Health Clinic Pty Ltd v Central Sydney Area Health Service (Supreme Court (NSW), Windeyer J, 28 March 2000, unrep)
Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd (No 12) [2019] NSWSC 916
Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2008] NSWSC 738.
Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268; (2010) 383 ALR 577
Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2020] HCASL 270
Paolucci v Makedyn Pty Ltd [2021] NSWCA 215
Planet International Ltd v Turfella Pty Ltd (Supreme Court of NSW, Young J, 4 November 1991, unrep)
Re Remnant (1849) 50 ER 949
Seven Network Limited v News Limited (2009) 182 FCR 160; [2009] FCAFC 166
Seven Network Limited v News Ltd [2007] FCA 1062
Stanley v Phillips (1966) 115 CLR 470
Sydney Local Health District v Macquarie International Health Clinic Pty Ltd (2020) 105 NSWLR 325; [2020] NSWCA 274
Sydney Local Health District v Macquarie International Health Clinic Pty Ltd (No 2) [2020] NSWCA 316
Vincent Francis Stanizzo v Karina Vivianna Fregnan [2020] NSWSC 1296
Voicu v The Owners-Strata Plan No 1624 [2020] NSWCA 52
Zaghloul v Woodside Energy Ltd [2019] WASCA 187

Texts Cited:
Dal Pont, Law of Costs (5th ed., 2021, LexisNexis Australia)
M Galanter, “Mega-Law and Mega-Lawyering in the Contemporary United States”, The Sociology of the Professionals: Lawyers, Doctors and Others (1983, The Macmillan Press)
Law Council of Australia, “Case Management Handbook”, Chapter 25, Costs in the Federal Court, 26 July 2021, D Vine-Hall and L Harris
LL Oliver, Law of Costs (Law Book Co, 1966)

Category: Principal judgment
Parties: Macquarie International Health Clinic Pty Ltd (Plaintiff)
Sydney Local Health District (Defendant)
Representation:
Counsel:
Mr J Rogers (Plaintiff)
Ms S Scott (Defendant)
Solicitors:
Bruce & Stewart Lawyers (Plaintiff)
Clayton Utz (Defendant)

File Number(s): 2023/00426476
Publication restriction: Nil

Judgment

Introduction

The plaintiff (hereafter “Macquarie” or “the plaintiff”), by Summons filed 24 November 2023, appeals parts of a determination of ordered costs in Certificate of Determination of Review (“the determination”) of the Review Panel dated 27 October 2023. The defendant (hereafter “Sydney” or “the defendant”) opposes the orders sought.
The assessment of costs in the determinations of the Costs Assessor and the Review Panel were conducted under the Legal Profession Uniform Law 2014 (NSW) (“LPUL”) and the Legal Profession Uniform Law Application Act 2014 (NSW) (“LPULAA”). The costs in question are ordered costs which, by reason of Division 3 of Part 7 of the LPULAA, must be determined to be fair and reasonable (s 76(1)).

The proceedings giving rise to these costs

The costs the subject of this appeal relate to a five-day hearing in the Court of Appeal: Sydney Local Health District v Macquarie International Health Clinic Pty Ltd (2020) 105 NSWLR 325; [2020] NSWCA 274 (“Sydney v Macquarie”). That appeal was the end result of disputes about six agreements entered into between the parties in 1996 which “spawned substantial and lengthy litigation in this Court over the last two decades” (Sydney v Macquarie at [5]).
A term often used to describe long and complex proceedings of the kind that can be seen here is “mega-litigation”: Paolucci v Makedyn Pty Ltd [2021] NSWCA 215 at [8]. By way of comparison, in terms of size, Sackville J, the first instance judge in Seven Network Limited v News Ltd [2007] FCA 1062, used this descriptive word (at [2] – [6]), referring to the “electronic courtroom” set up for the 120-day trial, 9,530 pages of transcript, thousands of exhibits and a “truly astonishing” (at [4]) 2,500 pages of submissions. The legal costs engendered by mega-litigation are far more than usually high, as the Full Court of the Federal Court of Australia in Seven Network Limited v News Limited (2009) 182 FCR 160; [2009] FCAFC 166 noted at [1079].
The proceedings were commenced on 27 March 2000, when Macquarie sought urgent injunctive relief in relation to use of two building sites intended to be used as a hospital and car park. Windeyer J (Macquarie International Health Clinic Pty Ltd v Central Sydney Area Health Service, Supreme Court (NSW), 28 March 2000, unrep) outlined the dispute between the parties in the following deceptively simple terms:

“The original development plan was for a private hospital for 400 beds. Development approval for this was obtained. It has never been built, on Macquarie's case, because investment in private hospitals became less attractive after the heads of agreement were signed. For this and other reasons it was decided that the development should be reduced to a private hospital of 200 beds and it is accepted that Macquarie has no intention of building that hospital.
…
By [17 March 2000] … Macquarie had determined it could not go ahead with the proposed hospital. It was claiming that it had rights to seek a change of user by reason of changes to the legislation preventing the operation of the business or making it impossible to run it economically. It is perfectly clear that Macquarie could not, and will not proceed with the private hospital.”

In the Fifth Further Amended Statement of Claim filed on 2 May 2007, Macquarie claimed that Sydney’s conduct in retaking possession of the Car Park and Hospital Sites in March 2000 amounted to an unlawful trespass and sought damages. Nicholas J dismissed the claim: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2008] NSWSC 738.
In 2010, Macquarie was successful, on appeal, on liability: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268; (2010) 383 ALR 577. An application for special leave to appeal to the High Court having been refused later that year, it was then necessary for damages to be assessed to determine the losses caused by the wrongs, namely trespass to two sites.
Macquarie elected for an inquiry as to damages as opposed to an account of moneys received by Sydney from its occupation of the Car Park Site and the Hospital Site during the period of the trespass. The litigation’s second decade (2010 and 2020) consisted of this enquiry, on the basis of a claim for mesne profits (“the damages inquiry proceedings”). This hearing was initially set down for hearing for three weeks (15 days) in 2013 (Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd [2013] NSWSC 764 at [5]) but, as was the case with other aspects of these proceedings, this estimate was insufficient. The Court of Appeal judgment the subject of this costs appeal noted (at [23]) that the hearing did commence on 10 February 2014. However, for the reasons Kunc J referred to in his Honour’s 2019 judgment, the hearing took five times that estimate and was not completed until 2019.
After nearly 40 judgments and 100 days of hearing, Kunc J awarded Macquarie approximately $55 million (including interest) by way of mesne profits for trespass to land identified as “the hospital site” as well as approximately $30 million (including interest) in relation to land identified as “the car park site”. On 29 November 2019, Kunc J made orders in favour of Macquarie in the sum of $84,242,994.15. Execution of judgment was stayed upon payment by Sydney of the sum of $16,059,335.15.
On 24 December 2019, Sydney lodged an appeal from the orders of Kunc J’s orders in the damages inquiry proceedings. Macquarie filed a cross-appeal.
The Court of Appeal heard fourteen grounds of appeal from Kunc J’s judgment over a five-day period (25 – 29 May 2020). The appeal was allowed on most issues, in that the damages awarded for the hospital site were reduced to nil and the damages for the car park trespass claim reduced to $14,530.510 damages and interest. The cross-appeal was dismissed.
Unsurprisingly for such lengthy and complex proceedings, there was multiple representation on both sides both at first instance and appeal from the very beginning of this litigation. One of the issues for determination in this costs appeal is whether, in costs assessment the subject of this appeal, namely the Court of Appeal costs, the line between being well-represented and over-represented was crossed. This is the first of two issues for determination.
However, the main issue in this costs appeal does not arise from legal costs issues. It is a challenge to one of the disbursements claimed in the Court of Appeal costs.
The nature of this disbursement is as follows. In the course of preparation for the hearing in the Court of Appeal, Sydney consulted forensic business and financial experts (hereafter “Paxon” or “KordaMentha”), who had provided reports and been witnesses in the proceedings at first instance. Between 16 October 2019, three months after the final judgment of Kunc J on 17 July 2019, KordaMentha raised a series of invoices for those consultations during the course of the appeal.
Orders 4 – 7 made by the Court of Appeal related to costs. As to the hearing of the appeal, as was confirmed in Sydney Local Health District v Macquarie International Health Clinic Pty Ltd (No 2) [2020] NSWCA 316 at [4] (which dealt with other costs orders, including costs in the arising from the primary judgment), the Court was satisfied that “SLHD had substantial success on the appeal and by order 4 of our orders of 2 November 2020, Macquarie was ordered to pay SLHD’s costs of and incidental to the appeal.”
An application for special leave to the High Court was refused, on the basis that the Court of Appeal was “plainly correct”: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2020] HCASL 270. Sydney then filed an application for assessment of its costs and the Costs Assessor, Mr Bartos, provided his determination on 27 October 2022 (CB 464).
Two findings by Mr Bartos are drawn to my attention by Mr Rogers (submissions, paragraph 19).
The first of these is at paragraphs 67 – 69 of the Costs Assessor’s determination, concerning the “team approach” of representation taken by both parties in these long and complex proceedings, where Mr Bartos made observations about whether the level of representation was fair and reasonable. Where Mr Bartos was of the view the involvement of several lawyers was not fair and reasonable, he adjusted the relevant items accordingly, adding:

“Specifically, whilst I accept that this was an important case in my view an attendance by four solicitors and a paralegal in addition to three counsel at the hearing of an appeal was not fair and reasonable.” (CB 454)

The second area drawn to my attention is Mr Bartos’s determinations in relation to the fees of KordaMentha which, given the complexity of the issues and the amounts involved, he considered were not excessive. He did, however, disallow the first invoice from KordaMentha (item 1167), on the basis that it related to the proceedings at first instance (paragraphs 144 – 145 of his determination).
Macquarie filed an application for review of the Costs Assessor’s certificate and determination on 30 November 2022. A chronology of the submissions made to the Review Panel identifies the 14 issues put before the Review Panel, two of which were the asserted to be the excessive number of legal representatives despite the reductions made by the Costs Assessor, and the allowing of the invoices of KordaMentha.
On 20 October 2023, the Review Panel handed down its determination of the appeal that had been lodged on 30 November 2022, issuing a certificate for assessed costs in the sum of $1,172,423.93, being a $33,995.79 reduction from the Costs Assessor. As was the case with the Costs Assessor, the Review Panel provided a careful analysis of each of the 14 issues put before it. The issue of asserted duplication of costs was dealt with, inter alia, at paragraphs 12.8 – 12.15 and 20.7 – 20.11. The issue of expert consultant fees was dealt with at paragraphs 21.1 – 21.20, where the Review Panel expressed the same views as the Costs Assessor concerning the KordaMentha invoices. The Review Panel also determined that Macquarie should pay the Panel’s costs of the review and issued a certificate in the sum of $15,110.70.

The Grounds of Appeal

The Grounds of Appeal are not set out in the usual manner. I summarise these as follows:

Ground1: Denial of procedural fairness: At paragraphs 9 to 13 of the Summons, the plaintiff sets out a complaint that the level of redaction of invoices for confidentiality and privilege for invoices supplied by two consulting firms, KordaMentha and Paxon, was “so extreme that it is impossible to ascertain what work was actually undertaken”. It is asserted that, “by allowing these disbursements without enabling the plaintiff to properly consider and make submissions about the costs the subject of the invoices, the Review Panel denied the plaintiff procedural fairness”.

It is important to note that no objection was taken at any time to the claim of privilege being made or the way that this was proposed by any of the assessors; the circumstances in which Costs Assessor and later the Review Panel discussed the claiming of privilege in relation to these invoices with both parties are set out at CB 569, 656, 658 (confirming the parties’ agreement about redaction), 817, 818, 830 (where the claim of privilege is described, in Macquarie’s submissions, as “dubious” but not challenged) and 841. There has, however, been a late challenge to this procedure on the grounds of lack of procedural fairness.

Ground 2: Failure to undertake its statutory task conformably with s 76 of the LPULAA: The Review Panel is asserted not to have applied s 76 when determining that it was “satisfied that the work the subject of the [invoices] was done for the appeal” and allowed them in full and without reduction despite the lack of particularisation and the absence of further evidence from the defendant which would have enabled the Review Panel to conclude that the costs claimed in the invoices were reasonably incurred. It repeats the complaint about the heavy amount of redaction (paragraph 14(b) and the complaint about the failure to require the defendant to substantiate the fairness and reasonableness of the nature and extent of the work for attendances claimed.

Although not expressed as a separate ground, the Review Panel is also asserted to have erred in not applying s 76 of the LPULAA in permitting multiple representation in circumstances where “all costs beyond the attendance of the first solicitor should have been disallowed as unreasonable in respect of a hearing of appeal proceedings at which both senior and junior counsel appeared on each day of the hearing” (paragraph 2(d) of the Summons).

An additional ground: Although not identified as an additional ground, at paragraph 2 of the Summons the plaintiff “further appeals from the part of the decision below that relates to the professional costs allowed to the defendant for the attendance by multiple solicitors at varying levels of experience at each day of the five day hearing on 25 to 29 May 2023”. This would appear to overlap the separate ground of appeal in relation to multiple representation in paragraph 2(d), summarised above.

Ground 3: The Review Panel made findings without a proper basis: This ground has been abandoned.

As Ms Scott has pointed out in paragraphs 1 to 6 of her submissions dated 12 June 2024, these differ in some respects from the grounds of appeal relied upon at the hearing. This is one of the reasons why, as the issues raised in this appeal are illustrative of difficulties faced by courts when determining costs appeals, it is helpful first to set out what the relevant principles are.

Costs assessment reviews and appeals

Section 85 of the LPULAA sets out how reviews of costs assessments by the Review Panel should be conducted:

85 Conduct of reviews
(1) A review panel may, on an application made under section 83 or 84, review the determination of a costs assessor and may—
(a) affirm the costs assessor’s determination, or
(b) set aside the costs assessor’s determination and substitute the determination that, in its opinion, should have been made by the costs assessor.
(2) The review panel has, in relation to the application for review, all the functions of a costs assessor in relation to the assessment concerned and is to determine the application, subject to this Part and the costs assessment rules, in the manner that a costs assessor would be required to determine an application for costs assessment.
(3) Without limiting subsection (2), the review panel is not bound by the rules of evidence and may inform itself on any matter in the manner it thinks fit.
(4) If the costs assessors who constitute the review panel are unable to agree on a determination in relation to an application, the panel is to affirm the determination of the costs assessor.

The nature of an appeal to a Court from such a determination is by way of rehearing, resulting in fresh evidence or evidence in addition to or in substitution for the evidence given before the review panel, has created significant differences from the manner in which appeals had previously been conducted. In Gazecki v McCabes Lawyers Pty Ltd (2020) 102 NSWLR 259; [2020] NSWCA 98 at [25] – [43], Basten JA set out the relevant principles:

“[25] Secondly, it is convenient to return to the reasoning of the judge with respect to the nature of a costs appeal. It may be dealt with briefly because the reasoning did not appear to have a significant bearing on the outcome of the application and was addressed only in passing in this Court. As the applicant correctly noted, the judge’s view as to a constrained approach to the exercise of the power of review conferred on the District Court did not apply to the issues raised by the applicant. No doubt for that reason, it did not form a ground of appeal. Nor can it be said that the approach adopted by the primary judge was necessarily wrong.
[26] It is necessary to commence by setting out the relevant provisions of s 89 of the Application Act:
89 Appeal on matters of law and fact
(1) A party to a costs assessment that has been the subject of a review under this Part may appeal against a decision of the review panel concerned to—
(a) the District Court, in accordance with the rules of the District Court, but only with the leave of the Court if the amount of costs in dispute is less than $25,000, or
(b) the Supreme Court, in accordance with the rules of the Supreme Court, but only with the leave of the Court if the amount of costs in dispute is less than $100,000.
(2) The District Court or the Supreme Court (as the case requires) has all the functions of the review panel.
…
(4) An appeal is to be by way of a rehearing, and fresh evidence or evidence in addition to or in substitution for the evidence before the review panel or costs assessor may, with the leave of the Court, be given on the appeal.

[27] Two features of this provision are directly applicable. First, with respect to an amount of or above $25,000 there is an appeal as of right, being an appeal “by way of a rehearing”. Secondly, in respect of such an appeal, there is a leave requirement, but only as to the adducing of fresh evidence or other evidence not before the review panel or costs assessor.
[28] Relying on the judgment of Jordan CJ in Schweppes’ Ltd v Archer, the primary judge accepted that while the court would always review a decision of a taxing officer where it was contended that the officer proceeded “upon a wrong principle”, the court would otherwise be “reluctant to interfere”. Jordan CJ stated that, absent an error of principle, the court “will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will only do so in an extreme case.”
[29] Although the primary judge stated that “there is no distinction between the costs assessment regime and older regimes of costs taxation”, [24] that was not entirely correct. The Costs Rules, 1915, applied in Schweppes’ provided for a review in the following terms:
“64 When any party applies for an order for review, he shall serve upon the taxing officer a copy of the notice of motion or Summons to review.
65 Such application shall be heard and determined by the court or judge upon the evidence which has been brought in before the taxing officer, and no further evidence shall be received upon the hearing thereof, unless the court or judge otherwise directs.”

[30] As the primary judge also noted, the statement of Jordan CJ in Schweppes’ was adopted by Kitto J (sitting alone) in Australian Coal and Shale Employees’ Federation v The Commonwealth. However, the High Court rule engaged in that case was one which provided for review of a decision of a taxing officer, but only as to an item or part of an item to which objection had been taken. In both Schweppes’ and Australian Coal and Shale the rules provided for itemised costing, where most items were to be allowed according to a prescribed schedule of charges. This exercise was far removed from the current forms of assessment according to costs agreements between lawyers and their clients.
[31] The primary judge also referred to the Queensland authority, applying Queensland law. There is authority dealing with related provisions in the Full Court of the Federal Court. However, for present purposes it is sufficient to confine attention to the legislative regime for review of costs assessment in New South Wales.
[32] When Schweppes’ Ltd was decided the statutory power to review a taxation of costs was conferred by s 35(2) of the Legal Practitioners Act 1898 (NSW). Neither statute nor rules made provision for the manner of conducting such a review. In the absence of statutory or rule-based criteria, the courts developed principles for the classification of decisions distinguishing between cases where the taxing officer appeared to have acted upon an erroneous principle and those in which there was a challenge to a discretionary allowance. Different rules applied in different jurisdictions within the Supreme Court until a general set of rules with respect to costs was prescribed in Pt 52 of the Supreme Court Rules 1970 (NSW), which applied to both taxation of costs the subject of a court order and a taxation as between solicitor and client under the Legal Practitioners Act. The rules provided for a dissatisfied party to seek a reconsideration of a certificate issued by a taxing officer; a party could then request the court to “review the decision of the taxing officer on reconsideration.” No criteria were specified with respect to the nature of the “review”.
[33] The first major change in the statutory regime with respect to review of costs assessments came with the insertion by the Legal Profession Reform Act 1993 (NSW) of new provisions in the Legal Profession Act 1987 (NSW). These provided direction as to how a costs assessor was to assess “what is a fair and reasonable amount of costs.” They also introduced two provisions relating to appeals from decisions of costs assessors. The first, s 208L, provided an appeal as of right to the Supreme Court on a decision of a costs assessor as to a matter of law. If the costs assessor’s decision were not affirmed, the Court had power to redetermine the application. In that case, s 208L(3) provided:
“(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.”

[34] The second provision, s 208M, provided for an appeal with leave from a determination by a costs assessor. The appeal was said to be “by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given”: s 208M(4).
[35] This regime was in force from 1 July 1994 until 1 October 2005, when the 1987 Act was repealed by the Legal Profession Act 2004 (NSW). However, the provision for appeals, then found in ss 384 and 385 of the 2004 Act, maintained the regime in force since 1994. From 1 September 2008 these provisions were amended to provide for an appeal to the District Court, rather than the Supreme Court.
[36] The 2004 Act continued in forced until 1 July 2015 when it was repealed by the Application Act. The terms of s 89 are set out at [26] above. The new regime made a number of substantial changes to the earlier provisions.
[37] First, whilst it maintains an appeal as of right, that appeal is not restricted to questions of law; rather, it depends upon the amount of the assessment. An appeal from an assessment of less than $25,000 requires leave, whatever may be the ground.
[38] Secondly, again dependent upon the amount in issue, appeals can be brought either in the District Court or in the Supreme Court.
[39] Thirdly, no appeal was permitted from a determination by a costs assessor, but only from a decision of a review panel.
[40] Fourthly, the language of a “new hearing” (as in s 208M of the 1987 Act) has been abandoned and all appeals are “by way of a rehearing”.
[41] Fifthly, although there is an opportunity for the applicant to provide fresh evidence or evidence in addition to or in substitution for the evidence before the review panel or costs assessor, that can only occur with leave of the court: s 89(4).
[42] Sixthly, the court is not given specific powers, but rather is said to have “all the functions of the review panel.” The effect of this provision is by no means clear. The functions of the review panel are set out in s 85 of the Application Act, and involve reviewing “the determination of a costs assessor”: s 85(1). For that purpose, the review panel has “all the functions of a costs assessor … and is to determine the application … in the manner that a costs assessor would be required to determine an application for costs assessment”: s 85(2). The review panel is not bound by the rules of evidence and may inform itself on any matter in the manner it thinks fit: s 85(3). There is a degree of awkwardness in conferring on a court required to determine an appeal against a decision of a review panel all the functions of the review panel, which involve review of the decision of a costs assessor. That language may affect what is meant in s 89(4) by an appeal “by way of a rehearing”.
[43] No submissions were made in this Court on the scope and operation of s 89; accordingly, it is both unnecessary and inappropriate for the Court to resolve these questions in this case. What is clear, however, is that courts exercising jurisdiction under this provision must pay close attention to the terms of the statutory power and should not adopt statements from earlier cases dealing with different powers, unless persuaded that they remain applicable. Although the distinction between appeals on matters of law and appeals from the final determination of a costs assessment have been removed, it may, nevertheless, be appropriate to adopt different standards of scrutiny with respect to each. Thus, questions of law are inherently liable to review according to a correctness standard; a lower standard of scrutiny may well be applicable to an assessment of what costs are fair and reasonable in the circumstances of the particular case. Particularly is that so where a specific body of costs assessors, appointed solely for that function, reach evaluative judgments. Furthermore, costs assessors are expected to ensure consistency of approach, being a standard which cannot readily be applied by a reviewing court with limited experience of such matters.”

In Gilmore Finance Pty Ltd v Aesthete No 3 Pty Ltd [2020] NSWCA 114, Meagher JA made the following additional observations at paragraphs [7]-[9]:

“[7] The nature of an appeal by way of rehearing is described in Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40 at [23] (Gaudron, Gummow, McHugh and Hayne JJ) by reference to the characteristics which distinguish it from a hearing de novo and an appeal in the strict sense:
For present purposes, the critical difference between an appeal by way of rehearing and a hearing de novo is that, in the former case, the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error, whereas, in the latter case, those powers may be exercised regardless of error. At least that is so unless, in the case of an appeal by way of rehearing, there is some statutory provision which indicates that the powers may be exercised whether or not there was error at first instance. And the critical distinction, for present purposes, between an appeal by way of rehearing and an appeal in the strict sense is that, unless the matter is remitted for rehearing, a court hearing an appeal in the strict sense can only give the decision which should have been given at first instance whereas, on an appeal by way of rehearing, an appellate court can substitute its own decision based on the facts and the law as they then stand.

[8] The following passage from the judgment of Gageler J in Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30 at [31] makes clear that while it remains necessary to identify an error in the decision appealed from, in an appeal by way of rehearing that requirement may be satisfied by reason of further evidence adduced in the appeal or a change in the law which has the result that looked at in retrospect the decision appealed from was in one or more respects incorrect:
For practical purposes, the difference between correction of error on an appeal in the strict sense and correction of error on an appeal by way of rehearing lies in the temporal perspective that the appellate court is required to adopt in examining the correctness of the judgment under appeal. An appellate court determining an appeal in the strict sense is required to determine the correctness of the judgment under appeal at the time that judgment was given: in an appeal from a final judgment of a judge sitting without a jury, the correctness of the judgment is to be determined on the evidence adduced at the trial and on the law as it then stood. An appellate court determining an appeal by way of rehearing, in contrast, is required to determine the correctness of the judgment under appeal in retrospect: in an appeal from a final judgment of a judge sitting without a jury, the correctness of the judgment is to be determined on the evidence adduced at the trial supplemented by any further evidence that the appellate court may allow to be adduced on the appeal, and on the law as it stands when the appellate court gives judgment on the appeal.

[9] As Basten JA recently observed in Gazecki v McCabes Lawyers Pty Ltd [2020] NSWCA 98 at [42] by s 89(2) the Court determining the appeal by way of rehearing is said to have “all the functions of the Review Panel”. By s 85(2) the Review Panel in turn had “all the functions of a costs assessor in relation to the assessment concerned and is to determine the application, subject to Pt 7 of the Act and the costs assessment rules, in the manner that a costs assessor would be required to determine an application for costs assessment.” It was not submitted by either party that the effect of this provision is that the powers of the appellate court may be exercised whether or not there was error (in either of the senses referred to above) on the part of the Review Panel.”

It is important to underline that the court is not expected to conduct the kind of review that the Review Panel is authorised to undertake; it is conducting an appeal by way of rehearing. In Mirus Australia Pty Ltd v Wilson [2023] NSWSC 1432 at [22], Campbell J stated:

“[22] It is important to point out that an appeal by rehearing is not an appeal in the strict sense as the passages quoted by Meagher JA from Allesch v Maunz and Minister for Immigration and Border Protection v SZVFW make clear. Although error is required to be shown in an appeal by way of rehearing, as Gageler J (as the Chief Justice then was) said, “The correctness of the judgment is to be determined on the evidence adduced at the trial supplemented by any further evidence that the appellate court may allow to be adduced on the appeal”. With respect, Meagher JA seems to agree with Basten JA’s observations in Gazecki v McCabes that the consideration that the appellate court on rehearing “has all the functions of the review panel” does not mean that the Court is conducting the type of review that the review panel is authorised to undertake. The Court is conducting an appeal by way of rehearing.”

Where there is an error of law, there must be materiality to the legal error (Voicu v The Owners-Strata Plan No 1624 [2020] NSWCA 52 at [51]). Where there is an error of fact, courts have been less willing to intervene, as was noted in Vincent Francis Stanizzo v Karina Vivianna Fregnan [2020] NSWSC 1296 at [127]:

“I have had regard to these matters on the same basis as did the Assessor and, in turn, the Review Panel. As the Review Panel observed in relation to the findings of the Assessor, an assessment of counsel’s fees is one upon which reasonable minds might differ. Whether or not I would arrive at these precise figures is not the question; the question is whether I am satisfied that any error is disclosed in the Review Panel’s finding that these amounts are fair and reasonable in the circumstances. I am not satisfied of any error in the assessment of counsel’s costs.”

Mr Rogers draws to my attention that where an appeal concerns an error of law, the onus is on the plaintiff “not merely to demonstrate error…arising in the proceedings to determine the application but also to demonstrate that any such error is material to the determination”: Honest Remark Pty Ltd v Allstate Explorations NL [2008] NSWSC 439 at [24]. More recently, in Voicu v The Owners-Strata Plan No 1624, the Court stated at [51]:

“Finally, had it been necessary to consider the merits of the appeal in the District Court, a real issue would have arisen as to whether it would have been open on the material before the District Court judge, properly advised as to the matters relied upon in a proceeding in which the Court had jurisdiction, to uphold the appeal. While a discretionary refusal of relief on the merits may place a heavy burden on the respondent to establish that a different outcome was not open, an applicant cannot avoid the practical obligation to indicate some material error of law or fact in order to maintain the merit of his appeal, which would otherwise risk summary dismissal as frivolous or vexatious. The situation is analogous to that in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam. [26] Mr Lam had been accepted as a refugee, but had then committed a number of serious criminal offences. The Minister proposed to cancel his visa if not satisfied that the applicant passed the character test. The applicant’s relationship with his children who resided in Australia was a material consideration. Departmental officers undertook to contact a Ms Tran who had information as to his relationship with the children, and then obtain further submissions from him on the basis of that material. Neither step was taken. Gleeson CJ noted:
“[22] The applicant was unable to point to any additional information, or any argument, that might have been put before the respondent if there had been contact between the Department and Ms Tran following 7 November 2000, or if the applicant had been told that there would be no such contact. There is nothing to justify a view that, considered objectively, proper decision-making required further contact with Ms Tran.”

The Chief Justice continued:
“[34] … if a decision-maker informs a person affected that he or she will hear further argument upon a certain point, and then delivers a decision without doing so, it may be easy to demonstrate that unfairness is involved. But what must be demonstrated is unfairness, not merely departure from a representation. …
…
[37] A common form of detriment suffered where a decision-maker has failed to take a procedural step is loss of an opportunity to make representations. ... A particular example of such detriment is a case where the statement of intention has been relied upon and, acting on the faith of it, a person has refrained from putting material before a decision-maker. In a case of that particular kind, it is the existence of a subjective expectation, and reliance, that results in unfairness. Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.”

It may be inferred that the Chief Justice was, in the second sentence of [37], distinguishing the facts in Stead.”

Finally, it is accepted that matters which were not raised before the Review Panel are not matters with which this Court should deal, as doing so does not amount to correcting an error: Amirbeaggi v EB [2023] NSWCA 108 at [52]:

“Although the appeal to the District Court is an appeal by way of rehearing, and one for the purposes of which further evidence may be adduced, it is nevertheless necessary for an appellant to demonstrate error on the part of the review panel. Unless there is a question of jurisdiction, which may always be an issue, whether raised or not, there will generally be no appeal from a review panel with respect to an issue which was simply not raised before it. If a ground of appeal in the District Court were to raise such a matter, the likely response of the Court would have been that the review panel cannot have been in error in failing to deal with the matter which it was not asked to address.”

I have approached the issues in this costs appeal conformably with these principles. This has not been easy, due to the changes in grounds of appeal during the hearing, the raising of issues before me that were not put before the Costs Assessors and the sheer weight of the documentation from such lengthy and complex proceedings. The unfortunate result has been the need for repetition of factual material and submissions, in the setting out of this judgment, in order to reflect the shifting arguments put.

The role of the costs appeal judge

Ms Scott, at paragraph 61 of her submissions, draws my attention to the observations of Kitto J in Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621; [1953] HCA 25 at 628:

“…the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.”

Ms Scott submits that costs assessors are experts accustomed to making the evaluative judgements that assessment requires. They are expected to ensure consistency of approach which is a standard that cannot readily be applied by a reviewing court with limited experience of such matters: Gazecki at [43].
I would add to this that even where a judge does have some specialist knowledge in a particular area, they have been counselled not to use this information by the High Court in Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21. The first instance judge had, on an issue of expert evidence, used his own knowledge of the disease which led to the setting up of the Dust Diseases Tribunal. Even though the judges in that court had set up case management designed to respond to the needs of the tragic applications that came before it, the High Court warned that these judges should not consult their own knowledge about such issues when hearing those cases.
Once error is established, however, the court may have regard to any matter considered relevant to the determination of the question in a manner similar to that of the Review Panel when reviewing the determination of an assessor.
When determining whether error has been established, it is important to see these errors in the context of the determination appealed from. At one level, although large sums are involved, the areas of contention are very limited – a claim that insufficient reduction for the number of solicitors on the appeal was made, and a complaint about invoices from a consultant. Both the Costs Assessor and the Review Panel dealt with many other issues; there were 14 grounds in the Review Panel determination alone. The quantum of the costs was also large.

Proportionality

Underlying all of these principles is the importance not only of proportionality of costs but also the undesirability of costs issues coming to dominate litigation. The relevant provision in the LPUL, s 172(1), provides:

172 Legal costs must be fair and reasonable
(1) A law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are—
(a) proportionately and reasonably incurred; and
(b) proportionate and reasonable in amount.

Costs charged are to be no more than is fair and reasonable in all the circumstances and must be both proportionately and reasonably incurred and proportionate and reasonable in amount.
The concept of proportionality in legal costs is a key feature of modern costs law. Over the past two decades, changing views of the importance of proportionality have played a key role in statutory reform.
Another relevant feature is the profound changes in litigation in terms of complexity of issues and amounts involved, in circumstances where the changes to legal practice by reason of a greater level of legal sophistication as well as technology must be taken into account. As far back as 1983, in “Mega-Law and Mega-Lawyering in the Contemporary United States”, in “The Sociology of the Professionals: Lawyers, Doctors and Others”, R Dingwall & P Lewis (eds.), Marc Galanter forewarned:

“Litigation in the mega-law mode is distinctive in the way that mobile high technology warfare between superpowers differs from the set piece battles of an earlier day.”

The record case for many years in the United States was the antitrust battle between Howard Hughes and TWA (Hughes Tool Co v Trans World Airlines (1972) 409 US 363, 393). Supreme Court Chief Justice Burger labelled the 1.7 million documents (694 feet of shelf space) and 10-feet high briefs “the twentieth-century sequel to Bleak House”, noting that 56,000 lawyers’ billing hours added up to $7.5 million. Such statistics would be unlikely to cause the same reaction now.
Proportionality is a tool that must be used wisely. Where both parties have embarked on two decades of litigation where no expense has been spared, it may not be appropriate to invoke principles applicable in cases of much more modest parameters such as Gibson v Drumm & Others [2016] NSWSC 570 (a decision cited on about a dozen occasions to the Costs Assessor and Review Panel). It should be noted, however, that when these proceedings were commenced in 2000 and for at least part of the time that liability was the issue, the Civil Procedure Act 2005 (NSW) was not in force, the costs legislation was entirely different and concepts of proportionality were in their infancy.
I have accordingly viewed issues of proportionality through the prism of the long history of this litigation, as well as its size and complexity.

The issues to be determined in this appeal

Conformably with the manner of presentation of the submissions, I have divided the grounds of this appeal into two: the invoices appeal grounds, and what was informally referred to by the parties as the “too many lawyers” grounds.
I will set out the invoices and the basis for their challenge first.

The invoices

The six bills set out in the Summons are as follows:

KordaMentha Tax Invoice PI003918 dated 16 October 2019 in the sum of $6,382.50 excluding GST;

Paxon Group Tax Invoice I43486 dated 30 November 2019 in the sum of $10,200.00 excluding GST (Paxon Group Invoice);

KordaMentha Tax Invoice PI004433 dated 3 December 2019 in the sum of $7,362.50 excluding GST;

KordaMentha Tax Invoice PI005747 dated 17 Apr 2020 in the sum of $19,602.50 excluding GST;

KordaMentha Tax Invoice PI006055 dated 12 May 2020 in the sum of $7,157.50 excluding GST;

KordaMentha Tax Invoice PI006411 dated 5 Jun 2020 in the sum of $6,382.50 excluding GST.

The invoices appeal grounds

As is set out in paragraph 4 of its submissions in chief (and see Tcpt 2), the plaintiff raised completely different issues, namely:

Whether the challenged invoices were “disbursements” at all within the meaning of s 76 of the LPUL;

Whether the defendant satisfied its onus in establishing the fairness and reasonableness of the invoices.

Whether the redaction of the consultants’ invoices and failure to provide any reports to Macquarie resulted in denying the plaintiff procedural fairness.

Whether the Review Panel erred at law in assessing the attendance of the defendant’s solicitors at the hearing.

There was no express complaint to any of the assessors that the invoices were not disbursements. If what is complained of is lack of opportunity to make submissions about the redacted invoices at all, that is without substance, as this opportunity was clearly provided.
In the course of the hearing (Tcpt 5 - 6 13 14), the grounds of appeal changed again. They then became:

The Review Panel allowed invoice costs even though these were so heavily redacted the plaintiff could not work out what they were.

The Review Panel erred in not requiring the defendant to substantiate the fairness of the invoices in that they had not identified on what basis the mesne profits needed to be recalculated.

The Review Panel and Costs Assessor would accordingly have had no material upon which to make a determination as to the invoices as there was insufficient detail available to them (notwithstanding both being supplied with unredacted copies, to the knowledge and apparent consent of the parties).

The bill of costs did not disclose a reasonable basis for concluding that the costs invoiced were reasonable.

This all changed again in the course of the hearing when the submission was made that the costs of a professional consultant who was not retained as a witness for the hearing in question could not fairly and reasonably be charged to the other party on a party/party basis: Tcpt 63.
These problems were compounded when the plaintiff brought an additional ground or sub-ground, which had not been a matter raised before either the Assessor or the Review Panel, namely that costs for the consultations which took place between the solicitors and the consultants should also not be permitted. Essentially what the plaintiff sought was an order not only that all fees for the consultants should be reduced to zero (as opposed to unredacting them, or otherwise endeavouring to determine their reasonableness) but so should the fees of the solicitors relating to the seeking of the advice reflected in the invoices. No attempt had been made to ascertain what this sum would be and no figures will put before me as to how, were I to allow this ground of appeal, I would ascertain what that could those costs would be, it being the task of the judge hearing this appeal to make such an assessment.
It is unsurprising that there have been so many shifts of grounds and new issues raised in this appeal; the same problem occurred in the litigation as well. In Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd (No 12) [2019] NSWSC 916, Kunc J observed at [4]:

“It is necessary to set out the procedural history of what followed after delivery of the Principal Judgment, if only to explain why the hope of the Court, and no doubt shared by the parties, that the remaining issues could be resolved promptly in one further hearing proved to be unfounded. Without intending to be critical of anyone, the subsequent history was consistent with what had gone before, namely that new issues seemed to arise at every turn.”

Ms Scott submits that as a matter of fairness, the plaintiff should be held to the grounds of appeal pleaded in the Summons, and should not be permitted to raise grounds which are not only not contained in the Summons but which were not raised before the Costs Assessor or Review Panel. There is some force in this submission, as the result was that the hearing being unable to be completed in the allocated time and Ms Scott, who was not able to speak to her submissions on the appeal, had to respond in writing.
A second factor is that courts seek to deal with costs appeals as efficiently and speedily as possible because of the undesirability of satellite litigation on costs. This places a burden on the court because there are generally thousands of pages of documents and submissions to read, and very little time to do so. In A.C.N. 627 087 030 Pty Ltd t/as Yates Beaggi Lawyers v Poche [2024] NSWCA 145 at [67], Stern JA noted “the importance of a careful focus upon the nature of the error relied upon if such applications are not to lead to a disproportionate burden upon both litigants and the Court.”
Notwithstanding the difficulties faced by this court in dealing with all these additional grounds, and the persuasive submissions of Ms Scott, I consider I should endeavour to deal with Mr Rogers’ submissions. Next year will mark a quarter of a century since these proceedings were commenced and it is important for the court to do all it can to ensure finality of this lengthy litigation.

Consideration of the consultants’ fees on assessment

As examination of the documentation provided to the Costs Assessor and the Review Panel demonstrates, the objections raised by Macquarie to the consultant fees were made on a different basis to that now made. According to paragraph 14.1 (CB 367) of the submissions on assessment, the objection to these claims was made on very precise terms, namely only to complaints concerning the need to know who had undertaken the work, the date on which work was undertaken, what work was undertaken, the hourly rate applied and how the sums claim were calculated. It cannot be in dispute that all of this information (except what work was undertaken) was set out in the redacted invoices.
On 4 July 2022, Sydney provided its response to Macquarie’s other objections to these invoices, making the general observation (as to “what work”) that these fees related to the recalculation of the award of mesne profits (CB 442) and explaining that the Paxon bills were asserted (unsuccessfully: see paragraph 145 of the Assessor’s findings) to be claimable, as their report of 5 November 2019 was still considered and used by KordaMentha in its subsequent calculations. More importantly for the purposes of this appeal, on 25 July 2022, Sydney’s solicitors provided the Costs Assessor with copies of the unredacted invoices for both KordaMentha and Paxon. There was no complaint about this procedure at the time from Macquarie.
The Costs Assessor went on to make findings (at paragraphs 140 – 145) as follows:

“140. The Costs Respondent objected to all claims relating to the expert consultant fees claimed by KordaMentha and Paxon Consulting Group on the basis that insufficient detail has been provided concerning, who undertook the work, the date on which work was undertaken, what work was undertaken, hourly rate applied and how sums claimed were calculated.
141. Further, it submitted that as a proportion of work took place prior to the commencement of the appeal, it does not fall within the scope of the costs orders and accordingly, should not be allowed on assessment.
142. The Costs Applicant submitted that the fees of KordaMentha Pty Ltd (items 1167- 1171) are claimed where they relate to the re-calculation of the award of mesne profits. Fees of Paxon Group (items 1172) are also claimed on the basis that the information in their report dated 5 November 2019 was considered and utilised by KordaMentha in their calculations. It submitted that these costs fall within the scope of the costs order.
143. The Costs Applicant provided invoices.
144. In my view the costs given the complexity of the issues and the amounts involved are not excessive.
145. Having said that I disallowed the first invoice from KordaMentha, item 1167 as it apparently related to the proceedings at first instance.”

On 30 November 2022, Macquarie filed an application for review of the Costs Assessor’s determination (CB 525). Fourteen grounds were raised. The complaint about the invoices was as follows:

“14.1 The review respondent objected to all claims relating to the expert consultant fees claimed by KordaMentha and Paxon Consulting Group on the basis that insufficient detail had been provided concerning:
- Who undertook the work
- The date on which work was undertaken
- What work was undertaken
-Hourly rate applied
- How sums claimed were calculated.
14.2 It would appear that the review respondent provided the relevant invoices to the Assessor at some stage during the assessment process (see paragraph 143 of the Reasons). The assessor accepted the reasonableness of the invoices in full (with the exception of the first invoice) but failed to allow the review applicant any opportunity to consider the reasonableness of the claims or to prepare submissions in that regard.”

The Review Panel wrote to the parties on 15 February 2023 setting out a comprehensive review of the issues they considered to be important. At paragraphs 19.1 and 19.2 (CB 553) the following observations were made concerning expert consultant fees:

“19.1 The panel will give SLHD the opportunity to provide the information referred to at 14.1, and Macquarie the opportunity to then raise particular objections or provide particular documents, information or material relating to the consultant’s costs.
19.2 It is important to note that an assessor, like a panel, seldom has particular expertise in arriving at reasonable costs for experts in particular fields. Normally of [sic; should be “if”] a party wants to dispute such costs, material from another expert would be appropriate.”
[Emphasis added]

Paragraph 19.2 is of particular importance. The Review Panel made it clear that expert evidence would be necessary if there was to be a challenge as to the necessity of the work, as opposed to the “who and when” questions that Macquarie was asking. It is clear from the correspondence that the challenges both at assessment and on appeal were identified as relating to who undertook the work and when, and were not some part of a greater challenge to reasonable costs for an expert in this field. It was in these circumstances that the Review Panel made it clear to Macquarie that, if the fees were to be challenged on the basis of reasonable costs for experts in the field, this would have to consist of “material from another expert”. This was never done.
Sydney replied to the submissions in relation to the KordaMentha and Paxon bills as follows (see the covering letter at CB 566):

Response to Ground 14
“3…[SLHD] submits that the Costs Assessor has not erred in his determination with respect to Ground 14 of the Review Application. The Costs Assessor provided adequate opportunity to both parties to prepare submissions in relation to expert consultant fees. 4. Macquarie objected to the fees of KordaMentha and Paxon Consulting Group in full and submitted that further information of these invoices was required as part of the assessment process. The Costs Assessor was aware of the objection made to the fees of KordaMentha and Paxon Consulting Group and requested that SLHD provide copies of these invoices providing additional information. These documents were provided to the Costs Assessor by letter dated 25 July 2022 but were not provided to Macquarie due to concerns around confidentiality and waiver of privilege. 5. The Costs Assessor reviewed the documents provided and made a determination with respect to Macquarie’s objections, in particular see the Costs Assessor's Reasons for Determination (Reasons) at [140] – [145] and Schedule 1 to the Reasons (Bill of Costs in an excel format - as assessed) as provided by the Costs Assessor (Schedule 1). Notably, the Costs Assessor disallowed the costs claimed in the first invoice of KordaMentha as detailed at item 1167 of Schedule 1.” (CB 568)

Macquarie lodged further submissions of the panel on 29 March 2023; paragraph 4 set out its position concerning the expert consultant fees as follows:

“4.1 February 2023 stated that: The panel require any response and any submissions on those issues and in relation to Corda Mentha and Paxon Consulting Group, the details sought at ground 14.1 of the grounds from SLHD to reach the panel and Macquarie by noon 16 March 2023.
4.2 For ease of reference the details sought at objection 14.1 of the grounds in relation to the fees claimed by KordaMentha and Paxon Consulting Group were: - Who undertook the work - The date on which work was undertaken - What work was undertaken - Hourly rate applied - How sums claimed were calculated 4.2 This information was to be provided to the Review Panel and the review applicant by 16 March 2023.
4.3 The submissions of the review respondent of 16 March 2023 failed to provide those details and the information sought at objection 14.1 of the grounds remains outstanding. As a result, the review applicant cannot comply with paragraph 23.3.3 of until such details have been provided.
4.4 It is therefore submitted that either the Panel make a further direction for the provision of these details or these items be disallowed as they are unreasonable in the circumstances to be made payable by the review applicant.
4.5 The review applicant was unable to consider the reasonableness of these costs claimed without the provision of reasonable information during the costs assessment process and cannot do so at this Review.”

On 31 March 2023 the Review Panel sent the following letter to the parties (CB 655 – 657):

“Dear Parties
Re: Review Applicant – Macquarie International Health Clinic Pty Ltd Review Respondent – Sydney Local Health District Costs Review No. 2022/157239
1. Document received
The panel received a letter of 29 March 2023 attached to the letter was a document headed “review applicant’s submissions in response to review panel’s letters dated 15 February 2023 and 23 March 2023” of 3 pages, followed by specific objections. The sending email indicated a copy had been sent to SLHD care of their solicitors Clayton Utz.
2. Next Step SLHD is to provide final documents, information and submissions, as set out in the panel’s letter of 15 February 2023 by 20 April 2023.
3. Additional direction?
The panel notes the submission made by Macquarie that in relation to the fees of expert consultants, the panel should give a direction for provision of certain details namely:
3.1 Who undertook the work;
3.2 The date on which the work was undertaken;
3.3 What work was undertaken;
3.4 The hourly rate applied; and
3.5 How the sums claimed were calculated.
The panel itself has the invoices from Paxon Group and from KordaMentha. SLHD has provided that material on the basis that it is confidential and privileged from production.
A brief perusal of the Paxon Group invoice suggest that there is little if anything in that invoice which might give any insight into the advice given to SLHD or the conduct of the litigation for SLHD.
With the KordaMentha invoices there may be some matters that it is appropriate to protect on the basis of litigation, privilege and confidentiality.
The panel’s suggestion is that SLHD go carefully through the Paxon Group invoice and the KordaMentha invoices and redact only those entries that may genuinely give rise to issues of confidentiality or litigation privilege, and then send the invoices to Macquarie.
The alternative may be the panel making a direction for provision of the abovementioned details. The making of that direction would really be very similar to redacting the invoices.
The panel invites submissions and suggestions about this issue from SLHD, which should reach the panel and Macquarie as soon as possible and in any event by 20 April 2023.
The panel notes that it may well be in the interests of both parties to deal quickly and efficiently with this issue. From the point of view of SLHD, the receiving party on respect of the costs, whilst the panel has issue a determination lifting the suspension to the extent of $844,568.91, one would normally expect that SLHD want the matter resolved and any balance of the costs paid.
From the point of view of Macquarie, interest is running at 9.1%, the rate of interest on judgments. That is a higher interest rate than paid on most borrowing, and certainly a higher interest rate than paid on deposits or savings. Thus it may be in the interests of Macquarie to deal quickly with this.
Finally, the panel encourages the parties to negotiate to try to achieve a settlement with which they can both live. However any such negotiations will not delay the timetable the panel has set or the completion of this review.”
[Emphasis added]

The invoices sent on 20 April 2023 appear at CB 659-670. As previously noted, all but one of the items in the list of information requested by Macquarie, namely who did the work and when, was fully complied with. In his oral submissions on 20 June 2024, Mr Rogers pointed to the request for “what work was undertaken”, submitting that this was the key missing feature.
There are three problems with this submission, all of which require repetition of points already made.
The first is that Macquarie was plainly told, when the issue of the KordaMentha privilege claim was made, that an assessor “seldom has particular expertise in arriving at reasonable costs for experts in particular fields” and that “normally” where such a challenge was made, “material from another expert would be appropriate” (CB 553). The Panel actually repeated this phrase in its determination (at paragraph 21.11), adding that for what it was worth, despite not having such expert assistance, they considered the fees reasonable. Mr Rogers asked rhetorically how Macquarie could do so when they did not know from the invoices what work was being done; Ms Scott replied that they knew because they had the unredacted records of the solicitors who consulted them (I would add to this that Macquarie could have consulted its own experts if it needed expert opinion).
The second problem was that Macquarie was invited, when the issue of privilege and confidentiality claims came up, to ask the Review Panel to make a direction in relation to the redaction (as opposed to leaving it to the parties). Once again, this invitation was not taken up.
The third problem is that the KordaMentha invoices were disbursements. The nature of their work was not legal but mathematical. This was why the assessors, in their correspondence, made it plain that the challenge to reasonableness could not be dealt with in the absence of information or a report from another expert. The same principles for the reasonableness of legal work having to be established does not apply to disbursements.
It was no doubt with these factors in mind that Sydney responded to the correspondence as follows:

“28. The Costs Assessor provided adequate opportunity to both parties to prepare submissions in relation to expert consultant fees.
29. The Costs Assessor was aware of the objection made to the fees of KordaMentha and Paxon Consulting Group and requested invoices (providing additional information) from the Review Respondent. These were provided to the Costs Assessor by letter dated 25 July 2022. The Costs Assessor made a determination with respect to these objections, in particular see Reasons at [140] – [145] and Schedule 1 – and notably the Costs Assessor disallowed the costs claimed in the first invoice of KordaMentha as detailed at item 1167.
30. The Review Respondent also refers the Review Panel to the comments at paragraph 39 below.”

Sydney went on to say at paragraph 39 (CB 679):

“39. The Review Respondent has provided redacted copies of the relevant invoices to the Review Panel and the Review Applicant. The Review Respondent considers that the information contained in the redacted invoices is sufficient for the Review Applicant to make further submissions in relation to the expert consultant fees.”

The Review Panel wrote on 27 April 2023, noting receipt of redacted invoices (at all relevant times the panel had the unredacted copies) and added that it would allow time to Macquarie to make further submissions on these items (CB 688).
On 18 May 2023, Macquarie provided further submissions to the panel (CB 690 – 692):

“5 Expert consultant fees
5.1 The Review Applicant acknowledges receipt of the expert consultant invoices as claimed in the bill of costs, albeit in a highly redacted form, and does not propose to undertake a detailed item by item analysis of the costs claimed therein. However, the Review Applicant makes the following observations in relation to the invoices provided:
Korda Mentha lnvoices
5.2 lnstructions concerning the relevant portion of work was provided to Korda Mentha on 23.10.19 (item 6 of the bill of costs). The work claimed in the invoice dated 16.10.19 relates to work undertaken from 19.8.19 to 11.10.19. As this work took place prior to the provision of instructions, it is submitted that this work does not fall within the scope of the costs order and should be disallowed.
5.3 The Review Applicant submits that some deduction should be made to the balance of the Korda Mentha invoices on the following grounds:
The level of redaction applied is so extreme that itis impossible to ascertain what work was actually undertaken. See for example work undertaken on 26.11.19 wherein 1.8 hours have been claimed to review an email and to undertake some other unidentifiable work. ln addition, on 6.4.20, a 3.1 hour claim, has been made but the entirety of the description of work has been redacted.
The level of detail provided in the unredacted portions of the invoices is insufficient to allow an assessment as to whether the costs claimed are fair and reasonable in the context of the matter. For example, multiple claims have been made in relation to "various emails". No detail has been provided as to whether the emails were perused or prepared. No detail has been provided as to the length or content of emails. ln addition, a number of lengthy claims have been made in circumstances where insufficient detail has been provided to justify the claim. See for example, an 11.1 hour claim made on 5.5.20
A significant number of dual attendances and internal conferencing has taken place. This inefficient work practice has resulted in excessive and unreasonable costs.
lnconsistent time costing practices have been adopted that have unreasonably inflated costs. For example, on 30.3.20, 0. Stone claimed 1.2 hours to attend a teleconference in circumstances where W. Psaros claimed 1.9 hours for the same teleconference. By way of further example, on 28.4.20, three people attended the same conference and have claimed different times for the attendance (being 3.8 hours, 2.5 hours and 2.1 hours respectively).

5.4 Finally, the invoice dated 5.6.20 provides absolutely no itemisation or detail as to the work undertaken. The single cover page provided is entirely insufficient to allow an assessment as to what work was undertaken or whether it was reasonable in the circumstances. The entirely of this invoice should be disallowed.
Paxon Group lnvoice
5.5 The Paxon Group have claimed 19 hours to prepare a 5 page report (see item 14 of the bill of costs). It is submitted that this claim is excessive and unreasonable. The Review Applicant submits that no more than $5,100 (being 50% of the total claimed) would be reasonable in this regard.”

On 1 June 2023, Sydney provided submissions in response as follows:

“12. While it is unusual to claim experts’ fees as part of the costs of an Appeal, the Notice of Appeal filed by the Review Respondent sought to inter alia re-calculate the assessment of mesne profits and interest, and on this basis: - the fees of KordaMentha Pty Ltd are reasonably claimed in the Application for Assessment as they related to the re-calculation of the award of mesne profits; and - the fees of Paxon Group are reasonably claimed as the information provided in their report dated 5 November 2019 was subsequently considered and utilised by KordaMentha in their calculations.
13. The Review Respondent confirms that the Costs Assessor made a determination with respect to the expert’s fees and notably disallowed the costs claimed in the first invoice of KordaMentha as detailed at item 1167 and allowed all other fees. The Review Applicant appears to be re-agitating the same objections.
14. The detail provided in the redacted invoices of KordaMentha is adequate for a determination to be made in relation to the expert’s fees and this is not a reason to disallow fees that are reasonably claimed.
15. The fees of KordaMentha are within the scope of the costs order and are reasonable. The hourly rates and time claimed by the expert are reasonable, particularly noting the complicated calculations required, that the issues in the Appeal were complex and that the matter was of great importance to both parties.
16. The invoice of KordaMentha dated 5 June 2020 (Invoice #1172) clearly falls within the scope of the costs order and is work related to the hearing; the Appeal was heard in the period 25 to 29 May 2020 and Judgment was not handed down until 2 November 2020. This invoice should not be disallowed, as suggested by the Review Applicant.
17. The total time claimed in the invoice of Paxon Group is not unreasonable when considered in the context of the complex calculations required and that the information provided in the report was directly relevant and relied on to re-calculate the assessment of mesne profits.”

The Review Panel handed down its determination on 20 October 2023 and made the following findings at paragraph 21 of the determination:

“21.1 Ground 14 is a submission that the assessor did not provide adequate opportunity for submissions in relation to expert consultant’s fees.
21.2 The panel examined the correspondence with the parties during the assessment. Both parties were legally represented. The assessor had Macquarie’s objections and the response of SLHD. The assessor had the invoices. The assessor had the Appeal Books sent by way of file sharing with a letter of 25 July 2022. The invoices were sent with a letter of the same date. Those documents were provided in response to the assessor’s requirements in a letter of 2 June 2022. A copy of that letter from the assessor of 2 June 2022 was sent to Macquarie on the same date by letter to S Moran & Co. The assessor wrote “if you wish to make any submissions … I invite you to provide me written submissions six weeks after receipt of the electronic bills …”.
21.3 Although Macquarie was legally represented, and was aware that the assessor had required the invoices, it appears no submission was made to the assessor that those invoices should have been provided to Macquarie. On that basis, it was reasonable for the assessor to complete the assessment using those invoices and the other material.
21.4 In any event, the panel notes that by the time Macquarie made the May 2023 review submissions, Macquarie had the Korda Mentha and Paxon Group invoices. Thus the issue no longer arises. The panel reassessed costs.
21.5 At 5.2 of the May 2023 Macquarie review submissions, Macquarie submitted that that work “took place prior to the provision of instructions”. That work was done after the Supreme Court judgment. It was work done for the appeal, which had been notified to SLHD.
21.6 The fact that it was before the first item of work formally claimed in the fee items in the bill is not of significant relevance. The issue is whether the expert material was obtained for the appeal. The panel is satisfied that the work was done for the appeal.
21.7 The next issue raised with the Korda Mentha invoices is that some level of reduction should be made.
21.8 The panel notes that each of Macquarie and SLHD were and are legally represented. The panel notes that Macquarie has had the Korda Mentha and Paxon invoices since well prior to the [sic] those May 2023 submissions, for a period of around 7 months from the panel’s letter of 15 February 2023 the panel gave Macquarie the opportunity to raise particular objections and provide particular documents, information and material relating to consultant’s costs when the panel set a timetable for provision of material, submissions and responses in that letter.
21.9 The panel is satisfied that the amounts claimed were paid to Korda Mentha.
21.10 It is also important to note that Macquarie has the reports produced.
21.11 An assessor, like a panel, seldom has particular expertise in arriving at particular costs for experts in a particular field. For what it is worth, from the knowledge of the panel members of accounting and damages calculation work, the rates applied by Korda Mentha appear to be reasonable market rates.
21.12 Normally if a party wants to dispute such costs, some material from an expert in that field would be appropriate. Macquarie did not provide any such material.
21.13 The panel accepts that in a few respects there is not a great deal of detail of what was done. However there is nothing from an expert in the same area that would satisfy the panel that further detail would assist, or that prima facie, amounts claimed were unreasonable.
21.14 That is not to reverse the onus on SLHD to satisfy the panel that the costs were proportionately and reasonably incurred and proportionate and reasonable in amount. The panel is so satisfied on the basis of the details in the bill, the invoices, and the evidence that these amounts were paid and are likely to be reasonable.
21.15 As nothing from an expert in Korda Mentha’s field was provided, the panel accept for the most part that the amounts claimed by Korda Metha were proportionately and reasonably incurred and proportionate and reasonable in amount.
21.16 The panel makes similar findings in relation to the Paxon Group invoices.
21.17 The fact that the report was 5 pages is not of great relevance. Often it is more difficult to arrive at a succinct statement of facts and opinion than a voluminous statement.
21.18 Again on the basis of the information in the bill, the information in the invoices, and the report itself, and the payment of Paxon Group invoice, the panel is satisfied that the amount claimed was proportionately and reasonably incurred and proportionate and reasonable in amount in connection with the Court of Appeal proceedings.
21.19 The panel finds no basis for the reduction by $5,100.00 suggested by Macquarie.
21.20 Ground 14 is not made out.”

The statements in paragraph 21.8 and 21.10 are not correct; Macquarie only had the redacted bills, and they only received these on 20 April 2023 as part of the final submissions (CB 655, 656) The letter enclosing these redacted copies is at CB 658 and says:

“We refer to the Review Panel's letter dated 31 March 2023 and the Review Panel's suggestion in that letter regarding the provision of invoices of Korda Mentha and Paxon Consulting Group to your client, redacted for confidentiality or privilege. In that letter, the Review Panel also invited submissions and suggestions on this issue from our client, by 20 April 2023.
We are instructed to accept the Review Panel's suggestion, as set out above.
Accordingly, we enclose redacted copies of invoices rendered by Korda Mentha and Paxon Consulting Group. We note that these invoices are provided on the basis that:
• disclosure is for the sole purpose of determining the costs review matter referred to above;
• you agree to treat the information disclosed as confidential; and
• by providing the material to you, SLHD has no intention of waiving any privilege in the documents.”

This is clear evidence that the Review Panel had put forward a proposal which Sydney had accepted and which Macquarie, by its silence in terms of objections to this proposed course, also accepted. Ms Scott submitted that if a challenge had been brought to the redaction process, Sydney and KordaMentha would have been able to determine whether, in those circumstances, a claim for privilege should be made at all.

4.2 The costs respondent relies on the statement of Young AJ in Gibson v Drumm & Others [2016] NSWSC 570 at [20]: “Again, when there are two people in a firm, solicitors cannot charge for both persons reading counsel’s advice etcetera unless there is a very good reason for two persons being involved such as for instance where one solicitor or clerk is dealing with the intellectual property side of a case and the other with the presentation of evidence." (emphasis added)
4.3 The costs respondent submits that the costs applicant has not provided a good reason for more than one solicitor to undertake the same work. Accordingly, these attendances should be disallowed.
5. CONSIDERATION CLAIMS UNREASONABLE
5.1 The costs respondent objects to the claims for "considering" without specifying the work undertaken as a result of the consideration as unreasonable so as to justify the claim itself or the time claimed as fair and reasonable.
5.2 In this regard, the costs respondent refers to the statements of Young AJ in Gibson v Drumm & Others [2016] NSWSC 570 at [19] - [21]:
[19] …However, items 45 and 52 are time spent 'considering strategy'.
[20] I am not too sure what this really means. However, one must remember what Hodgson JA said in Lawrence v Nikolaidis & Co (2003) 57 NSWLR 355 (CA) at 372-3 that costs are not allowed solicitors in relation to matters such as collation of documents for time spent in refreshing recollection or making notes and like matters.
[21] … Planning strategy in the early stages of a Federal Court proceeding does not prima facie amount to something for which the client should pay. The client should not be paying for the internal intellectual processes of the solicitor. He or she will pay when those processes are disclosed in a communication to which the client will either agree or disagree. The mere fact that a solicitor plans a strategy is not in itself a benefit to the client unless that is communicated." (emphasis added)”

The response (CB 434 – 5) was as follows:

“16. The Costs Applicant disputes the Costs Respondent’s objections to duplication in the costs claimed.
17. The Costs Respondent has objected to items on the basis that there is “duplication” where clearly different tasks are performed and different time claims are made. See for example objections to items 789-794, 797-802, 806-811, 815-819, 824-830 which relates to the attendance of a number of persons at the hearing. A team approach, utilising appropriately qualified solicitors, paralegals and counsel is more than reasonable and not unusual, in the circumstance of this matter. Further the balance of work between the legal representatives is both fair and reasonable.
18. Further the Costs Applicant is of the view that the case referred to at paragraph 4.2 does not have application to the issues in this matter; the decision in Gibson v Drumm & Others [2016] NSWSC 570 dealt with a gross sum costs order. The circumstances of each matter must be considered on its own merits and not in isolation. In that case the total of the costs were ordered in the sum of $10,170 which is completely different to the costs in this matter; Gibson commenced in the Federal Court in relation to bankruptcy and was transferred to the Supreme Court and some costs were costs of a solicitor litigant.”

Mr Bartos, the Costs Assessor, set out at paragraphs 59 – 69:

“59. The Costs Respondent submitted that it does not object to the involvement of additional solicitors, where separate tasks were being undertaken and where this was reasonable in the circumstances. However, it objected in relation to the claims for more than one solicitor to undertake the same work on the basis that this is unreasonable on an ordered costs basis. It stated that, there are an extraordinary number of attendances that have been duplicated by more than one solicitor and in some instances, by up to five solicitors. By way of example, five solicitors attended each day of the hearing despite three Counsel also being in attendance. This has resulted in a total of $92,557.60 being incurred over the course of five days only (excluding Counsel fees).
60. The Costs Respondent relied on the statement of Young AJ in Gibson v Drumm & Others [2016] NSWSC 570 at [20]: “Again, when there are two people in a firm, solicitors cannot charge for both persons reading counsel’s advice etcetera unless there is a very good reason for two persons being involved such as for instance where one solicitor or clerk is dealing with the intellectual property side of a case and the other with the presentation of evidence."
61. The Costs Respondent submitted that the Costs Applicant has not provided a good reason for more than one solicitor to undertake the same work and accordingly, those attendances should be disallowed.
62. The Costs Applicant rejected the Costs Respondent’s objections to duplication in the costs claimed.
63. The Costs Applicant stated that the items objected to do not involve “duplication” but involve different tasks performed and different time claims are made.
64. It submitted that a team approach, utilising appropriately qualified solicitors and counsel is more than reasonable and not unusual, in the circumstances of this matter.
Further, the balance of work between the legal representatives is both fair and reasonable.
65. The Costs Applicant further submitted that; the decision in Gibson v Drumm has no application to this matter. It dealt with a gross sum costs order. The circumstances of each matter must be considered on its own merits and not in isolation. In that case the total of the costs were ordered in the sum of $10,170, which is completely different to the costs in this matter; Gibson commenced in the Federal Court in relation to bankruptcy and was transferred to the Supreme Court and some costs were costs of a solicitor litigant.
66. In my view Young J’s observation in Gibson v Drumm have to be viewed in the context of that case, a case very different from the present.
67. Once you accept that a team approach is reasonable in the circumstances of a case and especially a case involving very large sums of money I would expect that there would be a number of people involved on certain tasks, for example I would expect some documents such as submissions to go through several hands before being finalised or for several persons to review and comments on certain documents served by the other side. Ultimately it is an issue of reasonableness. I certainly would not expect given the seniority of the persons involved for most documents, especially routine correspondence to be perused by both solicitors and counsel.
68. Where I was of the view the involvement of several lawyers was not fair and reasonable I adjusted the relevant items accordingly.
69. Specifically, whilst I accept that this was an important case in my view an attendance by four solicitors and a paralegal in addition to three counsel at the hearing of an appeal was not fair and reasonable.”

The complaint to the Review Panel was put on similar grounds:

“5. The Assessor erred by failing to properly consider the general objection concerning consideration claims
5.1 The Assessor erred by failing to properly consider the review applicant's objection as to "consideration" claims, noting that in excess of 100 such claims were made in the bill of costs.
5.2 It is submitted that the Assessor incorrectly accepted the review respondent's submission that the word "considering" could easily have been replaced with "perusing", "reading" or "reviewing". The bill of costs as filed clearly delineated between reading, perusing and reviewing claims. Consideration attendances had been claimed as separate and distinct aspects of work and largely related to the consideration of "issues". No particularisation was provided as to the actual work undertaken as a result of these consideration claims and accordingly, it is clear that these claims related to the internal intellectual processes as described by Young in Gibson v Drumm & Others [2016] NSWSC 570 at [19] - [21]:
“[19] ... However, items 45 and 52 are time spent 'considering strategy'.
[20] I am not too sure what this really means. However, one must remember what Hodgson JA said in Lawrence v Nikolaidis & Co (2003) 57 NSWLR 355 (CA) at 372-3 that costs are not allowed solicitors in relation to matters such as collation of documents for time spent in refreshing recollection or making notes and like matters.
[21] ... Planning strategy in the early stages of a Federal Court proceeding does not prima facie amount to something for which the client should pay. The client should not be paying for the internal intellectual processes of the solicitor. He or she will pay when those processes are disclosed in a communication to which the client will either agree or disagree. The mere fact that a solicitor plans a strategy is not in itself a benefit to the client unless that is communicated."

5.3 It is submitted that was not enough for the review respondent to say that there had been an attendance or a number of them unless it could be shown that necessary and specific advice had been given or instructions received: Re Pender (1847) 50 ER 632; Re Cosedge (1885) 29 SJ 306.
5.4 The review applicant submits that the excessive number of consideration claims by multiple practitioners has significantly and unreasonably inflated costs and accordingly, they cannot be considered to be fair and reasonable.”

The Review Panel made the following observations (at CB 550 – 1):

“10. Ground 4: excessive and unreasonable amount of duplicated work
10.1 At 4.2, Macquarie refers to a decision of Gibson v Drumm & Others [2016] NSWSC 570 and in particular a comment at paragraph 20 of the decision of Young JA.
10.2 The judgment was a judgment on whether lump sum costs should be ordered, and if so, the amount of such costs. His Honour examined what might fairly be described as a solicitor’s bill and in paragraphs starting with paragraph 17, made observations about that bill. Those observations related to the facts of that particular matter, the claim was for solicitor’s costs totalling $14,734.00 and barrister’s fees of $7,730.00, referred to the Supreme Court from the Federal Court. The party to receive the costs, Mr Drumm, sought a gross sum costs order against Dr Gibson.
10.3 In the context of that particular matter, His Honour made some observations which included “again, when there are two people in a firm solicitors cannot charge for both persons reading counsel’s advice etc, unless there is a very good reasons for two persons being involved, such as for instance where one solicitor or clerk is dealing with the intellectual property side of a case, and the other with a presentation of evidence”. The case involved was not a complex case. It was not the sort of matter that would have warranted working in teams. It certainly did not involve anything like the amount of over $85 million in damages and interest that was the subject of the Court of Appeal proceedings. It was a judgment where His Honour had to arrive at a lump sum for costs. If general observations relevant to assessment generally made by His Honour Young JA are to be relied upon, His Honour’s observations in Old v Hodgkinson; Old v McInnes [2009] NSW SC 1160, made on 3 November 2009 are perhaps more relevant. The panel enclose a copy of a brief summary of His Honour’s remarks in that case.
10.4 Of course that case, like Gibson v Drumm involved costs in proceedings commenced prior to the application of the Uniform Legislation.
10.5 If the submission at 4.2 is meant to be an invariable rule, then with the qualification expressed “unless there is a very good reason for two persons being involved …” it would largely be true.
10.6 However as the panel has previously indicated the test is whether in the circumstances at the time the work was done to deal with the Court of Appeal proceedings, the issue is whether the work was proportionately and reasonably incurred. That test cannot become hardened and restricted into a series of invariable principles.
10.7 The panel will look at whether it was proportionate and reasonable to involve two practitioners, internal conferences and the like. In doing so, the panel will consider the many relevant matters about the Court of Appeal proceedings, some of which are referred to above.”

The Review Panel found:

“12. GROUND 4: EXCESSIVE and UNREASONABLE DUPLICATION
12.1 At 4.2, Macquarie refers to a decision of Gibson v Drumm & Others [2016] NSWSC 570 and in particular a comment at paragraph 20 of the decision of Young JA.
12.2 The judgment was a judgment on whether lump sum costs should be ordered, and if so, the amount of such costs. His Honour examined what might fairly be described as a solicitor’s bill and in paragraphs starting with paragraph 17, made observations about that bill. Those observations related to the facts of that particular matter. The claim was for solicitor’s costs totalling $14,734.00 and barrister’s fees of $7,730.00, referred to the Supreme Court from the Federal Court. The party to receive the costs, Mr Drumm, sought a gross sum costs order against Dr Gibson.
12.3 In the context of that particular matter, His Honour made some observations which included “again, when there are two people in a firm solicitors cannot charge for both persons reading counsel’s advice etc, unless there is a very good reasons for two persons being involved, such as for instance where one solicitor or clerk is dealing with the intellectual property side of a case, and the other with a presentation of evidence”.
12.4 That case was not a complex case. It was not the sort of matter that would have warranted working in teams. It certainly did not involve anything like the amount of over $85 million in damages and interest that was the subject of the Court of Appeal proceedings. It was a judgment where His Honour had to arrive at a lump sum for costs.
12.5 If general observations relevant to assessment generally made by His Honour Young JA are to be relied upon, His Honour’s observations in Old v Hodgkinson; Old v McInnes [2009] NSW SC 1160, made on 3 November 2009 are perhaps more relevant. The panel attaches a brief summary of His Honour’s remarks in that case.
12.6 The panel notes also that both Gibson v Drumm and Old v Hodgkinson were decided under the previous legislation, not under the Uniform Legislation.
12.7 If the submission at 4.2 is meant to be an invariable rule, then with the qualification expressed “unless there is a very good reasons for two persons being involved …”, that rule would largely be correct.
12.8 The real issue is whether the work for which the costs were claimed in the bill before the panel was proportionately and reasonably incurred. That test cannot be hardened and restricted into a series of invariable principles.
12.9 The panel looked at all the items in the bill, the objections, responses, Macquarie review submissions, SLHD review submissions and the primary material such as the Court books.
12.10 The panel conducted a reassessment of the costs claimed. In doing so, the panel first looked at whether it was proportionate and reasonable to do the work in the manner referred to in the bill, for example with two practitioners, internal conferences and the like. Then if it was so reasonable, the panel looked at the proportionate and reasonable costs in the circumstances at the time the work was done.
12.11 The panel considered the matters about the Court of Appeal proceedings set out above at Section 8, Background.
12.12 For the most part, the panel allowed more than one solicitor to be involved in the work, and the internal conferences.
12.13 The most significant reduction made by the panel (which was also made by the assessor) was that the assessor did not allow (and the panel did not allow), a second partner to attend the hearing of the Court of Appeal proceedings.
12.14 For the most part, ground 4 was not made out.
12.15 The exact approach taken by the panel can be seen from the attached schedules.”

How many is “too many”?

As was the case with the appeal in relation to the consultants’ disbursements, the plaintiff’s claim of how many lawyers should be permitted to be at the hearing changed not only during the assessment and appeal but also in the course of these proceedings. Initially the plaintiff brought the appeal on the basis that only one solicitor should have been permitted to instruct at the hearing. Mr Rogers, during the course of the appeal, instead put that the defendant should be allowed the costs of one partner and one lawyer (Tcpt 11), as opposed to one partner, one senior associate, one lawyer and a paralegal. Mr Rogers made it clear that there was no longer any attack made on the number of counsel at the bar table, all of whom were now acknowledged to be required.
Mr Rogers supports this claim by referring (submissions, paragraphs 74 – 77) to concerns about the use of multiple counsel in other judgments, most of which not only predate the commencement of the costs legislation and the Civil Procedure Act 2005 (NSW). not also the commencement of the twenty-first century, but even the commencement of the Civil Procedure Act 2005 (NSW): Stanley v Phillips (1966) 115 CLR 470 (at 479); Australian Blue Metal Ltd v Hughes [1970] 2 NSWR 119; Planet International Ltd v Turfella Pty Ltd (Supreme Court of NSW, Young J, 4 November 1991, unrep); GBT Corporation Pty Ltd v Scott (1994) 116 FLR 266; Cachia v Hanes (1994) 179 CLR 403.
The first two of these judgments discuss the undesirability of a third counsel. This is a helpful analogy in these proceedings, but not for the reasons espoused by Mr Rogers. These decisions are helpful because there is no challenge to more than three counsel, or indeed any counsel, in the appeal before me. That is because it is conceded that the complexity of the case requires such representation at the bar table. The best way in which the sheer size of this case differs from the facts in these earlier decisions can be demonstrated by reference to the following extract from Dal Pont, “Law of Costs” at 17.92:

“The basic inquiry in determining whether a successful litigant should be allowed the costs of three counsel on taxation is equivalent to that which applies in respect of two counsel: ‘would a reasonable and prudent man acting with ordinary prudence have ventured into the court without three counsel?’ The factors that go to determining whether or not such a course is reasonable and prudent are therefore the same as those that determine the reasonableness and prudence of employing two counsel. However, in view of the fact that allowing three counsel further increases the costs of litigation for an unsuccessful litigant, courts have shown less willingness to allow three counsel than to allow two. To this end, it has been observed that ‘there is rarely a case in which [the employment of a third counsel] will be justified’, the employment of a third counsel is an ‘unusual expense’ in ‘ninety-nine cases out of a hundred’, and that to justify three counsel the case must be ‘wholly special and peculiar’, ‘very strong’, and involve ‘extraordinary complication and difficulty’.
It is therefore unsurprising to find manifold occasions where the costs of three counsel have been disallowed. An example of a case where the costs of three counsel were allowed is the 1970 decision of Australian Blue Metal Ltd v Hughes, involving complicated and difficult issues, all of which had to be investigated, pursued and argued; a trial of up to six weeks’ duration a considerable number of documents; general complexity; and great commercial importance to the parties. The authorities reveal various other instances of courts allowing three counsel, in disputes of considerable significance to the parties, punctuated by complication and difficulty. A more recent example is Electricity Generation Corporation v Woodside Energy Ltd in 2011, where the amount in dispute was around $40 million, raising issues pertaining to the parties’ contractual relationship that would persist for several more years; and the difficulty, complexity and importance of the case from the parties’ perspective was evidenced by the legal teams each retained. Conversely, the fact that the party ultimately burdened with costs had chosen not to engage multiple counsel may be a factor, coupled with others, disinclining a court or taxing officer to allow the successful party an allowance for multiple counsel. Relativity may carry some weight in this context.”

In the present case, unlike the “ninety-nine cases out of a hundred”, there was no complaint whatsoever by either party about the other having more than three barristers. There were, in fact, more than three, and on both sides. Why, then, would no similar numerical representation for the solicitors be required, given the high degree of solicitor preparation work necessary to assist counsel with the complex issues in the appeal arising out of this lengthy hearing?
Indulgences in relation to barristers have been permitted in proceedings over much shorter hearings involving less complex issues. Referring to a case concerning $40 million which was heard over ten days, the trial judge in Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 (S2) at [11] had the following to say:

“Counsel for the plaintiffs referred to counsel’s fees. The defendants were represented by three counsel. It is no longer necessary to obtain a certificate for senior counsel. The taxing officer now considers whether the briefing of second, or senior counsel, was reasonably necessary in the circumstances. The taxing officer is to allow the fees of more than one counsel where he or she is satisfied that the nature and circumstances of the case are such that the services of two counsel are required if the case is to be presented to the court in such a manner that justice can be done between the parties: Stanley v Phillips (1966) 115 CLR 470 ; [1967] ALR 197 ; (1966) 40 ALJR 34, 479. In a superior court the employment of two counsel upon the trial of a really substantial suit or action is usual and is regarded as a reasonable and proper precaution on the part of a suitor: Smith v Madden (1946) 73 CLR 129; [1946] ALR 337, 132; City of Mandurah v Hull [2000] WASCA 353 [5]. In Sundell v Queensland Housing Commission (1954) 94 CLR 531; (1954) 28 ALJR 296; [1955] St R Qd 175, 534–535, Webb J considered the engagement of three counsel. His Honour referred to the test: would a reasonable and prudent man acting with ordinary prudence have ventured into court without three counsel? His Honour also referred to dicta that the considerations when dealing with the question of a third counsel were the length of the documents, the time the case was likely to last, the amount involved and the commercial importance of the case. In this case, there were many lever arch files of documents. The case was listed for 10 days although in the end it was completed in four. Ms Arthur says in her affidavit that the amount in dispute was said by the plaintiff to be in the order of $40 million. The commercial importance of the case extends not only to the amount in dispute in this case but also to the fact that the issues in question were relevant to the contract between the plaintiff and the defendants which will not be concluded for several more years. The difficulty, complexity and importance of the case in the minds of both parties is attested to by the legal teams and the leading counsel retained by each party. In addition, there were five defendants, although they had the same interest in the proceedings. I am satisfied that this is an unusual case where the defendants were justified in retaining three counsel.”

This is even more the case where a firm of solicitors is conducting a long-running and complex case. Both the Costs Assessor and the Review Panel accepted that a “team approach” was warranted on both sides, that the members if the team had different roles and tasks, and that the complexities of the issues required representation at a much higher level than would generally be the case. Although little or no reference was made to the level of representation for Macquarie, it is clear from the names of the barristers and solicitors in the costs assessment material that Macquarie was fully represented by a team of solicitors as well as a similar number of counsel. “Mega-litigation” cases at first instance (such as Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) (2008) 225 FLR 1, where liability and quantum totalled 404 days) are no less complex on appeal (in Bell there were three appeals and a successful special leave application).
As the plaintiff, Macquarie played an important role in directing the form and content of the proceedings. The Review Panel made an evaluative judgment based on the decades of expertise that each member of this Panel had. They adjusted the allowance made by the Costs Assessor using their knowledge of how mega-litigation is conducted.
In Gazecki v McCabes Lawyers Pty Ltd at [43], Basten JA stated:

“What is clear, however, is that courts exercising jurisdiction under this provision must pay close attention to the terms of the statutory power and should not adopt statements from earlier cases dealing with different powers, unless persuaded that they remain applicable. Although the distinction between appeals on matters of law and appeals from the final determination of a costs assessment have been removed, it may, nevertheless, be appropriate to adopt different standards of scrutiny with respect to each. Thus, questions of law are inherently liable to review according to a correctness standard; a lower standard of scrutiny may well be applicable to an assessment of what costs are fair and reasonable in the circumstances of the particular case. Particularly is that so where a specific body of costs assessors, appointed solely for that function, reach evaluative judgments. Furthermore, costs assessors are expected to ensure consistency of approach, being a standard which cannot readily be applied by a reviewing court with limited experience of such matters.”

The value of the evaluative judgments of the Costs Assessors in these proceedings is of a very high order. Every aspect of the determination of the Costs Assessor and Review Panel demonstrates the care taken and the level of skill involved. That includes their evaluation of the number of solicitors (and the paralegal) appropriate on an ordered costs basis. Examination of the determinations reveals that all three costs assessors minutely examined the charges and ruled out a significant number of attendances where there was multiplication of work (I note that no individual complaint of multiplicity was raised before me; Mr Rogers essentially complains in a general way that all the fees charged by the solicitor and the paralegal should not be allowed).
Mr Rogers’ submissions do not identify any error, material or otherwise, in the reasoning of the Review Panel; he simply points to other decisions (all of which relate to costs in non-mega-litigation proceedings) where multiple representation was not permitted. He is seeking to relitigate the determination of the Review Panel rather than pointing to errors, material or otherwise.
I detect no error, material or otherwise, in the Review Panel’s analysis of the facts and application of the relevant legal principles. Mega-litigation is clearly on the rise, as recent Federal Court defamation trials have recently demonstrated. Where one party has elected to conduct litigation in this manner, that party cannot be heard to complain that an opponent who is similarly represented is engaging in unacceptable multiple representation.
Accordingly, the appeal on this ground (paragraph 2(d) of the Summons) is dismissed as well.

Concluding remarks and orders

The plaintiff has failed on each of the grounds of appeal, either as pleaded in the Summons or as varied in the course of argument.
The Summons is dismissed with costs. I have granted liberty to apply, as a commonly made application in costs appeals is for the ordered costs to be determined pursuant to s 98(4) of the Civil Procedure Act as a gross sum costs order.

Appeal dismissed; Summons struck out and dismissed.

Plaintiff to pay defendant’s costs, with liberty to apply, such liberty to include the bringing of any application pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) for a gross sum costs order.

Decision last updated: 21 June 2024

Medium Neutral Citation:	Macquarie International Health Clinic Pty Ltd v Sydney Local Health District [2024] NSWDC 233
Hearing dates:	30 May and 20 June 2024
Date of orders:	21 June 2024
Decision date:	21 June 2024
Jurisdiction:	Civil
Before:	Gibson DCJ
Decision:	(1) Appeal dismissed; Summons struck out and dismissed. (2) Plaintiff to pay defendant’s costs, with liberty to apply, such liberty to include the bringing of any application pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) for a gross sum costs order.
Catchwords:	COSTS – “Mega-litigation” over a 20-year period concluded after a 5-day hearing in the Court of Appeal – assessment of costs for appeal – appeal from Costs Assessor to Review Panel on multiple grounds – appeal from Review Panel to District Court on two grounds only (consultants’ invoices and multiplicity of solicitors) – Summons dismissed
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 98(4) Legal Profession Act 2004 (NSW), s 4(1) Legal Profession Uniform Law 2014 (NSW), ss 6, 172 Legal Profession Uniform Law Application Act 2014 (NSW), ss 76, 85 Uniform Civil Procedure Rules 2005 (NSW), r 20.4
Cases Cited:	A.C.N. 627 087 030 Pty Ltd t/as Yates Beaggi Lawyers v Poche [2024] NSWCA 145 Amirbeaggi v EB [2023] NSWCA 108 Australian Blue Metal Ltd v Hughes [1970] 2 NSWR 119 Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621; [1953] HCA 25 Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) (2008) 225 FLR 1 Cachia v Hanes (1994) 179 CLR 403 Clay v Kurelic [2001] WASC 318 Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21 Gazecki v McCabes Lawyers Pty Ltd (2020) 102 NSWLR 259; [2020] NSWCA 98 GBT Corporation Pty Ltd v Scott (1994) 116 FLR 266 Giannarelli v Wraith [No 2] (1991) 171 CLR 592; [1991] HCA 2 Gibson v Drumm & Others [2016] NSWSC 570 Gilmore Finance Pty Ltd v Aesthete No 3 Pty Ltd [2020] NSWCA 114 Honest Remark Pty Ltd v Allstate Explorations NL [2008] NSWSC 439 Hughes Tool Co v Trans World Airlines (1972) 409 US 363 In the matter of the Queensland Law Society Act 1952 and in the matter of an application of Watling Roche against Stephen Collins (Supreme Court of Queensland, 22 February 1999, Williams J, unrep) Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153 Lewis v Doran [2008] NSWSC 186 Macquarie International Health Clinic Pty Ltd v Central Sydney Area Health Service (Supreme Court (NSW), Windeyer J, 28 March 2000, unrep) Macquarie International Health Clinic Pty Ltd v Sydney Local Health District; Sydney Local Health District v Macquarie Health Corporation Ltd (No 12) [2019] NSWSC 916 Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2008] NSWSC 738. Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268; (2010) 383 ALR 577 Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2020] HCASL 270 Paolucci v Makedyn Pty Ltd [2021] NSWCA 215 Planet International Ltd v Turfella Pty Ltd (Supreme Court of NSW, Young J, 4 November 1991, unrep) Re Remnant (1849) 50 ER 949 Seven Network Limited v News Limited (2009) 182 FCR 160; [2009] FCAFC 166 Seven Network Limited v News Ltd [2007] FCA 1062 Stanley v Phillips (1966) 115 CLR 470 Sydney Local Health District v Macquarie International Health Clinic Pty Ltd (2020) 105 NSWLR 325; [2020] NSWCA 274 Sydney Local Health District v Macquarie International Health Clinic Pty Ltd (No 2) [2020] NSWCA 316 Vincent Francis Stanizzo v Karina Vivianna Fregnan [2020] NSWSC 1296 Voicu v The Owners-Strata Plan No 1624 [2020] NSWCA 52 Zaghloul v Woodside Energy Ltd [2019] WASCA 187
Texts Cited:	Dal Pont, Law of Costs (5th ed., 2021, LexisNexis Australia) M Galanter, “Mega-Law and Mega-Lawyering in the Contemporary United States”, The Sociology of the Professionals: Lawyers, Doctors and Others (1983, The Macmillan Press) Law Council of Australia, “Case Management Handbook”, Chapter 25, Costs in the Federal Court, 26 July 2021, D Vine-Hall and L Harris LL Oliver, Law of Costs (Law Book Co, 1966)
Category:	Principal judgment
Parties:	Macquarie International Health Clinic Pty Ltd (Plaintiff) Sydney Local Health District (Defendant)
Representation:	Counsel: Mr J Rogers (Plaintiff) Ms S Scott (Defendant) Solicitors: Bruce & Stewart Lawyers (Plaintiff) Clayton Utz (Defendant)
File Number(s):	2023/00426476
Publication restriction:	Nil