Najjarine v Hakanson
[2009] NSWCA 187
•8 July 2009
New South Wales
Court of Appeal
CITATION: Najjarine v Hakanson [2009] NSWCA 187 HEARING DATE(S): 29 May 2009
JUDGMENT DATE:
8 July 2009JUDGMENT OF: Hodgson JA at 1; Macfarlan JA at 27; Young JA at 28 DECISION: (1) Leave to appeal granted, Notice of Appeal to be filed within fourteen days.
(2) Appeal allowed.
(3) Costs order below set aside, and in lieu thereof order that the applicant pay the respondent’s costs on a party and party basis, subject to the limits prescribed by cl 9 and Schedule 1 of the Motor Accidents Compensation Regulation (No 2) 1999.
(4) Applicant to pay the respondent’s costs of the application and the appeal.CATCHWORDS: PROCEDURE – Costs – Limits to costs under the Motor Accidents Compensation Act 1999 and the Motor Accidents Compensation Regulation (No 2) 1999 – Whether applicable to party and party costs. LEGISLATION CITED: Motor Accidents Compensation Act 1999 ss.92, 148, 149, 150, 151, 153
Motor Accidents Compensation Regulation (No 2) 1999, clauses 8, 9, 1, Schedule 1CATEGORY: Procedural and other rulings CASES CITED: CSR Limited v Eddy [2008] NSWCA 83; (2008) 70 NSWLR 725
Dyktynski v BHP Titanium Minerals Pty Limited [2004] NSWCA 154; (2004) 60 NSWLR 203
Lee v Yang [2006] NSWCA 214
Nominal Defendant v Gabriel [2007] NSWCA 52; (2007 71 NSWLR 150
NSW Insurance Ministerial Corporation v Willis (1995) 35 NSWLR 668
San v Rumble (No 2) [2007] NSWCA 259
State of New South Wales v Bujdoso [2007] NSWCA 44; (2007) 69 NSWLR 302
Tarry v Pryce (No 2) (1987) 88 FLR 270
Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474PARTIES: Omar NAJJARINE (appellant)
Keith HAKANSON (respondent)FILE NUMBER(S): CA 40374/08 COUNSEL: J TUNBULL (appellant)
P R STERNBERG (respondent)SOLICITORS: Ferguson Lawyers (appellant)
Elias Gates & Associates (respondent)LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): 69/06 LOWER COURT JUDICIAL OFFICER: Kearns DCJ LOWER COURT DATE OF DECISION: 20 August 2008
CA 40374/08
DC 69/068 JULY 2009HODGSON JA
MACFARLAN JA
YOUNG JA
: On 20 August 2008, Kearns DCJ, having previously awarded damages to the plaintiff (the respondent in this Court) for personal injury arising out of a motor vehicle accident, made the following order:
- I order the defendant to pay the plaintiff’s costs after 21 September 2005 on a party and party basis, including court fees prescribed under s 154.
2 From that order the defendant (the applicant in this Court) seeks leave to appeal. The application for leave to appeal has been heard on the basis that, if leave is granted, the appeal will be dealt with without further argument.
Statutory provisions
3 In order to understand the issues, it is necessary to have regard to relevant statutory provisions.
4 The Motor Accidents Compensation Act 1999 (the Act) contains detailed provisions concerning the making and resolution of claims for damages for personal injury arising out of motor vehicle accidents. The scheme of this Act has been discussed in a number of cases, including Lee v Yang [2006] NSWCA 214 and Nominal Defendant v Gabriel [2007] NSWCA 52; (2007 71 NSWLR 150.
5 Relevantly to the present matter, one course that claims may take is via the so-called CARS assessment under Pt 4.4 of the Act. By s 92 of the Act, a claim is exempt from assessment if, among other things, it is of a kind exempt under certain guidelines; and the guidelines include an exemption where the insurer denies that its owner or driver was at fault, and where the insurer claims a reduction of damages for contributory negligence in excess of 25 per cent.
6 Chapter 6 of the Act makes provision in relation to costs. Relevant sections are ss 148, 149, 150, 151 and 153:
148 Application of Chapter
(1) This Chapter applies to and in respect of costs in connection with a motor accident occurring after the commencement of this Act.
(2) This Chapter applies to and in respect of costs payable on a party and party basis, on a solicitor and client basis or on any other basis, unless this Chapter otherwise provides.
(1) The regulations may make provision for or with respect to the following:149 Regulations fixing maximum costs recoverable by Australian legal practitioners
- (a) fixing maximum costs for legal services provided to a claimant or to an insurer in any motor accidents matter,
(b) fixing maximum costs for matters that are not legal services but are related to proceedings in any motor accidents matter (for example, expenses for investigations, for witnesses or for medical reports).
(2) An Australian legal practitioner is not entitled to be paid or recover for a legal service or other matter an amount that exceeds any maximum costs fixed for the service or matter by the regulations under this section.
(3) This section does not entitle an Australian legal practitioner to recover costs for a legal service or matter that a court or costs assessor determines were unreasonably incurred.
(4) This section and any regulations under this section prevail to the extent of any inconsistency with the Legal Profession Act 2004 (in particular section 329 of that Act) and the regulations under that Act. An assessment under Division 11 of Part 3.2 of that Act of any costs in respect of which provision is made by a regulation under this section is to be made so as to give effect to that regulation.
(5) The Minister is to consult the Councils of the Bar Association and the Law Society about any proposed regulation under this section. The validity of a regulation is not affected by a contravention of this subsection.
(1) The regulations may make provision for or with respect to fixing maximum fees for the provision by medical practitioners of the following services:150 Maximum fees recoverable by medical practitioners for medico-legal services
- (a) provision of any medical report for use in court proceedings in connection with a claim, or for use in connection with the assessment of a claim by a claims assessor, or for use in connection with a medical assessment by a medical assessor,
(b) appearance as a witness in court proceedings or before a claims assessor in connection with a claim.
(2) A medical practitioner is not entitled to be paid or recover any fee for providing a service that exceeds any maximum fee fixed under this section for the provision of the service.
(3) In determining any matter to be prescribed under this section, the Minister is to consult with the Australian Medical Association and other appropriate bodies.
(1) This section applies if an assessment is made under Part 4.4 of the amount of damages for liability under a claim.151 Costs where claims assessment made
(2) If the claimant does not accept that amount of damages in settlement of the claim within 21 days after the certificate of assessment is issued, then the following provisions have effect with respect to liability for costs incurred after the certificate of assessment was issued:
- (a) the insurer is liable to pay the costs if:
- (i) the amount of court awarded damages in respect of the claim exceeds the amount of damages specified in the certificate of assessment by at least $2,000 or 20% (whichever is the greater), or
(ii) the amount of court awarded damages in respect of the claim exceeds the amount of damages specified in the certificate of assessment by at least $200,000,
(c) except as provided by paragraph (a) or (b), the insurer and claimant are liable to pay their own costs.
(4) The regulations may make provision for or with respect to the manner in which amounts referred to in this section are to be adjusted (to take account of inflation and other matters) for the purposes of enabling the comparisons provided for in this section to be made.
(5) In this section:
court awarded damages means all damages of any kind awarded by a court in respect of a claim (without the addition of interest) after taking into account any deduction or reduction in accordance with Chapter 5.costs means costs payable on a party and party basis in relation to a claim, including court fees prescribed under section 154.
(1) Any order of a court as to costs is to be made consistently with the relevant provisions of or made under this Act. However, the court may make an order that departs from those provisions in an exceptional case and for the avoidance of substantial injustice.153 Other matters relating to costs
(2) Subject to the regulations and rules of court where relevant, if costs are awarded to a claimant by reference to the amount recovered by the claimant, that amount is to be taken to be the amount recovered as qualified, or after making any deduction or reduction, in accordance with or by reference to Chapter 5.
(3) Regulations under this Chapter may fix maximum costs and fees by reference to costs and fees fixed by regulations under the Legal Profession Act 2004.
(4) The regulations may make provision for or with respect to the assessment or taxation of costs and any associated matters, and may do so by reference to the provisions of any Act.
7 Part 3 of the Motor Accidents Compensation Regulation (No. 2) 1999 (the Regulation) includes the following provisions in relation to costs:
Division 1 Maximum costs recoverable by legal practitioners
(1) This Division is made under section 149 of the Act and applies to the following costs payable on a party and party basis, on a solicitor and client basis or on any other basis:8 Application of Division
- (a) legal costs, and
(b) costs for matters that are not legal services but are related to proceedings in a motor accidents matter.
Note . Section 149 (2) of the Motor Accidents Compensation Act 1999 provides that a legal practitioner is not entitled to be paid or recover for a legal service or other matter an amount that exceeds any maximum costs fixed for the service or matter by regulations under section 149.
(2) This Division does not affect costs recovered before the commencement of this Regulation or for which a bill of costs was issued before that commencement.
(3) The amendments made to this Division by the Motor Accidents Compensation Amendment (Costs) Regulation 2001 do not affect costs recovered before the commencement of that Regulation or for which a bill of costs was issued before that commencement.
Note . Section 147 (2) of the Motor Accidents Compensation Act 1999 provides that expressions in Chapter 6 (Costs) of that Act (and consequently expressions used in this Part) have the same meaning as in Part 11 (Legal fees and other costs) of the Profession Act 1987, except where otherwise provided. Under the Legal Profession Act 1987, “costs” includes barristers’ and solicitors’ fees as well as other items that may be charged by barristers and solicitors (such as expenses and disbursements).
(2) The maximum costs for:9 Fixing of maximum costs recoverable by legal practitioners
- (a) legal services provided by a legal practitioner to a claimant or to an insurer in any motor accidents matter, and
(b) matters that are not legal services but are related to proceedings in a motor accidents matter,
- are the costs set out in Schedule 1, except as otherwise provided by this Part.
Note . Division 2 of Part 11 of the Legal Profession Act 1987 requires barristers and solicitors, before providing any legal services to a client, to provide the client with a written disclosure of the basis of the costs (or an estimate of the likely costs) of legal services concerned.
(2) If there is a change in the legal practitioner retained by a claimant or insurer in a motor accidents matter, the relevant costs are to be apportioned between the legal practitioners concerned.
(3) If there is a dispute as to such an apportionment, either legal practitioner concerned (or the client claimant or insurer concerned) may refer the dispute to a claims assessor for determination (unless the dispute arose in a matter in which, under section 92 of the Act, the claim is exempt from assessment).
(4) A legal practitioner has the same right of appeal against a determination made under subclause (3) as the practitioner would have under section 208L or 208M of the Legal Profession Act 1987 if the determination were a determination made by a costs assessor under Part 11 of that Act in relation to a bill of costs.
……
(1) This clause applies in respect of costs in a motor accidents matter if a legal practitioner:11 Contracting out—solicitor/client costs
- (a) makes a disclosure under Division 2 of Part 11 of the Legal Profession Act 1987 (sections 180 and 181 excepted) to a party to the matter with respect to the costs, and
(b) enters into a costs agreement (other than a conditional costs agreement, within the meaning of that Part, that provides for the payment of a premium on the successful outcome of the matter concerned) with that party as to those costs in accordance with Division 3 of that Part, and
(c) before entering into the costs agreement, advises the party (in a separate written document) that, even if costs are awarded in favour of the party, the party will be liable to pay such amount of the costs provided for in the costs agreement as exceeds the amount that would be payable under the Act in the absence of a costs agreement.
8 Schedule 1 to the Regulation is entitled “Maximum costs for legal services”, and clauses 1 and 2 of Schedule 1 provide as follows:
- Schedule 1 Maximum costs for legal services
(Clause 9 (1))
1 Costs determined by reference to certain stages in the matter
(1) The maximum costs for legal services provided for a stage of a motor accidents matter set out in Column 1 of Table A to this clause are the costs set out in Column 2 opposite that stage.
(2) However, if a legal practitioner was first retained in the matter after a certificate as to the claims assessment is issued under section 94 of the Act, the costs are those set out in Table B to this clause.
(3) Costs may be charged for more than one stage described in this Schedule.
(4) Other than stage 1 in the Tables to this clause, each stage specifies the maximum costs payable for all legal services provided in the period commencing on the occurrence of one specified event and concluding on either the occurrence of another specified event or settlement of the matter (whichever occurs first).
Table A
| Column 1 | Column 2 | |
| Stage | Costs | |
| 1 | For assistance in completing an accident notification form | Nil (except, in respect of a legal practitioner acting for a claimant, in so far as the assistance forms part of stage 2) |
| 2 | From the acceptance of the retainer to the preparation and service of a notice of claim under section 72 of the Act (including the provision of all relevant particulars about the claim to the insurer, even if those particulars are requested after the claim is served) |
(b) in the case of a legal practitioner acting for an insurer—nil |
| 3 | From service of the notice of claim under section 72 of the Act to the preparation and service of a response to insurer’s offer of settlement under section 82 of the Act |
(b) in the case of a legal practitioner acting for an insurer—nil |
| 4 | If settlement occurs without the issue of a certificate under section 94 of the Act—from service of the response to the insurer’s offer of settlement under section 82 of the Act to finalisation of the matter | In addition to the $500 specified for stages 1 and 2 (if chargeable):
(b) if the settlement amount is $20,000 or less and the insurer denied liability for up to 25% of the claim—10% of the settlement amount (c) if the settlement amount is more than $20,000 but less than $50,001 and the insurer wholly admitted liability for the claim—$500 plus 12% of every dollar of the settlement amount over $20,000 (d) if the settlement amount is more than $20,000 but less than $50,001 and the insurer denied liability for up to 25% of the claim—$2,000 plus 12% of every dollar of the settlement amount over $20,000 (e) if the settlement amount is $50,001 or more but less than $100,001 and the insurer wholly admitted liability for the claim—$4,100 plus 10% of every dollar of the settlement amount over $50,000 (f) if the settlement amount is $50,001 or more but less than $100,001 and the insurer denied liability for up to 25% of the claim—$5,600 plus 10% of every dollar of the settlement amount over $50,000 (g) if the settlement amount is $100,001 or more and the insurer wholly admitted liability for the claim—$9,100 plus 2% of every dollar of the settlement amount over $100,000 (h) if the settlement amount is $100,001 or more and the insurer denied liability for up to 25% of the claim—$10,600 plus 2% of every dollar of the settlement amount over $100,000 |
| 5 | If settlement occurs after the issue of a certificate under section 94 of the Act but without the commencement of court proceedings—from the issue of the certificate to finalisation of the matter | The total of the following:
(b) 2% of the assessment |
| 6 | If the matter is finalised after the commencement of court proceedings (whether by way of settlement or an award of damages)—from the issue of the certificate under section 94 of the Act to finalisation of the matter | The total of the following:
(b) 2% of the settlement or award |
Table B
| Column 1 | Column 2 | |
| Stage | Costs | |
| 1 | Advice on the issue of the certificate under section 94 of the Act | $250 |
| 2 | From the giving of the advice on the certificate issued under section 94 of the Act to finalisation of matter by settlement or award of damages | In addition to the $250 specified for stage 1:
(b) if the settlement amount or award is more than $20,000 but less than $50,001—10% of the settlement amount or award over $20,000 (c) if the settlement amount or award is $50,001 or more but less than $100,001—$3,000 plus 8% of every dollar of the settlement amount or award over $50,000 (d) if the settlement amount or award is $100,001 or more—$7,000 plus 2% of every dollar of the settlement amount or award over $100,000 |
2 Other costs for legal services
(1) Maximum costs for legal services provided in motor accidents matters may include (in addition to the costs for legal services provided for a stage in the matter, as referred to in clause 1) the costs set out in the Table to this clause.
(2) However, an amount for the fees for senior counsel, or for more than one advocate, are not to be included unless the court so orders.
Table
|
|
|
(b) up to $500 if the dispute relates to a matter referred to in section 58 (1) (b), (c) or (e) of the Act (c) up to $750 if the dispute relates to the matter referred to in section 58 (1) (d) of the Act but not exceeding $1,200 in respect of any one claim, regardless of the number or kind of disputes |
|
|
| |
|
|
|
|
| |
|
|
|
|
|
|
Decision of primary judge
9 In his reasons for his costs order, the primary judge noted that on 6 September 2005, an assessor had assessed the respondent’s damages at $16,501.15, plus costs of $3,258.22 inclusive of GST; and that on 9 August 2008, he had entered a verdict and judgment in the respondent’s favour in the sum of $112,498.89. He referred to s 151 of the Act and to San v Rumble(No 2) [2007] NSWCA 259 at [53]; and he then made the following reference to submissions from Mr Turnbull for the applicant:
10. I do not accept Mr Turnbull’s submission. His submission does not refer me to any section of the Act that would be infringed by an order as sought by the plaintiff. As to any regulation that might be infringed, Mr Turnbull has referred me to regulations 9 and 10. I do not think they would be infringed, because I do not think they apply in determining whether the plaintiff is entitled to an order for costs and nor do they apply in determining the form of order he is entitled to. Both those matters are governed by s 151(2) which the regulations do not override.9. Mr Turnbull submits that there should be no departure from the usual order that the plaintiff should receive an order for costs in accordance with the Act and the appurtenant regulations. He further submits that insofar as the plaintiff suggests that he should be entitled to costs that are not regulated, this would be seeking to ask the court to exercise a discretion that is contrary to the explicit terms of the act and regulations and should not be allowed.
10 It is common ground between the appellant and the respondent that these paragraphs disclose a decision that the limitations on costs prescribed by cl 9 of the Regulation were not to apply to the costs order he made, and that the costs order from which leave to appeal is sought is to be so interpreted; and that this Court should deal with the application on that basis. Although this does not necessarily flow from the terms of the costs order itself, and although unless interpreted on this basis there could in my opinion be no objection to the costs order, it is appropriate that the Court deal with the application on that agreed basis.
Leave to appeal
11 The question whether the limitations on costs in cl 9 of the Regulation apply in relation to party and party costs in circumstances such as those of this case is a matter of general significance, especially for insurers; though not of course for the respondent in this case. It was accepted by the applicant that, if leave is granted, it should be on the basis that the applicant pay the costs of the application and appeal in any event, on an ordinary party and party basis not limited by the Act or the Regulation. On that basis, it is in my opinion appropriate to grant leave to appeal.
Consideration
12 Section 148 of the Act says that Chapter 6 applies to costs payable on a party and party basis, as well as on other bases; and that is the ordinary basis on which costs are assessed as between parties to litigation, pursuant to a court order or agreement.
13 However, s 149 authorises regulations making provision for maximum costs for legal services provided to a claimant or an insurer, and excludes entitlement of a legal practitioner to be paid an amount that exceeds any maximum costs so fixed. This section does not in terms authorise regulations limiting costs recoverable as between parties to litigation; but that would be the effect of limiting costs payable to the legal practitioner by the client, by reason of the indemnity principle discussed in Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474 and CSR Limited v Eddy [2008] NSWCA 83; (2008) 70 NSWLR 725. In particular, it is clear that if a solicitor and client agreement caps the amount of costs recoverable by the solicitor from a party to proceedings, this enures to the benefit of the client adversary who is ordered to pay the costs of that party: see Tarry v Pryce (No 2) (1987) 88 FLR 270, Dyktynski v BHP Titanium Minerals Pty Limited [2004] NSWCA 154; (2004) 60 NSWLR 203 at [7].
14 Clause 8 of the Regulation says that Division 1A applies to costs payable on a party and party basis, as well as on a solicitor and client basis or any other basis. The limit to costs imposed by cl 9 and Schedule 1 of the Regulation would therefore apply directly to the assessment of costs as between parties, as well as applying indirectly to such costs via the indemnity principle, at least unless direct limitation of party and party costs was considered as not authorised by s 149 of the Act. Whether the limit does apply directly, or only applies indirectly, would of itself not matter; but what makes this question significant is the effect of cl 11 of the Regulation.
15 Clause 11 has the effect that, on certain conditions, a solicitor can enter into a costs agreement with a client that has the effect of excluding the limits on costs in Division 1A of the Regulation “to the extent that they are payable on a solicitor and client basis” (clause 11(2)).
16 That opens the way to an argument that, if such an agreement is made, even though it operates only in relation to costs payable on a solicitor and client basis, it has the effect of removing any limitation on party and party costs that might otherwise flow from the indemnity principle; so that if party and party costs are to be limited by the Act and the Regulation, it must by way of a direct limit on costs recoverable as between parties.
17 It was submitted by Mr Sternberg for the respondent that s 149 of the Act does not authorise regulations directly limiting costs recoverable as between parties; so that unless the Regulation is construed as not doing so, the Regulation is to that extent not authorised by the Act and is invalid.
18 This is the short but quite important point that needs to be decided in this case.
19 In my opinion, s 149 should not be given such a narrow construction. Section148 says that the Chapter, which includes s 149, applies to costs payable on a party and party basis as well as on other bases; so that where s 149(1)(a) refers to “maximum costs for legal services provided to a claimant”, it should not be read as being limited to applying to costs payable by the client to the legal practitioner, but rather should be read as extending to costs recoverable by the claimant in respect of those legal services provided to him or her. On that construction, there is no basis for reading down cl 9 of the Regulation; and I would read cl 9 as placing a limit on party and party costs, and I would read s 149 as authorising a regulation to that effect. Thus, I would read cl 11 of the Regulation as removing the limits only as between solicitor and client.
20 This limit on party and party costs can be removed by an order under s 153(1), but only in exceptional cases and for avoidance of substantial injustice.
21 The previous case in the Court of Appeal in which these provisions were considered (San v Rumble (No 2) [2007] NSWCA 259) did not address the question raised in this case, but in my opinion the approach I have taken is consistent with the general approach stated by Beazley JA (with whom Ipp JA agreed) at par [14] of that case:
- [14] The difference in purpose of the two provisions is apparent. The restrictions placed upon the circumstances in which costs are recoverable in the case where there has been a CARS assessment, indicate a legislative intention of encouraging parties to accept the primary assessment made under the scheme and of discouraging the bringing of legal proceedings. However, where there has been no anterior CARS assessment, that factor is not present. Accordingly, the cost sanctions against agitating the claim a second time without any significant difference in the result do not apply. That is recognised by the section providing that, in effect, the usual provisions of the rules of court relating to costs operate, including the rules governing offers of compromise.
22 Mr Sternberg relied on references in that case to a party’s entitlement to party and party costs; but in my opinion those references are neutral on the question whether or not party and party costs are subject to the limits of cl 9 and Schedule 1 of the Regulation.
23 One other question which arises indirectly in this case is whether cl 9 and Schedule 1 limit the costs of this appeal unless an order under s 153(1) is made. The amounts prescribed under Schedule 1 come to an end with “finalisation of the matter” “whether by way of settlement or an award of damages”.
24 In my opinion, the better view is that such finalisation is reached when judgment is given at first instance, even if an appeal is subsequently lodged: cf NSW Insurance Ministerial Corporation v Willis (1995) 35 NSWLR 668 at 678, State of New South Wales v Bujdoso [2007] NSWCA 44; (2007) 69 NSWLR 302 at [16]-[18] and [28]-[35]. This view is confirmed by the lack of any provision in the Schedule which could be considered applicable to the costs of any appeal or of any second hearing (if a re-trial is ordered).
25 Even if I were wrong on this view, where as in this case (as in San) there is no challenge to the award of damages, but merely an appeal concerning costs, it is clear in my opinion that the proceedings were finalised by the award of damages at first instance, and the limits concerning costs would not apply to the appeal.
Order
26 For those reasons, I propose the following orders:
- (1) Leave to appeal granted, Notice of Appeal to be filed within fourteen days.
(2) Appeal allowed.
(3) Costs order below set aside, and in lieu thereof order that the applicant pay the respondent’s costs on a party and party basis, subject to the limits prescribed by cl 9 and Schedule 1 of the Motor Accidents Compensation Regulation (No 2) 1999.
(4) Applicant to pay the respondent’s costs of the application and the appeal.
27 MACFARLAN JA: I agree with Hodgson JA.
I agree with Hodgson JA.
9
2