Newcastle City Council v McShane (No 2) - [2005] NSWCA 250

NEW SOUTH WALES COURT OF APPEAL

CITATION: NEWCASTLE CITY COUNCIL v McSHANE (No 2) [2005] NSWCA 250

FILE NUMBER(S):
40009/04

HEARING DATE(S): 20 July 2005

JUDGMENT DATE: 25/07/2005

PARTIES:
NEWCASTLE CITY COUNCIL
Travis McSHANE

JUDGMENT OF: Mason P Giles JA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 4527/02

LOWER COURT JUDICIAL OFFICER: Robison DCJ

COUNSEL:
Appellant/Claimant: G Beauchamp
Respondent/Opponent: M E Down (Solicitor)

SOLICITORS:
Appellant/Claimant: Phillips Fox
Respondent/Opponent: Carroll & O'Dea

CATCHWORDS:
Costs - Calderbank offer - whether s198D of the Legal Profession Act extends to costs in the Court of Appeal (D)

LEGISLATION CITED:

DECISION:
List for Directions

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40009/04
MASON P
GILES JA
Monday 25 July 2005

NEWCASTLE CITY COUNCIL v Travis McSHANE (No 2)

JUDGMENT

THE COURT: Earlier proceedings in this Court (constituted by Mason P, Sheller JA and Giles JA) culminated in orders granting leave to appeal; dismissing the appeal; refusing leave to cross-appeal; and requiring the appellant/cross-opponent to pay 85% of the respondent’s/cross-claimant’s costs of the application for leave to appeal and appeal and the application for leave to cross-appeal (see Newcastle City Council v McShane [2004] NSWCA 425).
Two additional matters have arisen for decision that the parties have agreed may be resolved on the papers. The parties have also consented to these matters being dealt with by Mason P and Giles JA, Sheller JA having retired from the Court.
The first matter relates to a Calderbank offer of settlement made by the respondent and rejected by the appellant. The respondent has applied for a variation to the costs order whereby it has the costs of the appeal on an indemnity basis. The offer was without prejudice except as to costs and it indicated the respondent’s preparedness to accept the judgment sum of $62,300 plus costs. The offer was made on 11 October 2004, some 11 days prior to the hearing fixed in this Court. It was open for acceptance until 15 October 2004 and was not accepted.
The offer contained no element of compromise. In our view, the case for indemnity costs is not made out.
The second matter raises an issue of general significance. If it is appropriate for resolution at this stage it ought to be heard and determined by a bench of 3 judges, ideally with the assistance of oral submissions to supplement the written submissions already filed on the matter.
The substantive point relates to the scope of s198D of the Legal Profession Act 1987, which provides:
198D Maximum costs fixed for claims up to $100,000
(1)If the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed as follows:
(a)in the case of legal services provided to a plaintiff maximum costs are fixed at 20% of the amount recovered or $10,000, whichever is greater,
(b)in the case of legal services provided to a defendant maximum costs are fixed at 20% of the amount sought to be recovered by the plaintiff or $10,000, whichever is greater.
(2)The regulations may prescribe an amount to replace the amount of $100,000 or $10,000 in subsection (1) and may prescribe a percentage to replace the percentage of 20% in subsection (1). When such a replacement amount or percentage is prescribed, it applies for the purposes of subsection (1) in place of the amount or percentage that it replaces.
(3)The regulations may contain provisions of a savings or transitional nature consequent on the making of regulations under this section.
(4)When the maximum costs for legal services provided to a party are fixed by this Division the following provisions apply (subject to sections 198E–198G):
(a)a solicitor or barrister is not entitled to be paid or recover for those legal services an amount that exceeds those maximum costs,
(b)a court or tribunal cannot order the payment by another party to the claim of costs in respect of those legal services in an amount that exceeds that maximum,
(c)in assessing the amount of those costs that is a fair and reasonable amount, a costs assessor cannot determine an amount that exceeds the maximum set by this section.
(5)A reference in this Division to legal services provided to a party is a reference to legal services provided to the party by a solicitor or barrister (including by an agent or employee of the solicitor or barrister). Costs for legal services do not include costs charged as disbursements for services provided by any other person or other disbursements.
(6)If proceedings are commenced on a claim, the amount sought to be recovered by the plaintiff is taken to be the amount sought to be proved by the plaintiff at the hearing of the claim.
(7)Maximum costs fixed by this section apply despite regulations under section 196 (1) (a2) fixing those costs.
The plaintiff (who was the respondent in this Court) had brought proceedings for personal injury damages in the District Court. He recovered judgment for $62,300 plus costs. As indicated, this judgment was undisturbed on appeal.
It is common ground that the plaintiff’s costs for legal services at first instance will have exceeded the cap stipulated in s198D(1)(a). The parties are in dispute as to whether that cap applies in relation to the costs of an appeal. In light of the scope of s198D(1)(a) and (b), the question is of far-reaching significance, touching the interests of plaintiffs and defendants generally who bring appeals from proceedings involving claims for personal injury damages.
The appellant/defendant has written to the respondent/plaintiff politely but firmly refusing to pay any costs referable to proceedings in this Court on the basis that the costs of trial have already exceeded the cap. It is unnecessary at this stage to consider whether this involves a threat to disobey an order of this Court and/or whether it was a matter that should have been raised in this Court before we pronounced the abovementioned costs order (cf Penrith City Council v Parks (No 2) [2004] NSWCA 381, Legal Profession Act 1987, s198D(4)(b)).
The issue has been tendered to the Court at this stage in the proceedings per medium of a notice of motion filed by the appellant seeking the following orders:
1.That the opponent pay the claimant’s costs of the application for leave to appeal and appeal and the application for leave to cross-appeal in accordance with the orders of this honourable Court and independent of the costs payable in respect of the proceedings in the Court below.
2.That the opponent pay the claimant’s costs of this motion.
3.Such further or other order as the Court may deem appropriate.
It is possible that order 1 is inapt given that this Court has already made a costs order. This said, we are not anxious to provoke proceedings in the nature of contempt in circumstances where there appears to be a genuine dispute about a matter of principle and/or the scope of our earlier costs order. It is conceivable that it should be the appellant that should be moving the Court for the variation of the costs order.
It will be up to the parties to satisfy themselves as to the appropriate vehicle for raising the issue in this Court at this stage. We expect that agreement can be reached on this procedural aspect of the dispute of the substantive dispute.
The fact that the parties have invited the Court to resolve the issue on the papers suggests, not surprisingly, that they wish to avoid incurring unnecessary costs. On the other hand, if this is to be a test case it is important for the Court to receive proper assistance.
It is conceivable that the Attorney General, the Law Society, the Bar Association and the Plaintiff Lawyers’ Association may wish to present argument in the matter. If that occurred, then any concerns of the parties about costs may possibly be accommodated.
The matter will be listed for directions before the President on Friday 5 August 2005 at 9.30am.

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LAST UPDATED: 01/08/2005