Wende v Horwath (NSW) Pty Ltd

[2014] NSWCA 170

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Wende v Horwath (NSW) Pty Limited [2014] NSWCA 170

Hearing dates:

5 December 2013

Decision date:

02 June 2014

Before:

Beazley P at [1]; Basten JA at [15];
Barrett JA at [103]

Decision:

(A) In matter 2013/54356:

(1) Dismiss the summons seeking leave to appeal.

(2) Order the applicant to pay the respondent's costs.

(B) In matter 2013/149830

(1) Set aside the orders made in the District Court on 15 February 2013 dismissing the appeal from the determination of the Review Panel dated 6 January 2012.

(2) In place of the orders made in the District Court:

(a) set aside the certificates as to determination of costs issued by the Review Panel on 6 January 2012;

(b) set aside the certificates as to determination of costs issued by Ms Dulhunty, Costs Assessor, on 11 January 2011.

(3) Remit the matter to the District Court to make any consequential orders with respect to the appeal to that Court and to take such steps as it considers necessary with respect to the costs of the assessments undertaken by Ms Dulhunty and the Review Panel.

(4) Order the respondent to pay the applicants' costs in this Court.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

PROFESSIONS AND TRADES - lawyers - remuneration - taxation and assessment of costs - assessment under Legal Profession Act 2004 (NSW) - costs payable as a result of an order for the payment of an unspecified amount of costs made by a court - three such orders made by different courts - single application for assessment in respect of the three orders - determination by costs assessor upon that application - single purported certificate of determination - whether processes as adopted formed the foundation for application for review by a review panel - alleged failure of review panel to make a "review" - alleged failure of review panel to give adequate reasons - whether limit on costs recoverable under costs order against a legally assessed person operates for the benefit of the person's partners - scope of order for costs where order made after rehearing following hearing by arbitrator - costs of costs assessment - whether Legal Profession Act s 369(3)(c) applies to assessment of party/party costs as well as practitioner-client costs - LEGAL AID - legal assistance schemes - who is "legally assisted person" under the Legal Aid Commission Act 1979 (NSW) - ADMINISTRATIVE LAW - judicial review - whether review of appellate decision extends to first instance decisions - whether failure of appellate court to identify legal error in decision below constitutes reviewable error - scope of evidence in judicial review proceedings - "record" of court under review - Supreme Court Act 1979 (NSW), s 69

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 28, 38, 42, 43, 44, 46, 54, 56, 98
District Court Act 1973 (NSW), s 127
Interpretation Act 1987 (NSW), ss 5, 8
Judiciary Act 1903 (Cth), s 32
Justices Act 1902 (NSW), s 122
Legal Aid Commission Act 1979 (NSW), ss 4, 31, 34, 35, 37, 42, 47
Legal Practitioners Act 1898 (NSW), ss 22, 28
Legal Profession Act 2004 (NSW), ss 301, 319, 353, 354, 357, 359, 363, 364, 365, 367A, 368, 369, 373, 374, 375, 378, 380, 382, 384, 385; Pt 3.2, Div 11
Legal Profession Regulation 2005, cl 125, cl 134, Pt 9, Div 5
Legal Profession Further Amendment Act 2006 (NSW), Sch 2, [142]
Partnership Act 1892 (NSW), ss 5, 6
Supreme Court Act 1970 (NSW), ss 23, 48, 63, 69, 75
Uniform Civil Procedure Rules 2005, rr 42.1, 42.7, 42.12, 44, 46, 50.3(1), 51.2, 59.10

Cases Cited:

Alvaro v Amaral (No 2) [2013] WACA 232
Athens v Randwick City Council [2005] NSWCA 317; 64 NSWLR 58
Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2011] NSWDC 55
Blacker v Parnell [1978] 1 NSWLR 616
Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; 183 CLR 245
Branson v Tucker [2012] NSWCA 310
Calvin v Carr [1980] AC 574
Cockburn v Shehadie [2013] NSWSC 758
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Craig v South Australia [1995] HCA 58; 184 CLR 163
CSR Ltd v Eddy [2008] NSWCA 83; (2008) 70 NSWLR 725; (2011) 12 DCLR (NSW) 304
Dunn v Jerrard & Stuk Lawyers [2009] NSWSC 681
Edwards v Santos Ltd [2011] HCA 8; 242 CLR 421
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7
Frumar v Owners of Strata Plan 36957 [2006] NSWCA 278; 67 NSWLR 321
Guardianship and Administration Tribunal v Perpetual Trustees Qld Ltd [2008] QSC 49; [2008] 2 QdR 323
Hill v Green [1999] NSWCA 477; 48 NSWLR 161
In Re Dibbs and Farrell (1941) 41 SR (NSW) 249
Kells v Mulligan [2002] NSWSC 769
Khoury v Hiar [2006] NSWCA 47
Kirk v Industrial Court of New South Wales [2010] HCA 1; 239 CLR 531
Michael Wilson & Partners v Nicholls [2011] HCA 48; 244 CLR 427
Minister for Immigration and Citizenship v Li [2013] HCA 18; 87 ALJR 618
Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; 206 CLR 323
Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation [1963] HCA 41; 113 CLR 475
Muldoon v Church of England Children's Homes Burwood [2011] NSWCA 46; 80 NSWLR 282
Newcastle City Council v Wieland [2009] NSWCA 113; 74 NSWLR 173
The Owners of the Ship 'Shin Kobe Maru' v Empire Shipping Company Inc [1994] HCA 54; 181 CLR 404
Tomko v Palasty (No 2) [2007] NSWCA 369: 71 NSWLR 61
Owston Nominees No 2 Pty Ltd v Branir Pty Ltd [2003] FCA 629; 129 FCR 558
R v Magistrates' Court at Lilydale; Ex parte Ciccone [1973] VR 122
Repatriation Commission v Nation (1995) 57 FCR 25
Robbins v Federal Commissioner of Taxation [1974] HCA 58; 129 CLR 332
Ross v Lane Cove Council [2014] NSWCA 50
Twist v Randwick Municipal Council [1976] HCA 58; 136 CLR 106
Vakauta v Kelly [1989] HCA 44; 167 CLR 568
Wende v Horwath (NSW) Pty Ltd (unrep, P Taylor SC DCJ)
Wingfoot Australia Partners Pty Ltd v Kocak [2013] HCA 43; 88 ALJR 52
Wishart v Fraser [1941] HCA 8; 64 CLR 470

Texts Cited:

Aronson and Groves, Judicial Review of Administrative Action (5h ed, Law Book, 2013) at [12.280]
P Herzfeld, T Prince and S Tully, Interpretation and Use of Legal Sources - The Laws of Australia (Thomson Reuters, 2013), [25.4.730]
Justice P W Young, "Construing Court Orders" (1998) 72 ALJ 117

Category:

Principal judgment

Parties:

Herbert Wende, Margaret Wende, Mark Lloyd (Applicants)
Horwath (NSW) Pty Limited (First Respondent)
District Court of New South Wales (Second Respondent)
K M Dulhunty Costs Assessor (Third Respondent)
Richard Gulley Costs Assessor (Fourth Respondent)
Mark Campbell Costs Assessor (Fifth Respondent)

Representation:

Counsel:
C J Bevan (Applicants)
S F Hughes (Respondents)

Solicitors:
Hogan Geikie Poole Lawyers (Applicants)
Diamond Conway Lawyers (First Respondent)
I V Knight, Crown Solicitor (Second to Fifth Respondents)

File Number(s):

2013/54356; 2013/149830

 Decision under appeal 

Date of Decision:

15 February 2013

Before:

P Taylor SC DCJ

File Number(s):

2012/48613

HEADNOTE

[This headnote is not to be read as part of the judgment]

This case concerned an application for judicial review of a decision of the District Court dismissing an appeal from a review panel affirming a determination of party/party costs by a costs assessor.

In 1998, the applicants suffered loss when a neighbour's tree fell on to their property. They commenced proceedings against the neighbour to recover damages and retained Horwath (NSW) Pty Ltd ("Horwath") to provide expert evidence as to loss sustained by their business.

In 2004, Horwath filed a claim in the Local Court against the applicants seeking payment of $18,526 said to be due to it for professional services rendered. The matter was referred to an arbitrator who made an award in favour of Horwath. The matter proceeded to the Local Court by way of re-hearing where Horwath obtained judgment in its favour. The applicants then appealed to the Supreme Court, but their application was dismissed. Their application for leave to appeal to the Court of Appeal was similarly rejected. Costs were ordered against the applicants in favour of Horwath following the Local Court, Supreme Court and Court of Appeal proceedings.

Horwath made an application to have its costs in respect of the three costs orders assessed by a costs assessor pursuant to s 353 of the Legal Profession Act 2004 (NSW). Horwath's costs were determined at $175,052.78. The costs assessor issued one certificate of determination, expressed the assessment as global sum, did not expressly state how the costs were apportioned between each of the costs orders for which the application for assessment was made but appended reasons for her assessment to the certificate.

The applicants applied under s 373 of the Legal Profession Act 2004 to have the assessment reviewed. A review panel set the assessment aside and determined that the sum of $160,052.78 was a fair and reasonable amount of costs to be paid. None of the applicants' 35 grounds of review were accepted. The award was only adjusted to correct an arithmetical error of the costs assessor. The applicants then commenced an appeal against the panel's determination in the District Court pursuant to s 384 of the Legal Profession Act 2004, which was dismissed by P Taylor SC DCJ in Wende v Horwath (NSW) Pty Ltd.

The applicants brought an application to the Court of Appeal for judicial review of District Court's decision pursuant to the Court's supervisory jurisdiction under to s 69 of the Supreme Court Act 1970 (NSW).

The principle issues for determination on review were:

(i) Whether the costs order made by the Local Court Magistrate included the costs of the arbitration.

(ii) Whether the legal aid issued to Mr Wende enured for the benefit of all three applicants such that they would be entitled to protection under the limitation on recovery of costs against legally aided litigants conferred by s 47 of the Legal Aid Commission Act 1979 (NSW).

(iii) Whether a person entitled to apply for an assessment of party/party costs can make a single application to have multiple costs orders assessed.

(iv) Whether a cost assessor is required to issue separate certificates of assessment in respect of each costs order for which an application for assessment is made.

(v) Whether Horwath should be liable for the costs of the costs assessment pursuant to s 369(3)(c) of the Legal Profession Act 2004 because its costs claimed were reduced by more than 15% on assessment.

(vi) Whether the review panel conducted a "review" within the meaning of s 375 of the Legal Profession Act 2004.

(vii) Whether the cost assessor and the review panel gave adequate reasons for their determinations.

The Court held by majority, in upholding the application for judicial review, that the District Court's decision disclosed error of law on the face of the record in construing the Legal Profession Act 2004 and should be set aside accordingly. The Court also set aside the costs assessments of the costs assessor and the review panel.

The Court's findings were as follows:

In relation to (i)

1. Per Barrett JA (Beazley P agreeing): Regard may be had to context and the reasons for judgment when determining the meaning and effect of a court order: [245].

Athens v Randwick City Council [2005] NSWCA 317; 64 NSWLR 58 applied.

2. Per Barrett JA (Beazley P agreeing): In the ordinary course and in the absence of some indication to the contrary, an order simply that a party have its "costs" of an action encompasses all costs incurred by the party in the action, including those of interlocutory applications and other intermediate steps: [247]. Here, the arbitration was such an intermediate step in the Local Court proceedings: [252].

Principal legislation considered: Civil Procedure Act 2005 (NSW), ss 38, 42, 43, 44, 46 and 98; Uniform Civil Procedure Rules 2005 (NSW) 42.7(1) and 42.12.

Newcastle City Council v Wieland [2009] NSWCA 113; 74 NSWLR 173 applied.

3. Per Basten JA: Regard may be had to extrinsic material when interpreting a court order in the case of ambiguity and may be relied on even if there is no ambiguity: [59]-[62].

Athens v Randwick City Council [2005] NSWCA 317; 64 NSWLR 58 cited.

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7 referred to.

Guardianship and Administration Tribunal v Perpetual Trustees Qld Ltd [2008] QSC 49; [2008] 2 Qd R 323; Owston Nominees No 2 Pty Ltd v Branir Pty Ltd [2003] FCA 629; 129 FCR 558 applied

4. The order for costs should be construed against the respondent because it should have raised the issue regarding the costs of the arbitration before the Local Court Magistrate: [63]-[73].

In relation to (ii)

5. The Court: Protection from an adverse costs order conferred by the s 47 of the Legal Aid Commission Act 1979 (NSW) on a legally assisted person does not extend to persons with whom the person is in partnership: [212]-[234].

Partnership Act 1892 (NSW) ss 6(1) and 5(1).

In relation to (iii)

6. Per Beazley P and Barrett JA: Multiple costs orders may form the subject of a single application to have costs assessed pursuant to s 353 of the Legal Profession Act 2004: [6]-[9] (Beazley P); [195] (Barrett JA).

In relation to (iv)

7. The Court: A costs assessor making an assessment of party/party costs under several costs orders must make a separate assessment in relation to each order: [9] (Beazley P); [38]-[48] (Basten JA); [193]-[197] (Barrett JA).

8. Per Beazley P and Basten JA (Barrett JA contra): Each such separate determination must be embodied on a separate certificate of determination: [1], [10]-[13] (Beazley P); [38]-[48] (Basten JA).

9. Per Barrett JA (in dissent): The costs assessor's assessment complied with the procedural requirements of the Legal Profession Act 2004 (NSW) because it was possible to ascertain the assessor's determinations with respect to each costs order from the assessor's reasons notwithstanding that these determinations are neither expressly stated nor embodied in separate certificates: [181]-[211].

Legal Profession Act 2004 (NSW), ss 353, 354, 364, 367A, 373, 378, 384 and 385 considered.

Frumar v Owners of Strata Plan36957 [2006] NSWCA 278; 67 NSWLR 321 distinguished.

In relation to (v)

10. The Court: Horwath is not liable to pay the costs of the costs assessment because s 369(3)(c) of the Legal Profession Act 2004 (dealing with liability for the costs of an assessment of "costs that on assessment are reduced by 15% or more") only applies to assessments of practitioner-client costs: [74]-[88] (Basten JA); [265]-[273] (Barrett JA, Beazley P agreeing).

Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2011] NSWDC 55 considered.

In relation to (vi)

11. Per Barrett JA (Beazley P and Basten JA agreeing): The meaning of the term "review" and what it requires is not fixed and must be taken from the context in which it appears [157]. The function of a review panel under s 375 of the Legal Professional Act 2004 will vary according to the way in which the applicant for review chooses to frame his or her application [162].

Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; 183 CLR 245 applied.

Minister for Immigration and Citizenship v Li [2013] HCA 18; 87 ALJR 618 applied.

In relation to (vii)

12. Per Barrett JA (Beazley P and Basten JA agreeing): The requirement to give reasons under s 380 of the Legal Profession Act 2004 does not require a review panel to provide its own paraphrase of the reasons of a decision under review if it agrees with the conclusions and the reasons of that decision, provided the review panel makes a statement to that effect and makes it clear that it adopts those reasons: [176]-[179].

Robbins v Federal Commissioner of Taxation [1974] HCA 58; 129 CLR 332 applied.

Alvaro v Amaral (No 2) [2013] WACA 232 cited.

Judgment

1. BEAZLEY P: I have had the advantage of reading in draft the judgments of Basten JA and Barrett JA. I agree with the reasons of Barrett JA save for the question whether a global costs order may be made in circumstances where a party who has applied for a costs assessment pursuant to the Legal Profession Act 2004, s 353 seeks assessment of the costs payable in respect of several costs orders.

1. The relevant sections of the legislation are set out in the judgments of their Honours and I will only refer to the terms of the provisions as is necessary to explain my reasoning. Insofar as it applies to the present matter, s 353 entitles a party to apply for an assessment of the whole of, or any part of the costs that are payable pursuant to a costs order made by the court. An application for costs assessment must be made in accordance with the regulations: see the Legal Profession Regulation 2005, Pt 9, Div 5. The approved form is drafted so as to refer to a single costs order. The application and must be accompanied by the prescribed fee unless the fee has been waived or postponed: ss 354(1) and (4).

1. Section 357 provides that the Manager, Costs Assessment, is to refer "each application for costs assessment" to a costs assessor. Section 367A provides that the costs assessor "is to determine an application for an assessment of costs payable as a result of an order ... by making a determination of the fair and reasonable amount of those costs" (emphasis added). Section 368(1) provides that the costs assessor, after making a determination of costs, is to issue a certificate that sets out the determination. Section 368(2) provides:

"A costs assessor may issue more than one certificate in relation to an application for costs assessment. Such certificates may be issued at the same time or at different stages of the assessment process."

1. The respondent was entitled to receive costs as a result of various costs orders made in its favour in different courts. The costs orders related to the same 'matter' in that cost orders were made in the Local Court upon the success of the respondent's claim for professional fees rendered for services provided to the appellants. An appeal by the appellants to the Supreme Court from that judgment was unsuccessful and another order for costs was made in favour of the respondent. The appellants were refused leave to appeal from that judgment and a costs order was again made in favour of the respondent. Although the underlying matter in each Court was related in the way described, the appeal to the Supreme Court and to the Court of Appeal involved the commencement of a new proceeding: see respectively Uniform Civil Procedure Rules 2005 (UCPR), Pt 50, r 50.3(1) and the definition of "appeal proceedings" in Pt 51, r 51.2.

1. Costs orders may be made during the course of proceedings in respect of interlocutory matters. Costs of interlocutory applications may also be "reserved" for later determination whether or not as part of the final costs order made in the matter. Costs orders are also made at the conclusion of the proceedings. Pursuant to UCPR, r 42.7 costs orders made in respect of interlocutory applications during the course of proceedings do not become payable until the conclusion of proceedings unless the Court otherwise orders. That does not, however, preclude a party from applying for the assessment of costs prior to the conclusion of the proceedings.

1. Parties may and frequently, if not usually, apply for the assessment of all costs orders, interlocutory and final, in the one application. It also appears that parties sometimes make one application where costs are ordered at first instance and on appeal. On occasions, a single certificate issues in respect of the costs assessor's determination of the total costs payable, as happened on this occasion.

1. Although the provisions of the statute do not state that more than one costs assessment may be sought in the one application, neither does the legislation proscribe the filing of an application that seeks the assessment of more than one costs order, whether that be in respect of orders made by a court in the one matter or whether it be in respect of orders made in different courts as between the same parties, whether or not in the same 'matter', as I have described, or in unrelated matters. Although the approved form is drafted so that an assessment is sought in respect of a single costs order, being a pro forma document, there is no reason why it could not be adapted to refer to several costs orders, as clearly is done as a matter of practice.

1. Courts and tribunals frequently have before them applications in which more than one claim is made. Although a costs assessor is not a court or tribunal, the process prescribed for costs assessments bears a resemblance to a court process in the sense that the process is commenced by an application in an approved form. I agree therefore with the reasons that Barrett JA gives for an 'omnibus' application being permissible under the legislation.

1. I also agree with the reasons of Barrett JA, at [197], that although such an 'omnibus' application may be made, the costs assessor is required to make a determination as to the amount that is a fair and reasonable amount for the costs that are subject of each costs order. This is, in effect, recognised in the provisions of s 368(2) which provides that several certificates may be issued in relation to an application for assessment of costs. Section 373 provides for a review of a determination of the costs assessor. As the costs assessor must make a determination in respect of each costs order, the review for which s 373 provides must be in respect of that determination, and if more than one, each of those determinations. In this regard, I also agree with Barrett JA's reasons at [198].

1. Where I depart from his Honour is in respect of the question whether, where an omnibus application has been made, the legislation permits a costs assessor to make a global determination of the fair and reasonable amount of the costs subject of the various costs orders for which assessment has been sought.

1. In the present case, the determination made by the costs order was that the "fair and reasonable amount of costs to be paid to the costs applicant the sum of: $175,052.78". As Barrett JA has carefully explained, it may be possible in this case, given the way in which the itemised bill upon which the costs assessor made her determination was structured, to ascertain the amount that was determined in respect of the three costs orders subject of the assessment application. However, that possibility does not convert her determination into a determination in respect of each costs order as is required by the statute. On its terms and in its form, there was but one global determination. As a matter of construction of the statute, I do not consider that is permissible.

1. The matter can also be tested by the circumstance that a party seeking a costs assessment is not required to provide a bill of costs. If that had occurred in this case, the ability to 'sort out' what the determination was in respect of each costs order may not have been even a possibility. However, the important and indeed only relevant matter is that it is not for parties or a review panel or the court to 'sort out' what the costs assessor did. The statute prescribes what must be done. I have concluded that the statute requires a determination in respect of each costs order that is made and for which an application for assessment is made.

1. This may well have inconvenient consequences, given that judgment for the amount of the costs determined is obtained by the filing of a costs certificate in a court with relevant jurisdiction: s 368(5). If costs orders had been made in a matter both for and against a party seeking a costs assessment, it would be more efficient and equitable for those costs to be set off against each other with a final sum determined. However, the present structure of the legislation does not, as I would construe it, permit this to happen. The relevant professional associations may wish to bring this to the attention of the legislature.

1. It follows, therefore, that I agree with the orders proposed by Basten JA.

1. BASTEN JA: In 1998 the applicants, who ran a nursery business, suffered loss when a neighbouring tree fell on their property. The respondent, Horwath (NSW) Pty Ltd ("Horwath"), provided an expert opinion upon which to base a calculation of the amount of the loss. In March 2004 Horwath filed a claim in the Local Court against the applicants seeking payment of fees for its services. The matter was referred to an arbitrator, but ultimately proceeded to a hearing, Horwath obtaining a judgment in its favour. The applicants appealed to the Supreme Court, but their appeal was dismissed. An application for leave to appeal to this Court was rejected. At each stage, Horwath obtained an order that the applicants pay its costs.

1. Horwath claimed a total amount of $215,625.59 for its costs. No agreement was reached as to the amount payable and Horwath lodged an application for the costs to be assessed by a costs assessor pursuant to the Legal Profession Act 2004 (NSW), Pt 3.2, Div 11. An assessor, Ms Dulhunty, gave a determination in an amount of $175,052.78.

1. In the Supreme Court, one of the applicants, Mr Herbert Wende, had obtained a grant of legal aid. In accordance with the provisions of the Legal Aid Commission Act 1979 (NSW), an amount of $15,000 was paid by the Legal Aid Commission on account of Horwath's costs in those proceedings. Mr Wende was not liable for any further amount in respect of those costs. The assessor allowed a credit for the payment, but only in the sum of $10,000.

1. The applicants sought a review of the assessment which, in due course, was referred to a review panel. The review panel corrected the mistaken calculation of the payment from the Legal Aid Commission, but otherwise affirmed the assessment made by the assessor.

1. Pursuant to ss 382 and 384 of the Legal Profession Act, a party dissatisfied with a determination of a review panel may appeal against "a decision of [a review panel] as to a matter of law": s 384(1). An appeal dated 12 September 2012 was lodged with the District Court. The appeal was dismissed on 15 February 2013: Wende v Horwath (NSW) Pty Ltd (unrep, P Taylor SC DCJ).

1. Not persuaded by an expanding list of failures in resisting payment of an initial claim of $18,536, the applicants sought to appeal to this Court. The right of appeal conferred by s 127 of the District Court Act 1973 (NSW) is limited to a judgment or order in "an action" in the Court. As the Court has held in a series of decisions, that phrase, generally speaking, does not include statutory appeals from other jurisdictions: Muldoon v Church of England Children's Homes Burwood [2011] NSWCA 46; 80 NSWLR 282 at [11] (Campbell JA). Counsel appearing for the applicants did not seek to contend that there was any appellate jurisdiction in the present case. He conceded that the application for leave to appeal should be dismissed. He resisted an order for costs, but largely on the basis that little additional expense would have been incurred by the jurisdictional mistake in this court and an order may give rise to further disputation. The probable amount may be low, but is not a reason to decline the usual order. If it is indeed low there should be no strenuous resistance, but that too is beyond the range of relevant factors. The summons seeking leave to appeal should be dismissed with costs.

1. The applicants have now invoked the supervisory jurisdiction of the Court provided by s 69 of the Supreme Court Act 1970 (NSW). Pursuant to that jurisdiction, they seek to have the judgment of the District Court set aside on the basis of jurisdictional error, or for error of law on the face of the record of the District Court.

Nature of this Court's jurisdiction

1. The first issue in relation to this Court's jurisdiction concerned the ongoing significance of the certificate given by the original costs assessor, Ms Dulhunty. Although, in the course of oral argument, senior counsel for the applicants eschewed so much of the application as sought relief against Ms Dulhunty, he maintained the appropriateness of the grounds which sought to identify error in her decision. Subject to a minor qualification, that approach was erroneous. The applicants were party to a costs assessment and were dissatisfied with the determination of the costs assessor: accordingly, they were entitled to apply for, and did apply for, "a review of the determination": Legal Profession Act, s 373(1). Their application for review was referred, pursuant to s 374, to a panel constituted by two costs assessors. The review panel had "all the functions of a costs assessor" and was required to "determine the application ... in the manner that a costs assessor would be required to determine an application for costs assessment": s 375(2). The review was to be conducted on the evidence that had been received by the costs assessor, although the panel had power to receive submissions from the parties and receive fresh, or additional evidence: s 375(3). Further submissions and grounds of objection were filed with the application for review and were considered by the review panel. Otherwise, the matter proceeded on the material before the costs assessor.

1. The review panel confirmed the determination of the costs assessor (subject to the correction of the credit allowed for the Legal Aid Commission payment). In due course the panel issued a certificate setting out their determination, in accordance with s 378(1). The panel also gave a statement of reasons for its determination which, in part, adopted the reasons of the costs assessor. To the extent that that course was taken, Ms Dulhunty's reasons remained accessible for review. (Whether such adoption was permissible under s 380 was itself in dispute.)

1. The right of a party to have an initial decision reviewed on the merits is closely analogous to the so-called "all grounds" appeal which used to be available under s 122 of the Justices Act 1902 (NSW), providing for such an appeal from a conviction by a magistrate to Quarter Sessions (later the District Court). It was a "full appeal on law and fact". As explained by Dixon J in Wishart v Fraser [1941] HCA 8; 64 CLR 470, so long as the decision of Quarter Sessions affirming the conviction stood it was conclusive of the issues determined and it was not open to the person convicted to seek prohibition with respect to the conviction by the magistrate. Even if the disposition involved the dismissal of an appeal which was "withdrawn", with orders confirming the conviction and penalty imposed by the magistrate, no prohibition would lie: Blacker v Parnell [1978] 1 NSWLR 616. By analogy, there cannot be two certificates of assessed costs in relation to one matter: where there has been a determination by a review panel, which "sets out the determination", pursuant to s 378(1), that determination must, by implication, supersede the determination under review. Accordingly, it was not open to the applicants in this Court to seek to challenge the validity of the determination of Ms Dulhunty: the validity of that determination was assumed for the purposes of the review and it would be inconsistent with the fact of the review to allow the applicants to challenge the validity of the original certificate. Rather, unless and until the decision of the review panel be set aside, the original certificate has no legal consequence.

1. The same analysis does not apply to the determination of the review panel. The appeal to the District Court was limited to decisions of the panel as to matters of law. However, that right of appeal is more extensive than the scope of an application under the supervisory jurisdiction of this Court. If an appeal were taken to the District Court, it would be an abuse of process to invoke a similar but less extensive jurisdiction under s 69 of the Supreme Court Act, whilst the appeal remained on foot. If no appeal were taken to the District Court, but a challenge to the decision of the panel was brought to the Supreme Court, relief might well be refused on the basis that the statutory appeal right should properly be invoked, where available, rather than the supervisory jurisdiction under s 69. Further, an application under s 69 of the Supreme Court Act with respect to a decision of a review panel would not come to this Court, but would go to a judge in the Common Law Division.

1. In any event, an appeal having been taken to the District Court and determined by that Court, the applicants should properly be restricted to the challenges they now seek to make under s 69 to the orders made in the District Court, unless it be suggested (which it was not) that the appeal was not available on grounds which could be invoked under s 69.

Material available in this Court

1. The material sought to be relied upon in this Court included, appropriately:

(a)   the costs orders made by the arbitrator in the Local Court, the magistrate in the Local Court, Hislop J in the Common Law Division and this Court in refusing leave to appeal from the judgment in the Common Law Division;

(b)   the respondent's bill of costs, which covered costs incurred in all three sets of proceedings, together with its application for assessment, the certificate of Ms Dulhunty, together with her statement of reasons, the certificate of the review panel, with its statement of reasons; and

(c)   the notice of appeal to the District Court and the judgment and orders made in the District Court.

1. More controversially, the applicants sought to tender all of the exhibits before the District Court, which included correspondence between the applicants and the costs assessor, submissions before the costs assessor, submissions to the review panel, a transcript of the hearings in the Local Court, a transcript of the hearing before the District Court and submissions filed in the District Court.

1. Insufficient attention was accorded by the parties to identification of the material which might properly form the basis of consideration by this Court. To the extent that the applicants relied upon an error of law on the face of the record of the District Court, much of the latter material was irrelevant.

1. The applicants submitted that any material referred to by the District Court judge in his reasons was incorporated into "the record" of that court. However, that submission was too broadly stated. Two propositions may be accepted: first, the reasons of the court constitute part of the record, pursuant to s 69(4); secondly, material expressly incorporated into the reasons will also form part of the record. However, as a matter of statutory construction, the extension of the record to cover the reasons of the court or tribunal should not be construed as expanding the record beyond the reasons and any material expressly incorporated. An obligation to give reasons routinely includes an obligation to consider the material evidence and make findings of fact. If the legislature had intended to expand the scope of "the record" to include the evidence and submissions considered by the court or tribunal (which should no doubt have included the bulk of the evidence given and the submissions received before it) it might be expected that the legislature would have said so. Further, the record is identified in the context of the phrase "an error of law that appears on the face of the record of the proceedings": s 69(3). An error of law that appears on the face of the record (including the reasons) is not an error of law which appears from the evidence or the submissions. The expansive approach proposed by the applicants is inconsistent with established principle and should be rejected.

1. It does not follow, however, that the material tendered was irrelevant: identification of a "record" is not a necessary element in establishing jurisdictional error, such as a failure to accord procedural fairness. Indeed, procedural unfairness may be established by evidence of events which are not recorded in the evidence before the tribunal making the impugned decision. However, for reasons which will appear, it is not necessary to resolve any question as to the precise relevance of specific documents.

Certificate affected by legal error

(a) amended summons

1. As explained by Barrett JA, the applicants sought leave to amend their summons seeking to review the decision in the District Court in a number of broad ranging respects. The decision subject to review was made on 15 February 2013. The original summons was filed within three months, in accordance with the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), r 59.10. (It is not necessary to consider for present purposes whether that time limit applied with respect to a decision made before the commencement of the rule on 15 March 2013.) The application to amend was made on 2 October 2013 and was stood over for determination on the hearing of the summons. Relevantly for present purposes, the application to amend included the following heading and numbered paragraphs:

"Whether one bill of costs can validly claim costs under costs orders made by different court for purposes of costs assessment regime in Legal Profession Act 2004 (NSW)

2A The primary judge erred in his interpretation and application of ss 353 and 354 of the Legal Profession Act 2004 by his determination that the fact that a court order is needed to precede a valid costs assessment does not mean that each separate item or group of costs need be the subject of a separate court order.

2B The primary judge erred in his interpretation and application of ss 353 and 354 of the Legal Profession Act 2004 by failing to determine that the first respondent's bill of costs was invalid for the purposes of ss 353 and 354 on the ground that it included the costs ordered to be paid under three (3) separate and distinct costs orders made by three (3) different courts (namely, the Local Court, the Supreme Court and the Court of Appeal in three (3) sets of proceedings without distinction as to which costs were incurred under which order as to costs, or were incurred in which court or were incurred in which particular proceeding)."

1. In considering the application to rely upon these grounds, two questions are central. First, was the ground raised on the appeal to the District Court? Secondly, is the respondent embarrassed or prejudiced by the late proposed amendment?

1. Ground 9 in the notice of appeal to the District Court was in the following terms:

"The Statement of Reasons of the Costs Review Panel does not allow the Plaintiffs to arrive at total costs in respect of each of the three proceedings namely the Local Court proceedings, the Supreme Court proceedings and the Court of Appeal proceedings, in contravention of the authority of Frumar v Owners of Strata Plan 36957 [2006] NSWCA 278."

1. The trial judge found that Frumar was "not authority for the proposition asserted": at [96]. He also noted the applicants' submission that the rendering of a single certificate of assessment impeded the applicants in exercising their rights of appeal under s 385(2) of the Legal Profession Act. The trial judge accepted that there was "some force" in the submission that the right could not be exercised "if a party could not identify, in respect of the particular costs being assessed, the court or tribunal which made the order": at [103]. He concluded, however, that the bill and assessment were set out in a manner, by date and headings, which were sufficient "to enable a party to identify which costs relate to which proceedings, in circumstances where the assessment covers the costs in more than one court or tribunal": at [106].

1. It may be accepted that ground 9 did not directly raise the issue now sought to be relied upon, but it did in substance raise a question as to the validity of a single determination (and certificate) relating to costs in several jurisdictions, awarded pursuant to separate court orders.

1. So far as the question of prejudice is concerned, the issues raised are questions of law, relating to the precise nature of the statutory function conferred on the costs assessors and their powers to assess costs pursuant to several court orders. Whilst maintaining its objection to the amendment, the respondent was able to address the substance of the complaint, without prejudice or embarrassment (beyond having to deal with an extended application) in written submissions filed on 11 November 2013. In these circumstances, leave to amend to include grounds 2A and 2B should be granted.

(b) a global certificate

1. The respondent accepted that its application for an assessment of costs was made pursuant to the power conferred by s 353 of the Legal Profession Act. The application for assessment was made on 14 September 2010; s 353 then provided (as it does now):

353 Application for assessment of party/party costs

(1) A person who has paid or is liable to pay, or who is entitled to receive or who has received, costs as a result of an order for the payment of an unspecified amount of costs made by a court or a tribunal may apply to the Manager, Costs Assessment for an assessment of the whole of, or any part of, those costs.

1. Horwath was a person "who is entitled to receive ... costs", for the purposes of this provision. It was therefore entitled to apply to the specified officer for an assessment of the whole of "those costs". The subject matter of the proposed assessment was thus identified as costs resulting from "an order for the payment of an unspecified amount of costs made by a court or a tribunal".

1. The procedural requirements of such an application are identified in s 354:

354 How to make an application for costs assessment

(1) An application for a costs assessment:

(a) must be made in accordance with the regulations (if any), and

(b) subject to subsection (4), must be accompanied by the fee prescribed by the regulations.

(2) The application must authorise a costs assessor to have access to, and to inspect, all documents of the applicant that are held by the applicant, or by any law practice, Australian legal practitioner or Australian-registered foreign lawyer concerned, in respect of the matter to which the application relates.

1. The language of s 353(1) and s 354(2) is in the singular: each refers to "an order" made by "a court or a tribunal" and, in s 354(2), "in respect of the matter" to which the application relates. The use of the singular form is not definitive: the Interpretation Act 1987 (NSW), s 8(b) provides that "a reference to a word or expression in the singular form includes a reference to the word or expression in the plural form". Nor is the absolute nature of that proposition definitive: it applies only to the extent that the contrary intention does not appear from the specific legislation being construed: Interpretation Act, s 5(2).

1. There are practical factors which may suggest that a rigid system requiring a separate application with respect to each costs order would create undue complexity and expense. The clearest case might be a single matter which has been the subject of separate orders in relation to interlocutory applications and a final judgment. However, even that case is not necessarily persuasive. The argument appears to assume that all orders are in favour of the same party: if they are not, s 353(1) must be read as permitting a person who is both liable to pay and entitled to receive costs to make a single application. Accepting that such a construction is open, and one certificate eventuated, the party would not be able to challenge part of the certificate without having the whole certificate set aside and the assessment repeated. (It is at least doubtful that, on judicial review, or an appeal limited to a question of law, a court could set aside the tribunal's certificate in part only.) Further, the consequence of a single certificate by a party who is both liable to pay and entitled to receive costs would result in some form of set off if only one certificate were issued. By similar reasoning, if a specific costs order is set aside on review or appeal after the assessment has been undertaken, but others are not, again the global certificate must fail.

1. If separate applications must be made in relation to orders making different parties liable, an implied limitation must be read into s 353. A simpler course is to construe the section as requiring a separate application for each order, as its language suggests.

1. A further factor favouring a certificate for each order may be found in s 367A which is in terms assuming an application relating to a single order:

367A Determinations of costs assessments for party/party costs

A costs assessor is to determine an application for an assessment of costs payable as a result of an order made by a court or tribunal by making a determination of the fair and reasonable amount of those costs.

1. A possible approach is to permit a single application, but separate certificates: thus power is conferred on a costs assessor to issue "more than one certificate in relation to an application for costs assessment": s 368(2). No doubt that power would permit a costs assessor to provide separate certificates in respect of various costs orders covered by one application, but it does not provide an answer to the question of construing s 353. In its terms, s 353 requires an application to be made with respect to a particular order of a court or tribunal. The costs assessment must respond to that order and be limited by the terms of the order. A failure to comply with the terms of the order would be an error of law on the part of the assessor. So much might be assumed, but is in fact made express in s 364, which sets out the matters that the assessor must consider in assessing legal costs "payable as a result of an order made by a court or tribunal": s 364(1).

1. There is a further factor which militates in favour of the application being limited to a particular order. The result of a costs assessment is the issue of a certificate setting out the determination made by the costs assessor: s 368(1). The certificate may be filed in a court of competent jurisdiction and "taken to be a judgment of that court for the amount of unpaid costs": s 368(5). The judgment will accrue interest. Where a determination covers multiple court orders, the effect is to consolidate various separate liabilities into one judgment debt. According to the principle of merger, those separate liabilities would cease to exist. While it is possible that the party liable to pay costs could acquiesce in such a procedure, there is no statutory basis which would require that outcome. As Barrett JA explains, the applicants did not acquiesce in the process initiated by the respondent but made an objection to the costs assessor, asking that the application be, in effect, broken up into its constituent parts: see [183] and [184] below. Ms Dulhunty declined to take that step: if she were wrong in that refusal, that constituted an error of law.

1. There is a final reason why, at least in the present circumstances, a global certificate of costs with respect to the three proceedings was legally inappropriate. Even assuming that such a single certificate may be appropriate in some circumstances, a precondition to the merger of different sets of liability in one judgment debt is that each debtor be liable under each order. No one would suggest that a person who was liable to the respondent for the costs of one proceeding only could be joined in a certificate relating to the liability of other persons in other proceedings. Yet that is the consequence of the determination of costs payable by the applicants to the respondent in a global amount.

1. As explained by Barrett JA at [212]-[214] below, one of the applicants, Mr Wende, obtained a grant of legal aid in respect of the proceedings in the Supreme Court. It was in respect of that grant that the Commission paid an amount of $15,000, in full settlement of Mr Wende's costs liability. The Legal Aid Commission Act not only provides for a payment (in a limited sum) by the Commission, but provides an immunity for the legally aided person from liability for payment of the whole or any part of the costs ordered to be paid by a court or tribunal against the legally aided person: s 47(1)(b). Accordingly, Mr Wende had a statutory defence with respect to the judgment debt, limited to the costs payable pursuant to the order made in the Supreme Court. Because there is no specific order identifying which part of the costs are attributable to the order in the Supreme Court, there is no judgment debt from which he can claim immunity. This circumstance provides an illustration of the consequences of failing to provide separate certificates in respect of each costs order made in separate proceedings.

(c) waiver or acquiescence

1. It was perhaps arguable that the applicants acquiesced in the course taken by Ms Dulhunty by seeking review of her certificate. This proposition raises two separate issues, neither of which was argued before this Court. The first is that, merely by instituting proceedings for review the applicants waived any entitlement they had to have the initial determination set aside as invalid in point of law. The second possibility is that they lost the right to make such a case when they did not repeat the objection taken with Ms Dulhunty before the review panel.

1. Questions of "acquiescence" or "waiver" have frequently arisen in cases involving a reasonable apprehension of bias on the part of a judge, where either objection is not taken or having been taken and rejected, an interlocutory appeal or application for judicial review is not pursued: see R v Magistrates' Court at Lilydale; Ex parte Ciccone [1973] VR 122 at 132-134 (McInerney J); Vakauta v Kelly [1989] HCA 44; 167 CLR 568 at 577-579 (Dawson J); Michael Wilson & Partners v Nicholls [2011] HCA 48; 244 CLR 427 at [74]-[86] (Gummow ACJ, Hayne, Crennan and Bell JJ). Those authorities have no application (except perhaps by analogy) in the present case; there may, however, be analogous principles with respect to discretionary grounds for refusing orders quashing the decision of a tribunal or court or refusing to prohibit enforcement of orders where the procedure adopted below was tainted: see Aronson and Groves, Judicial Review of Administrative Action (5th ed, Law Book, 2013) at [12.280], under the heading "Blameworthy applicants".

1. The principle does not operate in the present case, however, because a review was undertaken at the instigation of the applicants. The result was a determination which superseded the determination of Ms Dulhunty, with the result that her determination no longer had legal consequences: see at [24] above. The mere fact of taking the appeal does not constitute a waiver of an erroneous decision on a point of law, although, if the complaint is a failure to accord procedural fairness, that error may be "cured" by a full and fair rehearing in an appellate tribunal: Calvin v Carr [1980] AC 574. Further, a failure to take an available right of appeal may lead to a refusal of relief with respect to the original decision: Twist v Randwick Municipal Council [1976] HCA 58; 136 CLR 106; Hill v Green [1999] NSWCA 477; 48 NSWLR 161 at [54]-[55] (Spigelman CJ); [155]-[157] (Fitzgerald JA, Beazley JA agreeing).

1. The applicants (described as "costs respondents") made submissions to the review panel dated 16 May 2011. Paragraphs 6 and 7, under the heading "General Principles", expressly referred to s 353 and its requirement that what was to be assessed was "costs as a result of an order". Given the earlier correspondence with Ms Dulhunty, which was before the review panel as part of the file, these submissions should have been understood as invoking a right to have separate bills for each costs order. To the extent that the review panel dealt with the issues raised in the general submissions, they were dismissed in paragraph 3.1 in the following terms:

"The panel notes that the assessment was correctly completed by the Assessor under the provisions of the Legal Profession Act 2004."

1. There was no withdrawal of the point which had been taken below. It did not have to be restated or reargued. The relevant objections were before the review panel and were addressed. Accordingly, if the assessment proceeded on a wrong basis and separate certificates were required relating to each court order, there is no reason to refuse the applicants relief.

(d) costs of arbitration in Local Court

(i) form of order

1. There was a dispute before the assessor, the review panel and in the District Court, as to whether the costs order made in the Local Court extended to the costs of the arbitration conducted in that Court.

1. Briefly, the history of the matter was as follows, commencing with proceedings filed by Horwath on 26 March 2004. Within a reasonably short period (the dates are not apparent from the chronology filed in this matter) a magistrate ordered that the proceedings be referred for determination by an arbitrator, pursuant to s 38 of the Civil Procedure Act 2005 (NSW). The arbitration proceeded over four days during the period from 25 October 2004 to 2 February 2005. The arbitrator reached a determination which included an order as to the costs of the referred proceedings, pursuant to s 54 of the Civil Procedure Act. Section 54 provided that "[t]his section does not limit the power of the referring court to make orders under section 98 with respect to the costs of referred proceedings": s 54(3).

1. On 7 May 2005 the applicants sought a rehearing before a magistrate, pursuant to s 43. The rehearing took place over some six days in July, October and November 2006. On 24 July 2007 the respondent's claim was upheld and the following order (as set out in the transcript) was made as to costs:

"There will be an order for the plaintiff, and the defendants to pay the plaintiffs their costs on a party/party basis as assessed or agreed until 20 October 2004. Thereafter from 21 October 2004, the defendants are to pay the plaintiff's costs on an indemnity basis."

1. The order, as set out in a document given over the hand of the Registrar, was in the following terms:

"1. Motion seeking stay [of] judgment dismissed.

2. Defendants to pay Plaintiff's costs of motion as assessed or agreed.

3. Defendants to pay Plaintiff's costs of hearing on party/party basis up to 20 October 04 thereafter Defendant to pay Plaintiff's costs on indemnity basis."

1. 20 October 2004 was a date after the matter had been referred to the arbitrator, but before hearings before the arbitrator had commenced, when an offer of compromise had been served. The registrar's orders are not in identical language to the transcript, although it may be inferred that the order as certified by the Registrar was adapted from the language used by the magistrate in Court. As the document prepared by the Registrar appears to reflect an entry in the records of the Local Court, it should be taken to be the order to be construed and enforced.

(ii) applicable principles

1. The question is whether the magistrate's order should be construed as including the costs of the arbitration, or as limited to the costs otherwise incurred in the Local Court proceedings. The order is, in terms, silent as to that issue: it does not expressly include the costs of the arbitration, nor does it expressly limit itself to the costs of the rehearing. There is a latent ambiguity, revealed by the context.

1. Although there has been a debate as to whether it is permissible to go to extrinsic material to assist an understanding of a court order, it is not in doubt that such material may be relied on in a case of ambiguity: P Herzfeld, "Interpretation of Orders", in P Herzfeld, T Prince and S Tully, Interpretation and Use of Legal Sources - The Laws of Australia (Thomson Reuters, 2013) at [25.4.730]. In Athens v Randwick City Council [2005] NSWCA 317; 64 NSWLR 58 at [29], Hodgson JA accepted a statement that "in the case of real ambiguity extrinsic material such as the reasons for judgment may be considered", referring to Justice P W Young, "Construing Court Orders" (1998) 72 ALJ 117. Hodgson JA also cited the proposition from Repatriation Commission v Nation (1995) 57 FCR 25 at 34, where Beaumont J said (Black CJ and Jenkinson J agreeing) that "evidence of surrounding circumstances is admissible to assist in [construction] of an instrument if the language is ambiguous or susceptible of more than one meaning, but not admissible to contradict the language of the instrument when it has a 'plain meaning' (see Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 per Mason J at 352)". This proposition was recently affirmed in Ross v Lane Cove Council [2014] NSWCA 50 at [30]-[31] (Leeming JA).

1. The reference to Codelfa draws on principles relevant to construing commercial contracts. It may therefore be appropriate to construe orders of a court according to a broad approach now adopted with respect to the construction of commercial contracts, without reference to the need for ambiguity: Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7 at [35] (French CJ, Hayne, Crennan and Kiefel JJ). As in this case, ambiguity may be latent in the sense that it is only revealed by reading a passage in its context. However, if references to the need for ambiguity are no more than a rejection of reliance on extraneous material to depart from a plain meaning, little may turn on this point.

1. There is a question as to what may constitute relevant extrinsic material. As noted by Herzfeld, there is a plethora of cases in which reference has been made to reasons for judgment: ibid. It is also permissible to look at the nature of the application by the party seeking the order and, to the extent that these documents do not resolve the question, the submissions made in the course of the application. So much appears to accord with the approach taken by Mullins J in Guardianship and Administration Tribunal v Perpetual Trustees Qld Ltd [2008] QSC 49; [2008] 2 Qd R 323 at [36], and by Allsop J in Owston Nominees No 2 Pty Ltd v Branir Pty Ltd [2003] FCA 629; 129 FCR 558 at [53], although, as Allsop J noted, the parties "should not have to examine the entrails of a long proceeding to understand their rights and obligations": at [54].

(iii) application of principles

1. Both Ms Dulhunty and the review panel treated the order as extending to the costs of the arbitration. The proper construction of the order was a question of law. The District Court judge held that, properly construed, it extended to the costs of the arbitration and no error was identified on the part of the assessors in adopting the same approach.

1. In order to construe an order, a court should:

(a) identify the statutory power under which the order was made (to avoid a construction leading to invalidity);

(b) address the language used, to identify a plain meaning if one is available;

(c) if latent ambiguity is alleged, refer to the reasons for judgment and the application to which the order responded;

(d) in the event of ambiguity (or other uncertainty), not resolved by reference to the reasons for judgment and the terms of the application, look to the submissions and (possibly) other material before the judicial officer on the application.

1. There was no question raised as to the scope of the magistrate's power to award costs. The magistrate who heard and determined the matter "on a full rehearing" had power to make orders for the costs of the rehearing and for the costs of the arbitration: s 46(1). It was also not in doubt that once an order for a full rehearing was made, the arbitrator's award ceased to have effect: s 44(1). Nevertheless, if invited to make an order as to the costs of the arbitration, and knowing that the arbitrator had power to award costs and had probably done so, it would be surprising if the magistrate did not inquire as to whether an order had been made and whether it should be taken into account. (No reason was suggested as to why the order by the arbitrator might not be considered by the magistrate in the exercise of her discretion, with respect to proceedings in which she had had no involvement.)

1. Turning to the largely neutral language of the order, the fact that it referred to "costs of hearing" (in the singular) tends to support the view that the order was addressing the costs of the rehearing before the magistrate and not the hearing before the arbitrator.

1. If there had been a written application, it did not appear in the material before this Court; the transcript revealed that Magistrate Freund merely referred to "the application in relation to costs": Tcpt, 16/07/07, p 3(55). Mr Hughes, appearing for Horwath, commenced the application by tendering three letters which were ultimately relied upon as Calderbank offers, one of which triggered the order for indemnity costs from 20 October 2004. Confirming the year of the offers was 2004, Mr Hughes continued (Tcpt, p 4(24)):

"Yes, and my application is, as all of these offers predate the rehearing application, that indemnity costs should be payable from the date - for the whole of the rehearing, having regard to all three of the letters ...."

1. Following expansive submissions by the applicants, which dealt in part with alleged errors in the transcript, the magistrate raised with counsel for Horwath the question of the arbitration, at p 19(45):

"HER HONOUR: Something that arises during the course of these submissions that just springs to mind is, Mr Hughes, you made an application that predates the rehearing. Obviously I was hearing the rehearing of this matter. Was there an arbitration or something of this matter initially?

HUGHES: There was, yes.

HER HONOUR: And the outcome in relation to that arbitration, do I need to know what that outcome was?

HUGHES: Ordinarily I would say that there is no problem with that, but given that these gentlemen are unrepresented I leave it for them as to whether or not they feel you should have a look at the outcome.

HER HONOUR: Because I would not ... [not transcribable] ... something I haven't - I'm not privy to. So this is the rehearing. So it's gone through a hearing before an arbitrator and it's come back for rehearing before me.

HUGHES: Yes."

1. It is apparent from the statement of the application at the commencement of the proceeding and from the magistrate's reference to the arbitration at the end of the hearing, that the arbitration was not expressly raised as part of the application. When given the opportunity, Mr Hughes did not say, as he could have, that the application was intended to cover the costs of the arbitration. Nor did he say anything about any order as to the costs of the arbitration.

1. The matter was relisted before Magistrate Freund on 24 July 2007. After a further brief hearing, she delivered a judgment dealing with three applications, namely an application that she disqualify herself (which was refused), an application for a stay (which was refused) and, finally, the application for costs. She identified it, fairly in the context of the hearing, as "the application for the indemnity costs": Tcpt, 24/07/07, p 5(35). Most of the extensive reasons that the magistrate then gave related to the offers of compromise and the reasonableness of the failure to accept them. Having dealt with that issue and determined that indemnity costs should be awarded, she turned to a final issue relating to the costs of Horwath's experts. Her reasons concluded (p 10(28)):

"This matter had a long and chequered history. It was a matter for the defendants as to how they wish to run their case, and I note that they were legally represented throughout the five days of hearing. This case did run longer than anticipated; however, it is not for me to ultimately decide whether or not the presence of an expert for cross-examination is a necessary feature.

Accordingly, for the reasons set out above, I order that ..."

1. There followed the discursive form of the order noted at [56] above. Thereafter, Mr Hughes sought costs of the application for the stay and a further order was made in that regard. No point was taken as to the scope of the initial order.

1. The fact that neither side (and particularly the representative of the respondent) raised any issue as to the relevance of the arbitration is inconsistent with the application extending to the costs of the arbitration, or the magistrate acting on the basis that it did so. It is quite possible that the sole reference to the arbitration (as a matter which came to the mind of the magistrate in the course of the hearing) was not considered material, because the outcome of the arbitration had nothing to do with the request for indemnity costs, which was the focus of the application.

1. In these circumstances, the order should be construed against the interests of the applicant for the order. If Horwath had wished to have an order which dealt with both the rehearing and the arbitration, it should have made that clear, both to the present applicants and to the Court. On its proper construction, the order for costs in the Local Court did not extend to the costs of the arbitration.

(e) costs of assessment

1. Provision for making an order as to the costs of the costs assessment is found in s 369 of the Legal Profession Act. A certificate which sets out a determination of costs is not to include the costs of the costs assessment: s 368(3). Accordingly, it is necessary for a costs assessor to issue a separate certificate with respect to the costs of the assessment.

1. The separate certificate issued by Ms Dulhunty under s 369 required that the "costs respondent" (presumably a reference to the three applicants) pay an amount of $13,128.76 as the costs of the assessment. The review panel "affirmed" that certificate and issued a separate certificate in respect of the costs of the review. The latter certificate, dated the same day, identified an amount of $5,818, to be paid by the applicants.

1. The challenge is not to the amount of the two costs certificates, but as to the party on whom liability should fall for payment of those costs. In the event that the costs determinations are set aside, those orders must also fall. However, because the applicants raise a separate and discrete question of law as to the operation of s 369 of the Legal Profession Act, independently of their other arguments, that issue should be addressed.

1. The amount of costs claimed by Horwath was $215,626; the amount allowed by the review panel was $160,053. The difference, being $55,573, was a little over 25% of the amount claimed. In those circumstances, the applicants claimed that Horwath's solicitors should have been required to pay the costs of the assessment, pursuant to s 369(3)(c). The correctness of that submission turns on the proper construction of s 369 which, so far as relevant, provides:

369 Costs of costs assessment

(1) This section applies to the costs of a costs assessment in relation to:

(a) costs to which section 317 (Effect of failure to disclose) applies, and

(b) costs to which section 364 (Assessment of costs-costs ordered by court or tribunal) applies, and

(c) costs that on assessment are reduced by 15% or more.

(2) A costs assessor is, subject to this section, to determine the costs of a costs assessment to which this section applies.

(2A) Subject to any order of or the rules of the relevant court or tribunal, the costs assessor may determine by whom and to what extent the costs of an assessment referred to in section 364 (Assessment of costs-costs ordered by court or tribunal) are payable and include the determination in the certificate issued under this section in relation to the assessment.

(3) The costs of a costs assessment to which this section applies are payable:

(a) for a costs assessment in relation to costs to which section 317 (Effect of failure to disclose) applies-by the law practice that provided the legal services concerned, or

(b) for a costs assessment in relation to costs to which section 364 (Assessment of costs-costs ordered by court or tribunal) applies-by such persons, and to such extent, as may be determined by the costs assessor, or

(c) for a costs assessment in relation to costs that on assessment are reduced by 15% or more-by the law practice that provided the legal services concerned or, if the costs assessor so determines, by such persons, and to such extent, as may be determined by the costs assessor.

...

(7) The certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs.

1. The respondent submitted that subs (3)(c) applied only to a solicitor/client bill. The construction which would so limit the operation of that provision turned primarily on two considerations. First, the structure of subs (3) deals with three discrete cases. Paragraph (a) applies only to an assessment where there has been a failure to disclose costs in advance, which assessment is necessary before the law practice can maintain proceedings against its client. Paragraph (b) applies to an assessment of costs pursuant to an order of a court or tribunal and gives a broad discretion to the assessor as to the party responsible for paying the costs. Paragraph (c) is silent as to which assessments it applies, but the fact that it requires the law practice that provided the legal services to pay costs, in the event of a reduction in excess of 15%, indicates that it is dealing with an assessment as between the law practice and its client.

1. Secondly, the antecedents to paragraph (c) applied to solicitor/client taxations only. The history of these provisions, known as the "one-sixth rule", is set out by Jordan CJ in In Re Dibbs and Farrell (1941) 41 SR(NSW) 249. As the Chief Justice noted at 252, the first relevant legislative provision in the UK dated from 1729 and applied, not to party and party taxations, but to the prevention of extortionate charges by solicitors of their clients. Such provisions continued through a long statutory chain and were included in the Legal Practitioners Act 1898 (NSW), s 28. Section 28 appeared in Pt 5 of the 1898 Act, dealing with "Bills of costs". Section 22 provided that, "[u]pon the application of the party chargeable with a bill ..., the bill shall be taxed in accordance with the rules of the Court". Section 28 provided that it applied to the costs of proceedings under s 22 and required that "[w]here the bill when taxed is less by a sixth part than the bill delivered ..., the costs shall, unless the Court otherwise orders, be paid by the solicitor": s 28(3).

1. That provision was not carried across into the Legal Practitioners Act 1987 (NSW), nor into the Legal Profession Act 2004 (NSW), as enacted.

1. The Legal Profession Act was intended to enact draft model provisions that had been provided by Parliamentary Counsel's Committee to the Standing Committee of Attorneys General in mid-2004. The draft model provisions contained the new equivalent of the "one-sixth rule", namely the 15% reduction standard: cl 1043 in Pt 10, Div 7, "Costs review". This was described as a "core provision not requiring textual uniformity", although each jurisdiction was expected to have a counterpart. It is not known why cl 1043 was not included in the Legal Profession Act. The model provision came in a part dealing with solicitor/client costs assessments. The amendments which introduced paragraphs (1)(c) and (3)(c) to s 369 commenced two years later, pursuant to the Legal Profession Further Amendment Act 2006 (NSW). (There appears not to be any relevant explanatory material accompanying the amendments.)

1. Thus, although s 369(3)(c) is silent as to the scope of its operation, there is both internal and historical support for the view that it applies to solicitor and client assessments only. However, two further considerations relied on by the District Court are not persuasive. In Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2011] NSWDC 55 Johnstone DCJ identified two further reasons at [70]:

"Thirdly, subsection (c) is mandatory, in the sense that if the costs of the law practice are reduced by 15% or more, the costs of the costs assessment are to be paid by the law practice. This is inconsistent with the general discretion conferred on the costs assessor in respect of an assessment of party/party costs to award such costs against such persons, and to such extent as may be determined. Finally, the use of the word 'reduced' in subsection (c) confirms that it relates only to practitioner/client costs. Under s 367 of the Act the costs assessor is required to determine an application relating to a bill, that is a practitioner/client bill, by confirming the bill or by substituting a lesser amount. That may, and usually will, involve a reduction. On the other hand, there is no element of reduction in the assessment of party/party costs. Under s 367A of the Act the costs assessor is required to make a determination of the fair and reasonable amount of costs payable as a result of an order made by a court or tribunal."

1. As to the reading of the provision as "mandatory", the reasoning appears to be based on a misreading of paragraph (c). The paragraph contains alternative courses, the second being in the same expansive and discretionary terms as the allocation permitted by paragraph (b).

1. The next reason refers to the use of the word "reduced" in paragraph (c). The words has a straightforward and readily understood common meaning. If the costs assessor, in the language adopted by the District Court judge, "substitutes a lesser amount", that will as the reasons concede, usually involve "a reduction": it is difficult to comprehend any other meaning. Why that should not apply equally to an assessment of costs claimed and allowed on a party/party basis is not explained by identifying the standard to be applied. The unarticulated assumption appears to be that the party claiming payment of its costs will not claim a specific amount. That is unrealistic: it would effectively deprive the respondent to the assessment of any opportunity to object sensibly and would also render it impossible for the respondent to agree to an amount in advance of the assessment. Neither factor conforms to the structure and purpose of the Legal Profession Act, Pt 3.2.

1. The principal consideration supporting a different conclusion is that, in contrast to the pre-existing paragraphs, paragraph (c) does not purport to limit its operation to any particular kind of assessment. If it had been intended to apply with respect to assessments under s 364, it would have been a simple matter to say that. Further, the overall purpose of Pt 3.2 of the Legal Profession Act is to regulate the billing of costs for legal services and to provide a mechanism for the assessment of legal costs: s 301. The proper assumption is that whenever costs are to be assessed the bill will be prepared by the law practice that provided the legal services. Accordingly, the responsibility is placed upon the law practice not to make excessive claims. In particular cases or circumstances, that assumption may prove false, in which case there is ample power in the costs assessor to order that costs be paid by some other person who was responsible for preparing or directing the preparation of a bill which exceeded the amount assessed by the specified margin.

1. The existence of the broad discretion available to the costs assessor is a matter of some significance in this regard. Indeed, even if the bill were reduced by the specified amount, it would be open to the costs assessor to order some or all of the costs of the assessment to be borne by the party responsible for paying the bill, possibly on the basis that many objections had proved fruitless and time consuming.

1. On balance, the first two considerations, favouring the conclusion that s 369(3)(c) is directed to solicitor/client assessments, not assessments of costs awarded by court order, should be accepted. Nevertheless, the standard adopted is not irrelevant in the latter situation. The broad principle as to the award of costs is that they "follow the event": UCPR, r 42.1. To apply that rule to a costs assessment requires a standard to identify success or failure by an objector. The 15% reduction is a standard which may readily be applied. A costs assessment will only result from the refusal of the person liable to accept the amount of the bill rendered. If the assessment results in a significant reduction in the bill (as to which, 15% provides a standard) there is good reason to consider whether the costs should be borne in part or in whole by the party raising the objections.

1. It is not clear that Ms Dulhunty adopted such an approach; if she did not, the review panel, in merely confirming her approach, also failed to do so. However, this is a somewhat more nuanced argument than that relied upon by the applicants and in the circumstances that the matter will need to be returned for reconsideration, it is not necessary to reach a firm conclusion on this ground.

(f) other grounds

1. The other grounds on which the judgment of the District Court was sought to be challenged should be rejected for the reasons given by Barrett JA.

1. It is not necessary to decide for present purposes whether the application for assessment of costs was ineffective to invoke the functions of the costs assessor's under the relevant provisions of the Legal Profession Act, because of non-compliance with s 353. In many cases it will be convenient and expeditious to assess costs contemporaneously under several orders. That may be so in proceedings heard together which involve separate orders with respect to a claim and a cross-claim, benefiting opposite parties to the proceedings. In such a case it would almost certainly be undesirable to have separate assessments, though arguably the applications would need to distinguish time spent on the claim from that spent on the cross-claim and it seems inevitable that separate certificates would result. In other cases such discrimination would not be necessary.

Orders

1. The conclusion that, in relation to orders made by different courts in separate proceedings, the scheme of Pt 3.2, Div 11 of the Legal Profession Act does not permit the issue of a global certificate of determination of costs, incorporating liabilities under the several and separate orders, the certificate issued by the review panel should have been set aside by the District Court. At least that is so in circumstances where objection to an application in that form was taken and where liability for such costs did not fall on the same parties with respect to each order. The different view upheld by the District Court involved an error of law in construing the Legal Profession Act, which appeared from the judge's reasons, forming part of its record.

1. That conclusion exposed for consideration the certificates issued by the initial costs assessor, Ms Dulhunty. They are subject to the same complaint and should also have been set aside.

1. The judgment in the District Court which failed correctly to identify the relevant errors of law must be set aside. The applicants should, presumably, have their costs of the proceedings in the District Court, although there is an issue as to whether this Court can make that order. The applicants should have their costs in this Court.

1. There remains a further question as to the appropriate orders with respect to the costs of the failed costs assessments. Whether those matters can be dealt with by the District Court or will need to be remitted to the Manager, Costs Assessment, is a matter which can be determined on remitter to the District Court.

1. The final question is whether this Court can set aside the certificates issued by the review panel and Ms Dulhunty, or whether the matter must be remitted to the District Court for it to take that step. Where the conclusion follows as a matter of law, and no alternative order is available, the just, quick and cheap resolution of the real issues would appear to require that orders be made by this Court: Civil Procedure Act, s 56(1). On one view, it would be open to this Court, having set aside the judgment of the District Court, to grant declaratory relief with respect to the invalidity of the certificates. Such a power derives from the conferral of "all jurisdiction which may be necessary for the administration of justice" in the State, and the obligation to grant "all such remedies as any party may appear to be entitled to in respect of any legal or equitable claim brought forward in the proceedings so that, as far as possible, all matters in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of those matters avoided": Supreme Court Act, ss 23 and 63. (See also s 75 with respect to the grant of declaratory relief.)

1. Giles JA continued (at [43]):

"I do not think s 47 [of the Legal Aid Commission Act 1979] precluded an assessment of the whole of the costs. Assessment of costs was concerned with quantification, not with liability. Depending on the various exceptions in s 47(3), (3A), (4) and (4A) of the Act, the legally assisted person might have been liable for some or all of the costs. . . . I do not think the assessor had to, or could, enter into whether one or more of the exceptions applied, or decline to assess costs on the ground that the legally assisted person was not liable to pay them to the claiming party."

1. So too in this case, in my opinion, s 47 of the Legal Aid Commission Act did not preclude resort to the assessment system in order to obtain quantification; and neither the assessor nor the review panel was concerned to enter into questions of where the payment burden fell or whether Mrs Wende and Mr Lloyd were entitled to the benefit that the Legal Aid Commission Act gave to Mr Wende. There was a clear liability of the Commission (albeit one that was limited as to amount) and quantification was, at least for that reason, required.

1. I am, in any event, not satisfied that the applicants' argument based on the Partnership Act1892 (NSW) is sustainable. The Legal Aid Commission Act defines "legally assisted person" as "a person to whom legal aid is provided". "Legal aid" means "legal aid under this Act". Both definitions are in s 4. Under s 31(1)(a), a "person" may apply for legal aid. Section 31(2) makes it clear that one "person" may make an application "on behalf of" another "person". In Division 1 of Part 3, a reference to an "applicant" is a reference to "a person on whose behalf legal aid is sought". Under s 34(1), the Commission must determine an application by granting it either unconditionally or subject to conditions or by refusing it.

1. Section 35(1) forbids the granting of an application unless a "means test" or "other test" is satisfied by "the applicant and each person who is associated with the applicant" (there is a "special circumstances" exception to this prohibition). Section 35(4) identifies persons "associated with" an applicant.

1. The Act makes it clear that an application by a corporation may, in certain circumstances, be granted (s 37(1)(b)) but says nothing about an application by a partnership or by partners or by one partner for himself and his or her partners.

1. The only facts available to the District Court showed that an application made by Mr Wende alone had been granted, he being one of three plaintiffs in the Supreme Court. It may be inferred that Mr Wende was found to satisfy a s 35 means test but it cannot be known whether, in that assessment, his partners in the nursery business were regarded as persons "associated" with him. The Legal Aid Commission Act was therefore correctly viewed as applying to Mr Wende alone as a single "legally assisted person".

1. Even accepting that Mr Wende was a member of a partnership and that he became a "legally assisted person" in respect of proceedings brought in the Supreme Court by himself and his partners, it does not follow that his legal aid application was, in terms of s 6(1) of the Partnership Act, made in a "manner showing an intention to bind the firm" - indeed, it is by no means clear that he intended to "bind" anyone to anything by making an application the sole purpose of which was to obtain a benefit or concession in the form of a grant of legal aid. And even if it be accepted that Mr Wende, in terms of s 5(1), made the application "for carrying on in the usual way business of the kind carried on by the firm", the only consequence under that section was again that his action bound the firm and the other partners. Each section is concerned with fixing other partners with liability for the acts of a single partner. Neither has anything to say about curtailment of joint and several liabilities of the partners or the bearing of the burden of such liabilities among them. Nor can the "benefit" to Mr Wende of the exemption conferred on Mr Wende by the Legal Aid Commission Act be regarded as some species of partnership property; and even if such a characterisation were possible, it would be relevant only to the positions of the partners among themselves and would say nothing about the liabilities of partners other than Mr Wende to the respondent.

1. The Supreme Court costs order was made against the three individuals. They thereby became subject to what would, in the ordinary course, have been joint and several liability of all of them for costs as agreed or assessed. The Legal Aid Commission Act operated to free Mr Wende from that liability. Joint and several liability of Mrs Wende and Mr Lloyd to the respondent remained. The question of how that liability ought properly be borne as among the three persons does not arise for consideration here.

1. As I have indicated, the primary judge did not err in the interpretation and application of provisions of the Legal Aid Commission Act as they related to the costs of the proceedings determined by Hislop J in the Supreme Court.

The scope of the Local Court order

1. In advancing Ground 3 at [116] above, the applicants contend that the primary judge erred in law (as both the assessor and the review panel had) by regarding the costs of the Local Court arbitration as part of the costs to which the respondent was entitled pursuant to the costs order made by the Local Court. The text of that order is set out at (a) of [130] above.

1. The primary judge proceeded on the basis (which is not challenged) that the arbitration in the Local Court occurred pursuant to an order made by that court under s 38 of the Civil Procedure Act 2005 and that the rehearing by a magistrate took place by reason of an application under s 42 and an order for full rehearing under s 43.

1. Upon the making of the order for full rehearing, s 44(1) and s 46(1) applied. Section 44(1) is as follows:

"If an order is made for a full rehearing, the award ceases to have effect and the proceedings are to be heard and determined in the referring court as if they had never been referred to an arbitrator."

(The reference to "the award" is a reference to the award made by the arbitrator.)

1. The matter of costs is dealt with by s 46(1) in this way:

"A court that hears and determines proceedings on a full rehearing:

(a) may make an order for costs in respect of the rehearing, and

(b) may, in addition, make an order for costs in respect of the hearing under Division 2."

1. Following the rehearing, the Local Court made the single costs order set out at (a) of [130] above. The assessor and the review panel proceeded on the basis that that order comprehended not only the costs of the rehearing by the magistrate but also what s 46(1)(b) refers to as "costs in respect of the hearing under Division 2", that is, the hearing by the arbitrator. The primary judge saw the central question as whether "the order for costs made in respect of the Local Court proceedings included, or excluded, the costs of the arbitration" - a question that turned on the proper construction of the order actually made.

1. After setting out the order in full, the primary judge (at [63]-[64]) referred to the way in which the assessor and the review panel had dealt with the question of its construction:

"63 The assessor at 4.11.1 of her reasons rejected the submission that this costs order did not include the costs of the arbitration. The assessor said:

'the order that the defendants pay the plaintiff's costs of hearing is inclusive of the arbitration costs anyway as those costs were and are part of the costs of hearing in the Local Court...'

64 The appellants did not identify any decision of the Review Panel dealing with this issue. My search of the grounds for review indicates a reference to this issue in ground six but not so as to raise a ground of review that the arbitration costs were not the subject of a valid costs order. Ground 15 (at AB 363) raised this more directly, and the Review Panel decided:

'This matter was ventilated at length before the Assessor. The Review Respondent has the benefit of an order in the arbitration proceedings. This ground is not made out.'"

1. The primary judge then referred to rule 42.12 of the Uniform Civil Procedure Rules 2005 as the foundation of an argument that there had been no order made in respect of the arbitration costs. His Honour continued (at [66]):

"In my view, this argument misconceives the effect of rule 42.12. This rule guides the court in determining what is the appropriate costs order after a rehearing. It says nothing about whether an order made embraces the costs of an arbitration. Those are matters of construction to be discerned from the terms of the order made. I agree with the assessor that the order of the magistrate can only reasonably be construed as including the costs of the arbitration. The costs order is not limited to a 'hearing' or 'rehearing', and awarded indemnity costs from 21 October 2004, a period including the arbitration which concluded on 25 October 2004. Thus the costs order must, it seems to me, include the arbitration costs."

1. Subsequently, after quoting s 46, he said (at [68]:

"Again in my view, this empowers the court to make orders in respect of the costs of a hearing and rehearing, but does not require the court to make a separate express reference to the costs of a hearing before those costs can be recovered under a court order. The power is 'in addition', but the costs order need not bear any particular form. The question to be determined is whether the order embraced the arbitration costs and for the reasons given I conclude that it did."

1. Reference was then made to s 44 and its status of an award once an order for rehearing is made. The primary judge then said at [70]-[72]:

"In my view, the appellants are correct in their submission that section 44 has the effect that any costs order made as part of the arbitration ceased to have effect once there was a rehearing. However, the assessment does not principally rely on any order for costs made as part of the arbitration, but the order of the magistrate made as part of the rehearing. That is the order that entitles the defendant to recover the costs of the arbitration.

However, the reasons of the Review Panel (at [15] on AB 431) indicate a reliance upon an order 'in the arbitration proceedings'. Further, there is evidence that there was a 'rehearing', thus potentially enlivening section 44. It might be argued that the order 'in the arbitration proceedings' is a reference to the order made by the magistrate which covers the period of the arbitration rather than a reference to the order made by the arbitrator (which may have lapsed because of the rehearing). However, I favour the latter construction.

Even accepting that the Review Panel has relied upon a costs order of the arbitrator, and that order ceased to have effect because there was a full rehearing, this ground is still not made out. As stated by Johnstone DCJ in Bellevarde Constructions Pty Ltd at [16]:

'Not only must a party who is appealing under s 384(1) establish an error of law, that party must also demonstrate that the error made justifies disturbing the assessment: Gorczynski v AWM Dickinson & Son [2005] NSWSC 277 at [22].'"

1. The applicants allege error of law on the face of the record, rather than jurisdictional error, in relation to the matter concerning costs of the arbitration. This Court is therefore confined to a consideration of "the record" for these purposes. It follows that attempts by the parties to call in aid aspects of the transcript of proceedings before the magistrate (or, for that matter, before the primary judge) must be rejected.

1. It may readily be accepted that the primary judge correctly viewed his task as the construing of the order of the Local Court. It is generally permissible to have regard to context and, in particular, the reasons for judgment when determining the meaning and effect of a court order: Athens v Randwick City Council [2005] NSWCA 317; 64 NSWLR 58. In this case, however, it is not permissible to look beyond what is said in the reasons of the primary judge including, of course the references to the statutory provisions to which he referred and which themselves represent a large part of the context.

1. The Local Court order of 24 July 2007 was that the defendants (present applicants) "pay the plaintiffs their costs", with a basis of assessment stated in relation to each of two periods. The question is whether the reference in the order to "their costs" was properly regarded as extending not only to the costs of the hearing by the magistrate who made the order but also to the earlier hearing before the arbitrator.

1. The Local Court order did not, in terms, refer to either of the components mentioned in s 46(1), being "costs in respect of the rehearing" and "costs in respect of the hearing under Division 2". It referred to "their costs", with "their", although in the plural, signifying the present respondent as plaintiff in the Local Court. The unqualified reference to that party's "costs" can only be understood as a reference to its "costs" generally in relation to the litigation at the conclusion of which the order was made. In the ordinary course and in the absence of some indication to the contrary, an order simply that a party have its "costs" of an action encompasses all costs incurred by the party in the action, including those of interlocutory applications and other intermediate steps. Thus, it was held in Newcastle City Council v Wieland [2009] NSWCA 113; 74 NSWLR 173 that an order that referred merely to "the costs of the proceedings" included the costs of an unsuccessful mediation conducted pursuant to an order of the court.

1. In the case just mentioned, the matter of the costs of the mediation was governed by s 28 of the Civil Procedure Act which stated that those costs were payable "if the court makes an order as to the payment of those costs, by one or more of the parties in such manner as the order may specify" and otherwise by the parties in agreed proportions. Ipp JA (with whom Beazley JA and Hodgson JA agreed) referred to rule 42.7(1) of the Uniform Civil Procedure Rules which states that, unless the court orders otherwise, the costs of any application or other step in any proceedings (including costs that have been reserved and costs in respect of any such application or step in respect of which no order as to costs has been made) are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.

1. Ipp JA continued (at [36]):

"The broad terms of Uniform Civil Procedure Rules, r 42.7(1) must mean that a 'step in any proceedings' includes mediation within the meaning of s 28. Thus, Uniform Civil Procedure Rules, r 42.7, when read with s 98 of the Civil Procedure Act, includes a power to award the costs of mediation under s 28. That is to say, as ordinarily understood, the costs of proceedings under Uniform Civil Procedure Rules, r 42.7 include the costs of mediation."

1. Section 98 of the Civil Procedure Act confers on the court a broad discretion with respect to orders for costs.

1. Ipp JA added that the construction he had adopted did not deprive s 28 of force and effect. He said (at [37):

"This does not mean that s 28 has no work to do, as Mr Cummings submitted would be the case on this construction. The work that it does is to define the circumstances under which costs of mediation are payable. Section 28, as I have observed, makes plain that, in the absence of an order or agreement, costs of mediation are not payable."

1. Precisely the same analysis is apt in the present case, with s 46(1) of the Civil Procedure Act here playing the role that was there played by s 28. The Local Court arbitration was a "step" in the Local Court proceedings. Rule 42.7(1), when read with s 98, meant that there was power to award costs of the arbitration under s 46(1), so that, "as ordinarily understood", the costs of the proceedings under rule 42.7(1) included the costs of the arbitration. This approach does not deprive s 46(1) of effect: the section still dictates that, in the absence of an order, costs of the arbitration are not payable.

1. I should add that the primary judge was, in my opinion, correct when he decided that s 46(1) allows one composite order, as distinct from two separate orders. A court that makes a single order covering costs of both the descriptions in the section thereby makes an order "for costs" of the first description and "in addition" makes an order "for costs" of the second description.

1. For these reasons, the primary judge did not make any error of law when he treated the costs of the Local Court arbitration as part of the costs to which the respondent was entitled pursuant to the costs order made by the Local Court.

Sections 354, 364 and 365 - "fair and reasonable" costs

1. As to paragraph (a) of Ground 5 at [116] above, no shortcoming in the interpretation and application of the words "fair and reasonable" is identified in submissions beyond those referred to in paragraphs (b) and (c).

1. As to paragraph (b), it is incorrect to say that s 354(1) adopts the requirements of clause 125(1)(a) of the Legal Profession Regulation. Rather, s 354(1)(a) requires that an application for costs assessment be made in accordance with the regulations, while clause 125(1)(a) of the regulation says that a person proposing to apply for assessment must complete an application "in the approved form" and deliver it to the other party with a notice of a certain kind. Clause 120 of the regulation makes provision for the approval of forms. The relevant approved form is Form 3. That form does not require the provision of a bill of costs but contemplates that such a bill may, if the applicant wishes, be adopted as a means of explaining or amplifying the contentions of the applicant. Production and delivery of a bill of costs are measures that an applicant may choose to adopt in making its application but there are no legal rules regarding the form, content, delivery and treatment of such bills.

1. In the absence of any such legal rules, the contentions as to alleged defects in the manner of delivery of a bill of costs cannot involve error of law.

1. As to paragraph (c) of Ground 5 insofar as it concerns s 319(2), the primary judge noted a submission by the applicants in the District Court that the review panel had failed to satisfy itself whether any claim for the preparation of the bill of costs contravened s 319(2). The judge noted (at [86]), however, that this matter had not been raised before the review panel, added to which it was something not within any of the grounds of appeal in the District Court and there were no submissions directed to establishing that certain costs allowed were not recoverable under s 319.

1. The primary judge was correct in these respects. No error of law is shown.

1. As to the aspect of paragraph (c) of Ground 5 that concerns s 365(2), the applicants' complaint, so far as their grounds of appeal go, is that there was non-compliance with s 365(2) by the costs assessor and by the review panel that was not recognised and appropriately dealt with by the District Court. Section 365(2) has the effect that, in a party/party assessment, the assessor must not apply the terms of a costs agreement for the purposes of determining appropriate, fair and reasonable costs.

1. The primary judge said (at [107]):

"Commencing at AB 335 the assessor gives three pages of reasoning as to why certain costs are not fair and reasonable and why others are fair and reasonable (see particularly [4.24]). This issue was raised in ground of review [13] (at AB 362) and rejected by the Review Panel at AB 431."

1. His Honour later said (at [110]):

"It appears from the pages referred to above (see especially [4.24] at AB 336) that the assessor did not apply the terms of the costs agreement to determine a fair and reasonable rate and the Review Panel so found (AB 430 at [11]). The appellants identify no passage which supports their submission. Accordingly, this ground is rejected."

1. Submissions in this Court did not provide any basis for concluding that the primary judge was wrong when he said that the provisions of the costs agreement were not applied in determining fair and reasonable rates. In addition, submissions about whether the costs agreement attracted legal professional privilege do not bear on the issue raised by the grounds stated in the summons; and questions of privilege were simply not before the District Court.

1. No error of law is shown in relation to the aspects of the District Court's decision covered by Ground 5 at [116] above.

Section 369(3) - costs of the costs assessment

1. Section 369(3) of the Legal Profession Act deals with the costs of a costs assessment and is relevant to Ground 4 at [116] above. Section 369(3) is in these terms:

"The costs of a costs assessment to which this section applies are payable:

(a) for a costs assessment in relation to costs to which section 317 (Effect of failure to disclose) applied - by the law practice that provided the legal services concerned, or

(b) for a costs assessment in relation to costs to which section 364 (Assessment of costs - costs ordered by court or tribunal) applies - by such persons, and to such extent, as may be determined by the costs assessor, or

(c) for a costs assessment in relation to costs that on assessment are reduced by 15% or more - by the law practice that provided the legal services concerned or, if the costs assessor so determines, by such persons, and to such extent, as may be determined by the costs assessor."

1. The costs assessor identified s 369(3)(b) as the provision relevant to her decision as to how the costs of the assessment should be borne. She determined that the present applicants should pay the costs of the assessment and that the present respondent was entitled to its fair and reasonable costs of the assessment, including the costs of its costs consultant.

1. The grounds on which the applicants relied in their application for review by a review panel included the following:

"That costs of the costs assessment should be borne by the costs applicant."

1. The review panel's determination in relation to that ground was:

"This is not a ground of review."

1. Upon their appeal to the District Court against the decision of the review panel, the applicants complained that the panel should have applied s 369(3)(c) by awarding the costs of the costs assessment against the current respondent rather than the present applicants because the costs had been reduced by more than 15%.

1. The primary judge, applying Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd (above), held that s 369(3)(c) did not apply. He said that that provision is concerned only with assessment of practitioner/client costs and that any attempt to apply it to party/party costs would be "unthinkable and plainly unjust". The applicants say that his Honour thereby fell into error of law. They argue that there is no reason why, in a case of party/party costs, the law practice that acted for a party should not be fixed with liability for the costs ordered.

1. In Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd, Judge Johnstone said (at [70]):

"There can be no doubt that s 369(3)(b) applies only to the assessment under s 364 of the Act of party/party costs ordered by a court or tribunal, because the subsection so provides, expressly. Nor could there be any doubt that s 369(3)(c) applies to the assessment of practitioner/client costs, because the subsection refers to the "law practice" that provided the legal services. The question is whether s 369(3)(c) also applies to the assessment of party/party costs. I consider that it does not. Firstly, the structure of s 369(3) is such that because subsection (b) applies only to the assessment of party/party costs, the legislature must have intended that subsection (c) was to apply only to the assessment of practitioner/client costs. Secondly, the reference to the law practice confirms this construction. Thirdly, subsection (c) is mandatory, in the sense that if the costs of the law practice are reduced by 15% or more, the costs of the costs assessment are to be paid by the law practice. This is inconsistent with the general discretion conferred on the costs assessor in respect of an assessment of party/party costs to award such costs against such persons, and to such extent as may be determined. Finally, the use of the word "reduced" in subsection (c) confirms that it relates only to practitioner/client costs. Under s 367 of the Act the costs assessor is required to determine an application relating to a bill, that is a practitioner/client bill, by confirming the bill or by substituting a lesser amount. That may, and usually will, involve a reduction. On the other hand, there is no element of reduction in the assessment of party/party costs. Under s 367A of the Act the costs assessor is required to make a determination of the fair and reasonable amount of costs payable as a result of an order made by a court or tribunal."

1. The primary judge was correct to adopt and apply this reasoning. A particularly compelling aspect of it is that the concept of reduction of costs on assessment is foreign to a party/party case where the assessor's task under s 367A is that of "making a determination of the fair and reasonable amount of" the costs ordered by the court to be paid. That process, unlike s 367 assessment of practitioner/client costs already rendered, does not involve any amount of "costs" that marks the starting point of the assessor's consideration. The party having the benefit of the order for costs will no doubt express an opinion as to the amount that should be found by the assessor to be fair and reasonable. But that is not an amount of "costs". It is an amount that the proponent says the party bound by the order should be required to pay as costs; and the fact that the assessor ultimately decides that some smaller amount is fair and reasonable does not mean that "costs" are reduced "on assessment".

1. There was no error of law by the primary judge on this aspect.

Conclusions

1. The applicants have not demonstrated that the decision of the primary judge was affected by any error of law. There is accordingly no basis for any finding of jurisdictional error or error of law on the face of the record in relation to that decision. The applicants have failed to establish any case for the grant of relief in the nature of certiorari.

1. I have mentioned that the costs assessor and the members of the review panel were named as parties to the proceedings in this Court and that, following reformulation of the applicants' claims, no relief was ultimately sought against them. It cannot be known whether they incurred costs at any stage after the filing of the summons in its original form. If they did, the applicants should pay their costs. In view of the substantive outcome, the applicants should also pay the respondent's costs.

1. Because the applicants have acknowledged that their claim for leave to appeal from the District Court decision is untenable, there should be an order that the summons seeking leave to appeal be dismissed with costs.

1. I propose orders as follows:

In proceedings 2013/54356:

1. Dismiss the summons seeking leave to appeal.

2. Order the applicants to pay the respondent's costs of the summons for leave to appeal.

In proceedings 2013/149830:

1. Grant leave to the applicants to file an amended summons in the form annexed to their notice of motion filed on 2 October 2013.

2. Proceedings dismissed.

3. That Herbert Wende, Margaret Wende and Mark Lloyd pay all other parties' costs of the proceedings in this Court.

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Amendments

24 February 2015 - In para [111] replace "an" before "review panel" with "a"

24 February 2015 - In paras [111], [155], [164], [167], [171], [172], [173] and [174] "appeal panel" changed to "review panel"

Decision last updated: 24 February 2015