Wentworth v Rogers - [2006] NSWCA 145

No judgment structure available for this case.

Reported Decision: 66 NSWLR 474

Court of Appeal

CITATION: WENTWORTH v ROGERS; WENTWORTH & RUSSO v ROGERS [2006] NSWCA 145
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 14 March 2006

JUDGMENT DATE:
7 June 2006

JUDGMENT OF: Santow JA at 1; Basten JA at 68; Hislop J at 214

DECISION: (1) In relation to the judgment in the Common Law Division given on 15 August 2002 and orders entered on 13 January 2003; (a) appeal allowed; (b) set aside the order made; (c) in lieu thereof, order that the Appellants have leave to appeal to the Court from the determinations of the costs assessor issued on 24 October 2001; and; (d) remit the appeal to the Division for determination; (2) In relation to the judgment given in the Common Law Division on 21 February 2005 and the orders entered on 21 March 2005; (a) allow the appeal; (b) set aside the orders made; (c) in lieu thereof, order that; (i) the appeals under s 208L of the Legal Profession Act 2005 from the determinations of the costs assessor issued on 24 October 2001 be dismissed; and; (ii) there be no order as to the costs of the appeals; (3) There be no order as to the costs of the applications for leave to appeal and the appeals in this Court

CATCHWORDS: COSTS – Indemnity Principle – costs orders made against Appellant – costs agreement between Respondent and his lawyers that no obligation to pay until successful recovery of costs from Appellant – whether Appellant liable to costs order if Respondent had incurred no lability to pay his lawyers - COSTS ASSESSOR – power of – costs assessor assessed bills – whether costs assessor had power to determine the terms and validity of costs agreement – whether judge in Common Law Division had power to hear appeal from costs assessor’s determination

LEGISLATION CITED: Civil Procedure Act 2005 (NSW), s98
Contracts Review Act 1980 (NSW), s9
Federal Court Rules, Order 80, r9
Income Tax Assessment Act 1936 (Cth)
Interpretation Act 1987 (NSW), s30
Judiciary Act 1903 (Cth), s35A
Legal Profession Act 1987 (NSW), s175, s177, s179, s180, s182, s184, s186, s192, s199, s201, s202, s206, s207, s208, s208A, s208B, s208C, s208D, s208F, s208G, s208H, s208J, s208L, s208M, s208S
Legal Profession Act 2004 (NSW), s323, s365, s384, s735, cl3, cl22
Legal Profession Amendment (Costs Agreement) Regulation 1999 (NSW)
Legal Profession Reform Act 1993
Legal Profession Regulation 1994 (NSW), cl261J
Solicitors Act 1870 (UK), s4
Solicitors Act 1974 (UK), s60
Suitors' Fund Act 1951 (NSW), s6
Supreme Court Act 1970 (NSW), s75A, s76
Supreme Court Rules, Part 31, r2, Part 52A, r8
Uniform Civil Procedure Rules 2005 (NSW)

CASES CITED: ABB Power Generation Ltd v Chapple (2001) 25 WAR 158
Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495
Backhouse v Judd [1925] SASR 395
Baker & Anor v Kearney [2002] NSWSC 746
Cachia v Hanes (1994) 179 CLR 403
CDJ v VAJ (1998) 197 CLR 172
Chancliff Holdings Pty Ltd v Bell [1999] FCA 1783
Chapmans Ltd v Yandell [1999] NSWCA 361
Clare v Joseph [1907] 2 KB 369
Clyne v NSW Bar Association (1960) 104 CLR 186
Custom Credit Corporation Ltd v Commercial Tribunal (NSW) (1993) 32 NSWLR 489
Davies v Taylor [No. 2] [1974] AC 225
Dyktynski v BHP Titanium Minerals Pty Ltd (2004) 60 NSWLR 203
Electrical Trade Unions v Tarlo [1964] Ch 720
Emeritus Pty Ltd v Mobbs (1991) NSW Conv R 55-588
General of Berne Insurance Co v Jardine Reinsurance Management Ltd [1998] 2 All ER 301
Graham v Aluma-Lite Pty Ltd (NSWCA, unrep, 25 March 1997)
Grygiel v Baine [2005] NSWCA 218
Gundry v Sainsbury [1910] 1 KB 645
Guss v Veenhuizen [No. 2] (1976) 136 CLR 47
Harold v Smith (1860) 5 H & N 381; (1860) 157 ER 1229
House v The King (1936) 55 CLR 499
Howard & Ors v Mechtler & Ors [2000] NSWSC 455
Hughes v Kingston Upon Hull City Council [1999] QB 1193
Johnson v Santa Teresa Housing Association (1992) 83 NTR 14
Joyce v Kammac Ltd [1996] 1 WLR 805
Lenthall v Hillson [1933] SASR 31
McCullum v Ifield [1969] 2 NSWR 329
McLean v Carlish (1917) 61 SJ 399
Muriniti v Lyons [2004] NSWSC 135
New Pinnacle Group Silver Mining Co v Luhrig Coal & Ore Dressing Applicances Co (1902) 2 SR (NSW) 50
Oshlack v Richmond River Council (1998) 193 CLR 72
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
R v Archbishop of Canterbury [1903] 1 KB 289
Re Adams and the Tax Agents' Board (1976) 12 ALR 239
Re Wilson [1978] VR 147
Reynolds v Whittens (2002) 57 NSWLR 271
Ryan v Hansen (2000) 49 NSWLR 184
Singleton v Macquarie Broadcasting (1991) 24 NSWLR 103
Thai Trading Co v Taylor [1998] QB 781
Victorian Stevedoring & General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73
Vital Finance Corporation Pty Ltd v Taylor (1996) 40 NSWLR 25
Wentworth v Rogers [1999] NSWCA 403
Wentworth v Rogers [2002] NSWSC 709
Wentworth v Rogers [2002] NSWSC 1198
Wentworth v Rogers [2004] NSWSC 1273
Woolf v Treblico [1993] VLR 180
Wyong Shire Council v MCC Energy (No. 2) [2005] NSWCA 196
Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410

PARTIES: Katherine Wentworth - Appellant CA 40919/02
Katherine Wentworth - First Appellant CA 40920/02
Salvatore Russo - Second Appellant CA 40920/02
Gordon Rogers - Respondent CA 40919/02 and CA 40920/02

FILE NUMBER(S): CA 40919/02; 40920/02

COUNSEL: Appellant in person - CA 40919/02; CA 40920/02
Second Appellant CA 40920/02 - D. Officer QC/V. Culkoff
Respondent - No appearance CA 40919/02; CA 40920/02
Amicus for Bar Association of NSW - M. Slattery QC/K. Rees/J. Single

SOLICITORS: Appellants in matters CA 40919/02, CA 40920/02 - Russo and Partners
Respondent in matters CA 40919/02, CA 40920/02 - Beazley Singleton Lawyers
Amicus for Law Society of NSW - Mr A.S. Brown

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S): SC 13492/01
SC 13494/01

LOWER COURT JUDICIAL OFFICER: Barrett J; Patten AJ

LOWER COURT DATE OF DECISION: 15 August 2002
21 February 2005

LOWER COURT MEDIUM NEUTRAL CITATION: Wentworth v Rogers [2002] NSWSC 709;
Wentworth v Rogers [2004] NSWSC 1273

CA 40919/02
CA 40920/02
SC 13492/01
SC 13494/01

SANTOW JA
BASTEN JA
HISLOP J
7 June 2006

WENTWORTH v ROGERS

WENTWORTH & RUSSO v ROGERS

The Appellant, Ms Wentworth, appealed against two judgments given in the Common Law Division with respect to the determination of a costs assessor under Part 11, Division 6 of the Legal Profession Act 1987 (NSW).

There had been lengthy litigation between the Appellant and Respondent involving criminal and civil proceedings. During the course of litigation, the Respondent and his lawyers signed two documents entitled “costs agreement” to the effect that the Respondent’s obligation to pay his lawyers arises upon costs being successfully recovered against the Appellant. The Appellant was unsuccessful and had costs orders made against her. The parties could not agree on the costs and a costs assessor assessed two sets of bills in respect of the cost orders.

The issues for determination in the Court of Appeal included:

(i) whether the Appellant, having been unsuccessful in civil proceedings brought in the Court, could be liable to a costs order in favour of the successful party, the Respondent, if he himself had incurred no liability to pay legal costs to his solicitor and barristers, and

(ii) whether the costs assessor had power to determine the terms and validity of any agreement or arrangement with respect to costs entered into between the Respondent and his legal advisers, and whether a judge in the Common Law Division could and should address the same issue pursuant to an appeal from the costs assessor.

Held in relation to (i):

By Santow JA:

1. The definition of “costs agreements” s184(1) of the Legal Profession Act 1987 should be read to include a costs agreement favourable to the client: at [32].

Clare v Joseph [1907] 2KB 369, distinguished.

2. Whether the current costs agreement was rendered void by s184 of the 1987 Act can only be determined definitively by a court, upon oral evidence from the principals, able to be tested in cross examination: at [36].

3. The indemnity principle continues to exist but should be applied flexibly rather than made into a rigid rule. No distinction should be drawn between a contingency expressed as a condition precedent or subsequent. The indemnity principle must at least accommodate the kind of conditional costs agreement recognised by s186 of the 1987 Act: at [50]–[56].

New Pinnacle Group Silver Mining Co. v Luhrig Coal and Ore Dressing Appliances Co (1902) 2 SR(NSW) 50; Dyktynski v BHP Titanium Minerals Pty Ltd (2004) 60 NSWLR 203, applied.

4. Depending on the nature of the residual obligation as determined more definitively by a court, it may in any event satisfy the indemnity principle: at [52]

By Basten JA:

5. The fundamental purpose of an order that one party to litigation pay the legal expenses or ‘costs’ of another party is to provide an indemnity in relation to the whole, or usually part, of the legal obligation incurred by the other party to his or her lawyers. The indemnity principle states that if that party is under no legal obligation to pay lawyers’ fees, no amount can be recovered from the unsuccessful party: at [102].

Gundry v Sainsbury [1910] 1 KB 645, cited.

6. The indemnity principle does not require that the costs have been paid, but it does require that there be a legal liability to pay costs: at [126].

Oshlack v Richmond River Council (1998) 193 CLR 72, applied.

7. In cases where payment is to be on a contingency basis, there is an immediate and quantifiable obligation imposed on the client when the retainer is created, the contingency operating as a condition subsequent: at [129].

8. A costs agreement which is rendered void, if not in writing or evidenced in writing, pursuant to s184(4), should not be read to include a costs agreement favourable to the client, which required no statutory authority for its enforceability: at [146].

Clare v Joseph [1907] 2 KB 369, applied.

9. No entitlement to costs on a quantum meruit basis can arise inconsistently with the terms of an express contractual provision. Accordingly, if, because of an agreement initially oral, the lawyers had no legal entitlement to require the client to pay costs, no basis for imposing a restitutional obligation can arise: at [152].

Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221

10. The ‘nominal party exception’ had no applicability in this case. A successful party should not always be treated as a ‘nominal party’ in relation to the costs dispute as it would result in the universal subversion of the indemnity principle: at [165].

Dyktynski v BHP Titanium Minerals Pty (2004) 60 NSWLR 203; New Pinnacle Group Silver Mining Co v Luhrig Coal & Ore Dressing Appliances Co (1902) 2 SR(NSW) 50; Cachia v Hanes (1994) 179 CLR 403, distinguished.

11. There is no relevant aspect of the statutory regime which requires a different understanding or application of the indemnity principle: at [167].

Hislop J: agreeing with Santow JA (except expressing no view as to 5) and with Basten JA (except expressing no view as to 8).

Held in relation to (ii):

By Santow JA:

12. A costs assessor undertaking an assessment pursuant to Pt 11 Div 6 of the Legal Profession Act 1987 had the power to, and should, consider the terms on which the legal practitioner was retained with discretionary appeal rights under s208L and s208M of the 1987 Act: at [38] and [40].

Graham v Aluma-Lite Pty Ltd (NSWCA, 25 March 1997, unreported); Wentworth v Rogers [1999] NSWCA 403, applied; Muriniti v Lyons [2004] NSWSC 135 applied.

13. Observations in relation to quantum meruit.

14. (Agreeing with Basten JA with Hislop J concurring): leave should in the particular circumstances be granted under s208M of the 1987 Act.

15. The enquiry should be limited to answer the question: would an agreement in those terms fail to accord with the indemnity principle or otherwise render the provider of legal services no more than a mere volunteer so as to preclude recovery by way of quantum meruit: at [62], [65] and [67].

By Basten JA:

16. Section 208H of the Legal Profession Act 1987 should be interpreted to mean that the costs assessor is not entitled to determine the extent of the contractual obligation, if there is a dispute in that regard, it must be determined by the court: at [159].

17. Administrative officers and bodies, which have no power to make binding determinations of law, are nevertheless required, for the purpose of exercising their powers, to consider matters of law: at [192].

Re Adams and the Tax Agents’ Board (1976) 12 ALR 239, applied.

18. A trial judge does have the power to determine the limits of costs payable: at [178].

Graham v Aluma-Lite Pty Ltd (unrep, NSWCA, 1997); Gundry v Sainsbury [1910] 1 KB 645, considered.

19. The existence of a dispute as to the limit of costs payable, combined with the lack of relevant procedural mechanisms for allowing a hearing and determination in an appropriate manner by a costs assessor, would generally mandate a grant of leave pursuant to s208M of the 1987 Act: at [193]. The primary Judge erred in not granting leave to appeal pursuant to s208M of the 1987 Act: at [202].

20. The appeal under s208L should be dismissed for lack of utility: at [206].

Hislop J: agreeing with Santow JA (except expressing no view as to 12) and with Basten JA (except expressing no view as to 17 and 18).

CA 40919/02
CA 40920/02
SC 13492/01
SC 13494/01

SANTOW JA
BASTEN JA
HISLOP J
7 June 2006

WENTWORTH v ROGERS

WENTWORTH & RUSSO v ROGERS

Judgment

1 SANTOW JA:

INTRODUCTION

2 As a result of these proposed orders, a Common Law Judge will first have to ascertain what is the content and proper interpretation of the arrangements governing costs and disbursements between the respondent Mr Rogers and his legal advisers. The agreements which purport to record them are set out at [57] below; being identical in terms I refer to them collectively as “the costs agreement”. For reasons I explain, that enquiry should however not be at large, but directed to whether the costs arrangements fall foul of the indemnity principle to the extent it has application, or otherwise whether under those arrangements those providing legal services to Mr Rogers are no more than mere volunteers.

3 In that context, the following questions arise in this appeal:

Legal Profession Act

(b) (i) was it rendered void by s184(4) of the Act and, if so,

(ii) would any costs be recoverable on any other basis, such as quantum meruit;

(d) in relation to the costs assessor’s interpretation of the nature, terms and construction of the relevant arrangements between Rogers and his legal advisers, did the cost assessor

(ii) can and should such interpretation be reviewed by a judge of this Court with curial powers to examine witnesses, which powers are denied a costs assessor, in order to determine whether Ms Wentworth (first certificate) or Ms Wentworth and Mr Russo (second certificate) are liable to pay the amounts so certified and, if so

(iii) what should be the scope of such review.

4 By leave, the Court was assisted by submissions from Mr Slattery, QC, and junior counsel, representing the Law Society of New South Wales as amicus curiae. This was in circumstances where Mr Rogers took no active part in the appeal.

SALIENT FACTS

5 The background elaborated by Basten JA should be read with the following brief outline of the immediate procedural history of these proceedings:

(b) Following those costs orders, a costs assessor, Mr Dwyer, made two assessments both evidenced by certificates issued 24 October 2001. The first was for $25,300.50 (91247/00) payable by Ms Wentworth and the second was for $147,085.03 (91248/00) payable by Ms Wentworth and Mr Russo. The costs assessor concluded that Mr Rogers’ legal representatives were acting for him on a “no win no fee” basis as opposed to acting on a purely pro bono basis (the latter, in the sense that Mr Rogers was not obliged to pay fees to his legal representatives regardless of the outcome of the litigation).

(c) The appellants before Barrett J and on appeal contended that the costs assessor had no jurisdiction or power to make this determination. On 15 August 2002, Barrett J refused leave to appeal the determination of the costs assessor under s208M of the Act. Having refused leave under s208M, Barrett J disqualified himself from hearing the s208L appeal (appeal on a matter of law).

(d) Patten AJ subsequently heard the s208L appeal and dismissed it.

(e) On 29 August 2005, the Court of Appeal granted leave for the present appeal (Judgment at Red, 242-245).
The relevant legislation

6 To answer the question concerning power or jurisdiction of a costs assessor to determine whether under the Act a “costs agreement” exists and its terms, and the consequential issues, it is necessary to start with an exegesis of the Act itself.

7 Relevantly, s208 of the Act, to be found in Pt 11, Div 6 subdiv 1 of the Act, provides as follows:

208 Consideration of applications by costs assessors

(1) A costs assessor must not determine an application for assessment unless the costs assessor:

(b) has given due consideration to any submissions so made.

(3) For the purposes of determining whether an application for assessment may be or is required to be made or for the purpose of exercising any other function, a costs assessor may determine any of the following:

(b) whether a costs agreement exists, and its terms. [emphasis added]

8 “Costs agreement” is defined in s173(1) of Pt 11 Div 1 of the Act as “an agreement referred to in section 184 as to costs for the provision of legal services.”

9 Section 184, in Pt 11, Div 3 of the Act, renders void that which the Act defines as a costs agreement, if not in writing or evidenced in writing. It is in the following terms:

184 Agreements about costs

(1) An agreement as to the costs of the provision of legal services may be made with a client by:

(b) the barrister or solicitor retained on behalf of the client by another barrister or solicitor.

(3) An agreement under this section is called a costs agreement.

(4) A costs agreement is void if it is not in writing or evidenced in writing.

(5) A costs agreement may form part of a contract for the provision of legal services.

(6) A costs agreement may consist of a written offer that is accepted in writing or by other conduct. A disclosure in accordance with Division 2 under section 175 or 176 may constitute an offer for the purposes of this subsection. [emphasis added]

10 In aid of the costs assessor’s consideration of applications under s208 is s207 which relevantly provides:

207 Costs assessor may require documents or further particulars

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

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

(2A) …

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

11 Ensuring compliance with such notices was effected by the Act in two ways. First the costs assessor was entitled to decline to proceed with the assessment in the absence of compliance: s207(5). Then, failure to comply with a notice without reasonable excuse exposed the legal practitioner to a charge of professional misconduct: s207(6).

12 To place these provisions in their context, I need to deal briefly with the structure of the Act.

13 Part 11 Div 6 of the Act is entitled “Assessment of Costs”. It comprises a number of subdivisions dealing with different aspects of the costs assessment and enforcement process.

14 Subdivision 1, “Applications and referrals for assessment”, specifies who is entitled to apply for an assessment, and how the application is to be made. Persons entitled to apply for an assessment include:

a client who is given a bill of costs

(b) a person who is liable to pay, or is entitled to receive, costs as a result of a costs order (s202).

The distinction between these two classes of persons is fundamental to the operation of Pt 11 of the Act. Different criteria and methods of assessment are provided in Pt 11 for each class.

15 Subdivision 2, “Assessment of bills of costs”, concerns applications relating to bills of costs, that is, the assessment of costs between a client and his or her legal representative. In such assessments, the costs assessor must consider whether it was reasonable to carry out the work for which the client has been charged, whether the work was carried out in a reasonable manner, and the fairness and reasonableness of the costs in relation to that work: s208A(1).

16 In carrying out the assessment provided for in s208A the costs assessor may also have regard to the additional matters listed in s208B which provides:

208B Additional matters to be considered by costs assessors in assessing bills of costs

(d) any relevant costs agreement (subject to s208C),

17 This provision reflects a legislative policy that in costs assessments as between a client and a legal practitioner, subject to the limited exceptions in s208C, costs agreements between the two may be taken into account.

18 Section 208C provides that a costs assessor is to decline to assess a bill of costs if

(b) the costs agreement specifies the amount of the costs or the dispute relates only to the date specified in the agreement for calculating the costs.

Section 208D, however, permits a costs assessor to determine whether a costs agreement is unjust. Such a determination overrides s208C to the extent of the injustice.

19 This structure reflects a legislative policy that the private agreement of the client and legal representative which complies with the Act is normally the final determinant of the costs payable on assessment, unless something in the nature of unconscionable conduct has been practised by the legal representative on the client.

20 Pt 11 Div 6 subdiv 2 is replete with references to the “client”. This subdivision deals only with the assessment of costs between a client and his or her legal representative.

21 By contrast subdiv 3, “Assessment of party/party costs”, concerns applications “relating to costs payable as a result of an order made by a court or a tribunal”; in short “court ordered costs”. In this subdivision, s208F does similar work to that done by s208A in Subdivision 2. Section 208F provides:

208F Assessment of costs—costs ordered by court or tribunal

22 Like s208C in Subdivision 2, s208G provides a list of additional matters which may be considered on an assessment. But the list in s208G is different from that in s208C:

208G Additional matters to be considered by costs assessors in assessing costs ordered by court or tribunal

23 Unlike the comparable provision in Subdivision 2 in respect of bills of costs between client and legal representative, s208G, concerning court-ordered costs, does not include a reference to “any relevant costs agreement”. It also omits the subject matters of s208B(1)(a) – (c). These relate to whether the legal practitioner has complied with the Act and applicable conduct regulations. Section 208H separately provides for the limited use to which the costs assessor may put a relevant costs agreement in the case of court-ordered costs:

208H Effect of costs agreements in assessments of party/party costs

(1) A costs assessor may obtain a copy of, and may have regard to, a costs agreement.

(2) However, a costs assessor must not apply the terms of a costs agreement for the purposes of determining appropriate fair and reasonable costs when assessing costs payable as a result of an order by a court or tribunal.

24 In summary, the relevance of a costs agreement to the work of a costs assessor differs markedly depending upon whether the costs assessor is assessing costs:

(a) as between a client and legal practitioner, in which case the costs assessor must apply the terms of the costs agreement unless that agreement is unjust or the work for which fees were charged falls outside the scope of that costs agreement; or

(b) under a party/party costs order, in which case the costs assessor may obtain a copy of a costs agreement and have regard to it, but does not have to do so, and, indeed, must not apply the terms of the costs agreement when determining what are fair and reasonable costs.

25 The omission from s208G of the subject matter of s208B(1)(a) – (c) relating to the legal representatives’ compliance with the Act and any applicable conduct regulations reflects a legislative policy that these are matters only relevant to an assessment as between legal practitioner and client and not to a party/party assessment.

DISPOSITION

Application of the Act to the present case

26 In this case, the costs assessor was determining an application for the assessment of court-ordered costs.

27 Sections 208F and 208G of the Act applied to such court-ordered costs assessment, not ss208B, 208C and 208D.

28 In respect of the indemnity costs order made by Sperling J (28 August 1997), s208F(3) of the Act provided that the costs assessor must assess the costs on that basis having regard to the Supreme Court Rules. At the time when the costs were assessed, Pt 52 r28A of the Supreme Court Rules 1970 provided:

On a taxation on the indemnity basis, all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the taxing officer may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party.

29 Accordingly, the Supreme Court Rules altered the methodology which the costs assessor was required to follow, but did not modify the relevance of a costs agreement to that process as prescribed by ss208G and 208H.

30 On the costs assessment the subject of these proceedings, I consider that the costs assessor was entitled but not obliged to have regard to the terms of any costs agreement between Mr Rogers and his legal representatives. This is unless it were rendered void by s184(4). Then clearly enough such an agreement could not be taken into account. (I deal later with the availability of quantum meruit as an alternative basis of recovery concluding that it should be available, unless the agreement fell foul of the indemnity principle or unless quantum meruit were unavailable because those providing legal services to Mr Rogers were mere volunteers.) The costs assessor is not permitted to apply the terms of any such agreement when determining what were fair and reasonable costs. However, Barrett J correctly observed in his judgment of 15 August 2002 at [48]:

“[48] The content of the costs agreement may, however, be used for other purposes relevant to the assessment. It will thus be available for consideration by the assessor if, as here, it is asserted that there is a term positively excluding the charging of costs by the lawyer, so that there is no liability for costs by reference to which a costs order can effectively operate. Use of the costs agreement for that purpose goes to the question whether costs should be assessed at all, rather than the question of the amount that is fair and reasonable.”

Was there a “costs agreement” within the Act and was it rendered void?

31 The first question to be determined is whether this agreement, referred to in more detail later, was a “costs agreement” within the definition of that term in s184 of the Act and, if so, whether it was rendered void insofar as “not in writing or evidenced in writing”.

32 The definition of a “costs agreement” in s184(1) of the Act is “an agreement as to the costs of the provision of legal services”. I would respectfully differ from Basten JA insofar as his reasoning proceeds on the basis that s184(4) should not be read to include a “costs agreement favourable to the client”; that is to say, s184 is not directed to costs agreements generally, but only those agreements as to fees for legal services which could not lawfully have been entered into under the general law. I do not consider that the statute should be read as mandating such a result, notwithstanding decisions such as Clare v Joseph [1907] 2 KB 369 on the differing UK law. Necessarily costs agreements can include features favourable to the client. Such a criterion would prove illusory as a basis for escaping the definition of costs agreement. The width of the statutory definition is emphasised by catching any agreement “as to” the costs of the provision of legal services; see Menhennitt J in Re Wilson [1978] VR 147, cited by Barrett J at [39].

33 But in any event, to the extent that the present agreement can be reliably understood as an agreement to pay “reasonable fees and disbursements” upon the condition of “costs being successfully recovered from Ms Wentworth”, it is no less an agreement “as to the costs of the provision of legal services” than one without such a condition. The clear purpose of the Act is to require agreements as to costs to be reduced to writing. I agree here with the observations of Barrett J at [19]:

“[19] The purpose behind s184(4) is clear enough. If there is to be reliance on the terms of a contract as to the quantum or manner of computation of, or other matters "as to", a lawyer's costs, that contract must either be a written contract or a contract evidenced in writing. This ensures that the terms are set down in tangible form so that any doubt about the way in which they are expressed is avoided. If, because of the lack of writing, there is room for speculation or argument about what was agreed as to costs, then the legislative policy is that any agreement should be treated as non-existent and rights and obligations on the subject of the lawyer's remuneration should be determined without regard to the supposed agreement.”

34 It is arguable that the extreme case of an oral agreement to charge no fees at all in any and all circumstances is not a “costs agreement” within the Act, notwithstanding the conclusion to the contrary by Barrett J at [39]. But that is not this case, insofar as the written version of the costs agreement is concerned.

35 Whether this costs agreement was rendered void by s184 because not “in writing or evidenced in writing” is a matter that itself can only be resolved once the material terms of the originally oral agreement have been determined. This is in order to ascertain whether any such material terms were omitted from what was evidenced in writing.

36 I consider that this question in the present case is only able to be determined definitively by a court, upon oral evidence from the principals, able to be tested in cross-examination, for reasons elaborated later.

Power or jurisdiction of costs assessor to interpret the costs agreement.

37 Against this statutory background I turn now to the primary question to be answered. Did the costs assessor under s208(3)(b) of the Act have power to determine in relation to any relevant costs agreement

(b) its being or not being a “costs agreement” within the meaning of that expression in the Act, and

(c) its proper construction?

38 I consider that the decision of the Court of Appeal in Graham v Aluma-Lite Pty Ltd (NSWCA, 25 March 1997, unreported), relevantly affirmed in Wentworth v Rogers [1999] NSWCA 403, contains strong dicta supporting the proposition that a costs assessor undertaking an assessment pursuant to Pt 11 Div 6 of the Act does have power to consider the terms on which the legal practitioner was retained. I quote the relevant passage in full from the joint judgment of Handley JA, Stein JA and Sheppard AJA in Wentworth v Rogers:

Graham v Aluma-Lite Pty Ltd

"...the matter raised in [the] point was something for the Costs Assessor to consider. It appears from the materials before us in this application that submissions were put to him on the point. Presumably, the proper way of pursuing that point would be to pursue whatever avenues of review or appeal may be available against the Costs Assessor. I do not wish to encourage Aluma-Lite to think that if such avenues are available success will lie at the end of the road. Without having heard argument on the matter, it nevertheless seems to me a doubtful proposition. The answer to the question would depend upon an examination of a number of considerations, including the actual terms upon which counsel agreed to do the work he was asked to do on behalf of Mrs Graham by the Manager of the New South Wales Bar association's Legal Assistance Scheme. The court does not know what the terms of counsel's engagement were. But, in any event, as I have indicated the question, in my opinion, is not one for this court. It is for the Costs Assessor in the first instance and thereafter whatever the Supreme Court Act and Rules provide for review or appeal."

Cachia v Hanes

39 It will be self-evident that determining the terms of the retainer necessarily entails determining both the content of the costs agreement as well as its proper interpretation. The costs assessor is unconstrained by the rules of evidence (s208(2) of the Act). But a costs assessor does not have judicial powers such as to summon those involved, whether barrister or solicitor, to give evidence or to submit them to cross-examination. What a costs assessor can do is require the applicant to produce any relevant documents (s207(1)) and require by a notice further particulars as to the basis of which costs were ascertained (s207(2)).

40 The Court of Appeal implicitly accepted that with these powers, though falling short of curial, the costs assessor was not only empowered in the first instance to determine the terms of the retainer of counsel and solicitor but should do so. That approach recognises the expeditious administrative process for assessing costs under the Act. For most cases determination by the costs assessor should suffice without necessity for curial review. It would be unusual that the content of the costs agreement was not self-evident from its written record, or its interpretation so problematic that a costs assessor could not, in practice, reach a sufficiently reliable result. But the discretion to order curial review remains as a safeguard for the exceptional cases that warrant it.

41 Section 208(3)(b) expressly empowers the costs assessor to ascertain “whether a costs agreement exists, and its terms”. That, in my view, necessarily includes determining whether such agreement is within the definition of “costs agreement” in the Act and whether it is rendered void by s184(4). That question in turn necessarily entails a consideration of whether the agreement is, or is not, “in writing or evidenced in writing”.

42 I consider that the Court of Appeal decision in Wentworth v Rogers (supra) must be followed. To the extent that the decision of Dunford J in Muriniti v Lyons [2004] NSWSC 135 is inconsistent it should not be followed. However, there is nothing in the Court of Appeal’s reasoning which precludes later review of the costs assessor’s decision by a judicial officer with wider curial powers pursuant to the discretionary appeal mechanism in s208M of the Act where this is justified. Section 208M(4) provides for “an appeal … to be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given”.

43 In Muriniti v Lyons (supra), Dunford J concluded at [56] to [58] that the costs assessor, who set out to determine under s208A and s208B whether certain preconditions for the payment of costs had been fulfilled, should have declined to make a determination or issue a certificate. This was until the issue of whether or when the relevant costs were payable had been resolved by a court with power to require sworn evidence and have it tested by cross-examination. That reasoning, though not in relation to court-ordered costs, was inconsistent with the reasoning of the Court of Appeal to which I have referred and should not be followed.

44 For reasons which I explain later, I consider that this was a case where review should not have been denied under s208M. But before turning to that question I need to deal with the implications of the indemnity principle.

The Indemnity Principle

45 The indemnity principle is long-established at general law. It is however not to be applied rigidly, or uninfluenced by statute or by practice recognised by statute, such as in relation to conditional fee agreements. I do not agree with the amicus’ submissions that the principle has ceased to exist. Certainly there have been inroads to it brought about by the Act and by analogical reasoning from recognised exceptions. Where a party to an action has an agreement with their legal adviser that they do not have to pay any costs, then the general law principle states that that party cannot recover party and party costs against their adversary: McCullum v Ifield [1969] 2 NSWR 329 at 330 per Taylor J citing Gundry v Sainsbury [1910] 1 KB 645.

46 This principle has been applied to applications for assessment of party and party costs under the Act. Thus in Howard & Ors v Mechtler & Ors [2000] NSWSC 455 at [11] Master Malpass observed:

“Under an order for costs, the paying party is only obliged to pay such costs as the receiving party was primarily and potentially legally obliged to pay to his solicitor. There is an indemnity only in respect of the costs covered by the order. A receiving party cannot recover a sum in excess of the liability to his own solicitor. ... It is necessary to prove that under no circumstances does the client have any liability to pay costs to his solicitors.”

47 The same principle has also been applied in respect of the assessment of costs between a client and his or her legal representatives under the Act: Baker & Anor v Kearney [2002] NSWSC 746. In that case the written costs agreements furnished by counsel provided an amount as the “Total Estimate” which was to be paid by the client four weeks in advance of the provision of the agreed legal services. None of the agreements contained any other provision obliging the payment of fees. No memoranda for advance payments in accordance with the agreements were rendered. As a matter of contract or agreement the client was under no obligation to pay the fees. Master Malpass at [14] stated “… it seems to me that a Costs Assessor should not proceed with an assessment of costs where there is no liability to pay those costs.” Dunford J in Muriniti v Lyons accepted that principle.

48 I consider that the costs assessor in this case necessarily had to determine in the first instance whether the indemnity principle had application in the circumstances in which Mr Rogers was placed. I consider that the effect of Graham v Aluma-Lite Pty Ltd and Wentworth v Rogers required that the costs assessor do so rather than the judge at first instance, here Sperling J. Here I differ respectfully from the conclusion of Basten JA to the contrary. As it happens, nothing hangs on that difference. I agree with Basten JA that it is clearly too late to re-open the decision of Sperling J that he did not have power to consider the issue. The whole purpose of the Act is for these kinds of matters to be resolved, subject to the review power, by the costs assessor operating expeditiously, economically and in a less formal way than a court. That, as here, a court may ultimately be faced with an application to review such a determination, does not detract from that consideration.

49 The ultimate application of the indemnity principle will depend on the content and proper construction of the costs agreement. However, I would offer the following as some guidance to the applicable principles.

50 First, the indemnity principle is not immutable, and should be applied flexibly rather than made into a rigid rule, as the examples given by Basten JA demonstrate. This was said as long ago as 1902 by Walker J in New Pinnacle Group Silver Mining Co v Luhrig Coal and Ore Dressing Appliances Co (1902) 2 SR(NSW) 50. It has been frequently affirmed since, most recently by the Court of Appeal in Dyktynski v BHP Titanium Minerals Pty Ltd (2004) 60 NSWLR 203. There, by analogy with the nominal party cases, a party who successfully conducted litigation for the benefit of his solicitor was not denied recovery from the other party by the indemnity principle. There was in reality no bonus to the successful party, nor punishment of the unsuccessful one, invoking the rationale for the rule articulated 150 years ago by Bramwell B in Harold v Smith (1860) 5 H & N 381 at 385; (1860) 157 ER 1229 at 1231.

51 Second, the Act now recognises conditional costs agreements of the kind where payment of the barrister’s or solicitor’s costs “is contingent on the successful outcome of the matter”; s186. No distinction is drawn between such a contingency expressed as a condition precedent or subsequent. I am inclined to the view that the application of the indemnity principle should not depend on that distinction either, though that is not necessary to decide. The costs agreement, to comply with the Act, must “set out the circumstances constituting the successful outcome of the matter”. I consider that the indemnity principle must at least accommodate the kind of conditional costs agreement recognised by s186. Otherwise, it will operate as a powerful disincentive from using the now statutorily recognised conditional costs agreement, facilitating access to justice, if the lawyer concerned will not recover costs from the other party where successful against that other party.

52 Here, the written version of the agreement is predicated first upon “costs being successfully recovered against Ms Wentworth”. Second, it appears to impose a residual obligation to make payment where there is no such recovery. This is by way of an undertaking to “pay when and if … in a position to do so”. That is, however, under the umbrella of what is referred to as a “pro bono” arrangement, an expression susceptible of more than one interpretation. Depending on the nature of that residual obligation as determined more definitively by a court, it may in any event satisfy the indemnity principle.

53 In Dyktynski (supra) the nominal party principle was applied by analogy. So in the present case, and depending on the ultimate content and interpretation of the agreement, I would provisionally conclude that the fee arrangement was in general conformity with the conditional costs agreements permitted by statute such that the indemnity principle would not be contravened. As required by s186(4), the written version of the agreement does “set out the circumstances constituting successful outcome of the matter”; it is based on successful recovery.

54 The general law governing the indemnity principle with its emphasis on flexibility is, in my opinion, quite capable of accommodating conditional fee agreements of this kind. It should do so recognising the importance of such agreements in promoting access to justice which may otherwise be unaffordable. The residual undertaking to pay, though qualified, strengthens the case for conformance with the indemnity principle. It is reasonable, not just in this ferocious litigation but more generally, to recognise in a costs agreement that the unsuccessful party who is subject to a costs order may delay or defeat recovery. Hence predicating payment on successful recovery is not unreasonable. In the words of Bramwell B this gives no unjustified bonus to the successful party nor does it impose any punishment on the losing one, so as to invoke the rationale behind the indemnity principle.

Quantum Meruit

55 I need next to deal with the question of quantum meruit insofar as Barrett J concluded at [28] that it provided an alternative basis of remuneration where there was no costs agreement or such agreement was void:

“[28] Where there is no "costs agreement" or any such agreement is void (because not in writing or evidenced in writing), it does not follow that the lawyer has no right to remuneration and the client has no obligation to pay for legal services provided. Where a lawyer does work and the client has the benefit of it, an entitlement to remuneration generally arises. But the lawyer is precluded from taking proceedings for recovery until after a bill of costs complying with the statutory requirements has been delivered to the client: s192. It is the delivery of the bill of costs that secures to the client or the lawyer (or both) access to the costs assessment process. If there is no assessment, the lawyer will recover according to ordinary contractual principles, subject always to the effect of s184(4) in making void any terms constituting a "costs agreement", in which event there is no apparent reason why there should not be recovery upon a quantum meruit.”

56 I agree with Basten JA that were the agreement rendered void by s184(4), while it might not be inconsistent with a statutory scheme to allow non-contractual recovery (Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 261-2 per Deane J), no such entitlement could arise inconsistently with the terms of an express contractual provision (per Dawson J at 266-7). This would be so, whether the contractual stipulation were oral or written. However, if the agreement were rendered void under s184(4), but its terms did not fall foul of the indemnity principle or otherwise render the provider of legal services “no more than a mere volunteer” (per Murray J in ABB Power Generation Ltd v Chapple (2001) 25 WAR 158), I consider that a quantum meruit entitlement would arise.

Should leave have been granted under s208M?

57 Each of the documents entitled “Costs Agreement” appears to have been signed by Mr Rogers on 10 February 1997. Each carried the notation “such agreement was entered into orally on or about 12 December 1994”. The first one was with respect to Ms Lydiard, one of the two barristers who acted for Mr Rogers. The other was with Ms Preston who, with Mr Rogers’ solicitor Mr Licardy, appears to have agreed in similar terms. The text was as follows:

“I, Gordon Rogers, agree that fees and disbursements incurred by Ms Virginia Lydiard, barrister, in relation to the matter of Wentworth v Rogers are to be paid by me as follows:

(1) Ms Lydiard’s legal services and disbursements are provided to me on a pro bono basis in that I am not obliged to pay Ms Lydiard (subject to paragraph 3 below) if I am unable to recover any costs against Ms Wentworth in this litigation.

(2) My obligation to pay such reasonable fees and disbursements does not arise upon a costs order being made in my favour but on costs being successfully recovered as against Ms Wentworth.

(3) In the event that such reasonable fees and disbursements cannot be recovered from Ms Wentworth I undertake to pay same when and if I am in a position to do so.

Notation: Such agreement was entered into orally on or about 12 December 1994.

[Signed]
Gordon Rogers

58 On 10 March 1997 Mr Rogers swore an affidavit which, so far as relevant, read as follows:

“…

2. I was present in court on 26 February 1997 when this matter was listed for mention. The plaintiff made certain comments to his Honour Mr Justice Sperling concerning my obligation to pay my legal representatives for their services in relation to my legal requirements.

…

4. When Ms Lydiard agreed to act for me in or about November 1994, it was on the basis that her fees would be met when we were successful in my efforts to re-establish the cross-claim. I would pay her for legal representation from any monies I recovered as costs. It was also agreed between Ms Lydiard and myself that if I was not successful in obtaining a costs order against Ms Wentworth in the future I would compensate her for her efforts if and when I was in a position to do so.

5. When Ms Preston appeared on my behalf as junior counsel with Ms Lydiard on 12 December 1994 it was my agreement with Ms Preston that she would represent me on the same terms as Ms Lydiard in terms of my liability to pay her for professional services.

…

59 This and other voluminous written material was both before the costs assessor and subsequently before this Court. It is conveniently summarised at [65] and [78] to [87] of the judgment of Barrett J. The costs assessor’s findings on the retainer were based on this written material, see [67] to [69] of Barrett J’s judgment.

60 The content of these particular costs agreements and their interpretation could not have been resolved definitively by the costs assessor on the documents, given his limited powers. First, this was an agreement which began as an oral agreement. It was not reduced to writing for over two years. Whether that writing included all the material terms of the agreement could not be clear beyond doubt. Moreover, it employed terminology like “pro bono” or “costs being successfully recovered” which, while not so uncertain as to be incapable of having an ascertained meaning, could not be said to be unambiguous.

61 The expression “no win/no pay”, found by the costs assessor to be the intended basis for payment, does not itself elaborate on what “win” meant. However, explanation is to be found in para 1 of the written agreement, providing that “I am not obliged to pay … if I am unable to recover any costs against Ms Wentworth in this litigation”. Para 2 indicates that this means more than obtaining a costs order, though entitlement so to recover would necessarily depend on a costs order; what para 2 then requires is “costs being successfully recovered against Ms Wentworth”. There then remains the precise meaning of the undertaking to which para 1 is subject, namely “to pay … when and if I am in a position to do so”. On one interpretation that would indicate a genuine obligation to pay, albeit qualified by Mr Rogers having the means to do so.

62 Whether the apparent meaning is the actual one and whether the agreement as written contains all its material terms can best be clarified by a Common Law judge by resort to oral evidence tested in cross-examination from those directly involved. But this is not an enquiry at large. It is an enquiry so far as necessary to answer the question: would an agreement in those terms fail to accord with the indemnity principle or otherwise render the provider of legal services no more than a mere volunteer so as to preclude recovery by way of quantum meruit?

63 Barrett J at [90] and [91] observed:

“[90] Practical marketplace considerations of this kind make it inherently improbable that a lawyer and a client entering into an arrangement they called "pro bono" in relation to litigation would intend that the lawyer have no right to charge costs in any circumstances whatsoever. For such a conclusion to be reached it would be necessary, in my view, to see clearly not only that the client understood that it was possible that a costs order might be made in his or her favour but also that both the lawyer and the client intended that neither should derive any advantage from such an order. The virtually universal expectation of such parties (because consistent with commercial reality) would be that the lawyer should have, albeit indirectly, the benefit of that costs order and therefore that there should subsist, in the arrangement between lawyer and client, recognition of the right of the lawyer to look to the client for payment sufficient to form a basis for the operation of the costs order consistently with the indemnity principle.

64 While these considerations may have a bearing on the ultimate interpretation of the costs agreement once its terms are sufficiently ascertained, I consider that they do not foreclose the need for the kind of examination by way of review that I have outlined.

65 One final matter. Although I conclude in the exceptional circumstances of this case that appeal under s208M of the Act should have been allowed, I do not consider that such review should be readily granted, or allowed to become automatic. If it did, the costs assessment process will cease to provide a straightforward, efficient mode of resolving costs disputes, but be trammelled by unnecessary litigation. This review should be carried out so that it deals only with the matters identified, and in an expeditious manner. It must be remembered that considerable delay and cost has already attended the costs orders originally made. Furthermore, any appeal must be pursued by the appellants with all reasonable expedition.

OVERALL CONCLUSION

66 Whether the overall costs arrangements fall foul of the indemnity principle depends ultimately on the content and construction of the costs arrangements. My view, necessarily provisional in that it turns on the proper construction of the agreements is that, if the costs arrangements are found to be substantially as recorded, they would not fall foul of the indemnity principle, for the reasons set out earlier.

67 I agree with Basten JA that leave should have been granted under s208M of the Act, obviating any necessity for appeal under s208L. The result of that determination should be that leave be granted and the matter remitted to a judge of the Common Law Division for consideration of the appeal under s208M. Its scope should not involve an unduly prolonged process, for reasons earlier explained. I agree in particular that, with respect, Barrett J was in error in declining to grant leave to appeal pursuant to s208M of the Act, generally for the concluding reasons of Basten JA under the heading “Application of Principles”, with the qualifications I have earlier expressed. I also agree that the judgment of Patten AJ needs now to be read in light of the judgments of this Court. I would respectfully concur with the orders Basten JA proposes.

68 BASTEN JA: On 29 August 2005 the Court granted leave to the Appellants to appeal against two judgments given in the Common Law Division with respect to determinations of a costs assessor under Part 11, Division 6 of the Legal Profession Act 1987 (NSW) (“the 1987 Act”). The substantive issue raised was whether the First Appellant, Ms Wentworth, having been unsuccessful in civil proceedings brought in the Court, could be liable to a costs order in favour of the successful party, Mr Rogers, if he himself had incurred no liability to pay legal costs to his solicitor and barristers. A second issue was whether the costs assessor had power to determine the terms and validity of any agreement or arrangement with respect to costs entered into between the Respondent and his legal advisers.

Background

69 The litigation between Ms Wentworth and her former husband, Mr Rogers, commenced in June 1981 when she commenced criminal proceedings relating to alleged domestic violence in January 1977. Civil proceedings in relation to the same events were commenced by her in late 1982. In July 1985 Mr Rogers was acquitted of the criminal charges and on 12 August 1985 commenced proceedings by way of cross-claim in Ms Wentworth’s civil proceedings, seeking damages for malicious prosecution.

70 On 20 December 1985, Mr Rogers obtained judgment in his favour on his malicious prosecution claim and in relation to Ms Wentworth’s civil claim, but that judgment was set aside and a retrial ordered on 6 March 1987.

71 On 8 April 1994 Sully J ordered that Mr Rogers’ cross-claim be heard separately from Ms Wentworth’s damages claim and that the latter proceed to a hearing. That hearing occurred two months later, Ms Wentworth recovering a small award of damages and half her costs.

72 In the second half of 1994, Ms Wentworth sought and obtained from Loveday AJ an order ex parte dismissing Mr Rogers’ cross-claim for malicious prosecution.

73 Ms Wentworth then having judgments in her favour for a small amount of damages and what was probably a significant amount of costs, challenged certain property transactions involving Mr Rogers and his current wife.

74 By November 1994 Ms Lydiard, barrister, had agreed to act for Mr Rogers and had obtained an adjournment of the property matters on account of his illness. At some stage in December 1994 Ms Preston, barrister, was recruited as a junior to assist Ms Lydiard.

75 On 12 December 1994 Mr Rogers filed a motion seeking to set aside the order dismissing his cross-claim for malicious prosecution. It appears from the commendably restrained bundle of materials before this Court that Mr Rogers intended to resurrect his claim for malicious prosecution, which had been dismissed ex parte because of his failure to prosecute it, with the expectation that, if successful, he would have a judgment against Ms Wentworth to set off against the judgments she had obtained against him. On that basis, he wished to contend that the property matters should be adjourned until after the malicious prosecution claim was resolved.

76 On 4 April 1995 Sperling J severed the hearing of the property matter from Mr Rogers’ motion to reopen the dismissal of his claim and directed that the latter be heard first.

77 On 10 September 1996 Sperling J gave judgment indicating that he would set aside the orders of Loveday AJ and dismiss Ms Wentworth’s motion for a permanent stay of the malicious prosecution proceeding. However, he made no orders on that occasion, but merely directed that counsel for Mr Rogers should bring in short minutes of order disposing of the matters which had been addressed in the judgment and invited both parties to bring in short minutes of order to reflect directions which should be made in relation to the balance of the proceedings.

78 Lest it be thought that the motions in issue were disposed of following a short hearing, it is appropriate to note that the dates of the hearing before Sperling J, listed at the beginning of his judgment of 10 September 1996, run from 23 March 1995 to 24 April 1996 and cover 37 days. In a submission on costs prepared by the two counsel involved in the case, and dated 1 May 1997, an “estimate” of Mr Rogers’ costs was provided, which included an amount of $271,017 for counsel, $7,575 disbursements for Mr Rogers and the relatively modest amount of $6,675 fees and disbursements due to Richard Licardy & Co, solicitors.

79 On 26 February 1997 Sperling J made orders giving effect to his judgment of 10 September 1996, other than with respect to costs. He directed that the parties exchange written submissions with respect to the costs other than those concerning the property matter. On 12 March 1997 Ms Wentworth filed a summons seeking leave to appeal against the orders made on 26 February.

80 The next step in the proceeding was a matter of some consequence, but it is necessary to identify some further factual matters before dealing with it. The first is that on 10 February 1997 Mr Rogers appears to have signed two documents, each entitled “costs agreement”. The one with respect to Ms Lydiard, read as follows:

Wentworth v Rogers

pro bono

(2) My obligation to pay such reasonable fees and disbursements does not arise upon a costs order being made in my favour but on costs being successfully recovered as against Ms Wentworth.

(3) In the event that such reasonable fees and disbursements cannot be recovered from Ms Wentworth I undertake to pay same when and if I am in a position to do so.

Notation: Such agreement was entered into orally on or about 12 December 1994.

Date: [Handwritten date 10-2-96 crossed out and handwritten date 10-2-97 initialled by GR.]

81 On 10 March 1997 Mr Rogers swore an affidavit which, so far as relevant, read as follows:

82 On 13 February 1997 Mr Licardy wrote to the Law Society asking the following question:

“Would you please advise me as a matter of urgency as to whether I am precluded under the Pro-Bono Scheme from receiving costs in this matter. Whilst at all times the agreement with Mr Rogers in respect of fees had been on a contingency basis both with this office and counsel, we believe that we should be able to pursue costs from Ms Wentworth in this matter.”

83 This and other material was before this Court because it was before the costs assessor. Although the record is by no means complete, it appears that such material was supplied to Ms Wentworth shortly after the affidavit was filed because on 26 March 1997 she appeared before Sperling J seeking to adduce evidence relating to pro bono arrangements between Mr Rogers and his legal representatives. That application was refused.

84 On 28 August 1997 Sperling J ordered Ms Wentworth and her solicitor, Mr Russo (the Second Appellant) to pay Mr Rogers’ costs on an indemnity basis and without set-off against costs orders made in favour of Ms Wentworth. The judgment noted that submissions filed by Mr Rogers included a request “for an order for costs on an indemnity basis against both Ms Wentworth and her solicitor, Mr Russo”: Judgment, p 4. The judgment explains why the costs order was made against the solicitor as well as the litigant. There is nothing in the judgment which addresses the question of whether Mr Rogers had any legal liability to either his barristers or his solicitor. Despite an application by Mr Rogers for a lump sum payment, to avoid the need for costs to be assessed, his Honour declined to make such an order. As a result, absent agreement, the costs required assessment.

85 It was the costs subject to the order made by Sperling J on 28 August 1997 which became the subject of the first bill assessed by the costs assessor and also, as appears from the judgment of Patten AJ, the costs of an application for leave to appeal to this Court, refused on 29 October 1999.

86 The second bill, which concerned Ms Wentworth alone, involved costs of proceedings in this Court heard on 12 June 1997 and 21 October 1998. Each hearing involved the leave application filed on 12 March 1997 in relation to the substantive orders made by Sperling J on 26 February 1997.

87 The refusal of the March 1997 leave application gives rise to a number of factual issues, which were not explored in this Court. On the one hand, the costs agreements signed by Mr Rogers in February 1997 permit an inference that, at least thereafter, Ms Lydiard and Ms Preston were appearing on a contingent fee basis consistent with the terms of those agreements. On the other hand, the agreements would appear, in their terms, to apply only to the proceedings in the Common Law Division between the parties identified. No separate costs agreement is in evidence with either of the barristers or the solicitor in relation to the application for leave to appeal. Accordingly, the factual basis for the proposed challenge to liability for the two bills may not be the same.

Issues

88 The issues which appear to arise from the submissions in this Court made on behalf of the Appellants and on behalf of the Law Society, appearing with leave as amicus curiae, may be identified as follows:

(1) Objection having been taken by the unsuccessful party in civil proceedings (Ms Wentworth), was it necessary for the trial judge to be satisfied that the party seeking a costs order had a legal obligation to pay the fees and disbursements of the practitioners who had provided him with legal assistance for the purposes of the litigation?

(a) was it necessary that there be an extant obligation at the time the order was made, or was a future contingent obligation sufficient?, and

(b) on whom did the burden lie to establish the existence or non-existence of the obligation?

(a) did the costs assessor have power and authority to make that determination, or

(b) could such a determination only be made by a judge of the Court?

(a) the trial judge from whom the costs order was sought;

(b) a judge hearing an appeal from the costs assessor, or

(c) a judge hearing a separate application?

89 Implicit in question (1) is a proposition for which the amicus contended, namely that the indemnity principle has no operation in this State, at least since the commencement of the Legal Profession Reform Act 1993, which, it was said, allowed costs to be assessed for the purpose of recovery from another party to the litigation (whether assessed on a party and party or indemnity basis), regardless of any legal obligation of the receiving party to pay his or her counsel and solicitors. For that reason, it is convenient to address that question first, followed by the related and procedural questions.

90 For reasons which will be noted in more detail below, there are aspects of the arguments presented by both parties which are inconsistent with the reasons of this Court in Wentworth v Rogers [1999] NSWCA 403. As against the amicus, the reasoning in that case appears to have proceeded upon the basis that the Appellants could successfully resist an order costs if they could establish that counsel and solicitor acted on an unconditional no-fee basis. On the other hand, the reasoning is also inconsistent with the contention for the Appellants in the present appeal that the costs assessor had no power or authority to address this question. Further, although the issue of his jurisdiction was raised before the trial judge, in a judgment of 26 March 1997 he declined to allow Ms Wentworth to file evidence in relation to that issue holding, on the basis of a judgment of this Court in Graham v Aluma-Lite Pty Ltd (unrep, 25 March 1997) that it was not an appropriate matter for him to deal with. That interlocutory finding could have been challenged by the Appellants in seeking leave to appeal from the costs judgment of 28 August 1997, and it appears that the issue was raised. Accordingly, the 1999 judgment of this Court also stands in the way of a challenge to that aspect of the judgment of Sperling J.

91 The Appellants’ arguments depend fundamentally on a factual question, namely what were the terms of the retainer agreed between Mr Rogers and his barristers in late 1994 and (to a lesser extent) with his solicitor the following year? Their complaint is that this issue has never been properly determined on the evidence. Before the costs assessor, numerous documents were produced which might have had a bearing on the answer to that factual question. As Barrett J noted at [76] “the expression ‘pro bono’ is not of itself determinative of the question whether a lawyer is entitled to recover costs”. The documents, therefore, left the question in doubt. There was no discussion of the party on which the onus of proof fell in such circumstances. It was made clear at the opening of the proceedings before Barrett J on 1 August 2002 that the Appellants sought to call evidence as to these matters: Tcpt, 1 August 2002, p 2. As it turned out, his Honour refused leave to appeal without considering any further evidence. It may thus be accepted that the matter has been dealt with in the absence of a full judicial exploration of the factual issues in dispute. The question for this Court is ultimately whether that omission amounts to error.

Nature of appeal to this Court

92 It will be necessary to consider below more broadly the effect of statutory provisions introduced into the Legal Profession Act 1987 by the Legal Profession Reform Act 1993 (NSW) (“the 1993 Reform Act”). The changes introduced by that legislation have been continued in the Legal Profession Act 2004 (NSW). At this stage it is convenient to note key elements of the statutory scheme, and changes therein, relevant to the scope of the present appeal.

93 Following the issue of two certificates by the costs assessor, the Appellants appealed and sought leave to appeal, to the extent that leave was necessary, in order to challenge each of the determinations of the costs assessor. These separate matters came before Barrett J in the Common Law Division on 12 August 2002. In a judgment delivered on 15 August 2002, his Honour noted that the substance of the challenge to each certificate was directed to the proposition that an amount was payable by way of costs, in circumstances where the lawyers for the Respondent had acted “pro bono” or, arguably on a “no win/no fee” basis. To the extent that the costs agreements were relied upon, he noted that they were said to be void pursuant to s 184(4) of the 1987 Act and it was further said that the costs assessor had failed to provide sufficient reasons for his decision, in accordance with cl 26IJ of the Legal Profession Regulation 1994 (NSW) as amended by the Legal Profession Amendment (Costs Assessment) Regulation 1999. These questions could, it had been submitted, be dealt with pursuant to an appeal as of right with respect to a “matter of law”, as provided by s 208L(1) of the 1987 Act. However, to the extent that it was necessary to determine the terms of the lawyers’ retainers, it was accepted by the Appellants that there were mixed questions of fact and law, which required leave under s 208M of the 1987 Act. Although no formal order was made pursuant to Part 31, r 2 of the Supreme Court Rules, as then in force, the procedure for the determination of a separate question was adopted, the question being whether leave should be granted pursuant to s 208M. Barrett J dismissed the applications for leave in a lengthy judgment which gave extensive consideration to both the material tendered before him and to relevant legal principles: see Wentworth v Rogers [2002] NSWSC 709.

94 Had attention been given to the formulation of a specific issue or issues, for the purposes of separate determination under Part 32, it might have been appreciated that the expedient of separating the issues would almost certainly lack utility. The expedient appears to have been adopted because the primary judge had only one day available for the hearing at that time and was seeking to identify some part of the matter which could proceed to finality before him on that day. However, if he granted leave, it would have been necessary to re-list the matter for further hearing; if he did not grant leave it would again be necessary to re-list the matter for further hearing to deal with the questions of law. In a practical sense, his Honour’s judgment on the leave applications effectively dealt with the questions of law which might otherwise have been agitated as of right, adversely to the Appellants. However, because that aspect of the cases had been separated, he did not give judgment in relation to those issues. Having dealt with the leave applications, he then faced an application to disqualify himself from considering the other aspects of the matter, to which he acceded: Wentworth v Rogers [2002] NSWSC 1198 at [35]. These came before Patten AJ for hearing on 10 December 2004. On 21 February 2005 his Honour delivered judgment holding that the costs assessor made no error with respect to a matter of law. The appeals were dismissed: Wentworth v Rogers [2004] NSWSC 1273.

178 In my view Sperling J had power to consider this issue and, to the extent that he held that he did not have power, he was in error. There may have been discretionary reasons for not entertaining the application at that stage, but that would probably have meant the deferment of the costs order to a later date. In any event, it is too late now to reopen that decision, unless it is not possible to review the entitlement to recover costs following a costs assessment.

Nature of costs assessment

179 The second possibility is that the costs assessor had at least concurrent jurisdiction to consider these issues. There are significant statutory indications that he or she does not have such power or authority: see below. Against those indications are the reasons given in two cases in this Court to a contrary effect. However, in neither case was the power of a costs assessor in issue and in neither case was any consideration given to the statutory scheme under which costs assessors operate.

180 The order requiring the Appellants to pay the Respondent’s costs of the proceedings was made on 28 August 1997, by Sperling J. Neither the bills nor the applications for assessment are before this Court, but, on 24 October 2001, a costs assessor provided to the Appellants certificates of assessment and statements of reasons in relation to each bill. Each certificate was headed “Application by giver of bill”, which appears to have been the language used in relation to the legal practitioner who gave the bill to his or her client: see ss 199(1) and 201(1) of the 1987 Act. On the other hand, each certificate refers to the “applicant” as Mr Rogers and is also headed “Assessment of party/party costs”. One may assume that each application was made pursuant to s 202(1), as an application for assessment of “party/party costs” by the person entitled to receive costs as a result of the order for payment made by the Court. The applications were presumably made to “the proper officer of the Supreme Court”.

181 The proper officer was required, pursuant to s 206(1), to refer such an application to a “costs assessor”. Costs assessors are appointed by the Chief Justice of New South Wales pursuant to s 208S, which provided:

(4) A costs assessor is not an officer of the court when acting as a costs assessor.

182 Each of the certificates is entitled as if it were a proceeding in the Common Law Division of the Court and has a matter number. A certificate records the determination of the costs assessor: s 208J(1). It did not purport to be a judgment or order of the Court.

183 Under the 1987 Act, the costs assessor had various powers, including the power by notice in writing to require a person to produce documents, to require further particulars to be furnished and to require that the particulars be verified by statutory declaration: s 207 of the 1987 Act. Further, the costs assessor was required to allow a reasonable opportunity for written submissions and to give due considerations to such submissions: s 208(1). Section 208 continued:

(2) In considering an application, a costs assessor is not bound by rules of evidence and may inform himself or herself on any matter in such manner as he or she thinks fit.

(3) For the purposes of determining whether an application for assessment may be made or is required to be made, or for the purpose of exercising any other function, a costs assessor may determine any of the following:

(a) whether or not disclosure has been made in accordance with Division 2 and whether or not it was reasonably practicable to disclose any matter required to be disclosed under Division 2,

(b) whether a costs agreement exists, and its terms.

184 It was common ground that the costs assessor did not have powers to take oral evidence on oath, or permit cross-examination of witnesses: see Ryan v Hansen (2000) 49 NSWLR 184 at [23]-[39] (Kirby J). Adopting language which appears anomalous in those circumstances, s 208L provided for an appeal on a question of law to the Supreme Court and, on remittal for redetermination by that Court further provided:

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

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185 There would be something of an irony in now holding that a costs assessor had the power to determine questions of contractual liability, given the opposition to that conclusion raised by the Appellants in 1998. Unless it is necessary to determine that question in order to deal with the present appeal, in my view the question should be treated as open for further consideration in a case in which it squarely arises.

Appeal from costs assessor

186 The next question, which is in substance the question which arises on the current appeal, is whether a judge in the Common Law Division could (and should) have addressed that issue pursuant to an appeal from the costs assessor. Unless a judge had such a power, it would seem that the only means by which the Appellants could litigate this issue would be by commencing separate proceedings, by way of a collateral challenge to the enforceability of the costs orders made against them. That would seem to be an undesirable result.

187 Although the costs assessor is not an officer of the Court, there are two provisions for “appeal” against the decision of a costs assessor. The first involves a right of appeal against a decision as to a matter of law. Section 208L, so far as relevant, provides:

208L(1) A party to an application who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the Supreme Court, appeal to the Court against the decision.

188 The second provision, headed “Appeal against decision of costs assessor by leave”, is s 208M, which relevantly provides:

208M (1) A party to an application relating to a bill of costs may, in accordance with the rules of the Supreme Court, seek leave of the Court to appeal to the Court against the determination of the application made by a costs assessor.

(2) A party to an application relating to costs payable as a result of an order made by a court or a tribunal may, in accordance with the rules of the court or tribunal, seek leave of the court or tribunal to appeal to the court or tribunal against the determination of the application made by a costs assessor.

(3) The Supreme Court or court or tribunal may, in accordance with its rules, grant leave to appeal and may hear and determine the appeal.

(4) An appeal is to be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given.

189 In accordance with established authority, the reference to a “decision … as to a matter of law”, in s 208L(1), should be understood to include any decision which is material to the determination made by the costs assessor, whether separately identified as a matter of law or not, so long as it satisfies that description: see, eg, Custom Credit Corporation Ltd v Commercial Tribunal (NSW) (1993) 32 NSWLR 489, 499-500 (Meagher JA); cf Grygiel v Baine [2005] NSWCA 218 at [26]-[29]. Otherwise, the functions imposed on the costs assessor are expressed in terms of determining an application or making a determination. The only power not identified in those terms is the power and obligation under s 208C(1) to decline to assess a bill.

190 Assuming that the costs assessor has power to decide whether or not there is an agreement not to charge, or to charge at a reduced rate, any decision that the assessor might make is open to reconsideration, by leave, pursuant to s 208M. If there is disputed evidence, which in substance the costs assessor does not have power to deal with in the manner usually considered procedurally fair with respect to contractual disputes, and absent countervailing considerations, it would seem generally desirable that leave would be given to allow those matters to be agitated in a relevant court or tribunal. In some cases, there might be a right of appeal with respect to such a finding, where an error of law can be identified. However, it is more likely, as in the present case, that the real challenge is sought to be made in relation to findings of fact because the evidence was not complete, perhaps because there had been no cross-examination of any witnesses, who might have been required to give oral evidence in a court proceeding.

191 If the costs assessor did not have power to make findings in relation to such contractual matters, and purported to do so, his or her decision might be set aside as demonstrating legal error. In that case, it would be futile to remit the matter to the assessor; the dispute must be resolved elsewhere. On the other hand, it may be asked whether, if the costs assessor correctly refused to determine the contractual questions, leave could be granted under s 208M and those issues could be raised in the relevant court or tribunal.

192 The appropriate resolution of these uncertainties may be found in the principle that administrative officers and bodies, which have no power to make binding determinations of law, are nevertheless required, for the purpose of exercising their powers, to consider matters of law. Thus, in considering the power of a tax agents’ board, under the Income Tax Assessment Act 1936 (Cth), Brennan J (sitting as President of the Administrative Appeals Tribunal) held in Re Adams and the Tax Agents’ Board (1976) 12 ALR 239 at 242:

“An administrative body with limited authority is bound, of course, to observe those limits. Although it cannot judicially pronounce upon the limits, its duty not to exceed the authority conferred by law upon it implies a competence to consider the legal limits of that authority, in order that it may appropriately mould its conduct. In discharging its duty, the administrative body will, as part of its function, form an opinion as to the limits of its own authority. The function of forming such an opinion for the purpose of moulding its conduct is not denied to it merely because the opinion produces no legal effect.”

193 It would undoubtedly be desirable if a costs assessor had power to refer a question of law to the Supreme Court for determination, being the kind of power sometimes conferred on tribunals. On the other hand, it may have been thought sufficient that the costs assessor would have an implied power not to continue with the assessment of the application, so as to allow the parties to have the contractual issue determined in the court in which the proceedings arose. At least where that court is a court with appropriate jurisdiction, that approach would have much to commend it. In any event, it is not necessary to resolve the precise extent of the assessor’s powers for present purposes. The existence of a dispute of this kind, combined with the lack of relevant procedural mechanisms for allowing a hearing and determination in an appropriate manner, would, absent other considerations, generally mandate a grant of leave pursuant to s 208M of the 1987 Act.

Application of principles

194 The final step is to identify the basis upon which Barrett J declined to grant leave to appeal under s 208M of the 1987 Act. The test to be applied, his Honour held, was that “there is an obvious error on the face of the record and that there will be substantial injustice to the plaintiffs if the determination … is allowed to stand”, relying upon Reynolds v Whittens (2002) NSWLR 271. In that case, the test was accepted by the parties and, by O’Keefe J, subject to an apparent concern that there was no need for the error to be obvious: at [25].

195 Absent binding authority to that effect, that test seems to be far too inflexible and restrictive. The first limb sounds like the traditional requirement for the grant of certiorari. There is no basis for adopting such an approach in relation to an unconstrained discretion to grant leave. Further, as Barrett J appears to have recognised, no such constraints were imposed by the passage his Honour extracted from this Court in Chapmans Ltd v Yandell [1999] NSWCA 361. There, Fitzgerald JA held (Mason P and Davies AJA agreeing) at [12]:

“In considering whether or not leave to appeal is granted, it must be decided whether or not, there not being a matter of law arising in the proceeding and there being an appeal as of right only as to a matter of law, there is some other matter which in justice requires that leave to appeal be granted to allow that matter to be relitigated. The party seeking leave to appeal obviously bears the burden of establishing that justice does require that leave to appeal be granted. Further, the master when considering whether to grant leave to appeal obviously has a very wide discretion: … .”

196 Reference to High Court authority in this context is inapposite, the power of that Court to grant special leave to appeal being tightly constrained by express criteria set out in s 35A of the Judiciary Act 1903 (Cth).

197 At [94], the primary judge noted his acceptance of the relevance of “the existence or non-existence of a written agreement denying the lawyer’s right to charge”. Similarly he accepted the relevance of “a non-binding but activating representation or arrangement” to similar effect. His Honour then noted that the assessor’s reasons sufficiently showed that he had the possibility of such an agreement in mind as he reviewed the material before him and reached a conclusion that there was an agreement to charge on a “no win/no fee basis”, rather than a “pure pro bono” basis. He concluded that it had not been demonstrated that the assessor “may have overlooked relevant matters or failed to take into account the message conveyed by the ‘pro bono’ references”.

198 With respect, if he had committed the errors last mentioned, there would have been an error of law with an appeal as of right. Similarly, to show that the assessor had something “in mind” is to say no more than he took account of relevant considerations, again denying an error of law. There is no consideration of the limited fact-finding exercise which the costs assessor was able to carry out and the relevance that might have had to the basis on which he considered the matter.

199 Rather, his Honour appears to have determined the matter largely on the basis of an assumption. Thus, at [90], his Honour stated:

“Practical marketplace considerations of this kind make it inherently improbable that a lawyer and a client entering into an arrangement they called ‘pro bono’ in relation to litigation would intend that the lawyer have no right to charge costs in any circumstances whatsoever.”

“Clearly persuasive displacement of the market realities to which I have referred would be needed to support a view that there was, in the understanding and arrangements between lawyer and client, no right to costs on the part of the lawyer sufficient to prevent the operation of the costs order on the ground that the indemnity principle was not satisfied.”

200 First, there is, with respect, a difficulty in relying, absent relevant evidence, upon “marketplace realities” in seeking to determine the specific terms of a contract between two parties. Secondly, resort was had to marketplace realities because the terminology adopted in some documents was ambiguous or vague. Marketplace realities are unlikely to identify the precise terms of the agreement struck. Thirdly, it is only when such clear terms as to the basis and nature of liability can be identified, on a prima facie basis, that any burden of “persuasive displacement” could arise. Finally, there is no discussion of the inference in the last part of this conclusion that an onus lies on the person seeking to “prevent the operation of the costs order”. To the extent that questions of onus arise, the better view is that, once an issue as to entitlement has been raised, the onus lies on the party seeking to establish a legal liability to prove the elements necessary for success. For present purposes, however, there is no need to reach a final conclusion in relation to that issue.

201 At [95], the primary judge noted that the question whether the speculative arrangement constituted a “costs agreement” within s 184 was “irrelevant to the assessment of costs, given the effect of s 208H …”. Rather, the purpose of the assessment was to determine what was “a fair and reasonable amount for costs”. If his Honour were in fact asserting that the existence and content of a costs agreement, speaking generally, would always be irrelevant to the exercise being undertaken by the assessor under Subdivision 3, that would have been inconsistent with the approach adopted by Sperling J in declining to consider evidence of such an agreement, the dicta of this Court in Graham v Aluma-Lite and the following of those dicta by this Court in Rogers v Wentworth [1999] NSWCA 403. I do not understand his Honour to have been reaching that conclusion, but rather to have been asserting that, in the circumstances of the case, no error was shown on the part of the assessor in approaching his task on that basis.

202 Nor does it appear that these last matters were relied on as constituting countervailing considerations, against the exercise of a power to grant leave, which might otherwise have been appropriate. Given the limited ability of the costs assessor to determine disputed issues as to the existence of a contractual arrangement of the kind contended for by the Appellants, the powerful countervailing consideration would have been needed to avoid the conclusion that a grant of leave was the only tenable way to exercise the discretion, as justice required. It follows, in my view, that the refusal of Barrett J to grant leave to appeal pursuant to s 208M of the 1987 Act involved an error of principle of the kind which both permitted and required the intervention of this Court in accordance with the well-established principles in House v The King (1936) 55 CLR 499. In my opinion, the appeal from that judgment should be upheld, the decision set aside, leave granted and the matter remitted to the Common Law Division for consideration of the appeal under s 208M.

203 That leaves open the question whether the judgment of Patten AJ with respect to the appeal under s 208L should be allowed to stand.

204 His Honour proceeded on the basis that, leave having been refused under s 208M, it was necessary for the Appellants to demonstrate errors of law on the part of the assessor. If he had known that the correct resolution of the application under s 208M was to grant leave to appeal, it would have been unnecessary and inappropriate for his Honour to consider the further application, given that the matter would need to be reconsidered by a single judge in the Common Law Division in any event. To the extent that there are questions of law to be determined pursuant to the appeal, the Divisional judge will no doubt follow the law as identified by this Court, rather than Patten AJ, to the extent that there are discrepancies. However, there are further concerns with the judgment of his Honour. In identifying the issues for decision at [6], Patten AJ stated that he was taking the questions of law for decision from the written submissions of the Appellants. That was not a sufficient basis for determining the appeal, it being necessary to consider whether the issues so formulated were in fact questions of law at all. In my view they were not. The second and third involved, at best, mixed questions of fact and law. The first question, which asked whether the assessor “was entitled to determine the nature of the retainers”, appears to have been intended to ask whether the assessor was entitled to determine the contractual issue, namely whether Mr Rogers had any legal obligation to pay costs to his lawyers. For reasons noted above, there is some ambiguity in the use of the phrase “entitled” to make a finding. The correct answer may have been that he could make findings as to legal liability, but that they would not necessarily bind the parties, possibly absent the registration of a certificate in a court.

205 Further, at [45], his Honour concluded:

“I hold that in this case, the solicitors for Mr Rogers, as a matter of law, are not precluded from recovering costs from their client.”

206 On the basis that leave should be granted under s 208M, the appeal under s 208L lacks utility and subject to one qualification, the appeal to this Court in respect of the orders made below could properly be dismissed. The qualification is that the first order made by the Court was that “the appeal against the decision of the costs assessor as to matters of law is dismissed”. The form of the order assumes that the final determination of the costs assessor was a “decision … as to matters of law”, which it was not. Further, there were in fact two determinations of the costs assessor in any event. It may therefore be appropriate to set aside the order and affirm the result, in different terms. The remaining question concerns the costs of those proceedings below.

207 As already noted, the notice of appeal with respect to the judgment of Barrett J had been filed in 2002, well before the hearing of the appeal under s 208L, by Patten AJ, which took place on 10 December 2004. This procedural confusion resulted from the informal separation of the appeal and the leave application, which, as noted above, apparently occurred by consent of both parties, in an attempt to make use of the inadequate time available for the hearing before Barrett J, in August 2002.

208 Mr Rogers did not appear on the hearing of the appeal, nor did he take any part in the leave application. He should be taken to be aware that he was at risk of losing not only the substantive orders made in the Court below, but also the costs orders made in his favour. In my view both parties should share responsibility for the wasted costs of the hearing before Patten AJ and that, in place of his Honour’s order that the plaintiff pay the defendant’s costs of that appeal, there should be no order as to the costs of that part of the proceeding identified as the s 208L appeal.

Costs

209 In relation to the costs in this Court, Mr Rogers has not appeared or opposed the orders sought by the Appellants and, accordingly, no order for costs should be made against him. Although he was the respondent to an “appeal” in the proceedings in the Common Law Division, no costs order in his favour was made by Barrett J, nor was a certificate granted under the Suitors’ Fund Act by Patten AJ. Despite the form in which the cost certificates were given, it is doubtful whether a costs assessor constitutes a “court” for the purposes of s 6(1) of the Suitors’ Fund Act 1951. Subsection 6(1B) deemed “a taxing officer” to be exercising the jurisdiction of a court of first instance for the purposes of that section. Whether that provision applies in relation to a costs assessor is unclear, but does not matter for present purposes.

210 The Law Society appeared as amicus curiae and, in some respects, acted as a contradictor. However, it should not be seen as an adversary party, even to the extent that its submissions were in opposition to those of the Appellants. Accordingly, as is the usual course, it should neither pay nor receive costs. It follows that there should be no order as to the costs of the appeal.

211 To the extent that the Appellants have incurred the costs of legal representation, the result of that conclusion is that they are precluded from obtaining a certificate under the Suitors’ Fund Act, despite the fact that they have demonstrated error on the part of the primary judge in the application for leave under s 208M. Where there is no order as to costs, a respondent may nevertheless be entitled to a certificate under the Suitors’ Fund Act and be able to recover part of its own costs of an appeal: see Wyong Shire Council v MCC Energy (No. 2) [2005] NSWCA 196. It may seem anomalous that an appellant who is successful, but who does not obtain an order for costs against a respondent, through no fault of his or her own, does not get the benefit of any indemnification from public funds.

212 The circumstances of the case are perhaps unusual, as, in the absence of opposition, the Court would normally have made the orders sought by the Appellants without a full hearing. However, in the present case there were issues as to the power and authority of the costs assessor and the propriety of granting leave under s 208M. Rather than having the matter remitted to a single judge for reconsideration of the leave application, the Appellants have obtained a grant of leave in this Court. That course could not have occurred without the Court being satisfied that such a grant was appropriate. A hearing was required to achieve that result. Nevertheless, the Appellants are not entitled to recoup the costs of the hearing.

Conclusions

213 I would propose the following orders:

(a) appeal allowed;

(b) set aside the order made;

(c) in lieu thereof, order that the Appellants have leave to appeal to the Court from the determinations of the costs assessor issued on 24 October 2001; and

(d) remit the appeal to the Division for determination.

(a) allow the appeal;

(b) set aside the orders made;

(c) in lieu thereof, order that:

Legal Profession Act

(ii) there be no order as to the costs of the appeals.

214 HISLOP J: I have had the privilege of reading the judgments of Santow JA and Basten JA in draft.

215 I concur with the orders proposed by their Honours, essentially for the reasons they have given.

216 I note the areas identified by Santow JA where his Honour’s conclusions differed from those of Basten JA. However as those differences do not affect the overall result I prefer to express no concluded opinion on them.

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05/07/2006 - Changed Cover Sheet for Amicus Counsel, Amicus for Bar Association and not Law Society of NSW - Paragraph(s) Cover Sheet

Citations

Wentworth v Rogers [2006] NSWCA 145

Most Recent Citation

Cases Citing This Decision

171

Brisciani v Piscioneri (No 2) [2016] ACTCA 24

Gaynor v Attorney General of New South Wales [2020] NSWCA 48

Cases Cited

31

Statutory Material Cited

17

Wentworth v Rogers [1999] NSWCA 403

Muriniti v Lyons [2004] NSWSC 135

Howard & Ors v Mechtler & Ors [2000] NSWSC 455

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CITATION:	WENTWORTH v ROGERS; WENTWORTH & RUSSO v ROGERS [2006] NSWCA 145 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	14 March 2006
JUDGMENT DATE:	7 June 2006
JUDGMENT OF:	Santow JA at 1; Basten JA at 68; Hislop J at 214
DECISION:	(1) In relation to the judgment in the Common Law Division given on 15 August 2002 and orders entered on 13 January 2003; (a) appeal allowed; (b) set aside the order made; (c) in lieu thereof, order that the Appellants have leave to appeal to the Court from the determinations of the costs assessor issued on 24 October 2001; and; (d) remit the appeal to the Division for determination; (2) In relation to the judgment given in the Common Law Division on 21 February 2005 and the orders entered on 21 March 2005; (a) allow the appeal; (b) set aside the orders made; (c) in lieu thereof, order that; (i) the appeals under s 208L of the Legal Profession Act 2005 from the determinations of the costs assessor issued on 24 October 2001 be dismissed; and; (ii) there be no order as to the costs of the appeals; (3) There be no order as to the costs of the applications for leave to appeal and the appeals in this Court
CATCHWORDS:	COSTS – Indemnity Principle – costs orders made against Appellant – costs agreement between Respondent and his lawyers that no obligation to pay until successful recovery of costs from Appellant – whether Appellant liable to costs order if Respondent had incurred no lability to pay his lawyers - COSTS ASSESSOR – power of – costs assessor assessed bills – whether costs assessor had power to determine the terms and validity of costs agreement – whether judge in Common Law Division had power to hear appeal from costs assessor’s determination
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW), s98 Contracts Review Act 1980 (NSW), s9 Federal Court Rules, Order 80, r9 Income Tax Assessment Act 1936 (Cth) Interpretation Act 1987 (NSW), s30 Judiciary Act 1903 (Cth), s35A Legal Profession Act 1987 (NSW), s175, s177, s179, s180, s182, s184, s186, s192, s199, s201, s202, s206, s207, s208, s208A, s208B, s208C, s208D, s208F, s208G, s208H, s208J, s208L, s208M, s208S Legal Profession Act 2004 (NSW), s323, s365, s384, s735, cl3, cl22 Legal Profession Amendment (Costs Agreement) Regulation 1999 (NSW) Legal Profession Reform Act 1993 Legal Profession Regulation 1994 (NSW), cl261J Solicitors Act 1870 (UK), s4 Solicitors Act 1974 (UK), s60 Suitors' Fund Act 1951 (NSW), s6 Supreme Court Act 1970 (NSW), s75A, s76 Supreme Court Rules, Part 31, r2, Part 52A, r8 Uniform Civil Procedure Rules 2005 (NSW)
CASES CITED:	ABB Power Generation Ltd v Chapple (2001) 25 WAR 158 Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495 Backhouse v Judd [1925] SASR 395 Baker & Anor v Kearney [2002] NSWSC 746 Cachia v Hanes (1994) 179 CLR 403 CDJ v VAJ (1998) 197 CLR 172 Chancliff Holdings Pty Ltd v Bell [1999] FCA 1783 Chapmans Ltd v Yandell [1999] NSWCA 361 Clare v Joseph [1907] 2 KB 369 Clyne v NSW Bar Association (1960) 104 CLR 186 Custom Credit Corporation Ltd v Commercial Tribunal (NSW) (1993) 32 NSWLR 489 Davies v Taylor [No. 2] [1974] AC 225 Dyktynski v BHP Titanium Minerals Pty Ltd (2004) 60 NSWLR 203 Electrical Trade Unions v Tarlo [1964] Ch 720 Emeritus Pty Ltd v Mobbs (1991) NSW Conv R 55-588 General of Berne Insurance Co v Jardine Reinsurance Management Ltd [1998] 2 All ER 301 Graham v Aluma-Lite Pty Ltd (NSWCA, unrep, 25 March 1997) Grygiel v Baine [2005] NSWCA 218 Gundry v Sainsbury [1910] 1 KB 645 Guss v Veenhuizen [No. 2] (1976) 136 CLR 47 Harold v Smith (1860) 5 H & N 381; (1860) 157 ER 1229 House v The King (1936) 55 CLR 499 Howard & Ors v Mechtler & Ors [2000] NSWSC 455 Hughes v Kingston Upon Hull City Council [1999] QB 1193 Johnson v Santa Teresa Housing Association (1992) 83 NTR 14 Joyce v Kammac Ltd [1996] 1 WLR 805 Lenthall v Hillson [1933] SASR 31 McCullum v Ifield [1969] 2 NSWR 329 McLean v Carlish (1917) 61 SJ 399 Muriniti v Lyons [2004] NSWSC 135 New Pinnacle Group Silver Mining Co v Luhrig Coal & Ore Dressing Applicances Co (1902) 2 SR (NSW) 50 Oshlack v Richmond River Council (1998) 193 CLR 72 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 R v Archbishop of Canterbury [1903] 1 KB 289 Re Adams and the Tax Agents' Board (1976) 12 ALR 239 Re Wilson [1978] VR 147 Reynolds v Whittens (2002) 57 NSWLR 271 Ryan v Hansen (2000) 49 NSWLR 184 Singleton v Macquarie Broadcasting (1991) 24 NSWLR 103 Thai Trading Co v Taylor [1998] QB 781 Victorian Stevedoring & General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73 Vital Finance Corporation Pty Ltd v Taylor (1996) 40 NSWLR 25 Wentworth v Rogers [1999] NSWCA 403 Wentworth v Rogers [2002] NSWSC 709 Wentworth v Rogers [2002] NSWSC 1198 Wentworth v Rogers [2004] NSWSC 1273 Woolf v Treblico [1993] VLR 180 Wyong Shire Council v MCC Energy (No. 2) [2005] NSWCA 196 Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410
PARTIES:	Katherine Wentworth - Appellant CA 40919/02 Katherine Wentworth - First Appellant CA 40920/02 Salvatore Russo - Second Appellant CA 40920/02 Gordon Rogers - Respondent CA 40919/02 and CA 40920/02
FILE NUMBER(S):	CA 40919/02; 40920/02
COUNSEL:	Appellant in person - CA 40919/02; CA 40920/02 Second Appellant CA 40920/02 - D. Officer QC/V. Culkoff Respondent - No appearance CA 40919/02; CA 40920/02 Amicus for Bar Association of NSW - M. Slattery QC/K. Rees/J. Single
SOLICITORS:	Appellants in matters CA 40919/02, CA 40920/02 - Russo and Partners Respondent in matters CA 40919/02, CA 40920/02 - Beazley Singleton Lawyers Amicus for Law Society of NSW - Mr A.S. Brown
LOWER COURT JURISDICTION:	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S):	SC 13492/01 SC 13494/01
LOWER COURT JUDICIAL OFFICER:	Barrett J; Patten AJ
LOWER COURT DATE OF DECISION:	15 August 2002 21 February 2005
LOWER COURT MEDIUM NEUTRAL CITATION:	Wentworth v Rogers [2002] NSWSC 709; Wentworth v Rogers [2004] NSWSC 1273