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[2018] NSWSC 318

WKA Legal Pty Ltd v Gleeson

Costs assessment restrained

Catchwords

COSTS — Costs assessment — Procedure — Seriously contested questions of fact not suitable for determination on the papers as part of assessment — Assessment restrained to permit factual and legal issues to be resolved in Local Court proceedings — Legal Profession Act 2004 (NSW)

Cases cited

  • 68 Bathurst Street Pty Ltd v NV Legal Pty Ltd t/as NV Lawyers[2009] NSWSC 1145
  • Branson v Tucker[2012] NSWCA 310
  • Craig v South Australia (1995) 184 CLR 163;[1995] HCA 58
  • Doyle v Hall Chadwick[2007] NSWCA 159
  • Ex parte Mineral Deposits Pty Ltd; Re Claye and Lynch (1957) 59 SR (NSW) 167
  • Patakas v Bevan[2016] NSWSC 161
  • R v Commonwealth Industrial Court; Ex parte Cocks(1968) 121 CLR 313
  • Ryan v Hansen t/as Hansens Solicitors (2000) 49 NSWLR 184;[2000] NSWSC 354
  • Wentworth v Rogers; Wentworth and Russo v Rogers (2006) 66 NSWLR 474;[2006] NSWCA 145

Legislation cited

  • Legal Profession Act 2004 (NSW), § 322, 355, 357, 358, 359
  • Legal Profession Uniform Law Application Act 2014 (NSW), § 69
  • Local Court Act 2007 (NSW), § 35
  • Supreme Court Act 1970 (NSW), § 69

Judgment

Summary

  1. [1]

    This dispute is about what might loosely be termed a clash between Local Court and costs assessment proceedings in relation to unpaid solicitors’ costs.

  2. [2]

    The plaintiff (“WKA”) is an incorporated firm of solicitors. The defendant (“Mr Gleeson”) is a former client of WKA.

  3. [3]

    On 24 November 2017, WKA commenced proceedings against Mr Gleeson in the Local Court for approximately $50,000 in unpaid legal costs (the “Local Court Proceedings”).

  4. [4]

    On 12 February 2018, Mr Gleeson filed an application in this Court for nearly all of those costs to be assessed pursuant to the Legal Profession Act 2004 (NSW) (the “Act”) (the “Assessment”).

  5. [5]

    On 14 February 2018, Mr Gleeson was given leave in the Local Court Proceedings to file an amended notice of motion returnable on 8 March 2018 seeking a stay of the Local Court Proceedings pending the determination of the Assessment. It was the pendency of that motion that brought on these urgent proceedings in the Duty List.

  6. [6]

    On 2 March 2018, Robb J, sitting as Duty Judge, granted WKA leave to commence these proceedings by summons seeking a stay of the Assessment. The summons was made returnable on 7 March 2018 and came before me on that day as Duty Judge. Although originally framed as an application for interlocutory relief, the parties agreed that I should hear the matter on a final basis.

  7. [7]

    The matter was heard over slightly more than half a day, concluding shortly after 4.00pm. In circumstances where I had formed a clear view as to the outcome and with the motion in the Local Court Proceedings to be heard the next day, I made these substantive orders at the conclusion of the hearing:

  8. [8]

    These are the reasons for those orders.

  9. [9]

    Mr P Doyle Gray of Counsel appeared for WKA. Mr P Folino-Gallo appeared for Mr Gleeson.

Some common ground

  1. [10]

    Three matters were common ground:

    1. (1)

      Insofar as any authorities relied upon in the argument concerned predecessor legislation of the Act, they were nevertheless applicable to the proper construction of the Act.

    2. (2)

      The Registrar of the Court who acts as the Manager, Costs Assessment had not yet referred the Assessment to an assessor as the Manager was required to do under s 357(1) of Act, pending the outcome of these proceedings.

    3. (3)

      Any assessor to whom the Assessment was referred would not have the power to conduct an oral hearing but would have to conduct the Assessment “on the papers” (contrary to the position which now applies under s 69(1A) of the Legal Profession Uniform Law Application Act 2014 (NSW).

The Local Court Proceedings and the Assessment

  1. [11]

    It is necessary to set out the pleadings in the Local Court Proceedings and some parts of the application in the Assessment at some length (emphases added).

  2. [12]

    WKA’s statement of claim in the Local Court Proceedings includes:

  3. [13]

    Mr Gleeson’s defence in the Local Court Proceedings includes:

  4. [14]

    There is also this further specific pleading in the defence:

  5. [15]

    Mr Gleeson’s application for the Assessment includes:

  6. [16]

    The relevant provisions of the Act are:

WKA’s submissions

  1. [17]

    WKA’s submissions may be summarised as:

    1. (1)

      Section 359(1) of the Act makes it clear that an assessor must act on the basis of written submissions. The assessor cannot conduct an oral hearing to resolve contested factual or legal matters.

    2. (2)

      In the Assessment, Mr Gleeson has raised, by what appears to be a “cut and paste” exercise, exactly the same matters as are in issue in the Local Court Proceedings.

    3. (3)

      Those matters disclosed a fundamental contest as to what was the relevant costs agreement, relied on express conversations and oral terms and included an allegation in the nature of a cross-claim for negligence. Such matters could only be determined by hearing witnesses and testing their evidence in cross-examination.

    4. (4)

      In those circumstances, the Assessment was futile and should be restrained or prohibited. The appropriate forum for determining the parties’ dispute was the Local Court Proceedings.

    5. (5)

      Furthermore, three invoices which were part of the dispute in the Local Court Proceedings were not included in the Assessment. This raised the possibility of inconsistent findings in the Local Court Proceedings and the Assessment as to what was the relevant costs agreement.

  2. [18]

    In support of those submissions, WKA referred to several authorities.

  3. [19]

    First, reference was made to two passages from a decision of D Kirby J in Ryan v Hansen t/as Hansens Solicitors (2000) 49 NSWLR 184; [2000] NSWSC 354 (“Ryan”):

  4. [20]

    Next, WKA relied on these dicta of Basten JA in Wentworth v Rogers; Wentworth and Russo v Rogers (2006) 66 NSWLR 474; [2006] NSWCA 145 (“Wentworth”):

  5. [21]

    Finally, attention was drawn to the judgment of Hodgson JA (with whom JC Campbell JA agreed) in Doyle v Hall Chadwick [2007] NSWCA 159:

  6. [22]

    Reference was also made to the decisions of McDougall J in Patakas v Bevan [2016] NSWSC 161 and Barrett J (as his Honour then was) in 68 Bathurst Street Pty Ltd v NV Legal Pty Ltd t/as NV Lawyers [2009] NSWSC 1145. In both of those cases costs assessments had been restrained pending determination by the Court of issues relevant to the costs assessment. However, neither decision deals precisely with the argument put in these proceedings, but as I understand both decisions, they are implicitly based on the Court being the more appropriate forum for determination of the particular contested factual and legal issues.

Mr Gleeson’s submissions

  1. [23]

    Mr Gleeson’s submissions may be summarised as:

    1. (1)

      The Court should not interfere with Mr Gleeson’s statutory right to have the costs assessed.

    2. (2)

      The present application is premature. The costs assessor is entitled under the Act to determine both the existence of a costs agreement and its terms. It should be left to the assessor in exercising the assessor’s statutory function to determine, first, whether or not the issues can be determined by reference to submissions alone and, second, the appropriateness of the assessment continuing depending upon the answer to the first question. In support of that proposition, reliance was placed on what fell from Santow JA in Wentworth:

    3. (3)

      The Local Court proceedings were “subservient” to the assessment. I understood this submission to be derived from s 355(b) of the Act (see paragraph [16] above).

    4. (4)

      Picking up the reference to the Small Claims Division in the judgment of D Kirby J in Ryan (see paragraph [19] above), the Small Claims Division was frequently confronted with factual disputes and it did not follow that sworn evidence or cross-examination was required. It is convenient to record WKA’s response to this submission, which was to note that the Small Claims Division has a discretion to allow cross-examination or in certain circumstances could refer the matter to the General Division for hearing in the usual way: see s 35(4) of the Local Court Act 2007 (NSW) and paragraph 23 of the Local Court Practice Note Civ 1.

    5. (5)

      Insofar as there was any issue of negligence raised, that was Mr Gleeson’s risk that the assessor might come to the view that he or she could not deal with it. However, that was not a reason to restrain the entire Assessment.

Consideration

  1. [24]

    I was satisfied that WKA was entitled to succeed for five reasons.

  2. [25]

    First, I accept WKA’s submission that the issues raised about the applicable costs agreement could not be determined by a costs assessor in the absence of sworn testimony and cross-examination. However, I think a more accurate expression of the test (which I respectfully derive from Basten JA’s observations in Wentworth — see paragraph [20] above) is whether the issues raised are able to be dealt with by way of written submissions in a way that accords procedural fairness to the parties. This requires consideration of two issues:

    1. (1)

      The particular issue or issues in dispute and their importance within the universe of matters which the costs assessor is required to decide under the Act (including, but not limited to, the matters referred to in s 359(3) of the Act — see paragraph [16] above).

    2. (2)

      The means available to the costs assessor to inform himself or herself, including by requiring information to be verified by statutory declaration under s 358(1)(b) of the Act — see paragraph [16] above.

  3. [26]

    There is a spectrum along which any given issue will fall in relation to whether or not it can be resolved in a procedurally fair way on the papers. Circumstances are infinitely various and no general rule can be laid down. For example, it may be that, in the case of a relatively minor issue, procedural fairness would be satisfied by consideration of conflicting statutory declarations and the receipt of written submissions.

  4. [27]

    However, in the present case, it is clear that the dispute between the parties goes to one of the most fundamental matters in a costs assessment, being the existence and terms of any costs agreement. It is obvious that there will be conflicting evidence about alleged oral communications. If the Assessment were referred to an assessor, I am satisfied that he or she, properly instructing himself or herself, would have to come to the conclusion that the nature of the issues in dispute meant that it was inappropriate for the Assessment to proceed, because to attempt to resolve those issues on the papers would not be procedurally fair to either party.

  5. [28]

    Second, because I reached a firm view about my first reason, this is not a case where the Court’s intervention is premature. Putting it another way, there may be cases where, in the exercise of the Court’s discretion, it should be left to the assessor in exercising the assessor’s statutory function to determine whether, given the issue involved, the written material was sufficient to enable the question to be determined in a procedurally fair way. For example, the Court may consider that a decision could not be made until the written material that might be requested by an assessor was available, in which case it would be appropriate not to second guess what the assessor might do.

  6. [29]

    In the present case, the Court is satisfied that proceeding on the papers will not afford the parties procedural fairness. Furthermore, a costs assessor has not yet been allocated and, in the light of my principal conclusion, it would be a waste of time and resources for that step to be taken.

  7. [30]

    Third, in this case the Assessment does no more than raise the same issues as the Local Court Proceedings. As was pointed out for WKA, the Assessment does not engage in what might be thought to be the more usual exercise of line by line objections to particular items in a bill of costs. Therefore, it cannot be said that there is something raised in the Assessment which will not be dealt with in the Local Court Proceedings.

  8. [31]

    In any event, I do not accept Mr Gleeson’s submission that the Local Court Proceedings are in some way “subservient” to the Assessment insofar as that is intended to suggest that the costs can only be assessed through the costs assessment procedure. To the extent necessary, the Local Court Proceedings will enable the reasonableness of particular charges to be investigated. The costs assessment regime under the Act is not the exclusive means to ascertain the reasonableness of solicitors’ costs, which can also be addressed by a court if necessary: see Branson v Tucker [2012] NSWCA 310.

  9. [32]

    Fourth, while not decisive in and of itself, in my view it is appropriate to accord some weight to the fact that the Local Court Proceedings were commenced first and are not, to borrow the language of the forum non conveniens cases, a clearly inappropriate means of resolving the issues between the parties. On the contrary, for reasons already given, the Local Court Proceedings are the more appropriate means of resolving the present dispute. A related reason in favour of that conclusion is that the Local Court Proceedings also incorporate the three invoices which are not part of the Assessment.

  10. [33]

    Fifth, and again not in and of itself a determinative consideration, but nevertheless informing the exercise of the Court’s discretion, I am unable to identify any material prejudice to Mr Gleeson in not being permitted to pursue the Assessment. In particular, I found Mr Gleeson’s legal contention in the Assessment to be rather odd. This is because Mr Gleeson’s primary case (in both the Assessment and the Local Court Proceedings) is that the relevant costs agreement contained both written and oral terms. If that is correct, then it is not a costs agreement under the Act because s 322(3) provides that “a costs agreement must be written or evidenced in writing”. Mr Gleeson’s counsel, to maintain the consistency of his client’s position, had to concede that, in pressing for the Assessment to continue, Mr Gleeson had to accept that the costs assessor might find that there was no costs agreement under the Act.

Miscellaneous matters

  1. [34]

    For completeness, it is necessary to make three final observations.

  2. [35]

    First, by reference to D Kirby J’s decision in Ryan (see paragraph [19] above), the Court accepts WKA’s submission that an assessor would be unable to deal with any claim for a set off based on allegations of solicitor’s negligence. However, if that were the only complaint about the Assessment, given the very small part that allegation comprises in Mr Gleeson’s response, it would be insufficient to warrant the Court restraining the Assessment.

  3. [36]

    Second, both parties drew my attention to the areas of difference between the judgments of Santow JA and Basten JA in Wentworth, crystallised by Hislop J’s consenting judgment where his Honour said at [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”.

  4. [37]

    In the circumstances of this case, it is unnecessary for me to decide whether there is any material inconsistency between the view of Santow JA at paragraph [40] of Wentworth (quoted on paragraph [23(2)] above), and Basten JA’s opinion at [90] of the same judgment (quoted in paragraph [20] above). If there is an inconsistency, in my respectful opinion it may only relate to a question of degree. Both dicta accept that there may be disputes before a costs assessor that should not be dealt with by the assessor. Santow JA appears to confine such cases to an “exceptional” category whereas Basten JA’s view of the matter may not be so demanding. I do not need to resolve any potential difference between them in this case. This is because, in my view, it is clear that in this case the dispute could not be resolved in a procedurally fair way on the papers. The circumstances postulated by either judge as being sufficient to take the matter out of the purview of an assessor are satisfied.

  5. [38]

    Finally, there was some debate between the parties about the appropriate form of relief. Mr Gleeson drew attention to the fact that the Manager, Costs Assessment (who is also a registrar of this Court) had not been joined as a party. It was suggested for WKA that the Court could make an order prohibiting the Assessment. However, I had some reservations about whether the Court could make an order pursuant to s 69 of the Supreme Court Act 1970 (NSW) in the nature of prohibition in the absence of it being directed to a particular officer or decision-maker who had been joined to the proceedings.

  6. [39]

    While I accept there are dicta to the contrary (see, for example, the view of Kitto J in R v Commonwealth Industrial Court; Ex parte Cocks (1968) 121 CLR 313 at 324) I think the better view is that a relevant decision-maker must be joined to the proceedings in order for an order in the nature of a writ of prohibition to be made. In Craig v South Australia (1995) 184 CLR 163 at 174–5; [1995] HCA 58 at 176, the High Court observed that an order in the nature of certiorari pursuant to the South Australian equivalent of s 69 of the Supreme Court Act is properly made only if it be directed to the court or tribunal which made the decision.

  7. [40]

    There is no logical reason why the High Court’s observation should not also apply to an order in the nature of prohibition. Moreover, that corresponds with the statement of the Full Court of the Supreme Court of NSW in Ex parte Mineral Deposits Pty Ltd; Re Claye and Lynch (1957) 59 SR (NSW) 167 at 177 that the Minister (the decision-maker) “should of course be a respondent to these proceedings” (which were proceedings seeking the writ of prohibition). Aronson and Groves cite Re Claye and Lynch as authority for the proposition that prohibition cannot issue without the joinder of the decision-maker (Aronson, Groves and Weeks, Judicial Review of Administrative Action (6th ed, 2017) at [12.100]).

  8. [41]

    It ultimately seemed to be the common view of the parties that an injunction directed to Mr Gleeson restraining him from taking any further steps in the Assessment would, upon being brought to the attention of the Manager, Costs Assessment, have the practical result of no further steps being taken by anyone to progress the Assessment by referral to a costs assessor or otherwise. That seemed to me to be the appropriate way to proceed in the absence of any provisions in the Act or its rules applicable to a case such as this. If there was any difficulty about this, I reserved liberty to the parties to apply for any other orders that might be required to give effect to the Court’s decision.

Unofficial copy. Source: NSW Caselaw. Refer to the official version for authoritative text.