Gilles v Palmieri

1. [1]

   HER HONOUR: The plaintiff seeks judicial review of a costs assessor’s decision. This dispute has had a long history.

2. [2]

   By summons filed 26 September 2017, the plaintiffs seeks orders firstly, in the nature of certiorari to quash, on the ground of error on the face of the record, the determination dated 26 June 2017 made by the third defendant; secondly, in the nature of certiorari to quash the determination on the ground that the third defendant had jurisdiction to determine the first and second plaintiffs’ application for costs assessment dated 19 August 2015; thirdly, in the nature of mandamus that the third defendant consider and determine the first and second plaintiffs’ application for costs assessment dated 19 August 2015; and fourthly, that the matter of the costs assessment be remitted to the third defendant for further consideration and determination according to law.

3. [3]

   The first plaintiff is Joseph John Gilles. The second plaintiff is Gregory George Eliades. The first defendant is Vince Palmieri. The second defendant is DJZ Constructions Pty Limited. The third defendant is John Bartos (“the costs assessor”). All defendants have filed submitting appearances and have filed submissions in relation to costs.

4. [4]

   The plaintiffs relied upon two affidavits of Paula Louise Becker, the plaintiffs’ solicitor dated 26 September 2017 and 7 February 2018.

Short background

1. [5]

   I gratefully acknowledge the plaintiffs’ counsel’s submissions and have adopted some of them. This litigation concerning costs has had a troubled history.

2. [6]

   In about 2005, the first and second plaintiff, trading as Giles Payne & Co Solicitors and Public Notaries (“the firm”), in respect of professional negligence proceedings brought by the defendants (“the clients”) against their former solicitor, Mr Paul Pritchard.

3. [7]

   On 7 June 2005, the clients executed a costs agreement with the firm. This is the date that the firm was first instructed by the clients. The assessment of costs is therefore governed by Part 11 of the Legal Profession Act 1987 (NSW).

4. [8]

   The firm issued three statements of accounts to the clients for outstanding fees, on 28 November 2008 for the sum of $27,438.33 outstanding; on 20 March 2009 for the sum of $62,876.80; and on 5 June 2009 for the sum of $25,077.55.

5. [9]

   In about April or May 2009, the clients terminated the retainer with the firm.

6. [10]

   On 27 November 2014, the firm commenced proceedings in the District Court (“the first District Court proceedings”) for the recovery of its fees.

7. [11]

   On 19 August 2015, the firm applied to have its costs assessed on a solicitor/client basis as against the clients.

8. [12]

   The manager for costs assessment appointed the costs assessor, Mr John Bartos, to determine the application.

9. [13]

   On 4 December 2015, Gibb DCJ in the first District Court proceedings heard the clients’ notice of motion that the proceedings de dismissed on the basis that service occurred after the expiration of the requisite period of time as set out in Rule 6.2 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). His Honour dismissed the first District Court proceedings.

10. [14]

    On 23 August 2016, the Court of Appeal allowed an appeal by the firm (in part) on the issue of costs ordered by Gibb DCJ. The Court of Appeal did not disturb Gibb DCJ’s order dismissing the proceedings commenced in the District Court.

11. [15]

    On 21 October 2016, the firm commenced proceedings in the District Court against the clients for recovery of fees. (“the second District Court proceedings”).

The clients’ application for summary dismissal of the second District Court proceedings

1. [16]

   On 18 November 2016, the clients filed a notice of motion seeking an order to summarily dismiss the proceedings commenced by the firm.

2. [17]

   On 27 February 2017, Robison DCJ in Gillies & Elaides v Vince Palmieri [2017] NSWDC (unreported 27 February 2017) dismissed the second District Court proceedings commenced by the firm.

3. [18]

   The relevant facts are on 7 June 2005, Mr Palmieri (the first defendant) entered into a costs agreement with the firm. In May 2015, the firm served on the clients a bill of costs dated 1 May 2015 in assessable form in respect of costs for the period 1 July 2008 to 27 March 2009. On 19 August 2015, the clients filed an application for costs assessment headed “Legal Profession Act 2004”. On 21 October 2016, the firm filed the statement of claim by which they sued the clients to recover costs due pursuant to the retainer.

4. [19]

   Robison DCJ decided that the Legal Profession Act 2004 (NSW) applied to the situation before him and was persuaded that cl 18 as a whole provides that pt 11 of the Legal Profession Act 1987 does not govern the procedure and mechanisms for a costs assessment of a Legal Professional Act 1987 matter when an application for costs assessment of a Legal Profession Act 1987 matter is referred for assessment after the commencement of the Legal Profession Act 2004 on 1 October 2005.

5. [20]

   Robison DCJ noted that the application for assessment was not made and could not have been made “during the currency of” the Legal Profession Act 1987. His Honour stated:

6. [21]

   Robison DCJ reasoned, in part, that, unless cl 18(3) was construed in the way that commended itself to him, it would add nothing to cl 18(1) and would therefore have no work to do.

7. [22]

   His Honour decided that it was prohibited by a specific statutory provision, being s 533(b) of the Legal Profession Act 2004. He rejected the proposition that the governing legislation was the Legal Profession Act 1987. On 27 February 2017, an order was made that the second District Court proceedings be dismissed pursuant to UCPR 13(4)(i)(c).

The costs assessor

1. [23]

   On 19 June 2017, the costs assessor advised the firm and the clients by correspondence that it was his intention to return the matter to the manager for costs assessment.

2. [24]

   The costs assessor relevantly stated:

3. [25]

   On 26 June 2017, the costs assessor having not heard from the parties advised the firm and the clients that the application was incompetent; and he returned the application to the manager for costs assessment.

The decision of the Court of Appeal

1. [26]

   On 12 December 2017, in Gilles v Palmieri [2017] NSWCA 320 (“Gilles”), Barrett AJA (with McColl and White JJA substantially agreeing) upheld the firm’s appeal from Robison DCJ’s decision to dismiss the proceedings commenced by the firm in the second District Court proceedings.

2. [27]

   The Court of Appeal at [37]–[39] stated:

3. [28]

   The Court of Appeal set aside the orders of Robison DCJ and in lieu thereof relevantly made orders that the defendant’s notice of motion filed 18 November 2016 be dismissed and an order that the defendants pay the plaintiffs’ costs of the notice of motion.

Jurisdictional relief in the nature of certiorari

1. [29]

   The plaintiff now seeks relief in this Court in the nature of certiorari quashing the costs assessor’s decision.

2. [30]

   The Supreme Court retains its supervisory powers recognised by s 69 of the Supreme Court Act 1970 (NSW).

3. [31]

   Section 69 of the Supreme Court Act relevantly reads:

4. [32]

   Relief in the nature of certiorari is not an appellate procedure enabling either a general review of the order or decision, or substitution of the order or decision which the Supreme Court thinks should have been made. Relief enables the quashing of the impugned order or decision upon one or more of a number of distinct established grounds - jurisdictional error, denial of procedural fairness, fraud and error of law on the face of the record: Craig v South Australia (1994-1995) 184 CLR 163 at 175-176.

5. [33]

   In Craig v State of South Australia (1995) 184 CLR 163, Brennan, Deane, Toohey, Gaudron and McHugh JJ at 179 identified the scope for intervention by way of relief in the nature of certiorari with regard to administrative tribunals:

6. [34]

   Also its power to entertain an application for declaratory relief is confirmed by s 75 of the Supreme Court Act. However, all of these forms of relief are discretionary. One established case in which such relief will be refused as a matter of discretion is where there is in existence an adequate scheme for review available to the aggrieved party: see Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 552 and Ackroyd v Whitehouse (Director of National Parks & Wildlife Service) [1985] 2 NSWLR 239 at 247 to 248 per Kirby P. In so far as declaratory relief is concerned, another basis for refusing relief on discretionary grounds is that the relief sought is premature or may be futile.

7. [35]

   The firm submitted that there is no other scheme for review other than the relief sought by it. They say that strictly speaking, no mechanism for review exists given the position adopted by the costs assessor in deciding to return the application and not await the decision of the Court of Appeal in Gillies.

8. [36]

   According to the firm, the costs assessor was wrong in refusing to determine the issues raised by the application. He identified the following as his reason for considering that the application was ultra vires when he stated:

9. [37]

   In Griffith v Australian Broadcasting Corporation & Ors [2013] NSWSC 750, Beech-Jones J held [46] that (in the context of the Legal Profession Act 2004):

10. [38]

    The equivalent provisions for this current costs assessment are found within subdivision 2 of Part 11 of the Legal Profession Act 1987.

11. [39]

    The firm submitted it must follow that firstly, the task of the costs assessor is to assess according to the provisions made applicable by statute to the particular case; secondly, it was always open to the costs assessor to determine whether the assessment process applicable to the application fell within Part 11 of the Legal Profession Act 1987 or Part 3.2 of the Legal Profession Act 2004; and finally, while the costs assessor made a decision as to his interpretation as to the applicable assessment process, by reason of the decision in Gilles he was plainly wrong.

12. [40]

    The firm submitted that notwithstanding the decision in Gilles, the costs assessor is not an administrative officer exercising judicial power and as such is not bound by a decision of the District Court. I do not agree with this submission.

13. [41]

    In Hall Chadwick Pty Ltd v Doyle [2006] NSWSC 1195 Rothman J at [73] stated:

14. [42]

    In my view, the costs assessor should not have returned the application to the manager of costs assessments while there was an appeal from Robison DCJ extant. Given the Court of Appeal decision in Gilles, there is no longer any impediment to the costs assessment being carried out. Hence, I make an order in the nature of certiorari to quash, on the ground of error on the face of the record, the costs assessor’s determination dated 26 June 2017.

Costs

1. [43]

   The plaintiff seeks its costs of the proceedings or alternatively, submitted that as a minimum the clients should be liable for costs up to the time of service of the submitting appearance and not thereafter. The clients submitted that in the circumstances it would be unjust and unreasonable to impose any costs order against them other than an ordinary costs order that they pay costs incurred in the proceedings prior to the filing of the submitting appearance. The costs assessor submitted that pursuant to s 208SA of the Legal Profession Act 1987 precludes the making of a costs order against him.

2. [44]

   The starting point is s 98(1) of the Civil Procedure Act 2005 (NSW) which provides that, subject to the Act and rules of court, costs are in the discretion of the court. UCPR 42.1 provides that, subject to that part of the rules, the court is to order that costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.

3. [45]

   All defendants in this matter filed submitting appearances pursuant to UCPR 6.11. It reads:

4. [46]

   Although UCPR 6.11 does not expressly stipulate the consequences of the filing of a submitting appearance for the costs of the proceedings, it is implicit that a submitting party will not ordinarily be liable to costs order in respect of any costs incurred in the proceedings subsequent to the filing of the submitting appearance: see China Shipping (Aust) Agency Co Pty Ltd v D V Kelly Pty Ltd (No 2) [2010] NSWSC 1557 (“China Shipping (No 2)”), Rein J at [8].

5. [47]

   There are circumstances in which the Court’s general costs discretion under UCPR 42.1 may be exercised against the party that has filed a submitting appearance depending on “the role adopted by [that party] in the proceedings.” see Mahentirarasa v State Rail Authority (No 2) 2008 72 NSWLR 273 at [7].

6. [48]

   In Develtor Property Group Pty Ltd v Newcastle City Council [2001] NSWLEC 47, Bignold J at [51] and [52] stated:

7. [49]

   As previously stated, relief claimed by the plaintiff in these proceedings is by way of exercise of the Supreme Court supervisory powers contained in s 69 of the Supreme Court Act and also an application for declaratory relief pursuant to s 75 of the Supreme Court Act. All of these forms of relief are discretionary and not rights that could be declared by “consent orders” as submitted by the firm. It is a matter for the Court to determine whether relief should be granted.

The Suitors Fund

1. [50]

   The plaintiff accepts that s 6 of the Suitors Fund Act 1951 (NSW) has no application here.

2. [51]

   In Henderson v QBE Insurance (Australia) Ltd [2013] NSWCA 480, Beazley P (with whom Tobias AJA agreeing) stated at [57]:

3. [52]

   In AAI Limited v Fitzpatrick (No 2) [2015] NSWSC 1272 (“AAI Limited”), Schmidt J took a contrary position. Her Honour at [28] stated:

4. [53]

   In Allianz Australia Insurance Limited v Habib (No 2) [2015] NSWSC 1870, Beech-Jones J followed what Beazley P said in Henderson and declined to follow what Schmidt J said in AAI Limited. In Allianz, Beech-Jones J stated at [20] and [21]:

5. [54]

   The costs assessor is exercising administrative power.

6. [55]

   Further, by reason of s 208S(4) of the Legal Profession Act 1987, the costs assessor is not an officer of the Court when acting as a costs assessor. For these reasons I agree that the firm is not entitled to a certificate under the Suitors Fund Act 1951.

7. [56]

   The firm says that the issue here is whether the firm should be deprived of the prima facie entitlement for costs. While it might be said that the established practice is to make no order for costs against a costs assessor, the firm submitted there is no statutory prohibition that would displace the prima facie position as to costs.

8. [57]

   The firm accepts that the costs incurred by it have been limited by the absence of opposition from the other parties. The firm submitted that at a minimum, the clients should be liable for costs up to the time of service of the submitting appearance and not thereafter. However, this is not the end of the enquiry. The true position is that the question should be approached not by reference to prima facie expectations but according to an appraisal of the circumstances of the case.

9. [58]

   The firm referred to Nyman v Valmas [1997] NSWCA 235, where Beazley JA (with Mason P and Priestley JA agreeing) stated:

10. [59]

    According to the firm, the filing of a submitting appearance by a party occupying a true adversarial position in a commercial dispute and concerned with nothing but its own economic welfare cannot be allowed to operate as some form of insulation from the costs consequences of requiring the firm’s claim to proceed to curial determination rather than cooperating in a consensual resolution of it. Furthermore, the use of the words “save as to costs” contained in each defendant’s notice of submitting appearance must be read as contemplating that they would have a potential liability for costs notwithstanding the non oppositional position taken by them.

11. [60]

    The firm submitted and I have agreed that the stance adopted by the clients did not relieve the firm of the need to establish that it was appropriate for the Court to grant the relief sought by them. However, the firm then submitted that the clients had consented to the grant of relief sought by the firm, it is respectfully submitted that the firm would have been relieved of that need. The effect is that the “submitting” parties required the firm to persuade the Court of the correctness of their position. There was nothing to prevent any of the defendants from consenting to the relief sought by the firm.

12. [61]

    According to the firm there are effectively two points in time in which the clients ought to have consented to the relief sought by the firm. They are firstly that upon receipt and consideration of the firm’s summons and affidavit in support, regardless of the correctness of Robison DCJ’s decision in the District Court upon which the costs assessor relied in determining to return the application for costs assessment to the manager for costs assessment, the costs assessor was plainly wrong when he concluded that he had no jurisdiction to proceed with the assessment: Clause 18 of Schedule 4 of the Legal Profession Uniform Law 2015 (NSW); or secondly, after delivery of judgment by the Court of Appeal making orders and delivery of judgment in Gilles.

13. [62]

    As the firm succeeded on appeal in Gilles, it ought to have been obvious to the clients that the firm would succeed in being granted the orders sought in their summons. The decision by the costs assessor in deciding that he had no jurisdiction to conduct the costs assessment (regardless of the applicable legislation for that task) was made after consideration of submissions received by the “cost parties”. It was necessary for the firm to make all pre-hearing preparations, to brief counsel and to present their case to the court. It may well be that the lack of active opposition meant that the firm’s task was less onerous than it would otherwise have been. But effort and expenditure were incurred beyond that which would have been necessary had the clients’ consented.

14. [63]

    Finally, the firm says that there can be no criticism of their conduct of the firm that would justify depriving them of an order for costs.

15. [64]

    The clients say they put submissions to the costs assessor via correspondence dated 15 June 2017 and that it is for a costs assessor to proceed to determine the issues of fact and law as they arise on the costs assessment in order to discharge his function. The clients submitted that they played no role whatsoever in trying to persuade the costs assessor that he did not have jurisdiction to deal with the issues which have ultimately been held to be an incorrect decision.

16. [65]

    The clients referred to China Shipping (No 2), Rein J at [12] stated:

17. [66]

    Mahenthirarasa (No 2) does not refer to a decision of a costs assessor. A more relevant decision that involves a costs review panel is Doyle v Hall Chadwick [2012] NSWCA 175 (“Doyle”), referred to by the costs assessor.

18. [67]

    The costs assessor submitted that he could not deal with the application for assessment was clearly undertaken for the purposes of the administration of Part 11 of the Legal Profession Act 1987. As a consequence, the costs assessor can only be liable for costs in the current proceedings if it is shown that his decision was not taken in good faith.

19. [68]

    In Doyle, the Court of Appeal considered the operation of s 391 of the Legal Profession Act 2004, which is in identical terms to s 208SA of the Legal Profession Act 1987. Section 208SA of the Legal Profession Act 1987 provides:

20. [69]

    In Doyle, the Court of Appeal was asked to address a claim that a costs review panel should be liable for costs on the basis that it had acted improperly in conducting the relevant review. Basten JA (with MacFarlan JA and Sackville AJA agreeing) observed that such a claim “falls squarely within the scope of the protection provided by s 391.” Accordingly, “[w]hether or not the protection was available depended upon whether the review was conducted ‘in good faith for the purpose of the administration of’ Part 3.2 of the Legal Profession Act”. Doyle at [56].

21. [70]

    While the firm contended that the costs assessor’s conclusion that he did not have jurisdiction to conduct the assessment was plainly wrong, the costs assessor submitted that it could not be said that he was motivated by some ulterior purpose or otherwise did not act in good faith. The costs assessor reviewed Robison DCJ’s decision, considered the conclusion expressed and concluded that he was precluded from proceeding with the assessment. The costs assessor says that this conclusion was shown to be incorrect but mere error, even an egregious error does not demonstrate a lack of good faith: see Doyle at [58]-[59]. As there was no lack of good faith, s 208SA of the Legal Profession Act precludes the making of a costs order against him.

Conclusion

1. [71]

   It is my view, that the costs assessor reviewed the decision of Robison DCJ, considered the conclusion expressed and came to the decision that he was precluded from proceeding with the costs assessment even though he was aware there was an appeal extant from the decision of Robison DCJ. As it turned out the decision of Robison DCJ was overturned on appeal and the costs assessor’s decision not to proceed with the costs assessment was incorrect. However, it cannot be said that the costs assessor did not act in good faith. As there was no lack of good faith s 208SA of the Legal Profession Act precludes the making of a costs order against the costs assessor.

2. [72]

   So far as the clients are concerned, I do not agree with the firm’s argument that the clients should be liable for costs because this Court does not grant jurisdictional relief on the basis of consent of the parties. It is for the Court to be satisfied that it should grant jurisdictional relief. Whether or not the clients consented would have made no difference to the Court’s decision. The clients did all they were required to do and that was to file submitting appearances. In these circumstances no order for costs should be made.