CITATION: Legal Services Commissioner v Nikolaidis [2004] NSWADT 195 DIVISION: Legal Services Division APPLICANT PARTIES: Legal Services Commissioner RESPONDENT Leon Nikolaidis FILE NUMBER: 032022 HEARING DATES: 27/07/2004 SUBMISSIONS CLOSED: 07/28/2004 DATE OF DECISION: 09/03/2004 BEFORE: Brennan JWF - Judicial Member; Gailey C - Judicial Member; O'Neill A - Non Judicial Member APPLICATION: Evidence - expert - admissibility MATTER FOR DECISION: Preliminary matter LEGISLATION CITED : Legal Profession Act 1987 CASES CITED: Veghelyi v The Law Society of NSW Court of Appeal unreported 6 October 1995 APPLICANT REPRESENTATION: M Hadley, barrister RESPONDENT J Chippindall, barrister ORDERS: Orders made 28 July 2004: 1.The Tribunal declines to admit into evidence the report of Mr Hardman ; 2.The further hearing of this matter is stood over to a date to be fixed. REASONS FOR DECISION 1 On 21 October 2003 the Legal Services Commissioner ("the Commissioner") filed in the Tribunal an Information claiming that Leon Nikolaidis ("the Practitioner") while practising as a Solicitor was guilty of professional misconduct. 2 The Information was based on two grounds, namely: a) The Practitioner failed, without reasonable excuse, to comply with notices issued by a costs assessor under Section 207 of the Legal Profession Act 1987; and b) The conduct of the Practitioner involved deliberate charging of grossly excessive amounts of costs 3 On 28 July 2004 which was the third day of the hearing, the Practitioner sought to have admitted in evidence a report of a costs expert, Mr Kerry Hardman, dated 27 April 2004 which had been filed in the Tribunal on 29 April 2004. The Commissioner objected to the admissibility of the report and the question of its admissibility was subject to both written and oral submissions. The report was not verified and it did not comply with the Tribunal's Practice Note No. 14 but no issue was raised as far as those aspects were concerned. 4 Following the completion of submission by both parties the Tribunal adjourned for a period and following that adjournment ruled that in its determination the report was not admissible and did not constitute expert evidence. The Tribunal indicated then that reasons for this finding would be set out in the Tribunal's Reasons for Decision at the conclusion of the matter. 5 Following the completion of evidence and the submissions of both parties on the two complaints, the proceedings were further adjourned at the request of the parties for further submission as to penalty and costs in the event that the Tribunal found either or both complaints established. 6 By letter of 13 August 2004, the Practitioner caused the Tribunal to be informed that he wished to appeal against the ruling that the report of Mr Hardman was inadmissible. The letter requested that the Tribunal deliver its reasons in relation to the exclusion of that material before any finding is made on the substantive issues. 7 The Tribunal has taken into account the concerns raised by the Practitioner and potential prejudice he might suffer in the event that the Tribunal made, at this stage, an adverse finding on the over-charging complaint where, in effect, an issue as to the admissibility of evidence on which the Practitioner sought to rely was the subject of appeal. 8 The Tribunal has concluded it is appropriate to proceed as requested by the Practitioner and to now give reasons for the ruling made on 28 July 2004 and subject to the Practitioner lodging and prosecuting his appeal, deferring its Decision on the substantive issues involved in the two grounds of complaint, although of course only the second ground involves the issue of the appeal foreshadowed on 13 August 2004. 9 The costs complaint related to a bill of costs prepared and submitted to the Practitioner's client in June 2000. In the bill, costs totalling $28,365.60 were charged comprising $26,423.40 professional costs and $1,942.20 disbursements. 10 The bill was not paid by the client and the Practitioner made an application for assessment of costs in August 2000. The assessment was determined by a costs assessor on 25 May 2001 who found: a. The total amount of costs for providing the legal services to be fair and reasonable is $1,905.70; b. The total amount of disbursements determined to be fair and reasonable is $1,400.00 making a total of $3,306.70. 11 The Practitioner sought a review of the costs assessor's determination and the Costs Review Panel set aside the determination of the costs assessor and substituted the sum of $5,820.60 as the total fair and reasonable costs payable by the client, this sum being made up of $4,420.60 professional costs and $1,400.00 disbursements. 12 There was no appeal by the Practitioner under Section 208L, nor any application by the Practitioner for leave to appeal under Section 208M. Indeed, the Practitioner wrote to his client advising of his intention to enforce the Panel's determination. It is clear, in these circumstances, in the view of the Tribunal, that under Section 208KI the Panel's determination is binding upon the Practitioner and it is not open to the Practitioner in proceedings before the Tribunal to seek to introduce expert evidence in an effort to obtain a fresh determination of the fair and reasonable costs of the Practitioner when those costs have been determined by the Panel. 13 The Act provides a specific procedure for the determination of fair and reasonable costs and that procedure has been concluded in relation to the matter which is the subject of the second complaint. The evidence of this expert is sought to be admitted, on the issue of the fair and reasonable costs that were properly chargeable by the Practitioner. In the view of the Tribunal this course is not open to be pursued on behalf of the Practitioner. Section 208K1(2) makes it clear that the Panel's determination is binding on all parties (see Veghelyi –v- The Law Society of NSW Court of Appeal unreported 6 October 1995) and the Tribunal holds that the effect of the provision is that it is binding upon the practitioner in these proceedings as to the fair and reasonable costs chargeable. 14 The Tribunal is also of the view that in the event that the Tribunal were in error in rejecting the submission of the evidence of Mr Hardman by reference to Section 208KI(2) of the Act, the instructions given by the Practitioner's firm to Mr Hardman by letter dated 18 March 2004 which was exhibited in the proceedings are of such a nature and involve the making of assumptions which would, if the report were otherwise admissible, make it of no value as an expert's report. 15 In the view of the Tribunal this is clear from the terms of the instructions of which the relevant portion is as follows: "We seek to retain you to prepare an itemised bill with reference to the file for the period 29 August 1994 to 26 May 2000 and our costing records. We would provide you with the following information and instruct you to make the following assumptions for the purpose of preparing the bill: (i) the identity, experience and role within the firm of each person who did any work; (ii) the assumption that there was a valid costs agreement in place during the whole of the relevant period; (iii) where the costing records may be ambiguous, such further information as is available to us to identify precisely who did what, or in the absence of such instructions you are to take the most conservative position; (iv) the assumption that all work recorded on the time costing record was undertaken and necessary for the conduct of the matter; and (v) in respect of work that the file demonstrates was undertaken but is not recorded on costing records, you would insert in the bill such claim as you consider is reasonable based on the evidence available to you. Where there is no evidence as to the person who undertook the work you would assume it was undertaken by the person who had carriage of the file at the relevant time and where is no evidence on which to make an assessment the length of time, you are to assume that it was 1 unit We would also ask you to then to record on the bill such reductions as you would consider are required where the amount claimed is to be excessive, work claimed is clearly not chargeable to the client eg preparation of bills or where you may otherwise be provided instructions eg that the recorded attendance to produce the bill that in your professional opinion should properly have been rendered ('allowable work'). Following on from that assessment, we would ask you to include two additional columns. The first would apply to the allowable work the rates determined by the Costs Review Panel that had reviewed an assessment of another bill rendered in relation to the file. The second additional column would apply such rates as you would consider a fair and reasonable (upon the basis that there was no valid costs agreement in place)." 16 The instructions to the expert in this instance were not consistent with his being asked to prepare an expert's report in an impartial manner which report might have been of assistance to the Tribunal, had the issue of the proper costs chargeable by the Practitioner remained a live issue for consideration by the Tribunal. 17 The assumption that Mr Hardman was instructed to make that all recorded work on the Practitioner's time costing record was undertaken and necessary for the conduct of the matter removes a fundamental part of the process required to be undertaken by a costs assessor so that, inevitably, the result of the determination by the Panel and the purported calculation of fair and reasonable costs by the expert are based on different criteria so that any outcome reached by the expert would if the Tribunal felt it were proper to consider the different outcomes be of no assistance to the Tribunal. 18 Looking at the report itself, the Tribunal notes that the report, amongst other things: a) purports to express an opinion on an issue of facts relating to the provision of the Practitioner's file to the assessor; b) purports to argue issues of Law and to express opinions on, for example, the applicability of Divisions 2 and 3 of the Legal Profession Act to the Practitioner's costs and to assert that there were errors in the determinations of both the costs assessor and the Review Panel. 19 In the view of the Tribunal, this report may have been of assistance not as expert evidence, but as an aide memoire to the Practitioner's Counsel, had an appeal on a matter of Law been filed or application made for the leave of the Court to appeal against the decision of the Review Panel. If the issue of the proper costs to be paid were open for determination by the Tribunal, it is not the role of an expert witness to seek to given evidence on matters of Law or issues of fact which are matters for the Tribunal. 20 An assessor or a Review Panel, may reduce the charges made by a practitioner, without there being any issue as to the original charges constituting gross and deliberate overcharging. Where a complaint of that nature arises, it is open to the Practitioner to try to explain that the difference between the fair and reasonable charges, as determined, and his original bill are not attributable to deliberate and gross overcharging. It is questionable, and indeed unlikely, that a costs expert such as Mr Hardman could give expert testimony on that issue. The issue does not arise here, as Mr Hardman has not in his report tried to explain how a bill which is alleged to be excessive came to be issued in a way that excuses the Practitioner. Mr Hardman seeks to create a new figure for the Tribunal to use as being fair and reasonable. The report does not justify the difference between the fair and reasonable charge that has been determined and the bill as submitted and cannot be admitted in relation to that issue. This is not to suggest in any way that an expert could give admissible evidence on that issue following completion of a costs assessment application. 21 The Tribunal has accordingly declined to admit into evidence the report of Mr Hardman. 22 The further hearing of this matter is now stood over to a date to be fixed. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.