New South Wales Supreme Court CITATION : TURNER v PRIDE [1999] NSWSC 850 CURRENT JURISDICTION : Common Law FILE NUMBER(S) : 10921/1999 HEARING DATE(S) : 22 July 1999 JUDGMENT DATE : 26 August 1999 Ian Charles Turner PARTIES : v Neale Dennis Pride JUDGMENT OF : Master Malpass LOWER COURT JURISDICTION : Costs Assessment LOWER COURT FILE NUMBER(S) : 92273/1998 LOWER COURT JUDICIAL OFFICER : J M Goodman Mr M J Cohen (Plaintiff) COUNSEL : N/A (Defendant) Dr C Birch ( Amicus Curiae on behalf of the Attorney General of NSW) SOLICITORS : Smallwood Cathcart (Plaintiff) In Person (Defendant) CATCHWORDS : Assessment of costs (where there is an order for the payment of an unspecified amount of costs); Costs Assessor is obliged to comply with statutory requirements; compliance may require assessment of costs not the subject of objection; bias. ACTS CITED : Legal Profession Act 1987, S 173, s 199 - s 202, s 206 - 208, s 208A - s 208I, s 208L, s 208M. Legal Profession Regulation 1994, Division 3 clauses 25-26A, Division 4 clauses 26B - 26D, Division 5 clauses 26E - 26I. CASES CITED : Galea v Galea (1990) 19 NSWLR 263. Law Society of New South Wales v Gallagher [1999] NSWADT 8. DECISION : See paragraph 49 THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION MASTER MALPASS THURSDAY 26 AUGUST 1999 10921/1999 IAN CHARLES TURNER v NEALE DENNIS PRIDE JUDGMENT 1 The Court has been told that there were earlier proceedings in this Court between the plaintiff and the defendant. Largely, what is known comes from material provided by the plaintiff. There had been an advance of $75,000.00 by the plaintiff to the defendant. There had been documentation entered into between the parties (a Deed of Trust which gave the plaintiff a beneficial interest in a property owned by the defendant). The plaintiff lodged a caveat against the title to the property. Proceedings were brought by the plaintiff for an extension of that caveat. 2 There was interlocutory activity. The proceedings were set down for hearing. The plaintiff had briefed junior counsel. The proceedings were settled on the first day of the hearing. The plaintiff obtained payment in the sum of $105,000.00. By consent, an order was made that the defendant pay the plaintiff's costs. 3 The plaintiff prepared a "Party/Party Bill of Costs". It was in the order of $79,000.00. There was dispute as to the quantum of the costs. The plaintiff made application to this Court for an assessment of the costs. The application stated that "The amount of costs in dispute is the whole bill". The application was referred to a Costs Assessor (Mr Goodman). 4 An "Objection to Bill of Costs of Plaintiff" (the objection) came before the Costs Assessor. The total of the items identified in the objection was in the order of $27,000.00. There were communications between the parties and with the Costs Assessor. 5 The Costs Assessor issued a Certificate of Determination. He determined the costs payable in an amount in the order of $30,000.00. Subsequently, the Costs Assessor was asked to provide reasons for his determination. The Costs Assessor responded by letter dated 9 April 1999 (the letter). 6 On 19 April 1999, the plaintiff filed a Summons. Relief is sought pursuant to either s 208L or s 208M of the Legal Profession Act 1987 (the Act). 7 The hearing took place on 22 July 1999. The evidence comprised an affidavit from Mr Smallwood (the solicitor for the plaintiff) and documentation tendered on behalf of the plaintiff. The plaintiff was represented by counsel. By leave, counsel appeared on behalf of the Attorney General (there was no opposition to an appearance as Amicus Curiae). The defendant appeared in person. 8 Counsel for the plaintiff has prepared written submissions. On behalf of the plaintiff, two principal submissions are made. One has been referred to as a jurisdictional matter. This was founded on s 208A (5) and the fact that the Costs Assessor had reduced the bill by more than the sum total of the objections. In support of this submission, the plaintiff sought comfort in what had been said in Law Society of New South Wales v Gallagher [1999] NSWADT 8 (G B Molloy - Judicial Member). The other was a matter of bias. The plaintiff says that there was either actual or perceived bias. There were a few other matters agitated. I will expressly refer to some of them in due course. 9 At this stage it is convenient to look at some of the provisions of the Act which deal with the matter of assessment of costs (Division 6). The starting point is the distinction drawn in the Act between applications for assessment of costs in relation to "a bill of costs" (which is defined in s 173) and applications for assessment of costs that result from an order (made by a court or a tribunal). Whilst the expression "bill of costs" might be thought to be of general application, it does not appear in the provisions dealing with costs that result from an order. 10 The entitlement to make an application is conferred by Subdivision 1. Sections 199 - 201 enable applications to be made in relation to "a bill of costs". Section 202 enables an application to be made where the costs are payable as a result of an order (any "order for the payment of an unspecified amount of costs"). It has the erroneous heading "Application for assessment of party/party costs". 11 Section 206 - 208 are of general application to all assessments. Section 206 requires the Proper Officer of the Court to refer each application to a Costs Assessor to be dealt with under the Division. Section 207 empowers the Costs Assessor inter alia to make requirements in respect of the production of documents and the furnishing of particulars. Section 208 is headed "Consideration of applications by costs assessors". Subsection (1) prohibits the determination of an application unless the Costs Assessor has complied with the requirements thereof. 12 Subdivision 2 (which comprises sections 208A - 208E) prescribes the assessment process applicable when the Costs Assessor is dealing with an application relating to "a bill of costs". Subdivision 3 (which comprises sections 208F - 208I) prescribes the assessment process applicable where the Costs Assessor is dealing with an application relating to costs payable as a result of an order. 13 When the assessment takes place pursuant to Subdivision 3, the Costs Assessor must comply with the requirements of s 208F (inter alia he must consider the matters specified in subsection (1) and he must make a determination in accordance with subsection (2)). In assessing what is a fair and reasonable amount of costs, he may have regard to any or all of the matters enumerated in s 208G. 14 Section 208L provides an avenue of appeal where there has been a decision of a Costs Assessor as to a matter of law arising in the proceedings to determine the application. Whilst "decision" is undefined, it would seem to be intended that it contemplated a "determination". 15 Section 208M prescribes the avenues for leave to appeal. Where there has been an application relating to "a bill of costs", the section enables the seeking of leave to appeal in this Court. Where there has been an application relating to costs payable as a result of an order, the section enables the making of the application for leave to the court or tribunal that made the order. 16 In addition to the provisions of the Act, there is the Legal Profession Regulation 1994 (the Regulation). Division 3 (clauses 25-26A) of the Regulation has application where there is an assessment of a bill of costs. Division 4 (clauses 26B - 26D) therein has application where there is an assessment of "party/party costs" under s 202 of the Act. Division 5 (clauses 26E - 26I) is of general application. 17 There are prescribed forms for the making of an application for assessment. In the case of "party/party costs" Form 3 has application. Paragraph 5 of that form makes provision for the providing of information relating to the matter (one of the contemplated ways of providing that information is by attachment of a copy of a bill of costs). 18 Clause 26C prescribes a procedure to be complied with before the application is made and referred to the Assessor. It affords the opportunity to make both objection to the application and response to any objection. There is no prescribed form for either the objection or the response. 19 Clause 26G is in the following terms:- "A costs assessor may determine that the amount of fair and reasonable costs is the amount agreed to by the parties if during the course of the assessment the parties notify the costs assessor that they have agreed on the amount of those costs." 20 I shall first turn to the jurisdictional submission. In substance, it is said that the Costs Assessor was invested with power to determine only those costs items which were identified in the objection. It was said that this flowed from the proper construction of s 208A (5). It is in the following terms: "A costs assessor may not determine that any part of a bill of costs that is not the subject of an application is unfair or unreasonable."` The plaintiff looks to Gallagher as authority for this contention (see inter alia paragraphs 22-25). 21 Paragraph 22 contains the following:- "There is an argument oft raised in the profession, in or to the effect that an assessor must have regard to the whole of the bill and to all of the items therein set out." Paragraph 23 is as follows:- "It seems to me, therefore, that the role of the assessor is not at large but is confined by the items in the bill that are disputed, all other items being allowed simply because they are not disputed." 22 There may be some debate as to what was intended by those observations. It is not entirely clear as to whether they are intended to speak in terms of jurisdiction or power or merely in terms of general practice or procedure. 23 At the outset, it has to be borne in mind that the regime established by the Act and the Regulation brings into operation an assessment process (as opposed to the taxation process which it replaced). It was the taxation process that involved an item by item consideration. There will be cases where the assessment task can be properly performed by a global approach. 24 The assessment process does not put in place any formal pleading or similar requirement. Largely, the regime involves an informal process intended to effect expedient and less costly resolution of disputes by experienced practitioners. There will be cases in which at least one party (if not all) will be acting in person. The amount in issue may be very modest. The role of the Costs Assessor is not performed in a court context. 25 In the case of assessment where there has been a costs order Form 3 requires the provision of stipulated information relating to the matter (see paragraph 5 of the Form). The attachment of a copy of a bill of costs is merely one method of giving that information. Whilst the prescribed procedure enables the lodging of an objection and a response prior to the lodging of the application, in many cases no objection is lodged. Despite the lack of objection, the procedure still sees the application being referred for assessment. 26 After the application has been referred by the Proper Officer, the conduct of the assessment is in the hands of the Costs Assessor. He has been given powers to exercise (s 207). He is required to give the parties a reasonable opportunity to make written submissions and he is bound to give due consideration to any submissions so made (s 208). He is required to make a decision or determination (including a determination as to the costs payable) in accordance with statutory requirements (inter alia s 206). 27 The language of the Act has thrown up its fair share of problems. The history of the assessment regime has seen Costs Assessors presented with a host of contentious situations. The debate thrown up in the present case is but one of many. 28 A Costs Assessor is placed in the position where each assessment has to be conducted on a case by case basis. In some cases, the areas of dispute may be well defined by the relevant documentation. In others, it may provide little assistance. However the task may be presented to him, he is ultimately left to resolve the application by decision or determination which complies with the statutory requirements. 29 I should digress to observe that pleading processes do not confine the jurisdiction or power of a court or tribunal. Their function is to define and narrow issues. Generally speaking the parties select the issues which they wish to agitate and the court or tribunal resolves the dispute by a determination of those issues. But, this is not always the position. There are cases in which the selected issues will not be determinative of the real questions involved in the case. In those cases the court or tribunal must address the real issues, so that justice is done between the parties and the dispute is determined according to law. 30 In the case of a Costs Assessor, what is required is a performance of statutory functions and the discharging of statutory duties. It may be that in most cases the resolution of issues raised in the assessment will produce a result which discharges the duty to comply with statutory requirements. But, this will not always be the position (even in cases where issues have been well defined). 31 Without seeking to be exhaustive, I mention these matters as illustrations of situations where there may be a need for the decision maker to depart from any selected issues and address other considerations for the purpose of making a decision according to law. 32 I should add that in the case of a Costs Assessor a failure to comply with any of the statutory requirements has of itself the potential to provoke a complaint of error from a dissatisfied party. Of course, there may be a question of the materiality of the conduct of the parties in respect of the force to be given to any such complaint. A party who does not raise an issue before a Costs Assessor can expect difficulty if it is sought to agitate that issue on appeal. 33 In this case, the Costs Assessor was dealing with an application relating to costs payable as a result of an order (it was an application made pursuant to s 202). Accordingly, s 208A has no application to the assessment. Further, I do not accept either the construction which the plaintiff seeks to put on s 208A (5) or its application otherwise to the facts of this case. What is the subject of the application can be expected to be disclosed by the application itself (Form 3 requires the applicant to identify the amount of costs in dispute). In this case, the application for assessment related to the whole of the amount claimed by the plaintiff. It was not limited to part only of the "Party/Party Bill of Costs". 34 It may be that s 208A (2) was intended as imposing a limitation on what may be disallowed in cases where there is an application relating to a bill of costs (the Costs Assessor has to be satisfied that "the disputed costs" are unfair or unreasonable). The expression "the disputed costs" is not defined. Presumably, the manner in which the dispute may be manifested is not the subject of restriction. However, I need not further pursue that matter as s 208A has no application in this case (it applies only where the assessment relates to "a bill of costs"). 35 In this case, the relevant provision is s 208F (2). The contrast with s 208A (2) is of importance. Section 208F (2) requires the Costs Assessor to determine the costs payable by assessing the amount of the costs that in his or her opinion is a fair and reasonable amount. 36 Before proceeding further, I should again mention certain other statutory requirements. A Costs Assessor must give due consideration to the submissions that have been made (s 208 (1)). He must consider the matters specified in s 208F (1). 37 There is a statutory duty to form an opinion as required by s 208F (2). In forming that opinion he must give due consideration to any submissions that have been made and consider the matters specified in s 208F (1). He is required to make a determination in respect of the subject of the application. 38 The Parliament has seen fit to impose statutory requirements in respect of which the Costs Assessor is bound to comply. The language of inter alia Subdivision 3 does not justify the view that an absence of dispute (or objection) discharges or relieves the Costs Assessor of the obligation to comply with relevant statutory requirements. The Regulation recognises that even where there is agreement as to an amount, a discretion is retained by the Costs Assessor (clause 26G). 39 Accordingly, I reject the contention that the Costs Assessor has exceeded jurisdiction or power. His determination is consistent with him having complied with the statutory requirements applicable to this particular application. In order to comply with those requirements, he considered that there was a need to assess costs which were the subject of the application (but not identified in the objection) so as to form the required opinion as to what was a fair and reasonable amount. Such an approach was open to him in the circumstances of this case. 40 For completeness, I should observe that in complying with the statutory requirements, there is also a need to see that the requirements of procedural fairness are met. In this case, it is not said that there has been any departure from those requirements. Accordingly, I put that matter aside. 41 I now turn to the matter of bias. It suffices to direct attention to the allegation of apprehended bias. The attention of the Court has been drawn to the usual cases. Stress is placed on what appears in paragraph 3 of the letter. Paragraph 3 contains material which is directed towards expressing the reasoning process behind his determination. It also contains material which is directed to expressing the reasoning process behind the costs orders that were made by him. Strong views are expressed as to the quantum of the costs claimed by the plaintiff. Strong views are expressed as to the conduct of the solicitor for the plaintiff. The authorities make it clear that the expression of views with vigour should not necessitate disqualification ( Galea v Galea (1990) 19 NSWLR 263). It has been said that material contained in the letter demonstrates pre-judgment. I do not accept that contention. It must be borne in mind that the letter is an expression of the reasoning process made after the determination had taken place. 42 In my view, the assertion of bias fails. In presenting his reasons, the Costs Assessor has expressed a strong view to the effect that the costs claimed by the plaintiff were grossly excessive. It was a view that could properly be expressed with force. He has purported to determine the costs payable in an amount that was in his opinion fair and reasonable. In my view, the determination made by him was one that was open to him in the circumstances. 43 I have now dealt with the principal submissions. Accordingly, I shall proceed to make some express mention of other matters agitated either in written submissions or in argument. 44 It was said that there was error of law upon the face of the reasons of the Assessor. The substance of this contention is the assertion that the Costs Assessor failed to follow the approach enunciated in Gallagher . Before proceeding further with this contention, I should clarify one matter. The letter has been taken as the expression of the reasoning process of the Costs Assessor in reaching his determination. In the letter, the Costs Assessor makes some observations concerning the decision in Gallagher . It is common ground, that the decision in Gallagher had not been brought to his attention until some time after the determination had been made. Accordingly, whilst his reasoning process did not accord with what was said in the decision his views on the decision itself did not form part of his reasoning process. I have already dealt with matters relevant to that decision. For many reasons, this contention fails. 45 It was said that the Costs Assessor took into account irrelevant matters. In making this submission, reference was made to paragraphs 2 and 3 of the letter. I do not accept this contention. The thrust of the reasoning process was that the costs were grossly excessive and that the amount allowed was that which in his opinion was a fair and reasonable amount. He relied on inter alia his experience in reaching these views. This was a course open to him. It must be borne in mind that a Costs Assessor is not bound by rules of evidence and may inform himself on any matter in such manner as he sees fit (s 208 (2)). 46 Further, it is said that there was an erroneous finding in that the Costs Assessor proceeded on the basis that the litigation related to a loan of $75,000.00. In respect of this contention, some initial comments need to be made. Firstly, I do not accept that such a finding was made. Secondly, it is largely correct to say that the litigation related to a loan of $75,000.00. Thirdly, even if a different view were to be taken as to this matter, it would not be of such significance as to justify disturbing the determination. 47 The Costs Assessor has merely said that "Item 637 indicates that the litigation related to a loan of $75,000.00". Item 637 appears in the plaintiff's "bill of costs". It was the making of this loan that led to the litigation. The proceedings resulted in a judgment in the sum of $105,000.00. If the reference to the sum of $75,000.00 has any significance, it is to demonstrate the obvious disproportion between what was in dispute and the costs claimed by the plaintiff. The comment was part of the expression of the view that the costs were grossly excessive. 48 The plaintiff bears the onus of demonstrating an entitlement to relief. In my view, the plaintiff has failed to discharge that onus. No basis (be it error or otherwise) has been demonstrated to justify disturbing the determination. 49 The Summons is dismissed. The plaintiff is to pay the costs of the Summons. The exhibits may be returned. ********** Last Modified: 08/30/1999 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. 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