New South Wales Supreme Court CITATION : Peter Adams & Co v Wallace [2002] NSWSC 539 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 10140/2002 HEARING DATE(S) : 12 June 2002 JUDGMENT DATE : 20 June 2002 Peter Adams & Company (First Plaintiff) PARTIES : Adams & Partners (Second Plaintiff) John Wallace (Defendant) JUDGMENT OF : Master Harrison Mr J DeBerg (Plaintiffs) COUNSEL : Mr M J Heath (Defendant) Adams & Partners (Plaintiffs) SOLICITORS : Brian Muir & Co (Defendant) CATCHWORDS : Appeal decision of costs review panel and costs assessor LEGISLATION CITED : Legal Profession Act 1987 Legal Profession Regulations CASES CITED : N/A DECISION : (1) The appeal is dismissed; (2) The decision of the costs review panel dated 19 December 2001 is affirmed; (3) The plaintiff is to pay the defendant's costs as agreed or assessed. IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION MASTER HARRISON THURSDAY, 20 JUNE 2002 10140/2002 - PETER ADAMS & COMPANY & ANOR v JOHN WALLACE JUDGMENT (Appeal decision of costs review panel and costs assessor) 1 MASTER: By amended summons filed 12 June 2002 the applicant seeks an order that leave be granted to appeal the decision of costs assessor Peter Scammell dated 2 October 2001 and the costs review panel dated 19 December 2001 because the costs assessor erred as a matter of law in determining that the applicants had not satisfied s 175(2)(d) and (e) of the Legal Profession Act 1987 (the Act); that the provisions of s 184(6) were not relevant to his determination; that the costs review panel erred as a matter of law in proceeding to review the determination of the costs assessor without the evidence received by the assessor being before it as required by s 208KC(3); and by not issuing a notice in writing to the applicants to produce the file of the applications as required by s 208KD(1). The applicants relied on two affidavits of Jennifer Fraser sworn 15 January 2002 and 11 June 2002. 2 The plaintiff submitted that the costs review panel did not review the solicitor's file before making their decision and this constitutes an error of law. 3 Section 208KC of the Act states: "General functions of panel in relation to review application (1) A panel constituted under this Subdivision may review the determination of the costs assessor and may: (a) affirm the costs assessor's determination, or (b) set aside the costs assessor's determination and substitute such determination in relation to the costs assessment as, in their opinion, should have been made by the costs assessor who made the determination that is the subject of the review. (2) For the purposes of subsection (1), the panel has, in relation to the application for review, all the functions of a costs assessor under this Part and is to determine the application, subject to this Subdivision and the regulations, in the manner that a costs assessor would be required to determine an application for costs assessment. (3) However, the review is to be conducted on the evidence that was received by the costs assessor who made the determination that is the subject of the review and, unless the panel determines otherwise, the panel is not: (a) to receive submissions from the parties to the assessment, or (b) to receive any fresh evidence or evidence in addition to or in substitution for the evidence received by the costs assessor. …" 4 Hence s 208KC(3) provides that the review is to be conducted on the evidence that was received by the costs assessor who made the determination. Thus, if the solicitor's file was before the costs assessor, that file should be before the review panel. 5 On 21 October 2001 Mr Scammell requested that the solicitor arrange to collect a file from his office. On 22 October 2001 the plaintiff lodged an application for review of the decision. The solicitor handling the matter, Ms Fraser assumed that as a part of that process the file which was being held by the costs assessor would have been automatically transferred to the Supreme Court. On 5 December 2001 she became aware that this assumption was incorrect. On that day the plaintiff received a letter from Mr Scammell the costs assessor informing him that he (the costs assessor) still held the file and again requested her to collect it. The costs assessor further stated that if the review panel requires your file, which it may not, it will require them to be produced by you. At no time did the costs review panel request the plaintiff's solicitor's file from the plaintiff. 6 On 19 December 2001 the plaintiff made arrangements to have the file transferred by courier from Mr Scammell's office to the review panel. The review panel issued their certificate on the same day namely 19 December 2001. 7 On 19 December 2001 the costs review panel consisting of Leonard Hattersley and Peter McNally provided written reasons for its decision. It stated that it had considered the following: "1. The certificates and statement of reasons dated the 2nd of October 2001 published by costs assessor Peter David Scammell. 2. The material in the Costs Assessors file. 3. The Review Applicant's application for review and the grounds specified upon which they rely in seeking this review. 4. Generally Part 11 of the Legal Profession Act 1987 (the Act) and in particular sections 208 (2), 208A, 208G, 208KA, 208KC. And 208KH. 8 Its reasons continued: The function of the Panel is to review the material which was available to the Costs Assessor and exercise the same functions he did and to determine this application in the same manner as the Costs Assessor was required to determine the application for assessment. The Panel found the evidence available to the Costs Assessor was such that they were able to review his determination and findings as set forth in his statement of reasons without the necessity to call for any fresh or additional evidence." 9 The solicitor's file was couriered to the costs review panel on the day that the review took place. The issue is whether or not the review panel reviewed its contents or merely relied upon the documents in the costs assessor's file, together with the documents referred to earlier. The costs review panel stated that its function was to review the material available to the costs assessor and that "the evidence available to the costs assessor was such that they were able to review his determination and findings." While this is a borderline case I have come to the view that the plaintiff has not discharged his onus. On the balance of probabilities I am not satisfied that the review panel omitted to take into account the solicitor's file. Accordingly, this ground of the appeal fails. Section 184 of the Act 10 It is submitted by the plaintiff that the provisions of s 184(6) of the Act and the conduct of the respondent in authorising the payment of moneys held by the second applicant in its trust account in satisfaction of the memorandum of fees provided to him constituted acceptance of the amount billed by the first and second applicants in respect of legal services provided to them and the conduct of the respondent was such as to negate any defects alleged in compliance with the provisions of the Act. 11 Section 184 of the Act provides: "Agreements about costs (1) An agreement as to the costs of the provision of legal services may be made with a client by: (a) the barrister or solicitor who is retained by the client to provide the services, or (b) the barrister or solicitor retained on behalf of the client by another barrister or solicitor. (2) An agreement as to the costs of the provision of legal services may also be made between the barrister or solicitor providing the services and another barrister or solicitor who retained that barrister or solicitor on behalf of the client. (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." 12 The review panel in its reasons stated: "The provisions of s.184(6) of the Act were relevant as the Review Respondent continued to retain the Review Applicants after being given the document. … Ground 2 The Finding by the Costs Assessor that the provisions of s.184(6) of the Act were not relevant did not adversely affect the rights of the Review Applicants." 13 The review panel has considered the s 184(6) point and decided that although the conduct was relevant, it did not adversely affect the rights of the review. Section 184 defines a costs agreement. It relates to the provision of legal services. It must disclose the obligations set out in s 175. The disclosures are to be made before the solicitor is retained (s 178). It may consist of a written offer that is accepted in writing or by other conduct. In this case, the costs agreement did consist of a written offer dated 9 September 1998 which was signed by the respondent. The conduct becomes relevant if for some reason the respondent fails to sign the agreement but acts consistently with its provisions. Although at a later date the respondent did authorise some moneys held in trust to be paid to the solicitors in satisfaction of memorandum of fees, this conduct in authorising the transfer of funds to pay the solicitors in accordance with the memorandum of fees is not conduct which falls within s 184(6). Nor can it be said that the respondent entered into a subsequent costs agreement. The solicitor is obliged to deliver a bill of costs prior to transferring moneys from its trust account to its general account – see cl 32(2) Legal Profession Regulations. The authorisation of transfer of funds after a memorandum of fees and costs is issued does not amount to a subsequent costs agreement. This ground of appeal also fails. 14 Submissions were not made in relation to 1(a) and 1(b) of the amended summons. There were no reasons advanced as to why leave to appeal should be granted – s 208M of the Act. I can see no reason as to why leave should be granted, particularly when the review panel found that the costs assessor did not make any serious errors of fact regarding cancellation fees, necessary disbursements and the use of two solicitors. 15 Costs are discretionary. Normally costs follow the event. The plaintiff is to pay the costs as agreed or assessed. 16 I make the following orders: (1) The appeal is dismissed. (2) The decision of the costs review panel dated 19 December 2001 is affirmed. (3) The plaintiff is to pay the defendant's costs as agreed or assessed. ********** Last Modified: 06/24/2002 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.