New South Wales Supreme Court CITATION : Boral Timber v Lindquist [2004] NSWSC 341 revised - 30/04/2004 HEARING DATE(S) : 16 April 2004 JUDGMENT DATE : 29 April 2004 JURISDICTION: Common Law JUDGMENT OF : Master Harrison DECISION : (1) The appeal is dismissed; (2) The application for leave under s 208M of the Act is refused; (3) The decisions of the costs assessor dated 25 July 2002 and the review panel dated 5 November 2002 are affirmed; (4) The summons is dismissed; (5) The applicant is to pay the respondent's costs as agreed or assessed. CATCHWORDS : Appeal determination of Cost Review Panel - Appeal determination of Costs Assessor Compensation Court Rules 1990 (NSW) (now repleaded) LEGISLATION CITED : Legal Profession Act 1987 (NSW) - s 208M Legal Professional Regulation 1994 (NSW) CDJ v VAJ (No 1) (1998) 197 CLR 172 Chapmans Ltd v Yandell (t/as Yandells) [1999] NSWCA 361 Coulter v Regina (1988) 164 CLR 350 CASES CITED : Landwell (Vic) Pty Ltd v Neessen Investments Pty Ltd (unreported, NSWSC 16 September 1996, Young J) Morgan v Banning (1999) 20 WAR 474 Larsen v Vile [1999] NSWCA 397 State of Tasmania v Beadle (2001) 10 Tas R 302 Warner v Sampson [1959] 1 QB 297 Boral Timber Industries Limited (Plaintiff) PARTIES : Tony Brian Lindquist (Defendant) FILE NUMBER(S) : SC 13301/2002 Mr R Smith (Plaintiff) COUNSEL : Mr C Taylor (Defendant) Abbott Tout (Plaintiff) SOLICITORS : Savage Lawyers Orange (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION MASTER HARRISON THURSDAY, 29 APRIL 2004 13301/2002 - BORAL TIMBER INDUSTRIES LIMITED v TONY BRIAN LINDQUIST JUDGMENT (Appeal determination of Cost Review Panel; Appeal determination of Costs Assessor) 1 MASTER: By summons filed 6 December 2002, the applicant seeks firstly an order granting leave to appeal pursuant to s 208M of the Legal Profession Act 1987 (NSW) (the Act) from the determination of Messrs John A McGruther and John L Sharpe, Cost Review Panel Assessors dated 5 November 2002 in respect of matter No 90254/2002 and Mr Stephen Bowers, Costs Assessor dated 25 July 2002, secondly, further and in the alternative an order pursuant to s 208L of the Act setting aside the determination of the Cost Review Panel and of the costs assessor. 2 On 25 July 2002 the costs assessor issued a certificate as to determination of costs. The costs assessor determined that a fair and reasonable amount of costs to be paid to Tony Lindquist by Boral Timber Industries Pty Limited was $19,362.19. On 7 November 2002 the review panel affirmed the determination of the costs assessor. On 6 December 2002 Boral Industries filed this summons together with a statement of grounds of appeal. For convenience, in this judgment I shall refer to Boral Timber Industries Limited as the applicant and Tony Brian Lindquist as the respondent. Grounds of appeal 3 The applicant's grounds of appeal are firstly, that the cost assessors' reasons do not provide adequate explanation as required by cl 26I of the Legal Profession Regulation 1994 (NSW); secondly, the reasons given by the costs assessor do not provide sufficient explanation as to why the respondent's costs and disbursements were affirmed in the sum of $19,362.19; thirdly, the cost assessors' reasons disclose an error of law by allowing the respondent costs incurred in respect of preparation of matters that were not subject to the claim as pleaded in the amended application for determination in the Compensation Court; fourthly, the cost assessors' application of the test of "reasonableness" as applied under the Act discloses an error of law in allowing the respondent professional costs and disbursements in respect of matters that were not subject to the issues identified in the pleadings at trial; fifthly, the costs assessors' reasons disclose an error of law by stating that the terms of settlement struck between the parties did not expressly exclude any costs component relative to an injury that was not subject to the proceedings in the Compensation Court; sixthly, the costs assessors' have clearly, in allowing the extent of costs and disbursements for the respondent, acted on a wrong principle that results in a substantial injustice upon the applicant; and seventhly, the costs assessors' have not taken into proper consideration whether or not the work carried out was not only reasonable but also what is fair, as required by s 208F(1) of the Act. Leave for an extension of time to lodge an appeal 4 In Chapmans Ltd v Yandell (t/as Yandells) [1999] NSWCA 361, Fitzgerald JA (with whom Mason P and Davies AJA agreed) stated that it is important to keep in mind that the purpose of a requirement of leave to appeal is that it is intended to act as a filter to ensure that unsuitable appellant proceedings are not able to be brought with the attendant demands which that places upon the resources of the court and the burden which it places upon other parties and the delays which it causes to other litigants - see Coulter v Regina (1988) 164 CLR 350 at 359. 5 Fitzgerald JA also stated that if leave to appeal should be granted where there is some other matter which injustice required that the matter be re-litigated, the party seeking leave to appeal would obviously bear the burden of establishing that justice requires that leave to appeal be granted. Further, when considering whether to grant leave to appeal the Master obviously has a very wide discretion - see CDJ v VAJ (No 1) (1998) 197 CLR 172 (per McHugh, Gummow and Callinan JJ). 6 The summons seeking leave to appeal was filed on 6 December 2002. On 7 November 2002 the respondent's (then plaintiff's) solicitor received a certificate as to the determination of costs by a costs review panel issued on 5 November 2002. On 7 November the respondent's solicitor sought instructions from the applicant's (then defendant's) insurer, GIO Workers Compensation to appeal the costs review panel determination. On 13 November 2002 he received instructions to file the appeal. On 26 November 2002 the respondent's solicitor telephone the Supreme Court registry and was advised that the filing fee for the summons would be $574.00. On 29 November 2002 the respondent attempted to file the summons together with the statement of grounds of appeal and was informed by the registry that the filing fee was in fact $1,148.00. 7 On 2 December 2002 the applicant's solicitor sought further instructions from the insurer as to whether or not to file the summons due to the costs of the filing fees. On 5 December 2002 the solicitor received instructions and on 6 December 2002 the summons was filed. The applicant submitted that it was due to the incorrect advice received from the Supreme Court registry regarding the filing fee that the summons was not filed within time. The appeal under s 208L is, due to an oversight, only days late and the respondent has not suffered prejudice due to the delay. In these circumstances, it is my view, that leave to extend time to lodge the appeal should be granted. Section 208L 8 The approach that should be taken by the court in an appeal from a costs assessor was set out in Larsen v Vile [1999] NSWCA 397 and Chapmans Ltd v Yandell (t/as Yandells). An appeal under s 208L is confined to law. 9 Section 208L of the Act provides: "208L Appeal against decision of costs assessor as to matter of law (1) A party to an application who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the Supreme Court, appeal to the Court against the decision. (2) After deciding the question the subject of the appeal, the Supreme Court may, unless it affirms the costs assessor's decision: (a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or (b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application. (3) On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given." 10 On 12 September 1999 the respondent's solicitors commenced workers compensation proceedings on behalf of the respondent. On 5 July 2001, the respondent's solicitors advised the applicant's solicitors that they had received instructions to pursue common law rights in respect of the back injury that also occurred on 15 December 1998 while the respondent was employed by the applicant. On 11 July 2001 the workers compensation proceedings were settled in relation to an injury to the left upper limb below the elbow. On 18 July 2001, the applicant commenced District Court proceedings. The District Court statement of claim refers to the injuries suffered by the applicant as being those to the back, left leg, left buttock, sexual organs and psychiatric injury. The District Court proceedings were subsequently settled. 11 The bill of costs, which is the subject of this assessment, is for work done in the Workers Compensation Court proceedings. The gravamen of the applicant's complaint in this appeal is that as the applicant abandoned his claim for the injury he suffered to his back at a late stage in the proceedings in the Workers Compensation Court, he should not be entitled to recover any of those costs as they should be recoverable in the District Court. 12 The costs assessors in his reasons stated: "I took it that the submission of disentitlement by the Respondent's costs consultant relates to the liability of the Respondent for the Applicant's costs for the work in relation to the back claim done by the Applicant's solicitor in relation to the Applicant's claimwhilst [sic] the GIO was 'on risk'. In my opinion the submission is wrongly based. The relevant tests are contained in s.208F LPA. The test of reasonableness as to the carrying out of work is to be applied at the time the work was carried out and not by reference to subsequent events. A number of items in the Bill give detail as to the events relating to the back injury, workers compensation and common law. The Applicant's solicitor proceeded reasonably at all times. There was a thorough, careful and considered action at each stage throughout the matter. … I noted that Item 468 related to a letter to Counsel in relation to the client (Applicant) providing instructions to proceed with a common law claim "re accident on 15/12/98". I formed the opinion that the back-related items in the Bill were in the main "reasonably" carried out up until Item 492 (26.06.01) when the Applicant's solicitor wrote to Moray & Agnew, solicitors for the Respondent (in relation to insurance for a specific period of risk) as a result of the client's instructions at Item 491. The executed scaled copy of the Terms of Settlement are not expressly amended to disentitle the Applicant to costs in items relating to the 1998 back injury. If the Respondent wanted the benefit of costs reduction it now seeks, a specific order in relation to same should have been sought and obtained. WIMWCA s.112 provides that costs are in the discretion of the Court. There is in this matter no disentitling or limiting order made. I reject the Respondent's submission." 13 The review panel in its reasons noted: "1) … the reasoning of the Assessor in relation to the test of "reasonableness", as applied under the Legal Profession Act , and under the relevant legislation and Rules applicable to a claim of this type; especially with reference to the test being applied at the relevant time, namely when the work item was incurred, and not applied in hindsight, or in consequence of later events (including as surrounded Terms of Settlement struck only at or concurrently with the litigation hearing). Underpinning the reasonableness, in the view of the Panel, of the fashion in which the Applicant's solicitor conducted the litigation is the fact that, necessarily, the solicitor had to address a composite range of injury claims throughout the conduct of the matter, not to the exclusion of the fuller history of any back claims (including that of 1998). Indeed, it is also pertinent, in the view of the Panel, that the materials exhibit the fact that, at the time of the negotiations surrounding the Terms of Settlement, a proposal emanated from the Respondent to the effect that a settlement ought to embrace "all claims" (and therefore, inclusive of the historic back claims). Consequently, the solicitor for the Applicant would need, as part of professional responsibility, to that point, to have had a sound knowledge, resultant from his conduct of the case history to then, of the 1998 back claim to be able to give it due consideration (even if, resultantly, it was excluded, and then only partly pursuant to a Respondent having no instructions to enter into negotiations in any event). Against that background, in the view of the Panel, it cannot reasonably, in hindsight, be put that the exclusion of one part of the Applicant's injury claim therefore automatically carries with it the exclusion of the reasonable costs related, or as may have been related, to it when, to a certain (indeed ultimate) point, that component injury history was very much encapsulated within the conduct of the case and its settlement negotiation processes. It is further noted by the Panel that the Assessor made certain adjustments to the Bill, in any event, after that point in time (particularly after Item 492) when formal instructions were first given as to the exclusion of the 1998 back claim from the subject proceedings. In short, the total treatment by the Assessor in his regard to these, and other factors, is, in the finding of the Panel, sound and correctly based." 14 The applicant relied upon State of Tasmania v Beadle (2001) 10 Tas R 302; Landwell (Vic) Pty Ltd v Neessen Investments Pty Ltd (Unreported, NSWSC 16 September 1996, Young J) and Morgan v Banning (1999) 20 WAR 474 as being support for the proposition that the amendment, (i.e., deleting the reference to back injury in the Workers Compensation claim) backdates to the date of the filing of the application. Accordingly, the applicant submitted that the respondent is not entitled to its claim for costs for work done in relation to the back injury. 15 In State of Tasmania v Beadle the Full Court (per Underwood J with whom Slicer and Evans JJ agreed) at para [50] referred to the words of Hodson LJ in Warner v Sampson [1959] 1 QB 297 at 321, namely "Once pleadings are amended, what stood before amendment is no longer material before the court and no longer defines the issues to be tried." 16 Underwood J then stated: "This principle has been applied in the many cases which have dealt with applications to amend which, if granted, would have the effect of introducing a new cause of action because the amendment speaks from the date of the document that is amended. Those cases classically begin with Weldon v Neal (1887) 19 QBD 394 and are too numerous to set out here. In the light of this very well established law, it seems to me that had Parliament intended the Act, s44, to provide that an amendment has effect from any date other than the date of the document amended, it would have plainly said so." 17 Similar comments were made in the Landwell and Morgan cases. There was no formal amendment. However, even if there was, as in Beadle it takes effect from the date of the amendment. If there was to be an earlier date, there would have needed to be legislation or an order backdating the amendment. This submission fails. 18 The respondent also referred to its notice of objection to the applicant's bill of costs at paragraph (n) where it referred to Part 16 r 7 and Part 15 r 9 of the Compensation Court Rules 1990 (NSW) (now repealed). Part 16 r 7 states that where a party discontinues as to the whole or part of proceedings, the discontinuing party can be ordered to pay the costs of the other party up to discontinuance. Part 15 r 9 provides that where a party amends a document, with or without leave, he shall, unless the court otherwise orders, pay the costs of any other party of and occasioned by the amendment in order to support its argument that the usual rules about discontinuance and/or amendment should apply. Part 16 rule 7 refers to the discontinuance of proceedings. The proceedings were not discontinued they were settled. Part 15 r 9 refers to amendment of a pleading. From my reading of the work done by the solicitors (as it appears in the bill of costs) no formal amendment was made to the court documents so this rule also does not apply. 19 However, consideration of these rules is not the important issue in the appeal. Rather, it is that a solicitor is obliged to investigate the plaintiff's injuries properly in order to be able to ascertain whether or not an injury such as a back injury is serious enough so as to exceed the threshold limit in common law prior to discontinuing a workers compensation claim in relation to that same injury. Section 151C of the Act requires the plaintiff to make election between workers compensation rights and common law rights. In my view the costs assessor's duty is to assess a fair and reasonable sum for carrying out this work at the time it was carried out. That is the approach taken by the costs assessor. Hence, I agree with the reasoning of the costs assessor and the review panel. There is no error of law. I might add this appeal has an air of artificiality about it as the applicant sued the same employer in both the workers compensation and common law proceedings. 20 In the alternative the applicant relied on s 208M of the Act. 21 Section 208M provides: "208M Appeal against decision of costs assessor by leave (1) A party to an application relating to a bill of costs may, in accordance with the rules of the Supreme Court, seek leave of the Court to appeal to the Court against the determination of the application made by a costs assessor. (2) A party to an application relating to costs payable as a result of an order made by a court or a tribunal may, in accordance with the rules of the court or tribunal, seek leave of the court or tribunal to appeal to the court or tribunal against the determination of the application made by a costs assessor. (3) The Supreme Court or court or tribunal may, in accordance with its rules, grant leave to appeal and may hear and determine the appeal. (4) An appeal is to be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given. (5) After deciding the questions the subject of the appeal, the Supreme Court or court or tribunal may, unless it affirms the costs assessor's decision, make such determination in relation to the application as, in its opinion, should have been made by the costs assessor." 22 The decisions that the costs assessor made in relation to costs recoverable for the investigation and assessment of the back injury were discretionary ones. The applicant has already availed itself of the opportunity to ventilate its views before the review tribunal. The total amount of the bill was $19,362.19. The costs assessor had adopted the correct approach in determining these costs. It is my view that leave under s 208M should not be granted. 23 Costs are discretionary. Costs usually follow the event. The applicant is to pay the respondent's costs as agreed or assessed. The Court orders: (1) The appeal is dismissed. (2) The application for leave under s 208M of the Act is refused. (3) The decisions of the costs assessor dated 25 July 2002 and the review panel dated 5 November 2002 are affirmed. (4) The summons is dismissed. (5) The applicant is to pay the respondent's costs as agreed or assessed. ********** Last Modified: 04/30/2004 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.