New South Wales Supreme Court CITATION : Stanizzo v Grpcevski [2005] NSWSC 1185 HEARING DATE(S) : 17 November 2005 JUDGMENT DATE : 24 November 2005 JURISDICTION : Common Law Division JUDGMENT OF : Associate Justice Harrison DECISION : (1) Leave to appeal is granted; (2) The amount in the certificate as to determination of costs dated 2 September 2005 is varied. The sum of $13,600.00 referred to in paragraph one is deleted and in lieu the sum of $19,948.48 is inserted; (4) The defendant is to pay the plaintiff's costs as agreed or assessed. CATCHWORDS : Appeal decision of Costs Assessor - ss 208L & M of the LPA Legal Profession Act 1987 (NSW) - ss 208L & M LEGISLATION CITED : Legal Profession Act 2004 (NSW) - ss 384 and 395 Chapmans Ltd v Yandell (t/as Yandells) [1999] NSWCA 361 Coulter v Regina (1988) 164 CLR 350 CASES CITED : Larsen v Vile [1999] NSWCA 397 Montgomery v Egan Simpson Solicitors [2005] NSWSC 886 Vincent Francis Stanizzo (Plaintiff) PARTIES : Milorad Grpcevski (Defendant) FILE NUMBER(S) : SC 14507/2005 Mr M Rollinson (Plaintiff) COUNSEL : Mr P Menadue (Defendant) Mr V Stanizzo, VF Stanizzo Solicitors (Plaintiff) SOLICITORS : Mr D Lagopodis, Wiseman & Davidson (Defendant) LOWER COURT JURISDICTION : LOWER COURT FILE NUMBER(S) : 91020/2005 LOWER COURT JUDICIAL OFFICER : Mr Peter Rosier IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ASSOCIATE JUSTICE HARRISON THURSDAY, 24 NOVEMBER 2005 14507/2005 - VINCENT FRANCIS STANIZZO v MILORAD GRPCEVSKI JUDGMENT (Appeal decision of Costs Assessor - ss 208L & M of the LPA) 1 HER HONOUR: By summons filed 27 September 2005 the plaintiff seeks firstly, to appeal the determination of Peter Rosier, Costs Assessor dated 2 September 2005, in the assessment of practitioner and client costs between the plaintiff and the defendant pursuant to s 208L of the Legal Profession Act 1987 (LPA) secondly, in the alternative, leave to appeal against the determination pursuant to s 208M of the LPA and thirdly, an order varying the determination by substituting $19,048.48 as the amount of costs to be paid to the plaintiff (noting a credit of $8,100.00 to the defendant against this sum). 2 The plaintiff is Vincent Francis Stanizzo. The defendant is Milorad Grpcevski. The plaintiff relied upon his affidavits sworn 23 and 26 September 2005. The defendant relied upon the affidavit of Danny Lagopodis sworn 14 November 2005. 3 The plaintiff is the former solicitor for the defendant. He was instructed by the defendant in the matter of his application for a superannuation benefit from the BHP Biliton Superannuation Fund. For convenience I shall refer to the plaintiff as the practitioner and the defendant as the client. On 2 November 2004 the practitioner submitted a bill of costs to the client which totalled the sum of $19,048.48 less the amount paid, namely $8,100.00. The amount due and owing was calculated at $10,948.48. The defendant applied for a practitioner/client assessment of the bill. The matter was referred to Costs Assessor Peter Rosier who issued his determination on 2 September 2005. He determined that a fair and reasonable amount was $13,600.00 of which $8,600.00 has already been paid, leaving a balance of $5,000.00. Grounds of appeal 4 The ground of appeal is discrete. It is whether the Costs Assessor erred in law, or alternatively in fact, in reducing the amount assessed by reference to offers made in two letters dated 2 November 2004 and 20 July 2005. The law 5 Sections 208L and 208M of the Legal Profession Act 1987 have been repleaded. From 1 October 2005 the Legal Profession Act 2004 (NSW) came into effect. Section 384 of the new LPA is in identical terms to s 208L. Likewise, s 395 is in identical terms to s 208M. These proceedings were commenced prior to the repeal of the old Act, so s 208L and M apply. But if I am wrong the sections under the new act are in identical terms. 6 Section 208L LPA reads: "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." 7 The approach that now should be taken by the court in an appeal from a costs assessor (and Review Panel) was set out in Larsen v Vile [1999] NSWCA 397. It is incumbent upon the applicant to establish, in relation to any relief claimed under s 208L LPA that there has been some error of law in respect of the determinations made by the costs assessor. As such, an appeal under s 208L LPA is confined to law. I am not satisfied that the Costs Assessor's interpretation of these letters constitutes an error of law. I turn to consider whether leave should be granted pursuant to s 208M of the LPA. 8 Section 208M of the Act provides: "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." 9 The practitioner's counsel submitted that because the issue was a discrete one, this matter would be more conveniently and inexpensively be determined in this jurisdiction rather than seeking redress from the Costs Review Panel. The client's counsel disagreed. Normally, the Review Panel would be the preferred forum to ventilate issues but I accept that because this dispute is of short compass there is utility in bringing the matter to this Court. 10 It is necessary to reproduce the two letters in issue. 11 The letter from the practitioner to the client dated 2 November 2004 stated: "We refer to your last consultation at our office on 7th July 2004 when an amount of $6,600.00 was paid by you of our costs and disbursements. That payment, you will recall, was made on certain terms and conditions and acknowledged by you that if the itemized account totaled a higher amount, you agreed to pay the difference. You will also recall that due to the writer's imminent departure for overseas, we were not able to prepare an itemized Tax Invoice. We now attach such Tax Invoice from which you can see that the balance owing totals $10,948.48. However, as a sign of friendship and goodwill, we are prepared to reduce such balance to about one-half, say $5,500.00 and shall look forward to your remittance by return. It goes without saying that if you object to our Tax Invoice then we reserve the right to claim the full amount due and owing, viz. $10,948.48." 12 The second letter from the practitioner to the client's solicitor dated 20 July 2005 stated: "In our letter to your client dated 2nd November 2004, we made an offer to accept the sum of $5,500.00 in full satisfaction of the outstanding balance $10,948.48). That offer was renewed during our recent discussions with you in relation to our agreement to withdraw the Caveat. Our offer is still open. We note that our offer would effectively reduce our total costs including GST to $13,600.00 or a reduction of approximately 30%. If your client is prepared to accept our abovementioned offer, kindly advise by return fax." 13 Both letters were expressed to be on a "WITHOUT PREJUDICE" basis. I am of the view that the first letter constitutes a "without prejudice" offer. If the offer was not accepted then the practitioner reserved his right to recover the full amount due and owing, ie the sum of $19,048.48. The effect of the second letter was to renew the earlier offer made in the first letter. The client never accepted the offer. 14 In the client's submissions to the Costs Assessor at paragraph [7] he said "I declare that there is no reasonable prospect of settlement of the matter by mediation." 15 In response as to whether there was a reasonable prospect of settlement of the matter by mediation the solicitor answered: "Attached hereto are copies of letters sent to the applicant and the applicant's Solicitors on 2 November, 2004 and 20 July 2005 … . The respondent's offer to settle for a further $5,500 – has effectively given the Costs applicant an overall discount (of the original bill of $19,048.48) of 30% on the fees as billed which the Respondent submits is a generous reduction. The respondent's offer as abovementioned would have a total reduction of his bill to $13,600.00 incl. GST." 16 The practitioner in answering the question in relation to settlement prospects disclosed his previous offer for settlement. 17 The Costs Assessor at the beginning of his reasons summarised the issues raised by both parties. When referring to the practitioner's submissions he stated that the practitioner put all issues in dispute and then set about summarising the main sources of complaint. He added the rider "I hope that I do not do his submissions an injustice". 18 At paragraph [8] the Costs Assessor recorded the effect of these two letters and made comment in answer to a question about mediation as being "the practitioner has reduced his fees so that he will accept a further $5,500 giving a total discount of 30%." With respect, I do not think a fair reading of the practitioner's correspondence is open to that interpretation. The Costs Assessor's decision 19 In his reasons the Costs Assessor stated: I would, were it an option, confirm the bill of costs as representing fair and reasonable fees for work it was reasonable to perform in carrying out the retainer. However, the respondent has in fact made a concession the result of which is that the fees now claimed total $13,600 of which $8,600 are paid. I am satisfied that $13,600 is a fair and reasonable sum for the work which it was reasonable for the respondent to perform in relation to the engagement made by the fee disclosure of 12 March 2002. I issue a certificate accordingly." 20 So were it not for the "concession" the Costs Assessor would have confirmed the amount claimed in the bill of costs, ie the sum of $19,048.48. Whether leave to appeal should be granted 21 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. 22 Fitzgerald JA also stated that if leave to appeal should be granted where there is some other matter which in justice 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. 23 In Montgomery v Egan Simpson Solicitors [2005] NSWSC 886 (6 September 2005) it was stated at paragraph [9]: "9. As a general rule it is safe to say that leave will only be granted where there is some error of principle which works a substantial injustice to one of the parties – see Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 per Gibbs CJ, Aickin, Wilson and Brennan JJ; BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VR 756; Neimann v Electronic Industries Ltd [1978] VR 431 at 441; Perry v Smith (1901) 27 VLR 66; Darrel Lea (Vic) Pty Ltd v Union Assurance Society of Australia Ltd [1969] VR 401 at 407; and Busuttil v Holder & Anor (NSWSC, unreported Master Greenwood, 9 August 1996 – 122000/96) BC9603488." 24 The client submitted that leave under s 208M ought not be given because firstly, the Costs Assessor did not make an error of law; secondly, the very small amount of money involved; thirdly, the matter was not first referred to the costs assessment panel which is the appropriate place for review; fourthly, the manner in which the practitioner conduced himself in relation to the client; fifthly, it would be better for a hearing de novo to be conducted by a specialist Costs Assessor; sixthly, the practitioner did not put forward any new evidence which the Costs Assessor did not consider; and seventhly, that this Court does not have before it the practitioner's file the subject of this dispute. 25 I have already commented on the utility of the Review Panel. The amount in dispute is not insubstantial, there was no new evidence required, production of the practitioner's file is not necessary, and the issue for a new hearing is a discrete one. It is my view that there has been a substantial injustice to the practitioner. It is my view that leave ought to be granted under s 208M. The amount in the certificate as to determination of costs dated 2 September 2005 is varied. The sum of $13,600.00 referred to in paragraph one is deleted and in lieu the sum of $19,948.48 is inserted. Otherwise the certificate of assessment is confirmed. 26 Costs are discretionary. Costs usually follow the event. The defendant is to pay the plaintiff's costs as agreed or assessed. The Court orders: (1) Leave to appeal is granted (2) The amount in the certificate as to determination of costs dated 2 September 2005 is varied. The sum of $13,600.00 referred to in paragraph one is deleted and in lieu the sum of $19,948.48 is inserted. (4) The defendant is to pay the plaintiff's costs as agreed or assessed. ********** 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.