Forman & Anor v Rattray [2006] NSWSC 260

New South Wales Supreme Court

CITATION : Forman & Anor v Rattray [2006] NSWSC 260

HEARING DATE(S) : 6 April 2006

JUDGMENT DATE : 13 April 2006

JURISDICTION : Common Law Division

JUDGMENT OF : Associate Justice Malpass at 1

DECISION : The summons is dismissed; the plaintiffs are to pay the costs of the summons; the exhibits may be returned.

CATCHWORDS : Decision as to a matter of law arising in proceedings to determine an application for assessment - error of law - alleged failure to deal with submissions - denial of natural justice.

LEGISLATION CITED : Legal Aid Commission Act 1979, s41 Legal Profession Act 2004, ss384 & 385

Ralph W Forman (First Plaintiff) PARTIES : Health Care Corporation Pty Limited t/as Bankstown Private Hospital (formerly known as Greenoaks Private Hospital) (Second Plaintiff) Matthew Rattray by his next friend Stephen John Rattray (Defendant)

FILE NUMBER(S) : SC 15326/05

COUNSEL : Ms K C Morgan (Plaintiffs) Mr J E Armfield (Defendant)

SOLICITORS : Blake Dawson Waldron (Plaintiffs) Foulsham & Geddes (Defendant)

LOWER COURT JURISDICTION : Costs Review Panel

LOWER COURT FILE NUMBER(S) : 2004/91343

LOWER COURT JUDICIAL OFFICER : J A McGruther & J Bartos

- 8 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

Associate Justice Malpass

13 April 2006

15326 of 2005 Ralph W Forman v Matthew Rattray by his next friend Stephen John Rattray

JUDGMENT 1 His Honour: The proceedings arise out of earlier proceedings involving a large and complex personal injury claim. The earlier proceedings were commenced on 15 April 1992. They were settled on 21 March 2003 on terms that required the plaintiffs to pay the defendant's costs on a party/party basis. Thereafter, inter alia, a costs order was made. 2 An application was made for assessment of costs and the application referred to a costs assessor (Darryl Brown). The defendant's bill was in the sum of $994,635.70. 3 A certificate of determination together with attached reasons was issued. The costs were assessed in the sum of $714.650. The plaintiffs were also ordered to pay the costs of the costs assessment. 4 I should observe at this stage that the costs assessor was confronted by a formidable task. The bill contained voluminous items (7,810) and 869 pages. The objections contained not only many pages of general submissions, but innumerable specific objections in respect to what has been described as "thousands of individual items" (362 pages). The reasons comprise some 69 pages. 5 The plaintiffs sought a review by the Panel. The Panel's certificate of determination, together with the attached reasons was issued on 17 October 2005. The determination reduced the amount of costs payable by the plaintiffs to $684,650. The Panel disallowed certain of the fees charged by Mr Levy SC (the senior counsel for the defendant). 6 The plaintiffs now bring these proceedings pursuant to ss384 and 385 of the Legal Profession Act 2004 (the Act) by way of further challenge to the assessment of costs (they move on an amended summons filed in court on 6 April 2006). Section 384 of the Act provides a narrow ambit of challenge which is restricted to a decision as to a matter of law arising in the proceedings to determine the application. Section 385 provides a discretionary power to grant leave to appeal. The power is exercised having regard to the dictates of justice. 7 The proceedings were heard on 6 April 2006. Both parties were represented by counsel. Counsel have provided the court with written submissions which have been supplemented by oral argument. 8 Broadly speaking, there are four avenues of challenge to the assessment made by the Panel. The first concerns an argument founded on s41 of the Legal Aid Commission Act 1979 (the LAC Act). The second concerns the fees charged by Mr Levy SC. The third concerns an allowance of fees charged by expert witnesses. The fourth concerns the costs of the assessment by the costs assessor. 9 The defendant received legal aid during the period from 6 April 1990 until 30 November 2001. Legal aid in the sum of $109,890.67 was paid to the solicitor for the defendant by the Legal Aid Commission (the Commission). On 17 September 2002, a fee agreement was entered into with the defendant, effective as from 30 November 2001. The amount of legal aid was repaid and the solicitor for the defendant sought an approval pursuant to s41 of the LAC Act. 10 Section 41 is in the following terms:- 41 Demand for or receipt of certain payments prohibited (1) Despite any Act or law to the contrary, a private legal practitioner is not entitled to charge or recover from a legally assisted person any amount: (a) by way of costs in respect of work assigned by the Commission to the private legal practitioner on behalf of that person, or (b) by way of disbursements incurred on behalf of that person in connection with that work, except with the approval of the Commission. (2) A provision of any agreement (whether in writing or not and whether entered into before or after the commencement of this section): (a) under which the operation of this section is excluded, modified or restricted, or (b) which has the effect of excluding, modifying or restricting the operation of this section, is void. 11 In a letter 10 September 2004 from the solicitor for the defendants addressed to the Legal Aid Grants Division, the following was contained:- To assist us in our client's Costs Assessment, we would be grateful if you could provide me with a letter addressed to this firm confirming the relevant dates during which a grant of legal aid operated and confirming that all amounts paid by legal aid have now been refunded (and in fact even more than actually paid!) Please confirm that the Plaintiff is at liberty to recover full party/party costs in the matter as there has effectively been no grant of aid made during the course of this matter. 12 A response was received dated 21 September 2004. It contained, inter alia, the following:- I advise that the Commission granted legal aid, in this matter, from 6 April 1990 and aid was terminated on 30 November 2001. The Commission confirms that all moneys payable to the Commission have been repaid and you may now recover your client's party/party costs. 13 In the plaintiffs' written submissions, the following may be found:- 9. The Panel made an error of law in affirming that part of the decision of the costs assessor that allowed costs in excess of the Legal Aid Commission grant, breaching the indemnity principle. … … … 14. First, the Panel, agreeing with the costs assessor, although it accepted the limitations assessed costs in excess of the Legal Aid amount because of a letter received by the defendant's solicitor on 21 September 2004 , nearly three years after the defendant was not longer legally aided. That letter states: "you can now recover your client's party/party costs" (as quoted by the costs assessor Exhibit RCH 5 at page 9). This letter is taken by the costs assessor and the Panel, not only as a consent pursuant to section 41 of the Legal Commission Act as at 21 September 2004, but consent for the period 6 April 1990 to 30 November 2001. 15. Secondly, even if the Commission's letter did operate as a section 41 consent, neither the Panel nor the costs assessor had evidence before it to conclude that the defendant had paid his solicitor amounts in excess of the Legal Aid grant in the period 6 April 1990 to 30 November 2001. 16. Thirdly, the Panel took into account a fee agreement, provided after the grant of Legal Aid had been terminated, dated 17 September 2002, effective from 30 November 2001. 14 Section 41 of the LAC Act enacts a prohibition that operates between a private legal practitioner and a legally assisted person. The prohibition is brought to an end when the Commission gives an approval within the meaning of that section. 15 The costs assessor came to the view that such approval had been given. A similar view was formed by the Panel. In my view, both the costs assessor and the Panel were correct in reaching that view. I am unable to see how it could be construed otherwise than being in substance an approval within the meaning of the section. 16 The language of the section does not impose any temporal restriction upon the giving of approval. An approval can only sensibly have application to the period during which the legally assisted person has received legal aid. Once the approval has been given, there is no longer a prohibition preventing the private legal practitioner from charging or recovering costs and/or disbursements from a person who has been legally assisted. 17 What is said in paragraphs 15 and 16 of the plaintiffs' submissions does not involve any decision as to a matter of law. It needs to be added that neither the costs assessor nor the Panel is bound by rules of evidence and may be informed on any matter in such manner as is thought fit. In any event, I do not accept that there was a lack of evidence (inter alia, paragraph 6 of a letter dated 22 September 2004 gave an assurance as to the relevant question of obligation to make payment). I should add that I consider what was said by the Panel concerning the fee agreement had no significance in this appeal. 18 In the circumstances of this case, there was no error on the part of the Panel in concluding that the indemnity rule had not been breached. 19 I now turn to the remaining three challenges. These challenges can be considered together. The thrust of the contentions concerning these three matters is that the Panel failed to consider submissions made on each of the matters and that there was thereby an error of law. The submissions which were said not to have been taken into account may be found in paragraphs 18-36 of the plaintiffs' written submissions and elsewhere (including in the application for review of the costs assessor's determination). 20 Before proceeding further to deal with these challenges, I should first observe that a distinction needs to be drawn between what is regarded in certain contexts as "error of law" and what is contemplated by s384 of the Act. As earlier observed, s384 is available only where there has been a decision as to a matter of law arising in the proceedings to determine the application. In my view, what is said in this case to be error of law does not fall within that ambit. As has been said in other cases, contentions such as denial of procedural fairness and lack of disclosure of reasoning process, also do not fall within that ambit. 21 Leaving those considerations aside, I shall now proceed to deal with the alleged errors of law on their merit. 22 It is trite to observe that it is unnecessary that specific reference be made to every piece of evidence and to every argument. Be that as it may, I do not accept the submissions that the Panel failed to take into account any of the various matters that are relied on by the plaintiffs. 23 In the reasons of the Panel, reference is made to the documents considered. The Panel expressly identifies those documents as including "All of the material put before the Costs Assessor" and the application for review. These documents contain express mention of the matters which the plaintiffs required the Panel to consider. 24 Initially, I should make the point that I see no reason to not accept what the Panel has said as to what was taken into account. Further, I do not see the other contents of their reasons as providing any indication to the contrary. What the Panel did do in relation to each of the three matters was to expressly address what they were required to consider by reason of the provisions of the Act. 25 In respect of the fourth challenge, I should add that the conduct of the assessment was dictated by the nature of the dispute. I do not accept that the time spent on an assessment is an irrelevant matter. I do not accept that the assessor did other than make an assessment as was required by the Act. 26 Perhaps, I should also make express mention of two minor matters that are raised in the plaintiffs' written submissions. One is raised in paragraph 24 thereof. The other is raised in paragraph 33. 27 In paragraph 5.4 of the reasons of the Panel, the following appears:- The costs charged by Mr Levy are large. But that reflects the fact that he did a great deal of the work on the matter and the nature of the matter itself.