New South Wales Supreme Court CITATION : Cassegrain v CTK Engineering; Cassegrain v Cassegrain [2008] NSWSC 457 HEARING DATE(S) : 02 April 2008; 03 April 2008; written submissions on 9 May 2008. JUDGMENT DATE : 15 May 2008 JURISDICTION : Equity JUDGMENT OF : White J DECISION : See paras 146 and 147 of judgment. CATCHWORDS : COSTS – assessment – costs assessor – review panel – adequacy of reasons – basis of assessment of all disputed costs must be explained – statement of reasons must be sufficiently precise to give meaningful content to rights of appeal – sufficient to specify how disputed costs of the same kind were treated – failure to provide sufficient reasons. - PRACTICE AND PROCEDURE – joinder of members of costs review panel as defendants. Legal Profession Act 2004 (NSW) LEGISLATION CITED : A New Tax System (Goods and Services Tax) Act 1999 (Cth) Legal Profession Act 1987 (NSW) CATEGORY : Consequential orders Thomas Jean Roger Cassegrain v CTK Engineering Pty Ltd [2005] NSWSC 495; (2005) 54 ACSR 249 Cassegrain v Cassegrain [2006] NSWCA 39; (2006) 56 ACSR 711 Cassegrain v CTK Engineering Pty Ltd [2008] NSWSC 78 Frumar v The Owners of Strata Plan 36957 [2006] NSWCA 278; (2006) 67 NSWLR 321 Kennedy Miller Television Pty Ltd v Lancken (Supreme Court of NSW, Sperling J, 1 August 1997, unreported) Attorney-General of New South Wales v Kennedy Miller Television Pty Ltd (1998) 43 NSWLR 729 Campbelltown City Council v Vegan & Ors [2006] NSWCA 284; (2006) 67 NSWLR 372 Sasterawan v Morris [2008] NSWCA 70 Turner v Pride [1999] NSWSC 850 CASES CITED : Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495 Latoudis v Casey (1990) 170 CLR 534 Cachia v Hanes (1993) 179 CLR 403 Oshlack v Richmond River Council (1998) 193 CLR 72 Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474 Chapman's Ltd v Yandell [1999] NSWCA 361 Prouse v State Rail Authority of NSW [2003] NSWSC 999 New South Wales Bar Association v Stevens [2005] NSWCA 351 Lyons v Wende [2007] NSWSC 100 Thomas Jean Roger Cassegrain & Anor v PARTIES : CTK Engineering Pty Ltd & Anor; Claude George Rene Cassegrain v Thomas Jean Roger Cassegrain & 3 Ors FILE NUMBER(S) : SC 4277/04; 14024/07 14024/07 Plaintiff: N J Kidd COUNSEL : 1st & 2nd Defendants: R Beech-Jones SC & A Horvath 3rd Defendant: V Musico 4th Defendant: A Lo Surdo 14024/07 Plaintiff: Evangelos Patakas & Associates SOLICITORS : 1st & 2nd Defendants: Thompson Eslick Solicitors 3rd Defendant: Costs Review Panel 4th Defendant: Norton White Solicitors IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION WHITE J Thursday, 15 May 2008 4277/04 Thomas Jean Roger Cassegrain & Anor v CTK Engineering Pty Ltd & Anor 14024/07 Claude George Rene Cassegrain v Thomas Jean Roger Cassegrain & 3 Ors JUDGMENT 1 HIS HONOUR: This is an appeal and an application for leave to appeal from a decision of a costs review panel upholding a costs assessment. The appeal is brought under s 384 of the Legal Profession Act 2004 (NSW), which permits an appeal against a decision of a costs review panel as to a matter of law. The application for leave to appeal is brought under s 385 of the Legal Profession Act 2004. 2 The appeal and application for leave to appeal arise from costs orders made by me on 26 May 2005 in proceedings 4277/04, Thomas Jean Roger Cassegrain v CTK Engineering Pty Ltd [2005] NSWSC 495; (2005) 54 ACSR 249 ("the 2004 proceedings"). In those proceedings, the successful plaintiffs sought orders that CTK Engineering Pty Ltd ("CTK") be wound up. On 12 November 2004, Windeyer J appointed a provisional liquidator to CTK. Ultimately there was no opposition to the making of a winding-up order. The plaintiffs also sought an order against Mr Claude Cassegrain that he indemnify CTK in respect of the legal costs and expenses it incurred in the defence of the proceedings up to the time of the appointment of the provisional liquidator. The plaintiffs were successful. I ordered that: 1. CTK pay the plaintiffs' costs of the proceedings, including reserved costs, up to and including 12 November 2004; 2. Claude Cassegrain pay the plaintiffs' costs of the proceedings, including reserved costs; 3. Claude Cassegrain indemnify CTK against the costs payable by CTK to the plaintiffs, and in respect of costs and expenses incurred by CTK in defending the proceedings. 3 An application for leave to appeal from these orders was dismissed by the Court of Appeal on 22 February 2006 (Cassegrain v Cassegrain [2006] NSWCA 39; (2006) 56 ACSR 711). 4 Meanwhile, on 16 January 2006, the plaintiffs applied to have the costs assessed. On 19 March 2007, the costs assessor, Mr Salier, determined that a fair and reasonable amount of costs to be paid pursuant to the second order was $271,906.71. He assessed the costs of the proceedings up to and including 12 November 2004 in the sum of $162,452.27. He determined the costs of the costs assessment to be the sum of $11,491.57 and ordered that that sum be paid by the "Costs Respondents", namely, Claude Cassegrain and CTK. 5 CTK did not play an active part in the costs assessment. 6 On 10 May 2007, Claude Cassegrain applied to have the determinations of the costs assessor reviewed by a costs review panel. Only the plaintiffs were joined as parties to that application. The application was determined by the panel on the papers without calling for further submissions from the parties. On 8 June 2007, the panel affirmed the certificates of determination of the costs assessor. 7 On 20 July 2007, judgment was entered in proceedings 4277/04 in the following terms: " 1. The First Defendant pay the Plaintiffs' costs of the proceedings including reserved costs up to and including 12 November 2004, being the costs assessed as a fair and reasonable amount of costs in the amount of $162,452.27. 2. The Second Defendant pay the Plaintiffs' costs of the proceedings including reserved costs, being the costs assessed as a fair and reasonable amount of costs in the amount of $271,906.71. 3. The Second Defendant indemnify the First Defendant against the costs payable by the First Defendant to the Plaintiffs, and in respect of costs and expenses incurred by the First Defendant in defending the proceedings. 4. The First Defendant and the Second Defendant pay to the Plaintiffs the amount of $11,491.57, being the costs of Costs Assessment Application No. 00000048 of 2006. " 8 On 6 August 2007, Claude Cassegrain filed a summons in the Common Law Division seeking leave to appeal against the whole of the certificate of determination of costs by the costs review panel pursuant to s 385(2) of the Legal Profession Act 2004. He sought an order that the certificate of the costs review panel be set aside pursuant to s 384(2)(a) of that Act. The defendants to the summons as originally filed were the plaintiffs in the 2004 proceedings. I shall continue in these reasons to refer to the plaintiffs in the 2004 proceedings, namely, Thomas Jean Roger Cassegrain and Emilie Cassegrain as "the plaintiffs", even though they are the defendants to the common law proceedings. I shall continue to refer to the plaintiff in the common law proceedings as "Claude Cassegrain". 9 On 11 and 16 July 2007, the solicitor for Claude Cassegrain, Mr Evangelos Patakas, forwarded to the solicitor for the plaintiffs, Mr Peter Thompson of Thompson Eslick, two cheques totalling $107,627.33. The money was paid on a "without admission basis" and represented the amounts which Claude Cassegrain in his notice of objection had specified as being the appropriate amount to be allowed for the plaintiffs' costs, namely $48,414.50 in respect of professional costs and $56,427 in respect of disbursements, together with $2,786.21 for interest accrued from the date of the costs assessor's determination. 10 On 17 January 2008, the liquidator of CTK, Mr Lord, advised Claude Cassegrain that on 11 October 2007 he had received a demand for payment pursuant to the costs judgment in an amount of $173,943.84 being $162,452.27 under order 1, and $11,491.57 under order 4. He advised that on 3 December 2007, the company had paid $158,130.76 to the plaintiffs being the amount demanded less GST. He demanded that Claude Cassegrain indemnify the company in the sum of $158,130.76 pursuant to order 3 of the costs judgment. 11 As a consequence of this demand, on 1 February 2008 Claude Cassegrain applied in the 2004 proceedings for a stay of execution of the costs judgment made and entered on 20 July 2007. That application came before Palmer J as the duty judge on 8 February 2008. His Honour considered that such an application was better made to the trial judge and left it to Claude Cassegrain to approach me with any such application (Cassegrain v CTK Engineering Pty Ltd [2008] NSWSC 78). The matter was not listed before me until 19 March 2008. It was then apparent that a major issue on the stay application would be the merits of the appeal and application for leave to appeal in the Common Law proceedings. Rather than require those matters to be ventilated twice, I directed that the appeal and the application for leave to appeal in the Common Law proceedings be listed before me for hearing, together with the application for the stay. I indicated at that time that if leave to appeal were granted pursuant to s 385 of the Legal Profession Act 2004, I would not immediately embark upon the substantive appeal under that section. 12 It is in this way that the proceedings in the Common Law Division for orders under ss 384 and 385 of the Legal Profession Act 2004 came before me. 13 The principal issue is the adequacy of the costs assessor's and the panel's reasons. To understand the reasons it is necessary to describe the parties' submissions in detail. The panel largely adopted the assessor's reasons, and the assessor's reasons included his expressed preference for the submissions for the plaintiffs over those for Claude Cassegrain, except in respect of certain matters. Plaintiffs' Bill of Costs 14 On 16 November 2005, Mr Thompson, then employed by TurksLegal, wrote to Claude Cassegrain and Mr Lord as liquidator of CTK enclosing a draft bill of costs and making a without prejudice offer for the compromise of the amount claimed for costs. On 9 December 2005, a final bill of costs was served on the liquidator and Claude Cassegrain. The bill was filed for assessment on 16 January 2006. Mr Salier was appointed as the costs assessor. 15 The bill of costs was an extensive document comprising three parts. The first part consisted of a 22-page narrative describing the background to the institution of the proceedings, including reference to earlier litigation between different parties, namely, what has been called the "Dunn v CTK proceedings". These proceedings were relevant to the plaintiffs' proceedings and are referred to in my previous judgment. In the narrative, Mr Thompson provided an overview of the procedural steps in the 2004 litigation. He described the fact that the plaintiffs are residents of France who do not speak English and described the role of a Mr Mauduit. Mr Mauduit acted as consultant to the plaintiffs and their father, provided assistance in translation, and, himself being a lawyer, explained legal concepts which would be unusual for the French clients including, as Mr Thompson described it: "... discussion relating to the operation of the Australian Legal System, costs under it, the Corporations Act, the role and process by which a Provisional Liquidator is appointed by the Court, oppression, undertakings as to damages, security for costs, expedition, interlocutory relief, Court appointed expert conclaves, use and need for affidavits, notices to produce and the like. " 16 Mr Thompson went on to say: " Mr Mauduit has sent in a draft fee note setting out his time spent and rates to be charged. This was reviewed and for the purposes of the attached Bill of Costs included as a disbursement but discounted to include the time where Mr Mauduit was acting as translator and his rates were similarly reduced to accord with what is estimated to been [sic] the fee the Clients would have incurred using official interpreters. " 17 The second part of the bill of costs was an itemised description of work undertaken by the plaintiffs' solicitors. The bulk of the work was undertaken by Mr Thompson and a paralegal. This work was described over 143 pages and consisted of 1,313 items. For each item there was a description of the work done, the person by whom it was performed, the time taken, the hourly rate for the work charged, and the charge. The total amount claimed in the bill of costs for the solicitors' work was $134,021.50 before GST. A further charge of $13,402.15 was claimed for GST, making a total of $147,423.65. 18 A separate claim was made for disbursements including filing fees, services fees, witness fees, conduct money, barristers' fees, photocopying, search fees, experts' reports and official interpreters' fees. This was the third part of the bill. In addition, claims were made for interest on moneys borrowed to fund the plaintiffs' legal costs. Fees totalling $65,060 were claimed in respect of services provided by Mr Mauduit "for advising and acting as translator to Jean-Francois Cassegrain on behalf of the Plaintiffs to enable instructions to be provided to the Plaintiffs' Australian solicitors ... – calculated on a party/party basis". The hourly rate charged was €200 and the total hours for which the charge was claimed was 170 hours. 19 The total claim for disbursements was $224,397.36 inclusive of GST. The GST claimed totalled $12,868.89. 20 On 20 February 2006, Mr Thompson supplied to the costs assessor an amended disbursement schedule to correct certain identified errors. The effect of the amendments was to increase the total amount of the bill for disbursements to $229,428.52. The amount of GST included in the claimed disbursements was $12,598.57. Objections to Plaintiffs' Bill 21 During April 2006, Mr Evangelos Patakas provided Claude Cassegrain's response to the bill of costs. This was divided into three parts. The first part made general submissions and observations in support of the objections. The second made objections, item by item, to the solicitor's bill of costs. The third part dealt with objections to disbursements. The principal objections are summarised below. Where applicable, I give them the headings used in the assessor's statement of reasons. 1. It was submitted that there was duplication in attendances at conferences between the senior solicitor and the paralegal; the senior solicitor and paralegal claimed for work also done and charged for by experienced counsel; counsel was used and consulted extensively in almost every communication with the defendants and in respect of the preparation and conduct of the case; and there were numerous and unnecessary lengthy attendances between the solicitors and the plaintiffs' father. Dunn Proceedings 2. The plaintiffs' solicitors spent an inordinate amount of time in reviewing affidavits, correspondence and transcript of the Dunn proceedings. This was unnecessary and irrelevant because my judgment referred to facts as found by Barrett J in those proceedings which were accepted by the parties as agreed facts. The attendances in connection with Mr Dunn and the documents relating to the Dunn proceedings were unnecessary. Translation Costs Claim 3. The costs of translation should not be allowed, except for the cost of translating witness affidavits. Alleged Conflict of Interest by Solicitors 4. Costs claimed in raising alleged conflicts of interest of the solicitors acting for both defendants (i.e. for Claude Cassegrain and CTK) were not proper costs. White S.C. 5. Certain costs for briefing senior counsel were objected to on the ground that junior counsel should have been briefed. Cross-Claim (Derivative Action) 6. The bill of costs claimed costs in connection with an application to bring a derivative action on behalf of the company by way of cross-claim. The interlocutory process seeking leave to bring the claim was ultimately dismissed with no order being made in relation to the costs of that process. Such costs were claimed in the bill of costs and should be rejected. Security for Costs 7. The bill included costs for the plaintiffs' attendances in relation to an interlocutory process for security for costs. Windeyer J ordered that the plaintiffs pay the costs of the application for security for costs. Rates of Charge 8. The rates of charge for the paralegal should be allowed at $120 per hour, not the rate of $150 per hour as claimed and rates of charge claimed for junior counsel should be reduced. 5 & 8 November 2004 Hearing – before Windeyer J 9. There were three interlocutory processes heard before Windeyer J on 5 and 8 November 2004. One was for the appointment of a provisional liquidator on which the plaintiff succeeded. Costs of that application formed part of the costs order of 26 May 2005. A second application before his Honour was the plaintiffs' interlocutory process for leave to bring a derivative action. It was adjourned and ultimately dismissed on 18 February 2005 without any order as to costs. The third application was the respondents' interlocutory process for security for costs in which the defendants were successful and for which they were awarded costs. It was submitted that only one-third of the costs for the hearing and for the preparation of the hearing should be allowed. Dealings Regarding Provisional Liquidator after Appointment on 12 November 2004 10. Costs claimed for numerous conferences and other attendances between the plaintiffs' solicitors and the provisional liquidator and his staff after 12 November 2004 related to the administration of the affairs of CTK, and were not costs in the proceedings. Costs incurred in assisting the provisional liquidator with the conduct of the provisional liquidation should be disallowed. Post 16 December 2004 Consent by Respondent to Appointment of Liquidator 11. Following the consent by Claude Cassegrain on 16 December 2004 to the appointment of Mr Lord as liquidator of CTK, the only matter in issue was the question of costs of the proceedings and the application by the plaintiffs for Claude Cassegrain to pay those costs. It was submitted that the only relevant evidence at the hearing comprised documents filed by or relied upon in the hearing for the appointment of the provisional liquidator and the additional information provided in reports by the provisional liquidator. Hence certain specific items in the bill of costs were objected to on the ground that they were unnecessarily incurred having regard to the consent conveyed by Claude Cassegrain on 16 December 2004 to the appointment of Mr Lord as liquidator. Notice to Produce on Provisional Liquidator December 2004 12. An inordinate amount of time was spent on attendances with the solicitors for the provisional liquidator in connection with a notice for production of documents served on the provisional liquidator. It was submitted that these attendances concerned the process of provisional liquidation rather than the preparation for the remaining issues in the proceedings. This was a repetition of para [10]; Subpoena for Production on Clayton Utz December 2004 13. An inordinate amount of time was spent on attendances with Clayton Utz in relation to proceedings known as the " OAL proceedings" in which CTK had become involved. Whilst it was accepted that those proceedings were relevant to the oppression proceedings, it was said that the attendances in that connection were excessive. Mauduit Fees Claim 14. It was submitted that " There appears to be no formal basis for the alleged retainer of Mr Mauduit by either the applicants or their solicitor. " It was submitted that no costs should be allowed for Mr Mauduit's fees. He did not fulfil any legal role. It was submitted that the costs of interpretation should not be allowed except in relation to the giving of evidence. It was submitted that the fees claimed were excessive for an interpreter in any event. Applicants' Bill of Costs and Assessment of Bill of Costs 15. Claude Cassegrain sought an order for his costs in respect of objections to the bill. It was said that the bill was substantially contrary to the order for costs made by the Court in respect of the issue of security for costs, the interlocutory process for the derivative action and the associated costs of the cross-claim. The costs claimed in respect of Mr Mauduit and the claim for interest totalling $100,000 [ sic ] were totally unacceptable. Had it not been for gross overcharging and a fundamentally misleading bill of costs, the Costs Respondent would have been in a position to have attempted to settle the claim in some way. GST 16. It was submitted that GST should be allowed in accordance with the rules. No submission was made that no GST was payable because the plaintiffs were resident in France. 22 The objections to individual items were, in large measure, cross-referenced to these submissions although a number of submissions were made that particular charges were excessive. Specific objections were made to most disbursements. Plaintiffs' Submissions in Response to Objections 23 Thompson Eslick replied to these submissions on 2 May 2006. They provided a detailed response to each objection. They acknowledged that there should be a reduction for the costs claimed in relation to the security for costs application and explained that the reason those items had been included in the bill was because Windeyer J had not made any costs orders in delivering judgment. They observed that a costs order was made in relation to that application, although they were at a loss to understand exactly how that happened. Nonetheless they acknowledged that it did happen and did not seek such costs. In relation to both the objections to the security for costs application and the objections to the costs claimed in respect of the proposed derivative claim, Thompson Eslick identified specifically the items in the bill of costs which they said related to each claim. They submitted that the litigation was complex, that there were numerous contested interlocutory applications, that four judgments were delivered in the course of the proceedings, that the costs respondents were wrong in contending that the proceedings simply concerned the winding-up of CTK, that there were a large number of affidavits filed and read (excluding those relating to the security for costs application), and that Claude Cassegrain had not been forthcoming in relation to his conduct of the affairs of CTK such that the plaintiffs had to embark on a detailed investigation involving the issue of subpoenas, notices to produce and the interviewing of various witnesses. They cited the judgment of the Court of Appeal where Mason P said (at [43]): " ... the judgment of Windeyer J confirmed that the interlocutory application was hotly contested and that nothing was said to indicate that the claimant conceded any of the substantive claims or was willing to contemplate consenting to the final relief sought. ... His Honour went on to say (at [14]-[15]): ... Before White J ... Evidence was led and the claimant was cross-examined on matters relevant to the remaining issues. This was the tip of an iceberg of bitter litigation involving members of this family. No quarter appears to have been sought or given for many years. ... There were several instances of secret transactions involving conflict between the claimant's interests and his duty to the company. The findings also detailed conduct that had the effect of and was entered into with the intent of delaying the winding up of the company. Some instances occurred after the winding up proceedings had commenced. " 24 Thompson Eslick explained in some detail the difficulties of communication with the plaintiffs who are students resident in France and who did not speak English. They submitted that it was necessary to employ the services of a French lawyer, Mr Mauduit, who spoke English and who could interpret and assist in explaining the court process. 25 Thompson Eslick denied there was duplication between the work done by the senior solicitor, the paralegal and counsel. They submitted that the case was run in about six months (including the December/January holiday period) during which time there were two major hearings and three or four other contested interlocutory applications. Over 23 affidavits were prepared, filed and reviewed. The litigation was complex and heavily contested on all fronts. The plaintiffs' legal team consisted of a senior solicitor, a paralegal and junior counsel. The costs claimed for the work and time was neither unreasonable nor unusual. Claude Cassegrain put the plaintiffs to proof on all points and it did not lie in his mouth to object to the work which was necessary to be done to obtain the relief sought. The litigation was complex; it required extensive review of documentation and the quality of the preparation undertaken by counsel and the solicitors was high. There was a clear division of work between the senior solicitor and the paralegal and the fact that certain conferences were attended by them both did not mean that there was any unnecessary duplication. It was not unreasonable to have a senior solicitor and a paralegal working together to get everything done within the required timeframes. The total costs claimed in the bill of costs for the work of the paralegal amounted only to $27,798 and the claimed costs for her attendances at conferences were only $3,447. They submitted that it was appropriate and justified to have counsel settle letters, affidavits and court processes and that is what is expected in commercial litigation. It was crucial that counsel be at all times "up to speed" on what was happening in the proceedings. 26 Under this heading of complaints concerning duplication, Thompson Eslick dealt with challenges made by Mr Patakas to attendances on Jean Francois Cassegrain, the plaintiffs' father. Thompson Eslick made submissions as to why such attendances were necessary. They also identified the particular items in the bill of costs referable to such attendances. These totalled $9,351. 27 In relation to the complaint that an inordinate amount of time was spent reviewing affidavits, correspondence and transcript of the Dunn proceedings, Thompson Eslick submitted that most of the attendances were before the commencement of the action and that there was nothing unreasonable in them. It was necessary for the solicitors to understand what had occurred in those proceedings and what statements had been made. They noted that the defendants in the proceedings had themselves served subpoenas on Mr and Mrs Dunn to produce documents. 28 I have already outlined part of Thompson Eslick's response in relation to the objection to the costs of translation. Thompson Eslick emphasised that Mr Mauduit's fees had not been paid and his account had been submitted only in draft. They invited the costs assessor to look at the draft account and identify what he considered to be a fair cost for the service provided and to allow that amount. They also observed that Mr Mauduit's fees would be paid by the plaintiffs over and above the figure allowed on assessment. 29 Thompson Eslick submitted that the conflict of interests between Claude Cassegrain and CTK having joint representation was a relevant matter leading to orders that Claude Cassegrain indemnify CTK for the costs it had incurred in defending the proceedings, and that the costs incurred in raising those conflicts of interests were proper. 30 In relation to the contention that costs for briefing senior counsel should be disallowed on the ground that junior counsel should have been briefed, Thompson Eslick explained the circumstances in which senior counsel was briefed in some detail. They submitted that there was no duplication. Senior counsel was briefed because matters were fixed for hearing at times when junior counsel was unavailable. They submitted that senior counsel, who had only been recently appointed as senior counsel, only charged $20 per hour more than junior counsel's hourly rate in any event. 31 In relation to the costs claimed in connection with an application to bring a derivative action on behalf of CTK by way of cross-claim, Thompson Eslick submitted that it did not follow from the fact that the application was not proceeded with, that the costs in connection with the preparation of the application were not properly incurred. They described the history of the application. They observed that at the hearing before Windeyer J, his Honour noted that the derivative application might not need to proceed if a winding-up order was made. A winding-up order was ultimately consented to and it was in those circumstances that the plaintiffs did not need to proceed with the derivative application. They submitted that the fact that it was dismissed with no orders being made specifically in relation to it did not mean that the costs of the work related to the derivative action were not costs of the proceedings. They identified specific items in the bill of costs relating to the derivative action totalling $2,246. 32 As noted above, Thompson Eslick accepted that the costs relating to the application for security for costs should be taxed off. They identified items relating to security for costs in the bill of costs totalling $3,457.80. 33 Thompson Eslick submitted that the paralegal's rate should be allowed at the rate of $150 per hour from 25 October 2004 having regard to the experience of the person in question. They addressed the reasonableness of the hourly rates charged by junior counsel noting that in the hearings before Windeyer J and before me, Claude Cassegrain was represented by both senior and junior counsel. 34 In relation to the costs of the hearings before Windeyer J on 5 and 8 November 2004, Thompson Eslick submitted that the majority of the hearing time concerned the application for the appointment of a provisional liquidator and that somewhere between 80 and 90 percent of the time spent over the two days of hearing concerned the argument relating to the appointment of a provisional liquidator. 35 In relation to the objections for costs claimed relating to dealings with the provisional liquidator after his appointment on 12 November 2004, Thompson Eslick submitted that the attendances related directly to the proceedings and concerned attempts to obtain information in connection with the proceedings. The information sought primarily related to the company's tea tree business which had been concealed from the plaintiffs by Claude Cassegrain. Such dealings also related to costs incurred by the company in defence of the proceedings. Both were relevant matters in the oppression claim and were dealt with in my final judgment. The provisional liquidator gave evidence at the hearing before me. Thompson Eslick identified the particular items in the bill of costs which related to this objection. 36 Thompson Eslick disputed the submission made on behalf of Claude Cassegrain that following his consent on 16 December 2004 to the appointment of Mr Lord as liquidator, the only matter in issue was the question of costs and costs were unnecessarily incurred having regard to that remaining limited issue. Thompson Eslick rightly pointed out that the issue on the final hearing was whether or not Claude Cassegrain had engaged in oppressive conduct which would justify orders to be made against him personally to pay costs and to indemnify CTK for costs it had incurred in defence of the proceedings up to the appointment of the provisional liquidator. 37 Thompson Eslick made specific submissions in relation to costs incurred in dealing with a subpoena for production addressed to Clayton Utz concerning CTK's involvement in the managed investment scheme concerning OAL. They submitted that the costs were reasonably incurred and noted where the issue was dealt with in my judgment. They identified the particular items relating to attendances in connection with the subpoenas and submitted that the costs were reasonable having regard to the matters that needed to be attended to and having regard to the fact that the attendances included the review of documents produced. 38 Further submissions were made in respect of the additional objection to Mr Mauduit's fees. Thompson Eslick acknowledged that the claim was unusual and might be considered appropriate for reduction on assessment. They asked the costs assessor "to look at the matter practically and consider what would have been the costs of the Plaintiffs had an official interpreting service been retained in all those communications. We would submit that it is not inappropriate to allow some claim for payment towards Mr Mauduit's fees as claimed in his draft invoice." 39 Thompson Eslick advanced a number of reasons as to why they should receive their costs of preparing the bill of costs. They submitted that not much of the bill should be taxed off but in any event they submitted that no offer had been made by Claude Cassegrain to seek to resolve the claim. They submitted that the costs for preparing the bill and the assessment amounted in total to $8,563 which was not unreasonable. The costs of a costs consultant, D G Thompson, was claimed for separately. That firm of costs consultants spent four days reviewing the file and advising on the content of the bill. They submitted that the objections to the bill had been undertaken by attempting to reduce almost every item on the bill in the hope that some of them would be upheld, and, in doing so, Mr Patakas had made objections without considering what was reasonable in the context of actually what happened in the proceedings. 40 Thompson Eslick then made specific responses to the objections made to the disbursements. These occupied a further 23 pages. 41 On 14 February 2007, the costs assessor invited further submissions from the plaintiffs as to whether he should disallow the costs claimed in connection with the derivative action and the security for costs application. Those submissions were provided on 6 March 2007. It is unnecessary to consider the detail of those submissions except to note that in relation to the allocation of costs of the hearing before Windeyer J on 5 and 8 November 2006, Thompson Eslick submitted that no or very little reduction for costs associated with that hearing and its preparation related to the application for security for costs. At the same time, Thompson Eslick noted that, on their estimate, argument on the security for costs application accounted for possibly less than 10 to 15 percent of the whole hearing time. They submitted that in the absence of any application made either to Windeyer J, or later, to me, to have the costs of the hearing apportioned, there should be no apportionment of costs applying the principle that where there is a mixed outcome in proceedings, unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award costs to the successful party without attempting to differentiate between particular issues on which it was successful and those on which it failed. They submitted that on this principle there ought to be no reduction to the costs as claimed "other than those already identified in our response to the Costs Respondents' Objections". Costs Assessor's Determination 42 As noted above, the costs assessor assessed the plaintiffs' costs in the sum of $271,906.71 and assessed the costs up to and including 12 November 2004 in the sum of $162,452.27. The costs of the costs assessment were assessed in the sum of $11,491.57 including the sum of $2,719.07 being a proportion of the fee paid on the application and including the remuneration of the costs assessor. 43 The total amount of solicitors' costs allowed was $119,859.95 compared with the amount claimed in the bill of $147,423.65. In other words, the bill was reduced by $27,563.70. The total amount of disbursements allowed was $152,046.76 compared with the amount claimed of $229,428.52. In other words, disbursements were reduced by $77,381.76. 44 In his statement of reasons, the assessor stated (pages 2-3) that the documentation provided to him enabled him to confirm that the indemnity principle had not been breached. He said: " Section 353(1) of Legal Profession Act (the Act) addresses entitlement of a person to apply for assessment of party/party costs. Nowhere can there be found in that subsection any requirement for a bill of costs to be lodged with any application for assessment. I therefore used the bill of costs provided as a guide for the purposes of my coming to my own view of the work reasonable to be carried out and on that basis provide later in this Statement of Reasons for what work I thought was reasonable and how I carried out the costing of that work. ... The assessment system is not a taxation procedure and what I have to determine as required by the authority of Turner v Pride [1999] NSWSC 850 is a fair and reasonable amount for the costs of the Costs Applicants and whether or not I have a bill of costs, objections to items set forth in that bill of costs and responses to those objections. " 45 After describing some of the background to the proceedings including his acceptance that the litigation had been hard-fought and that the plaintiffs had had to seek out evidence of secret transactions involving a conflict between Claude Cassegrain and his duty to CTK and deliberate concealment of certain matters, the costs assessor said (page 4): " The Costs Respondents made what I might conveniently term general submissions and specific submissions. The general submissions were as follows:- 1. The senior solicitor and the paralegal attended all conferences together. 2. The senior solicitor and the paralegal claimed for work done and charged for by experienced Counsel. 3. Counsel was used and consulted extensively in almost every communication by Turks with the Defendants and in respect of the preparation and conduct of the case. 4. There were numerous and lengthy attendances by Turks on the Applicants' representative (their father) which were unnecessary and thus solicitor/client costs. I dealt with those submissions (taking into account the responses received) as follows:- 1. In the main I accepted this submission and reduced costs claimed accordingly where I thought that was appropriate. 2. In the main I rejected this submission. There were many instances where paralegal, senior solicitor and Counsel worked independently of each other. The main proceedings and interlocutory proceedings were pursued with diligence. 3. In the main I rejected this submission and again relied on what I have stated in 2 above. 4. In the main I rejected this submission. Overall I preferred the responses of the Costs Applicants to the submissions on behalf of the Costs Respondents except where I differed with regard to 1 above. " 46 Counsel for Claude Cassegrain submits that the use of the expression "in the main" means that it is impossible to determine in what respects the four identified submissions were accepted and in what respects they were rejected. 47 The costs assessor then dealt with 13 submissions under the headings set out earlier in these reasons. In most cases he rejected the submissions made on behalf of Claude Cassegrain and said that he preferred the submissions of the costs applicants on those issues. The exceptions were as follows. In relation to the translation costs, the assessor said that he had made a reduction to the claims of the fees incurred through the translator. This item concerns disbursements and in the section dealing with disbursements, the assessor said that he had allowed an amount of $18,530 in respect of items 155A and 155B of the table of disbursements. This was a reduction of $46,530 from the amounts in the draft accounts of Mr Mauduit which were included in the table of disbursements. 48 The item dealing with costs of senior counsel also concerned disbursements. The costs assessor said that he had made an appropriate reduction in the fees claimed on behalf of senior counsel where he thought there was some duplication because of the taking over of the brief from junior counsel and had also disallowed some costs for senior counsel concerning the security for costs application and the derivative action. These reductions are explicit in the costs assessor's later description of how the claims for the disbursements had been reduced or rejected. 49 In relation to the costs claimed in respect of the cross-claim for the derivative action and security for costs, the assessor said (pages 5-6): " 5. Cross Claim (Derivative Action) I have disallowed what I thought were the costs incurred in this regard and again considered an appropriate reduction of fees claimed by Counsel. I had regard to the authority of Prouse v State Rail Authority of NSW [2003] NSWSC 999. 6. Security for Costs I dealt with this particular aspect on the same basis as I dealt with the Cross Claim (5 above). " 50 The costs assessor did not say by what amount the bill of costs had been reduced in respect of these two claims except that it might be inferred from his earlier statement that "overall I preferred the responses of the costs applicants to the submission on behalf of the costs respondents except where I differed with regard to 1 above (the dual attendance of a senior solicitor and paralegal at conferences)", that the assessor adopted the submissions of Thompson Eslick quantifying the amounts claimed in the bill of costs relating to work done on the derivative application, cross-claim and the application for security for costs. In their submissions of 2 May 2006 they identified items of costs totalling $2,246 (plus GST) in connection with the derivative application and preparation of cross-claim and $2,834 (plus GST) in relation to the security for costs application. In their later submissions of 6 March 2007 they identified three additional items in relation to the filing and preparation of the derivative costs application totalling $144 plus GST. (In their submissions of 2 May 2006 they also identified disbursements totalling $623.80 which related to the security for costs application.) 51 The costs assessor reduced the rate of charge for the paralegal from $150 per hour to $120 per hour but otherwise did not adjust the rates charged either by the senior solicitor or by counsel. 52 In relation to the hearing before Windeyer J, the assessor said "I have addressed this particular aspect in dealing with 5 and 6 above". The assessor did not say expressly how he had dealt with this matter. However, there would be no reason to discriminate between the costs allowed for solicitors' attendance at the hearing before Windeyer J and the costs allowed for counsel. Mr Hollo of counsel appeared at the hearing before Windeyer J. The assessor reduced two of the disbursements for Mr Hollo for work done on 27 and 29 October 2004 by $1,232 which related to preparation including settling the cross-claim. There was no reduction of counsel's fees for appearances before Windeyer J on 5 and 8 November 2004. That fact, coupled with the observation which I have quoted as to the general preference for the submissions of the costs applicants (except in one respect) indicates that there was no reduction for the costs of the attendance of the solicitor or paralegal at the hearing before Windeyer J. 53 The assessor gave the following explanation for reductions made in respect of the bill of costs for solicitors costs (pages 8-9): " For the purposes of understanding reductions made by me to the costs claimed I costed the work as follows:- (i) the only hourly rate I reduced was the hourly rate of the paralegal which, as previously stated I allowed at $120.00 per hour overall rather than applying the increase sought to $150.00; (ii) I reduced claims for attendances at court to file documents to what I thought was an appropriate amount that would be charged by a law stationer to file documents on behalf of a law practice: (iii) as I have stated in dealing with general objection 1 I reduced where I thought it was appropriate claims for conferences attended by both the senior solicitor and the paralegal; (iv) I disallowed the costs claimed in respect of the derivative action and the security for costs application; (v) I disallowed claims for facsimile transmissions unless I though the material transmitted required to be sent as a matter of urgency and I disallowed claims for clerks to take material to and from Court by trolley; (vi) I reduced the claim at item 1275 which seemed to suggest application for assessment charge of $4,500.00 for six hours work at $150.00 an hour was claimed. With respect to this item I allowed 5 hours at $120.00 per hour; (vii) I disallowed claims for Loretta Dawson for perusing invoices and preparing cheques in payment of those invoices as I considered these claims to be of a solicitor/client nature; (viii) I reduced or disallowed disbursements in accordance with the information provided for the purposes of paragraph 128 of Legal Profession Regulation 2005 (the Regulation). " 54 These reasons may be contrasted with the earlier statement quoted in [44] above that the bill of costs was used as a guide for the purposes of the assessor coming to his own view of the work reasonably carried out and how he costed such work. It appears from the balance of the statement of reasons and in particular from the passage quoted above that the assessor proceeded by considering by reference to the bill of costs and the general nature of the proceedings what work was appropriate. He appears to have been generally satisfied that the work described in the bill of costs was appropriate work to be carried out but then made certain reductions for the reasons given. However, it is not possible, as it would be on a taxation of costs, to identify precisely how the figure of $119,859.95 (including GST) was arrived at as a fair and reasonable amount for the solicitors' costs. In some cases, it is possible by reference to the bill of costs to quantify the reductions, for example the effect of reducing the hourly rate for the paralegal work or the disallowance of claims made for Loretta Dawson and claims for clerks to take materials to and from court by trolley. In other cases, it is possible to put a maximum figure on the reductions, for example the claims for attendances at court to file documents or the claims made for facsimile transmissions. In the case of item 1275 the amount of the reduction appears from the reasons. 55 However, it is not possible by this process to ascertain all of the items in the bill of costs which were either rejected or reduced, or the amount of such individual reductions. Indeed, it appears from the analysis below that the bill of costs for solicitors' costs was reduced by more than the amount which would be expected from the assessor's reasons. The same is also true of the reduction in allowed disbursements. 56 In relation to disbursements, reg 128(1)(c) of the Legal Profession Regulation 2005 (NSW) requires the costs assessor to inform the parties of each disbursement varied by the determination. The assessor stated that (pages 9-10): " I varied disbursements claimed as follows:- (a) I rejected item 5; (b) I allowed in respect of the amounts claimed at items 15A and 17A a total amount of $2,000.00; (c) I reduced fees claimed for Mr White S.C. and particularly by reference to items 23, 24, 25, 27 and 28 by the total amount of $4,268.00 (including GST); (d) I reduced fees claimed on behalf of Mr Robert Beech-Jones for the same reasons and again with respect to disbursement items 60 and 61 by the amount of $1,650.00 (including GST); (e) I reduced fees claimed on behalf of Mr Robert Hollo with respect to items 50 and 52 by the amount of $1,232.00 (including GST); (f) I rejected the claim at item 110; (g) I rejected the claims at items 153, 154A and 154B; and (h) I allowed in respect of items 155A and 155B the amount of $18,530.00. " 57 I have prepared a table of the items which were rejected or varied and the amount of the reductions: Table of Rejected or Varied Disbursements Item Summary of Description of Item Amount Claimed ($) GST ($) Allowed ($) 5 Filing fee for Interlocutory Process 142.00 - - 15A John Atkinson claimed Expenses 1,534.25 153.43 2,000.00 17A Bruce Gardner claimed Expenses (conduct money) 4,518.55 451.86 (presumably + GST $200) 23, 24, 25 Senior Counsel preparation and conferences 4,330.00 433.00 2,200 (incl GST) 27, 28 Senior counsel conference settling cross-claim 1,550.00 155.00 - (see reasons p. 5) 60, 61 Counsel preparation and conferences 1,800.00 180.00 330.00 (incl GST) 50, 52 Counsel preparation and conferences and settling cross-claim 3,440.00 344.00 2,552.00 (incl GST) 110 Courier Charges 143.38 14.34 - 153 French legal opinion on enforcement of judgment 480.00 - - 154A 154B Interest on moneys borrowed to fund legal costs 14,262.00 - - 155A 155B Fees for Mr Mauduit 65,060.00 - $18,530.00 $97,260.18 $1,731.63 $25,812.00 Amount of reduction = $97,260.18 + $1,731.63 - $25,812.00 = $73,179.81 58 As can be seen from the above, the quantum of reductions of disbursements referred to in the quoted paragraphs totalled $73,179.81. The disbursements allowed of $152,046.76 was $77,381.76 less than the amount claimed in the amended table of disbursements. This discrepancy is in Claude Cassegrain's favour. 59 As noted above, the bill of costs for solicitors' costs was reduced by $27,563.70. It is possible to quantify, or to put a maximum limit, on the various reductions set out at pages 8-9 of the assessor's reasons (quoted at [53] above) by reference to the bill of costs. Set out below is a table quantifying, so far as possible, the reductions in paras (i)-(vii) of the assessor's reasons quoted at [53] above. Quantification of Reduction of Solicitors' Costs in Accordance with paras (i)-(vii) at pp 89 of Statement of Reasons: All figures are before GST (i) Paralegal hourly rate : $3,866.54 (ii) Attendances to file documents : Amount claimed was $597. It is unclear what the costs assessor considered would be the total of amounts which would be charged by a law stationer. (iii) Reduction for attendance by both senior solicitor and paralegal at conferences : the total amount claimed for attendances by solicitor at conferences and telephone conferences also attended by the paralegal was $8,677. The amount claimed for attendances by the paralegal at such conferences was $3,443.50. (iv) Costs claimed in respect of the derivative action : the amount of solicitors' costs identified in the plaintiffs' submissions to the assessor in respect of this matter was $2,246 in submissions of 2 May 2006, and a further $144 in submissions of 19 March 2007. They submit that in the objections of Claude Cassegrain another $599 was attributed to this heading. Claude Cassegrain submits that the solicitors' costs claimed in the bill of costs relating exclusively to this work totalled $3,813 and that a further $7,171.50 related partly to the application for security for costs, partly to the derivative action, and partly to the balance of the interlocutory application before Windeyer J. These costs related to preparation for the hearing before Windeyer J, attendances at directions hearings related to that hearing, and attendance at the hearing before Windeyer J. Claude Cassegrain submits that one-third of $7,171.50 should also be allocated to the derivative claim. (iva) Costs claimed in respect of the security for costs application : the amount of solicitors' costs identified in the plaintiffs' submissions to the assessor in respect of this matter was $2,834. The plaintiffs submit that in the objections of Claude Cassegrain another $1,396 was attributed to this heading. Claude Cassegrain submits that the solicitors' costs claimed in the bill of costs relating exclusively to this work totalled $5,717.50. He submits that part of further claims totalling $7,171.50 relates to this work. He submits that one-third of $7,171.50 should be allocated to the security for costs claim. (v) Non-urgent facsimile transmissions : the total claim for sending faxes was $1,341. It is not known what faxes were not considered to be urgent. (va) Clerks taking materials to court by trolley : the total amount claimed was $336. (vi) Reduction of item 1275 : $3,900. (vii) Loretta Dawson : $174. 60 It is evident that unless the costs assessor disallowed all of the claims for the solicitor to attend conferences and telephone conferences where such attendances were in the company of a paralegal (as distinct from disallowing the claims made for the attendance of the paralegal), the reduction of $27,563.70 would fully meet all of Claude Cassegrain's objections in respect of these identified headings, even assuming that two-thirds of that work for preparation for the hearing before Windeyer J, directions hearings associated with that hearing, and attendances at the hearing were disallowed. For the reasons in [52] it is unlikely that such costs were disallowed. 61 Subject to one possibility not adverted to by counsel for either party, either there were substantial reductions in respect of the matters in [2]-[4] on page 4 of the reasons (quoted at [45] above), notwithstanding the assessor's statement that in the main he had rejected those objections, or, there were further discrepancies or arithmetical errors in favour of Claude Cassegrain. It is impossible to identify how the figure of $119,859.95 (including GST) was arrived at. On the basis of the costs assessor's reasons, it appears to be too low. The qualification is that there may have been a substantial disallowance of the costs claimed for preparing the bill of costs, although no reasons for any such disallowance were given. Costs of the Costs Assessment 62 The costs assessor concluded that the plaintiffs should have the costs of the assessment. He said (at page 8): "I have accordingly allowed appropriate items in the actual bill of costs lodged and I have added a further $5,500 (including the $550 charged by D G Thompson Driscoll + Matters) for the preparation, filing and service of the responses." He later added (page 10): " I allowed for the preparation of the responses and provision of supporting documentation to me 15 hours at $330.00 per hour. I added to the amount thus calculated the fee of $550.00 charged by D G Thompson Driscoll + Matters to comment upon the responses provided. " 63 Section 368(3) provides that a certificate of the costs assessor's determination may not set out the costs of the costs assessment within the meaning of s 369. That fact plus the costs assessor's statement that he had allowed "appropriate items in the actual bill of costs lodged" in respect of the costs of the costs assessment indicates that the costs of preparation of the bill claimed in the bill of costs were to be included in the certificate of determination of the costs of the costs assessment and not in the certificate of determination of costs. 64 In their submissions of 2 May 2006, Thompson Eslick submitted that the costs relating to the preparation of the bill and the assessment which had been included in the bill of costs amounted to $8,563. That of course did not cover the cost of preparing responses to objections to the bill of costs which were allowed at $5,500. The amount allowed for the costs of the costs assessment was $11,491.57. This included $2,719.07 being a proportion of the fee paid for the application. It included $5,500 for the costs of preparing submissions in response to objections. It included $3,272.50 as the costs of the costs assessor. The sum of these three figures is $11,491.57. It follows that notwithstanding the assessor's statement that he had allowed appropriate items in the bill of costs as part of the costs of the costs assessment, no such amount was included. Senior counsel for the plaintiffs submitted that such costs were included in the sum of $119,859.95 allowed as solicitors' costs, but I doubt that is so in light of the statement quoted above. The exclusion of such costs may well explain the apparent discrepancy noted at [60] above. This appears to be an error in Claude Cassegrain's favour. 65 The assessor concluded that Claude Cassegrain should pay the costs of the assessment. He rejected the submission that there had been grossly excessive claims for costs. He took into account that no attempt had been made on behalf of Claude Cassegrain to negotiate costs issues. He was critical of the costs respondents' delay in providing submissions and objections. He took into account as a matter in the plaintiffs' favour that they had been prepared to make concessions in their responses with regard to the derivative action, the costs of the application for security for costs, the claim for interest charged on borrowings and Mr Mauduit's fees. He took into account that notwithstanding those concessions, no offer was then forthcoming from Claude Cassegrain in respect of costs in concluding that the plaintiffs should have the costs of the assessment. Application for Review to the Costs Review Panel 66 On 10 May 2007, Claude Cassegrain applied to have the determinations of the costs assessor reviewed by a costs review panel. The plaintiffs were joined as respondents to that application. CTK was not joined as a respondent. The grounds of the application included that the assessor had erred by failing to use the itemised bill of costs and notice of objection as the basis for his assessment of the work claimed and the reasonableness of the costs allowed. In the course of a seven-page submission, which was purportedly a statement of grounds for making the application for review, the solicitors for Claude Cassegrain submitted that by not identifying what sums had been claimed by the plaintiffs that had been disallowed by the assessor in relation to the derivative action, the application for security for costs and the 5 and 8 November 2004 hearing before Windeyer J, the assessor breached procedural fairness because Claude Cassegrain could not know what amounts had been allowed or disallowed. 67 Other grounds were also raised. It was contended for the first time that the claims for GST should have been rejected because GST was not payable as the plaintiffs were foreign residents and therefore the services rendered by the plaintiffs' solicitor were not taxable supplies. That argument had not been advanced to the costs assessor. 68 On 8 June 2007, the costs review panel upheld the assessor's determination. In relation to the complaint concerning the assessor's general approach to the assessment, the panel stated: " The Review Applicant asserts that the Assessment undertaken by the Assessor is flawed because of the failure of the Assessor to undertake a taxation, or a point-by-point reference to the Itemised Bill of Costs and the Itemised Objections. Determination : The Review Panel agrees with and adopts the reasoning process of the Assessor, and accordingly this ground is not made out. It is to be remembered that in Frumar v The Owners of Strata Plan 36957 (2006) NSWCA 278 at paragraph 62, the Court of Appeal expressly recognised the legitimacy of the approach adopted by the Assessor in the present application. " 69 In relation to the particular objections concerning the Dunn proceedings, translation costs and expenses, the derivative action, security for costs application, the hearing before Windeyer J, the dealings with the provisional liquidator after his appointment and the expenses claimed for Mr Mauduit, the panel adopted the reasons of the assessor. In relation to the claim for GST, the panel noted that the submission had not been relied upon previously. It determined that it was appropriate to allow GST because, if the matter was left as then asserted by Claude Cassegrain, a costs applicant could never recover his liability to pay GST. 70 It was submitted for the plaintiffs that the panel was in effect saying that as GST had been charged and paid and no objection had previously been taken, it would be unfair to the plaintiffs not to allow recovery of the GST paid. The panel did not say so in terms. 71 After the issue of GST was raised, Thompson Eslick reviewed their position in relation to GST. They accepted that because the plaintiffs were overseas residents, GST was not payable. In respect of the work for the legal services they performed, they remitted the GST which had been claimed and have acknowledged that this amount should not be included in the bill of costs. TurksLegal initially declined to remit GST until a tax ruling or court order was obtained indicating that GST was not chargeable. Thompson Eslick obtained a private ruling from the Australian Taxation Office which confirmed that GST was not payable. Subsequently TurksLegal have also remitted GST and it is now common ground that the charges for GST should not be included in the costs assessment. Appeal on Matters of Law 72 Mr Kidd, who appeared for Claude Cassegrain, identified the following alleged errors of law: (a) allowing recovery of GST for legal services provided to a non-resident client who was not conducting an enterprise in Australia within the meaning of A New Tax System (Goods and Services Tax) Act 1999 (Cth); (b) inadequacy of reasons of the costs assessor and of the costs review panel who adopted the costs assessor's reasons; (c) allowance for costs not properly the subject of the costs orders being the allowance of $18,530 for services provided by Mr Mauduit and costs of the security of costs application; and (d) ordering that Claude Cassegrain pay the costs of the costs assessment, notwithstanding that the costs assessment resulted in a reduction of almost 30 percent of the amount claimed. 73 Claude Cassegrain's primary position was that the Court should make an order granting leave pursuant to s 385(2) of the Legal Profession Act 2004 to appeal to the Court against the determination of the review application made by the panel. If leave were granted the appeal would not be confined to matters of law. Nonetheless, it is convenient to deal first with the appeal under s 384. GST 74 The plaintiffs now acknowledge that GST was not payable. The amount of GST on the costs and disbursements allowed by the assessor was calculated by Mr Thompson. There was no issue about his calculation. The amount of GST in the total professional costs allowed was $119,859 ÷ 11 = $10,896.27. Mr Thompson calculated that the professional costs allowed up to 12 November 2004 was $63,484, including GST of $5,771, and costs allowed after 12 November 2004 was $56,376 including GST of $5,125. This calculation was made by deduction after excluding the individual disbursements disallowed. Mr Thompson calculated that the GST on disbursements allowed up to 12 November 2004 was $7,942 and the GST on disbursements allowed after 12 November 2004 was $3,312. 75 However, it is not possible precisely to allocate GST to items of disbursements incurred before and after 12 November 2004, or to calculate precisely the amount of solicitors' professional costs allowed up to 12 November 2004, because of the discrepancy noted in [58] above. Mr Thompson attempted such an allocation, but his calculations did not reconcile the discrepancy. He took the disbursements incurred up to 12 November 2004 as shown on the table of disbursements deducting the particular items which were disallowed or reduced as set out in Mr Salier's reasons (a total of $91,026 exclusive of GST plus $7,942 for GST), and by deduction assumed that the total of disbursements allowed for the period after 12 November 2004 was the difference between that sum and the total allowed (inclusive of GST) of $152,046 (the difference being $53,078). That approach treats the unexplained reduction of disbursements of $4,201.95 as being applicable entirely to the period after 12 November 2004. The validity of the calculation of allowed solicitors' costs up to 12 November 2004 also depends on that assumption. Adequacy of Reasons 76 Save in relation to the GST issue, the costs review panel in substance adopted the reasons of the costs assessor. The panel rejected the asserted grounds for review being that the assessor had taken a wrong approach by failing to use the itemised bill of costs and itemised notice of objections as the basis for the assessment and thereby failed to take into account relevant considerations, and that the panel failed to provide reasons and details of what sums had been disallowed and thereby failed to provide procedural fairness. The panel contented itself with saying that it adopted and agreed with the reasons of the assessor and said that the assessor's approach was expressly permitted by Frumar v The Owners of Strata Plan 36957 ("Frumar") [2006] NSWCA 278; (2006) 67 NSWLR 321. Mr Kidd submitted that this was to misunderstand the decision and reasons in Frumar. 77 Section 370 of the Legal Profession Act 2004 provides: " 370 Reasons for determination (1) A costs assessor must ensure that a certificate issued under section 368 (Certificate as to determination) or 369 (Recovery of costs of costs assessment) that sets out his or her determination is accompanied by: (a) a statement of the reasons for the costs assessor's determination, and (b) such supplementary information as may be required by the regulations. (2) The statement of reasons must be given in accordance with the regulations. " 78 The relevant regulation for the costs assessor is reg 128. It provides: " 128 Certificate of determination of costs and statement of reasons—section 370 of the Act (1) A statement of reasons for a costs assessor's determination that is required by section 370 of the Act to accompany a certificate issued under section 368 or 369 of the Act must be accompanied by the following information: (a) the total amount of costs for providing legal services determined to be fair and reasonable, (b) the total amount of disbursements determined to be fair and reasonable, (c) each disbursement varied by the determination, (d) in respect of any disputed costs, an explanation of: (i) the basis on which the costs were assessed, and (ii) how the submissions made by the parties were dealt with, (e) if the costs assessor declines to assess a bill of costs—the basis for doing so, (f) a statement of any determination under section 363A of the Act that interest is not payable on the amount of the costs assessed or, if payable, of the rate of interest payable. (2) A statement of reasons to which this clause applies may be accompanied by such further information as the costs assessor concerned considers is necessary to clarify the determination of the application for a costs assessment. Note . Section 328 (9A) requires a costs assessor to also give reasons for his or her decision to set aside a costs agreement under subsection (1) of that section. " 79 The key requirement is that in respect of "any" disputed costs the assessor must provide an explanation of the basis on which the costs were assessed and how the submissions of the parties were dealt with. 80 Whilst the assessor is required to identify each disbursement varied by the determination, there is no express requirement that where the assessor proceeds by way of allowing, reducing or rejecting individual items of costs, that in respect of each item of disputed costs he or she explain the quantum of costs allowed or disallowed. 81 Of course, the regulation is not an exclusive statement of a costs assessor's obligation to give reasons. That is clear from s 370(1). The regulation prescribes such supplementary information as is required in addition to the provision of a statement of reasons for the determination. A statement of reasons must be sufficiently precise to give meaningful content to the rights of appeal (either as of right or by leave) in ss 384 and 385. 82 Section 380 requires that a costs review panel provide a statement of the reasons for the panel's determination and such supplementary information as may be required by the regulations. Regulation 134(1) required that the panel (in the circumstances of the present case) provide the same kinds of information as were required to be provided by the costs assessor under Regulation 128. Regulation 134(2) provided that: " 134 Statement of reasons—section 380 of the Act ... (2) A statement of reasons to which this clause applies may be accompanied by such further information as the panel concerned considers necessary to clarify the review of a costs assessor's determination. " 83 In Kennedy Miller Television Pty Ltd v Lancken (Supreme Court of NSW, Sperling J, 1 August 1997, unreported), Sperling J considered the cognate provisions of the Legal Profession Act 1987 (NSW) dealing with costs assessments. His Honour said (at 29-30): " In the case of a costs assessment, in the absence of reasons disclosing which items have been reduced, by what amount and for what reason or reasons in each case, an error of principle or a simple mistake (such as in arithmetic or looking at the wrong scale) or some other error of legal principle or of fact could go undetected and usually would. In the absence of reasons, the appeal rights provided by the statute would be ineffectual in the case of error of the most ordinary kind. It cannot have been intended by the parliament that an error of law or an error of fact affecting the result should pass without remedy under a scheme which provides for an appeal in relation to a matter of law and leave to appeal generally. I would hold, for this reason, that there is an implied statutory obligation on the part of a costs assessor to provide reasons such as I have mentioned." Later, his Honour said (at 34-36): "Because of the appeal provisions in the Legal Profession Act 1987, I hold that a costs assessor is bound to give reasons for his determination, specifying the items which have been reduced, by what amount and for what reason in each instance. ... In the ordinary course, the assessor would need to note against any item reduced the amount of the reduction or the reduced amount in order to be able to tally up the result. It would be easy enough to record the reason for the reduction in each instance at the same time. In each case, the reason must be readily to mind. Otherwise, the item would not have been reduced. In most instances, a word or two would suffice. A code could be devised for recurring reasons. I doubt that this would add much to the cost of the assessment. " 84 His Honour's judgment was upheld on appeal (Attorney-General of New South Wales v Kennedy Miller Television Pty Ltd (1998) 43 NSWLR 729). Priestley JA, with whom Handley and Powell JJA agreed, held that what Sperling J proposed as to the adequacy of reasons was workable. His Honour added that there was (at 737) "... scope for policy guidelines to become established governing the way in which reasons are provided." Subsequently, reg 128 was made. 85 In Frumar, the relevant legislation was s 208KG of the Legal Profession Act 1987 which required a determination of a costs assessment panel to be accompanied by "a statement of the reasons for the panel's determination". Regulation 68 was in materially the same terms as the current reg 134. In Frumar, a bill of costs was submitted for assessment claiming profit costs of $79,492.20. The costs assessor assessed profit costs at $65,000 and the panel on review assessed profit costs at $63,833. In his reasons, the costs assessor indicated that he had made an adjustment to professional costs where he considered that meetings of the respondent's legal team had led to charges that were on occasions not reasonable and that there were some excesses in relation to reporting to the client. He did not specify what items of such work claimed in the bill of costs were thought to have been unreasonably carried out. The costs assessor proceeded on a different basis. He assessed "an overall fee for professional costs" as $65,000 being about 215 hours at the partner's hourly rate. The panel endorsed the costs assessor's reasons but did not explain how it had arrived at the different figure of $63,833. 86 The Court of Appeal held that the reasons of the costs assessor and the panel were inadequate. This was an error of law (at 339 [85]; Campbelltown City Council v Vegan & Ors [2006] NSWCA 284; (2006) 67 NSWLR 372 at 399 [130]; Sasterawan v Morris [2008] NSWCA 70). Giles JA, with whom Beazley and Ipp JJA agreed, said (at 334-335): "[59] It can not be seen from the costs assessor's reasons what work in items in the bill of costs, being co-ordination work or reporting work or perhaps other work, was thought by the costs assessor to have been unreasonably carried out. Indeed, it does not seem that the costs assessor identified that work and, applying the hourly rates, deducted an amount from the profit costs, whilst inferentially accepting that the rest of the itemised legal services had been reasonably provided. Rather, he seems to have begun again with his own assessment of an overall fee based on what he considered was reasonable work to be carried out. Since his assessment was less than the $79,492.20 in the bill of costs, and in the light of what he said about coordination work and reporting work, he did not accept that the whole of the work in the bill of costs was reasonably carried out. But it can not be seen what work the costs assessor thought was or was not reasonable work to be carried out, including by way of coordination work and reporting work, or its relationship to the work in the items in the bill of costs. [60] The panel's reasons do not make good these difficulties in the costs assessor's reasons. They add to them. The panel endorsed the costs assessor's reasons as setting out the basis for his determination, and his approach of assessing the bill of costs 'as a whole' (under Ground 5), but in conducting its own assessment arrived at a relatively precise amount of $63,833 in lieu of the round figure. It can not be seen what work in the items in the bill of costs the panel thought was unreasonably carried out, or what work it thought was reasonable work to be carried out independently of the itemisation in the bill of costs and its relationship to the work in the items in the bill of costs. Maybe it accepted that the hourly rates were reasonable and applied them, but it did not say so: at least on the surface, in making its own assessment the panel could have applied different hourly rates. [61] The relatively precise amount suggests a calculation or an addition of items, but this is not explained. The assessment may or may not have been by adjustment of the bill of costs, but if it was the adjustments were not identified and if it was not there was no more than an end figure. The panel stated a figure as the result of its assessment and asserted that it was 'in all the circumstances' a fair and reasonable amount of costs, but the content can not be seen. [62] In my opinion, this fell short of providing a statement of reasons for the panel's determination as required by s 208KG of the Act, and fell short of providing the explanation required by reg 68(1)(d). If either the claimant or the opponent wished to appeal to the Supreme Court, he or it could not do so when he or it did not know: (a) whether the panel's assessment had been by taking the itemised bill of costs and allowing, disallowing or adjusting items, or by coming to its own view of work reasonable to be carried out; (b) if the former, what items had been allowed, disallowed or adjusted and whether as to hourly rate or reasonable times or for some other reason; or (c) if the latter, what work the panel thought reasonable and how it costed the carrying out of the work. [63] The claimant would need to know for appeal as to a matter of law pursuant to s 208L of the Act, but plainly also for appeal pursuant to s 208M. If the claimant had contemplated disputing the extent of unreasonable charging accepted by the costs assessor to have occurred in relation to coordination work and reporting work, how could he have done when he did not know what coordination work or reporting work had been excluded from the claim in the bill of costs, or what coordination work or reporting work the costs assessor had included in his own assessment as reasonable work to be carried out; or what the panel had done in these respects? How could he do so if he did not even know whether the panel had also accepted that there had been unreasonable charging in relation to coordination work and reporting work? The opponent also had an interest in the reasons, since it might have wanted to appeal against the cutting down of its costs, and it was equally in the dark. " 87 Later, his Honour quoted with apparent approval Sperling J's observation that an assessor should specify the items which have been reduced, by what amount and for what reason in each instance; whilst emphasising that each case must be considered on its own facts (at 336 [65]). 88 The present is not so extreme a case as was Frumar. It appears from the assessor's reasons at page 2 quoted in [44] above that he formed his own view of the work which was reasonable to be carried out and did so using the bill of costs as a guide. However, it appears from later in his reasons that he reached his ultimate assessment by making reductions to items claimed in the bill. One can identify from the assessor's reasons what hourly rates were considered to be reasonable and one can identify the kinds of work (classified by description, but without individual itemisation), where the charges claimed have been reduced. By recourse to the bill of costs and the parties' submissions, coupled with the assessor's statement as to the extent to which he preferred the submissions for the plaintiffs, one can identify the parameters of the reductions made. There remains uncertainty as to whether any reduction was made for the solicitors' costs on attendance at the hearings before Windeyer J. It is also not possible to say by what amounts there was a reduction from the costs claimed in respect of: (a) attendances to file documents; (b) attendances at conferences attended by the senior solicitor and the paralegal together; (c) the derivative action; (d) the security for costs application; (e) attendances to send non-urgent facsimile transmissions; and (f) preparation of the bill of costs. 89 It is also not clear whether any reduction was made in response to the objection to duplication of work between solicitors and counsel, excessive consultation with counsel and unnecessary attendances on the plaintiffs' father. The assessor said that "in the main" he rejected the submissions made on behalf of Claude Cassegrain in these respects. That implies that to some extent the submission was accepted. It is not possible to say how this was reflected in the costs allowed. 90 If the obligation to give reasons requires the specification of items which have been reduced, by what amount, and for what reason, in each instance (Kennedy Miller Television Pty Ltd v Lancken per Sperling J), then it is clear that the reasons were inadequate. Mr Beech-Jones SC for the plaintiffs submitted that it was never intended when the system of taxation of costs was replaced with a system of assessment that a costs assessor should act as a taxing officer upholding, reducing or rejecting individual items of bills of costs. So far as that submission goes, I agree with it. It was not necessary for the assessor to indicate by reference to each of the 1,313 items in the bill of costs which was accepted, which rejected and which varied, and in the latter case, by what amount. However, it was incumbent on the assessor to specify the amount of the reductions for the matters in [88] above, whether costs were reduced for attendances at the hearing before Windeyer J, and if so by what amount, and whether any, and if so what, costs were reduced by reference to the three submissions which were rejected only "in the main". By way of example, it would have been sufficient in my view for the costs assessor to say that instead of the amount claimed of $597 for attendances to file documents he allowed $200 (if that were the figure). It would have been sufficient for him to have said that he reduced the costs claimed by a particular amount where he considered there had been duplication in attendances of the senior solicitor and the paralegal at conferences. Likewise, it would have been sufficient to say that he reduced costs by a particular amount in respect of the derivative action or the security for costs application. Without such specificity neither Claude Cassegrain nor the plaintiffs can know how their submissions on these areas of disputed costs were ultimately dealt with (reg 128(1)(d)(ii)). 91 The costs assessor referred to Turner v Pride [1999] NSWSC 850. That case was a decision of Master Malpass (as his Honour then was). Apart from an observation (at [23]) that the assessment process replaced the taxation process which had involved an item by item consideration and that there would be cases where the assessment task could be properly performed using a global approach, that judgment does not bear upon the question of the adequacy of the assessor's reasons. In Frumar, Giles JA noted that that case provided no warrant for a panel (or assessor) making little more than a statement of the amount which was considered to be fair and reasonable (at [64], 335-336). 92 Both the costs assessor and the panel considered that the reasons were sufficient because in Frumar the Court of Appeal recognised the legitimacy of the approach of an assessor making his or her own assessment of what work was reasonable to be carried out without undertaking a taxation or a point-by-point analysis of an itemised bill of costs. However, in Frumar (at [62]), Giles JA emphasised that where an assessor proceeds by coming to his or her own view as to the work reasonable to be carried out, rather than by allowing, disallowing or adjusting items in an itemised bill of costs, it is necessary, in order that both parties be able to exercise rights of appeal, that they be informed what work the costs assessor thought to be reasonable and how he or she costed the carrying out of the work. The same applies to a panel. Where the costing of such work is made by reference to adjustments to items in a bill of costs, it is essential for the assessor or the panel to quantify the adjustments made in respect of costs that are disputed. That does not necessarily entail a line-by-line taxation of a bill. But it does require specification of what are disputed costs, for example, by reference to costs of a certain kind, and an explanation of what costs were allowed, or what was the amount of reduction from claimed costs, in respect of costs of that kind. In my view, the costs assessor's reasons and the panel's reasons for allowing solicitors' profit costs in the sum of $119,859.95 are inadequate. 93 The earlier analysis of the costs assessor's reasons indicates that the plaintiffs are more likely to have been disadvantaged by the insufficiency of reasons than is Claude Cassegrain. But there is no discretion to refuse appropriate relief once the error of law by insufficiency of reasons is demonstrated. Unless the Court can correct the error itself and determine the consequences which follow, the matter must be remitted to the panel. I consider this further below at [104]-[107]. 94 It was not submitted that the reasons for allowing or reducing items of disbursements, including counsel's fees, are inadequate. Mr Mauduit's Fees 95 It was submitted for Claude Cassegrain that the costs assessor erred in law in allowing $18,530 for Mr Mauduit's fees. It is clear that in allowing that sum, the costs assessor accepted the submission of Thompson Eslick on 2 May 2006 that his fees should be allowed at least to the extent that he provided translation services. Thompson Eslick submitted that at the hourly rate charged by a translation service in Australia called "Associated Translators and Linguists" such translation costs would in any event have exceeded $18,530. In other words, the figure was based upon the hours spent by Mr Mauduit applying what the costs assessor accepted would be an appropriate rate for translation services. 96 It was submitted that the costs assessor erred in allowing this amount because Thompson Eslick were not liable for those fees. Counsel submitted that as Mr Mauduit was not a "law practice" for the purposes of s 4 of the Act, and as he was not engaged by the plaintiffs' solicitors, it was not open to conclude that such amounts were "legal costs" for the purposes of the Act. This submission was based upon applying the definition of "legal costs" in s 4 of the Act to the expression "costs payable" in s 367A. In s 4, "legal costs" are defined to mean amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services including disbursements, but not including interest. However, in s 367A, the word "costs" includes "fees, charges, disbursements, expenses and remuneration" (definition of "costs" in s 302). Sections 352 and 353 deal with two types of assessment. Section 352 deals with an application by a law practice for an assessment of legal costs to which a bill relates. Section 353 deals with the right of a person who has paid or is liable to pay, or who is entitled to receive or who has received, costs as the result of an order for the payment of an unspecified amount of costs made by a court or a tribunal. In relation to an assessment of "costs" the relevant definition is that in s 302. Hence Mr Mauduit's fees could be the subject of a costs assessment notwithstanding that he was not a law practice and that his fees were not a disbursement incurred by the firm of solicitors acting for the plaintiffs. It is sufficient that they were fees, charges, disbursements, expenses or remuneration for which the plaintiffs were liable. 97 It was submitted for Claude Cassegrain that no-one was liable to pay any part of Mr Mauduit's costs and that it ought to have been found that his costs would only be paid if, and to the extent that, the costs assessor made an allowance for it. I understood this submission to be that allowing fees for Mr Mauduit was contrary to the "indemnity principle" that a person ordered to pay costs of proceedings is only liable to pay such costs for which the plaintiff is liable (Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495 at 498, 499, 505; Latoudis v Casey (1990) 170 CLR 534 at 543, 563; Cachia v Hanes (1993) 179 CLR 403 at 410; Oshlack v Richmond River Council (1998) 193 CLR 72 at 97, 121; Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 at 219; Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474 at 486-487 [45]-[50], 510-512 [159]-[166]). 98 The costs assessor concluded that the indemnity principle had not been breached (page 2). It has not been demonstrated that he erred in so finding. The plaintiffs, through their solicitor, acknowledge a liability for Mr Mauduit's fees in excess of whatever would be allowed on assessment. It was not submitted that the previous practice whereby taxing officers required proof of payment before disbursements were allowed is applicable to costs assessments under Pt 3.2 of the Legal Profession Act 2004. Costs of the Costs Assessment 99 But for my conclusion that the assessor and the panel made errors of law by failing to provide adequate reasons for the assessment of the bill of costs, I would not have interfered with the determination that Claude Cassegrain pay the costs of the costs assessment. The applicable regulation was reg 126. It provides: " 126 Determination of costs of party/party costs assessment – section 369(3)(b) of the Act In determining under section 369(3)(b) of the Act by whom and to what extent the costs of the assessment of party/party costs are to be paid, the costs assessor may have regard to the following: (a) the extent to which the determination of the amount of fair and reasonable party/party costs differs from the amount of those costs claimed in the application for assessment, (b) whether or not, in the opinion of the costs assessor, either or both of the parties to the application made a genuine attempt to agree on the amount of the fair and reasonable costs concerned, (c) whether or not, in the opinion of the costs assessor, a party to the application unnecessarily delayed the determination of the application for assessment. " 100 The costs assessor was not bound to reject the plaintiffs' claim for costs of the assessment, or to give the costs of the assessment to Claude Cassegrain, because the bill was reduced by almost 30 percent. There was no error in referring to the concessions made on behalf of the plaintiffs. I understand that part of the assessor's reasons to mean that the assessor considered the plaintiffs' costs application to have been reasonable and for them to have acted reasonably in responding to the objections made to it. Those are proper matters to be taken into account. The absence of a settlement offer and the delays in the provision of the submissions and objections were clearly relevant matters. 101 Section 369(3)(c) of the Act was not in force at the time of the assessor's decision. It provides that where costs are reduced by 15 percent or more on assessment, the costs of the costs assessment are payable by the law practice that provided the legal services concerned or, if the costs assessor so determines, by such persons and to such extent as may be determined by the costs assessor. At the time of the costs assessor's determination, there was not a prima facie rule that if costs were reduced by 15 percent or more, the costs of the costs assessment should be payable by the law practice concerned. That was not a matter which the assessor was obliged to take into account. Indeed, I do not consider that he would have been entitled to apply any such principle as a prima facie rule, as distinct from having regard to the extent to which his determination differed from the amount of the costs claimed. 102 I refer to this matter again in relation to the application for leave to appeal (see [128] below). It is enough to say that by itself there was no error of law in awarding the plaintiffs the costs of the costs assessment. 103 However, because the consequence of the error of law under s 384 will be that the application to the costs review panel to review the bill of costs will be remitted to the panel for redetermination, it will also be necessary to remit the application to review the determination of costs of the costs assessment. That is to say, if on redetermination the panel comes to a different outcome more favourable to Claude Cassegrain, that could affect the discretion in relation to the costs of the costs assessment. Consequence of Upholding Appeal under s 384 104 Where the panel's decision has not been upheld, s 384(2) empowers the court either to make such determination in relation to the application as in its opinion should have been made by the panel, or remit its decision "on the question" to the panel and order the panel to redetermine the application. The question is "the question the subject of the appeal". The question the subject of the appeal is whether the panel erred in deciding a matter of law arising in the proceedings for review of the costs determination. The panel erred by allowing the charges for GST, by failing to provide sufficient reasons for their decision upholding the costs assessment and in failing to hold that the reasons of the costs assessor were inadequate. 105 Without conducting a merits review based on the papers before the panel, I am unable to say what determination should have been made by the panel after concluding that the costs assessor's reasons were inadequate and that GST should not have been allowed. The panel can use its own knowledge and experience to determine such matters, whereas I would need evidence. Unlike s 385, s 384 does not contemplate the adducing of fresh evidence before the court if the court proceeds under s 384(2) to make such determination as in its opinion should have been made by the panel. Where the error of law is a failure to give adequate reasons and a failure to recognise the inadequacy of the costs assessor's reasons, it would be a rare case where the court could make its own determination of how the application to the panel should have been decided. 106 The inadequacy of reasons of the costs assessor and the panel did not extend to the entirety of the bill of costs. For example, no additional reasons were required in respect of the acceptance of the hourly rate charged by the senior solicitor. Nonetheless, it would not be practicable to remit for redetermination distinct parts of the bill of costs identified in [57] above, even if there were power to do so. It is not known to what extent the costs assessor, and on review, the panel, accepted the submissions that costs were claimed for work done by the solicitor and the paralegal which duplicated the work of counsel or that counsel was used excessively. 107 In any event, s 384(2) does not contemplate that if the appeal on a matter of law is upheld the Court may determine one part of the application for a costs assessment according to its opinion as to how it should have been determined by the panel, and also order the panel (or the costs assessor) to redetermine other part or parts of the application. Where the Court's decision is remitted to the panel, s 384(2)(b) provides for the Court to order the panel to "re-determine the application", that is, the application to review the costs assessor's determination. Even though there was no error of law of the kind alleged by Claude Cassegrain in the allowance of disbursements, except for GST, it is not possible to enter judgment for the amount of disbursements as found by the costs assessor less the correction to be made in respect of GST, and to remit the balance of the application to the panel. 108 Accordingly, as in Frumar, it is appropriate to remit the matter to the panel to redetermine the application for review of the costs assessor's determination. Pursuant to s 384(3) fresh evidence may be received on the redetermination of the application. That is so notwithstanding that on the original application such evidence would not be receivable unless the panel determined otherwise (s 375(3)). On such a redetermination the panel could affirm the costs assessor's determination, or reduce or increase the determination, but must give adequate reasons. If the assessment is again upheld without variation the panel will need to explain the apparent discrepancies in the total amount allowed for disbursements and the individual items of disbursements disallowed to permit a calculation of the effect of deducting charges for GST on the costs and disbursements allowed for pre and post 12 November 2004 work. Of course the panel might amend its determination in respect of disbursements, but it will in any event be necessary for it to re-assess costs and disbursements, excluding GST, for work done up to 12 November 2004 and work done thereafter. Application for Leave to Appeal 109 Section 385 of the Act provides: " 385 Appeal against decision of costs assessor by leave (1) A party to an application for a costs assessment relating to a bill 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 for a costs assessment 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. " 110 In Chapman's Ltd v Yandell [1999] NSWCA 361, Fitzgerald JA, with whom Mason P and Davies AJA agreed, said of the predecessor provision (s 208M of the Legal Profession Act 1987) (at [11] and [12]): " On the other hand, it is important to keep in mind the purpose of a requirement of leave to appeal. It is intended to act as a filter to ensure that unsuitable appellant proceedings which are not able to be brought with the 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 for example Coulter v Regina (1988) 166 CLR 350 about 359. It is also in my opinion important to keep in mind that s208M must be considered in the context of s208L, which restricts an appeal as of right to matters of law. In considering whether or not leave to appeal is granted, it must be decided whether or not, there not being a matter of law arising in the proceeding and there being an appeal as of right only as to a matter of law, there is some other matter which in justice requires that leave to appeal be granted to allow that matter to be relitigated. The party seeking leave to appeal obviously bears the burden of establishing that justice does require that leave to appeal be granted. Further, the master when considering whether to grant leave to appeal obviously has a very wide discretion: see CDJ v VAJ [1998] HCA 67 per McHugh, Gummow and Callinan, JJ. " 111 In Wentworth v Rogers, Santow JA (at 491 [65]) warned that the costs assessment process would become trammelled by unnecessary litigation if leave to appeal were allowed too readily. Basten JA said that to require an applicant for leave to establish an obvious error on the face of the record and substantial injustice if the determination were allowed to stand would be too inflexible and restrictive a test (at 517-518 [194]-[195]). The question whether leave should be given should be approached on the broad basis of whether or not justice so requires (Chapman's Ltd v Yandell at [12]; Wentworth v Rogers at 519 [202]). The amended summons identifies the following grounds of appeal under s 385 if leave to appeal is given. Apart from the mere assertion of error, those grounds were: (a) the panel erred by not determining that the costs assessor improperly exercised his discretion pursuant to s 369(2) and (2A) in awarding costs of the assessment against Claude Cassegrain notwithstanding his acceptance of more than $100,000 of Claude Cassegrain's objections and the disallowance of more than 25 percent of the costs sought by the plaintiffs in the costs assessment application; (b) the panel erred in not permitting Claude Cassegrain to file written submissions in support of the review application and by failing to determine in accordance with his objections on the costs assessment application that the costs claimed were unfair and unreasonable or were not properly costs which formed part of the costs orders; (c) the panel ought to have determined that certain of the costs allowed by the costs assessor as party/party costs were solicitor and client costs; (d) the panel ought to have determined that certain costs allowed by the costs assessor as fair and reasonable were not fair and reasonable according to the criteria in s 363 of the Act; (e) the panel erred in not upholding the complaint that the costs assessor had failed to provide an itemised particularisation of the amounts allowed and disallowed; and (f) the panel erred in determining that the costs assessor had provided adequate reasons and details of sums allowed and disallowed. 112 The last two points raise matters of law on which an appeal lies as of right under s 384. I see no reason to grant leave to appeal in respect of the same matters under s 385 with the result that there would be an appeal by way of new hearing and fresh evidence to the Court rather than a remittal of the decision to the panel. The panel is better equipped than is the court to reassess the bill of costs. 113 Although it was submitted for Claude Cassegrain in the statement filed under r 50.12(4) that leave should be given because the questions raised by the grounds of appeal were not purely factual and were not an attempt to ask the Court to "re-exercise purely administrative discretions", I think in substance the remaining grounds of appeal do invite the Court to reconsider the merits of the costs assessor's judgment as to the appropriateness of the rates charged by solicitor and counsel and the appropriateness of the work done. That is not necessarily a bar to the grant of leave. If it appeared from a review of the material before the assessor that there were arguable grounds of error such that justice required a review by the court of the assessor's and the panel's decision on matters of either fact or law, then I would be minded to grant leave. 114 In my view, Claude Cassegrain has no proper ground for complaint, except in relation to the inadequacy of reasons and the allowance of GST. Indeed, in one respect, namely not allowing any costs in respect of the proposed derivative action, I consider the costs assessor ought to have allowed whatever he considered to be appropriate costs in respect of that matter. I will deal briefly with the various grounds as they were put to the assessor using the same headings as appear in the assessor's reasons. Dunn Proceedings 115 The plaintiffs' solicitors were entitled and required to investigate the Dunn proceedings. The fact that the parties had accepted the facts stated in the judgment of Barrett J and that I relied upon the facts as stated by his Honour, does not mean that the plaintiffs could assume that in the proceedings before me the defendants would accept those findings of fact. Translation Costs 116 The argument advanced for Claude Cassegrain for disallowance of $18,530 for Mr Mauduit's fees has no reasonable prospects of success. It was plainly open to the assessor to consider that the costs of explaining in French to the French plaintiffs the various steps in the Australian legal process were reasonably incurred and I see no reason to doubt that the amount allowed was reasonable. Alleged Conflict of Interest by Solicitors 117 The objection that the claims made by the plaintiffs' solicitors that the defendants' solicitors had a conflict of interest were not acted on in the proceedings, and that the costs in connection with those matters ought not be allowed, was erroneous. A significant part of the oppression found in the proceedings was that Claude Cassegrain caused CTK to spend its funds on defending the plaintiffs' claims. That formed the basis for the order that he indemnify the company in respect of the costs it incurred and for which it was liable up to the appointment of the provisional liquidator. Retainer of Senior Counsel 118 The assessor made what he considered to be the appropriate reduction for fees where senior counsel took over a brief from junior counsel. I see no arguable ground of error. Cross-Claim (Derivative Action) 119 The assessor disallowed what he considered were the costs incurred in respect of the derivative action both for solicitors and counsel. He said that in reaching that conclusion, he had regard to Prouse v State Rail Authority of NSW [2003] NSWSC 999. There, Grove J said (at [15]): "... it is conventional to indicate when making an order for costs at the conclusion of litigation to indicate whether such an order includes or excludes costs of interlocutory applications and/or costs earlier reserved. " 120 A general order for costs does not include reserved costs unless they are specifically dealt with (New South Wales Bar Association v Stevens [2005] NSWCA 351). However the costs in respect of the interlocutory process for leave to bring the derivative action were not reserved. Nor was the application dismissed with no order as to costs. As Mr Thompson submitted to the assessor, the claim was dismissed because it had become unnecessary to pursue the application following the making of the order for winding up. The interlocutory process was an incidental part of the proceedings. Part 52A r 16 of the Supreme Court Rules provided that: " Subject to this Part the costs of any application or other step in any proceedings shall, unless the Court otherwise orders, be paid and otherwise dealt with in accordance with the provisions of this Part or the provisions of any order relating to the general costs of the proceedings. " 121 There were no relevant "provisions of this Part" relating to the costs of the dismissed application for leave to bring the derivative action. Part 52A r21 dealt with discontinued applications. Part 52A r 23 dealt with the dismissal of claims under Pt 32A r 2(1) or Pt 34 r 6A or Pt 34 r 7. The application was not discontinued. Nor was it dismissed under any of those rules. There was no order that such costs be dealt with otherwise than under the rule. Accordingly the costs in respect of the application fell to be dealt with under the provision of the order relating to the general costs of the proceedings. In the absence of an order that the application was dismissed with no order as to costs, the costs of the application were costs in the proceedings. Had an application been made in relation to such costs, I would have ordered that they be costs in the proceedings. It was not necessary to do so having regard to the terms of Pt 52A r 16. The costs assessor ought not to have disallowed the costs in respect of the derivative action unless he considered particular items were not fairly or reasonably incurred. This was an error in Claude Cassegrain's favour. The plaintiffs do not appeal from the disallowance of such items as raising matters of law under s 384, although they will be entitled to have the panel reconsider that matter in consequence of the remittal of this decision and the order that the panel redetermine the application. Security for Costs 122 The assessor disallowed what he considered to be the disbursements claimed (including counsel's fees) in respect of the application for security for costs. I see no arguable error in the allowance and disallowance of disbursements. As noted previously I cannot be sure what was disallowed for solicitors' costs, and this an error of law. Rates of Charge 123 The assessor concluded that he did not consider that the rates charged by counsel or Mr Thompson were excessive. I see no error in that conclusion. It is to be borne in mind that the matter was sufficiently complex that the defendants up to the appointment of the provisional liquidator, and thereafter Claude Cassegrain, retained senior counsel. Clearly the appointment of experienced junior counsel was appropriate, as was the use of the services of a senior solicitor. 5 and 8 November 2004 Hearing – before Windeyer J 124 The assessor did not make any reduction in relation to counsel's fees allowed at the hearing before Windeyer J. The objection by Claude Cassegrain that only one-third of the costs of the hearing should be allowed because there were three interlocutory processes before his Honour has no reasonable prospects of success. The substantive application dealt with by his Honour was for the appointment of a provisional liquidator. A small amount of time was spent on the application for security for costs. Prima facie, this would warrant a reduction in the costs allowed for the plaintiffs' counsel of 10 to 15 percent as originally submitted for the plaintiff. If there was an error in the allowance of counsel's fees it was an error of only a few hundred dollars at most. Having regard to the errors in Claude Cassegrain's favour, such an error would not warrant the grant of leave. 125 In any event, it would be arguable for the plaintiffs that all of counsel's fees should be allowed because the fees of that amount for junior counsel were reasonable to deal with the application for the appointment of the provisional liquidator. In other words, it would be arguable for the plaintiffs that the same quantum of fees would have been reasonably incurred had the only application been for the appointment of the provisional liquidator and therefore all of the fees should be allowed without apportionment. It is likely that there was no reduction for solicitors' costs for the attendance at the hearing before Windeyer J. The same reasoning applies to the assumed allowance of solicitors' costs in their entirety. It would not be just to grant leave to appeal to allow such a matter to be argued having regard to the small amount at stake and the errors in Claude Cassegrain's favour. Remaining Grounds 126 The remaining grounds (apart from Mr Mauduit's fees which have already been dealt with) do not appear to concern the claim for disbursements as distinct from solicitors' costs. In my view, the assessor was correct in rejecting the objections under these headings for the reasons advanced by the plaintiffs' solicitors and adopted by the assessor and the panel. 127 Accordingly, I do not consider that an appeal against the allowance of disbursements would stand any realistic prospects of success except possibly in one respect where the amount at stake is not such as would warrant the grant of leave in the circumstances. Nor do I think it likely that an appeal on the merits in respect of the allowance of solicitors' costs would have realistic prospects of success, although the assessment here is more difficult due to the inadequacy of the assessor's and the panel's reasons. In view of the appeal under s 384 there is no occasion to grant leave. 128 With respect to the ground of appeal concerning the awarding of costs of the costs assessment, for the reasons I have already given, I do not consider that the appeal against the exercise of the discretion under s 369 is seriously arguable. Indeed, on reviewing the papers, I think the exercise of discretion was right. Whilst it is true that a substantial amount was deducted from the bill and the disbursements, the costs of considering the bills and the submissions of the parties in relation to those matters would be comparatively slight compared with the costs of responding to the multifarious objections which failed. The extent to which the bill is reduced was only one factor to be considered, and even after the amendment to s 369(3) it is not a determinative consideration. Procedural Fairness Before the Panel 129 No submissions were advanced in support of the ground of appeal that there had been a denial of procedural fairness before the panel because no submissions were invited or allowed (beyond the submissions contained in the application for review). The prima facie position under s 375(3) is that the review will be carried out on the papers. I do not consider that this ground has reasonable prospects of success. Conclusion on Application for Leave to Appeal 130 For all of these reasons, the only grounds upon which I consider leave to appeal might be given would be in respect of GST and in respect of the failure to provide adequate reasons in relation to the allowance and disallowance of solicitors' costs. An appeal lies as of right in relation to those errors. Consistently with the reasoning in Chapman's Ltd v Yandell at [12], I do not consider that the errors of law are such as warrant the grant of leave to appeal under s 385. Position of the Costs Review Panel 131 On 19 March 2008, I gave leave to the plaintiff in the common law proceedings to file an amended summons. The amended summons added the members of the costs review panel and CTK as defendants to those proceedings. On the return of the amended summons on 2 April 2008, Mr Musico, solicitor, appeared for the costs review panel and submitted that the panel ought not to have been joined as a party. He referred in particular to s 387 which provides that "A costs assessor can be made a party to any appeal against a determination or decision of the costs assessor only by the Supreme Court." By virtue of s 382(1) that section applies in relation to a decision or determination of a panel as if references to a costs assessor were references to the panel. Mr Musico referred to a number of decisions which touched on s 208NA of the Legal Profession Act 1987, the predecessor to s 387. The relevant authority is Lyons v Wende [2007] NSWSC 100 where Cooper AJ said: " In their notices of motion the defendants seek an order that the Assessor and members of the Cost Review Panel be joined as defendants, or as parties to this matter before the Court. Section 208NA provides that a cost assessor can be made a party to any appeal against a determination or decision of the costs assessor only by order of the Supreme Court. It seems to be common ground, and I accept that there is no reason in this case to join them as parties to this particular appeal. It is normal to join a tribunal appealed from where the application is in the nature of a prerogative writ. This is not such a case. Here the application is a straight forward [sic] appeal, either under s 208L or s 208M of the Legal Profession Act 1987. Furthermore, this is not a case where any order is sought to be made against the Cost Assessor or members of the Review Panel in their personal right. In such a case it would be necessary to join them, to give them an opportunity to be heard on the orders which should or should not made against them. Here, the claim is that the Assessor and the members of the cost [sic] Review Panel have either made an error of law and/or an error of fact, so that leave should be granted under s 208M of the Act. There is certainly no allegation of impropriety on the part of the Assessor or members of the Review Panel nor are there any orders sought to be made against them. In these circumstances I decline to order that the Assessor or members of the Review Panel be joined as parties to this action. " 132 I do not understand his Honour to be saying that in no case of an appeal under s 208L, or for leave to appeal or appeal under s 208M, (or ss 384 or 385 of the current Act), should the members of the panel be made a party to the proceedings. They can only be made parties by an order of the court. Whether it is appropriate that they be joined will depend upon the relief sought or the relief which the court considers may be granted. If that relief includes remitting the decision to the costs assessor or the panel, then, in my view, the costs assessor or the panel, as the case might be, should be joined as a party to the appeal. In Campbelltown City Council v Vegan, Basten JA, with whom Handley JA generally agreed and McColl JA agreed, said (at 382 [55]): " In proceedings to review the decision of an inferior tribunal, absent some statutory provision to the contrary, it will usually be necessary to join the tribunal: see SAAP v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 79 ALJR 1009 at 1018 [43], 1027 [91], 1037 [153], 1041 [180]. The appropriateness of that course, particularly where an order is sought requiring further steps to be taken by the inferior tribunal, is self-evident: unless joined, the tribunal will not be bound by the order. On the other hand, it is not necessarily appropriate to name the members of the tribunal: see Re Ruddock; Ex parte Reyes (2000) 75 ALJR 465 at 468 [25] (McHugh J). It will usually be preferable to identify the tribunal by its official designation, so that persons who may constitute the tribunal if it is reconstituted will be bound. However, where the tribunal is an ad hoc body, appointed by an official as occasion arises, a different course may be appropriate. Whether the particular Panel still exists is not known. It would not be appropriate to order them to take particular steps: cf, in a case of prohibition, Clifford and Sullivan [1921] 2 AC 570 at 584. The Registrar was not joined in this Court, but should have been because, if the appeal is allowed, an order should be made directing the Registrar to take appropriate steps. " 133 Mr Musico submitted that s 387 was a statutory provision to the contrary. I do not agree. The fact that the Act contemplates that the court may order that the costs assessor or panel be made a party to the appeal suggests that if relief is sought requiring further steps to be taken by the costs assessor or panel the power under s 387 would be exercised. In the case of an application for leave under s 385, if the application for leave is dealt with separately and in advance of any appeal under the section, presumably the costs assessor or panel would only be joined if the court granted leave. 134 Accordingly, I refuse the application of the third defendants (the members of the costs review panel), that the summons against them be set aside. The third defendants entered a submitting appearance. 135 There remains the question as to whether the application for review of the costs assessor's determination should be remitted to the panel as previously constituted or whether the Court could make an order requiring the reconstitution of the panel with different costs assessors. In Frumar, Giles JA noted (at 340 [87]) that it was unclear under s 208L whether remission to the panel was to the panel as previously constituted. His Honour did not need to decide that matter as he saw no reason for intervention in the constitution of the panel undertaking the redetermination. There, the matter was remitted because the panel had failed to provide adequate reasons for its decision. 136 The circumstances in the present case are similar. I see no reason to intervene in the constitution of the panel and it is therefore unnecessary to consider whether there would be power to make a different order, and if so, whether the Manager, Costs Assessment would need to be joined as a party. Position of CTK 137 On 10 October 2007, Thompson Eslick forwarded a sealed copy of the costs orders entered on 12 July 2007 to the liquidator of CTK. They demanded payment of $173,943.84 being the sum of the costs ordered to be paid by the first defendant in orders 1 and 4. 138 On 10 December 2007, the liquidator forwarded payment of $158,130.76 representing the amount demanded less one-eleventh which was withheld in respect of goods and services tax pending the obtaining of a tax ruling. The moneys were deposited into the trust account of Thompson Eslick on that firm's undertaking that the moneys would not be disbursed until an interest bearing account was set up and agreement was reached with the liquidator as to the basis upon which the moneys were to remain in the account pending finalisation of Claude Cassegrain's appeal. 139 On 17 January 2008, the liquidator made demand on Mr Cassegrain for the sum of $158,130.76 pursuant to the order that he indemnify CTK against the costs payable by CTK to the plaintiffs. 140 CTK had not applied to the panel for review of the costs assessor's determination. Nor was it joined by Claude Cassegrain as a party to that application. It was submitted on behalf of CTK that there was judgment for costs against it which it does not seek to set aside and that it is entitled to be indemnified in respect of that judgment by Claude Cassegrain. 141 It does not appear that any further agreement has been reached between CTK and the plaintiffs as to the basis upon which those moneys would remain in the account pending finalisation of the appeal. 142 I do not agree with the contention advanced on behalf of CTK that because it was not a party to the proceedings before the panel, Claude Cassegrain would be liable to indemnify it in respect of the judgments entered against it irrespective of any success he might have on a redetermination of costs. In his assessment of party/party costs of the proceedings (as distinct from the costs of the costs assessment) the costs assessor issued a single certificate determining what were fair and reasonable amounts of costs to be paid to the plaintiffs in respect of the proceedings as a whole and in respect of the proceedings up to and including 12 November 2004. That was in accordance with the application made by the plaintiffs and followed from the terms of the orders of 26 May 2005. The assessor determined both matters. Claude Cassegrain's application for a review was for the review of both determinations. CTK ought to have been joined as a review respondent. The liquidator was aware that an application for review of the costs assessment had been made to the panel. It would have been open to him to have sought to be joined as a party. In the event, the panel did not call for submissions from any party before making their decision. The effect of the Manager, Costs Assessments' referring the determination of the costs assessor to the panel for review was to suspend the operation of the costs assessor's determination (s 377). The determination of the panel relevantly was: " 1. The review is determined by affirming the certificate of determination of Costs Assessor Gordon A Salier AM issued on 10th April 2007. 2. The amount determined as a fair and reasonable amount of costs to be paid to the Review Applicant is $271,906.71. " 143 The effect of the first paragraph of the determination was to affirm both the total amount of costs assessed and the assessment of costs of the proceedings up to and including 12 November 2004. The remittance of the application to the panel will require the setting aside of the first order entered on 20 July 2007 as well as the second and fourth orders. I take it that that judgment was entered pursuant to s 368(5), namely, by the filing of the certificate of determination of the costs assessor (the Act does not provide for the entry of judgment on a certificate of a panel affirming a costs assessment). However, as the application to review the costs assessor's determination must be remitted to the panel, the judgment will be set aside. CTK should be a party to the redetermination. 144 Counsel for CTK was ambivalent when asked whether the payment made by CTK was unconditional. The evidence has not suggested that it was unconditional. However, it is unnecessary to determine that matter. Even if, as between the plaintiffs and CTK, the plaintiffs are entitled to keep the payment made (and are not entitled to recover any additional sum if the redetermination increases the costs allowed), it does not follow that that sum would be the proper amount for which Claude Cassegrain is required to indemnify CTK if a different sum is ultimately entered as judgment for the costs CTK is required to pay up to and including 12 November 2004. 145 On a redetermination of the application the panel might increase the determination of the amount of costs recoverable up to 12 November 2004. Unless the liquidator and the plaintiffs have unconditionally agreed on the amount of $158,130.76 as the amount of costs payable under order 1 made on 26 May 2005, CTK would be liable to the plaintiffs and would be entitled to an indemnity in respect of such an increased amount. The evidence before me did not demonstrate that such an unconditional agreement had been reached. Orders 146 For these reasons, I make the following orders in proceedings 14024/07: 1. Order that the application pursuant to s 385 of the Legal Profession Act 2004 for leave to appeal against the determination by the third defendants of the application made by the plaintiff to the third defendants for review of the determinations of the costs assessor, being assessment 48/2006, be dismissed. 2. Order that the appeal pursuant to s 384 of the Legal Profession Act 2004 against the decision of the third defendants in respect of the said application be allowed. 3. Remit this decision to the third defendants. 4. Order that the third defendants redetermine the application. 147 In proceedings 4277/04 I order that the orders 1, 2 and 4 made and entered on 20 July 2007 be set aside. 148 I will hear the parties on costs. ****** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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