New South Wales Supreme Court CITATION : Scope Data Systems Pty Ltd v David Goman rep Partnership BDO Nelson Parkhill [2008] NSWSC 42 HEARING DATE(S) : 31 January 2008 JUDGMENT DATE : 13 February 2008 JUDGMENT OF : Malpass AsJ DECISION : Proceedings dismissed plaintiff to pay the costs of the proceedings. CATCHWORDS : COMMON LAW - costs assessment - form of application and service - costs of assessment - setting aside of judgment in the Local Court Legal Profession Act 1987 LEGISLATION CITED : Legal Profession Act 200 Legal Profession Regulation 2002 Uniform Civil Procedure Rules 2005 CATEGORY : Consequential orders Brierly v Reeves [2000] NSWSC 305 CASES CITED : Diemasters Pty Ltd v Meadowcorp Pty Ltd NSWSC, (unreported, Macready M, 16 July 2003) Turner v Pride [1999] NSWSC 850 PARTIES : Scope Data Systems Pty Ltd (Plaintiff) David Goman as representative of the Partnership of BDO Nelson Parkhill ( Defendant) FILE NUMBER(S) : SC 16341/06 COUNSEL : B Green (Plaintiff) JT Johnson (Defendant) SOLICITORS : Kent Attorneys (Plaintiff) Sally Nash & Co ( Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Associate Justice Malpass Wednesday 13 February 2008 2006/16341 Scope Data Systems Pty Ltd v David Goman as representative of the partnership of BDO Nelson Parkhill JUDGMENT 1 HIS HONOUR: The plaintiff was the unsuccessful party in litigation heard by Campbell J (as he then was). It was ordered to pay the costs of those proceedings. 2 The defendant made application for the assessment of those party/party costs. The relevant application was received by the proper officer in late July 2005. Prior to the making of that application, the defendant did not send a copy of the proposed application to the plaintiff which gave notice that advised that any objection to the application had to be lodged with the defendant in writing within 21 days of receiving such notice. The proposed application was served by letter addressed to Scope Data Pty Ltd at the registered office of the plaintiff (as opposed to its principal place of business) on 14 April 2005. The letter erroneously described it as a "Bill of Costs". 3 The application was referred to a costs assessor (Mr Scammel). 4 By letter dated 5 August 2005, the costs assessor called upon the parties to make submissions by 4.00 pm on 25 August 2005. Because he had not received submissions from either party by that time, he wrote a further letter dated 30 August 2005. 5 On 6 September 2005, the plaintiff responded to the letter dated 30 August 2005. This letter advised that the plaintiff had not received the letter dated 5 August 2005 and sought a copy of it. It also confirmed that the proposed application had not been received. 6 By letter dated 16 September 2005, the plaintiff raised with the costs assessor the matter of "Defective Application". This matter concerned an allegation of non-compliance with r 56(1)(a) of the Legal Profession Regulation 2002. It called upon the costs assessor to decline to deal with the application. It requested the costs assessor to "kindly ensure" that a copy of all documents passing between him and the defendant should be sent to the plaintiff. 7 By letter dated 18 October 2005 (which was sent to both parties), the costs assessor addressed the questions of the alleged breach of the regulation and of service of the proposed application and gave notice of his decision on both of them. He made a finding that the proposed application had been properly sent and that any deficiencies in the letter dated 14 April 2005 were irrelevant. The decision was expressed in the following terms:- "I have decided that I have jurisdiction to proceed with this assessment and intend to do so." In that letter he informed the parties that he considered that the plaintiff should be given a further opportunity to make objections. He extended the time for it to make both submissions and objections until 4.00 pm on 17 November 2005. 8 The plaintiff responded with a lengthy letter dated 8 November 2005. It canvassed a number of issues and made further submissions on the questions of form and service. The material did not address questions of quantum of the costs claimed by the defendant. 9 By letter dated 16 November 2005, the plaintiff made complaints to the Manager of Costs Assessment concerning the costs assessor and the conduct of the assessment. 10 In that letter, one of the complaints concerned an alleged failure to provide a complete and signed copy of the purported bill of costs. In respect of that matter, he sought a direction that the defendant provide a fresh and complete application after serving it with a complete and signed copy of the bill of costs. The letter also expressed an insistence that the costs assessor have no further involvement and that the process start afresh. 11 Save for what was said by the plaintiff in correspondence to the costs assessor and the manager, no application was made to the court to appeal against the decisions of the costs assessor and/or to restrain him from proceeding with his assessment. Instead, the plaintiff stood by and allowed the costs assessor to complete the assessment and to issue his certificate and give reasons for his determination. The certificate was issued on 21 November 2005. The costs were assessed in the sum of $20,467.56. This sum effected a reduction in the amount of costs claimed by the defendant. 12 In his reasons, the costs assessor observed as follows:- "I determined that the Costs Applicant and the Costs Respondent should equally bear my costs as assessor. To bring about that result, I have added one-half of my assessment costs to the amount determined in relation to the costs and disbursements and have required the Costs Applicant to pay all of my assessment costs to the Supreme Court as set out in the Form 4 Certificate enclosed." 13 Pursuant to those observations, the sum of $616.00 ("Allowed in respect of Assessment Costs) formed part of the sum of $20,467.56. 14 A separate certificate was issued in respect of the costs of the assessment. It contained an order that the costs of the costs assessor incurred in the course of the assessment in the sum $1,232.00 be paid by the defendant to the Manager, Costs Assessment. This sum was subsequently paid by the defendant to the Manager. 15 The certificate of the costs assessor was filed in the registry of the Local Court. This was done on 6 December 2005. By reason of the provisions of the legislation, this leads to it being taken to be a judgment of that court. The formal judgment of the court was erroneously dated 5 December 2005. 16 On 20 December 2005, an application for review by the panel was made. The application was referred to a panel (the ultimate panel was comprised by Messrs Salier and McIntyre). 17 The review panel issued a certificate of determination on 21 August 2006. The certificate was accompanied by a statement of reasons. The panel affirmed the certificate of determination of the costs assessor. The certificate also contained the following:- "THE AMOUNT DETERMINED AS A FAIR AND REASONABLE AMOUNT OF COSTS OF THE COSTS ASSESSOR TO BE PAID BY THE REVIEW APPLICANT IS $1,232.00." 18 The panel approached its task by annexing a copy of the grounds of the application for review to the statement of reasons and addressing in that statement each of those grounds. 19 The statement also contained the following:- "The Review Applicant chose at all times to pursue technical arguments rather than address what the Review Panel would have thought was relevant to the application. … It follows that the Review Panel will not disturb the determinations of the Costs Assessor and thus confirms the Certificate of Determination of Costs and the Certificate of Determination of Costs of the Costs Assessor issued by him. … (iv) in respect of disputed costs the Review Panel assessed costs on the basis as provided in this Statement of reasons and similarly dealt with the submissions made by the parties at first instance and the grounds for review. The Review Panel does not consider it is necessary to provide any further information to clarify its review of the Costs Assessor's determination except to say that as the determinations of the Costs Assessor were confirmed it falls to the Review Applicant to pay the costs of the Review Panel." 20 On 23 October 2006, the plaintiff brought a Notice of Motion to set aside the local court judgment. The defendant responded by filing its own Notice of Motion which sought, inter alia, the striking out of the plaintiff's notice of motion. 21 The Notices of Motion were heard by Bradd LCM on 9 November 2006. The Magistrate received argument in respect of both Notices of Motion. Attention was directed to the strike-out provisions of the Uniform Civil Procedure Rules and to the statutory scheme enacted by the legislation. 22 I should digress at this stage to observe that the initial part of the assessment process was governed by the Legal Profession Act 1987 ("the 1987 Act"). The latter part of the process was governed by the Legal Profession Act 2004 ("the 2004 Act"). 23 The statutory scheme prescribed by both pieces of legislation restricts any challenge to a determination to that which is provided for in the legislation. Section 208K of the 1987 Act and s 372 of the 2004 Act are in identical terms. The language of the sections is as follows:- "A costs assessor's determination of an application is binding on all parties to the application and no appeal or other assessment lies in respect of the determination, except as provided by this Division." 24 In reaching his decision, the Magistrate had regard both to the strike-out provisions and the statutory scheme. 25 The form of the order made by the Magistrate brought about a striking out of the plaintiff's notice of motion. Be that as it may, the effect of what was done was to refuse the application to set aside the judgment. 26 Thereafter, the plaintiff brought proceedings in this Court. The Summons was filed on 16 October 2006. At the time of the filing of the Summons the plaintiff was not legally represented. Later, the plaintiff came to be legally represented and an Amended Summons was filed on 4 December 2006. The plaintiff proceeds on that Amended Summons. 27 The relief sought by the plaintiff is somewhat unwieldy. Firstly, relief provided by the statutory scheme is pursued. Relief is sought pursuant to ss 384 and 385 of the Legal Profession Act 2004. Section 384 gives an appeal as a right where there is error as to a matter of law arising in proceedings to determine the application. The error as to matter of law must be material to the decision of the panel and justify the disturbing of it. Section 385 enables application to be made for leave to appeal. The Court has a discretionary power to grant such leave. The exercise of the discretion has regard to the dictates of justice. In addition to this relief, there is also a challenge made to the decision of the Magistrate. The decision of the Magistrate has been regarded by the parties as being interlocutory in nature. Accordingly, leave is required to appeal against the decision. In addition to these matters, there were also questions agitated as to the need for an extension of time. For present purposes, I shall put these matters aside. It seems to me that I should look at the merits of the claims for relief under the statutory scheme and I can later return to the other matters should there be a need to do so. 28 There seems to be no dispute that, should the plaintiff be unsuccessful on its application for relief pursuant to ss 384 and 385, there is no need to address the challenge to the decision of the Magistrate. 29 Broadly speaking, the claims for relief pursuant to ss 384 and 385 fall into three areas. 30 The first area concerns the alleged failure to comply with regulation 561(a). The second area concerns the question of service. The third area concerns allegations of denial of natural justice. 31 In my view, it is unnecessary to determine whether or not there was a breach of the regulation and a failure to strictly comply with the service provisions of the Legal Profession Act 1987 and the Regulations. I have come to this view by reason of the conduct of the plaintiff in respect of both the original assessment and the review by the panel. Such conduct made these matters irrelevant. 32 It is common ground that the plaintiff received both a copy of the application and of the bill of costs during the course of the assessment. It had the opportunity to make submissions in respect of both documents. It chose to restrict its submissions to matters which have been described by the panel as "technical arguments". It was open to the plaintiff to bring a challenge in this Court to the decisions made by the costs assessor on these matters. Instead of doing so, the plaintiff continued to participate in the assessment and allowed the costs assessor to proceed to his determination. Following that determination, it did not seek relief in this Court. Rather, it further invoked the assessment process by seeking a review and participated in that review. 33 For completeness, I should mention that the assessment process involved in this case did not require a bill of costs. The decisions made by the costs assessor as to the irrelevance of the complaints to the bill that was given are well founded. The lack of merit in the complaints as to the bill of costs is well illustrated by the fact that the plaintiff did not challenge any item in the bill of costs and did not make any submissions concerning the quantum of the claim advanced by the defendant. 34 In the course of argument, the court was referred to a number of decided cases (Brierly v Reeves [2000] NSWSC 305; Diemasters Pty Ltd v Meadowcorp Pty Ltd NSWSC unreported, Macready M, 16 July 2003). The facts of the present case make those cases distinguishable. In Brierly, the costs assessor decided that he had no jurisdiction and did not proceed with the assessment. Diemasters was a no service case, there was a finding that service of the application had not been effected on the respondent to the application. 35 It is curious that the plaintiff should seek to rely on Diemasters as supporting its present case. In my view, what was said does not assist the plaintiff. Master Macready (as he then was) observed as follows: "29 I turn to a consideration of the purpose of the regulation. The form that is required to be served certainly gives sufficient notice that the person giving it proposes to invoke the procedures for assessment of costs and the amount that will be claimed in that assessment. The regulation requires a certain period of notice to have expired before the application maybe lodged with the proper officer of the Supreme Court. Having regard to the terms of s 203(3), it is apparent that the question of settlement of the amount of costs by mediation would have to be addressed by the applicant prior to lodging the application. This indicates the purpose of this procedure is to put the parties into a situation where they consider some compromise by mediation of the amount claimed. 30 It is to be noted that under subreg (e) a copy of the application is to be sent by the proper officer to the person liable for payment of the costs. Objections may be made later because the regulation contemplates that any objections made after the application is lodged with the proper officer are to be sent to the costs assessor. 31 Although mediation and the avoidance of the additional costs incurred in the assessment process are worthwhile objects the failure to activate that process would I have thought not be so important as to make that process a condition of non compliance which would mean that the subsequent assessment process was invalid." 36 The observations were made in respect of the procedure set up by the regulation which was then in force (of which regulation 26C formed a part). The provisions of regulation 56(1)(a) succeed regulation 26C. The procedure is described as being one before application for assessment of party / party costs. It appears to have been had in mind that the prospects of mediation should be explored before the proposed application is served. The purpose of the notice is to afford the opportunity to make both objection "to the application" and response to any objection (see paragraph 15 of Turner v Pride [1999] NSWSC 850). 37 No guidance is given as to the nature of the objection that is contemplated by the regulation. However, it would seem that it was intended that it be referable to some matter that may disentitle the making of the application. The absence of the notice would be of no importance in this case as there is nothing to suggest that the plaintiff could advance any argument that would disentitle the bringing of the application. 38 The third area initially involved allegations of bias and denial of natural justice. The allegations of bias were abandoned and the challenge founded on denial of natural justice was restricted to an alleged failure by the panel to give sufficient reasons. 39 The legislation requires the panel to accompany its certificate with a statement of reasons. The panel provided a statement of reasons. Whilst it may be said that the disclosure of reasoning process in the statement of reasons was not expansive, it seems to me that what was said sufficed in the circumstances of this case. 40 What the panel did was to confirm the certificate of the costs assessor and adopt his reasoning process. The panel was dealing with procedural matters that did not require any expansive response. 41 I should also refer to another matter that was but briefly agitated during the hearing. It concerned the question of how the costs assessor came to deal with the costs of the assessment. There was reference to the provisions of s 208J(4) of the 1987 Act. 42 In my view, whether or not there could have been said to be error by the costs assessor in respect of this matter, what was involved was the small sum of $616.00. Whilst I do not consider that the amount involved would justify the granting of relief, there is a further relevant consideration. What has been done does not bring about any injustice to the plaintiff. The defendant has paid the whole of the costs of the assessment to the Manager and it was done to bring about payment of the liability had by the plaintiff to pay half of the costs. 43 Leaving aside what has already been said on the matter, the argument put on behalf of the plaintiff appears to ignore provisions contained in s 208F of the 1987 Act. This section falls within subdivision 3 which is headed "Assessment of party/party costs". Subsection (iv) of s 208F is in the following terms:- "The costs assessed are to include the costs of the assessment (including the costs of the parties to the assessment, and the costs assessor). The costs assessor may determine by whom and to what extent the costs of the assessment are to be paid." 44 For completeness, I shall make certain observations concerning the provisions of s 208J(4). The function of subs (4) is in the nature of a definition. It serves the purpose of defining "unpaid costs". The definition is provided for the purpose of subs (3). 45 The plaintiff has also made complaint about the order made by the review panel concerning costs of the assessment. This complaint excited little argument. 46 There seemed to be an assumption made by the plaintiff that this order involved some error on the part of the review panel. If that be the case, it is an error of no significance in this case. 47 There remains the question of the challenge to the decision of the Magistrate. In view of what has been said in respect of the merits of the relief sought under ss 384 and 385, this question does not have to be pursued. 48 Despite this being so, for the assistance of the parties, I will make the observation that it seems to me that the Magistrate reached the right result. 49 It seems to be common ground that in dealing with the Notices of Motion the Magistrate had in mind the provisions of r 36.15 of the Local Court Rules. The relevant part of that rule is as follows:- "(1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith." 50 This provision confers a discretionary power to set aside a judgment falling within its ambit. The discretionary power cannot be exercised until the threshold requirements contained therein are first satisfied. The exercise of the discretionary power depends on the court being satisfied that sufficient cause has been shown that the judgment was made irregularly, illegally or against good faith. 51 At all times, the plaintiff has been in a position where it was unable to discharge the onus of satisfying that threshold requirement. 52 The certificate was binding on all parties at the time the Magistrate dealt with the notices of motion. The determination of the review panel came to pass subsequent to the decision of the Magistrate. The review panel confirmed the determination of the costs assessor. Further, this court has come to the view that the challenge to the certificate is unmeritorious. 53 There remains the matter of the erroneous date of the judgment. I do not accept the contention that it gives rise to an irregularity. 54 It seems to me that the error is nothing more than an inconsequential clerical mistake. It is not a mistake in respect of which default on the part of the defendant is involved. It is clearly an accidental slip by the Court and is remediable. 55 In my view it is a mistake that can be corrected by operation of the slip rule (see r 36.17 of the Uniform Civil Procedure Rules). 56 Before concluding this judgment, it is appropriate to make certain observations concerning the plaintiff and its conduct throughout the assessment processes and these proceedings. Since about the middle of 2005, the plaintiff has persisted with pressing trivial technical arguments which were devoid of merit. At no stage does it seem to have been concerned with the quantum of the costs claimed against it. The quantum of the claim was relatively modest (in the order of $20,000). Such an amount does not justify the money and time that has been expended in dealing with the plaintiff's trivial and unmeritorious complaints. The proceedings in this Court have seen numerous court attendances and a disproportionate amount of valuable court time being devoted to their resolution. The purpose of the exercise seems to have been no more than to frustrate the efforts of the defendant to recover the costs of the original proceedings before Campbell J. 57 In the circumstances the claims for relief made by the plaintiff fail. The proceedings are dismissed. The plaintiff is to pay the costs of the proceedings. 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