New South Wales Supreme Court CITATION : Gilles & Eliades v Giakoumelos [2008] NSWSC 70 HEARING DATE(S) : 7 February 2008 JUDGMENT DATE : 18 February 2008 JUDGMENT OF : Malpass AsJ DECISION : Application for leave pursuant to s 208M Legal Profession Act 1987 refused; proceedings dismissed; plaintiffs to pay the costs of the proceedings. CATCHWORDS : COSTS ASSESSMENT - disclosure of fees of senior counsel - statutory construction - person concerned - reasonable opportunity to make submissions - disclosure - basis upon which fees were to be charged - materiality - reasons and appeal as of right LEGISLATION CITED : Legal Profession Act 1987 CATEGORY : Principal judgment CASES CITED : Cachia v Colaco [2004] NSWSC 1043 Frumar v Owners of Strata Plan 36957 [2006] NSWSC 224; (2006) 67 NSWLR 321 PARTIES : Joseph John Gilles & Gregory George Eliades trading as Giles Payne & Co Solicitors ( Plaintiffs) Jim Giakoumelos (Defendant) FILE NUMBER(S) : SC 16278/06 COUNSEL : I E Davidson (Plaintiffs) D D Knoll (Defendant) SOLICITORS : Giles Payne & Co (Plaintiffs) Konstan Lawyers (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Associate Justice Malpass Monday 18 February 2008 16278/06 Joseph John Gilles & Gregory George Eliades t/as Giles Payne & Co v Jim Giakoumelos JUDGMENT 1 HIS HONOUR: The defendant retained the plaintiffs to act in a probate dispute. These parties entered into a costs agreement. The plaintiffs provided legal services for the defendant. The plaintiffs then briefed counsel. The plaintiffs gave an estimate of the costs of legal services (letter dated 23 June 2004). It gave a total of legal fees of about $200,000 (including $60,000 for senior counsel). Senior counsel purported to make a disclosure of fees in writing (a document dated 24 January 2005). It disclosed rates of charge on a "contingency fee basis". On 3 February 2005, it was endorsed by the defendant ("I accept these fees"). 2 After a hearing over about six days, the proceedings were settled on 4 April 2005. On that day, the defendant signed a written document that, inter alia, appeared to have the effect of acknowledging indebtedness for legal costs in the order of $250,000 ("I am responsible to pay my own legal costs which are approximately $250,000"). I shall hereafter refer to this written document as "the writing". 3 In July 2005, the plaintiffs rendered a bill of costs for work done up to that date to the defendant. It claimed fees of senior counsel as a disbursement ($40,000). The attached trust account statement showed, inter alia, that $85,510 had been paid to senior counsel. 4 The total fees rendered by senior council was in the order of $125,000 (by April 2005). By July 2005 he had been paid the sum of $85,510 out of moneys held on trust. The defendant became aware of these matters by letter dated 7 July 2005. The balance was paid on 13 October 2005. 5 By August 2005, the defendant had terminated the retainer. He then retained his present solicitors. A copy of the memorandum of fees rendered by senior counsel was provided by letter dated 2 November 2005. Dispute emerged as to his fees. 6 In December 2005, the defendant made an application for an assessment of costs claimed by the plaintiffs. The application was made pursuant to s 199 of the Legal Profession Act 1987 ("the Act"). What was sought was an assessment of the whole of the bill of costs (including the fees of senior counsel). The objections relied on by the defendant brought an express challenge to the fees. One of the matters raised was the inadequacy of the material concerning his fees ("it is not possible to assess for the purpose of the objections what work was done"). 7 The application was referred to a costs assessor (Mr Walsh). By letter dated 6 April 2006, the costs assessor sought inter alia "urgent advices" as to how the respective items for senior counsel had been made up. In that letter, he observed that he had no particularisation of the makeup of the sum of $40,000. The plaintiffs did not provide material in response to that request. By letter dated 10 April 2006 submissions were sought as to the cost disclosure document provided by senior counsel. In addition to that request, six separate questions were raised concerning the matter of disclosure. The plaintiffs did not make submissions as requested and did not answer the questions. 8 The costs assessor completed the assessment and issued his certificate of determination. One of the consequences of that determination was a disallowance of part of the fees charged by senior counsel (in the sum of $52,360). 9 The certificate was accompanied by written reasons. The reasons mention the writing and treat it as an acknowledgement. The costs assessor found that there had not been adequate disclosure by senior counsel. He observed that the disclosure by senior counsel purported to be a conditional costs agreement and that it did not set out the circumstances that constituted a successful outcome. In making his assessment of fees of senior counsel, he had regard to the nature of the litigation. He came to the view that the hourly rate charged by senior counsel was excessive. His reasons contain the following:- "In my view the hourly rate charged by Senior Counsel is excessive. A fair and reasonable hourly rate for Senior Counsel is $500.00 plus GST making a total of $550.00. A reasonable daily rate for Senior Counsel is $5,000.00 plus GST making a total of $5,500.00 per day." 10 In paragraphs 84 and 85 of the reasons, apart from repeating that he had already determined that the rate claimed by senior counsel was not fair and reasonable, he set out specific items that had been disallowed and an expression of reasoning process for the items disallowed. 11 The plaintiffs made application for a review of the assessment by a panel. On 27 November 2006, the panel issued a certificate of determination. The determination upheld the disallowance of the fees of senior counsel. 12 The application was supported by a lengthy and detailed statement propounding numerous grounds. 13 The determination was accompanied by written reasons for review determination. I shall refer to the contents thereof in due course. 14 The plaintiffs have brought proceedings in this Court. An appeal as of right has been brought pursuant to s 208L of the Act. An appeal lies under that provision in respect of a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application. The section provides a limited avenue of appeal. 15 A right of appeal thereunder is not attracted unless certain requirements are satisfied. There has to be dissatisfaction with a decision. The decision has to be as to a matter of law arising in the proceedings to determine the application. 16 The case for the plaintiffs has undergone considerable change since the commencement of the proceedings. The hearing took place on 7 February 2008. An Amended Summons was filed in court on that day. The amendments in that document were made to enable argument to be put as outlined in amended submissions and submissions in reply. 17 At the commencement of the hearing, discussion took place concerning the matter of the width of the avenue of appeal provided by s 208L. The discussion led to the plaintiffs making application for leave pursuant to s 208M. This application was opposed. A ruling on that application was deferred pending a consideration of the merits of the matters argued in the appeal. 18 The Amended Summons propounds seven grounds of appeal. The grounds numbered 5 and 6 were not argued. 19 The grounds of appeal that were argued fall into certain categories. I will proceed to address each of the categories. 20 The principal matter argued concerned the application of s 208 of the Act. This is a section which is headed "Consideration of applications by costs assessors". The relevant provisions thereof are as follows:- "(1) A costs assessor must not determine an application for assessment unless the costs assessor: (a) has given both the applicant and any barrister, solicitor or client or other person concerned a reasonable opportunity to make written submissions to the costs assessor in relation to the application" 21 It is contended that there has been a breach of this provision. The breach was said to be the failure to give senior counsel reasonable opportunity to make written submissions to the costs assessor. 22 There has been argument as to the proper construction to be given to the provision. I have not been taken to any reading speeches or any decided cases. In my view, by reason of the particular circumstances of this case, it is unnecessary to embark on any extensive analysis of the provision. In any event, it may be a provision whose application turns on the facts of each particular case. 23 I consider that the plaintiffs have failed to demonstrate the alleged breach of the provision. I am not satisfied that senior counsel was a person "concerned" in the sense contemplated by the section. 24 The parties to the application before the costs assessor were the plaintiffs and the defendant. The plaintiffs were making a claim for their own costs and disbursements. The fees charged by senior counsel were being sought to be recovered as a disbursement. In the circumstances, the plaintiffs were placed in the position of defending their entitlement to recover that disbursement (a not unusual situation). Senior counsel had been paid in full. He had no financial interest in the outcome. 25 The plaintiffs pursued the role of defending the disbursement. They did not apply for an assessment of the fees of senior counsel. They did not invoke the assistance of senior counsel before the costs assessor. They did not ask that he be given notice of the application and thus be given a reasonable opportunity to make written submissions. The first time the matter of s 208 was raised was in this Court during the appeal. I leave aside the question of whether or not it should now be allowed to be raised, as this issue was not ventilated before the Court. 26 The function of the costs assessor was to assess the application. The only finding made in respect of his fees were that they were excessive and not fair and reasonable. Save for that matter (which was one that the plaintiffs could deal with), the costs assessor did not make any adverse finding concerning senior counsel. 27 The next category concerns the decision that there had been a failure to make disclosure in respect of the fees of senior counsel and the sufficiency of the expression of reasoning process for that decision. 28 The disclosure provisions may be found in Division 2 of Part 11 of the Act. For present purposes, the relevant provisions are ss 175, 176, 179 and 182. Section 175 sets out the obligations of a barrister or solicitor to a client. Section 176 sets out the obligation of disclosure had by a barrister or solicitor who is retained on behalf of the client by another barrister or solicitor. Section 179 provides that the disclosure must be made in writing and be expressed in plain clear language. Section 182 sets out the effect of non-disclosure. 29 Sections 175 and 176 impose a general obligation to disclose in accordance with the Division the basis of the costs of legal services to be provided. The sections also identify specific matters that are to be disclosed. 30 Division 3 of Part 11 deals with costs agreements. Section 185 thereof deals, inter alia, with the contents of a conditional costs agreements and imposes an obligation to set out the circumstances constituting the successful outcome of the matter. 31 The plaintiffs purported to give a disclosure in their letter dated 23 June 2004. So far as the fees of senior counsel were concerned, this was overtaken by his document dated 24 January 2005. The plaintiffs seemed to place some reliance on the writing. I shall deal with that document in due course. 32 The costs assessor observed that the senior counsel's document purported to be a conditional costs agreement and that it did not set out the circumstances constituted as to the successful outcome of the matter. This appears to have been influential in the expression of the view that the document did not adequately disclose the basis upon which senior counsel's fees were to be charged in this matter. 33 In my view, he sufficiently set out his reasons for coming to that view and that the view expressed by him reached the right result. The document contained the unhelpful information that the rates of charge were on "a contingency fee basis". What the contingency was and what the circumstances were in which the fees would be payable were never disclosed. The requirement of clear plain language was certainly not present. 34 In these circumstances, s 182 had application and the entitlement to be paid depended on an assessment under Division 6 of the Act (on the fair and reasonable basis). The costs assessor then proceeded to assess the fees on that basis and reached the result that has been earlier referred to. 35 In its reasons, the panel expressed itself as confirming what had been done by the costs assessor and implicitly adopted his reasons. 36 Before proceeding further, I will digress to make an observation concerning one other matter. It was one that was not addressed during the assessment process and was but briefly mentioned during the hearing of the appeal. There seemed to me to be a real question as to whether or not senior counsel had become entitled to the payment of any fees (because the contingency had not been defined). I take this matter no further as it has not been fully ventilated. 37 In the circumstances of this case, it is unnecessary to dwell on the obligation imposed by s 177 (to disclose an estimate of the likely amount of costs and of any significant increase in that estimate). The consequence of any such disclosure is prescribed in s 183. The non-disclosure of itself does not amount to a breach of the Act (rather, the failure is capable of being either unsatisfactory professional conduct or professional misconduct). 38 Section 208KG of the Act provides that the panel must ensure that a certificate issued under s 208KF sets out the determination of the panel and is accompanied by a statement of reasons given in accordance with the regulations. 39 The certificate of the panel was accompanied by a statement of reasons. The relevant regulation is regulation 68. I am not satisfied that the statement of reasons did not accord with that regulation. 40 The defendant argued that the regulation did not require an explanation for the variation of a disbursement. He relied on Cachia v Colaco [2004] NSWSC 1043. For present purposes, it is unnecessary to dwell on the question of whether or not that decision was correct. 41 In the statement of reasons, the panel observed as follows:- "The Assessor, having found that Senior Counsel had not made adequate disclosure, then proceeded to assess the fess as he was entitled to do and the Panel is of the view that the substituted hourly and daily rates are fair and reasonable in the circumstances of this particular litigation and the prevailing range of rates for Senior Counsel undertaking this type of work. Accordingly, the Panel confirms the Assessor's finding and rejects these grounds." 42 What will be a sufficient disclosure of reasoning process will vary from case to case. In my view, in this case, the panel has sufficiently explained the reasoning process that led it to uphold the decision of the costs assessor. It adopted the reasoning process expressed by the costs assessor (the costs assessor had indicated what rates he regarded as being fair and reasonable, the items disallowed and the reasons for that disallowance). The reasons were given in a context where the plaintiff had failed to provide information requested by the costs assessor as to the makeup of the fees. 43 The plaintiffs referred the Court to what was said by Giles JA in Frumar v Owners of Strata Plan 36957 (2006) 67 NSWLR 321 in paragraphs 43-45. In my view, in this case, the plaintiffs did have a real and not largely illusory right of appeal. I am not satisfied that the plaintiffs had any difficulty in understanding the decision that was made and in conducting the appeal before this Court. 44 The remaining area of appeal concerns what was said by the panel in paragraph 5.4 of the statement of reasons. The paragraph reads as follows:- "As to Ground (4) the Panel is of the view that no prejudice to the Review Applicant has arisen as a result of the Cost Assessor's failure to make reference in his Reasons of the written document by which the Review Respondent gave formal instructions for the acceptance of the terms of settlement. The Assessor had the document before him and the Panel is satisfied that he turned his mind to the contents of that document. Accordingly, the Panel confirms the Assessor's finding and rejects this ground." 45 The "written document" mentioned in that paragraph is the writing earlier referred to in this judgment. The manner in which the plaintiffs seek to give significance to the writing is somewhat unclear. If it is sought to categorise it as a disclosure document, I do not accept such a submission. It is an acknowledgement of an estimate of legal costs that had been already incurred and was made at or about the time of settlement of the proceedings. 46 It seems to be put that the panel erred in reaching the finding that it was satisfied that the costs assessor had turned his mind to the contents of the document. It was feebly suggested that this finding of the panel was an error of law. I do not accept that submission. 47 It was also suggested that the panel had failed to give sufficient reasons for being so satisfied. Also, I do not accept that submission. The panel did give reasons. It seems to me that what the plaintiffs are really saying is that the reasons given were erroneous. 48 In conclusion, I can only observe that I regard all of the argument on this area as being pointless. The writing itself and whatever findings were made concerning it have no significance. They had no materiality whatsoever to the decision to disallow part of the fees of senior counsel. It seems to me that this was one of the things being said by the panel. 49 There remains the question of the width of the avenue of appeal provided by s 208L. In the light of what has been earlier said, it is unnecessary to dwell on the matter. Perhaps, it suffices to repeat what has been said in other judgments concerning the matter of lack of reasons not falling within the narrow ambit of the section. 50 Because the plaintiffs have been unsuccessful on all matters argued, it would be futile to grant leave pursuant to s 208M. Accordingly, the application for leave is refused. 51 The proceedings are dismissed. The plaintiffs are to pay the costs of the proceedings. 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