Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Arnott v Glissan [2013] NSWCA 316 Hearing dates: 21 August 2013 Decision date: 26 September 2013 Before: Meagher JA at [1]; Barrett JA at [2]; Emmett JA at [3] Decision: The application is dismissed with costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: LEGAL PROFESSION - construction of costs agreement - no question of principle Legislation Cited: Legal Profession Act 2004, ss 302A, 322, 350, 357, 361, 368, 372, 373, 374, 375, 378, 380, 382, 384 Supreme Court Act 1970, s 69 Category: Principal judgment Parties: Maralyn June Arnott - applicant Paul Glissan - first respondent Reginald John Forster - second respondent District Court of New South Wales - third respondent Representation: Counsel: The applicant appeared in person. The first respondent appeared in person. The second and third respondents did not appear. Solicitors: File Number(s): 2013/62788 Decision under appeal Date of Decision: 2012-07-20 00:00:00 Before: Truss DCJ File Number(s): 2012/130486 Judgment 1MEAGHER JA: I agree with Emmett JA. 2BARRETT JA: I agree with Emmett JA. 3EMMETT JA: The applicant, Mrs Maralyn Arnott, seeks judicial review under s 69 of the Supreme Court Act 1970 in respect of a decision of the District Court. Section 69 provides that, where formerly the Court had jurisdiction to grant any relief or remedy or do any other thing by way of writ of certiorari, the Court shall continue to have jurisdiction to do so by way of judgment or order under that act. That includes jurisdiction to quash the ultimate determination of a court or tribunal in any proceedings if made on the basis of an error of law that appears on the face of the record of the proceedings. The face of the record includes the reasons for the determination. 4By the decision that Mrs Arnott seeks to impugn, the District Court upheld an appeal under s 384 of the Legal Profession Act 2004 (the Legal Profession Act) by the first respondent, Mr Paul Glissan, who is a barrister. Section 384 provides for an appeal against a decision as to a matter of law in a costs assessment application. 5Mr Glissan was retained to act on behalf of Blue Mountains Virtual Air Helitours Pty Limited (Helitours) in proceedings commenced in the Administrative Decisions Tribunal against Sevenex Pty Limited (Sevenex). Because of the amount claimed, the matter was transferred to the Supreme Court. Following the transfer, Sevenex applied for security for costs. At about the same time, an application was made to the Supreme Court to wind up Helitours in insolvency. While Helitours retained Mr Glissan in relation to the proceedings against Sevenex, it did not retain him in relation to the winding-up proceedings. 6Mr Glissan rendered two bills in respect of work and appearances on behalf of Helitours. He claimed that Mrs Arnott was liable to pay the bills. Mrs Arnott applied for a costs assessment in respect of the two bills. Before dealing with the issues raised in these proceedings, it is desirable to say something about the relevant provisions of the Legal Profession Act. The Legal Profession Act 7Under s 322 of the Legal Profession Act, a costs agreement may be made between a client and a law practice retained by the client, or between a law practice and an associated third party payer. A costs agreement may consist of a written offer in accordance with s 322(4) that is accepted either in writing or by other conduct. Under s 322(4), the offer must clearly state: that it is an offer to enter into a costs agreement; that the client may accept it in writing or by other conduct; and the type of conduct that will constitute acceptance. 8Under s 4, client includes a person to whom or for whom legal services are provided. Under s 302A, a third party payer, in relation to a client, is a person who is not the client and is under a legal obligation to pay all or any part of the legal costs for services provided to the client. Under s 302A(1)(b), a third party payer is an associated third party payer if the legal obligation to pay legal costs for legal services is owed by the person to the law practice. 9Division 11 of Pt 3.2 of Ch 3 of the Legal Profession Act, which consists of ss 349A to 400, deals with costs assessment. Under s 350(1), a client may apply for an assessment of the whole or any part of legal costs. Under s 350(2) a third party payer may apply for an assessment of the whole or any part of legal costs payable by the third party payer. An application by a client or third party payer for a costs assessment under s 350 must be made within 12 months after the bill was given, or the request for payment was made, to the client or third party payer. 10Section 357 provides that each costs assessment application is to be referred to a costs assessor to be dealt with under Div 11. Under s 361, a costs assessor must assess the amount of any disputed costs that are subject to a costs agreement by reference to the provisions of the costs agreement. A costs assessor is to determine a costs assessment application relating to a bill of costs by confirming the bill or, if the assessor be satisfied that the disputed costs are unfair or unreasonable, by substituting for the amount of the costs an amount that, in the assessor's opinion, is fair and reasonable. 11Under s 368, on making a determination of costs, a costs assessor is to issue a certificate that sets out the determination (a certificate). The certificate must be accompanied by reasons. Under s 372, 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 Div 11. Subdivision 5 of Div 11, which consists of ss 373 to 383, provides for review of a determination by a panel constituted by two costs assessors (a panel). Subdivision 6 of Div 11, which consists of ss 384 to 389, provides for appeals to the District Court against decisions of a costs assessor as to a matter of law. 12Under s 373(1), a party to a costs assessment who is dissatisfied with a determination of a costs assessor may, within 30 days after a certificate has been forwarded to the parties, apply for a review of the determination. Under s 374(1), the application is to be referred to a panel. Under s 375, a panel may review the costs assessor's determination and may either affirm it or set it aside and substitute such determination as, in the panel's opinion, should have been made. A panel has all the functions of a costs assessor and is to determine the application in the manner that a costs assessor would be required to determine a costs assessment application. The assessment is to be conducted on the evidence that was received by the costs assessor who made the determination that is the subject of the assessment and, unless the panel determine otherwise, it is not to receive submissions from the parties or to receive any fresh evidence. 13Under s 378, on making a determination in relation to an application for review, a panel is to issue a certificate that sets out the determination. Section 380 requires that the panel's determination be accompanied by reasons. 14Under s 384, a party to an application for costs assessment, who is dissatisfied with a decision of a costs assessor as to a matter of law may appeal to the District Court against the decision. Under s 382, subdiv 6 applies in relation to the decision or determination of a panel under subdiv 5 as if references in subdivision 6 to a costs assessor were references to the panel. 15Under s 384(2), after deciding the question the subject of the appeal, the District Court may, unless it affirm the costs assessor's decision, either make such determination as, in its opinion, should have been made by the costs assessor, or remit its decision on the question of law to the costs assessor and order the costs assessor to redetermine the application. On a redetermination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given. The Costs Agreement 16Mr Glissan rendered two bills of costs in respect of work and appearances on behalf of Helitours. He claimed that Mrs Arnott is liable to pay those bills under a costs agreement dated 18 February 2011 (the Costs Agreement). The Costs Agreement is in the form of an offer by Mr Glissan under s 322 of the Legal Profession Act, addressed to Helitours, VAH Pty Limited (VAH) and Mrs Arnott. The Costs Agreement was signed on behalf of both Helitours and VAH. Mrs Arnott also signed it. It was then returned to Mr Glissan. The precise date of Mrs Arnott's signing of the Costs Agreement and its return to Mr Glissan does not appear to be in evidence. 17In the Costs Agreement, Helitours, VAH and Mrs Arnott are together described as "the Clients". The Costs Agreement refers to the proceedings in the Supreme Court between Helitours, as plaintiff, and Sevenex, as defendant, and sets out the basis upon which Mr Glissan's costs would be calculated. It also contains an estimate of $6,000 as the likely total costs of opposing Sevenex's security for costs application, including appearing on a directions hearing on 22 February 2011, conferring with witnesses, preparing a letter as to recoverable damages, drafting an affidavit in opposition to the security for costs and preparing submissions for and appearing on the application for security for costs, on the assumption that the hearing would last one day. All of that work is described as Mr Glissan's "initial work". 18The Costs Agreement states that "the Clients" are entitled to negotiate a costs agreement with Mr Glissan, receive a bill from him and request an itemised bill within 30 days after receipt of a lump sum bill. It states that Mr Glissan will bill "the Clients" on completion of the "initial work" and that "the Clients" may discuss Mr Glissan's costs with him. 19Towards the end of the Costs Agreement, under the heading "Costs Agreement", the following is set out: "This Legal Costs Disclosure is an offer to enter into a costs agreement with the Clients in accordance with s 322 of the [Legal Profession] Act, which, if the Clients wish to accept it, they are required to do so in writing, by returning a signed copy." 20In addition, the Costs Agreement provided that it was "an essential condition" of Mr Glissan's retainer and of the Costs Agreement that "the Clients" or any of them continue to pay instalments of $500 per week to Mr Glissan "each and every week until payment in full" of his outstanding invoices dated 27 July 2010 and 17 December 2010, together with interest. The Costs Agreement stated that breach of that essential condition would entitle Mr Glissan to treat his retainer as at an end and to cease any of the work immediately. As will become apparent, that provision is relevant to the terms of the costs assessment in question. The Determination of the Costs Assessment 21The two bills of costs rendered by Mr Glissan, in respect of work and appearances for Helitours, were dated 17 December 2010 and 23 August 2011 and were for $2,246.53 and $6,000, respectively. Mr Glissan accepted that there was no costs agreement in relation to the first bill, which was one of the bills referred to in the "essential condition" of the Costs Agreement. The second bill was given under the Costs Agreement. 22Mrs Arnott's application for a costs assessment was referred to the second respondent, Mr Reginald Forster. The application was determined by substituting for the disputed costs, as a fair and reasonable amount of costs to be paid to Mr Glissan by Mrs Arnott, the sum of $2,246.53. That is to say, Mr Forster determined that Mrs Arnott was not obliged, under the Costs Agreement, to pay the bill of costs dated 23 August 2011 in the sum of $6000. On 26 March 2012, Mr Forster signed a certificate to that effect. The certificate stated that credit was to be given by Mr Glissan to Mrs Arnott for the sum of $1,697.53 paid on account of the costs of $2,246.53. Accordingly, Mrs Arnott was to pay to Mr Glissan the sum of $549. 23In his reasons, Mr Forster recorded that four issues arose for determination, two of which are relevant for present purposes: * whether there was an agreement that Mr Glissan was not to undertake any further work for Helitours after 18 February 2011 until the winding-up application had been determined; and * whether it was fair and reasonable for Mrs Arnott to be responsible for the costs claimed in the two bills of 23 August 2011. 24The first question arose because Mrs Arnott complained that the work charged for in the bill of 23 August 2011, which was done in connection with the security for costs application, was not necessary. She asserted that the application should have been deferred until the winding-up application had been determined. Mr Forster was satisfied that Mr Glissan had attempted to obtain an adjournment of the proceedings when they were called over on 22 February 2011 but failed. Mr Forster concluded that Mr Glissan therefore had no choice but to comply with the timetable set by the court and to comply with the procedural directions that were made on that day. 25Mr Forster referred to communications between Mr Glissan and Mrs Arnott in relation to submissions prepared by Mr Glissan on 12 June 2011. Mr Forster concluded that, if Mr Glissan had not carried out that work and had not appeared on the hearing of the security for costs application, Helitours would have faced the risk that its claim against Sevenex could have been struck out. Thus, in effect, Mr Forster gave consideration to, and rejected, Mrs Arnott's complaint that Mr Glissan had incurred the costs in the bill of 23 August 2011 unnecessarily. 26As to the second question, whether Mrs Arnott was personally liabile under the Costs Agreement, as mentioned above Mr Forster concluded that it was not fair and reasonable that Mrs Arnott be responsible for the second bill, of 23 August 2011, for $6,000. He reached that conclusion on the basis that the Costs Agreement was silent as to Mrs Arnott's responsibility for any future work carried out by Mr Glissan under it. The Appeal to the District Court 27By summons in the District Court filed on 24 April 2012, Mr Glissan appealed from Mr Forster's determination of the second question, that Mrs Arnott was not responsible for the costs in Mr Glissan's bill of 23 August 2011. Mr Glissan appealed from Mr Forster's decision on the second question under s 384 of the Legal Profession Act, on the basis that it was a decision as to a matter of law arising in the proceedings to determine the costs assessment application, as it concerned the correct construction of the Costs Agreement. 28Truss DCJ accepted Mr Glissan's contentions that Mr Forster made an error of law in construing the Costs Agreement by concluding that Mrs Arnott had no liability under it in respect of the bill of 23 August 2011. Her Honour therefore made the orders sought by Mr Glissan in his summons. Her Honour ordered that Mr Forster's certificate be set aside and that, in lieu thereof, a certificate be issued certifying that the sum of $8,246.53 was the fair and reasonable amount of costs to be paid to Mr Glissan and that, after credit is given for the sum of $1,697.53 paid by Mrs Arnott on account of that sum, Mrs Arnott is to pay Mr Glissan the sum of $6,549. These Proceedings 29A second certificate of determination of costs was issued in accordance with the orders of the District Court. By her amended summons commencing proceedings under s 69 of the Supreme Court Act, Mrs Arnott seeks an order that the decision of Truss DCJ be set aside, that the second certificate of determination of costs be set aside and that the matter be remitted to Mr Forster to redetermine whether Mrs Arnott be responsible for the costs claimed in the bills dated 17 December 2010 and 23 August 2011. 30Clearly enough, Mrs Arnott was not a client of Mr Glissan within the meaning of the Legal Profession Act. Rather, she was a third party payer, as defined in s 302A of that Act. However, that has little bearing on the question of whether, by signing the Costs Agreement and returning it to Mr Glissan, Mrs Arnott undertook personal liability for the payment of any bill rendered by Mr Glissan under the Costs Agreement. 31Mr Forster concluded that, although Mrs Arnott is named as one of "the Clients" in the Costs Agreement, she had joint responsibility to guarantee the payment of the outstanding bills referred to in the "essential condition" of the Costs Agreement. He concluded that that responsibility was owed jointly with Helitours, as a client, and VAH, as another associated third party payer. On the other hand, Mr Forster concluded that the Costs Agreement was silent as to Mrs Arnott's responsibility for the costs of any future legal work carried out by Mr Glissan pursuant to the Costs Agreement. Both of those conclusions are erroneous. 32The language of the "essential condition" of the Costs Agreement clearly signifies that it was a condition of Mr Glissan's retainer. It is not, in its terms, a promise by any person to pay the outstanding costs under the invoices dated 27 July 2010 and 17 December 2010 referred to in the condition. It says no more than that, even though Mr Glissan had agreed to perform the initial work on behalf of Helitours, his obligation to continue to perform such work was conditional upon the instalments being paid. If there were to be default in those payments, he would no longer have any obligation to continue to perform any work on behalf of Helitours. Thus, the essential condition provision imposed no obligation on any party. It was not a promise by any party to do anything. It merely provided that Mr Glissan would no longer be obliged to continue to work for Helitours if it were not met. 33Whether Helitours previously had an obligation in respect of the bills of costs referred to in the essential condition is a different question. Mr Glissan conceded that there was no costs agreement in relation to those bills, such that any obligation to pay could only be pursued as a quantum meruit claim, not as a matter of contract. However, whether Helitours was obliged to pay the bills is not to the point. Mrs Arnott certainly was not obliged to pay those bills under the Costs Agreement. 34On the other hand, there can be little doubt that, by signing the Costs Agreement as one of "the Clients" and sending it back to Mr Glissan, Mrs Arnott agreed to pay whatever costs became payable under it. She accepted an offer to enter into a costs agreement made in accordance with s 322. While Mrs Arnott was not a client for the purpose of the Legal Profession Act, the only sensible construction to be given to her conduct in signing the Costs Agreement and sending it back to Mr Glissan is that she was accepting personal responsibility for any costs properly payable to Mr Glissan in respect of the work or appearances on behalf of Helitours described in the Costs Agreement. Mr Forster erred in his conclusion that Mrs Arnott had no personal obligation. Truss DCJ made no error in concluding that Mr Forster's determination involved an error of law. 35Mrs Arnott also complained about a denial of procedural fairness on the part of Truss DCJ. However, there was no evidence before the Court concerning the conduct of the proceedings before the District Court. In particular, there was no transcript of the proceedings. Mrs Arnott was unable to say that she asked Truss DCJ to remit the matter to Mr Forster rather than directing the issue of a substituted determination. In the circumstances, there is no basis for concluding that there has been a denial of procedural fairness. 36The application should be dismissed with 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. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 September 2013