District Court New South Wales Medium Neutral Citation: Enterprise Finance Solutions Pty Ltd v Ciszek [2014] NSWDC 314 Hearing dates: 16 October 2014 Decision date: 23 December 2014 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) Summons dismissed. (2) Plaintiff pay defendant's costs. (3) Liberty to apply in relation to costs. (4) Exhibits retained for 28 days. Catchwords: COSTS - s 384 Legal Profession Act 2004 (NSW) appeal from Review Panel costs assessment review - solicitor and barrister charged fees without entering into a costs agreement - whether Review Panel erred in refusing the plaintiff's application to assess the costs at nil - whether indemnity principle invoked where there was no costs agreement and no evidence of payment - whether Review Panel erred in finding there had been no procedural unfairness where the costs assessor had adjourned the proceedings to permit a solicitor/client assessment - whether solicitor/client assessment necessary at all - appeal dismissed Legislation Cited: Legal Profession Act 2004 (NSW), ss 317, 324, 356 and 384 Cases Cited: Ada Evans Chambers Pty Ltd v Santisi [2014] NSWSC 538 Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495 Autore t/as Autore & Associate Solicitors & Barristers v Folino-Gallo [2014] NSWSC 777 Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd (2011) 12 DCLR (NSW) 304 Catto and Ors v Hampton Australia Ltd (In Liq) and Ors [2008] SASC 231 Coshott v Barry [2010] NSWSC 1324 CSR Ltd v Eddy (2008) 70 NSWLR 725 Dyktinski v BHP Titanium Minerals Pty Ltd [2004] NSWCA 154 Fordyce v Fordham and Anor (No 1) [2007] NSWSC 1036 Frumar v Owners of Strata Plan 36957 (2006) 67 NSWLR 321 Gorczynski v AWM Dickinson & Sons [2005] NSWSC 277 Halliday v High Performance Personnel Pty Ltd (in liq) [1999] HCA 13 Howard & Ors v Mechtler & Ors [2000] NSWSC 455 Khan v Jenni Mattila & Co Lawyers [2011] NSWSC 71 Kuek v Devflan Pty Ltd (Supreme Court of Victoria, Wood AsJ, 29 August 2011) O'Connor v Fitti [2000] NSWSC 540 Port Melbourne Authority v Anshun (1981) 147 CLR 589 Sittchichai Laksanabechnarong v F Net Pty Ltd (District Court of New South Wales, McLoughlin DCJ, 16 September 2011) Steele v Marshan [2012] NSWSC 32 Steele v Marshan [2012] NSWCA 141 Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No. 4) [2013] VSC 669 Telfer v Telfer (No 3) [2014] NSWCA 251 Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd (No 4) [2011] NSWSC 720 Wende v Horwath (NSW) Pty Ltd [2014] NSWCA 170 Wentworth v Rogers (2006) 66 NSWLR 474 Texts Cited: G E Dal Pont "Law of Costs" (3rd ed., 2013, LexisNexis) M Wilson, "Costs: Failure to disclose reduces court ordered costs", Law Society Journal (March 2012) Category: Principal judgment Parties: Plaintiff: Enterprise Finance Solutions Pty Ltd Defendant: Richard Michael Ciszek Representation: Counsel: Plaintiff: Mr S Bell Defendant: Ms M Castle / Mr E Yin Solicitors: Plaintiff: Simons Ravden Lawyers Defendant: O'Sullivan Saddington File Number(s): 2014/122142 Judgment 1. By Summons Commencing an Appeal (Part 50) filed 23 April 2014, the plaintiff brings an appeal from the Costs Review Panel's reasons dated 21 January 2014. The orders sought in the summons are as follows: 1. Appeal allowed. 2. The decision of the Costs Review Panel to be set aside. 3. The costs to be assessed as nil. 4. Costs. 1. The appeal grounds are as follows: 1. The Costs Review Panel erred in law in not determining that as at the time of the application for costs assessment there was no liability of the costs review respondent to pay his solicitor (and he had not done so) then the indemnity principle was invoked. 2. The Costs Review Panel erred in law in not considering that as there was no evidence of the arrangement for payment of costs between the costs review respondent and his solicitor then the indemnity principle was invoked. 3. The Costs Review Panel erred in law in not finding that there was no obligation on the costs review respondent's solicitor to pay a number of barristers (nor was there any evidence of payment), as there were no costs disclosures or costs agreement between the solicitor and barrister. 4. The Costs Review Panel erred in law in not finding the costs review applicant was denied procedural fairness in that they were not given the opportunity to object to the costs assessor allowing the solicitor for the costs review respondent to have its solicitor own client bill assessed. 5. The Costs Review Panel erred in law in not finding the costs assessor should not have allowed the solicitor for the costs review respondent to have its solicitor own client bill assessed. 6. The Costs Review Panel erred in not finding that the costs assessor should have assessed the bill without regard to the assessment of the solicitor of the costs review respondent own client bill. 7. The Costs Review Panel erred in law in not finding that the second assessment did not cure the ills of the original application for costs. 8. The Costs Review Panel erred in law in not finding that that the costs review respondent had no obligation to pay costs and thus the assessment should be nil. 1. The issues of law raised by these grounds fall into groups, some of which overlap, and I have structured this judgment accordingly. 2. Preparing this judgment has been difficult. The plaintiff failed to comply with the timetable for providing to the court either its submissions or the material in support. Nor were the submissions supplied to the defendant. I am grateful to Ms Castle, counsel for the defendant, who endeavoured to anticipate the contents of these missing submissions, and provided an advance outline of the issues she anticipated would arise. The submissions of the plaintiff that were provided to the court for the hearing did not deal with a number of issues about which I wished to hear, and a timetable had to be made for further submissions after the hearing was concluded. Grounds 4, 5 and 6 – Procedural fairness and the Review Panel's obligations to give reasons 1. Although only Ground 4 identifies procedural fairness as the issue, I include grounds 5 and 6, as the legal issues raised may also fall within the bounds of these arguments (they are, however, also dealt with in relation to the indemnity principle set out below). Insofar as that is the case, my consideration of this issue relates to all grounds raising the issues of procedural fairness and the obligation of the Review Panel to give reasons. Procedural fairness 1. The plaintiff complains it was not accorded procedural fairness and that this is an issue that the Review Panel failed to "determine" (written submissions, paragraph 47), and submits that this is demonstrated by the correspondence. A detailed analysis of the submissions put to the costs assessor is necessary, in part because this correspondence (as opposed to the plaintiff's written submissions) reflects the authorities relied upon in support of the plaintiff's request for the costs assessor to make a nil finding. 2. On 7 November 2011 the solicitors for the plaintiff wrote to the costs assessor asking, in light of the absence of costs agreements for the solicitor and one of the barristers, that the costs assessor obtain proof of payment of the accounts: "We have read the article in the November 2011 NSW Law Society Journal at page 42 that discusses the recent decision of Ventouris Enterprises v Dib Group Pty Limited Ltd [sic] (no 4) and Anor [2011] NSWSC 720 and its discussion regarding the indemnity principle in the context of party/party costs. The article also cites the relevant authority of Dyktinski v BHP Titanium Minerals Pty Limited [2004] NSWCA 154, that we have also considered. We duly request that you consider these two relevant decisions in the context of the failure of the costs applicant's solicitor and Mr. Henskens of counsel to enter into a Cost [sic] Agreement or make costs disclosure. It is our submission, based on these decisions and the indemnity principle, that if the Costs Applicant is not able to establish that there is a solicitor/client costs liability then they are not entitled to recover any party/party costs from our client. It is also our respectful submission, based on these duty bound [sic] authorities, that you should make further enquiries and request documents from the costs applicant to establish that there is indeed a primary solicitor/client costs liability prior to finalising the costs assessment. In this regard we note that the solicitor for the Costs Applicant has submitted that most of the costs have been paid but has resisted any attempt by us to obtain evidence of same." (Exhibit A, Tab 47) 1. The Costs Assessor sought submissions from the defendant, which were provided in a letter dated 21 November 2011. The Costs Assessor then wrote to the solicitors for the defendant on 13 December 2011 as follows: "I refer to the abovementioned matter and your letter of 21 November 2011 and note that your letter seems to suggest that the Cost Applicant has not paid all of the bills rendered to him and accordingly it appears to me that he cannot proceed to recover party and party costs until such time as either a liability arises for him to pay the solicitor and client costs or he has in fact paid those costs. I draw your attention to Section 317 of the Legal Profession Act, which effectively provides that if a law practice does not disclose to an [sic] client or an associated third party payer anything required by the division to be disclosed, the client or associated third party payer need not pay the legal costs unless they have been assessed. I further note that the Section goes onto [sic] provide that proceedings may not be maintained against the client unless such costs have been assessed. In the circumstances it [sic] my belief that if you press on with the current party and party application I would be left with no alternate other than to find that your application is in breach of the indemnity rule and disallow your client's claim entirely. If, however, you ask me to adjourn the matter to allow your firm to lodge a solicitor and client application for assessment against your client and if you receive an assessment I can then proceed to consider this party and party costs application on the basis that a liability does arise for your client to pay those costs once an assessment has occurred. Accordingly could you please advise me within seven (7) days whether you wish me to adjourn this matter until such time as you file a solicitor and client application and have your bill of costs assessed or whether you wish me to proceed with the material currently before me. I feel in all circumstances that I should give you the opportunity to have your solicitor and client costs assessed under Section 317, rather than summarily dismissing your application on the basis that it is in breach of the indemnity principle." (Exhibit A, Tab 49) 1. A copy of this letter was forwarded to the solicitors for the plaintiff on the same day (see the covering letter behind Tab 48 in Exhibit A). 2. This resulted in a complaint from the solicitors for the plaintiff that they had not received a copy of the letter of 21 November 2011. I am, however, satisfied that the contents of their letter are clearly within the knowledge of the plaintiff's solicitors, from the description of it in the Costs Assessor's letter. 3. On 15 December 2011 the solicitors for the plaintiff wrote to the Costs Assessor as follows: "We refer to your letter of 13 December 2011. We advise that the solicitor for the costs applicant did not provide us with a copy of the correspondence to which you refer and we have requested same (as well as any other correspondence sent by them to you that was not forwarded to us) as a matter of urgency. We respectfully request that we be given a [sic] opportunity to submit prior to your making any order of adjournment of the application. Assuming we are provided with the correspondence to you of 21 November 2011 urgently, we believe we will be able to provide you with our submissions within fourteen days. We look forward to your reply." (Exhibit A, Tab 51) 1. On 21 December 2011, the Costs Assessor wrote to the parties stating that he would "refrain from taking any further steps in this matter" until the 30 March 2012 to enable the plaintiff to file a solicitor/client application for assessment of costs and for that application to be dealt with. The solicitors for the plaintiff wrote to the solicitors for the defendant on 23 December 2011 complaining they still had not received a copy of the correspondence of 21 November and 15 December 2011 and wrote to the Costs Assessor on 23 December 2011 complaining about this continued failure (see Exhibit A, Tab 55). The Costs Assessor replied on 23 December 2011 as follows: "I refer to your letter of the 15 December 2011. I have already granted the adjournment and there is no reason for you to make any submissions in respect of such a grant. For your records I enclose a copy of a letter from the Applicants [sic] Solicitor's which is self explanatory." (Exhibit A, Tab 56) 1. The letter enclosed, dated 15 December 2011, is a letter the defendant's solicitors sent to the Costs Assessor which is in the following terms: "Thank you for your letter of 13 December. We are happy to take up your kind offer and request this matter be adjourned to allow our firm to lodge a Solicitor and Client Application for Assessment of Costs against our client." (Exhibit A, Tab 56) 1. The solicitors for the plaintiff wrote to the Costs Assessor on 23 January 2012 as follows: "We wrote to you on 23 December 2011. As we have not received a reply we think it possible that you did not receive that correspondence in the post. We enclose a copy of that letter. The delay and uncertainty in communication caused by corresponding only by post may have prejudiced our client because our request to be able to submit to you on the adjournment of the application was seemingly not received until after you made that decision. We suggest that communications be by facsimile or email in order that we then know that correspondence has been received in a timely fashion. If you agree to this course, kindly let us have appropriate contact details. We attach copies of our correspondence to the solicitor for the costs applicant today. Whilst we receive your correspondence, the solicitor for the costs applicant seems to have embarked on a process of writing to you directly without providing copies to us – despite your earlier direction that he ensure copies of all correspondence sent to you is also sent to us. We understand that you would have expected we received copies of that correspondence but we have not and our ongoing requests for same seem to fall on deaf ears. With respect, it may appear that decisions have been based on correspondence you have received from the solicitor for the costs applicant (believing that we have been provided with copies) when we do not have copies of that correspondence and have had no opportunity to submit on same. We request an opportunity to be able to submit to you on the adjournment of the application after we have been provided with the correspondence sent to you by the solicitor for the costs applicant." (Exhibit A, Tab 58) 1. On 24 February 2012 the Costs Assessor replied as follows: "I refer to the abovementioned matter and apologise for not having replied to your letter of 23 January 2012 before. Unfortunately I was overseas at the time and have only recently returned. I am at a loss to understand your reference to a letter from the Applicant dated 21 December 2011. A perusal of my file does not disclose any such letter. The only correspondence dated 21 December 2011 that I can find on my file is my letter to you and to the Applicant's Solicitors granting the adjournment. I note I provided you with a copy of the letter from the Applicant dated 15 December 2011 and 23 December 2011 and presume you already have that document. I note that the adjournment was granted by me to enable the Applicant to rectify an error in the process. I do not believe that there was any necessity for me to seek your submissions in relation to that application for adjournment, bearing in mind that the delay in issuing of a cost certificate would prejudice the Applicant, who is deprived of the monies due and it appears to me that there will be no prejudice to the Respondent. I have already made the decision granting the adjournment and any further correspondence in relation to that decision is pointless. You do, of course, have your rights of appeal and review once I have made a final decision, but at this stage my decision to grant the adjournment stands, as I believe it is my duty to ensure that this matter is progressed quickly. I have allowed the Applicant until 30 March 2012 to rectify the error in their process and if they do not take up that opportunity then I will review what further directions I should make in this matter at that time. A copy of this letter has been forwarded to the Applicant's Solicitors." (Exhibit A, Tab 59) 1. On 21 March 2012 (erroneously dated 21 March 2011) the Costs Assessor wrote to the solicitors for the plaintiff as follows: "I refer to the abovementioned matter and enclose a copy of a letter I have received from the Applicant's Solicitors, which is self explanatory. If you wish to make submissions as to why the extension requested should not be granted, please do so within seven (7) days. Please ensure that a copy of your letter is forwarded to the Applicant's Solicitors and you confirm with me that this has been done." (Exhibit A, Tab 60) 1. That letter sought an extension of time for the costs assessment on the basis that the other party to the costs assessment, namely Mr Ciszek, the defendant, had to have 30 days to respond, which took the costs assessment past the 30 March cut off. 2. On 21 March 2012 the solicitors for the plaintiff replied: "We refer to our letter of 7 November 2011 and subsequent requests by our office to make submissions on your decision to allow the Costs Applicant in the current party/party assessment an adjournment to establish a solicitor/client liability for costs. First, we reiterate our primary contention that if the Cost Applicant's solicitor is not entitled to any of his fees on a solicitor/client basis there is, therefore, in accordance with the indemnity principle, no corresponding liability for the Costs Respondent to pay such costs on a party/party basis. The solicitor/client liability is the starting point when assessing the fair and reasonable amount recoverable on a party/party basis. This contention has recently been examined by the Supreme Court in Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd & Anor (No. 4) [2011] NSWSC 720 (28 June 2011) that confirms that a law practice that cannot establish a solicitor/client liability for costs will not be able to recover any amount in respect of the provision of legal services in the matter to which the costs agreement related and they must repay any amount received in respect of those services to the client. This decision can be reviewed at: www.austlii.edu.au/au/cases/nsw/NSWSC/2011. As a result, the contravention and failure of the Cost Applicant's solicitor in this matter to establish a solicitor/client liability for costs - at the time of applying for a party/party assessment - disentitles the Costs Applicant to any recovery on this assessment. The consequences of the findings in Ventouris are significant on this assessment because of the indemnity principle. The indemnity principle is central to the costs assessment and provides that party/party costs (even where they are awarded on an indemnity basis) are considered to be only a partial and not perfect indemnity of costs and disbursements paid on a solicitor/client basis. The operation of the indemnity principle therefore means that the starting point in determining the fair and reasonable party/party costs by you must require an examination of the reasonable solicitor/client costs incurred by the Costs Applicant. From this starting point various deductions are then made in accordance with sections 364(1) & (2) of the Legal Profession Act 2004 (NSW) and the principles applied on a costs assessment to arrive at a fair and reasonable party/party total. Put simply, it then follows on from the indemnity principle that if there is 'no' solicitor/client costs liability or a 'reduced' solicitor/client liability there is - as a result - 'no' party/party liability or a 'reduced' party/party liability prior to the application of other assessment criteria. Your acknowledgement of the Costs Applicant's failure to establish a solicitor/client liability means the party/party application on this assessment must - in fairness to the Costs Respondent - be dismissed. Your decision to grant a lengthy adjournment to allow the Costs Applicant to establish a solicitor/client liability for costs is prejudicial to our client as: 1. Our client should not have to wait (in the "just, cheap and quick" era) for the Costs Applicant to rectify his own solicitor/client costs defects that should have been properly addressed at the time of engagement (and certainly not at the time of applying for and during a party/party assessment). 2. Our client has incurred substantial costs in this application that was doomed to failure from the start. 3. The Costs Applicant has resisted all attempts by our office to seek details of payments made by their client to establish a solicitor/client liability, including well prior to the start of the assessment process - claiming that it is privileged. They refused to even produce copies of solicitor/client bills rendered to their client until they were ordered to do so. 4. The Costs Applicant is unable to retrospectively fix the party/party application by getting the solicitor/client liability issues and costs separately assessed. 5. We did not receive a copy of the Costs Applicant's correspondence to you despite frequent requests and thus we were not able to make any submissions. At the time of writing we have still not been provided with same, including the letter from the Solicitor for the Costs Applicant to you apparently dated 21 November 2011 that led to your letter of 13 December 2011. 6. It is unlikely the separate costs determination will have a contradictor. This cannot be fair to the Costs Respondent. For all of the above reasons, it is our view that you should set aside your previous order granting the indulgence to the Costs Applicant and dismiss the part/party costs application with an order that costs of the assessment be payable by the Costs Applicant on an indemnity basis." (Exhibit A, Tab 61) 1. On 26 March 2012, O'Sullivan Saddington replied as follows: "We are arranging for service of the Bill of Costs on our client. We will immediately after 30 days elapsed from serve of the Bill of Costs, lodge the documents at Court for assessment. We have been faxed a copy of a letter addressed to you from SR Law dated 21 March 2012. We submit that their interpretation of the Ventouris Enterprises case is incorrect. That case discusses whether "a law practice cannot establish a solicitor/client liability for costs will not be able to recover any amount." That is not the situation in relation to the matter before you. There is a liability for costs between solicitor and client. In a recent article, which you have no doubt read in the March issue of the Law Society Journal, Ms Marina Wilson, a solicitor of the Law Society's Legal Costs Unit discusses the Judgment of Sittchichai Laksanabechnarong -v- F Net Pty Ltd. She says; "an application for assessment for party and party costs may be made even where there has been a failure by a practitioner to disclose to the client. However, the assessor must consider S317(4) to determine whether there should be a reduction of the costs." Whilst we note this is a matter for you, we would submit that in the matter before you, the cost assessed are reasonable and there should be no reduction." (Exhibit A, Tab 62) 1. On 30 March 2012 the solicitors for the plaintiff replied stating: "We refer to your letter bearing date 21 March 2011. This letter was only received by us yesterday, being 29 March 2012. We note the address on the letter for our office is not correct. This office is on Level 4 not Level 3 of 311 Castlereagh Street Sydney NSW 2000. We were not sent a copy by O' Sullivan Saddington of their letter bearing date 13 March 2012. We are still waiting for copies of other correspondence from them to you that have not been provided, despite multiple requests and without any explanation, to us - including the critical one apparently dated 21 November 2011 that seems to have led to your decision to postpone the assessment process. We have always provided copies of our correspondence to you to them, as directed, and their failure to do the same puts us at a substantial disadvantage. On behalf of the Costs Respondent we have objected to the Costs Applicant being granted permission to have its costs assessed as between O'Sullivan Saddington and their client. We have provided reasons earlier including those in our letter to you dated 21 March 2012 which we understand you could not have seen at the time of your correspondence. We further object to any extensions being granted as it puts our client at a further disadvantage. Further reasons will be provided next week. We have requested that correspondence with you be via either facsimile or email. We note in the present case that it is unclear when the letter bearing date 21 March 2011 was posted. If it was 21 March 2012, it has taken 8 days to reach this office. We assume any posted reply will take at least 3 workings days to reach you. When you are requiring responses within 7 days the process adopted certainly puts us at a disadvantage. We ask that you reconsider our request to correspond either by email or facsimile. We confirm that we have always provided the Costs Applicant with a copy of any correspondence we have sent to you and will also copy this letter." (Exhibit A, Tab 63) 1. The plaintiff's submissions approach this issue as if they are appealing from the costs assessor's decision, rather than the Review Panel's endorsement of it. This is made clear in the plaintiff's written submissions, which state (at paragraph 42): "Clearly there is a breach of procedural fairness. SR law had no opportunity to make submissions to the CA prior to decisions being made." 1. The submissions go on to say that if the plaintiff had had the opportunity to make submissions "the costs assessor may have made a different decision" (at paragraph 44), that the decision the costs assessor made "was to benefit O'Sullivan Saddington not in the interests of Mr Ciszek" and that had the submissions which were later made during the assessment been made before the initial decision to grant an adjournment "they may well have been successful". 2. Although the decision appealed from should be the Review Panel decision only, I will set out the reasons why I am satisfied that the costs assessor did consult the parties both before and after making his decision. In this correspondence, the plaintiff asks the costs assessor to make a nil finding because of the absence of a costs agreement. The costs assessor decided to adjourn the proceedings rather than dismiss them, for the reasons set out in his correspondence, and the costs respondent consented to this course. 3. The plaintiff did not lose the opportunity to make submissions in relation to the issue; they made submissions to the effect that a nil finding should be made and, when the assessor declined to do so, asked to be heard on the issue of the adjournment. The assessor told both parties that he had already determined to grant the adjournment. The plaintiff complains that if they had been heard as to the adjournment, the assessor would have taken another course, namely to dismiss the costs assessment, or record a nil finding. 4. What is procedural unfairness? As Basten JA noted in CSR Ltd v Eddy (2008) 70 NSWLR 725 at [39], the first question is whether there is unfairness "in a practical sense" and the second question is whether, if there was unfairness, the lost opportunity could have made any difference. 5. There was no unfairness in the practical sense, for the reasons outlined by the costs assessor in his correspondence. Nor is it evident what difference the lost opportunity would have made in terms of additional arguments being put forward by the plaintiff which would persuade the costs assessor to take a different course. 6. Mr Elliott did not identify to me the arguments that the plaintiff would have put if given the opportunity to do so, but hinted that this may have included an argument of res judicata, issue estoppel and/or Anshun estoppel (Port Melbourne Authority v Anshun (1981) 147 CLR 589), although without developing them sufficiently for Ms Castle to be able to reply, or for me to determine whether these were indeed lost opportunities. It is, strictly speaking, not necessary for me to do so, as no such issues were raised before the Review Panel and accordingly should not be raised before me: Fordyce v Fordham and Anor (No 1) [2007] NSWSC 1036 at [17]. I should note, however, that more than one certificate can be issued for a costs assessment (Coshott v Barry [2010] NSWSC 1324 at [66]) and that, if faced with the likelihood of the costs assessor refusing the adjournment, Mr Ciszek had a wide range of options, from discontinuing the costs assessment to seeking relief in the Supreme Court. 7. I am satisfied that the plaintiff would fail in relation to both these issues if the decision of the costs assessor were the decision the subject of this appeal. 8. There are, however, more fundamental problems for the plaintiff to confront than the issue of lack of procedural fairness by the costs assessor. As I have already noted, this is an appeal from the decision of the Review Panel, not the costs assessor. The Review Panel, in the decision appealed from, considered that this was an appropriate course for the costs assessor to take. The objection taken to the Review Panel's decision, according to the plaintiff's written submissions, is that the Review Panel "did not appear to determine the SR Law objections on the grounds of procedural fairness and thus they made an error of law" (written submissions, paragraph 47). This submission was explained, in the course of oral submissions, to be a complaint that the Review Panel had failed to give reasons and to deal in specific terms with the grounds of lack of procedural fairness: Frumar v Owners of Strata Plan 36957 (2006) 67 NSWLR 321. 9. This brings me to a consideration of the adequacy of the Review Panel's reasons. The Review Panel's obligation to give reasons 1. The Review Panel noted, under the heading "breach of the indemnity principle", that the defendant's legal advisers had failed to disclose their fees in a costs agreement. The Review Panel went on to say (at paragraph 16): "In response to that submission to the Costs Assessor by the Costs Respondent, it appears that the Assessor deferred proceeding with the assessment until the solicitor for the Costs Applicant had the practitioner/client bill assessed. Whether or not it was appropriate for the Assessor to do this is not a matter that the Review Panel has reason to express any opinion about, but [it] notes that the practitioner/client assessment took place. It is clear that, that assessment having taken place, the Review Respondent is liable to pay his solicitor for the legal services provided. Provided that the fees allowed on assessment of the party/party costs do not in any way exceed the Review Respondent's liability to pay fees to his own solicitor, then there can be no breach of the indemnity principle." 1. The Review Panel then concluded (at paragraph 18) that, "having considered the whole of the matter", it determined that the Assessor was "entitled to proceed with the assessment is the manner that he saw fit and there was no denial of procedural fairness to allow the solicitor for the Costs Applicant an opportunity to have his own costs assessed". The Review Panel added that under s 356 the plaintiff had no standing in relation to that costs assessment, and that accordingly "the Review Panel determines that this ground has not been made out" (at paragraph 19). 2. The plaintiff complains that the Review Panel did not set out the plaintiff's submissions as to how procedural unfairness occurred, and set out its own findings dealing with the plaintiff's complaint that the decision to adjourn unfairly benefited the defendant, who "had made no payment and had no liability to anyone" (written submissions, paragraph 45). 3. The obligation of the Review Panel (as opposed to the costs assessor) to give reasons needs to be seen in the context of its role. In Wende v Horwath (NSW) Pty Ltd [2014] NSWCA 170, Barrett JA noted how the Review Panel in those proceedings had summarised its documents and functions: "[156] The review panel was aware of the provisions of s 375. It included an accurate summary of them in its reasons. In addition, it stated that it had exercised the s 375(3) discretion and received (and taken into account) further material provided by the applicants. The panel was also aware of judicial statements about the nature of the s 375 task. It referred to Kells v Mulligan [2002] NSWSC 769 and Dunn v Jerrard & Stuk Lawyers [2009] NSWSC 681. 1. Barrett JA then explained the nature of the obligation of the Review Panel to provide reasons when considering decisions with which it agreed: [179]…There is no basis for any argument that a review panel which considers to be right both the decision under review and the reasons given for it must formulate its own paraphrase of those reasons. [180] Reference may be made, in this connection, to Alvaro v Amaral (No 2) [2013] WACA 232 where an issue arose as to the adequacy of reasons given by a master for refusing to grant leave to appeal against an arbitrator's award. It was held (at [37]–[38]) that the master, by stating that the arbitrator was "right" on a particular point, had in effect adopted the arbitrator's reasons as his own in concluding that there was no manifest error on the face of the award and no evidence of an error of law; and that this was a sufficient discharge of the duty to give reasons. [181] An example of unexceptionable adoption by an appellate court of reasons given by the judicial officer whose decision was subject to appeal may be found in Robbins v FCT [1974] HCA 58 ; 129 CLR 332. The judgment of the Full High Court constituted by Menzies, Gibbs, Stephen and Mason JJ (at 341) was, in its entirety, as follows: "The Court, having considered the judgment of Walsh J and having noted the criticisms made of it by counsel for the appellant, is of the opinion that that judgment is correct and that [the] appeal should be dismissed. The appeal is dismissed with costs." [182] In the present case, the review panel's function was to "review" the assessor's determination. For the purpose of performing that function, the panel was required to bring to bear experience and specialised knowledge in relation to matters already decided by the assessor for reasons stated by the assessor. It was quite sufficient for the review panel to say, in effect, that it shared and endorsed reasons for conclusions stated by the assessor that the that the panel, in turn, considered to be correct. 1. The same is the case here. The Review Panel has said that it shared and endorsed the reasons for conclusions stated by the assessor, noting only that it did not express an opinion (because one was not required, on the grounds before it) as to whether a solicitor/client assessment was in fact necessary. In endorsing the decision, the Review Panel was bringing to bear its specialised knowledge in relation to matters already decided by the assessor, for reasons stated by him. That is all that the Review Panel had to do. 2. The grounds of appeal relating to denial of procedural fairness (including but not limited to ground 4) and to the Review Panel's asserted failure to give reasons are not made out. Grounds 1, 3 and 5 – 8 – the indemnity principle 1. The principal issue which took up much of this appeal was whether, in adjourning the costs assessment for a solicitor/client assessment, the costs assessor had erred in law and whether the Review Panel, in failing to hold that this was an error by the costs assessor, similarly erred. This involves consideration of a series of authorities, some of which are unreported and available only through the prism of other decisions referring to them, and others which, while available online, do not refer to other decisions on the same issue. 2. The indemnity principle is explained in Wentworth v Rogers (2006) 66 NSWLR 474, where Santow JA at [46] cited with approval the observations made by Master Malpass in Howard & Ors v Mechtler & Ors [2000] NSWSC 455: "[46] This principle has been applied to applications for assessment of party and party costs under the Act. Thus in Howard & Ors v Mechtler & Ors [2000] NSWSC 455 at [11] Master Malpass observed: Under an order for costs, the paying party is only obliged to pay such costs as the receiving party was primarily and potentially legally obliged to pay to his solicitor. There is an indemnity only in respect of the costs covered by the order. A receiving party cannot recover a sum in excess of the liability to his own solicitor. … It is necessary to prove that under no circumstances does the client have any liability to pay costs to his solicitors." 1. Basten JA added, at [126]: "[126] Accordingly, it is beyond dispute that the purpose of an adverse costs order is to compensate or partly indemnify one party to litigation (usually the successful party) for the legal costs incurred in the course of the proceedings. The principle does not require that the costs have been paid, but it does require that there be a legal liability to pay costs." 1. The Review Panel dealt with this issue at paragraphs 17 – 17 of their determination. To frame the issue very broadly, the question is whether a party who does not have a costs agreement (and therefore, the plaintiff argues, any liability to pay costs) can enforce a costs order against the losing party in court proceedings, or whether this would be a breach of the indemnity principle. The authorities relied upon by the plaintiff 1. Is the absence of a costs agreement analogous to the situation where the costs agreement provided is void? This is the submission put before me in these proceedings, and was the submission put before the costs assessor, as the correspondence demonstrates. 2. Mr Elliott's written submissions of 15 October 2014 did not refer to any authority on this issue. However, as the correspondence to the costs assessor set out above shows, the plaintiff relied, in its application to the costs assessor, upon Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd (No 4) [2011] NSWSC 720, a decision based on the impact of s 324 of the Act. 3. In Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd (No 4), the fee agreement provided by counsel to his client was deemed void under s 324 of the Act because the agreement contained an uplift fee of 25%. Slattery J held that the statutory language of s 324 was "quite intractable", in that it wholly excluded the possibility of recovering fees on a quantum meruit or any other restitutionary basis outside the costs agreement itself (at [24]). 4. However, as Slattery J notes (and Wood AsJ concurs in Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No. 4) [2013] VSC 669 at [97]), the dismissal of the barrister's entitlement, even on a quantum meruit basis, is as a result of the language of s 324 in relation to an inclusion of such a term in a costs agreement, as opposed to a failure to provide a costs agreement at all. This was, as Slattery J went on to explain, because the legislature wanted to prevent, "in the strongest possible terms", agreements of the kind entered into by counsel with his client in Ventouris. 5. It may appear anomalous that a client without any agreement is in a better position than a client with a void agreement, but that is the practical result. I agree with Ms Castle's submission (at paragraph 19) that this decision is irrelevant, in that the agreement was void only because of the language of s 324, and for the policy principles stated by Slattery J. That is not the case here. 6. The other authority referred to by the plaintiff in the course of the costs assessment is Dyktinski v BHP Titanium Minerals Pty Ltd [2004] NSWCA 154. The ratio of this decision is set out in G E Dal Pont "Law of Costs" (3rd ed., 2013, LexisNexis), at [7.17] and I shall not repeat it. The Court of Appeal set aside the nil findings on assessment for reasons wholly unrelated to the circumstances of this case. 7. Finally, I observe that Dal Pont "Law of Costs" (3rd ed., 2013, LexisNexis),at [7.10] – [7.20], notes a series of similar examples, concluding that the application of the indemnity rule has not been especially strict, in that the courts have been willing to make a costs order even where the obligation to pay is remote (an early case where there was no costs agreement being Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495 (at 501). The approach taken in Sittchichai Laksanabechnarong v F Net Pty Ltd 1. The defendant referred the costs assessor to Sittchichai Laksanabechnarong v F Net Pty Ltd (District Court of New South Wales, McLoughlin DCJ, 16 September 2011). In that decision, the text of which is unavailable but which has been summarised in an article in the March 2012 issue of the Law Society Journal ("Costs: Failure to disclose reduces court ordered costs", by Marina Wilson), McLoughlin DCJ considered the application of s 317(4) of the Act to party and party costs. 2. The facts were as follows. An application to assess party and party costs was determined by the costs assessor at nil, on the basis that of the indemnity principle as discussed in Wentworth v Rogers, extending that principle beyond the pro bono principle to include the facts in that case. The assessor reasoned that due to the failure to disclose by the law practice, the client had no present liability to pay the practitioners. In the absence of a liability, costs cannot be recovered from the party ordered to pay the costs. An application for review was made, and the Review Panel allowed an amount of $47,906.15. This decision was appealed to the District Court and came before McLoughlin DCJ. 3. McLoughlin DCJ, in a review of the authorities, concluded that the principle was not immutable, and ought to be applied with some flexibility. Despite failing to provide a costs agreement and disclosure of costs, a practitioner was still entitled to costs from the client, but only after those costs were assessed on a solicitor and client basis first, and on a quantum meruit basis. 4. An additional matter for consideration, in determining that quantum meruit basis, was the applicability of s 317(4) of the Act, which permitted the reduction of the costs "proportionate to the seriousness of the failure to disclose". What was the impact of this provision on the determination of party and party (as opposed to solicitor and client) costs? McLoughlin DCJ considered that, even though there was no costs agreement, if it were not for s 317(4), the practitioner would be entitled to costs on a quantum meruit basis. Where there had been a failure to disclose, McLoughlin DCJ concluded that "the assessor must take into account and make a determination in accordance with s 317(4). Quite clearly that is a subsection that is punitive and sets out the seriousness of a situation where there is a failure to disclose" (quotation taken from Ms Wilson's article). What this means is that a party's quantum meruit costs could be reduced by a small, or even a substantial, amount, by reason of the fact that no costs agreement disclosing costs had been entered into. 5. Ms Wilson's conclusion is: "An application for assessment for party and party costs may be made even where there has been a failure by a practitioner to disclose to the client. However, the assessor must consider s 317(4) and determine whether there should be a reduction of the costs. On page 12, the court said: "It is sufficient to say that s 317(4) of the Act does not operate to provide an adverse party order to pay the client's costs with a ground for avoiding the consequences of the order. The subsection provides a client with a right to request on a practitioner/client… assessment a punitive order reducing the costs that would otherwise be fair and reasonable. Because a failure to disclose may amount to unfairness to a client, it may affect the quantum of costs payable by the client. The court has now made it clear that s 317(4) has an indirect impact on court-ordered costs pursuant to the indemnity principle." 1. Subsequently, a senior costs assessor, Mr Gordon Salier, wrote to the Law Society Journal expressing disagreement with that decision. I have been provided with a copy of that letter, and the issues he raised are compelling. I have decided, however, to err on the side of caution and to note only that this decision appears to have been a contentious issue in costs circles for some time. 2. It is clear from the reasoning of McLoughlin DCJ that the absence of a costs agreement does not mean that the party without the costs agreement cannot pursue the losing party for costs; what it means is that this pursuit is subject to deduction under s 317(4). The obligations of comity therefore require me to give these conclusions, from a fellow judge of this court, great weight. 3. Both counsel informed me that this decision, which is unobtainable, has never been referred to since. That is not strictly correct, in that the decision is referred to in Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No. 4) at [97], and the ratio considered. It is unfortunately a feature of many of the other decisions set out below that they do not refer to each other, as well as to this decision, despite discussing the same point. The difficulty is that many decisions such as Sittchichai Laksanabechnarong v F Net Pty Ltd are not published on Caselaw, and therefore are not available. 4. As the only decision to refer to this specific case, Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No. 4) is a decision of assistance, even though the issues in those proceedings are very different. First, Wood AsJ makes it clear that "one can have a retainer without a costs agreement" (at [86]); the question of retainer is answered by looking at "all the circumstances" (at [86]). 5. Dealing with McLoughlin DCJ's decision, Wood AsJ notes is that it relates to "the impact in an inter partes assessment of costs of the failure to comply with disclosure obligations to your own client" (at [97]). However, Wood AsJ goes on to note at [98] – [99]: "[98] In her third report Ms Harris makes reference to the effect of a failure to disclose in an inter partes assessment of costs. Ms Harris relies on Catto v Hampton ("Catto") which is a Supreme Court Full Court decision from South Australia. In that case the court did not allow an argument by the party with the liability to pay inter partes costs that there was no valid costs agreement when considering the recovery of costs on a time basis in circumstances where the costs had already been paid. [99] In my view reductions to legal costs for non-compliance form part of consumer protection legislation and have application in reviews of costs under that legislation. Here there is no review initiated by the client under the Legal Profession Act 2004 (Vic)("the Act"). The plaintiffs are seeking to take advantage of a section that is not applicable to them. Section 3.4.44A (2) of the Act makes it clear that where there is a costs agreement in existence the Costs Court has a discretion to not tax in accordance with the agreement in the event of material non-compliance. The Costs Court however, is not required to initiate an inquiry as to whether disclosure complies with applicable legislative requirements. The onus must therefore be on the client to raise these matters before non-disclosure has any potential impact. There is no obligation on the court to initiate such an inquiry, even on a review initiated by the client. This underscores the fact that it is the client's right in a review under that Act. It is not the obligation of a court dealing with an inter partes taxation or gross sum exercise to perform a de facto review under the Act and reduce the costs recoverable from the party liable. An application to set aside a costs agreement can be made to the Victorian Civil and Administrative Tribunal by the party liable. Again, a de facto application by a party liable to pay costs who is not the client is not appropriate. In any event Catto makes it clear that where costs are already paid to legal representatives by a client who is a party favoured by a costs order, it is not open to the party liable to argue the costs are not 'payable' by the client and thereby seek to avoid their liability under a court order." 1. In Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No. 4) all the costs had been paid, so this was not an issue (see [100] – [102]). However, Wood AsJ went on to cite an earlier unreported decision of his own, Kuek v Devflan Pty Ltd (Supreme Court of Victoria, Wood AsJ, 29 August 2011), at [103]: "[103] Coincidently, I have referred to Catto in an earlier unreported decision in Kuek v Devflan Pty Ltd as follows: 33. In any event, the respondents rely on authority for the proposition that such an exercise (to accurately quantify what the respondents are actually liable to pay their solicitors) is not appropriate anyway, and one need not go further than what has actually been paid. The Full Court in South Australia considered such an issue in Catto. The case involved an order for indemnity costs not party/party costs, but the respondents contend the principles are the same. 34. In the leading judgment by White J he states that: The principal question is whether the indemnity costs to which the defendants are entitled are the amounts which they actually expended in defending the plaintiffs' claims, or are only those amounts which their respective solicitors could have enforced in an action against them, ie, the amounts which they were legally obliged to pay. At paragraph [37] His Honour stated that … in analogous circumstances litigants have been held to be entitled to recover costs already paid in connection with litigation, even though their solicitors could not have enforced the claim for those costs. The cases involving uncertified solicitors provide an example. What followed at paragraphs [38 ] to [40] in the judgment were examples of such cases. 35. By way of further analogy, a solicitor acting for a client might have their costs reduced for non compliance with disclosure provisions in the Legal Practice Act 1996 or Legal Profession Act 2004 (see sections 91(a) and 3.4.17(4) respectively) in a review initiated by the client. In the matter of Shaw v Yarranova Pty Ltd [2010] VSC 567 ("Shaw") the issue of whether the indemnity principle had been breached was sought to be agitated by the party liable to pay party/party costs with an attempt to reduce the winning party's liability to their own solicitor on this basis. This is in effect what the appellant is seeking to do here by demonstrating that the respondents' liability to their own solicitors is less than what they seek to recover from the appellant, irrespective of what they have actually paid their solicitor. 36. In Shaw the Honourable Justice Beach stated at par [25]: Underlying part of the plaintiff's submissions was a contention that every party ordered to pay another party's costs is entitled to pursue an argument (and seek all relevant documents for the purposes of the pursuit of that argument) that there may have been non-compliance with disclosure obligations under (in this case) the Legal Practice Act 1996. The argument would then run that the party ordered to pay costs is entitled to rely on a failure to give information by the lawyers for his opponent to his opponent in reduction of the opponent's liability to his lawyers — and thereby bring the indemnity principle into play. Wood AsJ rejected this proposition. His Honour was correct to do so. A taxation of costs ordered to be paid by another party is not an occasion for an inquiry into what (if any) failures there have been in relation to disclosure requirements and what the "seriousness" of any such breach might be. The flexible and reasonable application of the indemnity principle, as the authorities show, does not permit such an approach." 1. Wood AsJ has helpfully put together a series of Victorian decisions which hold that an assessment of costs is not an occasion for inquiry into what (if any) failures there have been in relation to disclosure requirements for the purpose of reducing the opponent's liability to pay and thereby bring the indemnity principle into play. These decisions appear to run counter to the approach taken by McLoughlin DCJ in that non-compliance with the disclosure obligations does not permit a reduction in the sum claimed. Nor is there any suggestion that a separate solicitor/client assessment is necessary. Additionally, as Wood AsJ also notes, there has been a conflict of authority, and a different approach taken by the courts, as is set out in South Australia: Catto and Ors v Hampton Australia Ltd (In Liq) and Ors [2008] SASC 231. 2. This is relevant to the next issue, namely whether the costs assessor was correct in holding that the absence of a costs agreement mean that the costs could not be assessed on a party/party basis until they had first been assessed on a solicitor/client basis. The Review Panel expressed no opinion about this. There are a number of recent decisions on this point, largely inconsistent with, as well as not referring to, each other. No costs agreement: where the client is the complainant 1. Where the complaint comes from the client to whom the costs agreement was not provided, the obligation to have the bill assessed is clear. In Khan v Jenni Mattila & Co Lawyers [2011] NSWSC 71, no costs disclosure was ever provided to the plaintiffs, who were the clients of the defendant. The retainer was terminated and costs were assessed. In an application for extension of time for a solicitor/client costs assessment, Garling J stated: "[7] In the absence of a costs agreement, or else disclosure in accordance with Div 3 of Pt 3.2 of the Legal Profession Act 2004, a solicitor must first have their claim for costs and disbursements assessed under Div 11 of Pt 3.2 before their client is obliged to pay their costs: s 317(1), Legal Profession Act. [8] During the process of assessment, in the absence of a costs disclosure, the costs assessor may reduce the amount claimed for costs by an amount which is considered "… to be proportionate to the seriousness of the failure to disclose …": s 317(4), Legal Profession Act." 1. Returning to the indemnity argument put by the plaintiff, Garling J did not say that no costs were payable at all. As was the case in Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No. 4), one factor that even these cases make clear is that absence of a costs agreement does not automatically mean absence of a costs retainer. What Garling J is saying is that there must be a solicitor/client assessment. There is no reference in this decision to the unreported decision of McLoughlin DCJ. 2. In Steele v Marshan [2012] NSWSC 32; Steele v Marshan [2012] NSWCA 141, a solicitor acted for a client charged with criminal offences, without providing a costs agreement until after the proceedings were concluded. The client, who went on to act for himself, challenged the retainer and refused to pay. The magistrate held that there was a retainer, despite the absence of an agreement, noting at [47] (reproduced from [2012] NSWCA 141 at [18]): "Actions such as the present are now rare due to the provisions of the Legal Profession Act and the significant financial disincentive it provides to lawyers seeking to recover fees in the absence of a costs agreement or disclosure. Actions such as this make crystal clear the desirability of such disclosure being made very early in proceedings, as required by the Act. However the Act does not make it impossible to recover fees where a retainer can be implied by the circumstances. In my view this is a case where such a finding is inevitable." 1. The solicitor had not disputed that this amounted to failure to make a costs disclosure or that "[a]s a consequence, he was not entitled to recover costs unless they had been assessed under Div 11 of the Legal Profession Act: s 317(1)" ([2012] NSWCA 141 per Basten JA at [2]) and accordingly had his fees assessed. However, this was a solicitor/client rather than a party/party costs assessment. Clearly such an assessment must take place. The question is whether both a solicitor/client and a party/party assessment must take place. 2. In Autore t/as Autore & Associate Solicitors & Barristers v Folino-Gallo [2014] NSWSC 777, Harrison AsJ dismissed an appeal from a magistrate's ruling that failure to provide a costs disclosure and have the costs assessed did not prevent the barrister suing for those fees. (In those proceedings, the barrister performed the work and sent a costs agreement later, which was treated as amounting to not providing a costs agreement, as was the case in Steele v Marshan). Again, this was not a party/party assessment. 3. However, the party complaining about lack of a costs agreement in Ada Evans Chambers Pty Ltd v Santisi [2014] NSWSC 538 was indeed a third party, and with the novel twist that the successful party – a barrister being sued by his chambers for his fees – was acting for himself. Should he have sent himself a costs agreement? 4. Schmidt J rejected an argument similar to that put before me by the plaintiff, namely that the lack of fee agreement meant that there was no retainer (at [33]) and thus no obligation to pay. Her Honour noted the provisions of s 317(1), but held that costs could still be awarded, and the quantum of the costs was a matter for the assessor, but "the recoverability of such costs is not foreclosed by the lack of agreement" (at [34]). Schmidt J held that, if costs can be awarded, then they should be able to be assessed in accordance with that order, subject only to the provisions of s 316(1). Her Honour did not address the issue of whether those costs could be reduced by the assessor, or state whether the costs would have to be assessed on a solicitor/client basis first, but the language of her judgment appears to be that there is an entitlement to the fees under s 317(1) regardless of such steps. 5. The authorities are, it would seem, in conflict with each other, and additionally the authorities in Victoria are in conflict with those in New South Wales. Which is the correct view? 6. My function is to determine whether the Review Panel erred in law. The Review Panel expressed no view as to whether the assessment was necessary, but considered the costs assessor's approach "appropriate". Ms Castle points out that if the solicitor/client assessment was unnecessary, her client was the one who suffered, and that the delay caused had financial consequences for her client, rather than the defendant. However, ground 1 of the appeal squarely raises, as an issue of law, that the Review Panel erred in refusing to set aside the whole of the costs awarded. 7. My view is that the approaches taken by McLoughlin DCJ and Schmidt J are correct. Where there is no costs agreement, a party may still claim costs on a quantum meruit basis, on assessment; however, the assessor must consider s 317(4), and determine whether there should be a reduction of the costs by reason of the circumstances in which there was a failure to enter into a costs agreement, if considered appropriate. Thus, the absence of costs disclosure does not prevent recovery of fees on a quantum meruit basis, but this assessment is subject to s 317(4). In those circumstances, a separate solicitor/client assessment would be unnecessary as the costs assessor would be performing the assessment, and it has the added benefit of permitting the person against whom the costs order is sought of raising grounds under s 317(4) for the appropriate reduction (no such application was made, and no ground of appeal relies upon it). 8. The plaintiff's submission that without relevant disclosures being made in a costs agreement, the client (and thus the opponent) "has no liability to pay costs until they have been assessed" (written submissions) is incorrect. As Ms Castle points out in her submissions, s 317 goes to the issue of payment (whether a client can be required to pay where no disclosure is made) and not to liability to pay. Liability and payment are separate concepts; liability continues to exist even though, for the period of time during which costs are challenged, the client need not pay (although the client is, importantly, not prohibited from actually paying, or acknowledging an obligation to pay). The argument that the plaintiff could have raised under s 317 is the that which is referred to by McLoughlin DCJ (namely reduction of the quantum meruit costs to reflect the wrongful failure to enter into a costs agreement), but this was not relied on by the plaintiff before the costs assessor, the Review Panel, or this court, and need not be considered by me: Fordyce v Fordham and Anor (No 1). 9. I note that order (3) in the appeal asks me to assess the costs as "nil", but it was my understanding that this related only to the attack on these costs under the indemnity principle. If I had been asked to undertake the kind of exercise McLoughlin DCJ did, it would have been necessary to be addressed as to the relevant s 317(4) factors as to the circumstances in which no costs agreement was entered into; for example, that these were originally proceedings of modest compass, in the Local Court, in which Mr Ciszek was the successful defendant. No such submissions have been made. 10. I am satisfied that the costs assessor erred in requiring a separate solicitor/client costs assessment. The costs assessor should have assessed the costs in the manner advocated by McLoughlin DCJ. 11. However, this is not an error of law which supports the plaintiff's appeal, as Ms Castle points out. The defendant, not the plaintiff, suffered the relevant loss of having to prepare a separate assessment of costs, and the consequent delay in recovery of the amount assessed. The plaintiff did not make submissions to me as to whether, as a result of this separate costs assessment (as opposed to the party/party assessment), the plaintiff was shut out from objecting to specific sums. Nor was any such submission put to the Review Panel. 12. These grounds of appeal must fail. Ground 3 – Mr Hensken's fees 1. Three barristers were retained. Two provided costs agreements but one (Mr Henskens) did not. The plaintiff brings an additional argument in relation to Mr Henskens' fees, namely that the costs assessor assessing the solicitor/client costs, Ms Hutley, does not specifically refer to his not having provided a costs agreement. As she allowed his fees without reduction, the submission is that she was either tricked into believing, or failed to ascertain, that Mr Henskens did have a fee agreement. 2. Ms Hutley states that she was aware that the solicitor did not make disclosure under the Act, and states this at the bottom of page 1 of her Statement of Reasons (at 3.1). The point taken is that Ms Hutley's statement is general, and does not refer to the fact that Mr Henskens similarly did not give a disclosure. 3. As is noted above, the plaintiff had no standing in relation to the solicitor/client costs assessment carried out by Ms Hutley. As an experienced costs assessor, Ms Hutley carried out her assessment based on what costs were in dispute (O'Connor v Fitti [2000] NSWSC 540), making such adjustments as she considered appropriate. Her obligation to give reasons related to the issues between the defendant and his solicitor, and not to the issues the plaintiff wanted canvassed. 4. The plaintiff submits that, if I am satisfied that this fact was kept from (or omitted by) Ms Hutley, then her solicitor/client bill has been prepared on an improper basis and Mr Henskens' fees should not be allowed. 5. I do not accept this submission. Ms Hutley is a highly experienced and careful costs assessor, who has made a general statement about non-disclosure and then noted that she could go ahead to reduce the amounts by reason of the non-disclosure, in accordance with s 317. She has made deductions from the solicitor's costs and for items 430 and 431 in the disbursements (she identifies no s 317 deductions). I am of the view that Ms Hutley's awareness of the non-disclosure extended to counsel, but also that her awareness of this is entirely irrelevant to these proceedings. This ground is therefore not made out. 6. Additionally, by reasons of my finding that it was not necessary for the solicitor/client assessment to take place, this ground of appeal must fail. Ground 2 – no evidence of payment 1. This is essentially a "no evidence" ground. The submission made on behalf of the plaintiff in court before me was that Mr Ciszek was "never sent any bills" and that this lack of evidence is further proof of absence of retainer. 2. I note generally that the party who challenges the existence of a retainer bears the onus (Halliday v High Performance Personnel Pty Ltd (in liq) [1999] HCA 13 at [7] and that to displace the rule the party with the onus must establish that under no circumstances does the client have any liability to pay. Clearly, the absence of any bills would be strong proof. However, this submission is "contrary to the evidence", to use Ms Castle's words in her submissions in reply. Behind Tab 25 of the Tender Bundle are the 13 solicitor/client bills rendered by the solicitors for Mr Ciszek to him over the period 26 March 2009 and up to 7 June 2011. 3. The submission that there is no evidence of payment, made in oral submissions, differed from that made on page 3 of the plaintiff's outline of submissions, handed up on the day of the hearing, namely that these invoices should be viewed with suspicion. This "suspicion" arises, I am informed, because copies of the invoices were sought and refused a number of times. It is also asserted that the charge out rates of $370 and $400 in these invoices were "inconsistent with later documents", the inference being that I should view these invoices as lacking in bona fides, or worse. 4. I would be reluctant to assume that these bills are falsified in the absence of compelling evidence: Telfer v Telfer (No 3) [2014] NSWCA 251. The bills contain the sort of information that would be expected for bills of this nature, and look like bills that are expected to be paid, as they contain the words "total amount due and payable", as well as a summary of the work performed. The gaps in invoice numbers, dates and information of a contemporaneous nature indicate that these were sent at or about the date of each individual invoice. I have not been provided with the documents challenging the charge out rates. 5. My attention is also drawn to exchanges of correspondence which, if not answered, is asserted to amount to an admission (see paragraph 18 of the written submissions) and, if answered, is asserted to be dishonest (see paragraphs 19 – 26). At paragraph 26 of the submissions it is put that there is "no persuasive evidence" that the bills were paid "such as to attract the indemnity", from which I deduce that the plaintiff argues the assessor erred in law in accepting the evidence of the memoranda of fees without requiring proof of payment. 6. What were the submissions before the assessor and, in turn, before the Review Panel? The submission Enterprise Finance Solutions Pty Ltd's solicitors made to the costs assessor (see page 4 of the Notice of Objection behind tab 29) was that there was "no evidence that the costs applicant had paid" these accounts. The response of the solicitors for Mr Ciszek (tab 40 of the tender bundle) was that this was "irrelevant" to a party and party costs assessment. 7. The plaintiff brings the same complaint of lack of reasons from the Review Panel on this issue as were made in relation to the issue of procedural fairness. The Review Panel noted all the issues raised, and dealt with them in a general fashion. In doing so, the Review Panel may well have taken into account the well known principles to the effect that it is not necessary, for the purpose of a costs assessment, to demonstrate that the accounts sent have actually been paid. Similar arguments have failed, for example, in relation to conditional fee agreements: Wentworth v Rogers (2006) 66 NSWLR 474 at [45] – [46] per Hodgson JA; Dal Pont at [7.10] – [7.15]. The costs indemnity principle does not require the costs have been paid, but instead that there is a liability to pay them: CSR Ltd v Eddy at [50] per Basten JA. The plaintiff's contentions to the contrary are inconsistent with the authorities set out above. 8. This ground of appeal also fails. Practical injustice 1. This brings me to the issue of whether any error of law (namely not only the grounds adumbrated by the plaintiff, but also the error of the costs assessor in requiring the defendant to carry out a separate solicitor/client assessment), would justify disturbing the assessment: Gorczynski v AWM Dickinson & Sons [2005] NSWSC 277 at [22]. 2. In Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd (2011) 12 DCLR (NSW) 304 Johnstone DCJ stated, at [16]: "[16] Not only must a party who is appealing under s 384(1) establish an error of law, that party must also demonstrate that the error made justifies disturbing the assessment: Gorczynski v AWM Dickinson & Son [2005] NSWSC 277 at [22]. Thus it has been said by Associate Justice Malpass: The onus borne by the plaintiff is not merely to demonstrate error as to a matter of law arising in the proceedings to determine the application but also to demonstrate that any such error is material to the determination". 1. I respectfully adopt these frequently-cited statements as to the limitations of s 384 appeals. 2. The costs in these proceedings have been the subject of two assessments. Aside from the absence of a costs agreement, no basis for objection remains. I am satisfied that there is no "practical injustice" (CSR v Eddy) arising from the asserted errors of law. The plaintiff who brings this appeal brought proceedings in the Local Court and Supreme Court without success, and no practical injustice results from the defendant in these proceedings being entitled to his costs of those actions. Conclusions 1. Accordingly, if I have erred in my dismissal of any or all of the plaintiff's grounds of appeal, I am nevertheless of the view that such errors would not justify disturbing the assessment. 2. The appeal is dismissed. The plaintiff is to pay the defendant's costs. Liberty to apply is given in relation to costs. 3. An additional factor of concern is the series of allegations of professional misconduct made by the solicitors for the plaintiff about the solicitors for the defendant to the costs assessor. One such example is their letter of 14 December 2012, requesting the costs assessor to refer the solicitors for Mr Ciszek to the Legal Services Commissioner on the basis that their "conduct and bona fides" for the whole of the assessment process. While the circumstances in which the defendant's solicitors and counsel did not make fee disclosures are regrettable, the attack on their credibility at every turn by the solicitors for the plaintiff in correspondence was unnecessary and distracting. Orders 1. Summons dismissed. 2. Plaintiff pay defendant's costs. 3. Liberty to apply in relation to costs. 4. Exhibits retained for 28 days. ********** 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: 25 March 2015