Supreme Court New South Wales Medium Neutral Citation: Ferguson v Singler (No 2) [2015] NSWSC 891 Hearing dates: 20 November 2014 Decision date: 07 July 2015 Jurisdiction: Common Law Before: Button J Decision: (1) The certificate of the costs review panel of 12 June 2013 in costs review 2012/148107 is set aside. (2) The matter is remitted to a costs review panel to be determined in accordance with law. (3) Costs are reserved. (4) The parties have liberty to approach my Associate within two weeks of today to set a mutually convenient hearing date for a short costs hearing before me. (5) The parties are to provide written submissions of no more than three pages in length about the question of costs by 5 PM two days before that hearing date. Catchwords: JUDICIAL REVIEW – costs assessment – procedural fairness – documents before costs review panel without knowledge of plaintiff – adequacy of reasons of costs review panel when the two panellists disagree Legislation Cited: Supreme Court Act 1970 (NSW), s 69 Legal Profession Act 2004 (NSW), ss 324(1), 327(4), 353(1), 357, 358, 359, 364, 365, 367A, 370, 372, 373, 374, 375, 376, 378, 380, 383, 384 Legal Profession Act 1987 (NSW) Legal Profession Regulation 2005 (NSW), cll 126, 126, 128, 132, 134 Cases Cited: Bobb v Wombat Securities Pty Ltd & Ors [2013] NSWSC 757 Bobb v Wombat Securities Pty Ltd (No 2) [2014] NSWCA 261 Ferguson v Singler (Supreme Court (NSW), 20 November 2014, unrep) Frost v Karouche [2014] NSWCA 39 Levy v Bergseng [2008] NSWSC 294 Re Minister for Immigration; ex parte Lam [2003] HCA 6; 214 CLR 1 Singler v Ferguson [2010] NSWCA 325 Stead v State Government Insurance [1986] HCA 54, (1986) 161 CLR 141 Category: Principal judgment Parties: Jeffrey Ferguson (Plaintiff) Tony Singler (First Defendant) John Eric McIntyre (Second Defendant) Mark Campbell (Third Defendant) Representation: Counsel: M Castle (Plaintiff) E G Romaniuk SC (First Defendant) M B Eirth (First Defendant) Solicitors: Moray & Agnew Lawyers (Plaintiff) Bale Boshev Lawyers (First Defendant) Crown Solicitor's Office (Second and Third Defendants) File Number(s): 2013/214439 Judgment Introduction 1. This is an application by the plaintiff, Mr Jeffrey Ferguson, for judicial review pursuant to s 69 of the Supreme Court Act 1970 (NSW) quashing a certificate issued by a costs review panel on 12 June 2013. The application calls for consideration of aspects of Pt 3.2 of the Legal Profession Act 2004 (NSW) (the Act), which is entitled "Costs Disclosure and Assessment", as it was in April 2013, that being when the assessment by the costs review panel took place prior to the giving of reasons and the issuing of the certificate. 2. The second and third defendants, who were the two members of the costs review panel, entered submitting appearances. The real dispute is between the plaintiff and the first defendant, Mr Tony Singler. Brief chronological background 1. On 7 April 2003, Mr Ferguson and Mr Singler were involved in a motor vehicle accident in Newcastle. They have played different roles at different stages of the litigation over the twelve years since then, and for ease of comprehension I shall refer to each of them by name throughout this judgment. 2. Mr Singler sued Mr Ferguson in negligence in the District Court of New South Wales. The matter was heard and determined by Sidis DCJ. The judgment and verdict of her Honour of 15 May 2009 was in favour of Mr Ferguson. Mr Singler was ordered to pay the costs of Mr Ferguson. 3. Mr Singler appealed that decision. He succeeded in the Court of Appeal: see Singler v Ferguson [2010] NSWCA 325. The matter was remitted to the District Court for rehearing, and various costs orders were made. 4. It is useful to set out the orders of the Court of Appeal of 29 November 2010 in their entirety: 1. Appeal allowed; 2. Set aside the verdict and judgment for [Mr Ferguson] made in the Court below;3. Order that the matter be remitted to the District Court for rehearing;4. Save for the costs of 5 November and 1 December 2008, order that the costs of the first hearing at first instance abide the outcome of the new trial. [Mr Singler] is to pay [Mr Ferguson's] costs of 5 November and 1 December 2008;5. Order that [Mr Ferguson] pay [Mr Singler's] costs of the appeal;6. Order, pursuant to the Civil Procedure Act 2005, s 26, that prior to the matter being remitted, the proceedings are referred to mediation. 1. On 10 June 2011, Mr Ferguson was unsuccessful in his application for special leave to appeal against the decision of the Court of Appeal in the High Court of Australia. 2. On 9 May 2012, Mr Singler applied for the costs of the appeal that Mr Ferguson had been ordered to pay to Mr Singler to be assessed, pursuant to s 353(1) of the Act (Mr Singler was the moving party with regard to the assessment because the parties had been unable to agree about costs; nothing turns on that fact). 3. On 20 August 2012, Mr Terence Stern, the first costs assessor, determined the costs of the appeal payable by Mr Ferguson to Mr Singler (pursuant to order 5 of the Court of Appeal) to be $144,789.12. The first costs assessor also certified that the costs of that assessment should be split evenly between Mr Singler and Mr Ferguson. The reasons for that determination became exhibit H before me. 4. On 28 September 2012, Mr Ferguson applied for that decision to be reviewed, pursuant to s 373(1) of the Act. 5. On 29 April 2013, Mr Mark Campbell and Mr John McIntyre, the review panellists, determined that, because they were unable to agree, they would not interfere with the determination of Mr Stern of 20 August 2012. The reasons for that determination became exhibit K before me. Pursuant to s 375(4) of the Act, in those circumstances the order of Mr Stern was to stand. 6. With regard to that specific topic, the costs review panel stated (at paragraph 5.5 of Exhibit K): "…In this matter despite significant discussion and debate by the cost assessors making up the Review Panel, they were unable to reach agreement." 1. Although a large amount of background and contextual material was included in the determination of the costs review panel, no further substantive reasons were given for its determination that affirmed the determination of the first costs assessor. The costs review panel subsequently issued the certificate in question reflecting that determination. 2. The costs review panel also issued a certificate to the effect that Mr Ferguson must pay the costs of the review that it had undertaken. That certificate was part of exhibit K before me. 3. Thereafter, pursuant to the remitter from the Court of Appeal, there was a further hearing of the substantive dispute in the District Court before Mahony SC DCJ. That rehearing was part heard as at the date of the hearing before me. 4. At an early stage of the proceedings before me, Mr Ferguson sought leave to file an amended summons in Court. Mr Singler opposed that application. I granted leave to Mr Ferguson to do so, and delivered short reasons in support of my decision: see Ferguson v Singler (Supreme Court (NSW), 20 November 2014, unrep). Asserted grounds of judicial review 1. The amended summons of 20 November 2014 of Mr Ferguson notifies the following grounds of judicial review: 1. The Review Panel misconstrued its function and committed a jurisdictional error. 2. The reasons provided by the Review Panel were inadequate. 3. The Review Panel failed to afford procedural fairness to the review applicant. 1. By the end of her oral submissions, counsel for Mr Ferguson had made it clear that grounds one and two were two sides of the same coin: the proposition that the reasons given by the costs review panel were so inadequate as to constitute a jurisdictional error on its part. The subject matter of the dispute before me 1. The contentions before me were founded upon the approach of the costs review panel to the question only of the costs incurred in the appeal to the Court of Appeal. To be clear, the costs of the hearing before Sidis DCJ and of the rehearing of the matter by Mahony DCJ are not the subject of the application for judicial review. Nor, of course, is the correct approach to the substantive dispute, a question that was resolved by the refusal of the High Court to grant special leave over four years ago. A preliminary issue 1. A preliminary issue arose as to whether this issue should be resolved in the District Court rather than this Court. Mr Singler submitted that I would be reluctant to grant judicial review because there is a right of appeal pursuant to statute available to Mr Ferguson. Submissions about preliminary question 1. Mr Singler submitted that, as a result of the costs review panel affirming the decision of the first costs assessor, an appeal could be founded upon the decision of the first costs assessor, and that appeal would be available pursuant to s 384 of the Act. That section is as follows: 384 Appeal against decision of costs assessor as to matter of law (1) A party to an application for a costs assessment who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the District Court, appeal to the Court against the decision. (2) After deciding the question the subject of the appeal, the District Court may, unless it affirms the costs assessor's decision: (a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or (b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application. (3) On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given. 1. He submitted that the grounds of Mr Ferguson founded upon asserted legal error are within the jurisdiction of the District Court pursuant to that section, and that that is itself a reason to for me to decline to grant judicial review. 2. To the contrary, Mr Ferguson submitted that it can be seen that, in Bobb v Wombat Securities Pty Ltd & Ors [2013] NSWSC 757, Beech-Jones J summarised the view of Knox SC DCJ that the inadequacy of reasons of a costs assessor could not be dealt with under s 384(1) of the Act: at [9]. Furthermore, Beech-Jones J did not adjudicate upon the correctness of that approach: at [21]. 3. Mr Singler replied that the decision of Beech-Jones J in that matter permitted Mr Bobb to pursue the matter in the District Court, and Mr Bobb did so. Furthermore, the matter was subsequently appealed. It was said that the Court of Appeal was not called upon to consider whether the ground of inadequate reasons was an error of law for the purposes of s 384 of the Act, because that was determined in the proceedings before Beech-Jones J: see Bobb v Wombat Securities Pty Ltd (No 2) [2014] NSWCA 261 at [15]-[18]. Accordingly, that latter decision was said to be authority for the proposition that inadequacy of reasons can be the subject of a statutory appeal to the District Court. 4. Finally, Mr Singler invited my attention to Levy v Bergseng [2008] NSWSC 294 at [50]. There Rothman J said: The four major grounds, upon which the plaintiff in these proceedings relies, (together with the ground raised by the defendant in its cross-claim) are, at least in part, questions of law. Certainly the issues going to the denial of procedural fairness, the absence or inadequacy of reasons, the construction of the Costs Agreement, and the jurisdiction of the Review Panel are grounds which raise decisions as to a matter of law arising in the proceedings. Two of the grounds in the summons, which deal with whether, respectively, the claiming of loading and the claiming of cancellation fees were unjust, apart from the jurisdictional issue raised thereby, do not raise a question of law. The matters are inextricably interwoven, raise important questions, and the decision below is attended with sufficient doubt that leave to appeal ought be granted. Leave to appeal is granted in relation to all of the grounds, to the extent such leave is necessary. (I interpolate to note immediately that Rothman J was dealing with a statutory appeal to this Court, and furthermore one that his Honour had determined needed to be understood as being governed by the Legal Profession Act 1987 (NSW), not the Act.) 1. In short, Mr Singler submitted that the contentions of Mr Ferguson are questions of law; that they can be dealt with in the District Court; that that is where they should be resolved; and in the circumstances I would withhold the discretionary remedy of judicial review. Determination of preliminary question 1. I determine this preliminary question on the following five bases. The authorities are not pellucidly clear as to the breadth of s 384 of the Act. The litigation between Wombat Securities and Mr Bobb was complicated and multi-faceted, and the judgments are not without their intricacies. The substantive question was fully argued before me, beyond this threshold question, and featured very detailed and helpful written and oral submissions. The dispute between these two litigants has been going on for many years. Whilst it is true that the possible availability of relief pursuant to statutory appeal argues against judicial review, I do not consider that it should be determinative of the exercise of my discretion in the circumstances of this dispute. 2. For the foregoing five reasons, I do not consider that the threshold question should stand in the way of relief being granted by me, if otherwise appropriate. I turn to consider the substantive questions. Pertinent portions of the Act 1. Before turning to the basis of the grounds, and the submissions about them, it is useful to summarise and set out some sections within Pt 3.2 of the Act, and the relevant regulations. 2. Subdivision 2 of Div 11 of Pt 3.2 is entitled "Assessment". It contains s 357, which creates the regime of referral of costs disputes to cost assessors. 3. Section 358 of the Act is relevantly as follows: 358 Costs assessor may require documents or further particulars (1) For the purposes of determining an application for a costs assessment, a costs assessor may, by notice in writing, require a person (including the applicant, the law practice concerned, or any other law practice or client) to do any one or more of the following: (a) to produce, at a specified time and place, any specified document (or a copy of the document), (b) to provide written information on or before a specified date (verified by statutory declaration if the requirement so states) including, for example: (i) information as to the instructions given to, or work done by, any law practice in respect of the matter concerned, and (ii) information as to the basis on which the costs concerned were calculated, (c) to otherwise assist in, or co-operate with, the determination of the assessment in a specified manner. 1. Section 359 of the Act is relevantly as follows: 359 Consideration of applications by costs assessors (1) A costs assessor must not determine an application for assessment unless the costs assessor: (a) has given both the applicant and any law practice or client or other person concerned a reasonable opportunity to make written submissions to the costs assessor in relation to the application, and (b) has given due consideration to any submissions so made. (2) In considering an application, a costs assessor is not bound by rules of evidence and may inform himself or herself on any matter in such manner as he or she thinks fit. (3) For the purposes of determining an application for assessment or exercising any other function, a costs assessor may determine any of the following: (a) whether or not disclosure has been made in accordance with Division 3 (Costs disclosure) and whether or not it was reasonably practicable to disclose any matter required to be disclosed under Division 3, (b) whether a costs agreement exists, and its terms. 1. Subdivision 3 is entitled "Party/party costs". Contained within it are ss 364 and 365 of the Act, which are as follows: 364 Assessment of costs—costs ordered by court or tribunal (1) In conducting an assessment of legal costs payable as a result of an order made by a court or tribunal, the costs assessor must consider: (a) whether or not it was reasonable to carry out the work to which the costs relate, and (b) whether or not the work was carried out in a reasonable manner, and (c) what is a fair and reasonable amount of costs for the work concerned. (2) In considering what is a fair and reasonable amount of legal costs, a costs assessor may have regard to any or all of the following matters: (a) the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter, (b) the complexity, novelty or difficulty of the matter, (c) the quality of the work done and whether the level of expertise was appropriate to the nature of the work done, (d) the place where and circumstances in which the legal services were provided, (e) the time within which the work was required to be done, (f) the outcome of the matter. (3) An assessment must be made in accordance with the operation of the rules of the relevant court or tribunal that made the order for costs and any relevant regulations. (4) If a court or a tribunal has ordered that costs are to be assessed on an indemnity basis, the costs assessor must assess the costs on that basis, having regard to any relevant rules of the court or tribunal and relevant regulations. 365 Effect of costs agreements in assessments of party/party costs (1) A costs assessor may obtain a copy of, and may have regard to, a costs agreement. (2) However, a costs assessor must not apply the terms of a costs agreement for the purposes of determining appropriate fair and reasonable costs when assessing costs payable as a result of an order by a court or tribunal. 1. Subdivision 4 is entitled "Determinations". Its provisions are relevantly as follows: 367A Determinations of costs assessments for party/party costs A costs assessor is to determine an application for an assessment of costs payable as a result of an order made by a court or tribunal by making a determination of the fair and reasonable amount of those costs. 368 Certificate as to determination (1) On making a determination of costs referred to in Subdivision 2 or 3 of this Division, a costs assessor is to issue a certificate that sets out the determination. … 370 Reasons for determination (1) A costs assessor must ensure that a certificate issued under section 368 (Certificate as to determination) or 369 (Recovery of costs of costs assessment) that sets out his or her determination is accompanied by: (a) a statement of the reasons for the costs assessor's determination, and (b) such supplementary information as may be required by the regulations. (2) The statement of reasons must be given in accordance with the regulations. … 372 Determination to be final A costs assessor's determination of an application is binding on all parties to the application and no appeal or other assessment lies in respect of the determination, except as provided by this Division. 1. Subdivision 5 is entitled "Review of determination by panel". Section 373 of the Act creates the regime whereby a dissatisfied party to a costs dispute may apply for review of a determination of a costs assessor. 2. Section 374 of the Act provides for referral of an application to a panel. The section goes on relevantly to say: … (2) The panel is to be constituted by 2 costs assessors. … 1. Section 375 of the Act sets out the general functions of the cost review panel, and is as follows: 375 General functions of panel in relation to review application (1) A panel constituted under this Subdivision may review the determination of the costs assessor and may: (a) affirm the costs assessor's determination, or (b) set aside the costs assessor's determination and substitute such determination in relation to the costs assessment as, in their opinion, should have been made by the costs assessor who made the determination that is the subject of the review. (2) For the purposes of subsection (1), the panel has, in relation to the application for assessment, all the functions of a costs assessor under this Part and is to determine the application, subject to this Subdivision and the regulations, in the manner that a costs assessor would be required to determine an application for costs assessment. (3) However, 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 determines otherwise, the panel is not: (a) to receive submissions from the parties to the assessment, or (b) to receive any fresh evidence or evidence in addition to or in substitution for the evidence received by the costs assessor. … (4) If the costs assessors who constitute the panel are unable to agree on a determination in relation to an application, the panel is to affirm the determination of the costs assessor who made the determination that is the subject of the review. 1. Section 376 of the Act is relevantly as follows: 376 Relevant documents to be produced to panel (1) A panel constituted under this Subdivision may, by notice in writing, require a costs assessor, a law practice or any other person (such as an applicant or an associate of a law practice) to produce to the panel any document in his or her possession relating to an assessment of costs by a costs assessor. … 1. Section 378 of the Act provides for the provision of a certificate by a cost costs review panel that sets out its determination. 2. Section 380 of the Act is as follows: 380 Reasons for determination (1) The panel must ensure that a certificate issued under section 378 (Certificate as to determination of panel) or 379 (Recovery of costs of review) that sets out the determination of the panel is accompanied by: (a) a statement of the reasons for the panel's determination, and (b) such supplementary information as may be required by the regulations. (2) The statement of reasons must be given in accordance with the regulations. … 1. Pt 9 of the Legal Profession Regulation 2005 (NSW) (created pursuant to s 383 of the Act) is entitled "Costs disclosure and assessment - Pt 3.2 of the Act". It provides details with regard to notifications between the parties of applications for assessments of party/party costs, and objections thereto, and responses to such objections (clause 125); the basis on which the costs of a party/party costs assessments should be payable (clause 126); and the contents of the statement of reasons for the determination of a costs assessor about party/party costs (clause 128). It also provides details with regard to reviews by costs review panels, including service of an application upon the other party (clause 132); and the contents of the statement of reasons of the determination of a costs review panel (clause 134). 2. The latter clause is as follows: 134 Statement of reasons-section 380 of the Act (1) A statement of reasons for a panel's determination that is required by section 380 of the Act to accompany a certificate issued under section 378 of the Act must be accompanied by the following information: (a) the total amount of costs for providing legal services determined to be fair and reasonable, (b) the total amount of disbursements determined to be fair and reasonable, (c) each disbursement varied by the determination, (d) in respect of any disputed costs, an explanation of: (i) the basis on which the costs were assessed, and (ii) how the submissions made by the parties were dealt with, (e) a statement of any determination as to the person by whom and the extent to which either the fee paid or payable for the application for review or the costs of the costs assessor, or both, are to be paid, (f) if the determination relates to costs other than party/party costs and the panel declines to deal with an application for review of a bill of costs-the basis for doing so, (g) if the determination deals with any matter of the kind referred to in section 328 (1) or (4) of the Act (relating to the setting aside of a costs agreement), a statement as to the panel's reasons for its decision on that matter. (2) A statement of reasons to which this clause applies may be accompanied by such further information as the panel concerned considers necessary to clarify the review of a costs assessor's determination. 1. It can be seen in short that Parliament has created a detailed regime by way of the Act and its Regulation whereby disputes about party/party costs can be resolved by a costs assessor; that costs agreements between a party and his or her lawyer can be called for and considered by a primary costs assessor in the process of assessing party/party costs; that costs assessors must accord the parties to a costs dispute procedural fairness by way of the opportunity to make written submissions; that determinations of costs assessors can be reviewed by a costs review panel; that in doing so the costs review panel must fulfil the functions of the costs assessor; that both costs assessors and costs review panels must give reasons for their decisions; and that both primary costs assessors and the costs review panel can have before them documents and submissions from the parties to the dispute about costs. 2. Turning now to the substantive grounds of judicial review argued before me, it is useful to deal with them a little out of order. Ground 3 – denial of procedural fairness Submissions of Mr Ferguson 1. Mr Ferguson submitted that the costs review panel failed to afford him procedural fairness. That was said to be because there were relevant documents before the costs review panel of which Mr Ferguson (and his lawyers) had no knowledge, and those documents were taken into account in the determination of the costs review panel. (When I discuss that asserted ignorance of Mr Ferguson and his lawyers, I shall refer compendiously to all of them simply as Mr Ferguson, unless a distinction between them needs to be drawn). 2. The documents said to be before the costs review panel without the knowledge of Mr Ferguson are detailed in the affidavit of Peter Utiger (the solicitor for Mr Ferguson) read before me at page 4 of annexure A: … 2. Costs Agreement – [first counsel], dated 10 November 2004. 3. Costs Agreement – [first counsel], dated 6 May 2009. 4. Costs Agreement – [second counsel], dated 6 August 2010. 5. Disclosure of Costs & Retainer Costs Agreement, [senior counsel], dated 30 May 2006. 6. Letter of [senior counsel], dated 28 July 2010. … 1. Mr Ferguson submitted that he was unaware that items two to five had been provided to the costs review panel until 19 November 2015, that is, the day before the hearing before me, and well after, of course, the determination of the costs review panel. 2. Mr Ferguson accepted that a copy of item 6 was received by his solicitors on 21 July 2014. However, it was said that neither Mr Ferguson nor his lawyers knew, at the time of the assessment by the costs review panel, that item 6 was before the costs review panel. 3. Mr Ferguson asserted that his lack of knowledge that items 2 to 4 were before the costs review panel constitutes procedural unfairness, but he accepted that that procedural unfairness did not result in a practical injustice. Accordingly, he did not submit that they could found relief. 4. However, he submitted that the fact that items 5 and 6 were received and considered by the costs review panel, when those items are considered together, was both procedurally unfair and resulted in a practical injustice to him. 5. Mr Ferguson drew my attention to clause 7(a) of item 5, which is as follows: 7. I and the solicitor hereby elect to enter into this Agreement on a speculative or contingent basis and in consequence: (a) in the event that the proceedings result in a successful outcome, 25% of the fees otherwise payable will be charged; 1. He submitted that clause 7(a) in item 5, the date of which is 30 May 2006, is void. That was said to be in accordance with s 324(1) (that section having being the subject of an amendment that entered into force on 1 October 2005) and s 327(4) of the Act. 2. Section 324(1) of the Act was, as at 30 May 2006, as follows: 324 Conditional costs agreements involving uplift fees (1) A law practice must not enter into a conditional costs agreement in relation to a claim for damages that provides for the payment of a premium on the legal costs payable under the agreement on the successful outcome of the claim to which the costs relate. … 1. Section 327(4) of the Act was as follows on the same date: 327 Certain costs agreements are void … (4) A law practice that has entered into a costs agreement in contravention of section 324 (Conditional costs agreements involving uplift fees) or 325 (Contingency fees are prohibited) is not entitled to recover any amount in respect of the provision of legal services in the matter to which the costs agreement related and must repay any amount received in respect of those services to the person from whom it was received. 1. Separately, Mr Ferguson also relied upon an excerpt from the letter of senior counsel of 28 July 2010, item 6, which is as follows: "I refer to the present appeal in this matter and as far as my future fees are concerned I propose that I charge at the rate of $7,000 for each hearing day including any preparation time and $700 per hour." 1. Mr Ferguson then drew my attention to an invoice that is contained in the affidavit of Mr Utiger, with an entry on 1 October 2009 with a fee recorded as $7,000. 2. In short it was submitted that, if Mr Ferguson had known of the date of that letter of 28 July 2010, and its reference to future fees, he may have been in a position to impugn invoices that had been rendered in the past (such as the invoice of 1 October 2009) at that rate. Again, it was said that a question about the validity of lawyer/client costs may well have informed the quantum of party/party costs. 3. In summary, the submission of Mr Ferguson was that, if he had known of the documents excerpted above, he may very well have submitted that those lawyer/client fees were not payable by Mr Singler. And he may well have gone on to submit that that fact could be taken into account by the costs review panel with regard to the quantum of party/party costs payable. 4. With regard to the "onus" attaching to the proof of a practical injustice, Mr Ferguson asserted that, once Mr Ferguson had established a denial of procedural fairness, the burden fell upon Mr Singler to establish that, if procedural fairness had been afforded, there could not have been a different outcome; my attention was invited to Stead v State Government Insurance [1986] HCA 54, (1986) 161 CLR 141 and Re Minister for Immigration; ex parte Lam [2003] HCA 6; (2003) 214 CLR 1. Submissions of Mr Singler 1. Mr Singler did not dispute the factual contention that Mr Ferguson was not aware of the entirety of the documents that were before the costs review panel. However, he submitted that that was not sufficient to lead to my intervention, because it had not led to practical injustice to Mr Ferguson. 2. Separately, even if Mr Ferguson were to succeed on this ground, Mr Singler made it quite clear that the usual rule that costs should follow the event should not apply in this case, because that ignorance on the part of Mr Ferguson was not to be laid at the feet of Mr Singler or his lawyers. It is unnecessary at this stage to recount the details of his submissions about matters of fact on that topic. 3. In support of the proposition that no practical injustice had been occasioned to Mr Ferguson, Mr Singler submitted that the hourly or daily rates at which the fees of senior counsel were to be paid could never have been determinative of the question of what amount of costs between Mr Singler and Mr Ferguson were fair and reasonable. That was because the assessment was not of lawyer/client costs between Mr Singler and his lawyers; rather, it was an assessment of party/party costs between Mr Singler and Mr Ferguson. 4. Mr Singler also submitted with regard to item 6 that, irrespective of his knowledge of the document, Mr Ferguson had in any event already made comprehensive submissions with regard to the fees of senior counsel: Mr Ferguson had raised an issue about the fees at page 39 of his notice of objection (which became exhibit C before me), and submitted that the fair and reasonable rates should be $550 per hour and $5,500 per day. 5. Mr Singler submitted that, with regard to this assertion of denial of procedural fairness, the "onus" remains upon Mr Ferguson to demonstrate that there was sufficient error to justify judicial review in his favour. In particular, Mr Singler did not accept that there had been a shift of "onus" with regard to the question of practical injustice. He submitted that it remained incumbent upon Mr Ferguson, the party seeking judicial review, to demonstrate not only a denial of procedural fairness, but also that that denial resulted in a practical injustice to Mr Ferguson. Determination 1. The foundation of procedural fairness was recently summarised in Frost v Karouche [2014] NSWCA 39 by Leeming JA (Beazley P and Basten JA agreeing) at [41]: Ultimately, the question of the content of the obligation to accord procedural fairness is one of practical justice. Gleeson CJ said that "Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice": Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6; 214 CLR 1 at [37]. In connection with the [Motor Accidents Compensation Act 1999 (NSW)], in McKee at [8], Allsop P said that "procedural fairness would require any and all necessary steps to ensure a fair hearing". 1. As I have said, there was no dispute that, as things turned out, documents were before the costs review panel of which Mr Ferguson and his lawyers were unaware. I infer without difficulty, in the context of this hard-fought dispute that has extended over many years, that, if the lawyers of Mr Ferguson had known of those documents, they may well have made submissions about them; at the least, about the topic of whether Mr Singler was actually lawfully required to pay some or all of the fees of one or more of his lawyers, in light of the contents of ss 324(1) and 327(4) of the Act. That was a denial of procedural fairness to Mr Ferguson. 2. As I have recounted, the second dispute between the parties was whether or not it was incumbent upon Mr Ferguson to establish that that occasioned to him a practical injustice; and, if so, whether he can do so. 3. As for the question of "onus" with regard to demonstration of practical injustice I do not propose to tarry to provide a detailed analysis of the question. Indeed, it could well be inapposite to speak of one party establishing a lack of procedural unfairness, and then in some formal sense placing an "onus" on the resisting party to demonstrate the absence of practical injustice to the first party. 4. I think that it is enough to say that, in Stead v State Government Insurance at 147, the High Court of Australia spoke of the appellant needing to show "…that the denial of natural justice deprived him of the possibility of a successful outcome…", and that in Re Minister for Immigration; ex parte Lam Gleeson CJ at [37] – [38] said: … Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice. No practical injustice has been shown. The applicant lost no opportunity to advance his case. He did not rely to his disadvantage on the statement of intention. It has not been shown that there was procedural unfairness. And, as I have already indicated, there is no warrant for a conclusion that there was a failure properly to take into account the interests of the applicant's children. 1. In other words, Gleeson CJ was casting the responsibility of demonstrating practical injustice upon the party asserting that it had occurred. 2. In short, I approach the question on the basis that it is incumbent on Mr Ferguson to show a denial of procedural fairness, and also that it is incumbent upon him to show that he has suffered a practical injustice as a result. 3. As the unanimous judgment of the High Court of Australia in Stead v State Government Insurance shows, I should not be overly conclusive with regard to the question of whether, if Mr Ferguson had been aware of those documents, the costs review panel would have come to a different determination. In particular, to the extent that part of the submissions of Mr Ferguson is the proposition that, if he had known of the documents, he would have been able to demonstrate that something contrary to the Act had occurred, of course I do not make any such finding. Quite apart from anything else, I have not heard a word from any of the persons said to have been involved in that allegedly invalid process. To make any such determination in those circumstances would almost certainly be itself a denial of procedural fairness to those persons. It is for the same reason that I have not referred to those persons by name. 4. The authorities do not state that this question of practical injustice requires me to be affirmatively satisfied that, if Mr Ferguson had known of the documents, he must have made submissions, which in turn must have led to a different result. The authorities establish that it is sufficient for Mr Ferguson to demonstrate that a different result, if he had known of the documents and been in a position to make submissions about them, would have been reasonably possible. 5. I am satisfied of that proposition. That is because I consider that the costs review panel could have found the submission about invalidity of some lawyer/client fees attractive; could have regarded it as relevant to the question of party/party costs; and could have come to a different decision as a result of it. 6. In short, I consider that Mr Ferguson was denied procedural fairness, in that relevant documents were before the costs review panel of which he was unaware. And I also consider that Mr Ferguson has suffered a denial of procedural fairness that should be characterised as a practical injustice: he was unaware of documents that were before the body that was to determine a long-standing dispute about a very substantial sum of money, and, if he had not suffered from that lack of awareness, he could well have made submissions that could have led to a different result. 7. It follows that I consider that Mr Ferguson is entitled to have the certificate of the costs review panel quashed. Grounds 1 and 2 – contingent analysis of: asserted misconstruction of function, jurisdictional error, and inadequacy of reasons 1. As against the possibility that I am wrong in my determination that the decision of the costs review panel should be quashed on the ground of a denial of procedural fairness, I turn to deal briefly with grounds 1 and 2 on a contingent basis. Because I am undertaking the exercise in that limited way, I shall be briefer than I would be if I regarded these grounds as determinative. Submissions of Mr Ferguson 1. Mr Ferguson contended that the costs review panel misconstrued its function and committed a jurisdictional error. He submitted that those errors arose as a result of the failure on the part of the members of the costs review panel to provide reasons setting out their contrasting positions, or reasons setting out the basis of their disagreement, whether broad or specific. 2. He also notified, as a separate ground, that the reasons provided by the costs review panel were inadequate. However, as I have said, by the end of the hearing the position of Mr Ferguson was made clear: it was not that the reasons were inadequate, but rather that there were really no reasons at all, once one cut away contextual matters, matters that were not in dispute, and recitation of submissions. And the fact that there were no reasons at all means that the costs review panel failed fundamentally to carry out its function lawfully. In other words, he was content for me to regard the first two grounds as having the one foundation, and for me to consider them together. 3. As I have said, the salient reasons of the costs review panel were as follows: "…In this matter despite significant discussion and debate by the cost assessors making up the Review Panel, they were unable to reach agreement." That is the extent of the exposition of the views of the costs review panel, and of the two panellists. 4. It was submitted that, pursuant to ss 370, 375(2), and 380 of the Act, it was incumbent upon each of the panellists to do what a cost assessor would have been required to do; namely, give reasons for his or her determination. It was said that that was a necessary prerequisite of the costs review panel lawfully exercising its jurisdiction. That was said to be the case even though it was accepted that, as a result of the inability of the two panellists to agree, by way of s 375(4) of the Act the "determination" of the costs review panel would have no effect other than to affirm the determination of the first cost assessor. 5. Quite apart from failure to comply with what were said to be the requirements of the statute, it was said that the lack of reasons on the part of each member of the costs review panel makes review (appellate or otherwise) of the determination of the costs review panel impractical, if not impossible. Submissions of Mr Singler 1. Senior counsel for Mr Singler submitted that this particular question has not been the subject of judicial consideration in the past; counsel for Mr Ferguson did not submit to the contrary. 2. The position of Mr Singler was that the costs review panel is to provide detailed reasons if the two panellists are in agreement. That does not apply, however, if the two panellists cannot agree. Parliament has chosen to create a two person panel, with no mechanism for supplementation in the case of disagreement. Parliament has also chosen to create a mechanism whereby, in the case of disagreement, the costs review panel simply affirms the decision of the first costs assessor. In those circumstances, one can readily see why Parliament would not impose an obligation for reasons upon the costs review panel when its members cannot agree: the exercise would be fruitless, and the reasons would be inoperative. 3. In short, Mr Singler accepted that there were no detailed reasons given by the two individual members of the costs review panel. However, he submitted that they were not inadequate because there was no purpose, due to the statutory criterion for affirmation, for giving reasons. On the same basis, it was submitted that the costs review panel had not committed a jurisdictional error by failing to give detailed reasons. Determination of ancillary question 1. I accept the submissions of Mr Singler with regard to this ancillary question. That acceptance is primarily founded on a close reading of the statute. 2. It can be seen from s 375(2) of the Act that it is the panel that has all of the functions of the costs assessor, and not each individual panellist. That means that it is the panel that must provide, pursuant to s 370 of the Act, a statement of the reasons for the determination of the panel. 3. An identical analysis may be made of s 380 of the Act, which is the section that explicitly imposes a responsibility to give reasons upon the panel, not the panellists. 4. Here, the costs review panel has given a statement of the reasons for its determination: the two panellists could not agree, and accordingly, by way of statute, the determination of the costs assessor was affirmed. 5. I consider that the submission of Mr Ferguson would have force if s 375(2) of the Act spoke of the panellists having all of the functions of a costs assessor, including the provision of reasons, or if s 380 of the Act imposed an obligation to give reasons upon the panellists. But those are not the words that Parliament has chosen to use. The same may be said of the wording of clause 134 of the Regulation. 6. In short, I consider that the costs review panel has provided its reasons, in accordance with the statute and the delegated legislation. 7. Secondly, I consider that there is force in the submission of Mr Singler that a statute should not be interpreted in a way that imposes duties upon persons exercising a public function that would, by way of the statutory regime, be otiose in any event. 8. Thirdly, I reject the proposition of Mr Ferguson that the absence of reasons of the two disagreeing panellists somehow disadvantages a person in his position. That is because there could not, as a matter of mathematics, be "majority" reasons for the determination of the costs review panel that could be the subject of appeal or other review. All that one would have would be two sets of disagreeing reasons, each of them ineffectual in any event by way of operation of statute. And to continue the analogue with judicial reasoning, to the extent that the determination of the first costs assessor was being affirmed by the operation of statute, separate reasons of the two panellists that were without effect would be nothing more than analogous to "obiter dicta" that were not determinative of the dispute between the parties. 9. In short, I do not accept that the approach adopted to the question of reasons by the costs review panel demonstrates an error of law, whether jurisdictional or otherwise. If this were the only ground upon which Mr Ferguson sought judicial review, for the three foregoing reasons I would decline to intervene. Costs 1. The agreed position between the parties was that the costs of the hearing should be reserved. That was on the basis that, whichever party succeeded before me, the history with regard to the documents and correspondence passing between the two firms of solicitors could inform any costs order that I made. 2. I indicated to the parties on the hearing day that I was content to accept that joint submission, and that on the date of delivery of this judgment costs would be reserved for further short argument as necessary. I shall make some mechanistic orders to that effect. Orders 1. Accordingly, I make the following orders: 1. The certificate of the costs review panel of 12 June 2013 in costs review 2012/148107 is set aside. 2. The matter is remitted to a costs review panel to be determined in accordance with law. 3. Costs are reserved. 4. The parties have liberty to approach my Associate within two weeks of today to set a mutually convenient hearing date for a short costs hearing before me. 5. The parties are to provide written submissions of no more than three pages in length about the question of costs by 5 PM two days before that hearing date. ********** 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: 07 July 2015