Civil Trials Bench Book — Particular proceedings

Since the introduction in 1993 of the costs assessment scheme, providing for the assessment of legal costs — both between practitioner and client and between party and party — by legal practitioners appointed to act as costs assessors, in place of the former system of taxation of costs by taxing officers, the applicable legislation has included a right of appeal from determinations of costs assessors and review panels. The criteria for appeals, and the courts to which an appeal lies, has varied from time to time under the various iterations of the legislation. For the foreseeable future, at least three different regimes have potential application: that under Legal Profession Act 2004 (“LPA04”), that introduced by Legal Profession Uniform Law Application Act 2014 (“LPULAA”) when it first came into operation with effect from 1 July 2015; and that substituted by the Courts and Other Justice Portfolio Legislation Amendment Act 2015 with effect from 24 November 2015.^[1]

This chapter is concerned with the law and procedure applicable in appeals to a court from a costs assessor or a costs assessment review panel.^[2]

LPA04 Under LPA04, there is an appeal as of right from a decision of a costs assessor (and a review panel) as to a matter of law, to the District Court: LPA04 s 384. There is also an appeal by leave against the determination of the application by a costs assessor (including a review panel) (LPA04 s 385), which lies, in the case of a practitioner/client assessment, to the District Court (LPA04 s 385(1)), and in the case of a party/party assessment, to the court or tribunal that made the costs order: LPA04 s 385(2). If leave is granted, the appeal is a hearing de novo: LPA04 s 385(4).

LPULAA from 1 July 2015 Under LPULAA, as originally applicable,^[3] there is an appeal as of right from a decision of a review panel as to a matter of law, to the District Court. There is also an appeal by leave from the decision of a review panel generally, to the District Court. If leave is granted, the appeal is by way of rehearing, with fresh evidence or evidence in addition to or in substitution for the evidence before the review panel or costs assessor being permissible with the leave of the court. The significant changes from the LPA04 arrangements are, first, that there is no longer a direct appeal to the District Court from a first instance assessor, but only from a review panel, so that parties are required to exhaust their review rights before appealing to a court; and secondly, that the appeal is now by way of rehearing, and not de novo.

LPULAA from 23 November 2015 Under the post-November 2015 LPULAA arrangements (LPULAA s 89), there is an appeal from a decision of a review panel to:

The Supreme Court may remit the matter to the District Court, and may remove proceedings from the District Court. The appeal is by way of rehearing, with fresh evidence permissible by leave of the court.

The significant additional changes are, first, that the discriminator for when leave to appeal is required, or where there is an appeal as of right, is now a quantum-based test, in substitution for the former law/fact distinction; and secondly, that the appellate and supervisory role of the Supreme Court is restored, consistent with its traditional responsibilities in this area.

At the outset of any appeal, it will be important to establish which legislative regime applies.

The LPA04 arrangements continue to apply to practitioner/client (and third party) assessments and appeals where the client first instructed the law practice before 1 July 2015 (Legal Profession Uniform Law 2014, Sch 4, cl 18), and to party/party assessments and appeals where the proceedings to which the costs relate were commenced before 1 July 2015: Legal Profession Uniform Law Application Regulation 2015, reg 59.

The initial LPULAA arrangements apply to “uniform law” (formerly practitioner/client) assessments and appeals where the client first instructed the law practice on or after 1 July 2015 (Legal Profession Uniform Law 2014, Sch 4, cl 18), and to “ordered costs” (formerly known as party/party costs) assessments and appeals where the proceedings to which the costs relate were commenced on or after 1 July 2015: Legal Profession Uniform Law Application Regulation 2015, reg 59.

The revised LPULAA arrangements commenced on 24 November 2015. In the absence of any specific transitional provision, they should be considered to apply to appeals and applications for leave to appeal instituted on or after that date, in respect of assessments to which LPUL and/or LPULAA otherwise apply.

Appeals under LPA04

Under LPA04 there is a right of appeal to the District Court from a decision on a matter of law. Such an appeal lies from an assessor at first instance and from a review panel.

This is a “narrow” right of appeal, confined to a question of law: Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd (2011) 12 DCLR(NSW) 304 at [31]; Vumbucca v Sultana (2012) 15 DCLR(NSW) 375 at [36]; Sweeney & Vandeleur Pty Ltd v Angyal [2006] NSWSC 246 at [5]. Questions of law include denial of procedural fairness (Levy v Bergseng (2008) 72 NSWLR 178; Lange v Back [2009] NSWDC 180; but cf Madden v NSW IMC [1999] NSWSC 196), failure to give adequate reasons (Nassour v Malouf t/as Malouf Solicitors [2011] NSWSC 356; Bobb v Wombat Securities Pty Ltd [2013] NSWSC 757 at [36]; Frumar v Owners SP 36957 (2006) 67 NSWLR 321; Wende v Horwath (NSW) Pty Ltd (2014) 86 NSWLR 674; Randall Pty Ltd v Willoughby City Council (2009) 9 DCLR(NSW) 31 at [56]), and whether there was a retainer (at least if the facts are not in dispute): Mohareb v Horowitz & Bilinsky Solicitors (2011) 13 DCLR(NSW) 245.^[4]

In an appeal on a question of law alone, the court’s function is limited to identifying an error of law; while the court can “correct” any such error and substitute its own decision (LPA04 s 384(2)),^[5] it cannot engage in fact-finding or receive further evidence: B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; Madden v NSW IMC [1999] NSWSC 196.

The decision will not be disturbed on the ground of an error of law unless the error is material to the determination: Gorczynski v AWM Dickinson & Son [2005] NSWSC 277 at [22]; Honest Remark Pty Ltd v Allstate Explorations NL [2008] NSWSC 439 at [24]; Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd (2011) 12 DCLR(NSW) 304 at [16].

Unless it affirms the decision appealed from, the court must make such orders as the assessor should have made, or remit the matter to the assessor or panel for redetermination in accordance with the judgment of the court: LPA04 s 384(3); A Goninan & Co Ltd v Gill (2001) 51 NSWLR 441 at [26]. Although the section provides that 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, that applies not to the court’s determination of the appeal, which is one on a question of law only, but only to a redetermination by an assessor on remitter: Wende v Horwath (NSW) Pty Ltd (2014) 86 NSWLR 674 at [65], [89]; McCausland v Surfing Hardware International Holdings Pty Ltd [2010] NSWDC 222 at [27]–[50].

Under LPA04, a party to an application for costs assessment may also appeal, by leave, against the determination of the application by a costs assessor or a review panel: LPA04 s 385. The appeal lies, in the case of a practitioner/client assessment, to the District Court (LPA04 s 385(1)), and in the case of a party/party assessment, to the court or tribunal that made the costs order: LPA04 s 385(2); see McCausland v Surfing Hardware International Holdings Pty Ltd, above, at [16]; Legal Employment Consulting and Training Pty Ltd v Patterson [2010] NSWSC 130 at [6], referring to Legal Employment Consulting and Training Pty Ltd v Patterson [2009] NSWDC 357 at [7]–[10]; Madden v NSW IMC [1999] NSWSC 196; Altaranesi v Sydney Local Health District [2012] NSWDC 90 at [14]–[25]; Cameron v Walker Legal [2013] NSWSC 1985 at [40]. If leave is granted, the appeal is a hearing de novo: LPA04 s 385(4).

The purpose of imposing a requirement for leave to appeal is to provide a “filter”, so as to avoid burdening the resources of the courts and the parties with inappropriate appeals: Chapmans Ltd v Yandell [1999] NSWCA 361 at [11]. While there is a very wide discretion (Chapmans Ltd v Yandell, above, at [12]), leave should not be too readily granted: Wende v Horwath (NSW) Pty Ltd [2008] NSWSC 1241; Lyons v Wende [2007] NSWSC 101. There is no exhaustive description of the factors relevant to a grant of leave to appeal, other than the overall justice of the case: Busuttil v Holder (unrep, 7/11/96, NSWSC); Chapmans Ltd v Yandell. However, the existence of a seriously arguable case of error, and the quantum in dispute (or differently put, considerations of proportionality) are usually highly relevant: Aktas v Westpac Banking Corporation Ltd [2013] NSWSC 1451 at [21]. Additional relevant considerations include whether there are questions of fact upon which it is desirable that there be an opportunity for oral evidence and cross-examination, which was not available before the assessor (Wentworth v Rogers (2006) 66 NSWLR 474 at [190]); whether there is an appeal as of right to which the issues on which leave is required are related (Chapmans Ltd v Yandell at [12]; Levy v Bergseng (2008) 72 NSWLR 178 at [50]); and whether the applicant has exhausted rights of review by a review panel. The court may, if the matter has not been the subject of a review, refer the appeal to the Manager Costs Assessment, for reference to a Review Panel: LPA04 s 389.

Because, if leave is granted, the appeal is de novo, the appellant is not confined by grounds of appeal; the evidence is tendered again, without any restriction on further or fresh evidence; there is no requirement to demonstrate error; and the court must in effect re-perform the assessment process.

Appeals under LPULAA before November 2015

Under the pre-November 2015 version of LPULAA, there is a right of appeal from a decision of a review panel on a matter of law. Unlike under LPA04, under LPULAA the appeal lies only from a review panel, and not from an assessor at first instance. The appeal is to the District Court: LPULAA, Historical version for 2 July 2015 to 23 November 2015, s 89(1).

The general discussion above of such appeals under LPA04 remains applicable to this type of appeal under LPULAA: see [5-0540]. However, it ceases to be applicable to appeals to which LPULAA applies which are instituted after 23 November 2015, as such appeals are no longer confined to a matter of law.

Under the pre-November 2015 form of LPULAA, there is an appeal by leave from the decision of a review panel generally. Unlike under LPA04, under LPULAA the appeal lies only from a review panel, and not from an assessor at first instance. The appeal is to the District Court: LPULAA, Historical version for 2 July 2015 to 23 November 2015, s 89(2).

The general discussion above of considerations informing leave to appeal under LPA04 remains applicable to leave to appeal under LPULAA (see [5-0550]), save that as an appeal lies only from a review panel and not from an assessor at first instance, it is no longer relevant whether rights of review have been exhausted.

In contrast to LPA04, if leave is granted, the appeal is by way of rehearing, not de novo, with fresh evidence or evidence in addition to or in substitution for the evidence before the review panel or costs assessor being permissible only with the leave of the court. Because the appeal is by way of rehearing, it is necessary for an appellant to identify error (of law, of fact or of discretion) in the determination of the review panel. In such appeals, the court may adopt a less rigorous view to the receipt of fresh evidence than applies in appeals to the Court of Appeal, not least because there is no facility for oral evidence and cross-examination before an assessor. In particular, where there are contested questions of fact which have not been the subject of oral evidence and cross-examination before the costs assessor or review panel, a relatively liberal approach to the reception of fresh evidence may be anticipated: Cf Wentworth v Rogers (2006) 66 NSWLR 474 at [190].

Appeals under LPULAA from 23 November 2015

Under the post-November 2015 LPULAA arrangements, a party to a costs assessment that has been the subject of a review may appeal against a decision of the review panel to:

In addition to providing a “filter” against inappropriate appeals as discussed above (see [5-0550]), the post-November 2015 provisions have the additional purpose of encouraging appeals to be brought in an appropriate jurisdiction. Thus leave to appeal is required (a) in the District Court, if the amount of costs in dispute on the appeal is less than $25,000, and (b) in the Supreme Court, if the amount of costs in dispute is less than $100,000.

The considerations relevant to granting leave to appeal discussed in connection with the earlier legislation remain applicable, except that it is no longer relevant whether there is an appeal as of right to which the issues on which leave is required are related: see [5-0550], [5-0570].

The Supreme Court may remit the matter to the District Court, and may remove proceedings from the District Court: LPULAA s 89(3), (3A). This power may be exercised to remove into the Supreme Court matters in which important questions of principle are involved, and to remit matters which do not involve issues warranting the attention of the Supreme Court.

Ancillary procedures (all regimes)

Appeals and applications for leave to appeal should be commenced by summons in UCPR Form 84 (UCPR rr 6.4(1)(b); 50.4(1); 50.12(3)), and must specify the relief claimed (UCPR r 6.12), whether the appeal relates to the whole or part only (and if so what part) of the decision below (UCPR rr 50.4(1)(a); 50.12(3)(a)); the decision sought in place of the decision appealed from (UCPR rr 50.4(1)(b); 50.12(3)(b)); and a statement setting out briefly the grounds of appeal, including in particular any grounds on which it is contended that there is an error of law: UCPR rr 50.4(2); 50.12(4). Despite a suggestion that an appeal that does not comply with the rules in these respects is incompetent (Katingal Pty Ltd v Amor [2004] NSWSC 36 at [15]), the better view is that it is an irregularity which does not invalidate the proceedings); and, in an application for leave, a statement of the nature of the case, and the reasons why leave should be given: UCPR r 50.12(4). The summons should also include any application for an extension of time (UCPR rr 50.3(2), 50.12(2)), and any incidental orders, such as a suspension of the operation of the determination: see [5-0630].

In the Supreme Court, appeals and applications for leave to appeal are assigned to the Common Law Division: SCA s 53(1); UCPR r 1.18.

An appeal must be instituted, or application made for leave to appeal, within 28 days of the date on which notice of the assessor’s or review panel’s decision is given to the appellant: UCPR rr 50.2, 50.3(1)(a), (c); 50.12(1)(a), (c). The court may extend this time, and any such application for an extension of time to appeal must be included in the summons: UCPR rr 50.3(2), 50.12(2). On an application for extension of time, relevant considerations include the length of the delay and the explanation for it (Currabubula Holdings Pty Ltd v State Bank NSW [2000] NSWSC 232 at [87]–[88]; Kehoe v Williams [2008] NSWSC 807; Scope Data Systems Pty Ltd v Aitken (No 2) [2010] NSWDC 65 at [21]–[23]; Casaceli v Morgan Lewis Alter [2001] NSWSC 211 at [25]; Stojanovski v Willis & Bowring [2002] NSWSC 392; DCL Constructions v Di Lizio [2007] NSWSC 653; DCL Constructions v Di Lizio [2007] NSWSC 1180), the prospects of success of the appeal (Currabubula Holdings Pty Ltd v State Bank NSW, above, at [87]–[88]; Xu v Liu (unrep, 5/8/98, NSWSC)), and prejudice to the respondent: Scope Data Systems Pty Ltd v Aitken (No 2), above, at [21]–[23].

On an application for an extension of time, the court is entitled to expect affidavit evidence explaining the delay and showing the arguability of the appeal.

Under all regimes there is provision for the court to suspend the operation of the decision under appeal (LPA04 s 386(1), LPULAA s 90(1)), and to end that suspension: LPA04 s 386(2), LPULAA s 90(2). The assessor or review panel appealed from can also suspend the operation of the decision (LPA04 s 386(1), LPULAA s 90(1)), and the court — as well as the assessor or review panel who imposed it — can end such a suspension: LPA04 s 386(2), LPULAA s 90(2).

On such an application, the relevant considerations are analogous to those on an application for a stay of a judgment pending appeal, and include that the respondent is prima facie entitled to the fruits of the determination, whether the appeal has reasonable prospects of success, whether refusing a stay would render the right of appeal nugatory, and the balance of justice and convenience.

By the time an appeal of this kind is disposed of by the court, there will typically already have been a contested assessment process and a review, and in party/party matters the substantive litigation that has preceded the costs order under assessment. In that context, an order in respect of the costs of the appeal that requires a further assessment process protracts the dispute. There is great public interest in minimising the scope for further disputation, including assessment proceedings, and thus a great deal to be said for utilising the power of the court under CPA s 98(4)(c) to make a gross sum costs order in respect of the costs of the appeal: Cf Wilkie v Brown [2016] NSWCA 128 at [53].

Common appeal issues

Under LPA04, a costs assessor (and a review panel) is obliged to provide a statement of reasons with the certificate of determination: LPA04 s 370. That provision is not replicated in LPULAA, but an obligation to provide reasons has previously been found in this context in the absence of express statutory provision: Attorney-General (NSW) v Kennedy Miller Television Pty Ltd (1998) 43 NSWLR 729; affirming Kennedy Miller Television Pty Ltd v Lancken (unrep, 1/8/97, NSWSC). Failure to provide adequate reasons is error of law: Nassour v Malouf t/as Malouf Solicitors [2011] NSWSC 356; Bobb v Wombat Securities [2013] NSWSC 757 at [36]; Frumar v Owners SP 36957 (2006) 67 NSWLR 321; Wende v Horwath (NSW) Pty Ltd (2014) 86 NSWLR 674; Randall Pty Ltd v Willoughby City Council (2009) 9 DCLR(NSW) 31 at [56].

However, the costs assessment process is not itself a proceeding in a court (although, of course, an appeal to a court is); costs assessors are not judicial officers; and the assessment process is paper driven (although there is now a facility for oral hearings): Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd (2011) 12 DCLR(NSW) 304 at [30]; Brierly v Reeves [2000] NSWSC 305; O’Connor v Fitti [2000] NSWSC 540; Furber v Gray [2002] NSWSC 1144; Vumbucca v Sultana (2012) 15 DCLR(NSW) 375. The obligation to give reasons must be viewed in this context: Frumar v Owners SP 36957, above, at [43], [45]. While the reasons should identify the essential grounds on which the determination is made (Frumar v Owners SP 36957), they need not be lengthy and need not address every issue that might have been raised by the parties: Levy v Bergseng (2008) 72 NSWLR 178; Turner v Pride [1999] NSWSC 850 at [23]; Madden v NSW IMC [1999] NSWSC 196 at [16]; Cassegrain v CTK Engineering [2008] NSWSC 457 at [90]; Randall Pty Ltd v Willoughby City Council, above, at [56]. But they must be such that a party dissatisfied with the determination has a real — not largely illusory — right of appeal, by placing the parties in a position to understand why the decision was made sufficiently to allow them to exercise any right of appeal: Frumar v Owners SP 36957 at [44], [46]. Generally this will require showing whether the determination was made by allowing, disallowing and adjusting items in the bill, or by the panel forming its own assessment of what was reasonable work and costs; if the former, what items had been allowed, disallowed or adjusted and on what basis; and if the latter, what work the panel considered reasonable and it was costed: Frumar v Owners SP 36957 at [42]–[43].

However, a review panel is not required to provide its own paraphrase of the reasons of a decision under review if it agrees with the conclusions and the reasons of that decision, provided the review panel makes a statement to that effect and makes it clear that it adopts those reasons: Wende v Horwath (NSW) Pty Ltd, above, at [176]–[179]. This will be of great significance in matters to which LPULAA applies, where an appeal lies only from a review panel, as a challenge to the adequacy of a review panel's reasons, in circumstances where the review panel merely accepts the assessor's reasoning, must identify the defect in the assessor's reasons and the occasion when this point was taken before the review panel: Wende v Horwath (NSW) Pty Ltd at [176]–[179].

A costs assessor is obliged to observe the rules of procedural fairness: Levy v Bergseng (2008) 72 NSWLR 178; Nassour v Malouf t/as Malouf Solicitors [2011] NSWSC 356; CSR v Eddy (2008) 70 NSWLR 725 at [1], [10], [30]. Once again, the content of the obligation to afford procedural fairness is informed by the context. Mere non-provision to an objector of material that is in a broad sense relevant will not necessarily establish procedural unfairness, unless the objector has thereby been deprived of an opportunity to make some submission material to the question in issue: CSR v Eddy, above, at [1], [10], [38].

As with inadequacy of reasons, a complaint of denial of procedural fairness by an assessor will not be available on an appeal under LPULAA, where the appeal lies from the review panel and not from the assessor, unless the complaint was made on the review and not remedied by the review process: Wende v Horwath (NSW) Pty Ltd at [171].

Under LPA04, there was express provision that a review panel is to determine the application in the manner that a costs assessor would be required to determine an application for costs assessment, but 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 to receive submissions from the parties to the assessment, or to receive any fresh evidence or evidence in addition to or in substitution for the evidence received by the costs assessor: LPA04 s 375. This limited the scope to complain of a denial of procedural fairness by a review panel. Under LPULAA, a review panel is to determine the application in the manner that a costs assessor would be required to determine an application for costs assessment, and there is no restriction on the receipt of submissions (LPULAA s 85(2)); accordingly there is an obligation to afford parties an opportunity to make submissions (LPULAA s 69(1)); and there is greater scope for complaints of denial of procedural fairness by a review panel in matters under LPULAA.

Legislation

Rules

Further references