Background
Our instructing solicitor acted for the Defendant in the substantive proceedings seeking judgment for possession of land, as well as leave to issue a Writ of Possession.
These proceedings were successfully defended, securing an order for costs on the ordinary basis.
We prepared a fully itemised inter partes Bill of Costs on behalf of the Defendant, claiming a figure of approximately $157,000.00 in professional costs and disbursements.
The assessor reduced the costs down to a figure of $98,000.00. Following our Application for Review, this figure increased to $136,890.00.
Reasons for initial reductions:
Within their determination, the assessor had reduced costs on account of the following reasons:
a. Breach of indemnity principle.
b. Costs were disproportionate. This was in part based on the UK case of May v Wavell which requires a nexus between costs and damages in issue.
c. Reduction to hourly rates.
d. Disallowance of costs of assessment based on the above findings.
e. Interest calculated on paid costs (rather than total allowed).
f. Costs of assessment disallowed.
Rose Legal Costing recommended that an Application for Review should be prepared and were instructed to do so.
The Application for Review
The review application and supporting submissions prepared by this firm set out grounds for review, including the assessor’s errors in regard to the interpretation of the indemnity principle, proportionality, hourly rates allowed and costs of assessment.
Indemnity principle
During the course of preparing the bill, we identified significant amounts of work undertaken by the law firm that had not been charged to the client (approximately 12%). This additional work was itemised, although a cap was applied to the overall claimed professional costs to avoid any infringement of the indemnity principle. It is important to note at this stage that NSW conducts an assessment rather than a taxation.
Had the assessment been conducted based on the solicitor/client invoices alone, much of the additional work would have been overlooked and the clients would have doubtless been left with a lower net recovery of the costs they had paid. This shows the importance of instructing experts in legal costs to properly itemise the work carried out.
However, the assessor incorrectly determined that a percentage reduction should be applied to the overall costs in the amount of the difference between the professional cost as drawn and the actual invoiced amount.
The ground for review put forward by this firm covered extensive case law on this area, and submitted that the assessor’s arbitrary reduction in reflection of the percentage cap applied to the professional costs was ultra vires and an incorrect application of the indemnity principle. The panel agreed, noting as follows:
“the reduction of 12% was an arbitrary figure which is impermissible given the task at hand was simply to determine the fair and reasonable costs of [the Review Applicant]”
This resulted in a full assessment carried out by the panel.
Proportionality
The ground put forward here was, inter alia, that the assessor relied too heavily on the quantum in dispute, falling into a consideration of s 60 of the Civil Procedure Act, which is concerned with the Court’s practice and procedure in case management rather than an assessment of the costs.
The panel agreed, and noted that the fair and reasonable costs were proportionate.
Hourly rates and Counsel’s fees
Both of these were subject to reductions and a ground was put forward for each noting the reasonableness of the claim. The panel once more agreed with the ground for review and allowed Counsel’s fees, and the hourly rates, as claimed.
Outcome
As we were successful in all 8 grounds put forward, resulting in the determination increasing by 38%, the Review Respondent was ordered to meet the costs of both the assessment and the review.
If you have an order for costs, or a determination and would like advice on how to maximise recovery for your client, get in touch today. Equally, if you have a costs issue in any jurisdiction, we would be happy to have a free initial discussion with you on how we may assist.
Note: NSW assessments are not a court proceeding and are not precedents. Consequently, the details of the parties and assessor have been omitted from this article.