Blackstone Brief Volume 8

How are costs assessed in your State? A practical guide to assessing costs in Victoria, NSW and Queensland.

Happy New Year! To kick off 2018 we thought we’d show you exactly how costs are assessed in three jurisdictions – Victoria, NSW and Queensland. In last month’s edition we looked at the procedural differences in each state. Now, read on to find out exactly who assesses costs in your State, how they assess them, and what you need to do to have an assessment reviewed.

A guide to the legal costs recovery processes in Victoria, NSW and Queensland

VICTORIA

Who has the authority to assess costs?

In Victoria, the Costs Court hears and determines all costs matters that arise from the State’s courts and tribunals. It also hears costs disputes between legal advisers and their clients.

The Costs Court consists of an Associate Justice, a Judicial Registrar and two Costs Registrars. The Costs Court may reduce costs if it considers that they haven’t been reasonably incurred, that they’re excessive, or that they’re not reasonable or proportionate to the complexity, issue and amount in dispute.

What test will a Costs Assessor apply?

When assessing party/party taxations, the Costs Court will look at whether costs have been reasonably incurred and are of a reasonable amount. The costs of taxation will be calculated in line with the jurisdictional Scale of Costs: Order 63.36(5) of the Supreme Court Rules.

What if you want to review an assessment?

There is a 14-day time limit on seeking a review or reconsideration of a Costs Court order: Order 63.56.1  of the SC Rules.

A Costs Judge, Judicial Registrar or a Costs Registrar has the power to review or reconsider their own decisions: Order 63.56.1 and Order 63.56.2 of the SC Rules.

When a Judicial Registrar or a Costs Registrar reviews or reconsiders their own decision, a Costs Judge can, in turn, review this: Order 63.56.4 of the SC Rules.

A Supreme Court Judge can then review a Costs Judge’s review or reconsider their own or a Judicial Registrar or a Costs Registrar’s decision: Order 63.57 of the SC Rules.

Positives of Victoria’s model Negatives of Victoria’s model
  • The limited number of decision makers facilitates a system that promotes uniformity and consistency.
  • At mediation, the parties can ask for an estimate of the likely costs that will be allowed at a taxation. This can help resolve the matter early and cost-effectively.
 

  • If the amount of the professional charges and disbursements in any Bill of Costs is reduced by 15 per cent or more, the Costs Court has a discretionary power not to award any costs to the legal adviser, under Order 63.85 of the SC Rules.
  • The Court must apply the Rule unless the parties’ submissions give it reason not to: Laro-Bashford & Ors v Mihos [2016] VSC 77 (7 March 2016).

NEW SOUTH WALES

Who has the authority to assess costs?

In NSW, there are around 55 court-approved Costs Assessors. You can access a list of the Current Costs Assessors and the members of the Costs Assessor Rules Committee (CARC)​​ here.

What if you want to review an assessment?

Each party has 30 days to review a Cost Assessor’s Determination from the date the Court forward the Certificate of Determination to the parties: s 83 of the Legal Profession Uniform Law Application Act 2014 (LPULAA). A Review Panel constituted by two Costs Assessors will conduct the review (s 82 LPULAA), either affirming the Cost Assessor’s Determination or setting it aside and substituting the determination that, in its opinion, should have been made: s 85 LPULAA.

Either party may appeal against a decision of the Review Panel to:
(a) the District Court. However, it first must apply for the leave of the Court if the amount in dispute is less than $25,000, or
(b) the Supreme Court. However, it first must apply for the leave of the Court if the amount in dispute is less than $100,000: s 89(1)(b) LPULAA.

Positives of NSW’s model Negatives of NSW’s model
  • Costs Assessors have a wide discretion, particularly when determining which costs are fair and reasonable: s 76 LPUL and s 172 LPULAA.
  • Guidelines such as the Costs Assessment Rules Committee (CARC) Guideline for Costs Payable between Parties under Court Orders (Ordered or Party/Party Costs) assist with uniformity in a jurisdiction where this is a known issue.
  • In contrast to Queensland’s system of default assessments, Costs Assessors in NSW are required by law to give each party a reasonable opportunity to make submissions and must give them due consideration: s 69(1) LPULAA.
  • Although its practical application is unclear, Costs Assessors may choose to have an oral hearing. In considering these applications, the Costs Assessor won’t be bound by the rules of evidence and may inform themselves on any matter in the manner they see fit: s 69(1) LPULAA.
  • There is no “15% rule” (at least not in a party/party costs assessment), whereby if the costs claimed are reduced by 15% or more, that party is likely to be required to pay the costs of costs assessment.

 

  • The wide discretion provided to Costs Assessors can have negative consequences as Costs Determinations and Reasons are not published.
  • A high number of costs assessors  may compromise uniformity and consistency in decision-making.
  • Blackstone Legal Costing comes across numerous determinations in which the same issue has been determined quite differently by different Costs Assessors. For example, one assessor relied on one authority in finding that identifying and collating annexures was administrative, not legal, work. This meant it was covered by the hourly rates and should not be separately claimed. In other costs assessments, similar costs have been allowed. In some assessments a reduction based on proportionality is applied, while another Costs Assessor has stated: “it is not permissible simply for me to reason that a bill of $50,000 is disproportionate to a claim in which $25,000 was recovered. That is the process of capping which is the province of the Court under section 98 of the Act and not one of assessment which requires a valuation of the work done”.
  • There are few “case law” precedents based on actual Certificates of Determinations that can help with preparing submissions.
  • In solicitor/client disputes, a legal practitioner must pay for the cost of a costs assessment, if their costs are reduced by 15% or more on assessment (subject to the Cost Assessor’s discretion): s 204LPUL.
  • Despite the number of Costs Assessors, Costs Lawyers and Costs Consultants in NSW, the legal costs community is fragmented. This affects the uniformity of how testing costing principles and process are applied.

Who has the authority to assess costs?

In Queensland, there are about 45 court-approved Costs Assessors, including Blackstone’s General Manager and Costs Lawyer, Therese Tonkin.

You can find the full register of Approved Costs Assessors here.

How is a Costs Assessor appointed?

In both standard and solicitor/client matters:

If both parties agree to appoint a Costs Assessor, they can file a Request for Consent Order of Registrar with the registry (Form 59A Uniform Civil Procedure Rules 1999 (UCPR)). If they can’t agree on appointing a Costs Assessor, a judge or magistrate will appoint one at a directions hearing.

In solicitor/client matters the court that will appoint a costs assessor depends on the amount of the Itemised Bill:

  • If the Costs Statement is under $150,000 – the Magistrates’ Court.
  • If the Costs Statement is between $150,000 and $750,000 – the District Court
  • If the Costs Statement is over excess of $750,000 – the Supreme Court

What will a Costs Assessor determine?

In standard matters, a Costs Assessor will determine the costs of the Costs Assessment, as well as the liability of the parties to pay those costs. They will issue a Certificate of Costs within 14 days, a copy of which is provided to each party.

The parties may apply to the Registrar for a Consent Order if they reach settlement before a Costs Assessor is appointed: s 666 UCPR. The Costs Assessor will issue a certificate in the accepted amount if settlement is reached after a Costs Assessor is appointed.

What if you want to review an assessment?

In standard matters:

If you don’t agree with the Costs Assessor’s assessment of costs, you have 21 days after receiving it to request written reasons for the decision. The Costs Assessor then has another 21 days to provide them.

If you’re still not satisfied with the assessment, you can ask a court to review it, so long as you’re within 14 days of receiving the Certificate of Costs or written reasons for the decision.

In solicitor/client matters:

You have 14 days after receiving the Costs Assessor’s certificate to request written reasons. Again, the Costs Assessor must supply these within 21 days. You can also ask a court to review the Costs Assessor’s decision within 14 days of receiving the Certificate of Costs or written reasons for the decision.

The positives of Queensland’s model The negatives of Queensland’s model
  • The appointed Costs Assessor decides the assessment procedure.
  • In deciding this, the Costs Assessor may consider solicitor or counsel’s fees, the quantum of the costs, the parties’ interests, the way the matter was conducted, the quantum of the case, the nature and significance of the case, and any other relevant circumstances.
  • Scale rates promote a uniform approach in claiming costs.
  • As the ‘necessary and proper’ test is more stringent in standard costs matters (section 702 of the UCPR), Cost Assessors have limited scope for discretion.

 

  • The high number of Costs Assessors and decision makers makes it difficult to apply Scales and relevant principles in a uniform manner.
  • If a party fails to serve a Notice of Objection within 21 days of being served with a costs statement), the other side can apply to the court to have a Costs Assessor conduct a default assessment. If the Costs Assessor is satisfied that the Costs Statement was correctly served, they will assess the costs without necessarily considering each item and issue a certificate for the assessed costs (including the costs of assessment).
  • Considering the different tests for solicitor/client and standard costs disputes, it is difficult to convert a solicitor/client Itemised Bill into a standard Costs Statement.

And finally…
As you can see, each jurisdiction has its advantages and disadvantages. However, the one way to make sure you always capitalise on the strengths and avoid the pitfalls of the costs regime you’re working with, is to trust your costs to professionals like Blackstone.

Lastly, check out the Australian Lawyers Alliance website for this and other interesting articles helping you to manage your practice.