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Outcome of the Review of the Costs Assessment Scheme in NSW

On 21 May 2014 the Honourable Chief Justice Bathurst of the Supreme Court of New South Wales announced his final recommendations arising from the Review of the Costs Assessment Scheme in NSW. His Honour’s recommendations can be found here.

Background

In September 2011, Chief Justice Bathurst instigated a comprehensive Review of the Costs Assessment Scheme in New South Wales. Thirty nine submissions were made to the Review.

The Chief Justice nominated the Honourable Justice Brereton, the Principal Registrar of the Court and the Manager, Costs Assessment, supported by a Committee of costs experts, to consider these submissions and identify potential areas for reform.

On 12 March 2013, a report was published detailing the Committee’s recommendations for proposed reforms to the Scheme and the reasons for the proposed reforms. This provided a final opportunity for the legal and broader community to comment on the proposed future structure and operation of the Scheme.

The Chief Justice then personally considered these further submissions before determining whether or not to accept the Committee’s recommendations.

Outcome

There were 56 recommendations made by the Committee which were published in the 12 March 2013 report. The Chief Justice has now, through His Honour’s 21 May 2014 announcement, accepted almost all the recommendations. The recommendations accepted by his Honour were qualified by His Honour’s rejection of recommendations 3, 8 and 27.2 and deferral of recommendation 55. His Honour also provided reasons for accepting recommendations 28 and 29.

Key Recommendations

Significant recommendations arising from the Review include:

  • Recommendation 13 – That the Legal Profession Regulation 2005   be  amended  to provide  that,  upon  reference  of  an application to an Assessor for contested assessment, the Assessor may:

13.1. direct the parties to attend for a confidential conference to identify the real issues in dispute and reach a resolution of the dispute; and/or

13.2. before or after conducting a conference, make and issue an estimate (“early estimate”) of the approximate total that is likely to be allowed on assessment, which will stand as the assessment unless objected to by either party; and/or

13.3. direct that the matter proceed to full assessment either on the papers or with attendance by the parties, in connection with which the Assessor may direct that the parties file submissions, summon and examine witnesses either orally or on affidavit, direct or require the production of books papers and documents, and issue subpoenas.

  • Recommendation 22 – In addition to the power proposed under recommendation 13.1, that the Manager, Costs Assessments be empowered, at an early stage or any stage, and on application of a party, or on the Manager’s own motion, or upon request from an Assessor, to direct that the parties to an assessment participate in an ADR procedure, which may include mediation.
  • Recommendation 28 – That Costs Assessors be given the discretion to conduct an oral hearing in appropriate cases, and be provided with appropriate ancillary powers in accordance with recommendation 13.3.

NB: The Chief Justice clarified in his announcement of 21 May 2014 that:

  • oral hearings will be conducted by Costs Assessors in exceptional circumstances, not in the normal course;
  • oral hearings are not to be conducted for the purpose of resolving mere questions of quantum; and
  • a Costs Assessor may require a party requesting an oral hearing to pay the costs of such hearing in the first instance.

It is worth noting the Chief Justice’s comment that “it may be quicker and cheaper for a Costs Assessor to conduct an oral hearing rather than receive lengthy exchanges of written submissions”. Does this mean that a quick and cheap resolution of a matter will satisfy the “exceptional circumstances” warranting oral hearings?

  • Recommendation 29 – Legal Profession Act 2004 s 359 be amended to provide explicitly that Costs Assessors are authorised to determine all anterior and ancillary questions necessary to resolve the application, but not so as to preclude the parties, by estoppel, from arguing such questions in subsequent litigation.

NB: Despite concerns about greater power being conferred on Costs Assessors, the Chief Justice has accepted this recommendation, clearly indicating that Costs Assessors can have power to determine points of law on documents or facts stating that “Costs Assessors should determine all questions that arise in a costs assessment”.

  • Recommendation 38 – That Civil Procedure Act 2005 s 101 be amended to the effect that interest accrues in respect of party/party costs from such dates and at such rate as the Court in question may order and, in the absence of any other order, from the date of the costs order at the rate applicable to a judgment debt.
  • Recommendation 49 – That the office of the Manager, Costs Assessment be transferred into the Registry of the Supreme Court, such that the Manager, Costs Assessment be an officer of the Supreme Court, whose decisions as such are subject to Review as decisions of a Registrar of the Court.
  • Recommendation 53 – That a program of continuing education for Costs Assessors be maintained through an induction session and an annual seminar, and address, where appropriate and relevant, not only the role of the Costs Assessor and the costs assessment process, but also the philosophy and purpose of the scheme and how it complements the disciplinary regime, the role of the Office of the Legal Services Commissioner, the role of the professional associations and new practice issues.

Next Steps

  • All accepted recommendations are to be considered in light of the new Legal Profession Uniform Law Bill, and integrated as necessary
  • Considerable law reform and new regulation and rules will be required to give effect to and implement the reforms accepted by the Chief Justice
  • The Chief Justice has proposed to bring the proposals for reform to the attention of the Attorney General of NSW
  • Justice Brereton will present a seminar on this topic on 17 July 2014

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