Legal Costs: a Comparative Analysis of the Western Australian and New South Wales Regimes

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Legal Costs: a Comparative Analysis of the Western Australian and New South Wales Regimes THE ASSESSMENT OF DISPUTES ABOUT LEGAL COSTS: A COMPARATIVE ANALYSIS OF THE WESTERN AUSTRALIAN AND NEW SOUTH WALES REGIMES. Stephen Shaw (LLB) Thesis submitted in fulfilment of the requirements of the degree of Doctor of Philosophy School of Law Murdoch University Western Australia July 2013 Acknowledgements I wish to acknowledge the support of my wife Chris and my daughter Kelly, both of whom spent hours reading things and editing things they had no real interest in. My two supervisors deserve more credit than a university workload formula allows. I acknowledge Dr Kate Lewins, who read every word of this thesis at least three times; her patient corrections made what was too often a stream of consciousness into a semblance of academic discourse. I also acknowledge Dr Jaime Zander, who actually understands statistics, and who lent me that understanding so that my research could lead to some concrete conclusions. Without their gentle pushing and occasional kicks this thesis would have remained in my head and not found its way onto paper. I also wish to acknowledge the help and support of the staff from the Supreme Court of Western Australia and the Costs Assessment Scheme in New South Wales. In particular I thank Ramon Loyola, who was kindness personified during my visits to New South Wales. I also specifically thank the librarians in the Supreme Court of Western Australia for allowing me a work space that kept me safe from students. Lastly, I wish to thank David Garnsworthy, Western Australia‘s most well-known costing specialist. This thesis and my abiding interest in the issues surrounding legal costs originate with him. i Declaration This thesis contains no material which has been accepted for the award of any other degree or diploma in any other university and, to the best of my knowledge or belief, contains no material previously published or written by another person, except when due reference is made in the text. ______________________________________ Stephen Shaw July 2013 iii Abstract All Australian jurisdictions provide mechanisms for assessing legal costs. Costs assessment is carried out in two circumstances. Clients who are dissatisfied with what their own lawyers have charged can have those charges assessed. When a court orders that a losing litigant pay the legal costs of the winning litigant those costs too can be assessed. Australian costs assessment mechanisms have been inherited from England, and the traditional model of costs assessment is an adversarial process operated by the courts. Western Australia has a costs assessment scheme that follows that traditional model. In contrast New South Wales abandoned the traditional model in 1994, adopting an administrative costs assessment scheme operating separately from the courts with practicing lawyers acting as costs assessors and paid as sub contractors to determine costs disputes. This thesis explores the costs assessment schemes of both jurisdictions. The traditional judicial process still used in Western Australia and the ‗reformed‘ administrative process that has been introduced in New South Wales are examined separately and in some detail. In particular, the thesis considers the various factors that led to the 1994 Reforms in New South Wales and investigates whether the Reforms have produced the results that were expected of them. The thesis then provides quantitative data from both jurisdictions and evaluates the performance of each against the other in the context of a range of different factors including the rates of return on disputed bills and the time each system takes to determine disputes. As a result of the analysis, the thesis agrees with the New South Wales Reforms that the judicial process, where adversarial contest is used to determine the truth about the parties‘ claims, is not well suited to disputes that are centred in the reasonableness of legal fees. For that and a range of other reasons the thesis concludes that the administrative model of costs assessment as adopted in New South Wales is better able to serve the interests of the various stakeholders. Nonetheless, the thesis notes that the stakeholders in the New South Wales costs assessment scheme consider it deficient and that a recent and thorough review of the scheme has made recommendations that, if adopted, will make profound changes to the way that legal costs are assessed in that state. v Contents ACKNOWLEDGEMENTS ........................................................................................................................................ I DECLARATION ...................................................................................................................................................... III ABSTRACT ................................................................................................................................................................ V LIST OF TABLES ................................................................................................................................................. XIII LIST OF FIGURES ............................................................................................................................................... XIII CHAPTER ONE: INTRODUCTION TO THE THESIS ........................................................................................ 1 1.1:OVERVIEW ........................................................................................................................................................... 1 1.2: INTRODUCTION TO THE THESIS............................................................................................................................ 2 1.2.1: The Law of Costs and Costs Assessments .................................................................................................. 2 1.2.2: The structure of the thesis .......................................................................................................................... 3 1. 3: THE LAW OF COSTS: A BRIEF HISTORY ................................................................................................................ 5 1.3.1: Costs as a creature of statute ..................................................................................................................... 6 1.3.2:The law of costs in Australia ....................................................................................................................... 6 1.3.3:Why have a law of costs? ............................................................................................................................ 7 1.3.4:The Assessment Process .............................................................................................................................. 8 1.3.4.1: Client/solicitor and solicitor/client costs .............................................................................................................. 8 1.3.4.2: Party/party costs ................................................................................................................................................... 9 1.3.5: Costs: the default position ....................................................................................................................... 11 1.3.6: Contracting out of the default position .................................................................................................... 12 1.4: THE SCOPE OF THIS THESIS ............................................................................................................................... 13 1.5: THE PURPOSE OF THIS THESIS ............................................................................................................................ 14 1.5.1: Did the 1994 Reforms achieve their intended outcomes? ........................................................................ 14 1.5.2: Which of the two costs assessment regimes provides the most advantages to the jurisdiction‟s courts? 15 1.5.3: What are the unintended benefits of the 1994 Reforms? .......................................................................... 15 1.6: HOW WILL THE THESIS ACHIEVE ITS PURPOSE? ................................................................................................. 15 Table 1.1: Historical timeline of costs assessment ............................................................................................... 17 CHAPTER TWO: ASSESSMENT OF COSTS IN WESTERN AUSTRALIA- A BRIEF HISTORY .............. 19 2.1: OVERVIEW ........................................................................................................................................................ 19 2.2: THE EARLY YEARS ............................................................................................................................................ 19 2.3: THE WINDS OF CHANGE: THE CLARKSON COMMITTEE 1979-1983 ................................................................... 24 2.4: THE REVIEW OF THE CRIMINAL AND CIVIL JUSTICE SYSTEM IN WESTERN AUSTRALIA ................................... 28 2.4.1: The LRCWA‟s views on costs assessment and related issues .................................................................. 28 2.4.2: The time frame for seeking assessment. ................................................................................................... 29 2.4.3: Solicitor initiated assessment ................................................................................................................... 30 2.4.4: „One more such success
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