Spanos Enterprises Pty Ltd & 2 Ors v South Sydney City Council [1999] NSWSC 1077

New South Wales Supreme Court CITATION : Spanos Enterprises Pty Ltd & 2 Ors v South Sydney City Council [1999] NSWSC 1077 CURRENT JURISDICTION : Common Law FILE NUMBER(S) : 11633/99 HEARING DATE(S) : 27 October 1999 JUDGMENT DATE : 3 November 1999

Spanos Enterprises Pty Ltd (First Plaintiff)

Spanos Export Meats Pty Ltd (Second Plaintiff) PARTIES : Anthony William Spanos (Third Plaintiff)

South Sydney City Council (Defendant) JUDGMENT OF : Master Harrison

Mr J B de Vere Tyndall (Plaintiffs) COUNSEL : Mr M J Walsh (Defendant) Tjakamarra Forrest Solicitors of Canberra (Plaintiffs) SOLICITORS : Pike Pike & Fenwick (Defendant) CATCHWORDS : Appeal against decision of costs assessor; Extension of time ACTS CITED : Legal Profession Act 1987 (NSW) (as amended) - s 208L Kioa & Ors v West & Anor (1985) 159 CLR 550 R v Birks (1990) 19 NSWLR 677 Chouman v Margules 17 MVR 144 CASES CITED : Dubow v Miller Goddard Solicitors (NSWSC, unreported 30 September, Marster Harrison) Smits v Buckworths (NSWSC, unreported 22 September 1997, Young J) Wentworth v Wentworth (NSWSC, unreported 6 February 1998, Santow J) Webb v Queen (1994) 181 CLR 41 at 53 Gibson v O'Keefe (NSWSC, unreported 2 June 1998, Einstein J) DECISION : See para 26

14

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

MASTER HARRISON

WEDNESDAY, 3 NOVEMBER 1999

11633/99 - SPANOS ENTERPRISES PTY LTD & 2 ORS v SOUTH SYDNEY CITY COUNCIL

JUDGMENT (Appeal against decision of costs assessor; Extension of time)

1 MASTER: By summons filed 8 July 1999 the plaintiffs seek orders that firstly, that the certificate of determination of costs of John McGruther (the costs assessor) dated 4 May 1999 be set aside; secondly, that the matter be remitted to the costs assessor for re-determination; and thirdly, that the time for filing an appeal be extended. The first plaintiff is Spanos Enterprises Pty Limited, the second plaintiff is Spanos Export Meats Pty Limited and the third plaintiff is Anthony William Spanos. The plaintiffs relied on the affidavits Anthony William Spanos sworn 9 July 1999 and 29 July 1999 and Victor Tjakamarra Forrest of 27 August 1999 and 22 October 1999. The defendant relied on the affidavit of Rachel Suzanne Kelleher sworn 1 September 1999. 2 The grounds of appeal are firstly, that the costs assessor in reaching his determination was in breach of procedural fairness or natural justice and secondly, that there was a reasonable apprehension of bias on behalf of the costs assessor.

Extension of time to appeal 3 The court has a wide discretion when considering whether or not to extend time to appeal. The ultimate test is to do justice between the parties. As a general rule, time will be extended if there is no prejudice to the other party and appropriate orders for costs or the imposition of other terms of the extension adequately protect their position. 4 The certificate of assessment is dated 4 May 1999. The appeal should have been lodged by 2 June 1999. The summons was filed on 8 July 1999, just over one month out of time. The plaintiffs' reason for their delay was that they had difficulties obtaining documentation from his former solicitor and did not obtain the certificate of assessment until 23 June 1999. However, on 2 June 1999 Mr Spanos was aware that a judgment had been entered in the Land and Environment Court against the plaintiffs in the sum of $44,041.65 for costs on 17 May 1999. The alarm bells should have rung. The defendant did not demonstrate that it suffered any prejudice. While the exercise of discretion is finely balanced, and after taking the above matters into account it is my view that the time to appeal should be extended to 8 July 1999. 5 A short history of this matter is as follows.

(1) Mr Spanos is the chief executive officer, director and secretary of the first and second plaintiffs. He has held these roles since at least 1992. The plaintiffs own property worth about $8 million with a mortgage in the sum of $1.4 million. The approximate equity of the plaintiffs is $6.6 million. Mr Spanos is a voluntary youth worker.

(2) On 8 July 1998, Pearlman CJ of the Land and Environment Court gave judgment in a matter between South Sydney City Council as applicant, Spanos Enterprises Pty Ltd as first respondent, Spanos Export Meats Pty Ltd as second respondent and Anthony William Spanos as third respondent. Her Honour declared that the respondents, their servants and agents have used, permitted or suffered to be used premises known as "The Graffiti Hall of Fame" at 286-288 Botany Road, Alexandria (the premises) for the purpose of dance parties without having first obtained development consent from the applicant and are in breach of the Environmental Planning and Assessment Act 1979. Her Honour ordered that the respondents, their servants and agents be restrained from using, permitting or suffering to be used premises known as 286-288 Botany Road, Alexandria for the purpose of dance parties without having first obtained development consent from the applicant in accordance with the provisions of the Environmental Planning and Assessment Act 1979. Her Honour also ordered that the respondents pay the costs of the applicant as agreed or as assessed.

(3) On 15 January 1999 the defendant's solicitor served a bill of costs on the plaintiffs' solicitor and lodged an application for assessment of party/party costs with this court. The bill of costs claimed the sum of $65,588.35 for costs and disbursements.

(4) On 19 February 1999 the court referred the matter to Mr McGruther for costs assessment. The parties were notified accordingly.

(5) On 25 February 1999 the costs assessor wrote to the solicitors for the plaintiffs. He noted that no objections had been lodged as at the date of the letter. He allowed the plaintiffs 14 days to lodge objections and submissions. No notice of objections or submissions were ever lodged.

(6) The solicitor Mr Tees did not file a notice of ceasing to act. He may have been reinstructed by the plaintiffs in April 1999. In the meantime copies of all correspondence was mailed to the third plaintiff.

(7) On 4 May 1999 the costs assessor issued a certificate of determination of costs in the sum of $44,041.65. The costs assessor deducted $21,546.70 from the amount claimed in the bill of costs.

(8) On 18 March 1999 the plaintiffs' solicitor, Mr Tees wrote to Mr Spanos and stated: "YOU ALSO NEED ANOTHER SOLICITOR INSTRUCTED TO FIGHT THE ASSESSMENT OF ABOUT $65,000-00 COSTS AGAINST YOU IN THE LAND ENVIRONMENT COURT BELOW.D.G. THOMSON ARE RECOMMENDED AND MUST BE PAID UP FRONT ASAP AND URGENTLY. …" At the foot of the letter in handwriting appeared the words: "Handed to Mr Spanos personally at 1.46pm 18/3/1999 He said John Tyndall Barrister to act. I said "He cannot he is a Barrister" TS then said "We'll see anyway"."

(9) On 6 October 1999 in the matter Spanos Enterprises Pty Limited (plaintiff) v South Sydney City Council (defendant) (Equity No 3090/99), Mr Spanos made an application to set aside the application for statutory demand. Acting Master Berecry made findings in relation to the letter dated 18 March 1999 referred to above. The Acting Master stated at pp 4 and 5 of his judgment: "The letter is endorsed at the foot with a note that it was handed to Mr Spanos. Therefore, as at 18 March Mr Spanos was aware that his then solicitor was not going to act for him in relation to the costs assessment and further that that solicitor had informed him that he would need to instruct another firm. He also emphasised that there was a degree of urgency required.

The costs assessor handed down his certificate on 4 May, some six weeks after that letter. It would appear that Mr Spanos took no steps to protect the plaintiff in relation to the assessment of those costs until well and truly after the event. In his affidavit, which of course is contradicted by that particular letter, he deposes to the fact that it was not until mid June that he became aware of the assessment.

The plaintiff in these proceedings has failed to take steps to protect itself, before the assessor, by not acting on the advice given by the former solicitor. True it is he may not have had the complete file as at 18 March, but it was open to him to request the solicitor to make that file available. Had the solicitor refused to do so, there is adequate protection by way of application to the Supreme Court for the file to be released for the purpose of the note in the assessment to proceed. The plaintiff, through Mr Spanos, did not avail itself of those procedures." 6 For reason of comity, I accept these findings. I also agree with these findings.

The Law 7 The plaintiff submitted that the costs assessor in reaching his decision was in breach of procedural fairness or natural justice in that there was no prior notice given to the plaintiffs of the assessment; or no disclosure of material adverse to them was made; and there were deprived of the opportunity to provide information and be heard by the assessor, by reason of the incompetence or inadvertence of the plaintiffs' former solicitor in failing to bring these matters to the plaintiffs' attention in time or failing to make objections. 8 Section 208L of the Legal Profession Act 1987 (NSW) (as amended) provides. "Appeal against decision of costs assessor as to matter of law

(1) A party to an application who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the Supreme Court, appeal to the Court against the decision.

(2) After deciding the question the subject of the appeal, the Supreme Court may, unless it affirms the costs assessor's decision: (a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or

(b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application. (3) 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." 9 The plaintiff referred to portions of the second reading speech of the Legal Profession Reform Bill which occurred on 16 September 1993, the explanatory statement in relation to the Legal Profession Reform Bill 1993 and the New South Wales Law Reform Commission Report (No 70) entitled "Scrutiny of the Legal Profession - complaints against lawyers February 1993". It was submitted that these documents assist in the interpretation of s 208L of the Act. The language of s 208L is clear and there and there is no need to refer to these extrinsic matters. 10 In Judicial Review of Administrative Act, 2nd ed., pp 180-181 which are reproduced below, Professor S A de Smith said: "Natural justice generally required that persons liable to be directly affected by proposed administrative acts, decisions or proceedings be given adequate notice of what is proposed, so that they may be in a position: (a) to make representations on their own behalf; or (b) to appear at a hearing or inquiry (if one is to be held); and (c) effectively to prepare their own case and to answer the case (if any) they have to meet." 11 In Kioa & Ors v West & Anor (1985) 159 CLR 550 the High Court held that the duty to accord natural justice is a duty to act fairly. In the normal course, a party to judicial proceedings (as are those subject to costs assessment) could expect to be apprised of the nature of the case sought to be made against it, and of the date and time fixed for hearing such as to give it a reasonable opportunity to meet that case and to advance its own. These statements are similar to those expressed by Professor de Smith and referred to earlier. Brennan J (as he then was) at p 628 stated: "A person whose interests are likely to be affected by an exercise of power must be given an opportunity to deal with relevant matters adverse to his interests which the repository of the power proposes to take into account in deciding upon its exercise." 12 In relation to procedural fairness, Mason J stated in Kioa that the law had now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect the rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention. Procedural fairness is a notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case (pp 583 and 584). 13 On the subject of alleged solicitor incompetence, the plaintiff referred to R v Birks (1990) 19 NSWLR 677 and Chouman v Margules 17 MVR 144. These authorities refer to the manner in which cases were conducted before the court and are not relevant to the case before me. In any event, the plaintiff, Mr Spanos an experienced businessman, was told on 18 March 1999 to instruct a solicitor urgently in relation to the costs assessment but did not do so until April 1999 at the earliest. 14 The costs assessor complied with his obligations under the Act and more specifically those duties referred to under ss208, 208A and 208B. It was never drawn to his attention that the plaintiffs' solicitor was no longer acting for the plaintiffs. The costs assessor wrote to the plaintiffs' solicitor requesting objections and submissions to be lodged in accordance with s 208. The costs assessor did not have the knowledge that the plaintiff intended to lodge a notice of objection (if that was actually the plaintiffs' intention). The costs assessor carried out his duties under the Act in a proper manner. The costs assessor afforded the plaintiffs natural justice and was not in breach of procedural fairness. This ground of appeal fails. 15 The plaintiffs' second submission was that there was a reasonable apprehension of bias on behalf of the costs assessor because documents forwarded by the defendant's solicitor refer to the plaintiffs as being involved in criminal activities, a shooting incident and the involvement of police. 16 In Dubow v Miller Goddard Solicitors (NSWSC, unreported 30 September 1998) I held that the principle of apprehended bias applied to costs assessors. I have since become aware of the decision by Young J in Smits v Buckworth (NSWSC, unreported 22 September 1997) where he considered whether there was a reasonable apprehension of bias on the part of a costs assessor and applied the principle of apprehended bias. In Wentworth v Wentworth (NSWSC, unreported 6 February 1998) Santow J applied the principle to a taxing officer. 17 I have reproduced some of the principles in relation to apprehension of bias referred to Santow J in Wentworth. They are as follows: "The proper test for judicial or quasi judicial bias in Australia is as stated by the High Court in Webb v The Queen (1994) 181 CLR 41 at 47 (per Mason CJ and McHugh J, affirming the statements of principle in Livesey v New South Wales Bar Association (1983) 151 CLR 288 and Re JRL; Ex parte CLJ (1986) 161 CLR 342 at 352): 'When it is alleged that a judge has been or might be actuated by bias, this Court has held that the proper test is whether fair-minded people might reasonably apprehend or suspect that the judge has prejudged or might prejudge the case. The Court has specifically rejected the real likelihood of bias test. The principle behind the reasonable apprehension or suspicion test is that it is of 'fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done…' … The fairminded person has been described in different ways: for example, the reasonable person ( Vakauta v Kelly (1989) 167 CLR 568); the reasonably minded observer ( Goktas v GIO (1993) 31 NSWLR 684); and objective and reasonable person ( Raybos Australia Pty Limited v Tectran Corporation Pty Ltd (1986) 6 NSWLR 272 at 275). Thus Deane J in Webb (supra) at 67 quoting Livesey (supra) at 293: whether, in all circumstances, a fair-minded lay observer with knowledge of the material objective facts 'might entertain a reasonable apprehension that [the judge] might not bring an impartial and unprejudiced mind to the resolution of the question' in issue." 18 In Webb v The Queen (1994) 181 CLR 41 at 53 Mason CJ and McHugh J stated that test reflects the rationale that it is of fundamental importance that the parties to litigation and the general public have the full confidence in the integrity including the impartiality of those entrusted with the administration of justice (see Deane J in Webb at p 68). 19 More recently Einstein J in Gibson v O'Keefe (NSWSC, unreported 2 June 1998) considered whether conduct and comments of the ICAC Commissioner constituted apprehended bias. 20 The plaintiff referred to the letter dated 8 March 1999 where the defendant's solicitor wrote to the costs assessor and stated that the matter was a contested three day hearing before the Chief Judge in the Land and Environment Court alleging criminal activities on the part of the respondent and seeking injunctive relief. 21 At paragraphs 2 and 3 of the chronology also forwarded to the costs assessor, it was stated that in May 1995 there were various attendances upon a number of nearby residents and businessmen and a meeting was held with the Mayor and the Director of Planning and Building and others to monitor the present state of the evidence and what further steps could be taken and that correspondence was initiated with the New South Wales Police Service. It also stated that in 1996 there were a number of attendances upon Council officers and police relevant to various dance party events and the incidents were recorded and statements taken ultimately to be used in evidence. 22 At p 5 of the chronology it was stated that there was an incident widely reported which took place at the subject premises on 7 May 1995 (shooting) when as a result of a fight between participants at a dance party a person was shot and the perpetrator was subsequently shot by police. 23 At p 6 of the judgment at the foot of the page of Pearlman CJ said: "Each of these four deponents witnessed an incident on the premises during which a man was shot. They each made a statement to the police on 7 May 1995 in connection with that incident. The incident has no relevance to these proceedings, but it supports the reliability of the evidence given by each of these persons, as each of them was more likely to recall the event by reason of the incident." 24 Pearlman J in her judgment refers to at least four police officers who gave evidence before her. Some attended the premises when dance parties were either scheduled to take place (j pp 9, 11,12) or taking place. The judgment also referred to Council officers attending these premises. The statements about police officers making attendances at the premises and a shooting incident at the premises are true. The letter of 8 March 1999 uses the words "alleging criminal activities" (my emphasis). 25 It is my view that a fair minded person would not reasonably apprehend or suspect that the costs assessor would have prejudged the costs assessment. because two of the statements complained about are true and the third statement refers to alleged criminal activities. It would be expected by a fair minded person that a costs assessor would not accept all that was stated in submissions as being true and that the costs assessor would read the judgment and form his own view on it. This ground of appeal fails. The appeal is dismissed. The decision of the costs assessor of 4 May 1999 is affirmed. The summons is dismissed. Costs are discretionary. Costs should follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed.

26 The orders I make are:

(1) Time to file an appeal is extended to 8 July 1999.

(2) The appeal is dismissed. The decision of the costs assessor of 4 May 1999 is affirmed. The summons is dismissed.

(3) The plaintiffs are to pay the defendant's costs as agreed or assessed. **********

Last Modified: 11/04/1999 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.