October 2009


In this issue
The Concept of Proportionality & the Cost of Justice
ISO Re-certification
Recent Papers/Articles
2009 Conference of Regulatory Officers (CORO)
Inquiry Line Survey Results


THE CONCEPT OF PROPORTIONALITY & THE COST OF JUSTICE
By Steve Mark, Legal Services Commissioner (NSW)

Earlier this year the NSW Attorney General announced new laws which give judges the power to limit legal costs in cases involving disputes over wills. The new laws require the court to refer all family provision claims to mediation, except in special circumstances and empower judges to cut costs by determining simple cases without a hearing. The Succession Amendment (Family Provision) Act 2008 which commenced on 1 March also give judges the power to curb the use of expensive expert witnesses, costly medical reports and unnecessary valuations. The object of the legislation, according to the NSW Attorney General, is to control lawyers who charge excessive fees for simple estate disputes. At the heart of the legislation lies the concept of proportionality and represents in effect another warning to practitioners that proportionality should be central to fair and reasonable costs.

The concept of proportionality is a substantive principle of justice in the adversarial system and to this end has been given legislative effect. Section 60 of the Civil Procedure Act 2005 (NSW) for example, provides that “in any proceedings, the practice and procedure of the courts should be implemented with the object of resolving issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.” Basically, the principle requires that the procedures and their costs be measured against the complexity of the issues, the value of the subject matter and the nature of the claim involved.

However, the doctrine does not only relate to the practice and procedure of the courts, it also relates to costs. The doctrine of proportionality is embodied in the determination by an independent costs assessor of the Supreme Court who is able to have regard to inter alia, “the complexity, novelty or difficulty of the matter” and “the outcome of the matter” in determining whether costs are “fair and reasonable.” It is my view in making this determination a cost assessor should examine the costs charged in the matter against the amount ordered by the courts.

Despite being given legislative imprimatur it appears that the concept of proportionality is not being applied by either the courts or the profession effectively. This is particularly true in the area of personal injury litigation. My Office has received a number of complaints in which a client alleges he/she has been charged excessive costs compared to the actual amount awarded. In one matter for example, a complainant was charged $52,000 for a matter that settled for $80,000 inclusive of costs on the first day of court. In another matter, a complainant was charged in excess of $30,000 for a simple matter of recovering $4,000 in lost wages. There is also the problem that often the courts will make an award or settle a matter “plus costs.” The effect of such an order can be illusive to a plaintiff who is unaware of the amount of the costs being claimed.

One of the main reasons why the concept of proportionality may not be being applied effectively is because the concept as interpreted by the legislation is limited. The problem is that the legislation does not actually allow an examination of the costs charged compared to the amount ordered. The concept of proportionality is only alluded to in much of the legislation, not stipulated as a matter of fact. Apart from the Civil Procedure Act, in NSW there is only one piece of legislation that positively stipulates proportionality. Sections 339 of the Legal Profession Act 2004 provide for maximum fees of $10,000 in personal injuries cases where the claim is for an amount less than $100,000 and where there is no costs agreement in place. There is however no limitation of costs in NSW for awards greater than $100,000. There is also the problem that there are no charging limits in most matters. Since the deregulation of costs in NSW in 1994 there are very few areas where scales of costs or ceilings of costs are imposed.

In my view these problems could be overcome, at least in part, by limiting the fees chargeable in such matters to an exact amount being a maximum of 50% of the net amount recovered. This limitation was successfully introduced in Queensland in 2003. The Queensland legislation provides that a practitioner’s fees must not exceed half of what remains of the judgement amount after the subtraction of compulsory refunds and disbursements. The rule is colloquially known as the “50/50 Rule” and is presently embodied in sections 345-347 of the Queensland Legal Profession Act 2007. The 50/50 rule is novel because it provides an exact and certain maximum quantification of chargeable costs.

Perhaps it is now time to consider applying the Queensland approach to all litigious matters.


ISO RE-CERTIFICATION
The OLSC achieved re-certification to ISO 9001: 2000 in April 2009 with the support of all management and staff. The OLSC originally gained certification to ISO 9001: 2000 in 2005-2006, to ensure there was a formal external recognition of the OLSC as a professional, efficient and well-managed entity with evidence of our commitment to continuous improvement.

SAI Global conducted a Triennial Recertification Audit of the OLSC’s Quality Management System on 17 April 2009. The OLSC is committed to improving the quality of the services we offer. Our aim is to use a philosophy of continuous improvement, concentrating on areas of identified concern and required minimum standards. In line with our role, vision, mission, and values, the OLSC has set a number of objectives to ensure continuous improvement. These objectives include:

• To deliver our existing services in a consistent, reliable fashion while meeting and exceeding our stakeholders’ needs;
• To ensure the core processes run smoothly and efficiently with minimal non-compliance whilst ensuring maximum customer satisfaction and maximum staff morale;
• To align the Quality Management System to the OLSC’s Business Plan, which uses project methodology each year to set new projects to form its business plan to improve areas identified in performance monitoring and other new business initiatives;
• To observe centralised Human Resources, Information Technology, Asset Management and all other policies and procedures of the AGD;
• To maintain the OLSC Quality Systems Manual, incorporating policies, working procedures, flow charts and general administrative requirements, together with standard documents and forms to ensure accessibility and currency of information provided; and
• To maintain ISO 9001 certification.