COSTS – judicial review of decision of District Court judge on appeal from costs assessor

COSTS – judicial review of decision of District Court judge on appeal from costs assessor – calculation of maximum costs recoverable in personal injury cases pursuant to Legal Profession Act 2004 (NSW), s 338 – whether “amount recovered on a claim” is calculated having regard to amounts attributable to pre-judgment interest pursuant to Legal Profession Act 2004 (NSW), s 343(2) – meaning of “addition of interest”

State of New South Wales v Avery [2016] NSWCA 147 (27 June 2016)

In this case, the respondent (Mr Avery) brought proceedings against the State claiming damages for assault by a police officer. The District Court gave judgment in favour of the respondent for $101,800 including $1,800 in pre-judgment interest) and it was ordered that the State pay costs. The costs assessor found that Mr Avery’s costs were capped at $22,000 (including GST) of the $70,750.12 claimed because of s 338(1) of the Legal Profession Act 2004 (NSW) (“LPA”). The assessor was of the view that the “amount recovered” by Mr Avery did not exceed $100,000 because s 343(2) of the LPA states that in determining the “amount recovered”, “no regard is to be had to any part of the amount recovered that is attributable to costs or to the additional of interest”. Accordingly, the assessor found the pre-judgment interest was within s 343(2) and should be deducted from the judgment sum in determining the “amount recovered” and accordingly, costs should be capped pursuant to s 338(1).

On appeal to the District Court, the judge found that the costs assessor had erred in law and costs were not capped by s 338(1). The matter was remitted to the costs assessor. The State sought judicial review of the primary judge’s decision because the judge should have construed s 343(2) to require the deduction of the pre-judgement interest awarded to Mr Avery.

The Court considered the principles and legislation in relation to pre and post-judgment interest and applied principles of statutory interpretation to the relevant sections. Sackville AJA construed that the “amount recovered” in s 338(1) means the amount of the judgment in favour of the plaintiff and not the amount actually paid to the plaintiff pursuant to the judgment. Accordingly, where a plaintiff obtains judgment in contested proceedings, the “amount recovered” within s 338(1) of the LPA does not include any post-judgment interest paid to the plaintiff. (at [74])

After analysis of the wording in ss 338 and 343, Sackville AJA stated (at [80]) that “... it suggests that while s 343(2) requires post-compromise interest and perhaps post-judgment interest paid to a plaintiff to be disregarded in determining the “amount recovered”, it does not require pre-judgment interest awarded by a court to be deducted.” His Honour noted that conclusion was consistent with the statutory language. It was further stated at [83] that “I think that the direction in s 343(2) of the LPA to disregard “any part of the amount recovered that is attributable to ... the addition of interest” does not apply to interest included in the judgment sum pursuant to s 100(1) of the Civil Procedure Act.”

In conclusion, the State did not succeed in establishing that the primary Judge erred in law in construing s 343(2) of the LPA. The conclusion by the District Court that s 343(2) does not require the interest included in the judgment to be disregarded in determining the “amount recovered” for the purposes of s 338(1). Accordingly, the State’s application was dismissed and it was ordered that the State pay the respondent’s costs of the summons.