17.1.1 Contribution by clients towards costs of providing legal service

A legally assisted person may be asked to pay a contribution towards the costs of providing them with legal services under a grant of legal aid.

See Contributions chapter for the policies and guidelines on contributions.

Date Last Published: 21/12/2016

Legal Aid NSW must determine the fees to be paid to private legal practitioners to whom work is assigned by Legal Aid NSW: s39(1) of the Act.

See the Legal Aid NSW Fee Scale for fees paid to private legal practitioners.

See Delegation Instrument for Legal Aid NSW officers authorised to approve payment of legal practitioner's fees.


Date Last Published: 21/12/2016

17.3.1 Right of Legal Aid NSW to have private legal practitioner's costs assessed

Under s40, of the Act, Legal Aid NSW can request a private legal practitioner to whom work has been assigned to have the bill of costs assessed or taxed as if Legal Aid NSW and not the legally assisted person was the client of the legal practitioner.

17.3.2 Right of legally assisted person to have private legal practitioner's costs assessed

Under s 40(1)(A) of the Act, a legally assisted person who is required to pay a contribution under s46  of the Act has a right to apply to the Supreme Court to have the costs of the private legal practitioner assessed or taxed.

Where legal aid has been provided by an in-house legal practitioner, the legally assisted person does not have a right to apply to the Supreme Court to have Legal Aid NSW costs assessed.

See Contributions chapter for policies and guidelines on contributions under s46 of the Act.


Date Last Published: 21/12/2016

17.4.1 Section 41 of the Act

Section 41 of the Act prohibits a private legal practitioner from charging or recovering any costs from a legally assisted person for work that has been assigned by Legal Aid NSW to the practitioner on behalf of the legally assisted person.

A breach of s41 is an offence.

Any agreement to exclude, modify or restrict the operation of s41 of the Act is void.

Some examples of the effect of s41 of the Act are:

• a legal practitioner cannot receive costs from anyone on behalf of the legally assisted person without prior approval of Legal Aid NSW
• a legal practitioner cannot recover from a legally assisted person any of the 20 per cent deducted from their costs by Legal Aid NSW (transferred into Legal Aid NSWs Legal Aid Fund)
• a legal practitioner cannot charge for travel or accommodation costs without approval of Legal Aid NSW
• at the conclusion of a stage in a staged model grant of aid a legal practitioner cannot charge for a subsequent stage unless Legal Aid NSW has informed the legally assisted person that the grant of aid has been terminated.

Section 41 of the Act does not cover any legal fees earned and/or disbursements incurred by the private legal practitioner prior to the date their client received the grant of legal aid.

17.4.2 Legal Aid NSW can determine that s41 does not apply to grant of aid

Legal Aid NSW may determine that s41 of the Act will not apply when authorising a lump sum grant under s30(2) and (4) of the Act.

See Types of Grants of Aid chapter for policy on lump sum grants.

See Act chapter for commentary on s41 of the Act.


Date Last Published: 21/12/2016

Section 42 of the Act requires a court or tribunal to make an order for costs for or against a legally assisted person as if that person was not a legally assisted person.


Date Last Published: 21/12/2016

A court or tribunal may order a person who is or was a legally assisted person to pay to Legal Aid NSW the costs and expenses of providing them with the legal service.

17.6.1 When can an order be made?

Under s43(1)(a) & (b) of the Act a court or tribunal may make the order for a legally assisted person to pay Legal Aid NSW the cost of expenses of providing them with legal aid if the court or tribunal is satisfied that legal aid was obtained:

• by fraud or misrepresentation, or
• the legally assisted person has acted improperly in
  • bringing
  • defending, or
  • conducting

any proceedings for which the person received a grant of legal aid.

17.6.2 What costs and expenses are included?

Under s43(1) of the Act costs and expenses include:

• the fees of the legally assisted person's legal practitioner
• party/party costs, and
• expenses under s33 of the Act.

17.6.3 Which court or tribunal can make the order?

Under s43(2) of the Act Legal Aid NSW can make an application to the court or tribunal that is hearing, or has heard:

• any proceedings with which the legal aid is concerned, or
• any other court of competent jurisdiction.

17.6.4 Who can approve an application to the court/tribunal?

Legal Aid NSW officers authorised under the Delegation Instrument can decide whether an application to a court or tribunal is to be made under s43 of the Act.

Date Last Published: 27/05/2015

Under s43A(1) of the Act, Legal Aid NSW may postpone paying fees and disbursements to private legal practitioners until:

• party/party costs are recovered, or
• an official investigation into the conduct of the private practitioner is concluded: s43A(1)(b).

17.7.1 Deferring costs until party/party costs recovered

Legal Aid NSW may postpone paying fees and disbursements to a private legal practitioner for a matter where legal aid was granted until Legal Aid NSW is satisfied that the practitioner has taken all reasonable steps to recover any party/party costs to which the legally assisted person is entitled.

17.7.2 Deferring costs until the conclusion of an official investigation

Under s43A(1)(b) of the Act, Legal Aid NSW may postpone paying fees and disbursements to a private legal practitioner for a matter were legal aid was granted, until the conclusion of any official investigation into the conduct of a legal practitioner about allegations of:

• breach of the Legal Aid Commission Act or the Legal Aid Commission Regulation by the legal practitioner
• fraud or misrepresentation by the legal practitioner about the provision of legal aid or any such fraud or misrepresentation to which the practitioner is a party, or
• improper action by the legal practitioner in bringing, defending or conducting any proceedings for which legal aid has been granted or any such action to which the legal practitioner is a party.

17.7.3 What is an official investigation?

Under s43A(1A) of the Act, an official investigation includes:

• an investigation conducted by or under the authority of Legal Aid NSW where Legal Aid NSW has given written notice to the legal practitioner that the investigation is to be or is being conducted under s43A(1)(b) of the Act, or
• criminal or disciplinary proceedings commenced against the practitioner in relation to any of the allegations set out in 17.7.2 above.

17.7.4 When is a legal practitioner party to fraud or improper action?

A private legal practitioner may be a party to a:

• fraud
• misrepresentation, or
• improper action

if the practitioner:

• becomes aware of any fraud, misrepresentation or improper action, and
• fails to notify Legal Aid NSW promptly of that fact.

The fraud or improper action must relate to a grant of legal aid and include an allegation set out in section 17.7.2 above.

17.7.5 Payment of which costs can be deferred?

The power to defer paying fees and disbursements to a private legal practitioner relates only to costs incurred in the matter which is the subject of the investigation.

It does not relate to other work that the legal practitioner may have been assigned by Legal Aid NSW.

17.7.6 Who may defer the payment of fees?

Legal Aid NSW officers authorised under the Delegation Instrument can defer paying a private legal practitioner fees and disbursements until:

• party/party costs are recovered,or
• until the conclusion of any
  • official investigation by Legal Aid NSW, or
  • any criminal proceedings, or
  • disciplinary proceedings concerning allegations set out in 17.7.2 above.

Date Last Published: 21/12/2016

Under s43A(2) of the Act Legal Aid NSW may refuse to pay any fees to a private legal practitioner for proceedings where legal aid has been granted, if:

• any allegation referred to in s43(1)(b) of the Act against the practitioner is substantiated in any criminal or disciplinary proceedings.

This power is in addition to any other power Legal Aid NSW has to refuse to pay fees of a private legal practitioner.

17.8.1 What fees are included?

Under s43A(1)  the Act, the power of Legal Aid NSW to refuse to pay fees to a private legal practitioner relates only to fees in the legally aided matter which is the subject of the investigation (or criminal or disciplinary proceedings).

It does not relate to other work that the practitioner may have been assigned by Legal Aid NSW.

17.8.2 Who can determine not to pay a legal practitioner fees?

Legal Aid NSW officers authorised under the Delegation Instrument can determine to decline to pay the legal practitioners fees under s43A(2) of the Act.

17.8.3 Court may order private practitioner to repay costs to Legal Aid NSW

Under s43B(1)  of the Act a court or tribunal may order a private legal practitioner to repay to Legal Aid NSW the whole, or part, of any money paid by Legal Aid NSW to the practitioner.

17.8.4 When can an order be made?

An order under s43B(1)  of the Act can be made against a private legal practitioner when an allegation under s43A(1)(b)(i) or (ii) is substantiated in any criminal or disciplinary proceedings relating to those allegations.

17.8.5 What money can be ordered to be repaid?

Under s43B(2)  of the Act the court can order that any money paid by Legal Aid NSW to the legal practitioner in a matter:

• for which legal aid has been granted, and
• to which the allegation relates

is to be repaid to Legal Aid NSW.

17.8.6 Which court/tribunal can make the order?

Under s43(2) of the Act Legal Aid NSW can make an application to the court or tribunal that:

• is hearing, or
• has heard

any proceedings in relation to the matter which is the subject of the application, or

• any other court of competent jurisdiction.

An application can only be made to a court or tribunal that has the power to award costs.

17.8.7 When can Legal Aid NSW make an application?

Under s43(2)  of the Act the application can be made either:

• during, or
• after the conclusion of

the legally aided proceedings.

17.8.8 Who can approve an application to the court/tribunal?

Legal Aid NSW officers authorised under the Delegation Instrument can make an application under s43B(2) of the Act.


Date Last Published: 21/12/2016

17.9.1 Directing legally assisted person to pay party/party costs recovered to Legal Aid NSW

In cases where legal aid has been granted, Legal Aid NSW can, by giving written notice under s44(1) of the Act, direct

• a legally assisted person, or
• their private legal practitioner

to pay to Legal Aid NSW the whole or a specified part of any money recovered by or on behalf of the legally assisted person in the matter for which a grant of legal aid was made.

17.9.2 Legal Aid NSW must account to legally assisted person for money received

Under s44(3) of the Act, once Legal Aid NSW receives money it has directed the client to pay under s44(1) of the Act, it is required to account for that money to the:

• legally assisted person, or
• their private legal practitioner.

17.9.3 What can be deducted from the money received by Legal Aid NSW?

Under s44(4) of the Act, when Legal Aid NSW receives money it has directed the client or their legal practitioner to pay Legal Aid NSW, it may:

• deduct any amount owed to it by the legally assisted person, and
• offset the amount of any fees payable by it to any private legal practitioner in connection with the matter in which the money was recovered, against any other money held by the legal practitioner for the same matter.

17.9.4 Legal Aid NSW can take proceedings to recover money not paid under s44 of the Act

Under s44(5) of the Act, Legal Aid NSW may take proceedings to recover money not paid as directed under s44 of the Act, and any interest, as a debt in a court of competent jurisdiction.

Note: Where a s44 direction is appropriate, a matter is not to be referred to the Debt Recovery Unit until after the authorised officer has given the s44 direction to pay the money to Legal Aid NSW.


Date Last Published: 21/12/2016

Under s45 of the Act Legal Aid NSW may request a legally assisted person to assign their right to recover money which is payable to the legally assisted person.

17.10.1 What money can be recovered?

Legal Aid NSW may direct the legally assisted person to assign to Legal Aid NSW the right to recover money which:

• a court or tribunal has ordered to be paid to a legally assisted person (including an order for costs), or
• is otherwise recoverable by a legally assisted person whether or not in a proceeding, or by a settlement or compromise.

17.10.2 When can Legal Aid NSW direct a person to assign recovery rights?

Under s45(1) of the Act if a legally assisted person fails to recover the money within such time as Legal Aid NSW thinks reasonable, Legal Aid NSW may direct them to assign their recovery rights.

17.10.3 Direction to assign by a Notice

Legal Aid NSW may direct, by written notice, a legally assisted person to assign their right to recover the money or such part of the money as specified in the Notice.

A legally assisted person is to assign their recovery right in the Notice of Assignment within 21 days after the date of the Notice.

17.10.4 Failure to comply with a Notice

Under s45(2) of the Act a legally assisted person is deemed to have assigned their right to recover the money specified in the Notice of Assignment if they fail to comply with the notice within 21 days after the date of the Notice.

17.10.5 Who can direct a client to assign?

A Legal Aid NSW officer authorised under the Delegation Instrument can direct a client to assign their right to recover money.

17.10.6 Legal Aid NSW must account to legally assisted person

Legal Aid NSW must account to the legally assisted person for money recovered by it under s45 of the Act.

Date Last Published: 27/05/2015

Legal Aid NSW must pay costs awarded against a legally assisted person. up to the monetary limit established by the Legal Aid NSW Board, unless the matter comes within the exceptions set out below at 17.11.6.

Discretion to pay costs in certain types of matters

In certain matters Legal Aid NSW has discretion as to whether it will pay costs ordered against the legally assisted person.

See Delegation Instrument for who has authority to exercise the discretion to pay costs under s47(4) and (4A) of the Act.

17.11.1 Statutory protection for legally assisted person from paying certain costs

Under s47(1)(b) of the Act, a legally assisted person is given statutory protection against paying costs awarded against them except in:

• specified types of state matters.

The statutory protection in s47(1)(b) of the Act does not apply in federal court matters. However, see Act chapter for Legal Aid NSW policy on paying costs in Federal Court and tribunal matters.

17.11.2 Notification of statutory protection to other parties in proceedings

Because of the statutory protection and the Legal Aid NSW monetary limit, s34(6) of the Act requires that a legally assisted person's legal practitioner advises any other parties to the proceedings of the effect of s47 of the Act.

Section 34(6) Notice must be sent to all other parties involved in the proceedings which advises them of the effect of s47 of the Act.

See Costs Guideline 10.2 for direction on notifying other parties to proceedings of the effect of the statutory protection against an adverse cost order (s47 indemnity).

17.11.3 Contribution by legally assisted person towards s47 costs

Under s36(1)(b) of the Act a legally assisted person may be required to pay a contribution towards the costs which Legal Aid NSW pays under s47 of the Act. This is a condition of the grant of legal aid and the amount must be set out in the grant letter to the legally assisted person.

See Contributions chapter for details on the contribtion policy and payment procedures.

17.11.4 Legal Aid NSW liability is limited to a maximum amount under s47

Under s47(2) of the Act, the liability of Legal Aid NSW in the event an adverse cost order is made against a legally assisted person, is limited to a maximum amount. The current maximum amount is $15,000.

The ceiling of $5,000 referred to in s47(2) of the Act may be raised by Legal Aid NSW Board without amending the Act.

17.11.5 Uniform application of the limit

Legal Aid NSW does not raise the ceiling for particular matters. It will only raise the ceiling as a matter of policy to apply to all matters which come within the scope of s47.

Limits

Legal Aid NSW has increased the general limit on a number of occasions.

The following table sets out the different limits and the dates the limit was commenced.

17.11.6 How Legal Aid NSW distributes costs under s47 to parties

The maximum amount under s47 of the Act applies to ‘one proceeding'.

What does ‘in any one proceeding' mean for the purpose of s47?

The examples below set out Legal Aid NSW policy concerning specific types of proceedings and whether they are considered ‘one proceeding' or not for the purpose of s47 of the Act.

Examples

More than one party to a proceedings

Under s47(2)(a) of the Act if there is more than one successful other party to the proceedings the monetary limit will be shared between the parties except in the following circumstance:

• a separate monetary limit will apply to each party in any one proceedings if Legal Aid NSW is satisfied that the party has a separate interest in the proceedings.

Interlocutory applications

Under this policy, Legal Aid NSW regards interlocutory applications as part of the substantive proceedings and not a separate proceeding for the purpose of the s47 indemnity

Cross claims

In a case where a legal aid grant covers a cross claim and the defence of a proceedings and the proceedings are heard together, Legal Aid NSW considers this as ‘one proceeding' when applying s47(2) of the Act.

Appeals

Under this policy appeal proceedings are normally considered as separate proceedings from proceedings at first instance and s47(2) would be applied separately to these proceedings.

17.11.7 When Legal Aid NSW may decline to pay costs awarded against a legally assisted person

Under s47(4) or (4A) of the Act Legal Aid NSW may decline to pay costs awarded against the legally assisted person in the following types of matters:

• an appeal, or application for a new trial, made on the ground that money awarded to the legally assisted person is inadequate s47(4)(a)
• an action in which the legally assisted person is successful against one or more, but not all, of the other parties to the action: s47(4)(b) of the Act
• an action in which the legally assisted person is successful after having been unsuccessful in interlocutory proceedings related to the action: s47(4)(b1) of the Act
• when an order for costs is made against a legally assisted person in an interlocutory matter, where possible payment of those costs are to await the outcome of the proceedings. If the legally assisted person succeeds in the proceedings, Legal Aid NSW may decline to pay the interlocutory costs under s47(4)(b1) of the Act. Note that this subsection does not apply to order for costs made before 1 February 1997
• an action heard and determined under s42 of the Civil Procedure Act 2005 (NSW): s47(4)(c)
• an action brought under the Family Law Act 1975 (Cth), and
• matters under Child Support (Assessment) Act 1989 (Cth).

Legal Aid NSW should give the legally assisted person the opportunity to respond to a Notice which informs the legally assisted person that Legal Aid NSW intends to decline to pay costs under s47 of the Act.

If Legal Aid NSW decides to decline to pay costs under s47 of the Act then Legal Aid NSW must:

• record the reasons for the decision (s47(7))
• within 14 days notify the legally assisted person in writing of the decision (47(5)), and
• inform the legally assited person that they have a right to appeal to the Legal Aid Review Committee against the decision (47(6)).

17.11.8 When Legal Aid NSW is not liable to pay certain costs

Under s47(3) or (3A)  of the Act Legal Aid NSW is not liable to pay certain costs in other matters, all of which are listed below:

• costs incurred by or on behalf of a person for a period when that person was not a legally assisted person. This includes party/party costs which relate to work undertaken prior to the grant of legal aid.
• costs incurred in proceedings for a criminal offence in which the legally assisted person was the accused person
• costs incurred when a lump sum grant has been authorised under s30(2) and (4) of the Act and Legal Aid NSW determined when granting legal aid that s47 indemnity was not to apply to the grant of aid
• costs ordered against a formerly legally assisted person when legal aid has been terminated and the order for cost is made after the termination of legal aid
• costs incurred under a contractual obligation - (example - recovering costs under a covenant to a mortgage), or a statutory obligation.

17.11.9 Liability of legally assisted person under s47 when aid is terminated

If legal aid is terminated and an adverse costs order made after termination, the formerly legally assisted person is liable for the whole of the opponent's costs of the proceedings and this includes party/party costs incurred even when the grant of legal aid was current.

Legal Aid NSW officers must be aware of the effect that terminating legal aid may have in rendering formerly legally assisted persons liable for the whole of their opponent's costs of the proceedings. This includes party/party costs incurred for the period even when legal aid was current.

In appropriate cases, opportunities are to be given to a legally assisted person to conclude proceedings without incurring adverse costs orders. This is particularly relevant in in-house matters where Legal Aid NSW is also the legally assisted person's legal practitioner.

17.11.10 Who can authorise a s47 payment

Legal Aid NSW officers authorised under the Delegation Instrument can authorise payments under s47 of the Act.

Costs for interlocutory proceedings

Where possible costs for interlocutory proceedings will be deferred pending the outcome of the proceedings.

Who is authorised to exercise discretion under s47(4) and (4A) of the Act?

Legal Aid NSW officers authorised under the Delegation Instrument can exercise the discretion to decline to pay costs which come within s47(4) and (4A) of the Act.

Written Notice must be given to legally assisted person

Under s47(5) and (6) of the Act, Legal Aid NSW must give written notice of the decision within 14 days of the decision. The notice is to include advice that the legally assisted person has a right of appeal to a Legal Aid Review Committee.

Recording reason

Under s47(7) of the Act, Legal Aid NSW officer or committee that has made the decision to decline to pay the costs must record the reasons for the decision.

Right of appeal to LARC

The legally assisted person has a right to appeal against a decision by Legal Aid NSW not to pay costs under s47(4) and(4A) of the Act.

17.11.11 Is there protection under s47 of the Act for legally assisted persons in Federal court and tribunal matters?

The application of s47 of the Act to proceedings in the Federal Court was considered by the Full Court of the Federal Court in Woodlands and Ors v. Permanent Trustee Company Ltd and Ors (1996) 139 ALR127.

The Court held that:

“Section 47(1)(b) does not apply to the Federal Court in that it is inconsistent with s43(1) of the Federal Court of Australia Act (Cth) which sets out the Court's power to award costs”.

Whether or not s47 will apply in other federal courts and tribunals depends on whether legislation establishing those courts and tribunal includes a power to award costs that is inconsistent with s47 of the Act.

Legal Aid NSW should advise the legally assisted person in the grant letter that there is no statutory protection in federal court matters.

See Cost Guideline 10.2 for procedure on notifying legally assisted person about federal court and tribunal matter.

17.11.12 Legal Aid NSW may decide to pay certain costs in federal court matters

Legal Aid NSW policy is that it may pay an amount towards costs awarded against a legally assisted person up to the monetary limit set under s47(2) of the Act.

The legally assisted person will be liable to pay any balance owing.

17.11.13 The Court may make an order for security of costs against legally assisted person

Section 47(1)(b) of the Act does not prevent the court making an order against a legally assisted person for security to pay costs. However, it can provide a reason why an order for security for costs should not be made.

The New South Wales Court of Appeal in Rajski & Anor v Computer Manufacturer & Design Pty Ltd [1983] 2 NSWLR 122 decided that s47(1)(b) of the Act:

"cannot operate to destroy the jurisdiction or power of the Supreme Court to order security for costs . It certainly will in the ordinary run of cases make an order for security for costs a wrong exercise of the power to do so."

This decision was followed in Petranker v Brown [1983] 2 NSWLR 131.

Date Last Published: 21/12/2016

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