Blacktown City Council v Wilkie

Evidence of Mr Minas 27In his affidavit Mr Minas states the following: (a) that on 1 September 2011 Mr Floyd entered into a costs agreement with him for the purpose of representing him, together with council, in the proceedings. Under the terms of the cost agreement Mr Minas proposed to act on a pro-bono basis but it was agreed that Mr Floyd would be liable to pay any counsel's fees and that funds were to be placed in trust for this purpose; (b) it was on this basis that Mr Busuttil was retained to represent Mr Floyd at the hearing on 18 October 2011. However, this retainer was premised on the basis of an assurance by Mr Floyd that funds would be placed in trust to cover Mr Busuttil's fees; (c) on 10 October 2011 Mr Minas attempted, unsuccessfully, to contact Mr Floyd on his mobile. He then wrote to Mr Floyd by email seeking his instructions. The instructions confirmed the retention of counsel and that Mr Floyd proposed to place funds in trust for counsel's fees; (d) on 13 October 2011 Mr Floyd visited his office to provide Mr Minas with further material that he wanted to adduce before the Court and gave him further instructions; (e) on 14 October 2011 Mr Floyd changed his instructions and advised Mr Minas that he did not require legal representation for the hearing set down on 18 October 2011. Mr Minas stated that he cautioned Mr Floyd against this course of action and sought written instructions. Shortly thereafter, Mr Minas contacted Mr Busuttil and informed him that their instructions had been withdrawn and that upon receipt of written instructions from Mr Floyd he would contact Mr Shneider and the Court to alert them to the withdrawal; (f) a number of unsuccessful attempts were made to contact Mr Floyd to seek the written instructions regarding the withdrawal. Mr Minas was then contacted by the Court, as a result of which, the Court was informed that Mr Floyd was proposing to represent himself; (g) Mr Minas proceeded to contact Mr Shneider and inform him that Mr Floyd was proposing to represent himself and that he did not want legal representation; (h) further attempts were made to contact Mr Floyd to confirm the instructions that Mr Minas and Mr Busuttil were not to appear for him on 18 October 2011. On 15 October 2011 Mr Floyd contacted Mr Minas and repeated his earlier instructions that he did not wish to have legal representation; (i) on 16 October 2011 Mr Floyd sent an email to Mr Minas confirming that he had withdrawn his instructions enabling Mr Minas to act for him; (j) later that day, an email was sent to Mr Shneider from Mr Minas confirming that he no longer held instructions to act for Mr Floyd; (k) a similar email was sent to Court; (l) on 17 October 2011 Mr Minas had a telephone conversation with Mr Shneider to the following effect: Me: Steven did you get my email? SS: Yes, I did you have been sacked. Me: Do you want me to appear tomorrow as a matter of courtesy? SS: No mate, you have been sacked and you'll just be on [sic] the way. (m) to date Mr Minas has not received any remuneration for services performed by him on behalf of Mr Floyd, no funds were received in trust for council's fees and that he remains liable for these fees.

Evidence of Mr Shneider 28Mr Shneider filed an affidavit with the Court on 7 November 2011, in response to the affidavit of Mr Minas. 29In his affidavit Mr Shneider stated that he received Mr Minas' affidavit by email on 4 November 2011. Annexed to the affidavit were three emails sent by Mr Minas to Mr Shneider prior to the hearing on 18 October 2011, two dated 16 October 2011 and one dated 17 October 2011. The first two emails explained that neither Mr Minas nor Mr Busuttil had instructions to act for Mr Floyd and the third referred to the telephone conversation (referred to above) that Mr Minas had had with Mr Shneider. 30Mr Shneider deposed that on 17 October 2011 he received a telephone call from Mr Minas. Mr Shneider denied that the record of the telephone conversation set out above is accurate. In particular he denies that he said "mate you have been sacked and you'll just be on [sic] the way" or that Mr Minas used the words "as a matter of courtesy". Mr Shneider's recollection of the conversation was as follows: Mr Minas said: "Do you want me there tomorrow?" I said: "It is not up to me mate, it is up to you. If you are sacked what can you do? Really you can not [sic] do much. You would just be in the way". 31Mr Shneider annexed a file note made immediately after the conversation to his affidavit, which confirmed his account of the conversation. I accept his version of the conversation to be accurate. 32Mr Shneider stated that he was of the belief that Mr Minas had filed a notice of ceasing to act with the Court.

Mr Minas' Instructions to Act were Withdrawn 33As stated above, Mr Floyd did not file an affidavit in response to that of Mr Minas and did not appear at the show cause hearing. As a consequence, the evidence contained in Mr Minas' affidavit, insofar as it concerned Mr Floyd, remained unchallenged and must be accepted by the Court. 34On this basis the Court finds that as at 14 October 2011, Mr Minas' instructions were withdrawn by Mr Floyd.

The Principals Governing Ceasing to Act 35Rule 7.29 of the Uniform Civil Procedure Rules 2005 ("UCPR") states as follows: 7.29 Withdrawal of solicitor (1) A solicitor who ceases to act for a party in any proceedings may file notice of the change and serve the notice on the parties. (2) Except by leave of the court, a solicitor may not file or serve notice of the change unless he or she has filed and served on the client a notice of intention to file and serve the notice of change: (a) in the case of proceedings for which a date for trial has been fixed, at least 28 days before doing so, or (b) in any other case, at least 7 days before doing so. (3) Unless notice of the change is filed with the leave of the court, a solicitor filing such a notice must include in the notice a statement as to the date on which service of the notice of intention required by sub-rule (2) was effected. (4) A solicitor may serve a notice of change or notice of intention under this rule on the former client by posting it to the former client at the residential or business address of the former client last known to the solicitor. 36However, in the present case the evidence establishes that the decision to cease to act for Mr Floyd was not one taken by Mr Minas, but rather was made by Mr Floyd. That is to say, Mr Minas was 'sacked'. In these circumstances the need to comply with the procedures contained in r 7.29(1) and (2) did not apply. 37Instead, r 7.27 of the UCPR governs the present application. It provides as follows: 7.27 Removal of solicitor (1) A party that terminates the authority of a solicitor to act on the party's behalf must file notice of the termination. (2) A copy of the notice of termination, as filed, must be served on all other active parties and, if practicable, on the former solicitor. (3) Filing and service of the notice of termination on the other parties may be effected by the former solicitor. (4) This rule does not apply to a change of solicitor referred to in rule 7.26. 38Clearly, no notice of the termination was filed by Mr Floyd. However, this did not preclude Mr Minas filing and serving a notice of termination pursuant to r 7.27(3) of the UCPR. 39Furthermore, given the extensive and delayed procedural history of the notice of motion for contempt and the subsequent sentence hearing, it was, in my view, incumbent upon Mr Minas to attend Court on 18 October 2011 in order to personally inform the Court that his instructions had been withdrawn by Mr Floyd. 40This should have been done, first, as a matter courtesy to the Court, and second, to avoid the show cause application in which Mr Minas currently participates. Because no formal indication had been given to the Court that Mr Minas' instructions had been withdrawn by Mr Floyd and because Mr Minas continued to be his solicitor on the record, the Court was entitled to assume that the sentence hearing would proceed on 18 October 2011 with Mr Minas acting for Mr Floyd. The absence of notification by Mr Minas meant that no steps could be taken either by the Court or the council to avoid the wasted time and costs that ensued by preparing for, and attending, the scheduled sentence hearing. 41The impact of the role of a solicitor on the record in any litigation was emphasised in QGC Pty Ltd v Bygrave [2010] FCA 659; (2010) 186 FCR 376 per Reeves J who opined the following (at [52]-[54]): The importance of the role of a solicitor on the record 52 A solicitor on the record in any litigation has duties to both the court and his or her client. However, it is significant in this context, that a solicitor's duty to the court is "paramount" or "overriding": see Giannarelli v Wraith (1988) 165 CLR 543 at 555-556 per Mason CJ and 572 per Wilson J. 53 Both sets of duties serve very important purposes in the administration of justice. The main purpose of the former is to have an officer of the court who is responsible to the court for the proper conduct of the litigation before the court and who is answerable to the court should anything untoward occur in the litigation: see Myers v Elman [1940] AC 282 ( Myers ). The solicitor on the record therefore represents an essential component of the court's ability to maintain control over the litigation before it. 54 As Lord Atkin observed in Myers (at 302): If the Court is deceived or the litigant is improperly delayed or put to unnecessary expense, the solicitor on the record will be held responsible and will be admonished or visited with such pecuniary penalty as the Court thinks necessary in the circumstances of the case. 42As the solicitor on the record for Mr Floyd, the Court was entitled to rely on Mr Minas as the person responsible to it for the proper conduct of the contempt proceedings, including the sentence hearing. By failing to appear whilst remaining on the record Mr Minas compromised the Court's ability to maintain control over the proceedings, control that, as the procedural history tolerably demonstrates, to date has been sorely wanting. 43The result was wasted Court time and both wasted time and costs by the council. Therefore, a question arises as to who should bear these wasted costs?

Relevant Legal Principles in Governing and Awarding Costs Against Legal Practitioners 44The Court can order costs personally against a legal practitioner pursuant to s 99 of the Civil Procedure Act 2005 ("the CPA"): 99 Liability of legal practitioner for unnecessary costs (1) This section applies if it appears to the court that costs have been incurred: (a) by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or (b) improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible. 45The Court's power to make costs orders in respect of a legal practitioner pursuant to s 99 of the CPA is exercised to ensure legal practitioners observe their duty to the Court ( Kelly v Jowett [2009] NSWCA 278; (2009) 76 NSWLR 405 at [57]). A party to civil proceedings is under a duty to assist the Court to further the overriding purpose of the just, quick and cheap resolution of the real issues in the proceedings (s 56 of the CPA). Critically, legal practitioners must not cause their clients to be put in breach of that duty (s 56(4) of the CPA). The Court may take into account any failure to comply with s 56 in exercising its discretion in relation to costs (s 56(5) of the CPA). 46In Puruse Pty Ltd v Council of the City of Sydney [2009] NSWLEC 163; (2009) 169 LGERA 85 the Court described the interaction between the statutory power contained in s 99 of the CPA and the overriding purpose contained in s 56 of that Act as follows (at [45]-[48]): 45 The statutory power contained in s 99 of the CPA must be read together with s 56 of that Act and the UCPR which provide for the overriding purpose of the just, quick and cheap resolution of the real issues in the proceedings ( Kendirjian v Ayoub (No 2) [2008] NSWCA 255 at [13] and Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 221 FLR 241 at [66]). This Court is obliged to give effect to this purpose when interpreting and exercising any power given to it by the CPA or the UCPR (ss 56(2) and 57(2) of the CPA and see Lemery at [67]). This includes the discretionary power to order costs contained in s 99 of the CPA ( Kendirjian at [13] and Lemery at [67]). 46 Further, a party to civil proceedings is under a duty to assist the Court to further the overriding purpose, to participate in the processes of the Court and to comply with directions and orders of the Court (s 56(3) of the CPA and Lemery at [66]). Critically, legal practitioners must not cause their clients to be put in breach of that duty (s 56(4) of the CPA and Lemery at [66]) and the Court may take into account any failure to comply with s 56(3) or (4) in exercising its discretion in relation to costs (s 56(5) of the CPA). 47 The legislative enshrinement of these principles is a reflection of the central importance of case management which "is now an accepted aspect of the system of civil justice administered by the courts in Australia" ( Aon at [92]). The centrality of case management is to minimise the ( Aon at [5]): ...irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. This is because "speed and efficiency, the sense of minimum delay and expense, are seen as essential to a just resolution of the proceedings" ( Aon at [98]). 48 Even prior to the enactment of the CPA and UCPR, the Court in Lemoto stressed that "a core aspect of the administration of justice" from the perspective of the legal practitioner is "the prompt and efficient disposal of litigation" ( Lemoto at [96], see also [95] and [97]). Therefore, notwithstanding the caution expressed in Whyked as to the current usefulness of Lemoto , the principles espoused therein remain relevant and offer, in my view, a good starting point in any consideration of a wasted costs order. 47In Whyked Pty Ltd v Yahoo!7 Pty Ltd [2008] NSWSC 477, a case concerning a solicitor who had signed a certificate verifying that there were reasonable prospects of success in the case and who was otherwise diligent in performing his retainer, McDougall J, in considering the power conferred by s 99 of the CPA, reviewed the existing authorities and stated the following general principles (at [13], [14] and [17]); 13 Sully J considered the power conferred by s 99 , and authorities bearing on the exercise of that power, in Ideal Waterproofing Pty Ltd v Buildcorp Australia Pty Ltd [2006] NSWSC 155. His Honour concluded at [17] that s99 should be applied consistently with the principles stated in Ridehalgh v Horsefield [1994] Ch 205 , with what his Honour referred to as "two additional riders". 14 Ridehalgh concerned s 51 of the English Supreme Court Act 1981. There is no relevant distinction between the terms of that section and the terms of s 99. At 223-233, the Court of Appeal in Ridehalgh considered the adjectives "improper", "unreasonable" and "negligent". Their Lordships said: "'Improper' means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code. 'Unreasonable' also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner's judgment, but it is not unreasonable. ... 17 The "two additional riders" to which Sully J referred in Ideal Waterproofing were: (1) the jurisdiction to order costs against a legal practitioner personally is one to be exercised sparingly, because (among other things), the court would not always know all the details and circumstances of the practitioner's instructions. Thus, for the jurisdiction to arise, the conduct must involve some serious dereliction of duty or gross negligence (Dal Pont: Lawyers' Professional Responsibility in Australia and New Zealand (Second Edition) at 374-375); and (2) the inherent power of the court to order its officers to pay costs in an appropriate case is ordinarily one to be exercised on the basis of a serious dereliction of the duty owed by the officer to the court. However, it is neither necessary nor desirable to define the level of incompetence or negligence at which the costs jurisdiction will arise ( Harley v McDonald [1999] 3 NZLR 545 at [59] to [61]). 48More recently, the principles and authorities applicable to the Court's exercise of its discretion to make a wasted costs order were discussed in detail by Pain J in NA & J Investments Pty Ltd v Minister Administering the Water Management Act 2000 (No 2) [2011] NSWLEC 98 (at [227]-[236]). I gratefully adopt without repeating her Honour's discussion insofar as it is relevant to the present purposes. 49In the present case the only basis upon which the Court could exercise its jurisdiction to make a wasted costs order against Mr Minas is if it appears to the Court that the costs have been incurred "improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible" (s 99(1)(b) of the CPA). 50The term "without reasonable cause" was the subject of comment by Pembroke J in the recent decision of Ireland as Executor of the Estate of the late Charles Steward Gordan v Retallack (No 2) [2011] NSWSC 1096 (at [48]-[49] and [54]): 48 As a matter of ordinary language and the natural meaning of words, I do not think there is any material difference between "unreasonable", "not reasonable" and "without reasonable cause". Each conveys the same connotation. Each is effectively a synonym for the other. Each means practically the same thing. This was the view of P O Lawrence J in Mills v Cannon Brewery Co Limited [1920] 2 Ch 38 at 45. In Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 609 Sir Anthony Mason said that he was inclined to agree. 49 Absent binding authority compelling a different result, I would conclude that the criterion "without reasonable cause" in Section 99(1)(b) has been established on the facts of this case. This conclusion derives support from the decision and reasoning in Kendirjian v Ayoub [2008] NSWCA 194 especially at [208] - [213] (McColl JA). In that case, her Honour held that the failure of the appellant's legal practitioners to ensure that the written submissions prepared prior to the appeal hearing day enabled the court to deal with the appeal on that day meant that the costs of preparing for that day of hearing were incurred "without reasonable cause". See also Kelly v Jowett [2009] NSWCA 278 at [88] (McColl JA). ... 54 For those reasons, I have concluded that I should apply the ordinary, natural and well understood meaning of the expression "without reasonable cause" where it appears in Section 99(1)(b) of the Civil Procedure Act. I explained that meaning and its application to these facts in paragraphs [47] - [48] above. I regard this as a clear case. cf Kelly v Jowett (supra) at [60]; Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; (2005) 63 NSWLR 300 at [92]. In my view, the costs and disbursements incurred by Argyle in connection with the expert reports and the irrelevant factual evidence meet the requisite statutory description of "without reasonable cause". Save for the amounts specified in paragraph [67] below, they should be disallowed pursuant to Section 99(2)(a) of the Civil Procedure Act and the equitable jurisdiction to which I referred in paragraph [25] above. 51I adopt his Honour's rejection of the submission that the expression "without reasonable cause" in s 99(1)(b) requires a much higher threshold than that which ought to be afforded to it as a matter of ordinary language and the natural meaning of the words contained in that phrase.

Mr Minas is Not Liable for the Wasted Costs 52By reference to the above applicable legal principles, in the absence of any material calling into question the evidence given by Mr Minas the Court cannot find that Mr Minas' conduct in failing to appear on the day that the sentence proceedings were listed for hearing was either "improper" or, more relevantly, "without reasonable cause". 53This is because: (a) first, Mr Minas had his instructions withdrawn from him by Mr Floyd at short notice (only four days before the sentence hearing); (b) second, upon receiving this information he immediately took steps to contact both Mr Shneider and the Court in order to inform them of what had transpired (although his communication with the Court was somewhat equivocal); and (c) third, irrespective of the accuracy of the conversation that Mr Minas stated that he had with Mr Shneider on 17 October 2011, Mr Minas suggested that he should appear only to be told by Mr Shneider that, although it was a matter for him, he could not "do much. You would just be in the way". 54The latter comment by Mr Shneider, I accept, was not in any way intended to dissuade Mr Minas from appearing. Furthermore, as stated above, in my opinion, an obligation remained on Mr Minas to appear before the Court in order to indicate what had transpired. But despite Mr Minas' failings in this, and other unrelated, regards, the above facts reveal that it cannot be said that Mr Minas failed to appear before the Court absent any warning to the council, or that his conduct was otherwise "without reasonable cause" warranting an adverse costs order. 55Having said this, Mr Minas' behaviour attracts criticism. Throughout the conduct of both the substantive contempt proceedings and the sentence proceedings Mr Minas has failed to meet the high standards expected of an officer of the Court and a solicitor on the record. Mr Minas was frequently late for directions hearings and treated orders of the Court with a cavalier disregard tantamount to outright delinquency. The pleas by Mr Minas that he was simply "helping out" Mr Floyd must fall on deaf ears in circumstances where he persisted in remaining his solicitor on the record. From the Court's perspective, a solicitor on the record is just that, irrespective of whatever terms of retainer have been agreed to between the solicitor and his or her client.

Conclusion and Orders 56The Court is satisfied that the costs incurred by the council occasioned by the vacation of the sentence hearing on 18 October 2011 were not incurred improperly or without reasonable cause, and therefore, are not wasted costs for which Mr Minas is responsible. 57Accordingly, those costs remain reserved and will be determined on the next occasion the matter is before the Court.

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