On 5 December 2014, I gave judgment on two motions filed by Mr Habib, where he sought orders under Rule 36.15 of the Uniform Civil Procedure Rules 2005 (NSW) that judgments entered against him in each case be set aside under Rule 36.10, as having been entered irregularly (see Brezniak v Habib [2014] NSWSC 1730).
At the hearing of the motions, a notice to produce was also dealt with. On the motions, I came to the view that the Court had jurisdiction to enter judgment in matter number 2013/314464, on a certificate issued in Mr Brezniak's favour by a costs assessor, but that it did not have jurisdiction to enter judgment in his favour in matter number 2014/316920, on a certificate issued in his favour by a review panel.
I also concluded that both Mr Habib and Mr Brezniak were bound by those certificates; that Mr Brezniak was entitled to enforce the assessor's certificate, but not the review panel's certificate; and that the judgment entered on the assessor's certificate should not be set aside.
It is now necessary to deal with the question of costs and to make orders disposing of the two motions. For Mr Brezniak it was also suggested that some corrections should be made to the December judgment.
[2]
Corrections
There will be no amendment to the title of the proceedings. They each concern a judgment entered on application made by Mr Brezniak, after he took steps to have the certificates registered in this Court. While Mr Habib was the applicant on the motions, it was not he who commenced the proceedings, sought to register the two certificates, or enter judgment.
Paragraphs [15] and [22] of the judgment will be amended to reflect that judgment was "entered" after registration of the certificates, not "given".
It was also suggested that the same amendment be made to paragraph [30] and that the words "and then enforced" be added in paragraph [30] after the word "Court". The paragraph will not be amended. It provides:
"This statutory costs assessment mechanism is designed to provide a basis upon which disputes between legal practitioners and their clients about legal costs can be resolved without resort to the courts, although that is not precluded. That process can result in a certificate being issued by a costs assessor, which can be enforced as a judgment of this Court, if payment is not made by the client."
In paragraph [46] it was suggested that the words "bankruptcy notice" be replaced with the words "creditors submission". That amendment will not be made, the paragraph reflecting, as it does, the submissions advanced for Mr Habib.
Paragraph [84] provides:
"Both Mr Habib and Mr Brezniak are bound by the cost assessor's certificate and that of the review panel. Mr Habib thus cannot challenge the findings on which these certificates rest, as he has sought to do in these proceedings. As Basten JA discussed in Wende v Horwath that involves an abuse of process. As for Mr Brezniak, while is presently entitled to pursue his enforcement of the assessor's certificate, he is not entitled to pursue enforcement of the review panel's certificate, as he sought to do."
It was suggested that the last sentence should be deleted, because there is no evidence that Mr Brezniak has sought to enforce that certificate. I do not accept that submission.
It was Mr Brezniak who registered both certificates and had judgment entered in respect of each of them. The purpose of taking such steps is so that the costs which have been assessed can be recovered by enforcement of the resulting judgment. Indeed, the steps taken by Mr Brezniak to register the review panel's certificate on 28 October 2014, followed the filing of Mr Habib's first motion on 13 October 2014, in which he sought to have the first judgment entered in respect of the assessor's certificate on 18 October set aside.
The only purpose for registering the review panel's certificate was for Mr Brezniak to recover the assessed costs, by entry and enforcement of the judgment, which followed registration of the certificate, in the event that Mr Habib's motion to have the other judgment set aside succeeded. That was what triggered Mr Habib's second motion.
[3]
Costs
The usual order as to costs is that they follow the event.
On 12 January 2015, submissions were advanced for Mr Brezniak. He sought an order for costs in his favour, on an indemnity basis, because he had been wholly successful in having Mr Habib's motions dismissed, as well as a notice to produce. It and the subpoena issued in similar terms had not been raised on the motions, but had to be dealt with at the hearing of the motions.
It was claimed that a gross money order in the sum of $10,828.13 was thus warranted under s 98(4)(c) of the Civil Procedure Act 2005 (NSW), the Court having sufficient information to make such an order.
Those submissions in part rested on a false premise: namely, that orders in favour of Mr Brezniak had been made on 19 December 2014. At the hearing on 6 November 2014, I had dismissed a notice to produce and Mr Habib's counsel had indicated that a subpoena in similar terms would not be pressed. In the judgment of 5 December, I found in favour of Mr Habib on one motion and against him on the other. On 19 December, I gave directions for the filing of submissions as to costs and the orders that the parties asked the Court to make.
In his submissions of 8 February 2015, Mr Habib opposed the making of the orders sought for Mr Brezniak and submitted that his submissions ought not to be received, as they had been filed outside the timetable fixed. Attached were copies of correspondence with Mr Brezniak's solicitor, Ms Searle, regarding settlement of the dispute over costs. No agreement was reached and Mr Habib, who was by then unrepresented, sought an order for costs in his favour, on the basis that it was he who was successful on the motions.
Mr Habib also opposed the orders sought by Mr Brezniak on the basis, amongst other things, that he had not been wholly successful and that the notice to produce had not been dealt with at the November hearing. He also denied that the subpoena had been withdrawn, or that there had been any abuse of process. He submitted that the circumstances provided no basis upon which an indemnity costs order could be made against him and, in any event, he claimed that he had already paid certain costs on 14 December "out of fear".
Mr Habib also submitted that Mr Brezniak had not complied with a subpoena served on 10 December, which had been dealt with by Hatzistergos DCJ on 6 January 2015. That, of course, was irrelevant to the costs orders to be made in respect of the motions.
Mr Habib also advanced submissions as to the merits of his dispute with Mr Brezniak, which are also irrelevant to the question of the costs orders which should be made in these proceedings. As were questions which he asked about the basis on which Mr Brezniak had charged costs and questions which he had about the correspondence between he and Ms Searle and a tax invoice which she had issued, in relation to proceedings in the Federal Circuit Court.
On 13 February 2015, Mr Brezniak's submissions were amended, upon it being realised that no orders had as yet been made. It was there submitted that both motions should be dismissed with costs on a lump sum basis, given that Mr Brezniak had been wholly successful on the motion in relation to the assessor's certificate and the notice to produce and that he had also never sought to enforce the review panel's certificate. On 16 February, the orders sought were confirmed to be:
Proceedings 2013/314464
1. That the motion be dismissed.
2. That the applicant (Habib) pay the defendant (Brezniak) his costs in the sum of $10,828.13.
Proceedings 2014/316920
1. That the motion be dismissed.
2. No orders as to costs.
Mr Habib responded by objecting to the further submissions filed for Mr Brezniak, submitting that he had never withdrawn his subpoena and that no unnecessary costs had been incurred. He denied that the Court had sufficient information to make a lump sum costs order. He also claimed that he had paid the certificate amount in full in December 2014 and that Mr Brezniak had already been awarded costs in the matter. Accordingly, the Court should order that each side should bear its own costs.
[4]
The notice to produce
The notice to produce was not dealt with in either motion. It was served by Mr Habib and called on at the hearing. It was set aside at the hearing, whereupon attention was drawn to a subpoena, in similar terms, which had also been served and which was returnable the following day. Mr Newton of counsel appearing for Mr Habib, then undertook not to call on that subpoena.
As I observed at [4] of the December judgment, that concession was properly made. Unnecessary costs had been incurred in service of a subpoena in similar terms to the notice to produce.
Mr Habib had brought an appeal to the District Court from the review panel's certificate, but neither it, nor the assessor's certificate had been suspended or stayed. I found that, in the circumstances, Mr Brezniak was entitled to register the assessor's certificate in this Court and to enforce it, by entry of judgement in this Court. Mr Habib could not challenge that judgment, as he had sought to do under Rule 36.15.
The purpose of the notice was to have documents relating to the dispute as to costs between Mr Brezniak and Mr Habib, which had been dealt with by the assessor and the review panel produced in these proceedings. It was set aside because pursuit of those documents and Mr Habib's attempted challenge of the findings on which the assessor's certificate and the review panel's certificate rested, brought at the same time as an appeal to the District Court in relation to the review panel's certificate, involved an abuse of process.
The usual order under the Rules is that costs follow the event. Costs orders are not intended to punish an unsuccessful party, but to indemnify the successful party for costs incurred in the successful conduct of the proceedings.
In relation to the notice to produce, the usual order would be an order that Mr Habib must pay Mr Brezniak's costs, as agreed or assessed. The Court has a discretion to depart from the usual order, in appropriate circumstances. An indemnity costs order may be made in circumstances where a party's conduct amounts to misconduct (see Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at per McHugh J at [69]).
In the circumstances in which the notice to produce was pursued by Mr Habib in this case, where all that was in issue was whether judgments entered in this Court, following the registration of the assessor's and review panel's certificates, should be set aside under the Rules, it seems to me that both abuse of process and relevant misconduct have been established in Mr Habib's pursuit of the notice to produce.
The merits of the dispute lying between the parties in relation to costs was not in issue in these proceedings. The documents sought to be produced were irrelevant to what had to be decided on the motions.
Mr Habib was pursuing his statutory rights of appeal against the review panel's certificate in the District Court. If those documents were relevant to anything, they can have only been relevant to those proceedings.
In the result, I am satisfied that an indemnity costs order should be made in Mr Brezniak's favour, in relation to the notice to produce.
[5]
The motion in relation to the assessor's certificate - 2013/314464
Mr Brezniak was wholly successful on this motion.
Both Mr Brezniak and Mr Habib are bound by the assessor's certificate, unless it is set aside.
I concluded that Mr Brezniak was entitled to register that certificate as he did, and to enter judgment and enforce it. Mr Habib was not entitled to challenge the findings on which that certificate, or indeed, the review panel's certificate rested, in these proceedings. That had to be pursued in the District Court.
I also concluded that Mr Habib's pursuit of this motion, as well as his appeal in the District Court, involved an abuse of process (see [76] - [84] of December judgment).
That is also an appropriate basis for making an indemnity costs order in favour of Mr Brezniak on this motion. The assessor's certificate was suspended while the review was pursued. The review failed and the review panel's certificate has finally been appealed, but that did not result again in the suspension of the assessor's certificate. Nor has it been stayed.
In the result, pursuing this motion, as well as the appeal to the District Court, was an abuse of process and incurred costs unreasonably. That amounted to relevant misconduct. Mr Brezniak should, accordingly, have an indemnity costs order in his favour.
[6]
The motion in relation to the review panel's certificate - 2014/316920
The same conclusion is not available in relation to the review panel's certificate.
On the proper construction of this statutory scheme, I concluded that Mr Brezniak was not entitled to have the review panel's certificate registered in this Court as it was, in response to Mr Habib's motion to have the judgement entered in respect of the assessor's certificate set aside.
The Court could not enter judgment in respect of that certificate. There could only be one certificate in respect of assessed costs and one judgment entered in respect of such costs. In this case, that was a judgment in respect of the assessor's certificate, the suspension of which was brought to an end, when the review panel affirmed the assessor's determination.
Thus it was that I concluded that Mr Brezniak was entitled to pursue enforcement of the assessor's certificate, but not the review panel's certificate, by entry of judgment in respect of that certificate, which was plainly irregular.
It follows that Mr Habib was entitled to an order setting aside the entry of the judgment in respect of the review panel's certificate. In the result, Mr Habib must also have the usual order as to costs in his favour.
[7]
A gross costs order is not appropriate
In the result, I consider that a gross costs order is not appropriate.
The parties have not addressed how such costs might be calculated. Further, Mr Habib claims to have paid the costs Ms Searle was demanding. That claim has not been addressed. What payment was actually made and in respect of what costs, is also not apparent.
[8]
Orders
For those reasons, I order that:
The motion in matter number 2013/314464 is dismissed.
The judgment entered in matter number 2014/316920 is set aside.
Mr Habib is to bear Mr Brezniak's costs of the notice to produce dealt with at the hearing on 6 November 2014 and the motion in matter number 2013/314464, on an indemnity basis.
Mr Brezniak is to bear Mr Habib's costs of the motion in matter number 2014/316920, as agreed or assessed.
[9]
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Decision last updated: 12 March 2015