Consideration
32 While the appellants did not formally file an application for leave to appeal, they made submissions as to why leave should be granted if it is required. Given that the appellants have filed a notice of appeal, made comprehensive submissions as to why leave should be granted and indicated that they are content for the application to be determined on the papers, I am satisfied that it is appropriate for the formal requirements prescribed by way of r 35.12 of the Federal Court Rules 2011 (Cth) to be dispensed with pursuant to r 1.34. I am satisfied that the appellants have applied for leave to appeal and that the notice of appeal can be treated as an application for leave to appeal: SZLRP v Minister for Immigration and Citizenship [2009] FCA 77 at [16].
33 I turn now to the appellants' submissions regarding the errors they contend mean that the PJ "is attended by sufficient doubt to warrant it being reconsidered".
34 The appellants complain that at PJ[5], the primary judge erred by stating that even if section 174 of the Uniform Law had been contravened, the lawyers would not be prevented from recovering their taxed costs. The appellants submitted that the onus is on the respondent to prove that the indemnity principle is satisfied. Further, they submitted that the "prohibition does not prevent the lawyers from recovering their costs by way of solicitor and client costs assessment". The appellants contended that until the lawyers have "done the solicitor and client assessment, the clients have no liability for the lawyer's fees and disbursements", Thus they cannot, on the appellants' case, satisfy the indemnity principle.
35 According to the appellants, the necessary assessment "had not been done at the time of the taxation". Those submissions may be answered as follows. First, the primary judge observed that "it was doubtful" that many of the appellants' complaints were able to be entertained as they had not formed part of the notice of objection to the taxation that had occurred. Notwithstanding that, her Honour then explained the "indemnity principle" at [22]:
Costs are awarded to indemnify (or more accurately, partially indemnify) a successful litigant, rather than to punish an unsuccessful one: Cachia v Hanes (1994) 179 CLR 403 at 410-11 (Mason CJ, Brennan, Deane, Dawson, and McHugh JJ); Oshlack v Richmond River Council (1998) 193 CLR 72 at [1] (Brennan CJ). All the indemnity principle means in the present context is that Homebuilding cannot recover more from the Cappellos than the costs it would have been liable to pay its lawyers in the event that I had not ordered the Cappellos to pay its costs.
36 Her Honour went on to deal with the provision of the costs disclosures and was satisfied that the relevant disclosure was broad enough to capture costs associated with the setting aside of a bankruptcy notice and was provided in the appropriate form and to the appropriate person. Her Honour was not satisfied that there was a "sustainable" complaint with respect to the appellants' contentions as to the quantum and timing of the costs disclosures, nor could they have been more accurate with respect to counsel's fees, given the timing of counsel's invoice.
37 Most importantly, despite expressing a view at [37] that non-compliance with s 174 of the Uniform Law would "probably be excused", the primary judge made it pellucidly clear at [36] and [40] that it is undoubtedly the case that, by reference to s 178(1)(b) of the Uniform Law, a failure to comply with the disclosure obligations does not result in a client or associated third party being absolved of the need to pay the costs as assessed; rather they are not payable until they have been assessed, or any costs dispute has been determined by the designated local regulatory authority. In this matter, an assessment, that is a taxation by a Registrar, has taken place and indeed a review in favour of the appellants has also taken place. As to the balance of the submissions with respect to this issue, it would appear that the appellants' understanding of the processes surrounding the assessment, taxation and payment of costs and the basis upon which they might be awarded is incomplete or misguided. There is no merit in the submissions of the appellants in this regard.
38 The appellants also submitted that at PJ[18] and [19], the primary judge erred when her Honour categorised the appellants as "non-associated third party payers" pursuant to section 171(1) of the Uniform Law. They contended that her Honour was therefore misconceived in referring to section 178 of the Uniform Law as that provision relates to an "associated third party payer". Further, the appellants contended that her Honour erred in holding that the appellants were legally obliged to pay the respondent's legal costs as "the costs order obligated the appellants to indemnify the respondent for such costs as it was liable to pay its lawyers, not to pay its legal costs". Again, I find these submissions to be ill-founded. The reference to s 178 simply makes it clear that non-compliance with disclosure obligations does not, in any event, mean that the respondent was not liable to pay its legal costs. The provision is silent on the position of non-associated third-party payers. From the wording of the provision, it appears that non-compliance with disclosure obligations does not impact upon the liability of non-party associated third party payers. The available authorities make this position quite clear. As stated by Woods AsJ in Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 4) [2013] VSC 669 at [103], referring to an earlier unreported case of his own which cites Shaw v Yarranova Pty Ltd & Anor [2010] VSC 567 at [25], '[a] taxation of costs ordered to be paid by another party is not an occasion for an inquiry into what (if any) failures there have been in relation to disclosure requirements…". Further, in Wilson v Bauer Media Pty Ltd [2018] VSC 161, at [30], Dixon J stated:
"…Even if the Uniform Law was thought to affect a client's legal liability to pay their solicitor, Catto and the cases applying it, require than an unsuccessful party's obligation to indemnity a successful party with the benefit of a costs order who has paid their costs is unaffected.
39 A further submission made by the appellants was that at PJ[22], the primary judge erred by holding that "party and party costs order made by her negates the indemnity principle set down by the High Court". As is clear from paragraphs 35 to 37 above the appellants have simply misunderstood what has held by the primary judge.
40 The appellants also submitted that at PJ[25], the primary judge erred in relying on the taxed party and party costs to determine whether "there had been compliance with the costs disclosure obligations" rather than the solicitor and client costs. Not only have the appellants advanced no basis for this submission, but it is also ill-founded. The primary judge did not rely upon any estimated costs as being the basis for compliance with disclosure obligations. Instead, the primary judge found that the respondent did produce costs disclosures, contrary to the appellants' submissions. Her Honour then makes a comment that the estimated amount which was disclosed was indeed close to the amount actually determined on taxation. Accordingly, this submission must be rejected.
41 The appellants next submitted that at PJ[28], the primary judge failed to correctly apply s 174 of the Uniform Law by not finding that the costs disclosure ought to have been made after instructions were initially given. It appears that the appellants are advancing that, as the costs disclosure was made 3 months before the appellants commenced the bankruptcy proceedings, they could not therefore apply to those proceedings. Further, and relatedly, the appellants submitted, the primary judge erred by holding that the costs disclosure related to the enforcement of judgment debt through bankruptcy proceedings. This submission has no force. As the primary judge correctly found at PJ[28], "[i]t [being the relevant costs disclosure] was therefore sufficient to capture costs incurred or likely to be incurred in such proceedings [that is the enforcement of the judgement debt] and that would include an application to set aside the bankruptcy notice".
42 As to PJ[29] - [32], the appellants submitted that the primary judge's reference to s 180 of the Uniform Law is misconceived as a costs disclosure and a costs agreement are distinguishable under the Uniform Law. The relevant paragraphs of the PJ are as follows:
As to the second, the Uniform Law does not require a costs disclosure agreement to be signed. Section 180(3) states that:
A costs agreement may consist of a written offer that is accepted in writing or (except in the case of a conditional costs agreement) by other conduct.
Here, a document entitled "General Terms of Business", which was annexed to both disclosures sent to Mr Re, stipulated that acceptance of the costs disclosure and costs agreement could be effected either by signing and returning the document to the lawyers or by "continuing to instruct [them]".
By continuing to instruct the lawyers, Homebuilding accepted the lawyers' offer.
As to the third complaint, Mr Re was a director of Homebuilding at the time of the judgment that generated the judgment debt: see Cappello v Hammond & Simonds NSW Pty Ltd [2020] NSWSC 1021 at [2] (Ball J). In the absence of evidence to the contrary, the presumption of continuance applies. I therefore infer that Mr Re was also a director of Homebuilding at the time the costs disclosures were made. Mr Re was the second defendant in the Supreme Court proceedings. It is apparent from the judgment that he and Homebuilding were represented by the same lawyers, who are the lawyers for Homebuilding in the current proceedings. The costs agreements indicate that he and Homebuilding were "jointly and severally liable for any monies owing to [the lawyers]". In these circumstances, sending the documents to Mr Re is sufficient to bring them to the attention of Homebuilding.
43 Again, these submissions are misconceived. As s 174(6) of the Uniform law makes clear, a costs disclosure must be in writing. There is no requirement that it be signed. The relevance of s 180 of the Uniform Law is as to the sufficiency of sending the costs disclosures to Mr Re, as was questioned by the appellants, and is completely answered at PJ[32], as can be seen above.
44 Next, the appellants submitted that, at PJ[33], the primary judge erred by "shifting the onus" and requiring the appellant to prove compliance with the costs disclosure obligations. A clear reading of PJ[33] discloses no "shifting of onus". Rather, her Honour states that "[i]t is apparent from the first disclosure that the professional fees were underestimated, but the Capello's' submission was made with the benefit of hindsight. The Capello's made no attempt to explain to the Court when the lawyers ought to have realised that the costs were likely to be significantly greater than the amount they had originally disclosed."
45 The appellants also submitted that at PJ[35], the primary judge erred by failing to determine that counsel had not breached costs disclosure obligations. There is simply no basis for this submission, and it must be rejected.
46 The appellants submitted that at PJ[36] and [40], the primary judge erred by holding that even if the costs agreements were void, there would still be a liability to pay legal costs once they are assessed. The appellants submitted that pursuant to s 178(1)(b) of the Uniform Law, the client is not required to pay legal costs until they have been assessed on a solicitor and client assessment. The appellants again have provided no basis or explanation for their interpolation of the words "on a solicitor and client assessment" into s 178(1)(b).
47 As well, the appellants submitted that at PJ[37], the primary judge erred by holding that non-compliance would, in any event, likely be excused pursuant to s 178(3), by way of rule 72A of the Legal Profession Uniform General Rules 2015 (NSW) (Uniform Rules). The appellant submitted that s 72A of the Uniform Rules requires the respondent to prove the elements of the provision which it did not do. First, the primary judge's remarks about Rule 72A amount to no more than obiter. Her Honour opined that "r 72A of the Uniform Rules "disapplies" s 178(1) in circumstances that probably apply here" (Emphasis added). Secondly, and by extension, there is no suggestion of the respondent being required "to prove the elements of the provision".
48 The appellants also submitted that, at PJ[38], the primary judge erred by failing to note that in the Appeal Decision, the judicial review application was unsuccessful because there was an error of fact, not an error of law as required. The appellants have advanced no submissions as to the significance of this to the current application for leave. There is simply no error in this as contended for by the appellants.
49 After filing their supplementary submissions, the appellants also referred the Court to Frontier Law Group Pty Ltd v Barkman [2016] NSWSC 1542 as authority for the consequences of non-compliance with disclosure obligations. The appellants did not make any submissions in relation to this case. It is therefore unclear why the Court has been referred to the case.
50 With respect, the errors which the appellants have advanced, and about which they have made submissions appear to be misconceived, disclose a misunderstanding of the matter, or lack relevance. As stated by Burley J in EBT17 v Minister for Home Affairs [2019] FCA 200 at [4], the grounds of appeal should be assessed on a reasonably impressionistic level and as to whether they are "sufficiently arguable" or have a reasonable prospect of success. In this instance, I am not satisfied that the PJ is attended with sufficient doubt so as to warrant the granting of the leave to appeal. Accordingly, as the first limb of the test in Décor Corporation is not satisfied, it is not necessary for me to consider the second as the tests are, as set out above, cumulative. Further, as noted by the respondent, these issues have been repeatedly ventilated in previous proceedings.