Citigroup Pty Limited v Middling

Introduction 1This matter was listed for final hearing for 3 days commencing 22 April 2014. Mr Middling, the defendant, applied for leave to amend his defence, which resulted in the matter having to be adjourned. On the amendment application I heard evidence from Mr Quy, the defendant's solicitor, as a result of which I directed Mr Quy and Mr Elliott, the junior barrister instructed by Mr Quy on behalf of the defendant, to file written submissions as to why a personal costs order ought not be made against each of them in respect of the costs of the amendment and the costs thrown away by the adjournment: Citigroup Pty Limited v Middling [2014] NSWSC 474.

Parties' submissions 2Both Mr Quy and Mr Elliott submitted that I ought not determine whether a personal costs order ought be made in advance of the hearing, since such determination would require privileged information to be disclosed, which could be to the detriment of Mr Middling, the defendant. They also submitted that such determination would give rise to a conflict of interest between Mr Middling and his legal advisers. 3Mr Elliott, whose submissions were adopted and relied upon by Mr Quy, submitted: "Mr Elliott would, in answer to the personal costs issue, seek to put factual matters before the Court to further explain the sequence of events leading up to the amendment and adjournment applications made on 22 - 23 April 2014. However, for Mr Elliott to do so would necessarily involve the disclosure of confidential communications which are the subject of client legal privilege in favour of the defendant, Mr Middling, Mr Elliott's client. If privilege is to be maintained over those communications, then Mr Elliott would be at a disadvantage in relation to the personal costs issue. If Mr Middling were to waive privilege over those communications, this would need to be following receipt of independent legal advice . . . There is a real risk however, that the disclosure of such communications would provide to Mr Middling's opponents in the proceedings. . . an unfair strategic advantage." 4The plaintiff (Citigroup) and the cross-defendant (Perpetual) submitted that a decision ought be made now as to whether either Mr Quy or Mr Elliott or both of them were liable for the costs personally. 5Citigroup submitted that no such evidence has been identified but that, in any event, the Court could review any such evidence in the absence of the other parties in order to determine whether those documents or that evidence is properly the subject of a claim for privilege. Citigroup submitted, in the alternative, that I should order the defendant to pay Citigroup's and Perpetual's costs on an indemnity basis and that I should reserve the question of whether Mr Quy and Mr Elliott ought pay the costs until after the determination of the substantive proceedings or until further order. 6Perpetual submitted that, having regard to the evidence of Mr Quy at the hearing of the adjournment application that he had not even turned his mind to the question of a defence under the Contracts Review Act 1980 (NSW) until he conferred with Mr Wheelhouse SC shortly before the hearing, the proposition that it would be necessary for Mr Quy and Mr Elliott to traverse privileged communications, is without foundation. 7Perpetual submitted, in the alternative, that the Court could consider the information alleged to be privileged without disclosing it to either Perpetual and Citigroup. 8Perpetual submitted further that any conflict between Mr Middling and his legal advisers was inherent in the application for a personal costs order and was not a reason to defer it until the final determination of the proceedings. 9Perpetual also contended that it would suffer prejudice if the costs question were not determined now because it may be that I would not be the trial judge and the trial judge would not have heard and seen the evidence in support of the adjournment application. In that event, were the matter to be determined by the trial judge, the nuances of the evidence before me would be lost.