Judgment
1On 23 May 2011, I gave reasons for judgment on an application by Messrs Paul LeRoy and Geoffrey McDonald ("66G trustees") for payment of funds out of court in the proceedings that are matter number 2003/087265 ("2003 proceedings") and also on Ms Wade's personal claim against Ms Suttor in the proceedings that are matter number 2009/287047 ("2009 proceedings") ( Claudio Grizonic v Suzanne Ranken Suttor & ors; Dawn Wade v Suzanne Ranken Suttor [2011] NSWSC 471]. I expressed the view that the appropriate orders were to the effect:
In proceedings 09/287047:
(1.) Give judgment that the defendant, Ms Suttor, pay the plaintiff, Ms Wade, the sum of $38,813.
In proceedings 03/098265:
(2) Order that the funds in court to the credit of these proceedings, including all accrued interest, be paid out to Geoffrey David McDonald and Paul Andrew Leroy.
(3) Declare that Geoffrey David McDonald and Paul Andrew Leroy are entitled to the sum of $3557.88 standing to the credit of Claudio Grizonic and Suzanne Ranken Suttor, in the trust account of Messrs Yates Beaggi Lawyers, including any interest accrued thereon.
2Lest anything had been overlooked, and in case any question of interest arose in respect of the judgment in favour of Ms Wade against Ms Suttor, I afforded the parties an opportunity to bring in short minutes, and made directions for submissions, also, in respect of the question of costs, and the outstanding Notice of Motion concerning Mr Gallego, as follows.
Direct that the 66G trustees bring in short minutes of orders to give effect to this judgment.
Direct that Ms Wade file and serve any amended notice of motion specifying any relief still sought. Ms Wade is not to be entitled to rely at the hearing on any affidavit evidence not served by 27 May 2011.
Direct that the respondents not be entitled to rely on affidavit evidence not served by 10 June 2011.
Adjourn the motion in respect of Mr Gallego to Thursday, 16 June 2011 at 10am.
Direct that Ms Wade give notice in writing of these directions to Mr Gallego at his address for service, not later than close of business this Wednesday, 25 May 2011.
Direct that each party lodge with my Associate and serve on the other parties a document setting out the costs orders it seeks, any supporting submissions and any additional evidence on the question of costs by 2 June 2011.
Direct that any party seeking to make submissions in reply on the question of costs lodge with my Associate and serve on the other party by 9 June 2011.
Matter adjourned for short minutes and submissions on costs to 16 June 2011.
3Those directions were substantially complied with, except by Mr Gallego, who appears to have proceeded on the misapprehension that the motion in respect of him would be for mention only on 16 June, with a view to being heard at a later date.
4As a result of the amended motion and the submissions that have been filed, the essential issues that remain for determination are (1) finalisation of the substantive orders in the proceedings for payment out of court; (2) a claim by Ms Wade for interest in respect of the judgment in her favour against Ms Suttor; and (3) the questions of costs including (a) the costs of the proceedings for payment out of court, (b) the costs of the 2009 proceedings between Ms Wade and Ms Suttor, and (c) Ms Wade's application to vary a costs order previously made by Davies AJ in the 2003 proceedings.
5So far as concerns the substantive orders in the proceedings for payment out of court, the 66G trustees have brought in short minutes which, except that they make provision in respect of costs, do not substantially differ from those that I foreshadowed in the substantive judgment. Accordingly, in proceedings 03/087265, I make the following orders.
Order that the funds in court to the credit of these proceedings, including all accrued interest, be paid out to Geoffrey David McDonald and Paul Andrew Leroy.
Declare that Geoffrey David McDonald and Paul Andrew Leroy are entitled to the sum of $3557.88 standing to the credit of Claudio Grizonic and Suzanne Ranken Suttor in the trust account of Messrs Yates Beaggi Lawyers, including any interest accrued thereon.
6I turn next to Ms Wade's claim for interest in respect of her judgment against Ms Suttor. For the purposes of interest, the judgment comprises three distinct components.
7The first is the principal sum of $5,240, which was owed by the partnership to Ms Wade personally (as distinct from the debts that were assigned to her). Ms Wade claims interest on this sum from 5 February 2004, being the date of appointment of the receivers and managers, at the rates prescribed by the rules of Court for interest on unpaid judgment debts [see (NSW) Civil Procedure Act, s 101, and (NSW) Uniform Civil Procedure Rules, r 36.7].
8The first observation to be made in this respect is that there is no evidence that this debt was interest bearing. The appropriate date from which it should bear interest is the date on which it ought to have been repaid and, on the evidence available to me, this was no earlier date than the date on which demand was made, namely 8 July 2008. That is a period of approximately three years, and over that period, the average prescribed interest rate was about 8.5 per cent. Accordingly, I allow interest in the amount of $1,336 on that component.
9The second component relates to the assigned debts other than the Mathew Trnka debt, which total $7,316. Interest on them is claimed at the prescribed rate from the date of notice of assignment, which was also the date of demand, namely 8 July 2008. There being no evidence that these were interest bearing debts, that seems to me to be the appropriate date. I allow interest on the same basis, calculated in the sum of $1,865.
10The third, and most significant, component is the Mathew Trnka debt of $26,257 on which interest is claimed from 5 February 2004 at 10 per cent quarterly (being 40 per cent per annum). Unlike the others, this debt bore contractual interest at the rate of 10 per cent per quarter. The entitlement to interest did not depend on the demand being made. The creditor was contractually entitled to interest at that rate, and following the assignment, so was the assignee. An argument was advanced that the entitlement to interest ceased upon dissolution of the partnership. I do not accept that the terms of the contract have that effect. The circumstance that the debt became payable on dissolution of the partnership does not mean that the entitlement to interest at the contractual rate ceases at that time. Even if it did, the contractual interest rate would be a strong indicator as to the appropriate rate to be adopted by the Court.
11It was also argued that interest should not be awarded as the creditor was not out of pocket by any amount. However, interest is awarded to compensate a creditor for being out of money, and to deprive the debtor of the benefit of having money that out to have been paid over to the creditor. In this case, the assignee had an entitlement to interest from the date of the assignment and, indeed, the original creditor had an entitlement to interest from before the date of assignment.
12In the case of the Mathew Trnka debt, Ms Wade is entitled to interest at the contractual rate of 10 per cent per quarter from 5 February 2004, the date from which it is claimed, a period of approximately seven years and five months, which I calculate at $77,720.
13Accordingly, I allow interest in the total sum of $80,921. It follows that the total judgment, inclusive of interest, to which Ms Wade is entitled, is $119,734.
14In proceedings 2009/287047, I give judgment that the defendant, Ms Suttor, pay the plaintiff, Ms Wade, the sum of $119,734.
15I turn then to the question of costs. There are two proceedings before the Court in which it is necessary to consider the question of costs. The first is the application made in the 2003 proceedings for payment out of court of the funds in court, initiated by the 66G trustees' application for payment out of court. That does not involve the whole of the costs of the 2003 proceedings, but only those costs associated with the application for payment out of court. The second is the related proceedings brought in 2009 by Ms Wade against Ms Suttor, to which only those two individuals were party.
16As far as concerns the 66G trustees' costs of the application for payment out of court, ultimately, their claim succeeded in full. It was unsuccessfully opposed by Ms Suttor and Ms Wade. There is no sufficient reason to depart from the ordinary rule that the costs of those proceedings should follow the event. Ms Suttor and Ms Wade must pay the 66G trustees' costs of the application for payment out of court. Both of them assumed the risk of costs by opposing the 66G trustees' application, and there is no sufficient reason to apportion responsibility for costs between the two of them.
17Ms Wade brought a cross-claim in the 2003 proceedings, and she brought her own claim against Ms Suttor in the 2009 proceedings. Her cross-claim in the 2003 proceedings for payment out of the funds in court failed, but her personal claim against Ms Suttor succeeded.
18Several factors have been advanced as telling against, or in reduction of, a costs order in favour of Ms Wade. The first was that she did not succeed in full, but for only part of the amount claimed. That said, she has ultimately succeeded for a sum, inclusive of interest, of in excess of $100,000. Moreover, it is commonplace for plaintiffs not to succeed for the full amount claimed; they still recover their costs because they have had to come to court to get any success at all, unless a relevant offer has been made - and there is no evidence of any relevant offer in this case.
19The second matter raised was that the amount of the claim was well within the jurisdiction of the District Court, and the principal amount for which judgment was given was in fact within the jurisdiction of the Local Court. It was, therefore, contended that the effect of UCPR, r 42.34, was that there should be no order as to costs.
20Given the concurrence of the 2003 proceedings and the commonality of issues between the 2003 and the 2009 proceedings - which plainly overlapped, not only was there good reason for commencing the 2009 proceedings in this Court to be heard with the 2003 proceedings, it would frankly have been absurd to adopt any other course. There is insufficient reason to depart from the ordinary rule that Ms Wade should recover her costs of the 2009 proceedings.
21That may leave the assessor with some challenge in apportioning costs which were incurred in connection with both the 2003 proceedings and the 2009 proceedings. While it will be plain that some costs - for example, in respect of pleadings and court documents - relate to one only of those proceedings, the affidavits generally related both, and the hearing before the Court related to both. For the guidance of the assessor, I would indicate that, so far as the hearing before the Court was concerned, it would be appropriate to apportion costs two-thirds as to the 2003 proceedings, and one-third as to the 2009 proceedings.
22I have considered the application advanced by Ms Wade in her submissions for an order that the costs payable by Ms Suttor to Ms Wade be assessed on the indemnity basis. In my view, there is quite insufficient delinquency in the defence of those proceedings by Ms Suttor to justify such an order.
23That then leaves Ms Wade's application pursuant to her amended notice of motion filed on 26 May 2011, to vary a costs order made by Davies AJ on 7 December 2009, to the effect that Mr Gallego personally pay her costs of and occasioned by the vacation of an earlier appointment for the final hearing of the proceedings of which I eventually disposed, to commence before his Honour on 10 and 11 December 2009: it was vacated on the application of Ms Suttor on the basis, essentially, that she was not ready.
24Davies AJ ordered, pursuant to Civil Procedure Act , s 99, that Mr Gallego pay the costs of the 66G trustees and of Ms Wade of the application to vacate and the costs thrown away by reason of the vacating of the hearing on the ordinary basis, such costs to be payable forthwith and assessable immediately. His Honour declined to order that such costs be assessed on the indemnity basis.
25Mr Gallego was employed by Robert Silberberg, solicitor. As has been pointed out in a number of cases, in law, where an employed solicitor has the conduct of a matter, nonetheless, the solicitor for the client is the employer, or principal, and the circumstance that the employee might have the conduct of the matter does not detract from that [see Re Bannister & Legal Practitioners Ordinance 1970-1975; Ex parte Hartstein (1975) 5 ACTR 100; Knaggs v J A Westway & Sons Pty Ltd (1996) 40 NSWLR 476; Kelly v Jowett, 420-421 (McColl JA, Beazley JA and Barrett J agreeing)].
26Mr Gallego was a solicitor with an unrestricted employee practising certificate. In other words, his certificate was not subject to any restrictions, but he was authorised to practise only as an employee and not as a principal. He could be a solicitor on the record, although, for reasons pointed out in Kelly v Jowett (2009) 76 NSWLR 405, by Barrett J, it is undesirable that anyone other than a principal of a practice be the solicitor on the record. As his Honour noted (at 425):
Solicitors in sole practice or in partnership should not allow an employed solicitor to be the solicitor on the record in proceedings, even if the employed solicitor holds an unrestricted practicing certificate. As McColl JA has observed, the client does not retain the employed solicitor; the retainer is with the employer. The solicitor retained has clear and direct responsibility to the client for the execution of the retainer. Personal assumption of the role of solicitor on the record and the specific relationship with the court that it entails are part of that responsibility, even though day-to-day work may be delegated to an employee.
27In this case, the Court documents at the relevant time bore no indication that Mr Gallego was an employee; they were signed in his own name; they indicated him to be the solicitor on the record and, as it were, the person having responsibility for the matter. There was no reference, at all at that stage, to Mr Silberberg, even on the coversheet. It was in those circumstances that Davies AJ made the costs order against Mr Gallego.
28Mr Jones, for Ms Wade, contends that the position was misrepresented to the Court, that the true solicitor was in fact Mr Silberberg, and that he too ought to be ordered to pay the costs that Mr Gallego was ordered to pay. Mr Jones further argues that they both ought to be ordered to pay those costs on the indemnity, as opposed to the ordinary basis.
29I accept that, where a principal solicitor has responsibility for a matter, notwithstanding that it is conducted primarily by an employed solicitor, the presence or absence of personal responsibility for any default on the part of the principal solicitor may not be decisive as to whether a costs order should be made against the principal solicitor. The seminal case of Myers v Elman [1940] AC 282 indicates as much.
30On the other hand, I also accept that the presence or absence of personal responsibility on the part of a principal solicitor, though not decisive, is highly relevant. This is apparent from the judgment of the Court of Appeal in Kelly v Jowett , in which an analysis was undertaken of the principal solicitor's degree of responsibility, and it was held that where the principal solicitor was sufficiently on notice of the inexperience, if not incompetence, of the employed solicitor, it was proper that the principal solicitor should be made responsible for the wasted costs.
31The position in the present case is quite different. There is no evidence that anything came to the personal attention of Mr Silberberg. Mr Gallego was not a novice with a restricted practising certificate, but a solicitor of some experience, with an unrestricted practising certificate. I have, as Mr Jones has urged, given close attention to the potential significance of the circumstance that Davies AJ was, no doubt, under the misapprehension that Mr Gallego had ultimate responsibility as the principal solicitor for the case, but - having given that due consideration - it seems to me that, in the circumstances of this case, where the responsibility was that of Mr Gallego, and where Mr Silberberg is not shown to have been at all implicated, the order made by his Honour would have been the appropriate one, even if it had been known at the time that Mr Gallego was an employee only and that the principal solicitor was Mr Silberberg.
32So far as concerns the application that the costs be assessed on the indemnity basis, that application was made to and declined by Davies AJ. It seems to me that the circumstance that Mr Gallego was an employee of Mr Silberberg makes no difference to the reasoning that supported his Honour's rejection of the application for indemnity costs. In my view, it is inappropriate to revisit his Honour's decision, already made after argument on that issue.
33Ms Wade's amended motion of 26 May 2011 against Mr Silberberg and Mr Gallego is, therefore, dismissed with costs.
34My remaining orders, therefore, are:
35In proceedings 2003/087265:
Order that the first defendant, Ms Suttor, and the third defendant, Ms Wade, pay the costs of the fourth and fifth defendants, Geoffrey David McDonald and Paul Andrew Leroy.
36In proceedings 2009/287047:
Order that the defendant, Ms Suttor, pay the plaintiff, Ms Wade's, costs.
37In both proceedings:
Order that Ms Wade's Notice of Motion filed on 11 December 2009 and amended on 26 May 2011, be dismissed with costs.
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Decision last updated: 01 August 2011