DJZ Constructions Pty Ltd v Paul Pritchard trading as Pritchard Law Group and Ors

DJZ Constructions Pty Ltd v Paul Pritchard trading as Pritchard Law Group and Ors - [2010] NSWSC 1472 - NSWSC 2010 case summary — Zoe

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JUDGMENT 1 HER HONOUR: By motion filed on 9 December 2010 the first defendant, Mr Pritchard sought orders staying the judgment and orders to be made, pending the determination of an appeal; orders departing from the usual costs order, in a variety of ways and dealing further with an order for security for costs. 2 The parties were agreed as to certain orders necessary to be made to give effect to the judgment, namely: "1. Judgment for the plaintiff against the first defendant in the sum of $728,857.39 being damages of $471,598.27 together with interest in the amount of $257,259.12. 2. Judgment for the plaintiff against the second and third defendants in the sum of $127,574.91 being damages of $95,676.50 together with interest in the amount of $31,898.41. 3. Judgment for the fourth defendant against the plaintiff. 4. Judgment for the cross-claimant against the first and second cross-defendants. 5. Judgment for the third cross-defendant against cross-claimant." 3 Belatedly, Mr Pritchard and DJZ reached agreement as to the terms of a stay: 10. That the judgment and orders for costs given in favour of the plaintiff against the first, second, and third defendants, and order for discharge of security, be stayed until further order of the Court, such stay being ordered by the Court on the undertaking to the Court of the first defendant to expeditiously prosecute any appeal against the judgment in the proceedings." 4 They departed from each other in various ways, as to the other orders sought: "6. The Orders requiring the plaintiff provide security for costs for the first defendant are discharged. 7. The first defendant to pay the plaintiff's costs as agreed or assessed. 8. The first and second cross-defendants' pay the cross-claimant's costs as agreed or assessed. 9. The cross-claimant pay the third cross-defendant's costs as agreed or assessed. 5 Giles Payne & Co ('Giles Payne'), second and third defendants/first and second cross-defendants, also sought a stay of the judgment and costs orders as between it and Mr Pritchard.

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19 DJZ failed on the first claim and succeeded on the second. The usual order is that costs follow the event, even if the successful party loses on some issues. That ordinary rule may be departed from in cases where distinct issues have been litigated and the successful party has failed on an issue which is clearly dominant or separable (see the discussion in Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328 at 330-31 and James & Ors v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296 at [31] - [36]). 20 Mr Pritchard argued that there should be such a departure from the usual position in this case, given the outcome, which resulted in an award in respect of only two of the four heads of damages claimed, items 2 and 4. The order in respect of item 4 was reduced by 30%, on account of contributory negligence found on the cross claim brought by Mr Pritchard against Giles Payne, another firm of solicitors who had advised DJZ in relation to the matters the subject to the second claim. DJZ itself succeeded in a claim against Giles Payne, only brought after Mr Pritchard had brought his cross claim. The cross claim brought by Mr Pritchard against DJZ's former counsel, Mr McGovern, failed as did DJZ's claim against him. 21 Mr Pritchard's claim was that while the cross claim had to be considered, the simplest and fairest way of reflecting the parties' respective success was to allow DJZ only to recover 50% of its costs against him Alternatively, it was put, the matter could be assessed by reference to the 38 issues which the parties had advanced. Mr Pritchard had succeed on 21, DJZ on 14, Giles Payne on none and Mr McGovern on 2. 29 issues lay between Mr Pritchard and DJZ. They each succeeded on 14 and one did not arise. 22 It was also argued that these circumstances were such that there would be a further departure from the usual order in favour of Mr Pritchard, namely that DJZ would be ordered to pay 50% of his costs, reflective of his success in the proceedings. 23 DJZ's case was that the issues were not discreet or severable in the way urged for Mr Pritchard. Mr Palmieri had been cross examined over a range of issues for approximately two and a half days. The greater part of the cross examination went to the second claim. Both claims rested on the nature of the original transaction, resting as it did on the 1999 deed, which was the foundation of the venture in question. Mr Pritchard was cross examined for half a day on all issues and the only other witness to the first claim, Mr Wilson was also examined for half a day. Submissions on all matters took 2-3 days and the balance of the time was taken up with the cross claims. 24 DJZ succeeded on only one claim. It would not be just to make the orders Mr Pritchard sought. Effectively they would cancel each out. The relatively minimal resulting difference would reflect who had spent most on legal fees in prosecuting their case. That would not be a just result. Such an order would involve even further departure from the usual order. An order of this kind required particular circumstances to be established, which were not present here (see TPC v Nicholas Enterprises Pty Limited (1979) 24 ALR 201 at 208, and Ventouris Enterprise Pty Limited v Dib Group Pty Limited No 2 [2010] NSWSC 1317 at [27]). 25 I am satisfied that the circumstances are such that there should be a departure from the usual costs order in favour of DJZ, but not to the extent Mr Pritchard urged. DJZ advanced two relatively distinct claims against him. While there was some overlap in relevant evidence, for example going to matters of credit, there was not such an intermingling of these issues that justice demands that his application be refused entirely. To the contrary, I am satisfied that justice demands that the costs order reflect Mr Prichard's success in resisting a very substantial part of the case brought against him. 26 Account must be taken, however, of the impact of the cross claims which Mr Pritchard brought and the resulting claims DJZ advanced against Giles Payne and Mr McGovern. All claims were heard together, but the cross claims occupied a substantial part of the total 12 days of hearing. That had an impact on the parties' costs, which may not be ignored. The case advanced in relation to the 1999 deed occupied a smaller part of the trial than did the second claim. In my view a just assessment is that the order in favour of DJZ should be reduced by 35%, to reflect Mr Pritchard's success in relation to the claim on which he succeeded. 27 I am also satisfied that this not a case where a further departure from the ordinary costs order is warranted. Three particular matters were said to warrant such an order. Firstly, that the issue on which Mr Pritchard succeeded was substantial, he successfully resisting a claim for $1.669 million. Secondly, that the negligence claim was inconsistent with the case which had been advanced by DJZ in the Supreme Court proceedings and thirdly, that the claim rested to a significant part on the question of Mr Palmieri's credit, which was not established. 28 In my view, while these matters support a departure from the usual costs order, justice does not demand that there should also be a costs order in Mr Pritchard's favour in relation to the issue which he successfully defended. His success in resisting part of the case brought against him is properly reflected in the conclusion which I have reached, which results in him being obliged to meet only 65% of DJZ's costs. The particular circumstances required to be established before an order of the kind sought may be made, are in my view, not present in this case.

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Costs between DJZ and Mr McGovern 32 DJZ failed against Mr McGovern. It argued that no costs order should be made against it, notwithstanding that loss. That was opposed by Mr McGovern. I can see no basis for any departure from the usual costs order in Mr McGovern's favour, other than in relation to the additional costs incurred by DJZ, as the result of having to engage new senior counsel, when Mr McGovern had to withdraw. Again, in my view DJZ should not have to bear the costs resulting from his failure to earlier identify his conflict. 33 It was argued for DJZ that given the nature of the defensive case which it brought against Mr McGovern and the small amount of costs involved in the prosecution of the claim, in the overall costs incurred in the proceedings, that the efficient way of dealing with those costs is simply to treat them as costs of the parties on the main issue. It was argued, in the spirit of pragmatism, consistently with the requirements of s 56 of the Civil Procedure Act, that there should be no separate order as to these costs. That course was opposed for Mr McGovern, who argued that the usual order would permit an agreement as to these costs, which it was envisaged could readily be reached. The possibility of a Bullock or Sanderson type order was suggested as a way of dealing with the circumstances. That was not embraced by the other parties. 34 I am all in favour of pragmatism and indeed urge it upon the parties, by making sensible accommodations with each other. I do not, however, see that it can provide a basis for departure from the ordinary approach flowing from s 98 of the Civil Procedure Act and the Court's Rules, even despite what s 56 of that Act provides. 35 Nor do I see that justice requires that an order should be made requiring Mr Pritchard to indemnify DJZ against the result of this order, as DJZ also sought. It was, DJZ which elected to take a defensive position, following the cross claim Mr Pritchard brought against Mr McGovern. I cannot see why it should be relieved of the consequences of that decision, other than in the respects I have earlier outlined. 36 These costs will be as agreed or assessed. It should be well within the parties' reach to arrive at a sensible agreement in relation to these costs, which it was common ground would be modest. 37 Unless some common ground emerges, when the formal order is formulated, which I would obviously consider, it seems to me that the usual order must be made in favour of Mr McGovern, other than in relation to the additional costs incurred as the result of his withdrawal, which he stood over.

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Costs between Mr Pritchard and Giles Payne on the cross claim 38 Mr Pritchard succeeded against Giles Payne. He urged a departure from the usual order, relying on a Calderbank offer of 23 April 2010, in which he made an offer to all parties to settle the proceedings on the basis of a payment of $500,000 to DJZ, with Giles Payne and Mr McGovern each to pay DJZ $50,000, that is, $600,000 in total, in full settlement of all claims. The offer was rejected, but DJZ was prepared to settle for $675,000, inclusive of costs, on the basis that Mr McGovern and Giles Payne waive their unpaid legal fees, of $90,000 and $110,000. They refused. 39 This was submitted to have caused a significant road block to the settlement negotiations, a position taken by Giles Payne and Mr McGovern without reasonable justification, given that they were not entitled to recover their fees. DJZ had a right to resist their payment, on the ground of breach of fiduciary duty or breach of retainer, particularly in relation to fees wasted or rendered futile. 40 I am unable to accept Mr Pritchard's case. This is not a case where a solicitor has acted, despite being conscious of a conflict. Nor has it been shown that DJZ suffered any loss or damage as the result of Giles Payne acting in the proceedings, other than in relation to the additional costs incurred as the result of having to engage new solicitors, which I have already dealt with. DJZ itself advances no claim for damage. The need to cease acting did not become apparent to Giles Payne until the filing of Mr Pritchard's amended defence, after the hearing had commenced, with the result the bringing of the cross claim, whereupon Giles Payne ceased acting. It appears that to that point the work undertaken for DJZ, if not undertaken by Giles Payne, would have had to have been undertaken by some other solicitor. Even when there was a change of solicitor, there was no apparent alteration in the course which DJZ pursued in the proceedings. 41 The need for DJZ to obtain new legal representation certainly had the result of delay and the incurring of some additional costs, because DJZ had to obtain new legal representation (except in relation to junior counsel). Had Giles Payne never acted for DJZ, Mr Pritchard's belated amendment of his defence and the bringing of the cross claim, would still have resulted in delay and additional cost, albeit not those associated with instructing new solicitors. 42 As to the costs incurred while Giles Payne acted, it has to be considered that this is not a situation like that dealt with in Cachia v Isaacs (1985) 3 NSWLR 366 at 371, on which Mr Pritchard relied. That case was concerned with the consequences of negligence, it being observed at 376 that the applicable principal is:

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"A solicitor forfeits his right to receive costs for work done by him which is useless as a result of his negligence." 43 Here there was no attempt to show that Giles Payne had been negligent in the conduct of these proceedings, or that it had undertaken useless work. To the contrary, DJZ makes no complaint about the work which was undertaken and only reluctantly joined Giles Payne as a defendant in the proceedings. DJZ appears to have received the benefit of what was done beforehand. 44 The complaints advanced against Giles Payne concerned its negligence in relation to the matters the subject of the second complaint brought by DJZ against Mr Pritchard, not any negligence in the conduct of these proceedings. It was apparent on the evidence, that Giles Payne did not recognise any failures on its part in relation to the work undertaken for DJZ in relation to the matters relied on in Mr Prichard's cross claim. Its resistance to the claims Mr Pritchard eventually brought against it failed, for the reasons explained in the principal judgment. That Giles Payne also did not appreciate that it had a conflict, in later acting for DJZ in these proceedings, prior to the amendment of Mr Pritchard's defence, must also be accepted. 45 Mr Pritchard's complaint that Giles Payne ought to have recognised its conflict from the outset and ought never to have acted for DJZ in these proceedings at all, does not support what was advanced in relation to the rejection of the April 2010 Calderbank offer. It is not a question of Giles Payne acting unreasonably in not accepting this offer. The offer was made to all parties and was not accepted by any of them, including DJZ. The offer was thus not one capable of acceptance by Giles Payne, or any other party, alone. For its part Giles Payne offered to settle the issues in dispute on the basis that it would separately resolve the question of its unpaid fees with DJZ. Mr Pritchard did not respond to that proposal. 46 It follows that Mr Pritchard's 23 April offer cannot ground a basis upon which there may be any departure from the usual costs order. 47 For its part Giles Payne argued that an order that it bear 25% of Mr Pritchard's costs of the cross claim, excluding those that related to Mr McGovern, would properly reflect the limited measure of success achieved by Mr Pritchard on the cross claim (see McLaughlin v Dungowan Manly Pty Ltd [2010] NSWSC 306). 48 This followed, it was argued, because Mr Pritchard had argued that Giles Payne was the principal adviser in the litigation before Einstein J and should bear a very significant proportion of any damages which DJZ suffered. That case was not established. 49 I do not accept that submission. There was here no disentitling conduct on Mr Pritchard's part, such as the unreasonable pursuit of unmeritorious claims, or discreditable conduct in the proceedings. Mr Pritchard succeeded on the cross claim, contribution was assessed, with the result the orders made in recognition of Giles Payne's contribution to the damages DJZ incurred. 50 Hammerschlag J's discussion in Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1163 at [32] is pertinent: "28 Part 42 r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") provides as follows: "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs." 29 The general rule that costs follow the event and that a successful litigant receives his costs in the absence of special circumstances justifying some other order is of very long standing: see eg Ritter v Godfrey [1920] 2 KB 47. 30 The general rule can, in the discretion of the Court, be displaced in appropriate cases. Relevant authorities have been recently and conveniently collected by White J in Short v Crawley (No 40) [2008] NSWSC 1302 at [25]-[32]. 31 Examples of instances where the general rule may be displaced include the following: a a costs order in favour of a successful party can be modified to reflect its failure on particular issues even if the successful party did not act unreasonably in raising those issues: Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (Supreme Court of New South Wales, Hodgson CJ in Eq, 3 June 1998, unreported, BC9802305 at 10-11); b if a party unreasonably pursues or persists with points which have no merit, such conduct will constitute a consideration relevant to the ordering of costs even in circumstances where that party is generally successful: Oshlack v Richmond River Council (1998) 193 CLR 72 at 122; c conduct in relation to the matter may be discreditable to an extent warranting a party being deprived of costs: Jamal v Secretary Department of Health (1988) 14 NSWLR 252 at 271; d where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed: Hughes v Western Australian Cricket Association (Inc) (1986) 8 ATPR 40-748 at 48,136; e where the proceedings involve multiple issues departure from the general rule may be warranted particularly where the losing party has succeeded on issues which occupied significant time. Nevertheless the application of the general rule may involve hardship where a party succeeds on some issues but fails on others particularly where the losing party succeeds on some issues. However unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Ritchie's Uniform Civil Procedure NSW at [42.1.15]; Waters v PC Henderson (Australia) Pty Ltd (New South Wales Court of Appeal, 6 July 1994, unreported, BC9404952 at 5); Short v Crawley (No 40) at [27]-[28]; f a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them: Hughes v Western Australian Cricket Association (Inc) at 48,136. 32 In Hughes v Western Australian Cricket Association (Inc) Toohey J (in a passage cited by White J in Short v Crawley (No 40)) referred to what was said by Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 12 in the following terms:

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Costs between Mr Pritchard and Mr McGovern on the cross claim 57 Mr Pritchard failed against Mr McGovern. While breach of retainer was established, causation was not. Mr McGovern sought an indemnity costs order, relying on two Calderbank letters and an offer of compromise. Mr Pritchard sought an order that each side bear its own costs. 58 The cross claim was brought on 11 May 2009. The first Calderbank offer was made by Mr McGovern on 21 September 2009 on a walk away basis, before the pleadings were closed. There was an amended defence to the cross claim filed on 8 December. At that time, Mr McGovern's affidavit evidence was not on. It was filed on 29 March 2010 and a second affidavit on 1 April. 59 It was submitted for Mr McGovern that it should have been apparent that the claim against him would fail, given the true basis of the Court of Appeal's judgment, on which the question of causation turned. This was a matter always known to Mr Pritchard and his advisers. It was accepted, however that at this time, Mr McGovern's pleadings did not make his reliance on that judgment clear. 60 In the circumstances it seems to me that it was not unreasonable for this offer to have been refused, given the state of the pleadings and the evidence. It was not until the amended defence that the causation issue on which Mr McGovern eventually succeeded, resting as it did on the matters on which the Court of Appeal's judgment turned, was made clear. 61 The second offer was an offer of compromise made under Rule 20.26 on 15 April 2010. There was a second Calderbank offer made on the same date, which was open until 22 April, the day on which a mediation between the parties had been arranged. That offer required Mr Pritchard to give up his claim and that McGovern's costs of $65,000 be paid. The letter explained the basis on which Mr McGovern would resist the claim. That was the basis on which he eventually succeeded. There is no question that Mr McGovern bettered the offer. 62 Mr Pritchard's case against Mr McGovern was that the loss in question had been caused by earlier difficulties, not advanced by the James interests before the Court of Appeal and on which its decision did not rest, despite some obiter observations about those difficulties. At the time of this offer, the nature of the contest between the parties was clear. Mr Pritchard's case was not made out at trial. 63 In the circumstances I can see no basis upon which Mr McGovern could be deprived of a costs order in his favour. He succeeded in resisting the claim brought against him. A departure from the usual order ordinarily requires that there be some misconduct in the proceedings by the successful party. (See Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72). In my view that was not shown here, despite Mr Pritchard's reliance on the rejection of his April offer made to all parties, which I have dealt with above and the road block which he complained Mr McGovern's refusal to settle without payment of his fees presented in the negotiations. I will deal further with that matter below. 64 As to the offer of compromise, Pt 42 r 42.15A provides: "42.15A Where offer not accepted and judgment as or more favourable to defendant (cf SCR Part 52A, rule 22; DCR Part 39A, rule 25; LCR Part 31A, rule 20) (1) This rule applies if the offer concerned is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim concerned as favourable to the defendant, or more favourable to the defendant, than the terms of the offer. (2) Unless the court orders otherwise: (a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis: (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made." 65 A different order will only be made in exceptional circumstances. In South Eastern Sydney Area Health Service v King [2006] NSWCA 2; it was observed:

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69 There was no question as to the power to make such orders, but they were opposed as unwarranted in the circumstances. 70 Giles Payne and Mr McGovern acted for DJZ in the proceedings up to the time that Mr Pritchard filed an amended defence and brought the cross claims, relying on what was claimed to have been their negligence in respect of the same matters for which DJZ was pursuing him in negligence. They then withdrew and themselves became parties to the proceedings. In brief compass, Mr McGovern had earlier advised DJZ in relation to taking other proceedings which it was then contemplating. He had also come to give advice which had an impact on the litigation in which Mr Pritchard was acting for DJZ. The case brought against him by Mr Pritchard on the cross claim and that brought by DJZ both failed, causation not having been established. Giles Payne had briefed Mr McGovern and had also come to give advice which had an impact on the litigation in which Mr Pritchard was acting. The case brought against it by Mr Pritchard and DJZ succeeded. They were found to have been joint tort feasors. 71 It was Mr Pritchard's complaint that in the those circumstances, Mr McGovern and Giles Payne always had a conflict of interest, which should have resulted in them advising DJZ of the conflict and declining to act for it, in the proceedings it brought against him. That his defence was not amended and the cross claim brought until the commencement of the hearing, did not alter that fact. Accepting instructions for DJZ in the proceedings amounted to improper conduct within the meaning of s 99 if the Act, or at least conduct undertaken without reasonable cause. It was not necessary to come to the view that there had been serious misconduct or a serious dereliction of duty. 72 It was argued that both Mr McGovern and Giles Payne were shown to have breached their duty to DJZ. The conflict which they had was thus actual. This resonated with the situations dealt with in Holmes v DMS Pacific Exports [2007] NSWSC 563 and Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) 46-105. The order sought would be made if the consensus of judicial or professional opinion was that the conduct was improper, even if it did not violate the letter of a professional code. 73 Section 99 provides: "99 Liability of legal practitioner for unnecessary costs (cf Act No 52 1970, section 76C; SCR Part 52A, rules 43 and 43A) (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. (2) After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following: (a) it may, by order, disallow the whole or any part of the costs in the proceedings:

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10.2 A practitioner must not accept instructions to act for a person in any proceedings or transaction affecting or related to any legal or equitable right or entitlement or interest in property, or continue to act for a person engaged in such proceedings or transaction when the practitioner is, or becomes, aware that the person's interest in the proceedings or transaction is, or would be, in conflict with the practitioner's own interest or the interest of an associate. 78 It was submitted that: "The misconduct of Giles Payne and Mr McGovern SC was compounded in the present case by their consistent refusal to acknowledge their position of conflict of interest. The Court should conclude from the position adopted by Giles Payne and McGovern SC at all relevant times that neither Giles Payne nor Mr McGovern SC appreciated that they were acting in a position of conflict." 79 It was also relevant, it was argued, that in this case there were practical consequences for the proceedings, flowing from the failure of Giles Payne to deal with its obvious conflict before the amendment of the pleadings which expressly raised that issue. Giles Payne's later insistence on payment of its fees for work undertaken for DJZ in these proceedings, became an impediment to the settlement negotiations. 80 The result was wasted costs. The proceedings would have been brought to hearing more promptly, had Giles Payne not acted. The adjournment resulting from its joinder, so that DJZ could obtain new representation, led to unnecessary costs being incurred. Neither DJZ nor Mr Pritchard should have to bear the costs of the provision of their services: "... during the period of their serious misconduct or such costs as were incurred improperly, or without reasonable cause, in circumstances for which Giles Payne or Mr McGovern SC were responsible." 81 Giles Payne's case was that its situation was far removed from those dealt with in the authorities and that the order sought would not be made. There was no assertion made against it that it was aware of any conflict until the amendment of the pleadings, which caused it to withdraw in March 2009. Nor was there any real suggestion that the costs incurred to that point were wasted. 82 That it had a conflict was submitted not to have been obvious, even given the findings made against it, which really turned on the circumstances in which it came to give DJZ highly qualified advice in relation to the settlement of the proceedings in which Mr Pritchard was acting, at a time when it had limited access to relevant information. There was no suggestion that DJZ might have any claim against it, until Mr Pritchard amended his pleadings and no basis for it to perceive any potential conflict, before that time. Once the decision was made, Giles Payne promptly withdrew. 83 Care had to be taken not to consider this application in a way which attributed perfect hindsight to Giles Payne in relation to its conduct before March 2009 (see Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; (2005) 63 NSWLR 300 at 321). The case that there should have been an appreciation of the conflict from the outset, given the circumstances revealed on the evidence, would not be accepted. The circumstances make it understandable that the conflict was not appreciated at the time. The fact that the Court has taken a different view and concluded that there was relevant negligence, did not alter that neither negligence nor conflict were in fact perceived at the time. This was not a case where conflict was perceived and the solicitor acted any way, the kinds of situations dealt with in the authorities relied on for Mr Pritchard. 84 In my view, this claim has not been established. It may firstly not be overlooked that the order sought by Mr Pritchard is not one which DJZ pursues. In the Marriage of CJ and KM Anstis and Anor [1999] FamCA 842; (1999) 26 FAM LR 548, the compensatory nature of orders such as here sought was discussed and at [49] orders directed to the result of a failure to recognise a conflict, namely where adjournments resulted, the solicitor's conduct there being found inadequate and unacceptable. A compensatory order was made in respect of the resulting additional costs incurred. This is not such a case, for reasons which I have already outlined. 85 In Lemoto, the development of the idea of the 'wasted costs order' was explained by McColl JA at [91], in relation to circumstances in which a wasted costs order would be made against a legal representative 'whose conduct had led to the incurring of unnecessary costs'. 86 The orders here sought are not directed to costs which have been shown to have been unnecessary. If that work in question had not been performed by Giles Payne, it would have still been necessary for DJZ to have had it performed by someone else. The principles McColl JA extracted from the authorities were discussed at [92]:

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Conclusion 90 It seems to me that the orders sought cannot be made. As was submitted for Giles Payne, an order under s 99 may not be made merely upon the basis that a conflict existed. Considerably more must be shown, if the requirements of either s 99(1)(a) or (b) are to be satisfied. In this case that was absent. 91 Firstly, it must be accepted that any conflict was not appreciated when Giles Payne and Mr McGovern accepted instructions to act for DJZ in these proceedings. Nor was it shown that while they acted, they ever sought to protect or advance their own interests, rather than those of DJZ. 92 It is also difficult to see that there were wasted costs incurred by DJZ as the result of any failure by Giles Payne and Mr McGovern to appreciate any conflict, before Mr Pritchard advanced his claim against them. After they withdrew, DJZ does not appear to have altered its course. It had to deal with the consequences of the withdrawal, by engaging new solicitors and senior counsel, but makes no complaint itself as to any wasted costs, which it incurred while represented by Giles Payne and Mr McGovern before their withdrawal. 93 DJZ brought proceedings which succeeded in part and failed in part. The aspect which failed was not as the result of what Giles Payne or Mr McGovern did, or failed to do, in these proceedings. That costs were unnecessarily incurred in the pursuit of these claims, before they withdrew, is not apparent. The work undertaken would undoubtedly have been performed by others, if Mr McGovern and Giles Payne had not been retained. Thereby DJZ would have incurred costs. That they would have been less than were incurred as the result of Giles Payne and Mr McGovern acting was also not shown. 94 This was not a case where a legal practitioner acted notwithstanding known and obvious conflict, which resulted in unnecessary costs being incurred, as were the circumstances in the various authorities relied on for Mr Pritchard. DJZ having itself no complaint about the work performed for it, before Giles Payne and Mr McGovern withdrew and there having been no waste established, it is difficult to see why it ought to be relieved of the obligation to pay for the work undertaken on its behalf in these proceedings. If DJZ is not entitled to such relief, it is difficult to see on what basis an order could be made in favour of Mr Pritchard under the section. 95 Unquestionably there must have been some additional costs incurred by DJZ as the result of the need to alter its representation when Giles Payne and Mr McGovern withdrew, once conflict became apparent, but that is not a cost with which s 99 is concerned, nor is that the complaint to which Mr Pritchard addressed this part of his case. I have already dealt with these costs, which I am satisfied Giles Payne and Mr McGovern should, as a matter of justice between the parties, themselves bear. Unquestionably, it would have been desirable that Giles Payne and Mr McGovern did not accept instructions to act for DJZ in these proceedings. That, is not however, a proper basis for making orders under s 99, which must be reserved for only clear cases of a particular kind. 96 The situation which resulted in Giles Payne and Mr McGovern being joined in the proceedings, was as a consequence, at its highest, of conflicts which were not recognised, until raised in the amended defence. Even if it be accepted that they ought to have been recognised beforehand, given the circumstances, that there was serious misconduct or serious neglect involved in the failure to have earlier appreciated the conflicts, does not follow. The evidence does not suggest that any failure to recognise conflict was deliberate, or that, for example, Mr McGovern and Giles Payne sought to mislead DJZ, in order to protect themselves. Rather, there was a failure to appreciate that there was anything which they might have to protect. Nor was it shown that the proceedings might have taken any different course, had the conflict been recognised earlier, with the result that Giles Payne and Mr McGovern acted for DJZ from the outset. The impediment allegedly caused by the fees incurred by DJZ in instructing Giles Payne and Mr McGovern would not have existed, but other difficulties would have. Namely, the fees incurred in instructing other solicitors and senior counsel to act for DJZ. 97 In all of the circumstances, I am unable to come to the view that the basis necessary for orders of the kind sought by Mr Pritchard under s 99 was established.

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