Grace v Bennie

Application for assessment of party/party costs

1. In December 2009, the plaintiff sought an application for assessment of party/party costs on behalf of the defendant. The application was incomplete in that it sought assessment of only the professional costs. It was not until April 2012 that details of disbursements were provided and the application amended to include them. The delay was said to be due to the ill health of the plaintiff and of his costs consultant.
2. During the course of the party/party costs assessment the defendant retained a Melbourne solicitor, Rosemarie Ryan, to act for him. Ms Ryan entered into correspondence with the plaintiff asserting that no bill had ever been sent to the defendant. The plaintiff then twice sent a copy of a bill to an address at which the defendant no longer resided. On 5 March 2010, a bill was finally received by Ms Ryan.
3. This application for assessment of party/party costs is not the bill of costs from which this dispute arises.

Application for assessment of practitioner/client costs

1. On 4 March 2011, the defendant lodged an application for assessment of practitioner/client costs with the Manager, Costs Assessment, together with an application for the waiver of the filing fee, which was successful. This is the bill of costs from which the dispute arises.
2. There were long delays caused by difficulties experienced by the plaintiff, who was granted extensions until February 2014 to provide submissions.
3. Ultimately, the costs assessor determined that the amount charged was not fair and reasonable and that $186,141.00 should be refunded to the defendant.
4. The defendant sought a review of the determination in relation to questions of capacity to enter into a costs agreement and also the 25% uplift fee. This review was unsuccessful. The amount of $186,141.00 remains owing to the defendant. The plaintiff has already made two unsuccessful attempts to appeal which have incurred costs for the defendant.

The plaintiff's first unsuccessful application to appeal

1. In April 2014, during the course of the practitioner/client costs assessment before Mr Bartos, the plaintiff sought to appeal a preliminary determination. The assessment was stayed while this occurred.
2. This appeal was incompetent (as a preliminary determination cannot be the subject of an appeal) and was dismissed, with a costs order being made against the plaintiff. Costs in the amount of $28,485.90 have been sought from the plaintiff pursuant to the Supreme Court's order. This bill is currently undergoing the costs assessment procedure.
3. The costs have not been paid and the costs assessment relating to $28,485.90 has been delayed. The defendant submitted that it is being delayed as a result of the plaintiff's conduct, such as: 1. When the assessment was first referred to Mr Sharpe, the plaintiff waited three weeks before bringing to Mr Sharpe and the defendant's attention the fact that there was a conflict with Mr Sharpe; 2. When the matter was reassigned to Ms Dulhunty, costs assessor, the plaintiff first sought an indeterminate amount of time to put on objections, again citing illness and when given an extension alleged that Ms Dulhunty was biased and asked her to recuse herself; 3. Having provided a medical certificate to Ms Dulhunty the plaintiff provided no reasonable indication of when, if ever, it could be expected that he would be in a position to provide objections to the bill. He appeared not to have contemplated retaining anyone to prepare the objections for him.

The plaintiff's second unsuccessful application to appeal

1. In March 2016, the plaintiff issued another appeal, pleading substantially the same case in the District Court at Lismore. That appeal was also incompetent. The plaintiff ultimately agreed to discontinue the appeal. As I understand it, no order for costs was made.

The current appeal

1. This current appeal is now before this Court. The plaintiff is of the view his chances of success on appeal are strong. Counsel for the defendant conceded that the arguments raised by the plaintiff are weak but not hopeless. In order for the plaintiff to succeed he will need to establish either: 1. That the deduction of money from trust without having sent a bill of costs (and therefore in breach of the relevant trust account regulations) was a "request for payment", or; 2. That the delivery of a bill of costs which did not comply with the requirements of a bill of costs at common law or under the Legal Profession Act 1987 was nevertheless a "bill of costs" for the purpose of time starting to run in which the defendant could make an application for assessment.

Whether a stay of proceedings should be granted

1. Both parties relied on ss 56 and 67 of the Civil Procedure Act 2005 (NSW). It is not necessary to reproduce s 56 here.
2. Section 67 of the Civil Procedure Act reads that "subject to rules of court, the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day." Additionally, the defendant relies on the inherent jurisdiction of this Court.
3. This discretion is judicial and to be exercised only upon relevant grounds of law. The overriding principle involves the question of what the interests of justice require. It is more convenient and consistent with the 'overriding purpose' of the Civil Procedure Act (ss 56-58), that all or as many disputes as possible between the same parties are determined in the one proceeding and any ultimate relief to be obtained is obtained as quickly and cheaply as possible.
4. In so far as a stay of proceedings is concerned, in Penrith Whitewater Stadium Ltd & Anor v Lesvos Pty Ltd & Anor [2007] NSWCA 103, McColl JA stated at[18]-[20]: "[18] The overriding principle in an application for a stay is to ask what the interests of justice require: New South Wales Bar Association v Stevens [2003] NSWCA 95 at [83] per Spigelman CJ (Meagher JA and Sheller JA agreeing). [19] The detailed principles concerning the grant of a stay are set out in Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 at 694: a. Where there is a risk that an appeal will prove abortive if the appellant succeeds and a stay is not granted, the Court will normally exercise its discretion in favour of granting a stay; b. the onus is upon the applicant to demonstrate a proper basis for a stay; c. it is a matter of discretion whether the Court grants a stay and if so as to the terms which would be fair as part of the granting of a stay; d. what is important in considering whether or not a stay ought be granted is the balance of convenience and the competing rights of the parties before it; e. it is not necessary that special or exceptional circumstances should be made out; it is sufficient for the applicant to demonstrate a reason or an appropriate case to warrant the exercise of discretion in its favour. [20] Since a stay will prevent the judgments being enforced while the appeal is pending, the Court should endeavour to preserve the status quo by protecting the judgment creditor from the risk of loss. …" (citations omitted).
5. The defendant referred to Bruce Maples v Siteberg [2012] NSWSC 435 at [17] and [25], where McDougall J stated: "17 It is clear from the cases to which I have referred that the inherent power of the Court to stay later proceedings until costs in earlier proceedings have been paid is a power based on the Court's power to prevent the abusive or vexatious use of its processes. Thus, in Rice, Harvey J said at 54: ...it is a rule that when a plaintiff brings an action and fails, he shall not bring another action for the same cause and against the same defendant till he has paid the costs of the first action. Prima facie, under those circumstances the second action is, in the eyes of the court, vexatious. … 25 For example, a s 67 stay may be ordered where security for costs has been ordered to be given, but has not been given. Again, it may be, the s 67 power could be exercised where the earlier costs order had been made, between the same parties and essentially "in the same cause", but in another court. Again, it may be, the s 67 power could be exercised where an earlier costs order had been made, either in the same court or another, although not between the same parties but between the applicant and a party in effect controlled by, or the puppet of, a party who seeks to re-litigate."
6. The defendant submitted that the correct exercise of the discretion is served by ordering a stay of proceedings on terms.
7. The defendant submitted that the plaintiff as a solicitor and officer of this Court stood in a fiduciary relationship with the defendant while acting for him. The plaintiff received money on behalf of the defendant. That was trust money, in respect of which the plaintiff owed fiduciary, statutory and contractual duties. In breach of those duties, the plaintiff paid out to himself moneys far in excess of what he was entitled to for his costs and has continued to hold those moneys for a period in excess of seven years.
8. The defendant also submitted that in these circumstances these proceedings are an abuse of process and the Court should not permit them to be prosecuted without the plaintiff paying into Court the amount owing to the defendant or such other amount as Court sees fit. Alternatively, the defendant submitted that the plaintiff should not be permitted to prosecute these proceedings in circumstances where he has not paid the costs of the previous incompetent Supreme Court appeal.
9. The plaintiff submitted that his appeal is bona fide and a genuine attempt to protect himself from a determination of the costs assessor which if left as it is will have drastic consequences for him financially and for his mental health. The plaintiff currently describes himself as an "infirm solicitor". His infirmity is said to relate to a number of matters, including tort law reform, bad financial advice and the stress of acting for the defendant.
10. He says that he is currently impecunious and that he owns no real property, the family home being in his wife's name. He says that that since his incarceration in the Currumbin Psychiatric clinic in July 2015, he has been certified as unfit to work as a solicitor and consequently has been unable to earn an income through his legal practice. From July 2014, his daughter conducted his practice until April 2016 when she left to work in London. The practice is now conducted by his wife Bernadette Grace who was admitted to practice law in New South Wales on 1 July 2016.
11. The plaintiff also holds the view that his impecuniosity is attributable in large part to the defendant's conduct over the years which led to his mental breakdown in July 2014. He says that it is pretty simple; if a stay of proceedings is ordered, "I won't be able to run my appeal". (T15.22).
12. In the exercise of my discretion, the order for a stay on terms being made are that the plaintiff, a solicitor and officer of this Court, has not paid or taken steps to secure the payment of the $186,141.00 that the costs assessor had found that he had overcharged the defendant. To my mind, this is a matter of concern. The plaintiff has not paid the costs of the first incompetent Supreme Court appeal commenced in 2014. The plaintiff commenced a further incompetent appeal in 2016 in the District Court in Lismore, however no adverse costs order was made. The factors mitigating against an order being made are that the plaintiff says he is impecunious and if an order for a stay on terms is made his current appeal will be stifled.
13. After analyzing the competing rights of the parties, it is my view that the plaintiff has discharged his onus of proof. In my view, it is fair that a stay of proceedings should be granted, the term that the plaintiff pay funds into court. In my view, a fair amount would be $10,000 as this goes some way towards the defendant's costs incurred due to the earlier incompetent appeal.
14. Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs of the notice of motion filed 11 July 2016 on an ordinary basis as agreed or assessed.

The Court orders that: (1) These proceedings are stayed until the plaintiff pays the sum of $10,000 into Court. (2) The plaintiff is to pay the defendant's costs of the notice of motion filed 11 July 2016 on an ordinary basis as agreed or assessed.

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