Homsi v Pasquale

The relevant statutory provisions

1. Sections 98 and 99 Civil Procedure Act 2005 (NSW) provides: "98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. (5) The powers of the court under this section apply in relation to a married woman, whether as party, tutor, relator or otherwise, and this section has effect in addition to, and despite anything in, the Married Persons (Equality of Status) Act 1996. (6) In this section, "costs" include: (a) the costs of the administration of any estate or trust, and (b) in the case of an appeal to the court, the costs of the proceedings giving rise to the appeal, and (c) in the case of proceedings transferred or removed into the court, the costs of the proceedings before they were transferred or removed. 99 Liability of legal practitioner for unnecessary costs (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: (i) in the case of a barrister, as between the barrister and the instructing solicitor, or as between the barrister and the client, as the case requires, or (ii) in the case of a solicitor, as between the solicitor and the client, (b) it may, by order, direct the legal practitioner: (i) in the case of a barrister, to pay to the instructing solicitor or client, or both, the whole or any part of any costs that the instructing solicitor or client, or both, have been ordered to pay to any other person, whether or not the solicitor or client has paid those costs, or (ii) in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs, (c) it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party. (3) Before making such an order, the court may refer the matter to a costs assessor (within the meaning of Part 7 of the Legal Profession Uniform Law Application Act 2014) for inquiry and report. (4) The court may direct that notice of any proceedings or order under this section with respect to a legal practitioner be given: (a) in the case of a barrister, to the instructing solicitor or client, or both, as the court may direct, or (b) in the case of a solicitor, to the client. (5) The court may give ancillary directions to give full effect to an order under this section, including directions to a legal practitioner to provide a bill of costs in assessable form: (a) to the court, or (b) to a party to the proceedings, or (c) in the case of a barrister, to the instructing solicitor or client, or both, or (d) in the case of a solicitor, to the client. (6) A party's legal practitioner is not entitled to demand, recover or accept: (a) in the case of a barrister, from the instructing solicitor or client, or (b) in the case of a solicitor, from the client, any part of the amount for which the legal practitioner is directed by the court to indemnify any party pursuant to an order referred to in subsection (2)(c). (7) In this section, "client" includes former client."

The principles and procedure applicable to costs orders against legal practitioners

1. The relevant principles are set out in Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300. It should be noted that while the power to make a costs order against a legal practitioner is to be used sparingly and only in clear cases, it is equally as important that costs litigation of this kind should not become "satellite litigation" (Lemoto v Able Technical Pty Ltd at 322 and 345). I also note the discussion of what amounts to "improper", "unreasonable" and "negligent" in Ridehalgh v Horsefield [1994] Ch 205 at 223-233.
2. It has long be recognised that the power to order costs against a legal practitioner is exercisable not only in favour of the lawyers and client but also in favour of the opposing party, although it is unusual to see a joint application of the kind which has occurred here.
3. The procedure for notification of a legal practitioner of such a step is set out in s 99(2) Civil Procedure Act 2005 (NSW). Those steps have been carried out here, and no objection has been taken to the manner in which this application has come before the court in the form of any failure to comply with s 99(2).

The circumstances giving rise to the application

1. The costs claim before the court was, perhaps unusually, a significant issue in the plaintiff's claim for damages from the defendant, principally because her legal representatives acknowledged from the first that the plaintiff's claim for damages was, at best, for past and future out of pocket expenses of a very modest nature.
2. Mr Di Michiel was issued with a subpoena to give evidence in the hearing, and cross-examined about the circumstances in which the plaintiff was provided with a certificate for her claim form by Mr Di Michiel's father, a retired general practitioner, who saw her in Mr Di Michiel's office. He was also cross-examined on his conduct of the proceedings. It quickly became clear that Mr Di Michiel had had very little to do with the commencement or conduct of this claim, and two of his former employees, Mr Mark Meoni and Mr Christopher Long, were called.
3. Mr Di Michiel was represented during the hearing on liability and damages by Mr Webb QC. He was also supplied with a copy of the transcript and exhibits, although this appears to have occurred after judgment was reserved. Many of the objections raised by Mr Lloyd, who now appears for Mr Di Michiel, arise from the circumstances in which the plaintiff and defendant now seek to rely upon evidence in that trial, and I was asked to reject those portions of the transcript on the basis of lack of procedural fairness and/or failure to comply with the procedure identified in Newell; Muriniti v De Costi [2018] NSWCA 49 (although this decision had not been handed down when I heard these proceedings in 2017).
4. The complaints Mr Di Michiel made about the absence of procedural fairness were only one of a series of rulings sought in the course of the hearing of this application, In the course of a two-day hearing, I was also asked to make rulings in relation to Exhibit A, a Notice to Produce served by the plaintiff upon Mr Di Michiel's solicitors, a complaint by Mr Lloyd of the raising of an additional ground in the submissions in reply and objections to portions of the affidavit of Mr Crowe (Exhibit B). The reasons for my ruling are set out at the end of this judgment. I note, however, that the technicalities of this hearing suggest that "satellite litigation" on costs is difficult to avoid in the absence of a clear established procedure being set out in the relevant legislation and rules.
5. Fortunately, these proceedings differ from Newell; Muriniti v De Costi in one very important respect: it was common ground between the parties that, if any costs order were to be made, it would be for the whole of the proceedings for one or both of the parties, as opposed to being for discrete issues of the kind ordered by the Court of Appeal after it set aside the first instance judge's "broad axe" costs orders, despite these being such a vital tool in the prevention of satellite costs litigation (see the observations of Brereton J, In the matter of Optimisation Australia Pty Ltd (Costs) [2018] NSWSC 280 at [29]-[30]).
6. In practical terms, the plaintiff and defendant made the same points and treated their application as a joint one, so this is provided for in my orders.

The particulars provided by the plaintiff and defendant in support of their application

1. The particulars provided fall into groups as follows: 1. The initial conference the plaintiff and Mr Di Michiel had, and the circumstances in which she signed a blank claim form; 2. The asserted inadequacy of the cursory examination Dr Di Michiel gave her, which was performed in Mr Di Michiel's boardroom and not in a doctor's surgery; 3. The plaintiff's asserted lack of awareness that proceedings were commenced; 4. The hopelessness of the claim; 5. The hopelessness and inaccuracies of the sole medical report and the occupational therapist's report; and 6. The evidence of two former employees of Mr Di Michiel that the manner in which the plaintiff's case was conducted reflected many if not most of the inadequacies of Mr Di Michiel's practice. 7. The circumstances of termination of Mr Di Michiel's retainer approximately six weeks before the trial, the circumstances in which it is asserted hedid not provide essential documentation to the plaintiff's new solicitors and his demeanour generally. 8. Additional matters raised in Dr Thornton's submissions in reply concerning the conduct of earlier proceedings by Mr Di Michiel on behalf of the plaintiff (Homsi v Nabulsi [2017] NSWDC 16).
2. This judgment is divided into five parts: 1. A consideration of each of the particulars in question and whether, individually, any of these particulars would be sufficient to warrant a costs order pursuant to s 99. 2. The causation argument raised on behalf of Mr Di Michiel, namely that Drexlers Litigation Lawyers had ample time to determine whether to proceed with the case. 3. The plaintiff's and the defendant's submission that in combination, if not individually, the facts made out in support of the particulars warrant the making of a costs order. 4. An alternative argument raised by Mr Lloyd that by reason of the $0 award, the plaintiff has not "won" and is not entitled to fees (this relates only to the plaintiff's application for costs against Mr Di Michiel and not to the defendant). 5. Reasons for my rulings.

The initial conference and the claim form

1. The particulars provided by Dr Thornton falling under this category are as follows: "The plaintiff indicated in evidence that she was provided with a blank claim form and signed the claim form (T 155, lines 9-11). When asked by me to identify the handwriting on the claim form, the plaintiff indicated it was not her handwriting (T 154 Lines 49-50). The plaintiff in evidence following the initial conference was provided with a letter setting out her injuries and disabilities. The plaintiff gave evidence following the initial letter she did not receive any further follow-up letters from Mr Di Michiel or his firm Premier Compensation Lawyers. At the initial conference the plaintiff in evidence stated that she was never advised that if she lost the matter in court then she would have to pay the defendant's costs (T 158, lines 9-11). The plaintiff gave further evidence that she was never advised that if the damages did not exceed $40,000 then she might not be entitled to costs (T 158, lines 13-14)."
2. Mr Lloyd, for Mr Di Michiel, submitted it was clear from the evidence and findings that Mr Meoni, not Mr Di Michiel, had conducted the plaintiff's claim. None of the conduct described, if it were made out, would cause costs to be incurred, which is necessary for an order of this kind: see Newell; Muriniti v De Costi [2018] NSWCA 49 at [71]. The documents in Exhibit 2 showed that the plaintiff was given detailed information as to her prospects of success and the range of damages. This continued in relation to the conduct of the proceedings by the plaintiff's current legal advisers.
3. On the day of the hearing, despite being told that she had no prospect of success, the plaintiff elected to proceed with her claim (as is made clear by her submission to the court at the commencement of the hearing: T 7). Mr Lloyd submits that the circumstances in which her current legal representatives were refused leave to withdraw on the day of the hearing are not the fault of Mr Di Michiel.
4. As is set out below in the section of this judgment concerning causation, none of these matters could accordingly give rise to extra unnecessary or improperly incurred costs for which his client was liable. Nor did the failure to take such steps amounts to serious neglect or serious incompetence or serious misconduct by Mr Di Michiel. These particulars are not an appropriate basis for a personal costs order against Mr Di Michiel.

Whether the plaintiff's medical examination (for the claim form) took place at all, or in Mr Di Michiel's office

1. Dr Thornton's particulars are as follows: "The plaintiff in evidence on several occasions stated that at no time was she examined by Dr Peter Di Michiel at either his surgery or at the offices of Premier Compensation Lawyers (T 158, lines 22-37)."
2. Mr Lloyd pointed out that I had rejected the plaintiff's evidence that she was not examined by Dr Di Michiel (see Homsi v Pasquale at [85]).
3. I accept Mr Lloyd's submission that the circumstances in which she had a medical examination by a doctor whilst in her solicitor's office do not reflect well on the doctor in question, but do not amount to grounds warranting a special costs order against Mr Di Michiel.

Commencement of proceedings

1. Dr Thornton's particulars are as follows: "The plaintiff provided evidence that she never instructed Premier Compensation Lawyers to commence proceedings. She only became aware of the proceedings when she was notified of the court hearing date (T 156, lines 20-28)."
2. In further particulars dated 14 June 2018 Dr Thornton repeated that not only did the plaintiff not instruct to commence the hearing, but that she first became aware of it when notified of the hearing (grounds 7 and 8).
3. Mr Lloyd draws my attention to my findings as to the inconsistent and unreliable nature of much of the plaintiff's evidence (Homsi v Pasquale at [85]). She was aware that there were proceedings on foot in that she was attending medical appointments for the defendant and was assessed by the occupational therapist in February 2016. She signed a costs disclosure and agreement. He submits, and I agree, that this was not a case where she was unaware that proceedings had been started.
4. This is not an appropriate basis for the making of a personal costs order against Mr Di Michiel.

Prospects of success

1. Dr Thornton's particulars are as follows: "Proceedings were certified by Mr Jason Di Michiel, solicitor and director, that the matter had reasonable prospects of success pursuant to s 347 Legal Profession Act 1987 (NSW). In fact he ought to have certified it under cl 4 of Sch 2 to the Legal Profession Uniform Law Application Act 2014 (NSW) that there are reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law that the claim for damages in these proceedings has reasonable prospects of success. The defendant submits that this, based upon the quantum evidence of Dr Peter Giblin and Ms Susie Mullen, was not the case."
2. This is the principal ground for this application. While the plaintiff certainly was in a motor vehicle which came into contact with another motor vehicle, her Medicare documentation confirmed her outgoings were zero. The overlap between her two previous motor vehicle accidents and the trivial nature of her injuries meant that any entitlement of past or future care was moot. She acknowledged in her evidence she had not even filled a single prescription (or for that matter, been prescribed any medication) or seen a medical practitioner for ongoing care, and her future out of pocket expenses were similarly likely to be zero. This was a case where the damages were trivial, but regrettably this court sees applications of this kind on a regular basis, as Mr Lloyd acknowledged in his submissions, referring to other proceedings of a similar kind in which he had appeared before me only very recently.
3. However, Mr Lloyd is correct in drawing attention to the many judicial observations that mere pursuit of a hopeless case is not sufficient to warrant an order under s 99, for the reasons stated in Lemoto v Able Technical Pty Ltd at 92. As the Federal Court said in Levick v Deputy Commissioner of Taxation (2000) 102 FCR 155 at [44], "unreasonable conduct" for the purposes of a personal costs order must amount to more than merely acting on behalf of a client who has little or no prospect of success. There must be something "akin to abuse of process" (at [44]), namely "using the proceeding for an ulterior purpose or without any, or any proper, consideration of the prospects of success" (at [44]). In other words, there must be some form of deliberate decision taken by the solicitors to bring a case where there is no chance of success, but an intention to use the procedure for an ulterior purpose, such as the obtaining of legal costs (Melbourne City Investments Pty Ltd v Myer Holdings Ltd [2017] VSCA 187).
4. Was the case in fact hopeless on its face, or at the beginning of the litigation? Liability was admitted (notwithstanding a period of uncertainty as to whether the plaintiff was in fact a passenger in the vehicle) and technically the plaintiff could have brought a claim resulting in the reimbursement of some very modest sum in terms of past or future medical costs. In those circumstances, there was a reasonable prospect of damages being recovered in the action, "however modest" (Degiorgio v Dunn (No 2) (2005) 62 NSWLR 284 at [17] per Barrett J). Cases have been litigated to the highest level of the court system in relation to claims where the damages have been effectively nominal, not only in personal injury but in other causes of action such as defamation (see for example Boland v Dillon (2010) 243 CLR 298). The fact that a modest claim is brought does not, without more, amount to conduct warranting a personal costs order, although it may be a factor in depriving the party in question of a costs order.
5. The New South Wales Court of Appeal considered the issue of nominal damages in personal injury proceedings in State of New South Wales v Stevens (2012) 82 NSWLR 109, where the plaintiff was awarded (on appeal) only $100 in relation to a psychiatric injury claim following a breach of contract (for which damages were unsuccessfully claimed). The plaintiff had been awarded "nominal damages" of $10,000 plus costs and the appellant sought (at [23]) reversal of the costs order in favour of the plaintiff at first instance.
6. McColl JA noted (at [14]) that damages were "the prime remedy in actions for breach of contract and tort" and explained the difference between nominal damages and an award of personal injury damages: "[25] Part 2 of the Act only applies to "an award of personal injury damages": s 11A(1). It applies "regardless of whether the claim for the damages is brought in tort, in contract, under statute or otherwise": s 11A(2). Section 11A(3) prohibits a court from awarding "damages, or interest on damages" contrary to Pt 2. "Damages" is defined in s 3 to include, subject to irrelevant exceptions, "any form of monetary compensation". "Injury" and "personal injury damage" are defined in s 11 (Pt 2) to mean respectively "personal injury", including "impairment of a person's … mental condition", and "damages that relate to the death of or injury to a person". [26] Critically, nominal damages are not "real damages" and, in particular, they are vindicatory, not compensatory. They are awarded because the plaintiff has established the liability issue, being the breach of contract, in the senses explained by Ogus and McGregor, but has not established that any damages flowed from that breach. Accordingly they are not "monetary compensation" and do not fall within the meaning of "an award of personal injury damages" in the Act."
7. In terms of which "event" costs should follow, although the nominal damages were reduced from $10,000 to $100, the costs order at first instance was undisturbed and the appeal costs ordered were that each party pay his or its own costs.
8. I note that this is not the case in other jurisdictions such as the United Kingdom, where legislation has been enacted to prevent the bringing of trivial claims and where exaggeration of symptoms may result in a plaintiff being penalised by dismissal of the claim or refusal to award damages. No such statutory regime exists in Australia, and the concept of unlikelihood of harm resulting in dismissal of proceedings, which may exist in relation to other torts (such as defamation, see Kostov v Nationwide News Pty Ltd [2018] NSWSC 858) has no place in relation to motor vehicle legislation.
9. Mere hopelessness (in terms of quantum) has been recognised in many decisions as being insufficient, without more, to warrant a personal costs order against the solicitor. In the present case, the claim was not so much hopeless as a claim which turned out to be for a sum of money even smaller than that anticipated by the parties. It is not hopelessness of the same kind as, for example, having no cause of action whatsoever.
10. Mr Lloyd noted in addition that it was possible between September 2017 and the hearing to put on further evidence if the medical evidence was insufficient, particularly given the circumstances in which the proceedings came before the List Judge on 4 October 2017 for the purposes of ascertaining the readiness of this and other matters where Mr Di Michiel had ceased to act. No such step was taken. That submission, however, arises in relation to the causation issue, which I have considered separately.

Medical evidence and occupational therapist reports

1. Dr Thornton's submissions are as follows: "The reports of Dr Giblin and Ms Mullen proved useless. Neither were provided with adequate instructions nor accurate medical histories. In fact Ms Mullen was only provided with the CTP Medical Certificate generated by Dr Peter Di Michiel."
2. Mr Lloyd submitted that the report of Dr Giblin identified symptoms correctly, although at the top end of the scale and, beyond misdescribing the circumstances of the plaintiff's accident (as to which, see Mason v Demasi [2009] NSWCA 227), it could not be said that the report in question was not so hopeless as to warrant exclusion from consideration entirely. Dr Giblin assessed the plaintiff as having an 8% whole person impairment, as well as attempting an apportionment exercise.
3. The weakness of the medical evidence does not warrant the making of a personal costs order against Mr Di Michiel.

The evidence of Mr Mark Meoni concerning his role

1. Dr Thornton's particulars were as follows: "Mr Mark Meoni, former solicitor at Premier Compensation Lawyers, gave evidence that another solicitor at Premier Compensation Lawyers, Mr Chris Long, indicated that it was the standard practice not to discuss costs with the client as the client "would not give you instructions to proceed" (T 225, lines 43-47). Mr Meoni gave further evidence that the s 85A Particulars did not reflect the medical evidence. His evidence was that there were no medical reports. The s 85A Particulars were in fact based upon a template. He gave further evidence that if a doctor did not comment on or was quite vague in relation to treatment and regular things were, as is indicated in the document, analgesic medication, attendances and things on a general practitioner, physical therapists like that and gym programs. They were regular things that he would advise (i.e. Mr Di Michiel) to put in as just general things (T 224, lines 27-45)"
2. In the further particulars dated 14 June 2018, Dr Thornton identified these particulars as a "template" supplied by Mr Di Michiel and identified Mr Di Michiel as the person who drafted the claim form.
3. Mr Lloyd noted that the plaintiff was given a costs agreement which he signed and which contained clear provisions outlining costs issues. There is no suggestion that the plaintiff cannot read English. There is no suggestion that she was denied the chance to read the documents before signing it.
4. Perhaps the most difficult issue for the plaintiff here is that the claim form was prepared by Mr Meoni, not Mr Di Michiel. While Mr Meoni was a very recently admitted solicitor whose work was checked by Mr Di Michiel, there was no suggestion that Mr Meoni (or, more importantly, Mr Di Michiel) invented symptoms, or deliberately put dishonest information. Mr Meoni conducted the proceedings with efficiency; there were no missed medical appointments, show cause applications or oversights in serving medical reports. Whether or not Mr Di Michiel was supervising this file, it is hard to find something wrong with how Mr Meoni prepared and prosecuted the plaintiff's claim. The problem was that the claim was worth very little, if anything, but that is not sufficient, without more, to warrant a personal costs order.

Letter terminating (Exhibit E of the trial exhibits)

1. Dr Thornton's particulars concerning the circumstances in which Mr Di Michiel ceased to act were as follows: "The plaintiff in these proceedings gave evidence that she received correspondence from Premier Compensation Lawyers, the previous solicitors, but due to a conflict they were unable to act for her in any further capacity in this matter (Exhibit E of the trial exhibits). No further reason was provided."
2. In his further particulars dated 14 June 2018, Dr Thornton asserts that Mr Di Michiel "abandoned the plaintiff at short notice when it became known that the defendant was not making any offers but was seeking a costs order against the plaintiff" (paragraph 9).
3. Mr Lloyd submitted that the reason given by Mr Di Michiel for withdrawal - namely that the plaintiff's case might be prejudiced by reason of the medical certificate signed by his father being a stride against her credibility - was not an unreasonable one. There is no suggestion that there was any other reason for his withdrawal. In addition, Mr Di Michiel located and arranged for a new solicitor to take carriage of the matter, namely Drexler Litigation Lawyers, on or about 12 September 2017. There is no suggestion that he misled Drexler Litigation Lawyers in any way in relation to his description of the case.
4. These submissions are relevant to Mr Di Michiel's challenge to the application on the basis of a break in the chain of causation, and require a careful chronology of the events in question, which I have endeavoured to set out in more detail below.

Mr Di Michiel's evidence and demeanour

1. Dr Thornton's particulars were as follows: "When questioned in cross-examination, the defendant submitted that Mr Di Michiel was evasive and defensive in relation to provision of the file to Drexler Litigation Lawyers. In relation to the Costs Agreement these were produced into the hearing (on 13 November 2017) in addition to several calendar entries. Mr Di Michiel in evidence stated that he did not put copies of all correspondence on the file if provided to the plaintiff. The defendant submits this is a most unusual practice. In particular, when questioned about the "reasonable prospects of success" letter Mr Di Michiel provided evidence that "Well, she has that one, that's why there's no need to provide it" (T 196, lines 25-26). The defendant submits that if the letter had been sent to the plaintiff then it should have been attached to the file. The defendant submits that her instructing solicitors requested an entire copy of the plaintiff's file and after some days into the hearing Mr Di Michiel provides this additional correspondence."
2. These matters are the subject of findings in my judgment. No costs were wasted by his conduct, although arguably the hearing was extended by reason of the fact that he was called. I was not, however, addressed on this basis.
3. In his submissions in reply, Dr Thornton notes (at paragraph 2) that Mr Di Michiel has elected not to go into evidence by filing an affidavit. However, Mr Di Michiel gave evidence in the hearing, so the reasons for objection to this course are unclear.
4. This is not an appropriate basis for the ordering of costs against Mr Di Michiel.

No subpoenaed documents

1. Dr Thornton's particulars were as follows: "When questioned in relation to production to Drexler Litigation Lawyers of copies of subpoenaed documents Mr Di Michiel gave evidence that there were no subpoenaed documents (T 196, lines 47-50; T 197, lines 1-5). The defendant submits that Premier Compensation Lawyers would be in no position to assess the claim without the subpoenaed documents. In addition, Premier Compensation Lawyers has an ongoing duty to continually evaluate the claim as to its merits and prospects of success."
2. The complaint concerning the absence of subpoenaed documents appears to be to the effect that the case could not be conducted properly because of the failure of Mr Di Michiel to provide documentation necessary for the hearing.
3. There does appear to have been a delay in relation to the inspection of documents under subpoena after these were obtained on 18 October. This was because Dr Thornton was away. However, I am satisfied that, at all relevant times, Dr Thornton was aware of the plaintiff being involved in two prior accidents and of the weakness of the plaintiff's medical evidence generally. In particular, he and the solicitors who instructed him were aware from the first that the plaintiff's claim form had been signed by Dr Di Michiel, and that the connection between Mr Di Michiel and his doctor father would have been obvious to them, even if they were unaware of this being the reason why Mr Di Michiel had withdrawn from the conduct of this case.
4. It is hard to see what additional material provided under subpoena could have changed those views. While this material confirmed that the plaintiff had not seen her general practitioner about her injuries, the absence of any report or information about the plaintiff's general practitioner would, again, have been evident from the claim form and medical reports they had received when they took over the conduct of the proceedings.
5. I note the reference to asserted breaches of the Australian Solicitors Conduct Rules. These asserted breaches are not matters which I need to determine.

Additional grounds raised in Dr Thornton's submissions in reply

1. Dr Thornton additionally particularised, at paragraph 12 of his submissions in reply: "The plaintiff was unsuccessful in an extension of time application pursuant to s 109 Motor Accidents Compensation Act 1999 (NSW). Mr Di Michiel abandoned the plaintiff in this matter and referred her to Paramount Lawyers. His Honour Mahony J determined that any delay in progressing the plaintiff's claim was caused by her solicitor's lack of diligence. His Honour found that the plaintiff at best she [sic] would be entitled to 1.5 hours per week totalling $60,000 and well below the proscribed [sic] threshold of $112,500. This demonstrated a cavalier attitude by Mr Di Michiel."
2. This is an appropriate occasion for me to give reasons for my ruling in relation to the use of evidence given by the witnesses at the trial as well as for Mr Lloyd's to reliance upon any claim arising from the plaintiff's prior unsuccessful application on the basis that this was not a claim which had been raised prior to 14 June 2018 and was not one he came to meet.
3. Both applications were unsuccessful because it was clear from the cross-examination of Mr Di Michiel that he had been aware of the issues arising from the earlier proceedings. In addition, as to his objections concerning use of the transcript of the trial the subject of this application, he had been supplied with transcript and other information from the parties. Given that Mr Di Michiel had elected to be represented by senior counsel, apparently for the duration of the proceedings (in that senior counsel returned when Mr Meoni gave evidence), Mr Di Michiel was in no position to complain about absence of procedural fairness in relation to how that trial was conducted.
4. Mr Lloyd submitted, in the alternative, that the failure of the plaintiff's claim in the prior proceedings bore no identified causal connection with any personal costs liability in these proceedings. The parties' submissions on this issue is discussed in the section of this judgment concerning Mr Di Michiel's "overall conduct and behaviour in relation to the plaintiff" (to use the description given by Dr Thornton in his submissions in reply at paragraph 13).
5. Consideration of the "overall" conduct and of the causation issue requires a chronology of the relevant events.

Chronology relevant to Drexler Litigation Lawyers assuming conduct of the proceedings

1. The principal difficulty the plaintiff and defendant face in their application for costs against Mr Di Michiel is Mr Lloyd's causation argument, namely that these proceedings were transferred to Drexler Litigation Lawyers in sufficient time for them to determine whether the plaintiff's claim was both worth proceeding with and ready for trial.
2. The relevant timeline is as follows: 1. 11 September 2017 - a report from Dr A S McIntosh, a biomechanical engineer, is served on Mr Di Michiel under cover of an email dated 12 midday that day (page 65 of Exhibit 2). This report is out of time as it should have been served by 28 August 2017, the date for service of medical and liability evidence. It is also contradictory to the defence filed, which admitted liability. 2. 12 September 2017 - The file is transferred to Drexler Litigation Lawyers on or shortly after this date. That file included the medical evidence and the claim form signed by Dr Di Michiel. 3. 26 September 2017 - Drexler Litigation Lawyers accepted instructions and filed a notice of change of solicitors, knowing that the hearing date is on 1 November 2017. 4. 4 October 2017 - Mr Purkiss appeared before Letherbarrow SC DCJ and does not seek an adjournment of the hearing (see T 8 of the hearing transcript), although an extension of time for the settlement conference was sought. Letherbarrow SC DCJ makes the following orders: "1. Confirm the hearing fixed to commence on 1 November 2017. 2. Note that Mr John Purkiss of Brexler Litigation Lawyers has filed a Notice of Change on 26 September 2017. 3. Note that the matter is listed for hearing on 1 November 2017 and such hearing date is confirmed. 4. Extend the time for the parties to undertake a settlement conference which can be done by telephone to 27 October 2017." 1. According to Mr Purkiss's affidavit, "several matters" were raised by Mr Renshaw in court and there was a conference outside court. His letter of 5 October 2017 to the defendant, this included a statement that the defendant proposed to deny liability, and further particulars of this proposal were sought (this letter was not answered by the defendant in terms). 2. Mr Purkiss checked whether the defendant had complied with the obligation to file all medical evidence by the due date, which check was made on 11 October 2017. This resulted in objection being taken to the report of Dr Andrew McIntosh, which had been sent on 11 September 2017, in a letter from Mr Purkiss dated 12 October 2017, which objection was later upheld by Letherbarrow SC DCJ. Dr McIntosh was a biomechanics engineer and it would appear his report related to the proposed claim that the plaintiff was not in fact in the vehicle. However, this report had been in the file at the time it was sent to Drexler Litigation Lawyers. 3. LTE Support photocopied documents under subpoena on 17 October 2017 which were delivered on 18 October 2017. 4. On or about 20 October 2017 - According to the affidavit of Mr Purkiss, a settlement conference proceeded on 20 October 2017. Dr Thornton represented the plaintiff (see the notes on p 38 of Exhibit 2). Dr Thornton gave estimates of what the plaintiff could expect (a total of $40,000). Mr Purkiss learned from Dr Thornton that Mr Crowe said there would be no offers as the defendants would argue that the plaintiff was not in the vehicle on that day. The plaintiff signed instructions concerning this new issue and instructing for the lodgement of an offer of compromise. 5. 20 October 2017 - the solicitors for the defendant notify Drexler Litigation Lawyers by letter that they propose to seek leave to amend the defence to "not admit" that the plaintiff was a passenger in the vehicle. 6. 24 October 2017 - the defendant files a notice of motion to extend time for service of the report of the biomechanical engineer, Dr McIntosh. This is supported by an affidavit of Mr Crowe deposing to correspondence and telephone calls to the solicitors for the plaintiff on this issue. An amended defence denying liability is filed. All of this conduct, except the service of the report on 11 September, postdates the handover of the file by Mr Di Michiel; however, no submission is made that the biomechanical engineer's report triggered the handing over of the file by Mr Di Michiel. 7. 25 October 2017 - An email from Mr Purkiss to Dr Thornton describes the plaintiff as not being reliable or trustworthy. There is an analysis of documents under subpoena for contemporaneous visits to doctors to complain of injuries. 8. 26 October 2017 - Mr Purkiss's affidavit of this date deposes to the plaintiff being unready to meet this new amended defence on 1 November 2017. 9. 26 October 2017 - Letherbarrow SC DCJ hears the defendant's application to extend time to serve Dr McIntosh's report and amend the defence. The extension of time is refused but leave to amend is granted. Costs were to be costs in the cause. No application was made to adjourn the hearing. 10. After 27 October 2017 - Dr Thornton decides that the proceedings should not be pursued as the plaintiff has no claim to damages of any kind. 11. 31 October 2017 - a Chronology prepared for the court sets out the history of all three motor vehicle accidents the plaintiff suffered. 12. 1 November 2017 - prior to the hearing, the plaintiff has a conference with her legal team. The notes taken in conference before the hearing start with the warning that she should accept a "V for the D + costs" and she is asked whether Mr Di Michiel "pushed her along". She replies that "it was a good case" and that she would get around $30,000. She was told her barrister recommended "V for the D" and that the judge "does not like female plaintiffs". The notes also refer to the solicitors having "had your case for a month, trying to support allegations in the statement of claim" but that they now feared "V for the D" and a large costs order. It is clear from these documents that the concern is that the court may not accept the plaintiff's claim that she is in the car, in part because of the lack of contemporaneous report to medical practitioners. Dr Thornton tells the plaintiff "we are not prepared to run the case" and "we are not obliged to run the case". The plaintiff responds that she is not prepared to drop the case, as she believes she has a good case, and "wants to speak to the judge herself". She was told that the judge would tell her she needed lawyers to run her case and that she could face a costs order. 13. 1 November 2017 - The plaintiff's solicitors and counsel seek leave to withdraw from the proceedings because their client will not accept their advice to drop the proceedings. The application is refused and the hearing proceeds.
3. The above dates demonstrate that Drexler Litigation Lawyers were ready for hearing on medical issues and that their real fear was that the evidence of the plaintiff that she was not in the car would not be accepted. Although Dr McIntosh's report had been rejected, telephone records showed her mobile phone as being used by someone at her home address. However, as the transcript of the first day confirms, this was no longer a concern to Dr Thornton on the first day of the hearing, because he had been able to obtain instructions on this issue.
4. The real concern of Dr Thornton and his instructing solicitor was thus that the plaintiff would receive a derisory amount of damages and that there was a risk as to costs. However, what additional information did they receive on or prior to the first day of the hearing to make them want to withdraw? Mr Lloyd submits that they already knew all relevant information, and that the break in chain of causation was already complete.

The causation issue

1. Mr Di Michiel submits that no costs claimable under ss 99(1)(a) or (b), and in particular no costs following the period when he ceased to act, arise from any of the conduct attributed to him in relation to the hearing. This is because: 1. Drexler Litigation Lawyers accepted instructions and filed a notice of change of solicitor knowing that the hearing was on 1 November 2017. 2. Mr Purkiss had not one, but two, opportunities to ask Letherbarrow SC DCJ for an adjournment, in circumstances where the costs order could have taken other factors into account (for example, the change of defence). 3. The plaintiff's new solicitors always knew about the three accidents and that Dr Di Michiel had signed the claim form, as the above chronology makes clear, and had the relevant medical reports. There was nothing to stop them seeking orders for (or even serving) updated reports if necessary, as these would fall into a different category to fresh reports. 4. The plaintiff's new solicitors and Dr Thornton advised the court that they did not believe the claim had reasonable success and wished to withdraw. Mr Lloyd submits that to continue to act in the case could have put them in breach of Sch 2 cl 1 of the Legal Profession Uniform Law 2014 (NSW), the inference being that the order made under UCPR r 7.29 should not have been made because this required them to act in breach of their obligations. 5. The plaintiff, despite being abandoned by her legal team, elected to press on.
2. The facts and matters identified by Mr Lloyd in issues 1, 2 and 3 are clearly made out by the chronology. However, the transcript shows that issues 4 and 5 are not accurate representations of what occurred.

Particulars 4 and 5 of the causation argument

1. As the transcript shows, the following occurred: "THORNTON: It's an application for both myself and my instructing solicitors to withdraw from the matter. HER HONOUR: That sort of application. I don't suppose you could have given me some advance notice of that so I could - THORNTON: Well, we only found out this morning about ten minutes ago, your Honour. HER HONOUR: All right. That's a pretty good reason for not telling me beforehand. Well, of course you need leave under - was it 7.29? THORNTON: That's correct, your Honour." (T 1)
2. The basis was: "THORNTON: My instructing solicitors had difficulty obtaining the file and some of the subpoenaed documents. They were only able to obtain all these documents towards the end of last week." (T 2)
3. I was then told that this was one of a series of cases listed for case management because of a common problem involving some solicitors (one of whom was apparently Mr Di Michiel) ceasing to act suddenly: "HER HONOUR: All right, who brought that application? How did it come to be before - I note it was listed for directions on 25 September by the judicial registrar. He did it in chambers so in other words it was put in the list because somebody asked for it. RENSHAW: We did, your Honour. HER HONOUR: What was the reason for that, Mr Renshaw? Was there some problem? RENSHAW: There were a number of matters where sundry parties had ceased to act and it was brought to the Court's attention - HER HONOUR: I see. RENSHAW: --so that the Court would be assisted in respect of the future conduct of those matters as to whether they would be occupying spaces in the calendar. HER HONOUR: All right, so you say it was listed at the request of the defendants because it was one of many, can I say, one of many? RENSHAW: That's correct, your Honour. HER HONOUR: One of many hearings where the defendant apprehended there could be a problem. This is a problem something to do with Mr Di Michiel? RENSHAW: It's a problem to do with them ceasing to act and therefore the hiatus occurring in representation and the prospect that the individuals may not be represented at all. HER HONOUR: Did you do this in response to Mr Dr Michiel ceasing to act? RENSHAW: In this and other matters as I understand it. HER HONOUR: All right. RENSHAW: And other matters with other firms as well. A bit of a pandemic occurring I think. HER HONOUR: All right. So other firms have as well. Why, what's happened to Mr Di Michiel, is he still in practice? THORNTON: At the moment, yes, your Honour." (T 5)
4. The plaintiff was clearly agitated, as I observed at the time (T 5) and I asked if I should read the affidavit of Mr Purkiss which was already in the file, which I was told was not necessary. Dr Thornton then gave the following explanation concerning quantum: "THORNTON: I reviewed them [the documents under subpoena] and I formed a view in relation to prospects of the claim in relation to quantum and then on conferring with the plaintiff this morning I provided her with some advice and she was not willing to accept the advice that either I or my instructing solicitors [sic]." (T 5 -6)
5. Dr Thornton then informed the court that after giving those instructions, the plaintiff did not want him to continue acting, to which the plaintiff interjected: "THORNTON: However, after providing this advice to the plaintiff she now does not want us to act on her behalf. HER HONOUR: She doesn't want you to act? THORNTON: No. PLAINTIFF: I didn't say that. HER HONOUR: You didn't say that? PLAINTIFF: No, I didn't. I told him - he was telling me he wants to leave. He doesn't think this case is going anywhere." (T 7)
6. The issue was not one of liability but of quantum: "HER HONOUR: You could have said, "Look, we've only just come into the matter and the hearing is a month away and we've got worries with the subpoenaed documents." That's the first thing. The second thing is that you could have sent somebody up to look at the documents in the registry. The third thing is I would have thought when you were confronted with the amended defence you might have had a clearer picture of what some of the problems were. I don't know what's been disclosed on subpoena but-- THORNTON: Liability is not a problem in this matter." (T 8)
7. It was Mr Renshaw who raised the issues identified by Mr Lloyd, but he did so after my ruling: "RENSHAW: That primary duty is not to promote actions of which he has no belief of the viability of those actions as prescribed by the Legal Practitioners Act and having formed that opinion he is placed in a dilemma, as I understand it. THORNTON: That's correct. RENSHAW: That is that the claim is not viable and the consequences of that are twofold that he has an ethical obligation to withdraw. HER HONOUR: I see what you mean." (T 9)
8. Mr Renshaw went on to say that the problem was the case was only worth past and future out of pockets of a modest quantum (T 9 - 10). The problem then explained to me was that the plaintiff's other car accidents confused the quantum issue, painting a picture of a young woman with injuries where causation arose (T 10 - 11). The plaintiff's husband then interrupted and said he had the same problem in relation to his hearing, in the following week.
9. The plaintiff then said: "PLAINTIFF: Yes, I'm, I'm the client and I was told before I come in that I should just clear the case because I'm, I'm, I've lost it and he told me that he got information that I - SADEK: From you. PLAINTIFF: From you, that I would - SADEK: That you told him, "Don't let them in, it's a losing case." PLAINTIFF: That I have already lost. HER HONOUR: What? SADEK: I swear to God and my kids, that is what he said to us. HER HONOUR: He said that the judge said it? RENSHAW: Well, this does bear a - SADEK: He said that you told him that it's a losing case, and don't let her in and you better just give it up there. PLAINTIFF: And they told me to sign papers - SADEK: Sign papers that you are losing the case. PLAINTIFF: That, and to say that - SADEK: Yeah, and - HER HONOUR: Look, judges don't do that sort of thing, that's corrupt conduct, we don't. You must be well aware of how our legal system works, our legal system doesn't work in that fashion. SADEK: That's what we have been told, thank you. RENSHAW: Well, this is fairly problematic. HER HONOUR: It must be obvious to you that I know very little about this case, except your names and what I was able to read on the way down in the lift. If it is any consolation to you, we only get given these files the night before or the morning of the hearing. So, I wouldn't have known before 4.30 yesterday who was in this case and I've got no interest in telling barristers that they've got no case and that they should drop it. RENSHAW: I don't think that your Honour's conduct is being impugned. HER HONOUR: No, I know, but the thing is that I'm just pointing out that that sort of thing doesn't happen, but it's because that sort of thing doesn't happen doesn't mean that I should make it clear to the plaintiff that such a thing is never going to happen, and certainly not in this Court. Dr Thornton, have you done the statement of issues, and the chronology? THORNTON: I've done the chronology, your Honour, and the issues. HER HONOUR: The chronology will do. THORNTON: Yes please. HER HONOUR: I think that I know what the issues are. Did you do a statement of damages, or was that fraught topic? THORNTON: Your Honour, the chronology is enclosed in the tender bundle. HER HONOUR: That is very helpful, thank you. Can I see the tender bundle? Can you just hand it up to me so that I can have a look? THORNTON: Thank you." (T 14 - 15)
10. I have set this out in some detail because I am concerned at the implication in Mr Lloyd's submissions that the continued representation of the plaintiff in any way constituted a breach of Sch 2 cl 1 of the Uniform Law.
11. This was a case where I was told that a plaintiff with compensable injuries had a causation problem by reason of two prior motor vehicle accidents. The fact that the claim was more modest than expected - even if the amount in question was nominal - would not permit counsel to withdraw on the day of the hearing under any circumstances, not least because it could expose his own client to costs orders if the hearing were vacated or a bad result if the client proceeded while acting for herself. The terms of UCPR r 7.29 cannot be varied because of a view counsel forms on the day of the hearing which is inconsistent with that of his or her client, particularly where the wrongful conduct lay in failure to examine documents under subpoena as opposed to some wrongdoing by the client.
12. The real problem in relation to the application to withdraw was that it should have been apparent to anyone reading the medical evidence and HIC printout, as opposed to documents under subpoena, that this was a very small claim indeed, given the three accidents the plaintiff had been involved in, which was information the plaintiff's lawyers had had in their possession from day 1. This was not something that should only have been considered on the morning of the hearing.
13. Nor is it fair to say that the plaintiff elected to press on with the case. She had no idea until the morning of the case that her lawyers had any doubts about the merits of her claim. The fact that the plaintiff wanted to continue with her claim has a strong basis in her long term association with Mr Di Michiel.
14. Grounds 4 and 5 are not made out. However, the break in the chain of causation is completed by reason of the first three factors. The plaintiff's new lawyers had all the information necessary when they took over the file and they elected to continue despite opportunities to vacate the hearing date.

Mr Di Michiel's "overall conduct" of these proceedings

1. The plaintiff and defendant alternatively bring a "catch-all" submission that, while the individual particulars may not be made out, the whole of Mr Di Michiel's conduct and demeanour warrant the making of these orders.
2. Mr Di Michiel brought a claim where liability was straightforward but there was little or no quantum. Cases of this kind are brought in this court with distressing regularity, but may result in the payment of a small sum as well as legal costs of a not inconsiderable size. The bringing of such a case, even in circumstances where dozens of similar cases are brought, does not warrant a personal costs order, without more. Mr Di Michiel's conduct of these proceedings, while of a very poor standard, does not warrant a finding of this nature.

The "no win no fee agreement: did the plaintiff actually win the case?

1. Mr Lloyd alternatively argues that costs orders under s 99 may only be made in respect of costs that are "payable" by the party who is to be indemnified.
2. Has the plaintiff been successful in her claim against the defendant?
3. This entitlement to costs is necessary for the liability for her to pay her lawyers' costs to be invoked. Dr Thornton submits that a judgment, even for $0, is still a judgment. The plaintiff does not, however, have the benefit of a costs order, and one of the gaps in the application brought by the plaintiff and defendant is the request for me to determine costs between them on the basis of success, failure or (perhaps unusually in these proceedings) both of the above.
4. In Harriton v Stephens (2006) 226 CLR 52, Crennan J, with whom Gleeson CJ, Gummow and Heydon JJ agreed, said: "Because damage constitutes the gist of an action in negligence, a plaintiff needs to prove actual damage or loss and a court must be able to apprehend and evaluate the damage, that is the loss, deprivation or detriment caused by the alleged breach of duty. Inherent in that principle is the requirement that a plaintiff is left worse off as a result of the negligence complained about, which can be established by the comparison of a plaintiff's damage or loss caused by the negligent conduct, with the plaintiff's circumstances absent the negligent conduct."
5. I also note the observations of McColl JA in New South Wales v Stevens, set out above.
6. An award of zero dollars is effectively a loss. If there is a "no win no fee" agreement, that would be a loss. If the plaintiff has effectively lost the case, then her lawyers accordingly have no entitlement to fees as the plaintiff has not "won".

Costs of the proceedings and of this application

1. No costs orders were made in the previous judgment. The plaintiff does not have an entitlement to costs until such time as a costs order has been made. No costs order has been sought by the defendant. If such a costs order had been sought, the plaintiff's entitlement to costs would have required satisfaction of the provisions of r 42.35 Uniform Civil Procedure Rules 2005 (NSW). Given the absence of any award, that does appear unlikely to have been an order I would have made.
2. Taking all of the above into account, I am satisfied that the result in these proceedings is not a victory, even a Pyrrhic one, for the plaintiff, but a loss. Accordingly, no entitlement for the plaintiff to costs has been made out. I have, however, reserved all issues of costs for this application and that reservation would permit the plaintiff's solicitors to consider whether they should bring an application for costs against the defendant.

The costs of the defendant

1. The defendant has not sought any costs against the plaintiff, presumably for the reason that she is indigent.
2. While I have considerable sympathy for the position of the defendant in relation to costs in this application, the defendant has elected to support the plaintiff in this application.
3. I have, however, reserved the issue of the costs of bringing this application and any application against any party other than Dr Di Michiel in relation to the hearing.

Dismissal of notice to produce

1. During the hearing, Dr Thornton called on a notice to produce for a wide range of generally described documents which he submitted should have been produced by Mr Di Michiel but which had not been located in the file, the inference being that the file had been doctored in some way. A request was also made for electronic records. The precise nature and ambit of these electronic records was also unclear.
2. The application was made only very shortly before the hearing and in those circumstances I do not intend to go behind Mr Lloyd's statement that these documents were not produced.

Late notice of particulars in the submissions in reply

1. Mr Lloyd submitted that the bringing of allegations concerning his client's conduct in relation to the plaintiff's previous claim (which the plaintiff effectively lost because Mr Di Michiel did not file the claim in time) should not be permitted because it was raised so late as to be procedurally unfair and he could not meet it.
2. I refused this application, principally because the other particulars effectively raised this issue in any event.
3. Mr Lloyd also raised the issue of the admissibility of the judgment and referred to s 91 Evidence Act 1995 (NSW). The parties had already given evidence in the proceedings before me about the circumstances of those proceedings (which Mr Lloyd hinted was similarly in breach of s 91).
4. Where the conduct of litigation by a solicitor for a client is the subject of an application for costs, the principles set out in s 91 need to be read in context. The judgment was permitted to be tendered subject to s 136 restrictions, but the relevant conduct was in any event the subject of evidence in these proceedings.

Objection to the affidavit of Mr Anthony Crowe

1. This affidavit consisted of a list of transcript excerpts. I found them quite helpful and treated it as a submission, although it was formally marked as an exhibit with restrictions under s 136 Evidence Act 1995 (NSW).

The costs in this application

1. I was not addressed in relation to the costs of this application and I propose to reserve them.
2. Without expressing any concluded view, there is much to be said in a case such as the present for each party bearing his or her own costs, and I invite the parties to consider whether further battles concerning legal costs should be embarked upon.

Orders 1. Notice of motion filed on 3 April 2018 dismissed. 2. Costs reserved with liberty to apply.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 October 2018