Ideal Waterproofing Pty Limited v Buildcorp Australia Pty Limited & ors

Supreme Court of NSW|2006-02-07|Before: Sully J

Introduction 1 SULLY J: By a Notice of Motion filed on 12 September 2005 Ideal Waterproofing Pty Limited, (hereinafter "Ideal"), seeks against Dr. David Doyle trading as The Builders Lawyer, (hereinafter "Dr. Doyle"), the following relief: "1. An order pursuant to s99(2) of the Civil Procedure Act, 2005 that the whole of the costs in proceedings 30060/03 as between the plaintiff/applicant and the solicitor for the applicant ("The Builders Lawyer") (the respondent) be disallowed. 2. An order that the solicitor for the applicant ("The Builders Lawyer") (the respondent) in the proceedings pay the applicant's costs of this application. 3. Such other orders as this honourable Court deems appropriate." 2 The form used for this Notice of Motion is prescribed pursuant to the Uniform Civil Procedure Rules made pursuant to the Civil Procedure Act 2005 (NSW), (hereinafter "the CP Act"). Such a form requires the filing party to complete, among others, two sections. One is headed: "Party Details". The other is headed "Further Information About Persons Involved in the Motion who are not Parties to the Proceedings". 3 In the present case the filing party, Ideal, has completed the former section thus: "Parties to the proceedings

IDEAL WATER PROOFING PTY LIMITED BUILDCORP AUSTRALIA PTY LIMITED CAN 074 763 170 First Respondent

Applicant ZURICH AUSTRALASIAN INSURANCE LIMITED Second Respondent

CONSUMER TRADER AND TENANCY TRIBUNAL OF NSW Third Respondent"

Family or Company name: DR. DOYLE T/AS THE BUILDERS LAWYER

Address: PO Box 420 BROADWAY NSW 2007" 4 The "Party Details" as thus furnished reproduce the corresponding details in the originating process by which the proceedings numbered 30060/03 were commenced in this Court. 5 That originating process was a Summons filed on 8 July 2003 by Dr. Doyle then acting for Ideal. The Summons brought into the Court an appeal against certain orders that had been made on 10 June 2003 by the Consumer Trader and Tenancy Tribunal, (hereinafter "the CTTT"). The relief actually claimed in the Summons was: "1. An order that the entirety of the orders of the Consumer Trader and Tenancy Tribunal in this matter made on 10 June 2003 be set aside. 2. The execution and all other proceedings or actions based upon or under the Orders may be stayed until after the hearing of the appeal against the said Orders. 3. Costs. 4. Such further or other order as the court thinks fit." 6 It will be necessary to examine later herein various aspects of the hearing of that appeal and of the orders disposing of the appeal. It is, however, expedient to point out at once that the proceedings which were commenced by the filing of the present Notice of Motion ought to have been commenced, in my opinion, by a Summons originating fresh proceedings by Ideal against Dr. Doyle. The issues which the Notice of Motion tenders for decision have nothing whatsoever to do with any of the parties named as "Defendants/Respondents" in the "Party Details" section of the Notice. That being so, the issues thus tendered by the present Notice of Motion are, in my opinion, not interlocutory to the appeal proceedings numbered 30060/03, and the use of a Notice of Motion rather than of an originating Summons was therefore misconceived. 7 The point is not merely an incidental debating point. The hearing of the Notice of Motion occupied, effectively, two Court sitting days. On both sides of the record the proceedings were not well structured, or well focused, so as to distil clear issues, clearly stated and supported by appropriately structured and focused affidavits and related tenders. The result has been to make unhelpfully complicated and imprecise both the issues which must now be decided, and the evidence available in aid of that exercise.

The CP Act s99 8 Immediately in point are sub-sections (1) and (2) which provide: "(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 …………………………….. (ii) In the case of a solicitor, as between the solicitor and the client, (b) It may, by order, direct the legal practitioner: ……………………………. (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." 9 For the purposes of the present Notice of Motion it is necessary to consider only the issues of serious incompetence, serious neglect, and want of reasonable cause in circumstances for which a legal practitioner is responsible. 10 None of those concepts is defined in section 99 itself, or otherwise by the CP Act. Ritchie's Uniform Civil Procedure NSW suggests that the undefined terms will probably be interpreted having regard to the approach taken in Myers v Elman [1940] AC 282. 11 Myers v Elman was concerned with an order that a successful plaintiff's costs should be paid by the solicitor for the unsuccessful defendants. The jurisdiction thus invoked depended upon legislation that was not expressed in quite the same way as is section 99 of the CP Act. The nature of the jurisdiction and the principles governing its exercise are summarised as follows in the speech of Lord Wright, at 318, 319: "But alongside the jurisdiction to strike off the Roll or to suspend, there existed in the Court the jurisdiction to punish a solicitor or attorney by ordering him to pay costs, sometimes the costs of his own client, sometimes those of the opposite party, sometimes it may be of both. The ground of such an order was that the solicitor had been guilty of professional misconduct (as it is generally called) not, however, of so serious a character as to justify striking him off the Roll or suspending him. ………………………….. The cases of the exercise of this jurisdiction to be found in the reports are numerous and show how the Courts were guided by their opinion as to the character of the conduct complained of. The underlying principle is that the Court has a right and a duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally, …………………… . The matter complained of need not be criminal. It need not involve peculation or dishonesty. A mere mistake or error of judgment is not generally sufficient, but a gross neglect or inaccuracy in a matter which it is a solicitor's duty to ascertain with accuracy may suffice. Thus, a solicitor may be held bound in certain events to satisfy himself that he has a retainer to act, or as to the accuracy of an affidavit which his client swears. It is impossible to enumerate the various contingencies which may call into operation the exercise of this jurisdiction. It need not involve personal obliquity. The term professional misconduct has often been used to describe the ground on which the Court acts. It would perhaps be more accurate to describe it as conduct which involves a failure on the part of the solicitor to fulfil his duty to the Court and to realise his duty to aid in promoting in his own sphere the cause of justice. ………………………… . " 12 Perhaps more to the point in the construction of section 99(1) and (2) of the CP Act are some analyses made by the English Court of Appeal in Ridehalgh v Horsefield [1994] Ch 205. The case concerned aspects of the proper construction and application of section 51(6) and (7) of the Supreme Court Act 1981. The provisions were: "(6) In any proceedings mentioned in sub-section (1), the court may disallow, or (as the case may be), order the legal or other representative concerned to meet, the whole of any wasted costs or such part of them as may be determined in accordance with rules of court. (7). In sub-section (6), 'wasted costs' means any costs incurred by a party - (a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or (b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay …………………… ". 13 Of these provisions, and speaking of general principles, the Court said: "Since the Act there have been two cases which deserve mention. The first is In Re A Barrister Wasted Costs Order (No. 1 of 1991) [1993] QB 293. This arose out of an unhappy difference between counsel and a judge sitting in the Crown Court in a criminal case. It was held on appeal, in our view quite rightly, that courts should apply a three-stage test when a wasted costs order is contemplated. (1) Has the legal representative of whom complaint is made acted improperly, unreasonably or negligently? (2) If so, did such conduct cause the applicant to incur unnecessary costs? (3) If so, is it in all the circumstances just to order the legal representative to compensate the applicant for the whole or any part of the relevant costs? If so, the costs to be met must be specified and, in a criminal case, the amount of the costs. (We have somewhat altered the wording of the court's ruling but not, we think, its effect.)." [231F] 14 Later, and looking in a more particular fashion at the terminology: "improper, unreasonable or negligent", the Court said: "'Improper' means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code. 'Unreasonable' also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner's judgment, but it is not unreasonable. The term 'negligence' was the most controversial of the three. It was argued that the Act of 1990, in this context as in others, uses 'negligence' as a term of art involving the well known ingredients of duty, breach, causation and damage. Therefore, it was said, conduct cannot be regarded as negligent unless it involves an actionable breach of the legal representative's duty to his own client, to whom alone a duty is owed. We reject this approach. ………………………….. But for whatever importance it may have, we are clear that 'negligence' should be understood in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession. In adopting an untechnical approach to the meaning of negligence in this context, we would however wish firmly to discountenance any suggestion that an applicant for a wasted costs order under this head need prove anything less than he would have to prove in an action for negligence : 'advice, acts or omissions in the course of their professional work which no member of the profession who was reasonably well-informed and competent would have given or done or omitted to do;' an error 'such as no reasonably well-informed and competent member of that profession could have made;' see Saif Ali v Sydney Mitchell & Co [1980] AC 198, 218, 220, per Lord Diplock. We were invited to give the three adjectives (improper, unreasonable and negligent) specific, self-contained meanings, so as to avoid overlap between the three. We do not read these very familiar expressions in that way. Conduct which is unreasonable may also be improper, and conduct which is negligent will very frequently be (if it is not by definition) unreasonable. We do not think any sharp differentiation between these expressions is useful or necessary or intended." [at 323D - 233E] 15 Later still, and discussing the topic of the pursuit of a hopeless case, the Court said: "A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he acts for a party who pursues a claim or a defence which is plainly doomed to fail. …………………………………….. . It is not entirely easy to distinguish by definition between the hopeless case and the case which amounts to an abuse of the process, but in practice it is not hard to say which is which and if there is doubt the legal representative is entitled to the benefit of it." [at 233F - 234F]

16 And, finally, speaking of the exercise of the over-arching discretion which undoubtedly attends a decision to make an order, the Court said: "Even if the court is satisfied that a legal representative has acted improperly, unreasonably or negligently and that such conduct has caused the other side to incur an identifiable sum of wasted costs, it is not bound to make an order, but in that situation it would of course have to give sustainable reasons for exercising its discretion against making an order." [at 239F] 17 I propose to deal with the present motion conformably with the principles thus analysed and stated in Ridehalgh, but with two additional riders. 18 The first rider is a body of principle which I take from Dal Pont: Lawyers' Professional Responsibility in Australia and New Zealand (2nd Ed) at 374-375: "Importantly, the jurisdiction to order costs against a lawyer personally is one to be exercised sparingly, 'with care and discretion and only in clear cases', especially where the order sought is one for indemnity costs. This is because, inter alia, it will often be difficult for a court to know all the details and circumstances of the lawyer's instructions. There is no cause for the jurisdiction to be exercised merely because the litigation is decided adversely to the litigant, for otherwise 'those seeking to advance legitimate claims, or pursue legitimate defences might well be deprived of legal representation and access to justice, in consequence, would be impeded'. Nor should the jurisdiction be attracted merely because of the lawyer's bona fide mistake or error of judgment, or where the client has misled the lawyer as to the facts which would otherwise not have justified the action. ……………………………….. To attract this jurisdiction, the lawyer's conduct must have involved a serious dereliction of duty or gross negligence." 19 The second rider is a body of principle which I take from a decision of the Court of Appeal of New Zealand: Harley v McDonald [1999] 3 NZLR 545 at paragraphs [59], [60] and [61]: "[59] An officer of the Court, whose role is to assist in the administration of justice, cannot properly perform that role if falling below minimum levels of competence and care. There is therefore a duty resting on such officers to achieve and maintain appropriate levels of competence and care. If in serious dereliction of such duty, the officer is properly amenable to the costs jurisdiction of the Court. This duty is reinforced by the fact that Parliament has decreed that practitioners, both barristers and solicitors, must perform at a certain level of competence and care, otherwise sanctions are available in terms of ss 106 and 112 of the Law Practitioners Act 1982 . That level is prescribed by giving the disciplinary tribunals power to make orders if of opinion that the practitioner has been guilty of negligence or incompetence in a professional capacity, and that the negligence or incompetence has been of such a degree or so frequent as to reflect on the practitioner's fitness to practice as a barrister or solicitor or as to tend to bring the profession into disrepute. [60] It is neither necessary nor desirable to attempt to define the level of incompetence or negligence at which the costs jurisdiction can be invoked beyond saying that such incompetence or negligence must amount to a serious dereliction of duty to the Court. There is no necessary correspondence between the level at which disciplinary sanctions are possible under the Law Practitioners Act 1982 and the level required to constitute a serious dereliction of duty to the Court. It can be said, however, that the levels will often coincide, and incompetence or negligence falling short of a disciplinary level under the Act, will not ordinarily amount to a serious dereliction of duty to the Court. [61] The English 'wasted costs' legislation gives the Court jurisdiction if the legal representative has acted 'improperly, unreasonably, or negligently'. The United Kingdom Parliament has determined that standard to be appropriate, but in terms of the inherent jurisdiction of the High Court in New Zealand we do not consider the standard should ordinarily be set lower than that adopted by our Parliament for the purposes of the Law Practitioners Act 1982 . For this Court to adopt the United Kingdom approach would come close to legislating. …………………………………"

The Proceedings 30060/03 20 The substantive claims made by the originating Summons have been set out at paragraph 5 hereof. 21 The proceedings thus commenced by Ideal came on for hearing on 19 August 2004 before Sperling J. His Honour reserved his decision, which he handed down on 27 August 2004. 22 Sperling J's decision concerned orders which the CTTT had made, on 10 June 2003, in the following terms: "1. That the claim and cross-claim in this matter be transferred to the District Court of NSW pursuant to section 23 of the Consumer, Trader & Tenancy Tribunal Act 2002. 2. That each party bear their own costs of the motions listed and heard today, 10 June 2003. 3. That costs in the proceedings apart from the costs of and incidental to today's motions be reserved. 4. That the respondents file and serve within 42 days of today's date any application(s) they propose should be heard and determined with this application (claim and cross-claim)." 23 The orders made by Sperling J were: "(1) Appeal allowed in part; (2) Order 1 of the Consumer, Trader and Tenancy Tribunal made on 10 June 2003 set aside; (3) The application to transfer the proceedings in the Tribunal to the District Court be dismissed; (4) Each party to bear its own costs of the proceedings in this court." 24 What has now to be decided is whether the costs now proposed to be charged by Dr. Doyle to his then client, Ideal, pursuant to Sperling J's order (4) should be disallowed in whole or in part pursuant to section 99(1) of the CP Act.

The Resolution of the Present Motion 25 Having regard to the way in which the hearing of the Motion proceeded, it is useful to analyse the present proceedings as follows:

[1] Ideal, the moving party, carries the burden of proof.

[2] The relevant standard of proof is the normal civil standard: that is to say, proof on the balance of probabilities.

[3] That concept has to be understood in the way explained by Dixon J in Brigenshaw v Brigenshaw (1938) 60 CLR 336 at 361, 362: "The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. ………………………….. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect references. " [emphasis added]

[4] What Ideal is thus called upon to prove are all of the following: [4.1] Some fact, or some concatenation of facts, sufficient to satisfy any or all of the statutory criteria of, relevantly, costs incurred by Dr. Doyle by serious neglect; by serious incompetence; or by want of reasonable cause in circumstances for which Dr. Doyle was responsible. [4.2] Causation in the sense that the costs so incurred were incurred in connection with the proceedings 30060/03 in this Court. [4.3] Some fact, or some concatenation of facts, sufficient to justify the making, on Ideal's present Motion, of an order disallowing, either in whole or in part, Dr. Doyle's proposed solicitor/client costs of acting in the proceedings before Sperling J.

[5] The present Motion is not, either de iure or de facto, a proceeding by way of appeal from either the whole, or any part, of the decision of Sperling J. The present Motion is a stand-alone application by Ideal for relief against Dr. Doyle in respect of costs that will be, otherwise, payable on a solicitor/client basis by Ideal to Dr. Doyle in respect of the latter's professional services in connection with the institution and the subsequent conduct of the appeal proceedings that Sperling J decided.

[6] Any evidence about the actual decision of Ideal to appeal against the orders of the CTTT is slender at best. There is no evidence from the proper officer of Ideal. There is no evidence, - by which I mean evidence in proper affidavit form, - from Dr. Doyle. There is some evidence in the form of correspondence annexed to an affidavit of Mr. Mark Field, the solicitor having carriage, in Ideal's interest, of the present Motion.

[7] Evidence in connection with the actual conduct of the appeal proceedings before Sperling J is available in the form of a transcript of the hearing of those proceedings: see Exhibit A(1) in the hearing of the present Motion. Some of the correspondence annexed to Mr. Field's affidavit is relevant also on this further topic.

[8] As to the institution of the appeal which Sperling J ultimately decided, annexure "K" to Mr. Field's affidavit of 11 October 2005 is a copy of a letter written on 27 June 2003 by Dr. Doyle to Mr. Ian Smith of Ideal. Mr. Smith was, on my understanding of the fact, the officer of Ideal who was authorised to represent Ideal in its relevant dealings with Dr. Doyle.

The letter reads, formal parts omitted: "Further to our telephone discussions of recent date and your several faxes indicating the great stress and discomfort that this suit by Buildcorp has in respect to you and your family, we regret to advise you that prior to reasons which we received yesterday, the Tribunal on the last occasion has resolved that the matter should be transferred from the Tribunal (Consumer Tenancy and Trader Tribunal) to the District Court. The orders and the decision with its reasons are annexed here. The upshot would appear to be as follows, that you are being sued for the original amount [some $106,000,00 plus costs] (which are likely to exceed $35,000.00). Presently there is no offer from the Buildcorp parties with Zurich Insurance with respect of payment of money for you. We have received a letter which is copied to you from their solicitors since the Tribunal hearing in which they request an offer from you. If you have an appreciable sum that you feel that you would wish, for commercial reasons, to offer, we would suggest that you let us know an appropriate figure presently. If, on the other hand, as we expect, you are not in a position to make any appreciable offer, then you must consider your alternatives. We would suggest that you make an appeal against this ruling to the Supreme Court. To transfer to the District Court will take more costs and more time, approximately we would estimate $35,000.00 worth of costs and perhaps a further 15 months. If you succeed in the Supreme Court, then your costs should be much lower when the matter returns to the Tribunal. If you do not succeed in the Supreme Court, it may well be that you will force the other side to become more reasonable in the offers that they would accept to end this litigation. We are not in any position to motivate the other parties. A loss in the Supreme Court is likely to be the most motivating factor that can be imagined to force your opponents to settle. Provided over the next two months you can bring your present account into balance, we would not charge you for the appeal unless we were successful in the Supreme Court. If we did succeed we are entitled then to charge an additional premium of 25% upon the fess charged. Upon success in the Supreme Court or, in the event that you do not wish to appeal to allow the matter to be transferred to the District Court, our costs will continue as certained (sic) in our cost agreement. Please do not hesitate to let us know of any queries. I will be available in the afternoon on 1st July 2003 but away prior to that. Any decision on an appeal must be made before 5th July 2003."

[9] Annexure "L" to Mr. Field's affidavit is a copy of a letter written on 17 July 2003. It is clear from the letter that there had been further relevant correspondence between 27 June 2003 and 17 July 2003; but that further correspondence is not in evidence.

The letter reads, formal parts omitted: "We refer to your letter of today's date which we imagine was in relation to your receipt of our letter of 4 July 2003. We understand that you must find the present circumstances very irksome and that you are going ahead knowing that you may not succeed on the Appeal. At least you have the consolation that you will not have to pay our fees if we should not succeed on the appeal. Otherwise, if you wish to make an offer to settle that can be done. However we have resolved that you do not wish to do so, and that this, in any event, may not be the right time. If you go to the press with allegations which may be difficult to prove, or go to the press at all, unfortunately you may only attract further costs and expense, which we, for instance, would not be able to carry, in addition to the appeal work."

[10] Annexure "M" to Mr. Field's affidavit is a collection of material copied and sent to Dr. Doyle by the solicitors then acting for the parties which Ideal had joined as defendants in its claim in the CTTT. The material is covered by a letter dated 21 April 2004. That letter conveys the following proposals for consent orders disposing of the appeal proceedings numbered 30060/03: "In an effort to reduce the issues in dispute and to limit the further costs of these proceedings to all parties Buildcorp Australia Pty Limited ("Buildcorp") and Zurich Australian Insurance Limited ("Zurich") propose the following course of action: 1. Ideal agrees to its appeal being dismissed and the proceedings being transferred, by consent, to the Consumer Trader and Tenancy Tribunal (the "CTTT"); 2. proceedings by Ideal dismissed as against Zurich in respect of the proceedings to be transferred to the CTTT; 3. Ideal's and Buildcorp's costs of the proceedings before the Supreme Court be reserved and determined by the CTTT; 4. Zurich's costs of defending the proceedings brought on behalf of Ideal, in both the CTTT and the Supreme Court, be reserved and argued at the conclusion of the proceedings transferred to the CTTT; and 5. the proceedings transferred to the CTTT continue purely as a building dispute between Ideal and Buildcorp without reference to any issue of subrogation."

[11] On 10 June 2004 Dr. Doyle wrote again to Mr. Smith. So far as is now relevant that letter, which is annexure "N" to Mr. Field's affidavit, reads: "We note that the other side has not made an offer - the only 'offer' is a proposal that Ideal Waterproofing concedes everything in respect of the appeal. This correspondence, which is enclosed, was originally faxed to us after the time of expiry. You have told us that you do not have the money to pay the $102,000 that Buildcorp claim and that you have no money to pay us for anything other than our disbursements. If the appeal fails, they will seek their costs, which will be considerable and will include the costs in the CTTT. None of this has been brought about by us as you know. We rate your chances with the appeal as reasonable, but we can say no more than that."

[12] On 1 September 2004 Dr. Doyle wrote to Mr. Smith a letter reporting on the outcome of the appeal hearing by Sperling J. It is annexure "O" to Mr. Field's affidavit. It is a lengthy letter, but I quote it, formal parts omitted, because it catches the flavour of much of what was put by Dr. Doyle at the hearing of the instant Motion: "The Supreme Court has recently allowed our appeal against the orders of the CTTT Transferring this matter to the district court in this way one can say since it was our appeal we won the appeal. We have been, in the terms of our cost agreement, successful. However the appeal was conducted in an unusual fashion. The judge informed the parties that he felt they should come to an agreement in relation to the appeal since he thought he would be finding fault affectively with both sides. An effort was made to see whether there could be an agreement in relation to the appeal with the other side, but the other side, determined that they wanted to run the appeal. In the event, the appeal was heard and the judge made a decision. The judge formally said to us that he would not call upon us to address him. In other words we would not be heard by his Honour, having indicated that he proposed to allow the appeal. On the other hand his Honour did invite submissions on cost. In the context of a successful appeal and the way it was run, we suggested that if he did not intend to follow the usual rule that the winner should obtain its costs then he might consider that each party should bear its own cost of the appeal. We were concerned that the other side would pursue its application for indemnity costs. In the event his Honour found the appeal although won by the appellant Ideal Waterproofing would be won on the basis that both parties should bear there (sic) own costs of the hearing of the motion the (sic) below and of the appeal in the Supreme Court. Given that our costs are in the order of $27,000 this is a less then (sic) satisfactory outcome but not as unsatisfactory of loosing (sic) the appeal and having to pay the other sides (sic) cost. His Honour, not having heard from us, naturally could not have the benefit of our submissions in relation to the matter as a whole and based his decision, we feel, upon a limited view of the parties (sic) position. We enclose a copy of the Judgment for you to read in due course (sic) in it you will see his Honour has commented that we had no need to bring an action against Zurich since they had no right to bring a case in their own name against Ideal Waterproofing. This may well be the view that a Supreme Court Judge takes 3 years after the event, but to our mind there is no explanation of his Honours (sic) gratuitous comments. Similarly we find that his Honour appears not to understood (sic) the context in which we are endeavouring to show that Buildcorp both uninsured, unregistered and unlicensed as a builder at all times material. (sic) Amongst the many aspects of that question (and there are at least 3), his Honour appears to have overlooked the fact that both of those matters are essentially relevant on the tribunals' practice in the past on the issue of whether or not Buildcorp having breached the Home Building Act in such a substantial fashion is to be permitted to proceed against a Sub contractor in Ideal Waterproofing in these circumstances, where it is apparent that no attempt was made by Buildcorp to abide by the terms of the unsigned contract in so far as notice and dispute resolution was concerned. The matter is now to return to the CTTT for determination effectively of Buildcorps (sic) claim against you in the amount of $122,000. It is likely that the cost of these proceedings will be at least $25,000. In these circumstances we feel that were a compromise possible it may prove to be the less risky course. This case appears to be an example of where an unregistered, uninsured and unlicensed builder can recover against a Sub contractor in relation to alleged defects which have occurred through the failure of the main contractor to give notice to the subcontractor of its intent to rectify. This would seem to us to be a very unjust outcome. It is our view that the plain intent of the act (sic) is that builders should be both insured, registered and licensed if they are to perform residential work, say for the past 2 years when residential building work in excess of 3 story's (sic) has been exempted from these requirements of the act. We shall discuss these matters with you in conference this morning."

[13] The available evidence sheds no light whatsoever upon the further conferences to which annexure "O" refers. Neither is there any evidence of what actually caused Ideal to make its present application about a year later, except for an uninformative paragraph in an affidavit of Mr. Field sworn on 9 September 2005. That paragraph reads: "10. I am instructed the reason this application was not brought earlier is that Ian Smith was unaware of Ideal's possible rights until he sought independent legal advice."

[14] There is in evidence Terms of Settlement which were lodged with the CTTT on 24 November 2004. In essence, Ideal agreed to pay $2,000 towards the costs of one of the other parties; and all claims and cross-claims then current in the CTTT were dismissed. The Terms of Settlement are expressed as having been agreed without admission of liability.

[15] Sperling J was very critical of the course of proceedings in the CTTT, that course having given rise to the appeal proceedings that were heard by his Honour. It will suffice to quote the following passages from his Honour's reasons: "60. A good deal of what has been done in relation to these proceedings on behalf of the respective parties has been misjudged and mismanaged. Ideal's initial application for an order declaring it had no liability to Zurich served no purpose. Zurich's cross-claim was misconceived and hopeless. Ideal's earlier application for orders which was dismissed by the Tribunal was redolent with misconception. Zurich's cross-claim was relied upon as a reason for transferring the proceedings to the District Court notwithstanding that the claim was unsupportable, as counsel properly conceded at the hearing before me. The application for further orders made by Ideal was utterly without merit. 62. So far as concerns the costs of the proceedings in this court, it is apparent that both sides have contributed to a state of affairs culminating in the order transferring the proceedings to the District Court. In particular, Buildcorp and Zurich contributed to the Tribunal's erroneous decision to transfer the proceedings to the District Court by relying on an asserted need for determination of Zurich's cross-claim when it ought to have been apparent that the claim could not possibly succeed there (or anywhere). That alone, it seems to me, disqualifies Buildcorp and Zurich from recovering an order for the costs of the proceedings in this court irrespective of other considerations. 63. The appropriate order is that proposed by Ideal's solicitor, namely, that each party should pay its own costs of the proceedings in this court."

[16] These observations have caused Dr. Doyle, not surprisingly it might be thought, to express a great deal of affront and indignation which he articulated at length both in his written submissions and in his oral submissions which have been recorded and transcribed.

I decline to become entangled in these controversies. I say again: I am not hearing an appeal from the decision of Sperling J; and I am certainly not conducting an inquiry into any perceived short-comings of the CTTT.

[17] Is there, it must then be asked, credible evidence which, if accepted, establishes to the requisite standard all of the matters as enumerated in [4] above?

I have no hesitation in saying that, in my opinion, there is not. This is an application, if ever there was one, where the supporting material put before the Court might be thought to typify what Dixon J had in mind when speaking of "inexact proofs, indefinite testimony or indirect references" .

What seem to me to be the true issues tendered by the present Motion appear to have occurred to the parties, if at all, as issues incidental to a re-visiting of the tangled and obtuse course of proceedings in the CTTT. The combination of the use of a Notice of Motion rather than of a Summons; and a total absence of evidence from some appropriate officer of Ideal about the institution and subsequent conduct of the appeal proceedings heard by Sperling J, seems to me to leave the Notice of Motion unsupported on critical matters by relevant and credible evidence.

[18] I propose, therefore, to make presently an order dismissing the Notice of Motion.

I add, however, this: I wish it to be completely clear that such an order is not intended to convey, and should not be represented by anyone as in fact conveying , any kind of approval of the way in which the parties before the CTTT conducted the litigation there pending.

The Costs of the Present Motion 26 I reaffirm, without repeating in detail, what is said in paragraph 7 hereof. If further support for those views be thought necessary, then I believe that a fair reading of the transcript of the two day hearing of the Motion will readily provide it. 27 In those circumstances, it seems to me that justice would best be done by leaving both Ideal and Dr. Doyle to pay their own respective costs.

[2] Each party to the Notice of Motion is to pay its own costs of and incidental to the Motion.

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.

CITATION : Ideal Waterproofing Pty Limited v Buildcorp Australia Pty Limited & ors [2006] NSWSC 155

Myers v Elman [1940] AC 282 CASES CITED : Ridehalgh v Horsefield [1994] Ch 205 Harley v McDonald [1999] 3 NZLR 545 Brigenshaw v Brigenshaw (1938) 60 CLR 336

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