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[2011] NSWSC 365
Supreme Court of NSW
2011-03-28
Harrison J, Hoeben J
Original judgment source is linked above.
Judgment 1HIS HONOUR : On 11 March 2011, I vacated the hearing in this matter, which had been scheduled to commence on 14 March 2011. I reserved the costs thrown away or occasioned by reason of the adjournment. These reasons deal with that issue.
Background 2The plaintiff sues his former solicitors for professional negligence. It is for present purposes unnecessary to recite the details of the claims that he makes, other than to observe that he frames his causes of action in contract and in tort. 3Registrar Bradford listed the matter for final hearing commencing on 14 March 2011 when it came before him on 30 September 2010. It was given an estimate of between seven and ten days. The Registrar made directions at that time in accordance with Final Orders of Practice Note SC CL 7. Drexler & Partners then represented the plaintiff. However, that firm served a notice of intention to cease acting for the plaintiff on 10 November 2010. A notice of ceasing to act was served on 23 November 2010. Problems then developed in the plaintiff's camp. 4The proceedings came in due course before Hoeben J on 8 December 2010. The plaintiff appeared in person. He informed the Court that he had retained a nominated firm of solicitors to appear for him. That firm later informed the defendants that the plaintiff had not in fact retained them. 5On 11 January 2011 the defendants' solicitor wrote a letter to the plaintiff in which they expressed some concern about the state of readiness of the proceedings for hearing, having regard to the plaintiff's failure to comply with some of Registrar Bradford's earlier directions. They threatened to re-list the matter before Hoeben J if no satisfactory response to their letter was received. No reply to that letter was received from the plaintiff. 6The defendants' solicitors again wrote to the plaintiff on 25 January 2011 advising that they had written to the Court seeking to have the matter re-listed. Before that occurred, Mr Clough, the plaintiff's newly retained and now current solicitor, telephoned the defendants' solicitor advising that he had been approached by the plaintiff to appear for him in the proceedings. The plaintiff did not have the file, which was with his former solicitors. They required an undertaking as to their fees before they would release it. An application to get the file was scheduled to be heard on 9 February 2011. Mr Clough said in the telephone conversation that he believed that it was impossible for the matter to proceed on 14 March 2011 and that he anticipated a need to apply for an adjournment. This was some five weeks or so before the trial was due to commence. Mr Clough's prediction was accurate. 7The matter came before Registrar Bradford on 9 February 2011. The plaintiff's former solicitors were ordered to produce their file, subject to some conditions, by no later than 5.00pm the following day. After some argument the Registrar granted the parties liberty to apply for the matter to be re-listed before Hoeben J, but not before Mr Clough had had an opportunity to review the file and liase with the defendants' solicitor. 8On 22 February 2011 the defendants' solicitor wrote to Mr Clough confirming that the proceedings had been listed before Hoeben J for directions on 24 February 2011. The letter sought further detailed particulars and drew attention to the plaintiff's failure to comply with certain previous orders. Mr Clough attended the directions hearing on 24 February 2011 and informed his Honour that he had only been approached by the plaintiff to appear for him as recently as January that year. He said that he had received 16 boxes of files the previous week but more documents were expected. He expressed the view that the plaintiff's loss of opportunity case would appear not to have been properly considered by any previous solicitors and that he had instructions to retain a forensic accountant to assist with it. He indicated that he took objection to some of the material requested by the defendants in their solicitor's recent letter. Mr Clough provided the defendants with a schedule of damages. 9Between 28 February and 4 March 2011, several letters were exchanged between the solicitors. The matter returned to Hoeben J on 7 March 2011. The plaintiff's representative informed his Honour that he had not seen all of the relevant witness statements or other documents necessary to permit him to form a view about the readiness of the matter and he confirmed that the plaintiff proposed to serve a report from an accounting expert. His Honour expressed a preference for retaining the hearing dates and indicated that it was up to the plaintiff's representatives to seek to vacate the hearing if that appeared to be necessary. His Honour confirmed the hearing dates and made no order as to costs. 10Mr Clough advised the defendants' solicitor on 9 March 2011 that he had instructions to apply for an adjournment. As anticipated, he had not been able to prepare the matter for hearing in the time available to him since he came into the matter. The defendants' solicitor foreshadowed that they would apply for costs in those circumstances, estimated to be in the order of $55,000. The application came before me two days later as earlier indicated.
Consideration 11Since the application that came before me to vacate the hearing, it has come to light that the first defendant is an undischarged bankrupt. The plaintiff did not become aware of that fact until advised of it by the defendants' solicitor on 17 March 2011. They had themselves only been informed of that fact, presumably by the first defendant, on 14 March 2011, the scheduled first day of the hearing. The first defendant's estate had apparently been sequestrated as long ago as 20 August 2008. 12The plaintiff contended that in these circumstances an application to the Federal Court pursuant to s 58(3)(b) of the Bankruptcy Act 1966 for leave to proceed against the first defendant would have been necessary on that day and that it would itself inevitably have interrupted the trial. In the events that have occurred, such an application was made to the Federal Court and leave to proceed was granted. That process, however, took some weeks. 13The defendants argued that the grant of leave nunc pro tunc was a mere formality and would not, or at least should not, have unduly interrupted the hearing, even though notice of the first defendant's bankruptcy had not been given until very late in the day. They even contended that leave was unnecessary having regard to the terms of s 82(2) of the Bankruptcy Act because the plaintiff sued for unliquidated damages arising otherwise than by reason of a contract. Such damages were not provable in the first defendant's bankruptcy. However, that contention was not pressed with any vigour as the plaintiff also sued for breach of the first defendant's retainer in respect of which claim leave to proceed arguably became significant. 14The competition for costs therefore became one between the following interests. One the one hand, a plaintiff who was through his own fault (although not because of the fault of his new solicitor or counsel) not ready to proceed to a trial, thereby necessitating an adjournment application that was only made on the last working day before the scheduled commencement of the hearing, even though commendably foreshadowed somewhat earlier. On the other hand, defendants who were not procedurally at fault and who were ready to proceed with the hearing, but whose failure to advise of the bankruptcy of one of them would in all likelihood have necessitated, or at least occasioned, an application to vacate the hearing in any event. 15In my opinion, the requirement to apply for leave to proceed because of the first defendant's bankruptcy would inevitably have led to the hearing being vacated. It is all very well to point to the regularity with which an order granting leave is usually made in cognate circumstances, so that such applications appear on one view to be little more than a formality: see, for example, Sturdy Components Pty Ltd v Trustee of the Bankrupt Estate of Sturt [2000] FCA 884 per Burchett J. However, I do not accept, and it would have been at least incautious of the plaintiff's solicitors to assume, that every such application for leave to proceed is necessarily a foregone conclusion. The solicitors for the plaintiff could have maintained the hearing and continued with the trial without first applying for leave to proceed but only at their peril. The wisdom of hindsight, revealing that the application for leave was ultimately uncontroversial, should not be permitted to distort the significance of what confronted the plaintiff or erroneously to understate the potential consequences. In fairness to Mr Braham of senior counsel, who appears for the defendants, he tacitly and quite properly acknowledged that fact in the course of his clear and helpful submissions. 16A party applying for an adjournment occasioned by that party's own fault, and without fault or countervailing considerations on the other side, would ordinarily, if not usually, be ordered to pay the costs of the other side thrown away or occasioned by the adjournment. The plaintiff obviously accepted that general proposition. In the present case, however, there was a countervailing consideration. The first defendant ought to have disclosed his status as an undischarged bankrupt and very much earlier than he did. The fact that he may have been indemnified by a professional indemnity insurer with respect to the plaintiff's claim does not change that. The proceedings were commenced in the very same year in which the first defendant's estate was sequestrated and no mention of it was made until after the hearing was vacated. In my experience it was inevitable that the hearing would have been vacated if it had commenced as expected and the first defendant had revealed his status only on the first day. The likelihood that the defendants, or at least one of them, would have been ordered to pay the costs wasted in those circumstances would have been high.
Conclusion and orders 17The plaintiff submitted that the fairest order in the circumstances would be either that each party pay and bear his or their own costs or alternatively that there be no order as to the costs of the vacated hearing. The defendants continued to contend that the plaintiff should pay their costs. It appears to me that the competing contentions of the parties have equal, or at least comparable, force and my orders should reflect that impression. 18I am of the view that the costs thrown away or occasioned by reason of the vacated hearing should abide the final outcome in the proceedings. Those costs should accordingly be the costs in the cause.
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: 03 May 2011
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