Lace v Yonan

Supreme Court of NSW|1999-10-22|Before: Mr J

New South Wales Supreme Court CITATION : Lace v Yonan [1999] NSWSC 1072 CURRENT JURISDICTION : Common Law FILE NUMBER(S) : 10566/99 HEARING DATE(S) : 22 October 1999 JUDGMENT DATE : 2 November 1999

S Lace (Plaintiff) PARTIES : Albert Yonan (Defendant) JUDGMENT OF : Master Harrison

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

JUDGMENT (Extension of time to appeal;) Appeal decision of costs assessor; Leave to appeal)

1 MASTER: By amended summons filed 23 April 1999 the plaintiff seeks to appeal from the decision of the costs assessor Mr R J Moyle dated 15 November 1998 pursuant to s 208L and leave to appeal pursuant to s 208M of the Legal Profession Act 1987 (NSW) (as amended) (the Act). The plaintiff also seeks an order extending the time within which to institute this appeal to the date of the filing of the summons pursuant to Part 51A r 3(1) of the Supreme Court Rules. Paragraphs 2, 3, 5, 8, 9, and 10 of the amended summons were not pressed. The plaintiff relied on the affidavit of Terrence Anthony Sullivan sworn 9 March 1999. The defendant relied on the affidavits of his solicitor Douglas Knaggs sworn 31 August 1999. Extension of time to appeal 2 The costs assessor gave his reasons for his decision on 24 September 1998. He issued a certificate of assessment of costs on 15 November 1998. On 25 November 1998 the solicitor acting for the plaintiff forwarded a letter to the costs assessor seeking further reasons for his determination. On 7 January 1999 the plaintiff's solicitors wrote a further letter to the costs assessor seeking a reply to his letter of 25 November 1998. On 10 February 1999 the costs assessor replied to the plaintiff's solicitor directing him to the decision of Attorney General for New South Wales v Kennedy Miller Television Pty Limited (1998) 43 NSWLR 729 and informed the plaintiff's solicitor that he was now functus officio. 3 On 11 March 1999 the plaintiff filed his summons. An amended summons was filed on 23 April 1999. The plaintiff should have lodged his summons by 15 December 1998, however it was actually lodged a little less than three months after that date, and about one month after the costs assessor informed the plaintiff's solicitor that he (the costs assessor) was functus officio. 4 The court has a wide discretion when considering whether or not to extend time to appeal. The ultimate test is to do justice between the parties. As a general rule, time will be extended if there is no prejudice to the other party and appropriate orders for costs or the imposition of other terms of the extension adequately protect their position. 5 The issue raised under s 208L of the Act, which will be referred to in more detail later in the judgment is, in my view, of importance to the profession. The defendant did not demonstrate that he suffered any prejudice caused by the delay. The plaintiff's solicitor filed the summons within about one month after he had been informed that the costs assessor was functus officio. It is my view that justice is best served if the plaintiff is granted an extension of time in which to appeal. History of the matter

(1) On 20 October 1994 the defendant Mr Yonan, (who was the plaintiff in the District Court proceedings) obtained an award of damages in his favour in the District Court, in the sum of $94,967. The present plaintiff (who was the defendant in the District Court proceedings) was ordered to pay Mr Yonan's costs. The solicitors acting for Mr Yonan at the time of the arbitration, were Messrs Smith Monte Costa & Carbone.

(2) On 25 November 1994 Mr Yonan filed an application for rehearing.

(3) On 28 May 1996 Judge Taylor gave judgment in the rehearing in favour of Mr Yonan in the sum of $54,163.

(4) On 4 June 1996 Judge Taylor ordered that the Mr Lace pay Mr Yonan's costs of the rehearing except for the costs of 29 March 1996 which were ordered to be paid by Mr Yonan's solicitor.

(5) Mr Lace has paid Mr Yonan's costs of the rehearing.

(6) In relation to the costs of the arbitration, the plaintiff's current solicitor telephoned Mr Charles Monte of the firm Smith Monte Costa (as it then was) and said to him "Have you rendered a bill of costs to Albert Yonan for the arbitration?" He replied "We have not done that and I am not sure what our position is as Mr Yonan has brought a professional negligence claim against our firm, and it may be that we are not entitled to render a bill for the arbitration." In a further conversation Mr Monte informed the plaintiff's current solicitor Mr Knaggs that "We probably wont be charging any costs for the arbitration but I will make some enquiries of LawCover and the Law Society as to what we can do in relation to disbursements such as counsel's fees." The solicitors who acted for Mr Yonan in the arbitration proceedings have not and may not ever render a bill of costs for the legal services that they provided to him. At this point in time Mr Yonan has no obligation to pay his former solicitors any legal costs or disbursements.

(7) Mr Yonan's current solicitor Mr Douglas Knaggs served the plaintiff's solicitor with a purported bill of costs for assessment which included the legal work carried out by the former solicitors in relation to the District Court arbitration. (8) This "bill of costs" was referred to R J Moyle barrister for assessment.

(9) On 26 August 1998 the plaintiff's solicitor forwarded a letter to the costs assessor seeking to add six additional items to the bill of costs.

(10) On 4 November 1998 the plaintiff's solicitor forwarded a notice of objections to the costs assessor and the solicitor acting for the defendant.

(11) The costs assessor forwarded a letter to the plaintiff's solicitor concerning these additional items. The plaintiff's solicitor never received this letter and consequently did not object to the items. The sum of the items in dispute is $2,950.

(12) On 15 November 1998 the costs assessor issued a certificate of determination and assessed a fair and reasonable amount of costs to be paid to Mr Yonan in the sum of $24,329.04.

(13) On 11 April 1999 the plaintiff filed a summons.

(14) On 23 March 1999 the plaintiff filed an amended summons.

(15) On 11 August 1999 by consent, it was agreed that if either party was to dispute receipt of any of the costs assessor's correspondence they were to notify the other party in writing by 18 August 1999. The plaintiff's solicitor did not notify the defendant's solicitors that they had not received the costs assessor's letter relating to the additional items to be included in the bill.

Appeal from costs assessor's award of $24,329.04 6 The plaintiff submitted firstly, that the assessor erred in law by carrying out the assessment as the defendant had not paid any costs to the solicitors who had acted for him in the proceedings, the subject of the assessment; and secondly, that those solicitors have not rendered an account to the defendant. 7 The current solicitor for the defendant Mr Knaggs says that he followed normal practice. He rendered a bill which covered the costs of the previous solicitor. He was prepared to undertake to the court that any costs received by the plaintiff that were owed to the former solicitors would be paid to them, or used to set off an amount of damages for allegedly not handling the matter properly. It is to be observed that when the former solicitors acted for Mr Yonan he received a higher verdict than he did when his application for rehearing was determined. The current solicitor acted during the determination of the rehearing. There is no evidence to suggest that Mr Knaggs gave an undertaking to the former solicitors to pay their costs at the conclusion of the District Court proceedings. Nor is there any evidence that the costs and disbursements incurred by the former solicitors had been ascertained or agreed upon. 8 Section 208L of the Act provides. "208L Appeal against decision of costs assessor as to matter of law

(1) A party to an application who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the Supreme Court, appeal to the Court against the decision.

(2) After deciding the question the subject of the appeal, the Supreme Court may, unless it affirms the costs assessor's decision: (a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or

(b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application. (3) On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given." 9 In the notice of objections (at p 5) the plaintiff made the following submissions to the costs assessor: "In this matter the Costs Applicant has not paid any costs to his Solicitors in respect to the arbitration and those Solicitors have not even rendered an account to the Costs Applicant and it appears that those Solicitors are unlikely to ever render an account. The effect of proceeding with the Assessment, is to give moneys to the Costs Applicant over and above the damages awarded and thus enable the Costs Applicant to make a profit at the expense of the Costs Respondent. The Costs Respondent therefore submits that the Costs Applicant is not entitled to be indemnified for costs which he has not incurred and further submits that the Costs Assessor not proceed with the assessment or in the alternative not issue a Certificate of Assessment until such time as the Costs Applicant becomes liable for the costs of the arbitration." 10 In a letter dated 8 September 1998 by the plaintiff's solicitor to the costs assessor, the following additional matters were raised: "In his capacity as the current solicitor for the Plaintiff Mr Knaggs has advised that he was forwarded by the Plaintiff's previous solicitors the file in relation to the arbitration proceedings. Mr Knaggs did not perform any of the work in relation to the arbitration and, in fact, was not instructed by the Plaintiff until after the re-hearing of the Arbitrator's Award. In his capacity as the current solicitor for the Plaintiff Mr Knaggs has prepared the Bill of Costs which you have now been asked to assess. We submit to you that seeking to have the costs of the arbitration assessed at this stage is inappropriate and artificial as no costs have been rendered to the Plaintiff by the solicitors who did the work in relation to the arbitration and those solicitors have advised that no such costs might ever be rendered or, alternatively, if they are rendered at some time in the future they will be in a limited amount. As no costs are currently payable by the Plaintiff in relation to the arbitration proceedings we submit that the Plaintiff is not in a position to seek payment of costs (which are in fact a reimbursement for party/party costs) as he has no current liability for any party/party costs. We further submit that at this stage the Plaintiff's liability for party/party costs is a contingent liability and depends on whether or not his previous solicitors seek such costs at any time in the future. We further submit that it is those costs for which the Defendant is and will remain liable in accordance with the Arbitrator's Award. In summary we submit that costs only become so when they have been rendered and that if the person who performed the work chooses not to seek such costs then, "costs" do not come into existence. We submit to you that the Bill of Costs that you have been asked to assess should not be assessed as it is not what it purports to be i.e., "Plaintiff's Bill of Costs Pursuant to Orders made on 20 October 1994". 11 In the costs assessor's letter of 24 September 1998 he sets reasons in paragraphs 8 to 14. "8. the Cost Respondent submits that this matter should not proceed because there is an action afoot between the Costs Applicant and his former solicitors for professional negligence; 9. the writer in a letter dated 9th September, 1998 drew attention to the decision of Isaacs v Cachia (1981) 2 NSWLR 92 and to the decision in Cachia v Isaacs (1985) 3 NSWLR 366. At that time the writer indicated that the costs the subject of the present application were "untainted by negligence"; 10. the writer arrived at the conclusion in (9) above having regard to the pleadings and particulars in the Assessment of Party/Party Costs (CL/90321/1998). At the time of making an assessment in that matter it was patently obvious from the chronology subsequent to 25th November, 1994 (in particular 16 and 18 of that chronology) together with the verdict and judgement of His Honour Judge Taylor DCJ that there was a potential cause of action between the Costs Applicant and his former solicitors for advice which may have been between the Costs Applicant and his former solicitors for advice which may have been given to the Costs Applicant to make an application for rehearing of the matter from the award of the Arbitrator. The particulars (Bill of Costs) at Items 73 - 76, Item 104 and Items 108 -111 indicate settlement negotiations between the parties prior to the rehearing of the matter before His Honour Judge Taylor DCJ; 11. the costs order before the Arbitrator, Mr C Jurd, was an order for costs in favour of the Costs Applicant. It was not an order for costs in favour of the former solicitors; 12. the Costs Respondent submits that if an assessment and determination is made in this matter the Cost Applicant may not account for those costs to his former solicitors. The position is that the determination of party/party costs made in the prior matter (CL/90321/1998) exceeds the amount of party/party costs claimed in this present matter. Any determination made by the writer would off set the Cost Applicant's liability under the previous determination. As between the Costs Applicant and his former solicitors the costs of the former solicitors in respect to costs incurred and subject to the order of the Arbitrator on 20th October, 1994 can be off set against any claim for damages made by the Costs Applicant against his former solicitors for professional negligence; 13. any proceedings between the Cost Applicant and his former solicitors are not relevant to these proceedings because the costs for which the Cost Respondent is liable are not tainted by negligence and are separable from those costs incurred by the former solicitors subsequent to the award of the Arbitrator made on 20th October, 1994; 14. to accede to the submissions of the Costs Respondent would be to deny natural justice to the Cost Applicant." 12 The plaintiff referred to s 199 of the Act which states: "Applications by clients for assessment of costs in bill (1) A client who is given a bill of costs may apply to the proper officer of the Supreme Court for an assessment of the whole of, or any part of, those costs. (2) An application relating to a bill of costs may be made even if the costs have been wholly or partly paid. If the costs have been wholly or partly paid, the application is to be made within the period prescribed by the regulations for the purposes of this subsection. (3) If any costs have been paid without a bill of costs, the client may nevertheless apply for an assessment. For that purpose the request for payment by the barrister or solicitor is taken to be the bill of costs. (4) In this section, "client" includes any person who is a party to a costs agreement relating to the legal services for which the bill of costs is given, other than the barrister or solicitor who gave the bill or who provided the services." 13 As the costs have not been paid, nor has a request for payment by the former solicitor been made s 199(3) does not apply. The definition of the words "bill of costs" appear at s 173(1). It states: "Definitions (1) In this Part: "bill of costs" means a bill of costs for providing legal services, and includes a memorandum of fees; …" 14 Section 192(1) of the Act provides: "Proceedings for the recovery of costs by a barrister or solicitor for providing legal services must not be commenced or maintained against any person unless at least 30 days have passed since a bill for those costs was given to the person in accordance with this division."

15 In Saddington's Legal Practitioner's Act Annotated (Law Book Co, 1937), at p 63, it is said, in the context of delivery of bills: "No order for delivery will be made where the solicitor makes no claim for costs because in such a case there is no bill."

16 The defendant's former solicitors have neither rendered a bill, nor have they indicated that they intend to make a claim for costs. In fact, there is evidence to suggest that they do not intend to charge for their services. There is no bill of costs. 17 Saddington (supra) at pp 63-64 states: "The amount due to the solicitor cannot be ascertained until the amount of the bill of costs has been agreed upon or has been ascertained by taxation…" (now assessment) 18 In other words, costs as between a solicitor and client can only be ascertained either by agreement between them, or by an assessment performed by a qualified costs assessor. There was no agreement between either Mr Yonan or his current solicitor with his former solicitor as to the quantum of costs nor has an assessment of those costs taken place.

19 It is my view a client does not become liable to pay the solicitor's costs until either there is a bill of costs delivered to the client by the solicitor who performed the work or there is an agreement or an undertaking by the current solicitor acting on his or her client's instructions to the former solicitor to pay those costs. The corollary is that a party which has a costs order made against it is not liable to pay costs unless the client has actually become liable for them. While it may be true that the costs order was made in favour of the client not the former solicitor, the fact remains that in the absence of a bill in the proper form being delivered by the former solicitors to the client or an agreement or an undertaking, no costs have become due and payable. 20 Secondly, despite Mr Knaggs' assertion, it is not "normal practice" to render a bill of costs which includes costs of a previous solicitor where that solicitor has neither rendered a bill nor asserted a lien for unpaid costs over the client's documents. Had the previous solicitors asserted such a lien, then it would have been incumbent upon Mr Knaggs to ensure that their costs were adequately secured. However there is no evidence to suggest that any such lien existed. 21 For these reasons I find that the decision of the costs assessor has not erred in law. The appeal should be upheld and the decision of the costs assessor of 15 November 1998 should be set aside. If the former solicitors render a bill of costs in due course that bill of costs may be the subject of a costs assessment application. Leave to appeal on amount in dispute 22 If I am wrong, I turn to consider whether leave to appeal should be granted on the separate issue of disputed amounts which totals $2,950. Section 208M of the Act provides: "(1) A party to an application relating to a bill of costs may, in accordance with the rules of the Supreme Court, seek leave of the Court to appeal to the Court against the determination of the application made by a costs assessor. (2) A party to an application relating to costs payable as a result of an order made by a court or a tribunal may, in accordance with the rules of the court or tribunal, seek leave of the court or tribunal to appeal to the court or tribunal against the determination of the application made by a costs assessor. (3) The Supreme Court or court or tribunal may, in accordance with its rules, grant leave to appeal and may hear and determine the appeal. (4) An appeal is to be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given." 23 In seeking to appeal under s 208M the applicant requires material, other than, or in addition to, a point of law in order to be successful. This section provides that such an application requires leave in accordance with the rules of the court. 24 I have read Master Greenwood's decision in Busuttil v Holder & Anor (NSWSC, unreported 9 August 1996). In particular I agree with his comments on the applicable test for leave. He says: "Thus whilst each application for leave to appeal is to be determined on its merits and I heed the statement of the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 that it is "unnecessary and unwise to lay down rigid and exhaustive criteria" for the grant of leave to appeal, as the circumstances of different cases are "infinitely various"" I can see nothing in what is before me that leads me to a conclusion that I ought to look to the question of leave other than to apply the criteria of an obvious error on the face of the record and substantial injustice done to the plaintiff if the determination of the costs assessor is allowed to stand." 25 The amount in dispute is $2,950. The total allowed by the costs assessor as a reasonable amount was $24,329.04. The amount in dispute is one eighth of the amount of costs allowed. The plaintiff did not comply with directions agreed to by the parties on 18 August 1999 and did not notify the defendant's solicitor that he had not received the costs assessor's letter concerning the additional items. Even if I accept that the costs assessor should not have allowed these costs and take the above matters into account, it is my view that there is no substantial injustice done to the plaintiff if the determination of the costs assessor is allowed to stand. I would have refused leave to appeal pursuant to s 208M of the Act. 26 Costs should follow the event. The defendant is to pay the plaintiff's costs. 27 The orders I make are:

(1) The time to lodge an appeal is extended to 23 April 1999.

(2) The appeal is upheld. The decision of the costs assessor dated 15 November 1998 is set aside.

(3) The defendant is to pay the plaintiff's costs. **********

Last Modified: 11/04/1999 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.

Legal Profession Act 1987(NSW)

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