Lawrence v Nikolaidis

[2003] NSWCA 129

Court of Appeal (NSW)|2003-07-02|Before: Meagher JA, Beazley JA, Hodgson JA, Sully J

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Court

Court of Appeal (NSW)

Decision date

2003-07-02

Before

Meagher JA, Beazley JA, Hodgson JA, Sully J

Source

Original judgment source is linked above.

Judgment (68 paragraphs)

[1]

CITATION : Lawrence v Nikolaidis [2003] NSWCA 129 HEARING DATE(S) : 14/05/03 JUDGMENT DATE : 2 July 2003

[2]

JUDGMENT OF : Meagher JA at 1; Beazley JA at 13; Hodgson JA at 14 DECISION : 1. That the appeal be allowed; 2. That the respondent to pay the appellant's costs of the appeal and to have a Suitors' Fund Act certificate if otherwise entitled; 3. That the amount of the assessment of costs be reduced by $5,000.00 to $22,409.56 as at 22 May 2001.

[3]

CATCHWORDS : Assessment of costs - Expenses recoverable by witnesses generally - Costs recoverable by self-represented solicitor-litigant Legal Profession Act 1987 LEGISLATION CITED : Limitation Act 1969 Builders Licensing Act 1971 Local Court (Civil Claims) Act 1970 Cachia v Hanes (1994) 179 CLR 403 Atlas Corporation Pty Limited v F G Kalyk (unreported NSWCA 12/02/01) Guss v Veenhuizen [No. 2] (1976) 136 CLR 47 London Scottish Benefit Society v Chorley (1884) 13 QBD 872 at 875; 877 Buckland v Watts [1970] 1 QB 27 at 35 Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd [2002] NSWSC 838 Kowal v Zoccoli (2002) 4 VR 399 Petrunic v Barnes [1989] VR 927 CASES CITED : Secretary Department of Foreign Affairs v Boswell (1992) 39 FCR 288 Brott v Almatrah [1998] 2 VR 83 Walton v McBride (1995) 36 NSWLR 440 Kerridge v Foley (unreported NSWSC 19/08/70) Chanter v Blackwood (No. 3) (1904) 1 CLR 456 Howes v Barber 18 QB 588 Anthony v Walshe (1888) 22 LR 619 Cachia v Isaacs (unreported NSWCA 23/3/89) Russo v Russo (1953) VLR 57 at 67 Australian Blue Metal Ltd v Hughes & Ors (1970) 2 NSWR 119 Wayne Lawrence PARTIES : v M D Nikolaidis & Co FILE NUMBER(S) : CA 40803 of 2002 COUNSEL : A: B Zipser R: J K Chippindall SOLICITORS : A: N/A R: M D Nikolaidis & Co

[16]

Wednesday 2 July 2003 WAYNE LAWRENCE v M D NIKOLAIDIS & CO Judgment 1 MEAGHER JA: This is an appeal on the unexciting question of the taxation of costs. 2 By statement of liquidated claim filed in the Manly Local Court and dated 2 October 1997, the claimant, Mr Lawrence, sued the opponent, Mr Nikolaidis, a solicitor who trades under the name of Nikolaidis & Co, for $38,000 for work done. The proceedings were defended. The learned Magistrate who heard the proceedings found for the defendant, for whom he entered judgment. He ordered that the claimant pay the opponent's costs, assessed on the basis of a two days' full hearing. 3 Mr Lawrence appealed to the Supreme Court against the Magistrate's decision. That appeal was dismissed with costs. 4 In the August-November 1999 period, Mr Nikolaidis, the opponent, submitted two bills of costs to the claimant, one in respect of each of the above proceedings. Each bill was referred for the assessment of Mr Michael Robinson, a costs assessor. 5 Mr Lawrence objected to nearly every item on both bills, including an objection that Mr Nikolaidis could not recover costs for representing himself. Mr Robinson determined all necessary questions, substantially reduced the bills and issued a certificate. He gave reasons for his findings. 6 Mr Lawrence lodged an application for a review in the Supreme Court, which was referred to a review panel, as provided in the Legal Profession Act. The panel upheld Mr Robinson's decisions. 7 Not to be deflected from his determination to prolong the proceedings apparently endlessly, Mr Lawrence then filed a summons seeking to set aside the decisions of both Mr Robinson and the review panel. This summons was heard by Master Harrison, who considered all the evidence, the history of the matter, and all legal questions which arose from the position of what costs were properly allowable to a solicitor who acted for himself. Master Harrison dismissed the summons with costs. She could discover no error of law. 8 This Court, perhaps unwisely, granted leave to Mr Lawrence to appeal, but limited the leave to the question whether a solicitor acting for himself is entitled to charge for all reasonable expenses or only those which required the exercise of professional legal expertise. In my view, the latter is the correct view. This is supported not only by general principle but also by the decision of the High Court in Cachia v Hanes (1994) 179 CLR 403. 9 Mr Zipser, learned counsel for the appellant, who said everything which could possibly be said on behalf of his client, was able to point to a heresy in the rule as enunciated by Mr Robinson, who said: "The law does not prevent him [ scil . a solicitor] from recovering his reasonable professional costs in acting for himself in litigation…. I consider that the proper approach to assessing costs in this case was to compensate the solicitor for time properly spent in preparation of his defence". 10 So put, the law is mis-stated. The principle has nothing to do with the broad question of reasonableness; it has everything to do with the narrower question of whether the item in respect of which costs are claimed can be accurately classified as one requiring the exercise of professional skill. 11 However, mercifully, Mr Robinson did not follow his own misdirection. Mr Zipser was unable to point to a single example of an item of costs allowed on a wrongful basis. 12 The appeal should be dismissed; and, once again, with costs. 13 BEAZLEY JA: I agree with Hodgson JA. 14 HODGSON JA: On 11 July 2002, Master Harrison in the Common Law Division dismissed an appeal by the appellant Wayne Lawrence under s.208L of the Legal Profession Act 1987 (the Act) against a decision of a costs assessor, and also dismissed an application for leave to appeal under s.208M of that Act. 15 The appellant applied for leave to appeal to this Court from that decision; and on 10 December 2002, leave to appeal was granted, confined to one matter, which I will identify later.

[17]

CIRCUMSTANCES 16 On 2 October 1997, the appellant commenced proceedings against the respondent Leon Nikolaidis (identified in the appeal papers by the name of the firm of which he is the sole principal) in Manly Local Court claiming $38,000.00 plus $24,293.45 interest for work alleged to have been done in relation to the building of the respondent's home between 1988 and 1992. 17 By his Amended Defence dated 7 November 1997, the respondent denied any contract, denied the doing of work, and also relied on s.14 of the Limitation Act and s.45 of the Builders Licensing Act. 18 The proceedings were heard over two days in the Manly Local Court, namely 13 October 1998 and 10 May 1999. The appellant was unrepresented, while the respondent acted as his own solicitor. The case was conducted on behalf of the respondent in court by a barrister, T.S. Hale. The appellant gave evidence in the case, and was cross-examined by Mr. Hale. At the end of the appellant's case, Mr. Hale submitted that the respondent had no case to answer, and this was upheld, on the basis of s.45 of the Builders Licensing Act. The Local Court made the following order: Claim struck out. Verdict for the defendant. Plaintiff to pay defendant's costs to be assessed pursuant to s.34(1)(c) on basis of two full days hearing. 19 The reference to s.34(1)(c) was a reference to a provision of the Local Courts (Civil Claims) Act 1970, s.34(1) of which provides as follows: 34(1) Subject to this Act and the rules, and subject to any other Act: (a) costs in or in relation to an action shall be in the discretion of a court, (b) a court has full power to determine by whom, to whom and to what extent costs are to be paid in or in relation to an action, and (c) a court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis. 20 In about June 1999, the appellant appealed to the Supreme Court from that order of the Local Court. On 6 September 1999, Sully J dismissed this appeal and ordered the appellant to pay the respondent's costs. 21 On 7 August 1999, the respondent served a Bill of Costs on the appellant in relation to the Local Court proceedings. The amount of costs totalled $29,575.30, the amount of disbursements (mainly Counsel's fees) totalled $12,480.40, and the total of the bill was $42,055.70. 22 On 5 November 1999, the respondent served a Bill of Costs on the appellant in relation to the proceedings in the Supreme Court. The costs in this bill totalled $4,533.50, the disbursements totalled $3,149.20, and the total of the bill was $7,682.70. 23 The bills identified items of work as having been carried out either by "partner" (since the respondent was the sole principal of his firm, this must mean the respondent himself, and time was charged at $325.00 per hour), "employed solicitor" (time charged at $200.00 per hour), "para-legal" (time charged at $125.00 per hour) and "senior secretary" (time charged at $84.00 per hour). 24 The appellant filed Notices of Objection to both bills, objecting to $37,700.00 in relation to the Local Court bill, and $5,772.75 in relation to the Supreme Court bill. The respondent responded by a letter dated 19 March 2001 and submissions dated 30 April 2001. 25 On 22 May 2001, the costs assessor issued a certificate as to determination of costs in relation to both proceedings, determining the total costs at $16,378.76, total disbursements at $10,730.80, giving an overall total of $27,409.56. His reasons included the following statements: The costs were assessed on the basis of the information supplied in the applicant's bills of costs and various submissions and correspondence which passed between the parties and myself. I was not assisted by the respondent's lengthy and often acrimonious criticism of the applicant's case, and I was unable to accept the objection consistently made that the applicant could recover no costs for his work because he was a solicitor litigant. The law does not prevent him from recovering his reasonable professional costs in acting for himself in litigation, see most recently Atlas Corporation Pty. Limited v F. G. Kalyk New South Wales Court of Appeal (unreported), 12 February 2001. I considered that the proper approach to assessing costs in this case was to compensate the solicitor for time properly spent in preparation of his defence both in the Court below and the appeal.

[18]

Particularly in the Local Court bill there were many excessive claims. I did not consider that the hourly rate claimed by the solicitor or his secretary were reasonable. In the case of the solicitor I allowed $215.67 per hour being two-thirds of the amount claimed. In the case of the secretary I allowed three-quarters of the amount claimed namely $63.00 per hour. I enclose herewith a Schedule of all items reduced in each bill, which will clarify the extent to which I allowed the objection to each item. 26 On 31 May 2001, the appellant lodged an application for review of this determination by the Review panel. On 12 December 2001, the Review panel affirmed the decision of the costs assessor, holding that, in relation to the Atlas v. Kalyk point that the costs assessor had correctly applied the law. 27 The appellant then filed a Summons in the Supreme Court, challenging the determination of the costs assessor and that of the Review panel. This was dealt with by the Master as an appeal under s.208L of the Act, and an application for leave to appeal under s.208M of the Act. In dealing with the appeal, the Master referred to Atlas v. Kalyk, and continued: The costs assessor refers to the defendant as a solicitor litigant and states that he acted for himself in litigation. The costs assessor found that the law does not prevent a solicitor litigant from recovering costs. The costs assessor did not err in law in proceeding on this basis. Much of the work was carried out by a Partner of MD Nikolaidis & Co and staff. The only work carried out by the defendant was the preparation statements and sundry matters incidental thereto including attending with Counsel and attending on the hearing. The defendant did not charge for time spent searching for records and locating documents in order to prepare the case and assemble evidence. The time charged by him was only that time in which he was actually engaged in locating witnesses and preparation of statements and evidence. He is entitled to do so, and accordingly this submission fails.

[28]

D) Similar issues arise in relation to items 153 to 156 of the bill of costs for the Local Court proceedings (BB 17) (items 169 to 172 in the cost assessor's work sheet (BB 88)). 33 In the case of all these items, although the costs assessor reduced the hourly rate, he did not make any reduction in respect of the time claimed. 34 Mr. Chippindall for the respondent submitted that all litigants in person are entitled to out-of-pocket expenses, and out-of-pocket expenses can extend to loss of earnings due to time properly spent in dealing with the legal proceedings: Petrunic v Barnes [1989] VR 927; Secretary, Department of Foreign Affairs v. Boswell (1992) 39 FCR 288. In any event, Mr. Chippindall submitted, the costs assessor did limit the costs to "reasonable professional costs", as shown by the sentence preceding the sentence relied on by the appellant. Mr. Chippindall referred to Brott v. Almatrah [1998] 2 VR 83, and also to the following passage from Atlas at [9], referring to the High Court decision in Cachia: It is nevertheless clear that the majority did not overrule Guss v Veenhuizen [No 2] and their statements about the position in the case of solicitors acting for themselves in litigation were only dicta. It might be said, with respect, that although solicitors representing themselves in litigation have no need of any indemnity against professional costs paid or payable to another practitioner, there is still scope for the indemnity principle. Such solicitors will have spent time and trouble representing themselves and, to that extent, they will have lost the opportunity of using that time doing professional work for other clients and being remunerated accordingly. The indemnity in the case of solicitor litigants is, therefore, against the opportunity cost rather than the direct cost of their professional time spent on their own case. 35 Furthermore, Mr. Chippindall submitted, the respondent was in any event entitled to witnesses' expenses: see Cachia at 417; and cf. Walton v. McBride (1995) 36 NSWLR 440 at 452-3; Kowal v. Zoccoli [2002] 4 VR 399. Any time that the respondent may not have been doing professional work, he did spend as a witness; and accordingly he was entitled to reasonable fees for this.

[29]

DECISION 36 It is convenient first to consider what costs are recoverable by a self-represented litigant who is not a solicitor. 37 First, there are out-of-pocket expenses actually and reasonably incurred. It was held in Boswell that this extended to earnings actually lost because of time reasonably spent on the case. However, in my opinion this decision must be considered as disapproved by the High Court in Cachia. In the judgment of the five judges of the majority in that case, after reference to legislation and a rule applying in England, there appears the following (179 CLR at 416-7): We should add that the English legislation and rule represent a straightforward approach to the problem, in contrast to the approach adopted in some cases where courts have treated the loss in earnings of a litigant incurred in the course of the presentation or conduct of his case as a disbursement (45). Clearly, that is merely an indirect way of recompensing a litigant for time spent in the preparation or conduct of his case which, if it is not contemplated by the relevant legislation or rules, is not permissible. Of course, a litigant who qualifies as a witness is entitled to the ordinary witness's fees. 38 Footnote (45) referred to in that passage, is as follows: (45) See Kerridge v. Foley (unreported; Supreme Court of N.S.W.; 19 August 1970); Secretary, Department of Foreign Affairs and Trade v. Boswell [No. 2] (1992), 39 F.C.R 288; cf. Petrunic v. Barnes, [1989] V.R 927; Australian Blue Metal Ltd. v. Hughes, [1970] 2 N.S.W.R 119. 39 Then, there are "ordinary witnesses' fees". There is real difficulty here as to what this includes. Undoubtedly, it includes a reasonable fee for time actually spent giving evidence in court. However, it is not clear what if anything may be included by reason of preparation, and what if anything may be included in relation to attendance at court in order to deal with matters of evidence given by witnesses (particularly witnesses for the other side) as they arise. 40 There was some discussion of this in Chanter v. Blackwood (No.3) (1904) 1 CLR 456. In that case, a petitioner sought a declaration that the respondent in that case was not duly elected; and obtained a declaration to that effect. The petitioner attended at the trial of the petition in the High Court, and also at the re-count before the Deputy Registrar. However, he did not give evidence. On taxation, the Deputy Registrar allowed expenses of these attendances, stating that he did not hold that the petitioner was a witness, but that he was entitled to be present and should therefore be allowed his expenses of so doing. In giving judgment on a summons to review the taxation on those items, Griffith CJ said this: I reserved judgment on the objection that the travelling expenses of the petitioner to attend the trial of the petition ought not to be allowed. The case of Howes v. Barber (18 Q.B., 588 ; 21 L.J. Q.B., 254) was cited in support the of objection. In that case, Lord Campbell C.J., said:-"The simple fact that parties are examined as witnesses must by no means be considered sufficient to establish a claim for their expenses as witnesses, and if it appear that their attendance was unnecessary, or that they attended to superintend the conduct of the cause, the claim ought to be rejected." On the other hand, the expenses of a person subpoenaed as a witness may be allowed although he is not actually called, if his attendance was reasonably necessary having regard to the probable course of the case. In the case of a party the issue of a subpoena would be an idle form. In my opinion, therefore, the expenses of a party who may reasonably be expected to be required as a witness should be allowed without a subpoena being issued. No authority was cited to me in which such expenses have been allowed to a suitor conducting his case in person. The case of Anthony v. Walshe, (1888) 22 L.R. Ir., 619, is against such an allowance. There are, in my opinion, some cases of such a character that the party ought prima facie to be regarded as a probable witness. Such, I think, are cases in which the status or character of the party is involved, and in which it is likely that adverse evidence may be given at the trial as to which his evidence might be beneficial to him. As an instance I may mention the case of a wife made respondent in a divorce suit. I think that the same rule should prima facie be applied in the case of an election petition in favour of a party claiming or defending the seat for himself, although the nature of the issues raised might be such as to exclude the application of the rule.

[52]

22 5D claims $12,845 for attendance at court to give evidence. He makes a further claim for travel time. $12,845, applied to six days attendance as a witness, implies $2141 per day. 5D is a business manager with professional qualifications and a record of positions of high responsibility in large businesses with demanding management tasks over very large resources and funds. I have to assess an appropriate ordinary witness fee for a professional person with such high qualifications based on what it might be expected that such a person would require to be paid to retain him to give evidence. Ps contend for payment of $235 per hour for six hours for each day, such day including travelling time, which implies $1,410 per day and a total of $8,460. My assessment is that the appropriate witness fee is at the rate of $1,750 per day, to include attendance for the whole day, travelling time and all other claims for attendance in the capacity of a witness. In my view I should allow $10,500. 47 Finally, in Kowal v. Zoccoli [2002] 4 VR 399, the Victorian Court of Appeal was dealing with taxation of costs awarded to a defendant in a professional negligence case in the County Court. The defendant doctor had been represented, but he attended in court for the five days of the trial. The taxing registrar allowed a claim for costs in relation to five days' attendance at something over $5,000.00 per day, being fees the doctor claimed to have lost. On a review of this, a judge varied this to $217.00 per day, according to the scale of witnesses in the County Court. The doctor sought leave to appeal from that decision. After discussing inter alia Cachia v. Hanes and McBride, Phillips JA at 403-4 said this: 12. That is enough to dispose of the present case, for it establishes that the Taxing Registrar in the County Court erred in allowing what was, in effect, compensation for loss of income. The County Court judge, on review, allowed the doctor the ordinary witness allowance: and so much is authorised by the High Court in Cachia v. Hanes ; for the majority said "Of course a litigant who qualifies as a witness is entitled to the ordinary witness's fees." There is no cross-appeal against the amount allowed by the County Court judge in this instance and so no point is made of the allowance by the judge for the five days for which the doctor claimed, notwithstanding that he did not give evidence.

[56]

Winneke P and Ormiston JA agreed. 48 I think it follows from these cases that a litigant, whether represented or not, may be entitled to some witnesses' expenses, in addition to expenses for time actually spent giving evidence in court. 49 Where attendance at court is reasonably necessary to deal with unforeseeable evidence as it arises, the expense of that attendance may well be allowed. However, it seems clear that such witnesses' expenses will not be allowed as a matter of course. Samuels JA in Cachia v. Isaacs referred to cases where prudence entailed attendance as "insurance against shifts and new assignments in the adversary's evidence". In Walton v. McBride, Dr. McBride was allowed only the costs of his attendance on those days when he was a witness, and was allowed no costs for those days when he was "available to hear and observe witnesses, give instructions to his Counsel and listen to the accusations made against him". In most cases, it may be considered prudent for a party who is familiar with the facts of the case and who is represented by a lawyer to attend at a hearing and be available to comment to the lawyer on the evidence as it is given; but I think that McBride makes it clear that this is not enough to justify entitlement to witnesses' expenses. There must be at least a reasonable expectation of something new arising, which would require prompt instructions. 50 In relation to represented litigants, expenses may be allowed for a conference with a solicitor and/or barrister, in so far as this is necessary in order to prepare for giving oral evidence or to prepare an affidavit. In the case of a solicitor litigant, the same expenses may be allowed in connection with such a conference had with a barrister. 51 However, I do not think expenses would be allowed in relation to such matters as collation of documents or other material in preparation for giving instructions or giving evidence, time spent in refreshing recollection or making notes with a view to giving evidence or giving instructions, and matters of like nature. 52 Where the self-represented litigant is a solicitor, it is clear that the solicitor can recover the reasonable costs of doing what is truly professional work in relation to the case. However, just as a represented litigant cannot recover expenses incurred in attending to give instructions as a party (as opposed to a witness) or to observe and/or superintend the conduct of the case, neither can a self-represented solicitor recover expenses in respect of those matters. 53 When one considers the application of these principles to the present case, there is to my mind a real question in relation to the items specifically referred to by Mr. Zipser. There were the five and a half hours spent in preparing the respondent's statement, two two-hour long conferences associated with each of the two days of hearing, and the full day's attendance at court (seven and a half hours) on each of those days. 54 The respondent did provide material relevant to these items. First, there were general comments in the letter dated 19 March 2001: In relation to paragraph 4 on page 2, the codes are standard codes used by this firm for very many years. Much of the work was carried out by another Partner of this firm and staff. The only work that was carried out by the writer was the preparation Statements which only he could effectively do and sundry matters incidental thereto including attending with Counsel and attending on the Hearing.

[66]

He relied on similar submissions in relation to the other two conferences and the second day's hearing. 57 The costs assessor decided that the time involved in all these items was properly spent in preparation of the respondent's defence; and that is a finding that cannot be challenged. Time properly spent, however, could include time properly spent in professional work, or time properly spent as a witness, or time properly spent doing such things as parties to litigation, whether professional or otherwise, do in support of their case. 58 Unrepresented litigants who are not solicitors are extremely limited in the costs they can recover, and the exception favouring solicitors is regarded as anomalous. In those circumstances, I think the exception should be applied carefully rather than loosely. Certainly, I do not think solicitor/litigants should be allowed witness' expenses on a more accommodating basis than other litigants. Thus, if a solicitor/litigant is seeking witness' expenses additional to those occasioned by actually giving evidence or attendance at court for that purpose, and (where a barrister is instructed) a conference with the barrister for that purpose, it is necessary to provide material to show that this is justified, consistently with the approach supported by Cachia v. Isaacs, McBride and Maronis, as discussed above. There was no such material in this case, and thus no material justifying witness' expenses beyond those for such conference or conferences with Mr. Hale as were truly necessary preparation for giving evidence. 59 The question then is, did the costs assessor decide that the remainder of these items comprised professional work, and if so, was such a conclusion reasonably open? That conclusion would require a finding that none of the five and a half hours claimed for the preparation of the statement was for the non-professional work of collating documents, refreshing recollection, making notes, etc., and that the whole of it was for the professional work of putting the material into a satisfactory form so as to be suitable for service or as a basis for admissible oral evidence. It would require a finding that, apart from the time spent preparing for giving evidence, none of the eight hours of conference time which I have mentioned was for the non-professional purpose of giving non-expert instructions, and that the whole of it was for the exercise of professional expertise in preparation of the case. And it would require a finding that the case was such as to require attendance at court throughout both days of both a senior junior barrister and a "partner level" solicitor. 60 To my mind, those findings would be unreasonable on the material provided; and accordingly, taking into account the costs assessor's wrong statement of the test to be applied, I am satisfied that the costs assessor did apply the wrong test that he stated. And accordingly, I am satisfied that the Master was in error in holding that the correct test was applied. 61 In a case such as this, in my opinion a solicitor/litigant should identify to the costs assessor the basis on which he or she is claiming for time spent: that is, whether it is for as professional work (and if it is a simple case, being conducted by a barrister, why professional assistance, particularly assistance by a solicitor at "partner level", was required); or as a witness (and if the claim is for more than time spent actually giving evidence or in conference with a barrister to prepare an affidavit or prepare to give oral evidence, why that additional time was necessary). This was not done here. 62 The question then is, what should be done. Section 208L(2) of the Act empowered the Master either to make such determination as in her opinion should have been made by the costs assessor or to remit the matter to the costs assessor; and this Court has the same powers. Although the material is deficient, it seems highly unlikely that any review of the costs awarded would result in a reduction of more than a few thousand dollars; and it seems highly likely that the trouble and expense, and potential further costs, involved in a further assessment of the costs would be out of proportion to this amount. On the other hand, I think the chance of a different result is sufficient to justify the appeal being upheld, and some order made. 63 In my view, the following orders should be made: 1. Appeal allowed. 2. The respondent to pay the appellant's costs of the appeal and to have a Suitors' Fund certificate if otherwise entitled. 3. The amount of the assessment of costs be reduced by $5,000.00, to $22,409.56 as at 22 May 2001.