Mathew CHAINA & Ors v The Presbyterian Church

Judgment 1HIS HONOUR: Nature of proceedings This judgment is to be read with the judgment in Mathew Chaina & Ors v The Presbyterian Church (NSW) Property Trust & Ors (No 4) [2011] NSWSC 524. 2That judgment was in respect of a Notice of Motion by the applicants seeking an order pursuant to s728(1)(b) of the Legal Profession Act 2004 (NSW) for files held by their former solicitors in the primary proceedings (No 2002/69354) be released to their present solicitors, BDL. In that judgment I indicated that I proposed to make the orders sought, but only if the costs of the former solicitors were appropriately secured. I indicated my preliminary view that the applicants should pay the costs of the motion, but granted leave for submissions to be made to the contrary. That judgment was handed down on 7 June 2011 and the parties were given time to agree on the form of the orders to be made. 3When the matter came before the Court on 17 June 2011, agreement had been reached as to the form of the orders, except in respect of two matters. The first was the question of whether interest on the costs to which the former solicitors were entitled was to be secured and the second was the costs of the motion. 4I indicated to the parties that it was not my intention that interest on the costs of the former solicitors should be secured, and for that reason I made no mention of interest in my reasons. The parties were directed to provide written submissions as to the costs of the motion. This judgment is in respect of that costs question. Consideration 5For completeness, I set out the orders made by consent on 17 June. The nature of these orders impacts on the costs question. "1. Pursuant to s 728(1 )(b) of the Legal Profession Act 2004 (NSW), the Former Solicitors are ordered to give to the Current Solicitors such of the Applicants' documents as are held by the Former Solicitors in relation to the Primary Proceedings ("the Files") as soon as practicable but, in any event, no later than 14 days after the date on which the first of the following occurs: a. the First Costs Judgment being satisfied in whole; b. the amount of the First Costs Judgment Debt being paid into the District Court of New South Wales in proceeding number 10/349405; c. SCL being provided with the following as security with respect to the First Cost Judgment Debt: i. a memorandum of mortgage in registrable form in terms agreed between the Applicants and SCL (or, in the default of agreement, in terms determined by the Court) securing the payment of the First Judgment Debt against the property described as lot 17 in Strata Plan 54026 (being the property known as 1007/185-211 Broadway, Ultimo) ("the Ultimo Property") and enforceable on and from 27 November 2011; and ii. an unconditional bank guarantee in favour of SCL; or d. the amount of the First Costs Judgment Debt being otherwise satisfactorily secured in a manner agreed between SCL and the Applicants, and the Applicants, the Former Solicitors and the Current Solicitors executing a "Tripartite Agreement" of the kind recommended by the Law Society of New South Wales in terms agreed between the Applicants, Former Solicitors and the Current Solicitors. 2 That SCL is restrained from calling on any unconditional bank guarantee provided in accordance with paragraph 1(c)(ii) of these orders until the earlier of the following: a. the date fourteen days after the date on which the claims made by the Applicants (or any of those Applicants) in this proceeding is compromised; b. the date fourteen days after any final judgment is given in this proceeding at first instance; c. such other date as is set by the Court on the application of SCL of the Applicants (or any of them). 3. That SCL inform MTP within 24 hours of becoming aware that an event described in order 1 of these orders has occurred. MTP are not obliged to comply with order 1 of these orders until they are given notice pursuant to this order. 4. The Applicants to notify SCL in writing within 48 hours of the Applicants (or any of them) compromising any claim made by them (or any of them) in this proceeding. 5. These orders do not affect any rights and/or obligations that SCL or the Applicants have under, or in connection with, the First Costs Judgment. ... 7. The Applicants, the Former Solicitors and the Current Solicitors have liberty to apply in relation to these orders. The Court notes the undertaking of the Current Solicitors to hold the Files (and any copies of it may make to those Files) subject to the Former Solicitors' liens. In these orders: "the Applicants" means the second to fifth Plaintiffs in the Primary Proceedings; "the Primary Proceedings" means Mathew Chaina & Ors v the Presbyterian Church (NSW) Property Trust & Ors, Supreme Court of New South Wales matter no. 2002/69354; "the First Costs Judgment" being the Judgment made on 21 October 2010, District Court of New South Wales matter no. 2010/349405; "the First Costs Judgment Debt" means the amount owing under the First Costs Judgment as at the date of these orders ("Judgment Debt"); "Current Solicitors" means Berrigan Doube Lawyers; "Former Solicitors" means (jointly and severally): a. SCL; and b. MTP; "MTP" means (jointly and severally) the partners of the firm known as McLachlan Thorpe Partners; "SCL" means (jointly and severally) Paul Sarvaas and Charles Ciappara." 6SCL made two submissions in relation to the costs of the motion. They submitted that they should recover their costs since they were successful in the motion. They submitted that the Court should make a gross sum costs order to prevent further litigation concerning the assessment of those costs. The amount sought by SCL is $10,000 payable within 28 days. 7In support of that application, SCL relied upon an affidavit of Mr Ciappara, sworn 17 June 2011. That affidavit supported the proposition that such an amount was in line with the percentage of costs likely to be recovered on an assessment basis. The affidavit also indicated that the amount was otherwise significantly discounted. 8The applicants do not oppose the costs order sought by SCL. 9MTP sought an order for costs against the applicants and that such costs be payable forthwith. That order is opposed by the applicants. No point is taken by the applicants as to MTP's entitlement to recover their professional costs of acting for themselves in the motion. That was an appropriate concession ( Atlas Corporation Pty Limited v Farancis Garry Kalyk [2001] NSWCA 10). 10MTP submitted that they sought to accommodate the interests of both parties, but were prevented from doing so by the inability of the applicants and SCL to reach an agreement as to security for their fees. In those circumstances MTP, absent consent from SCL, was prevented from making files available to the applicants by its obligations under the 2008 tripartite agreement. 11MTP submitted that they had to incur costs by participating in the application, reviewing the material served and reviewing orders proposed because all of those matters potentially affected them. Those matters impacted upon MTP's obligations under the tripartite agreement and their rights in relation to their own unsecured and outstanding fees. 12MTP submitted that the primary reason for the motion was the non-payment of fees by the applicants to SCL. On that issue, the judgment of 7 June 2011 vindicated the position of SCL. Since it was necessary for MTP to be present and to participate in the motion, they submitted that they should be compensated for their costs in so doing. 13MTP submitted that their costs should be paid forthwith because their participation in the litigation was now complete. This was not one of those situations where at the end of the case, costs orders which go in different ways needed to be reconciled so that there should be only one occasion for the enforcement of costs. They submitted that this issue was discrete and that the costs could be easily assessed. They drew the Court's attention to the substantial delay likely to be incurred between now and when the primary proceedings were finalised. Finally, as previous solicitors who are no longer involved in the proceedings, they submitted that they should not have to await their outcome. 14The applicants submitted that the real issue was between SCL and themselves and that under the tripartite agreement, MTP's obligations would follow the outcome of that dispute. There was no real reason for MTP to be present for the hearing of the motion. 15The applicants submitted that MTP did not play any active part in the motion. They needed to be a party to the motion out of necessity and as a matter of procedural fairness, since they held the files which were the subject matter of the motion but in those circumstances, a submitting appearance would have been sufficient. 16The applicants submitted that the general rule is that costs follow the event. In this motion, there was no real issue between MTP and themselves. In those circumstances, they submitted, MTP could not claim to have been successful having regard to the position they maintained in respect of the motion. The applicants submitted that MTP should bear its own costs. 17I am satisfied, given the contents of the 2008 tripartite agreement, that simple prudence required the presence of MTP when the motion was being argued. Most importantly, MTP's participation was essential in the formulation of the final orders. Since MTP had a real interest in the form of the final orders, a submitting appearance would not have been sufficient. 18Once one accepts that MTP's participation in the motion was not only reasonable but essential, the resolution of the costs issue becomes relatively straightforward. The dispute was brought about by the applicant's approach to the claim for costs/security by SCL. Since the applicants were unsuccessful in that dispute, they should pay the costs, not only of SCL but of others who were required to participate in the motion. 19Just because the applicants are required to pay MTP's costs of the motion, it does not follow that such payment should be made forthwith. While I accept that this motion can be regarded as discrete and separate from the primary litigation, the costs associated with it are more properly to be regarded as part of the overall costs of the litigation generally, such as, for example, MTP's costs associated with the 2008 tripartite agreement. I appreciate that there will undoubtedly be considerable delay (although the Court will be doing its best to reduce this) before this matter is finalised. Nevertheless, in the context of this litigation and the part played by MTP in it, that is not a decisive consideration. In any event, MTP's position in relation to their costs can be adequately protected by their entitlement to interest. 20I am not persuaded that MTP's costs of the motion should be payable forthwith. 21The orders which I make are as follows: (1) That the applicants to the motion of 5 April 2011 pay SCL's costs of the motion assessed at $10,000 within 28 days of these orders.. (2) That the applicants to the motion of 5 April 2011 pay MTP's costs of the motion, as agreed or assessed. (3) If the costs cannot be agreed within 28 days of the date of this order, MTP has leave to apply for assessment of those costs immediately thereafter. For the avoidance of doubt, the costs of the motion shall include the costs of this costs argument.