Pincevic v Nicholas Panos t/as N Panos & Associates

District Court of NSW|2013-08-29|Before: Mr J

Introduction 1The applications before the court are as follows: (a)A summons commencing leave to appeal (Part 5) filed on 9 August 2013 and amended on 18 August 2013; (b)A notice of motion filed on 14 August 2013 seeking leave to dismiss the costs summons for failure to comply with r 50.4 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") on the basis that it was invalidly filed pursuant to r 7.1 UCPR. (c)Alternatively, transfer of these proceedings to Parramatta to the Costs Assessment Appeal's List is sought. 2The plaintiff is a litigant in person. In the course of the proceedings, I granted leave to a Mr Tim Brikich to appear as his "McKenzie friend" (McKenzie v McKenzie [1971] P 33; [1970] 3 All ER 1034; [1970] 3 WLR 472). My reasons for doing so are set out at [9] - [11] below. 3These proceedings relate to a comparatively modest amount, namely the balance of fees owed to counsel in relation to disputed assessments of land tax. A certificate was issued by the Costs Assessor for $30,396.05 on 8 July 2013.

The appointment of Mr Brikich as a "McKenzie friend" 9A preliminary matter of some importance was the question of the representation of the plaintiff. In making an order for Mr Brikich to appear as his "McKenzie friend", I took into account the relevant principles as set out by the New South Wales Court of Appeal in Damjanovic v Maley (2002) 55 NSWLR 149 and JP Morgan Trust Australia Ltd v Hammond [2012] NSWSC 213. Those issues include the small sum and lack of complexity of the case, the language difficulties of the plaintiff, the fact that this is a court of inferior jurisdiction carrying out its circuit obligations, and Mr Brikich's familiarity with the factual background. 10In particular, although Mr Brikich is the plaintiff's business partner, he was neither a party to the proceedings the subject of the costs agreement, nor to the costs agreement. This means that he has no personal interest in the litigation. In addition, he has acquired a great deal of general legal experience, as has the plaintiff, from court proceedings in which they have separately or together been involved, which I gather are extensive and involve issues of complexity and considerable sums of money. 11Another factor is that both the plaintiff and Mr Brikich indicated they wish the case to be disposed of quickly because they were about to commence work on a large project some distance away from Wollongong. In fact, the plaintiff urged me to hand down judgment on 26 August 2013, but by reason of the second application made by Mr Brikich on that day for an adjournment to obtain legal advice, I did not do so. I stood the matter over to Thursday 29 August 2013 to enable the plaintiff to obtain legal advice in relation to the principal issue in these proceedings, namely whether notification of extra costs and variations to Dr Sorensen's fees could only be provided in writing, as opposed to oral advice to this effect.

The nature of costs appeal proceedings 12The costs assessment system is fundamentally different from court proceedings. The costs assessment procedure is not intended to operate along the lines of a court, for the reasons explained by Johnstone DCJ in Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd (2011) 12 DCLR (NSW) 304 ; [2011] NSWDC 55. 13Costs assessors are not judges, or officers of the court. They are appointed from the ranks of solicitors and barristers, and bring a wide range of experience and common sense to the task of costs assessment. The system is paper-driven, in that submissions are not made orally, and requirements for hearings such as cross-examination or knowledge of complex legal issues are not required. The reasons given are not a judgment but a private ruling between the parties, arrived at after an informal proceeding where the costs assessor will notify the parties of their entitlements to put submissions and otherwise ensure that fairness results. These factors all operate in favour of litigants in person, and as a result it is common for parties objecting to solicitor and client costs to represent themselves. 14I endeavoured to point out these factors, and the manner in which they are explained in Bellevarde, to the plaintiff. I have also endeavoured to point out that the process of appeal by way of Summons is very different, in that proper grounds of appeal should be formulated, as should questions about whether those grounds are brought pursuant to s 384 or 385 of the Act. The formulation of the grounds of appeal, and the material relied upon in relation to that appeal, occupied a considerable amount of the time allocated to the hearing.

The grounds of appeal 15The grounds of appeal went through many drafts, including two Summonses and a notation in the court orders, before being formulated during the hearing on 26 August 2013 as follows: (1)No disclosure by solicitors of any extra costs and variations to the original estimate of costs from Dr Sorensen. (2)No notification by solicitors in writing of any extra costs and variations to their own costs (ss 309 and 316). (3)That the Costs Assessor double counted Dr Sorensen's costs in his bill of 23 July 2012, in that this was for work done as per his invoice of 29 June 2012. (4)That the Costs Assessor permitted the solicitors to continue to charge for their work after their retainer was terminated. 16It was not in dispute before the Costs Assessor that the work charged for was done, or that the rates charged were unreasonable. Essentially what the plaintiff argues is that the defendant should not be able to charge for any of Dr Sorenson's work, not for orders that the costs be remitted for further assessment. In addition, grounds 2 and 4 deal with matters entirely outside the costs assessor's assessment of Dr Sorensen's costs. 17Although Mr Brikich indicated that the appeal brought pursuant to s 384, in that these were errors of law, I have dealt with these grounds both on the basis of ss 384 and 385 of the Act. 18I shall deal with each ground in turn.

Ground 1: No disclosure by solicitors of any extra costs and variations to the original estimate of costs from Dr Sorensen. 19I have set out above the basis upon which the Costs Assessor was satisfied, from the material provided by the defendant in a letter dated 7 June 2013, as well as from Mr Brikich's email (referred to in paragraph 12 of the Statement of Reasons), that I am satisfied that the Costs Assessor did not come to any error of law. 20Nothing could be clearer, from Dr Sorensen's costs agreement of 23 March 2011, than that Dr Sorensen was giving an estimate of the most general kind. His precise words were: "I estimate that my fees in this matter are likely to be in the order of $15,000, exclusive of GST, on the basis of a hearing of up to one day and preparation for hearing (including briefing witnesses) of 1 to 1.5 days. This estimate is not a quote and is subject to change depending on the scope of the work required. Please call me if you have any queries." 21The plaintiff well knew that further work was required, and he paid a further $3,480 in relation to that work. His complaint is that he was not told in writing about the nature and extent of the additional charges, such as the cost of the written submissions in the second memorandum of fees. 22The relevant facts are clearly and succinctly set out in the letter of 7 June 2013 provided by the defendant to the Costs Assessor, at paragraphs 21 and 23 to 27: "21. When the first additional application 126011 was lodged in around 23 January, 2012, the complexity and costs of the matter was discussed with Mr Pincevic. Ms Oddo informed Mr Pincevic that in relation to the Claremont Meadow Land we would now have to prove our case for the 2010 year and also for the 2007 to 2011 years, which would require much more information and increase the costs. Mr Pincevic understood this and realised that due to the Commissioner issuing the assessments this was outside our control and he still wanted to continue with the case. Further, as we had a new case of Boomerang and Brikich we had to prove this case as well which would increase the costs. Mr Pincevic understood this. Due to the issues that we had already encountered it was impossible to give Mr Pincevic an estimate of fees so Ms Oddo advised that it would depend how long the matter went for and what issues would arise. Ms Oddo discussed with Mr Pincevic that as Blue Mountains Honey Pty Limited also used the Huskisson Land for bee keeping that we should request that the Tribunal put all other matters on hold pending the outcome of proceedings 106104. Mr Pincevic agreed that this was a good idea in order to reduce costs. Ms Oddo requested this of the Tribunal however it was not agreed to by the Respondent. The Respondent would only agree to have all matters joined so that evidence in one matter be evidence in the other. The Tribunal made this order and accordingly the one proceedings had then become five. ... 23. On 28 March, 2012 the Tribunal made an order that the Applicants file and serve their evidence and submissions by 28 May, 2012. It was agreed that Dr Sorensen would be counsel in all matters based on his rates. Again it was impossible to give an estimate of fees as we could not predict where this matter would go. Further, if it progressed into the 2013 year, then two new proceedings would have been established. As the matter substantially widened, the evidence prepared in November, 2011 had to be amended and new evidence had to be obtained from Mr Brikich and Mr Camilleri who also used the land for primary production in earlier land tax years. Ms Oddo was instructed to attend to this with Dr Sorensen. Due to delays in obtaining information from Blue Mountain Honey Pty Limited Ms Oddo attended to obtaining various extensions of time to file and serve evidence and submissions. The next relevant order of the Tribunal was made on 20 June, 2012 that on or before 31 July, 2012, we were to file and serve affidavit evidence and submissions. The Respondent was becoming impatient and indicated that they would not consent to any further extensions. 24. Various telephone conferences were arranged on 18 June, 2012 with Stephen Craig, 18 June, 2013 [sic] with Tony Pincevic 20 June, 2012 with Tim Brikich and 25 June, 2012 with Victor Camilleri each together with Dr Sorensen and the affidavits were drafted. On 29 June, 2012, Dr Sorensen issued an invoice for $22,522.00 for work between 30 April, 2012 and 27 June, 2012. You will see that the invoice was for the above conferences, attendance on Oddo re further evidence required and reviewing affidavits. 25. Dr Sorensen provided another estimate as it was clear that the matter would not involve a 1 day hearing. Dr Sorensen advised that he estimated that the matter would now be at least a three day hearing. 26. In the meantime, the Respondent served various Summons to Produce on the applicants. One of those Summons required bank account statements and tax returns from all members of Mr Pincevic's family for the 2007 to 2012 years. Mr Pincevic was not happy about this because the ownership of the Claremont Meadows Property was in his family members' name only for tax purposes. In our view, and quite understandably, Mr Pincevic had become exhausted by the tribunal process. 27. On 20 July, 2012 we received a telephone call from Mr Pincevic's son, informing us that Mr Pincevic did not want to continue on with the matter. We confirmed these instructions with Mr Pincevic and withdrew from the proceedings. The matter was officially dismissed on 1 August, 2012. On 23 July, 2012, Dr Sorensen issued an invoice in the amount of $6,160.00. The invoice was for considering and preparing draft written submissions. These invoices remain outstanding." 23Most of the items charged for by Dr Sorensen in his first memorandum of fees relate to these events and conferences. The second memorandum for draft written submissions was forwarded after the instructions of 20 July were received.

The plaintiff's application for leave to bring fresh evidence 24The plaintiff called for production of the diary notes of Ms Oddo. Fresh evidence of this kind may not be relied upon in relation to an appeal under s 384, but may in limited circumstances be sought under s 385. Fortunately it was not necessary for me to determine this issue, as the defendant offered to provide this material. 25The defendant's file notes are now in evidence before the court. Their contents clearly demonstrate the difficulty that Ms Oddo was in relation to this rapidly expanding matter. For example, her memorandum of 13 September 2011 reads: "It was agreed to use Dr Sorensen. It was hard to estimate how much it would cost because it will depend on how long it took. Dr Sorensen charges $770 per hour. TP realised that this was his last chance and if we were successful he could continue on to prepare for the actual hearing which is different to the mini hearing." 26Another entry dated 19 January 2012 read: "LO [Ms Oddo] advised that it is impossible to estimate how much longer the matter will go on for and how much it will cost. The major factor is the actions of the OSR and CSO with issuing more assessments and issuing more summons [sic]. TP understood and agreed LO is trying her very best and the delay and cost is out of our control. LO to proceed. LO advised TP that the 2010 matter is listed for directions, on 29/2/12 and LO will try and have this new matter (2007-2011) listed for the same date to try and join the matters and reduce cost. TP thanked LO for that." 27All this does is to confirm the costs assessor's findings (at paragraphs 13 to 15), the text of which is set out above. This fresh evidence is of no assistance to the plaintiff. 28The costs assessor went on to note, in relation to the items charged for: "16. There is no material suggesting with respect to any of the items in the Bill that it was not reasonable to carry out the work, that the work was not carried out in a reasonable manner, that it was not within the retainer, that the time claimed is excessive or that the amount charged is not in accordance with the rates in the costs agreement. 17. The Bill should be confirmed." 29This is relevant because a s 384 appeal must demonstrate not only that there has been an error of law, but that the error justifies disturbing the assessment: Gorczynski v AWM Dickinson & Son [2005] NSWSC 277 at [22]. 30In Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd, supra, Johnstone DCJ said (at [16]): "[16] Not only must a party who is appealing under s 384(1) establish an error of law, that party must also demonstrate that the error made justifies disturbing the assessment: Gorczynski v AWM Dickinson & Son [2005] NSWSC 277 at [22]. Thus it has been said by Associate Justice Malpass: "The onus borne by the plaintiff is not merely to demonstrate error as to a matter of law arising in the proceedings to determine the application but also to demonstrate that any such error is material to the determination": Honest Remark Pty Ltd v Allstate Explorations NL [2008] NSWSC 439 at [24]." 31I am satisfied that the Costs Assessor did not err in holding that there had been adequate compliance with the provisions requiring estimates of future costs. There is nothing in s 309 or s 316 mandating that these further costs must be in writing and/or contain precise sums. 32Even if the assessor had erred, the matters set out at paragraph 16 by the costs assessor are matters that warrant not disturbing the assessment. This was work carried out in a very short time span, in accordance with the charging rates, of an essential nature, for which there were explicit instructions from a very experienced businessman who would have understood from these conferences, without needing it spelled out in writing, that there would be additional charges for these significant new claims. 33The provision of the additional documentation may be relevant if leave were granted under s 385 for consideration of this ground of appeal pursuant to s 385. I am not satisfied that leave to appeal should be granted, but if I have erred in this regard, the file notes produced by the defendant and tendered by the plaintiff are compelling evidence of solicitors operating in the difficult circumstances described above, and where the plaintiff was kept informed both of these difficulties and of the uncertain scope of the cost of the work. 34Whether brought under s 384 or 385, this ground is not made out.

Ground 2: No notification by solicitors in writing of any extra costs and variations to their own costs (ss 309 and 316). 35The same findings would relate to the circumstances in which the solicitors' initial estimates in relation to their own costs were provided. Sections 309 and 316 do not mandate that such notification should be in writing. 36However there is a more compelling reason for this ground to fail. The costs of the solicitors are not challenged in this costs assessment. The plaintiff told me that the solicitors had in fact been able to keep their costs within the agreed parameters. The plaintiff's complaint to me was that the solicitors had done so, but Dr Sorensen had not. 37This ground of appeal must fail.

Ground 3: That the Costs Assessor double counted Dr Sorensen's costs in his bill of 23 July 2012, in that this was for work done as per his invoice of 29 June 2012. 38Leaving aside the fact that there was no dispute by way of formal objections, as the Costs Assessor notes at paragraph 12, and the Costs Assessor was not told of this alleged double counting, the simple fact is that this submission is completely wrong. 39There is no double counting in Dr Sorensen's bill. What he has done is to provide, in his memorandum of fees of 29 June 2012, work for the month of June 2012, which includes a discussion with Ms Oddo about documentations on 14 June 2012 and a fee for drafting an affidavit and memorandum on 27 June 2012. 40In a separate tax invoice dated 23 July 2012, Dr Sorensen has charged for preparation of his written submissions for the hearing which took place on 14, 15, 27, 28 and 29 June 2012. There is nothing in the previous memorandum for the dates 15, 28 and 29 June 2012. This second invoice not only describes different work done on different dates, but where the two dates are common, describes different activities on those dates. 41The plaintiff's objection is that Dr Sorensen should have put all of this work into one bill, and that he sent a second bill in circumstances where the only explanation can be that he is billing for the same items twice. 42The circumstances in which Dr Sorensen's account of 23 July 2012 is sent are easy to understand. On 20 July 2012, the plaintiff decided either that he did not wish to retain these solicitors anymore (which is what he told the court) or that he wished the solicitors to discontinue the litigation (the version given by the defendants). At the time, Dr Sorensen was still completing his written submissions. When his retainer was terminated, he sent a bill for the work that he had done on the submissions. The litigation was in fact discontinued on 1 August 2012. 43This s 384 ground of appeal fails in limine. There can be no error of law in failing to consider an issue that was never raised. I would not be prepared to grant leave to appeal for the purposes of s 385. However, if leave to appeal were granted, the errors of fact in the plaintiff's submissions are so obvious that the ground of appeal could not be made out.

Ground 4: That the Costs Assessor permitted the solicitors to continue to charge for their work after their retainer was terminated. 44This is another complaint that was not put before the Costs Assessor. Given the plaintiff's insistence upon matters of this kind being evidenced in writing from the defendant, it seems surprising that he does not produce correspondence (such as letters from another solicitor taking over the matter) to support the very serious allegation that the plaintiff did not wish to bring the litigation to an end, but to end his retainer of the defendant and Dr Sorensen. 45As is set out above, the information before the Costs Assessor was the plaintiff's son telephoned the solicitors to advise that he did not want to continue with the matter. The solicitors then "confirmed these instructions with Mr Pincevic and withdrew from the proceedings" on his behalf, with the matter being dismissed on 1 August 2012. The evidence and submissions had to be prepared by 31 July 2012 and the defendant had to represent the plaintiff at a directions hearing for the purpose of finalising the matter. 46Leaving aside the obvious difficulties of the plaintiff informing the court during the hearing of these matters when the Costs Assessor was not asked to consider this issue, someone had to represent the plaintiff at the directions hearing following these instructions, and to arrange for the proceedings to be either discontinued or handed over to another lawyer. The taking of those steps was essential and they were entitled to charge the plaintiff for them. 47Not only were the costs in question were not the subject of objection in the assessment, but no attempt has been made to quantify what those costs are. I am simply asked to put a line through whatever costs the defendant and/or Dr Sorensen charged after the 20 July 2012 date on the basis that no more work could be carried out, and add the costs up myself, something I decline to do. The solicitors' memoranda of fees in question have not even been tendered. 48Whether this ground of appeal is brought under s 384 or 385, I am satisfied that it has not been made out.

Applications by the plaintiff for an adjournment 49These proceedings were adjourned twice to suit the convenience of the plaintiff. On the first occasion, the plaintiff was unable to attend court for business reasons. On the second occasion, the plaintiff called for copies of documents evidencing the discussions between the parties about the increase in costs of the litigation, which required the matter to be adjourned part-heard. 50In the course of making final submissions, Mr Brikich indicated that the case was too difficult for him to conduct, as he had thought he simply had to make the point that there was nothing in writing in relation to Dr Sorensen's costs being more than the estimated fee and that this would be the end of the case. I indicated that I was not prepared to grant that adjournment and that I would set out the reasons why in my judgment. 51Section 60 Civil Procedure Act 2005 (NSW) provides as follows: "60 Proportionality of costs In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute." 52Section 61 provides that courts may adjourn a hearing subject to the requirements of justice and the principles in s 56, namely the requirement for "just, quick and cheap" resolution of court proceedings. 53These are proceedings for a comparatively modest sum of money, which have already taken up a considerable amount of time on three days of these sittings, to enable Mr Brikich to present the plaintiff's submissions fully, and this has included an adjournment necessary as a result of his calling for the production of documents. 54The plaintiff consulted other lawyers after terminating the services of the defendant and could have been represented had he wished to be represented. He is a successful businessman with a flourishing construction business; the hearing date was selected to enable him to attend, as he is about to commence a large project. He elected to be represented by his business partner, Mr Brikich, who prepared the summons and researched the legal issues. 55I indicated to the plaintiff that the only basis upon which I would grant an adjournment would be on the basis that the costs thrown away by reason of the adjournment would be borne by the plaintiff. He was not prepared to accept this. I also explained the difficulties of relisting this matter, taking into account these are circuit sittings which finish on Friday 30 August 2013 where the next sittings are not until Monday 21 October 2013. 56Taking all of the above into account, while I was not prepared to adjourn the proceedings for a third time, to some uncertain date in the future, in circumstances where I may not return to Wollongong for some months (if at all), I stood the proceedings over to Thursday 29 August 2013, to give the plaintiff enough time to consult a solicitor and/or barrister, either to make further submissions or to bring a fresh application for adjournment. 57No further application for adjournment or further submissions have been made today on the plaintiff's behalf, either by Mr Brikich on his behalf or by a member of the legal profession. Mr Brikich stated that he had contacted a solicitor who said that three days was not enough to prepare for such a complicated application. 58I propose to hand down my judgment notwithstanding these submissions, having regard to the need for finality in proceedings (D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 (at [34]), Gleeson CJ, Gummow, Hayne and Heydon JJ) and the principles set out in s 56 Civil Procedure Act 2005 (NSW).

Costs 59This brings me to the question of the costs of the summons. The general principle is that costs follow the event. There are additional reasons for making such an order in the present case, namely the plaintiff's inability to articulate proper grounds of appeal, the hopelessness of those grounds, the series of requests for adjournments and the drawn-out way in which the plaintiff has conducted his case. 60Mr Cesta-Incani has made an application this morning for those costs to be paid on an indemnity basis. He submitted that the hopelessness of the grounds set out in the Summons and the manner in which the plaintiff has conducted the appeal (including requests for adjournments and inability to formulate the grounds of appeal) warrant the making of such an order. 61This is a clear case of proceedings which were not only hopeless but where the plaintiff had personal knowledge of facts inconsistent with his submissions. Mr Brickich may not be a lawyer, or experienced in preparation of court applications, but he knew these facts as well, because he was assisting the plaintiff with his land tax problems. 62This should have been a straightforward claim of whether the costs assessor erred in finding that the plaintiff had been given sufficient information about future costs estimates in relation to two unpaid accounts from his barrister, for work that the plaintiff had authorised the barrister to do. The fact that the plaintiff is a litigant in person is no bar to the making of an order for indemnity costs in appropriate circumstances: Dubow v Fitness First Australia Pty Ltd [2011] NSWCA 401. The plaintiff could have discontinued the summons when the hopelessness of the grounds became apparent (and thereby escaped an order for indemnity costs: Macedon Shire Ranges Council v Thompson [2009] VSCA 209), but instead sought adjournments and raised new, and equally hopeless, grounds of appeal. Mr Brikich raised a further ground this morning, claiming that the plaintiff had never received a copy of the written submissions Dr Sorensen had prepared. Mr Cesta-Incani, who was not only well-prepared but showed unfailing courteousness and fairness to Mr Brikich and the plaintiff throughout the hearing, has kindly offered to provide Mr Brikich with a copy of Dr Sorensen's draft submissions if these are available. 63The defendant's application for indemnity costs is a reasonable one in the circumstances, and I have accordingly ordered that costs of both the proceedings and the defendant's notice of motion be paid on an indemnity basis.

Orders (1)Summons dismissed. (2)Plaintiff pay defendant's costs, including the costs of the defendant's notice of motion, on an indemnity basis. (3)Defendant's notice of motion dismissed.

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: 11 October 2013

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