Skalkos v T & S Recoveries Pty Ltd

LOWER COURT Supreme Court - Common Law Division JURISDICTION : LOWER COURT 13130/02 FILE NUMBER(S) : LOWER COURT Malpass M JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40202/04 CLD 13130/02

SHELLER JA IPP JA GROVE J

Judgment 1 IPP JA: This is an application for an extension of time within which to apply for leave to appeal and an application for leave to appeal from a decision of Master Malpass. The issue before the Master concerned a challenge by the claimant to a cost assessment by a costs assessor. The Master decided that the determination of costs by the costs assessor should not be disturbed. The costs concerned were those ordered to be paid by the claimant pursuant to a judgment of this Court entered on 4 December 2002. The judgment was in respect of a claim for damages for defamation brought by Mr Joseph Assaf and Ethnic Communications Pty Limited against the claimant and Foreign Language Publications Pty Limited. The plaintiffs in that action succeeded and Mr Assaf was awarded damages in the sum of $150,000 and Ethnic Communications Pty Limited was awarded damages in the sum of $30,000. 2 On 5 October 2000 the trial judge ordered that the claimant and Foreign Languages Publications Pty Limited pay the costs of Mr Assaf and Ethnic Communications Pty Limited on a party and party basis until and including 16 August 1994 and thereafter on an indemnity basis. The inference is that on 16 August 1994 Mr Assaf and Ethnic Communications Pty Limited made a reasonable offer of settlement which was not accepted. The litigation continued thereafter for more than eight years until judgment was entered on 4 December 2002. The costs assessor assessed costs at $941,444.77 and this sum was entered as a judgment on 4 February 2002. 3 The damages awarded to Mr Assaf and Ethnic Communications Pty Limited have been paid. These parties have assigned the debt created by the costs order to the opponent. 4 On 17 February 2003 a bankruptcy notice was issued against the claimant and on 23 October 2003 a creditors' petition was issued seeking the bankruptcy of the claimant based on the unpaid costs order. The hearing of the petition was to take place on 12 February 2004, that hearing was adjourned to 9 March and again to 23 March 2004. The day before the hearing of the petition this application for leave was filed with the result, I infer, that the hearing of the creditors' petition was adjourned. 5 The claimant's appeal against the assessment of costs by the costs assessor came before Master Malpass as an appeal under s 208L of the Legal Profession Act 1987 (NSW). By s 208L(1) an appeal lies against a decision of a costs order as to a matter of law arising in the proceedings. 6 By s 101(2)(c) of the Supreme Court Act 1970 (NSW) leave to appeal is required where a party seeks to appeal against a judgment as to costs only. Pt 51 r 4(1) of the Supreme Court Rules 1970 (NSW) required the claimant to appeal within 28 days from the entry of judgment, that is 28 days from 20 December 2002. In fact the claimant filed his summons for leave to appeal for an extension of time within which to apply for leave to appeal only on 22 March 2004. 7 The ground on which the claimant seeks to challenge the decision of the Master is that, firstly, the costs assessor failed to take into account the proportionality between the amount of the verdict and the amount assessed for costs and, secondly, that the Master failed to have regard to this principle of proportionality in determining whether or not the costs assessor had erred. 8 In my opinion, in determining whether costs have been reasonably and properly incurred, it is relevant to consider whether those costs bear a reasonable relationship to the value and importance of the subject matter in issue. See in this regard Szlazko v Travini [2004] NSWSC 610, Moore v Moore [2004] NSWSC 587, Gallagher v CSR Limited (unreported, Supreme Court of Western Australia, 31 March 1994). This conclusion is supported by s 208G(f) of the Legal Profession Act. 9 The failure on the part of the costs assessor and the Master to have regard to the principle of proportionality does not, however, in the circumstances of this case, alone warrant granting the relief sought by the claimant. 10 The delay in this case is very long. It is more than twelve months. Further, I do not regard the explanation for the delay as reasonable. In this regard the claimant's solicitor has filed an affidavit saying that during 2003 time-consuming and stressful matters made it difficult for Mr Skalkos to attend to all his affairs. I am not persuaded that this is a satisfactory justification for the delay. 11 I would add that I am not impressed by the fact that the only explanation for the delay, tendered by way of evidence on oath, was given by the claimant's solicitor. No affidavit was tendered by the claimant himself. 12 According to the claimant's solicitor, the claimant was not informed by his legal advisers until the week beginning 15 March 2004 that the costs assessor may have made an error in failing to take into account the principle of proportionality. It is also said that a speech made by the Chief Justice on 2 February 2004 alerted the claimant or his lawyers to this principle. In any event it appears that it was only in mid March 2004 that counsel informed the claimant of the proportionality argument. 13 I do not think that the omission on the part of the claimant's legal advisers over the prior 12 month period to take the point of proportionality is a compelling reason to grant the extension of time. It must also be borne in mind that the realisation of the existence of this argument was apparently thought of only within days of a hearing of a creditor's petition for the claimant's bankruptcy and seems to have been largely provoked by the consequences of that hearing. 14 I also take into account the fact that the argument based on proportionality was raised neither before the costs assessor nor the Master. 15 A further relevant factor is that the evidence before the Court does not establish that the claimant has a reasonable prospect of having the costs as assessed by the assessor reduced to any material extent. 16 Firstly, in this regard, the trial lasted for 34 days. After that there were four days of hearing in relation to defences of qualified privilege. The Court has not been informed what other interlocutory disputes took place and the Court has not been given any information to give it an understanding, in broad terms, of how the amount of $941,444.77 is made up. On this evidence it is difficult to make any reliable assessment as to the reasonableness of the amount. 17 Secondly, although it appears from the papers that the judgment was given in respect of a claim for defamation, the material before the Court does not reveal the nature and extent of the defamation. It is therefore not possible for this Court to have any understanding of the importance of the action to Mr Assaf and Ethnic Communications Pty Limited in vindicating their reputation. 18 Thirdly, no explanation has been given for the conduct of the claimant in persisting with his defence for so many years despite a reasonable offer having been made. Prima facie, the inference is that much of the responsibility for the trial taking so long and being so costly has to be attributed to the claimant for carrying on the litigation in the face of a reasonable offer of settlement. 19 Taking into account all the matters to which I have referred, I consider that the application for an extension of time should be dismissed with costs. 20 SHELLER JA: Mr Broun QC and Mr Pesce appeared for the claimant on this application, which was a difficult one. Mr Broun put all the submissions that could be put in favour of the application with his usual care and candour. Despite that I am not persuaded that the extension should be granted. I agree with the reasons for judgment that have been given by Ipp JA and with the order that he proposes. 21 GROVE J: I also agree with the order proposed by Ipp JA and the reasons which he has given. 22 SHELLER JA: The order of the Court will therefore be as proposed by Ipp J. **********

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