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Cases Cited: Goldberg v Beckett [2015] NSWSC 1966
Harrem Pty Ltd v Tebb & Anor [2008] NSWSC 510
Johns v Law Society of New South Wales [1982] 2 NSWLR 1
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
Rhodes v Tower Australia Superannuation Limited as Trustee for Tower Superannuation Fund [2004] FCA 812
Studio B Hair Design Pty Ltd t/as Studio B Hair Design v Kerrison t/as Kerrisons Legal Services [2025] NSWSC 924
Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256

Category: Costs

Parties: Studio B Hair Design Pty Ltd t/as Studio B Hair Design (Plaintiff/First Cross-Claimant)
Robert Francis Kerrison t/as Kerrisons Legal Services (First Defendant/First Cross-Defendant)
Amanda O’Brien (Second Defendant/Second Cross-Defendant)

Representation: A Crossland (Plaintiff)
J Dooley (Defendants)
Solicitors:
Watson Law (Plaintiff)
Gilchrist Connell (Defendants)

File Number(s): 2022/161245

Publication restriction: Nil

JUDGMENT

1. In August 2025 I gave judgment for Mr Kerrison. The issue between the parties being whether he had properly exercised his right of general lien over funds which he held in his trust account, having acted for Studio B after it sold its hairdressing business, there then being a dispute about its entitlement to all of the proceeds. It having directed him to transfer those funds to it, which he had not complied with, at a time when there was an ongoing dispute about his costs and their assessment: Studio B Hair Design Pty Ltd t/as Studio B Hair Design v Kerrison t/as Kerrisons Legal Services [2025] NSWSC 924.

2. I also concluded that the costs which Garling J had earlier ordered Studio B to pay Mr Kerrison having been assessed, they could be ordered to be paid out of trust: at [73]-[75].

3. The parties were directed to confer about the appropriate orders, including as to costs, they having earlier indicated that they wanted to be heard further: at [77]. They were unable to agree and so advanced written submissions about their respective positions.

4. Studio B’s position was that the appropriate orders were to dismiss each party’s claims, with no order for the payment of funds from trust and that no costs order should be made in favour of Mr Kerrison, despite his success in the proceedings.

5. Earlier, Studio B had pursued a motion by which it sought orders that Mr Kerrison’s defence be struck out and his cross-claim be dismissed. Its amended motion sought judgment in its favour and was listed for hearing before Wright J on 14 April 2025, when it was dismissed by consent, Mr Kerrison belatedly having served his evidence. Costs of the motion were then reserved.

6. Studio B did seek its costs of the motion, which it contended had been justified and reasonable in the circumstances where Mr Kerrison had failed to file his evidence until the last possible moment.

7. The orders it pressed were:

“1. Statement of Claim Dismissed.

2. Cross-Claim Dismissed.

3. Except as to Order 4, no order as to the costs of the proceedings, with the intention that each party pay its own costs.

4. Mr Kerrison to pay Studio B’s costs of and ancillary to the Notice of Motion filed 21 February 2025, and the Amended Notice of Motion filed 8 April 2025.”

8. Mr Kerrison’s position was that the Court should order:

“1. The plaintiff’s claim is dismissed.

2. Judgment for the cross-claimant on the Cross-Claim.

3. Direct the defendant/cross-claimant to transfer $23,379.70 of the $91,180.38 funds held in his trust account (Trust Account) to himself for payment of the Garling J assessed costs ($21,274.75) plus interest thereon (of $2,104.96, being 406 days [up until 5 September 2025] @ $5.1846 per day).

4. The plaintiff/first cross-defendant to pay the defendant/cross-claimant’s costs of the proceedings on the ordinary basis up to 5pm on 8 July 2025, and on the indemnity basis from 5pm on 8 July 2025 onwards, as agreed or assessed.

5. Direct the defendant/cross-claimant, in part-payment or payment on account of the costs the subject of order 4, to transfer the remainder of the funds held in the Trust Account after the transfer provided for by order 3 (being $67,800.68) to himself.

6. There is otherwise no order as to costs.”

9. Those orders reflected that on 7 July 2025 Mr Kerrison had made a Calderbank offer on the basis that he would receive 50% of what was held in trust and there being no order as to costs in these proceedings, which was not accepted. Had it been, Studio B would undoubtedly have been in a better position than it now is.

The costs

10. There is no issue that the usual costs order under the Uniform Civil Procedure Rules 2005 (NSW) is that costs follow the event: r 42. Or that the Court has a broad discretion to depart from the usual order, in accordance with what justice demands in the particular circumstances: Civil Procedure Act 2005 (NSW) s 98.

11. Misconduct in the course of the proceedings is a recognised basis on which the Court may order such a departure: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [69] considered in Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256. In Oshlack, misconduct was explained to include lax conduct effectively inviting the litigation and obtaining relief which the unsuccessful party had already offered in settlement of the dispute.

12. I gave judgment for Mr Kerrison in August, having explained that much of what had been in issue between the parties had fallen away and what remained in issue: at [13]-[22].

13. I concluded that the case Studio B pressed could not be accepted, Mr Kerrison having a general lien over the funds he held on trust. Still Studio B refused to direct the transfer of even the costs Garling J had earlier ordered in Mr Kerrison’s favour out of trust: at [19]-[20]. It pressing orders for him to transfer to it the entire $91,180.38 he still held on trust and in the alternative, that he retain for his own benefit the sum of only $18,180.38 and transfer to it the residual sum of $69,905.63: at [31].

14. The result was that I found that s 144 of the Legal Profession Uniform Law 2014 (NSW) did not preclude Mr Kerrison's exercise of his general lien over the funds he holds on trust in respect of both the costs he incurred in successfully pursuing his case on the review of the earlier costs assessment, but also those he incurred in resisting the relief Studio B pursued in these proceedings: at [71].

15. Still, whether a costs order should be made in favour of Mr Kerrison remained in issue, despite his success and Studio B’s refusal of his July 2025 offer.

16. Mr Kerrison did not address the motion, but in all the circumstances it seems to me that justice demands that he bear the costs of the motion not pressed because of the late service of his evidence. Mr Kerrison’s approach not having to that point accorded with the obligations imposed on him by s 56 of the Civil P**rocedure Act and having predictably resulted in the motion which led to the belated service of his evidence, he having earlier repeatedly failed to comply with the Court’s orders.

17. Studio B also urged that there would be no costs order in favour of Mr Kerrison, given that he had refused reasonable requests to remit amounts which would have left funds in trust sufficient to cover his claimed costs, pending the costs assessment and its review. That would have avoided the proceedings. He had also failed to explain the basis of his finally claimed entitlement to a lien over all of the funds held in trust, his general lien.

18. The result was that it was only at the final hearing that Mr Kerrison had disclosed his reliance on his general lien, he to that point having no basis to refuse to disburse trust funds in accordance with Studio B’s 21 December 2021 directions. The result predictably being the bringing of these proceedings, which he had then conducted by ambush.

19. The nature of the claimed general lien having earlier not been notified to Studio B, not having been pleaded and only exposed in the written submissions served shortly before the hearing.

20. Reliance was also placed on:

21. Rhodes v Tower Australia Superannuation Limited as Trustee for Tower Superannuation Fund [2004] FCA 812 where French J observed at [19] that “the discretion to award costs to a successful respondent may be informed by its failure to take a preliminary objection until the very last minute. I would not go so far as to say that it would be appropriate in any but exceptional cases to award costs against such a respondent. However it may be appropriate to refuse the benefit of an order for costs in such a case”; and

22. Harrem Pty Ltd v Tebb & Anor [2008] NSWSC 510 where Palmer J discussed the culture of trial by ambush which his Honour considered to be long dead: at [19]. Observing that “significant points of law, particularly those going to jurisdiction, should be brought to the attention of the opponent as soon as possible If the point is a good one, wasteful litigation might be avoided. If the opponent presses ahead regardless and fails, an indemnity costs order may follow. But at least the parties will have avoided the waste of time and money which has occurred in this case.”

23. It must be accepted that Mr Kerrison’s pleadings did not disclose his reliance on his general lien. Reference in his defence and cross-claim being rather made to a beneficial interest in, charge over or alternatively an equitable charge or equitable lien or fruits of the action lien over what he still held in trust.

24. That the case finally advanced was unexpected accorded with my observations at [17]-[22]. But the course pursued at the hearing accorded with Studio B adhering to its obligations under s 56 of the Civil Procedure Act, it accepting that the real issues lying between the parties plainly turned on the long and well recognised general lien which solicitors have over funds they hold on trust for a client. It was the scope of that lien which remained in issue: at [33]-[48].

25. Despite this, Studio B continued to refuse to agree to have any of the funds which Mr Kerrison held in trust transferred to him, despite my having raised with it such an agreed way forward, during the course of the hearing. Even despite costs Garling J had earlier ordered it to pay Mr Kerrison having been assessed and a review unsuccessfully pursued.

26. Despite evidence about directions it gave in the past about Mr Kerrison transferring funds out of trust, there is no evidence that it has ever directed him to transfer any of those funds to himself. Even at this point it does not accept that any order may be made permitting Mr Kerrison to transfer any funds out of trust to himself.

27. I am thus satisfied that it must be accepted that it was the conduct which both parties pursued which resulted in the litigation unfolding as it did, not only that which Mr Kerrison pursued.

28. In all those circumstances, the final result being that the case Studio B pressed having failed as it did, I consider that justice does not now permit a departure from the usual costs order, other than in respect of the motion.

29. In respect of the Calderbank offer, what has to be established is that Mr Kerrison’s offer involved a real and genuine element of compromise and that its non-acceptance was unreasonable: Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8]-[9].

30. In all the circumstances I have discussed, I am not satisfied that both have been established, given the belated way in which Mr Kerrison’s reliance on his general lien was disclosed and advanced.

Other orders

29. The funds held on trust are $91,180.38. After payment of the costs Garling J ordered, which have been assessed, $67,800.68 will remain in trust.

30. Mr Kerrison’s case that his solicitor’s and counsel’s fees in these proceedings exceed that amount, albeit they have not all yet been quantified, was not challenged and should be accepted. But those costs have neither been agreed nor yet assessed.

31. Mr Kerrison still urged that the Court should order that what remains in trust should be paid to him either to part pay his remaining costs or on account of those costs. That does not accord with the approach in Johns v Law Society of New South Wales [1982] 2 NSWLR 1. Or that explained in Goldberg v Beckett [2015] NSWSC 1966 at [36] that a “solicitor’s lien is a security, not a device for effecting satisfaction of an outstanding account whose precise quantification remains in doubt.” Payment of costs held in court in that case before their assessment was thus refused.

32. While it was Studio B which disputed the relevance of what was decided in Goldberg because it concerned a fruits of the action lien and not a costs order made in proceedings in which a solicitor and former client had been opposing litigants, I consider that no different approach is available in relation to Mr Kerrison’s general lien and his unassessed costs.

33. For all of these reasons I order that:

34. Studio B’s claim is dismissed.

35. Judgment is entered for Mr Kerrison.

36. Mr Kerrison transfer $23,379.70 of the funds held in trust to himself for payment of the costs Garling J ordered, assessed to be $21,274.75, plus interest thereon of $2,104.96, that reflecting 406 days up until 5 September 2025 at a rate of $5.1846 per day.

37. Mr Kerrison pay Studio B’s costs of the motion, as agreed or assessed.

38. Studio B otherwise pay Mr Kerrison’s costs of the proceedings, as agreed or assessed.

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