Sukkar v Haoui

The defendant's submissions

1. The defendant submitted that this was not an application made by or on the plaintiff's behalf. It was simply one made by Mr Bazouni in his own interest. The circumstance that he failed indicated that he, and not the plaintiff, should pay his costs. Alternatively, he should indemnify the defendant in respect to the costs he is liable to pay to his solicitors.
2. With reference to parts of my reasons, the defendant pointed to a range of omissions by the applicant, which the defendant characterised collectively as a failure to comply with his obligations, as the plaintiff's solicitor, under s 56 of the CP Act. Those omissions including failing to formally effect the plaintiff's asserted withdrawal of her instructions; failing to notify the Court (or the defendant) that circumstances (imminent surgery) had occurred which might jeopardise the hearing date which the plaintiff had advised to him; from the point of such advice, not filing a notice of ceasing to act with expedition; and (further or alternatively) not acting on the prompt he received from the defendant's solicitor from 3 March 2022.

The 'interested party's submissions

1. Counsel for Stacks Goudkamp noted that his client did not appear as amicus, but was joined to the motion. It had no practical alternative but to appear at the application and certainly the applicant took no point as to its decision to appear. Stacks Goudkamp should be treated, in effect, as a party to the application, but even if was not, a costs order should still be made in its favour.
2. As to who should pay its costs, Stacks Goudkamp reprised its argument at the hearing of the application that Mr Bazouni laboured under the misapprehension that it was entitled not to do anything to formalise the Court record after the plaintiff had terminated his retainer. This was despite the plaintiff indicating that it wanted the solicitor to request the vacation of the hearing date and her indication that she did not have any alternative lawyer. Instead, Mr Bazouni sought to shift (unsuccessfully) his burden on to Stacks Goudkamp. This position was maintained through to the hearing despite Stacks Goudkamp signalling its position that he was required to file the notice of ceasing to act and its own inability to represent the plaintiff at the hearing.
3. Stacks Goudkamp submits that Mr Bazouni, or Prominent Lawyers, as the unsuccessful 'party' who necessitated its participation at the hearing, should pay Stacks Goudkamp's costs of appearing at the motion. Alternatively, if the costs were payable by the plaintiff, she should be indemnified by Mr Bazouni.
4. In anticipation of a submission by Mr Bazouni that Stacks Goudkamp represented that it acted for the plaintiff, Stacks Goudkamp argued that there was nothing unreasonable about its conduct which disentitled it from receiving its costs. Stacks Goudkamp had requested, but Prominent Lawyers had withheld, information that would assist it to represent the plaintiff at a forthcoming hearing.

The plaintiff's submissions

1. Although submissions were nominally expressed as being advanced on the plaintiff's behalf, the substance of the submissions, manifested in the text, makes it apparent that they were intended to reflect the position, and advance the interests, of Prominent Lawyers.
2. Prominent Lawyers cited authorities that the power to make a costs order against a solicitor under s 99 is to be used sparingly, should make allowance for the exigencies for the litigation environment and take into account that the solicitor is hampered by a duty of confidentiality as to what it could say about communications received from a client.
3. Prominent Lawyers submitted that, at most, all that occurred was an oversight, which I take to be a reference to an omission to file a ceasing to act, which omission was compounded by 'confusing' correspondence from Stacks Goudkamp. It expected, and it was insinuated, entitled to expect that an incoming solicitor would expeditiously file a notice of change of solicitor. Prominent Lawyer's conduct did not rise to the level required by s 99 of the CP Act, which was characterised as amounting to a 'serious dereliction of duty'.
4. Addressing the defendant's submissions, Prominent Lawyers said it was wrong to say that it had been 'instructed' to apply for a vacation of the hearing date. Although it may be true that Prominent Lawyers was obliged to notify the Court that the hearing date was in jeopardy, the defendant itself was aware of the surgery and the defendant was also aware of issues concerning the plaintiff's representation. It was said that the defendant failed to respond to correspondence from Stacks on 10 and 19 March 2022. The real cause for the motion was the plaintiff's failure to organise her own representation after December 2021.
5. Addressing the submissions of Stacks Goudkamp, Prominent Lawyers blamed that firm for the belated application made, which was rejected. It was only on 22 March 2022 that Stacks indicated that it would not act for the plaintiff at the hearing. Prominent Lawyers was entitled to believe that Stacks would file a notice of change of solicitor.
6. Prominent Lawyers also justified its decision to join Stacks to the motion. As Stacks expected, Prominent Lawyers submitted that Stacks had represented, to itself, and also to the defendant's insurer, that it represented the plaintiff. That representation was not withdrawn before the application was filed and was only withdrawn at the hearing of the motion.
7. Prominent Lawyers criticised Stacks in several respects: for failing to obtain information from the plaintiff (the proximity of a hearing date) and failing to properly articulate their position (that it did not act for the plaintiff). It complains that it is at a level of disadvantage in making submissions as to the plaintiff's instructions.

Consideration

1. Although there was some commonality in the submissions of the defendant and Stacks Goudkamp, their positions were not completely assimilated and it is appropriate to consider their positions separately. For reasons to shortly become apparent, that is not to say that there is not substantial overlap in relation to the applicable considerations.

The position concerning the defendant

1. As to the defendant, it is a party in the substantive proceeding. It successfully opposed the application by Prominent Lawyers for leave to withdraw. In doing so, it incurred legal expense and, under the Uniform Civil Procedure Rules 2005 (NSW) r 42.1 (the 'usual rule' through which costs follow the event), it was entitled to have an order for costs to compensate it for its expense. As I read the submissions of Counsel for the plaintiff, they intimated that the defendant was partly responsible for the problem necessitating the application such that it appears to me that it was implicitly or even faintly suggested that the defendant was not entitled to its costs at all. If I am not mistaken in this, I reject Counsel's suggestion. The defendant made it very clear from 3 March 2022 - about 3 weeks before Prominent Lawyers' brought its application - that Prominent Lawyers may have a problem and that it should act to promptly to formalise the position of who may represent the plaintiff at the hearing. The suggestion, in effect, of moral equivalence, as between Prominent Lawyers and the defendant, in promptly notifying the Court that the hearing date may be imperilled does not amount to conduct by the defendant which would disqualify it from having its costs paid. It was not the defendant's concern whether the plaintiff was ready, or not ready, to proceed with the hearing. It was not privy to and could not ascertain directly from the plaintiff what her intentions were as to the hearing date. She was not its client. To the contrary, to all intents and purposes to an interested onlooker, she had Prominent Lawyers as her solicitor. But because of certain circumstances, there appeared to be some doubt. This explains why the defendant's lawyers invited Prominent Lawyers to take the necessary steps to clarify the plaintiff's representation; where it did not until it brought its late application. Accordingly, there is no reason why costs should not follow the event.
2. The real question was who should pay for those costs: Prominent Lawyers or the plaintiff.
3. Contrary to the submission advanced by Prominent Lawyers, the power under s 99 of the CP Act is not confined by a need in an applicant to establish a 'serious dereliction of duty' by the practitioner. As s 99(1)(b) makes plain on its face, the power to order costs against a legal practitioner may be enlivened where costs have been incurred 'improperly', or 'without reasonable cause', in circumstances for which a legal practitioner is responsible.
4. In Kelly v Jowett (2009) 76 NSWLR 405 McColl JA, delivering the leading judgment, observed that in considering exercising its discretion to make costs orders against legal practitioners, the Court may take into account a legal practitioner's failure to comply with s 56 of the CP Act (at [59]). Her Honour (at [61]) observed that the underlying principle is that the court has a right and a duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which the solicitor is engaged. The jurisdiction is exercised where it is demonstrated that the solicitor has failed to fulfil his or her duty to the Court and to realise his or her duty to aid in promoting in his own sphere the cause of justice. The order is for payment of costs thrown away or lost because of the conduct complained of and is frequently exercised in order to compensate the opposite party in the action. At [62], her Honour said that the object of the wasted costs jurisdiction is to protect the client who has suffered and to indemnify the party who has been injured. Misconduct or default or negligence in the course of the proceedings is in some cases sufficient to justify an order. But the exercise of the power in s 99 does not depend on proof of misconduct so, in that sense, it is not punitive: Pinebelt Pty Ltd v Bagley [2000] NSWSC 655 at [16].
5. In Ritchie's Uniform Civil Procedure (NSW) at [s 99.15], the learned authors observe that a legal practitioner's duty to the Court includes ensuring that legal proceedings are conducted efficiently and expeditiously and such 'conduct' includes a failure to comply with rules of court or interlocutory directions and, I interpolate, non-compliance with the requirements of a Practice Note, with the result that a party incurs costs unnecessarily.
6. There must be a causal connection between (a) the particular conduct of the practitioner, or circumstances for which the practitioner is responsible; and (b) another person incurring costs: Newell v De Costi (2018) 97 NSWLR 398 per Beazley P (as her Excellency then was, Gleeson and White JJA agreeing) at [71]-[72]. Newell indicates that a two-stage approach is to be taken. First, to identify where costs have been incurred as a result of conduct on the part of a representative; and secondly, whether the unnecessary costs were incurred by the conduct: at [71].
7. There are two competing aspects of the public interest which call to be balanced when applying s 99: the public interest in maintaining and nurturing a legal profession which provides vigorous representation for litigants in court, uncompromised by a fear of personal sanctions for failure; and the public interest in the need to maintain a practitioner's obligation to provide independent advice to litigants and to give proper weight to the efficient administration of justice: Re Felicity (No.4) [2015] NSWCA 19 at [14].
8. There is nothing in this case, about any vigorous representation of the plaintiff or need for the plaintiff to receive independent advice as matters which militate against the imposition of a costs order against a practitioner. This case concerns the plaintiff facing the risk of becoming stranded, without legal representation, at an imminent hearing. As I noted in my reasons (at [27]), it is part of a solicitor's duty to guard against the possibility of the Court finding itself dealing with unrepresented litigants close to a hearing date. For reasons explained at length in the reasons for judgment, this case concerned, in particular, the practitioner's simple failure, repeated over a period of months in the lead up to a hearing, to take the standard expedient required by the court rules of formalising the cessation of its representation and its standing back, despite certain events or circumstances occurring throughout February and early March - when there was likely still time for the plaintiff to obtain alternative representation - which should have prompted Prominent Lawyers to put beyond doubt the formal cessation of its representation as the solicitor on the record of the plaintiff. The fact that it brought the application, albeit at a time when it was too late, reflected, ultimately, Prominent Lawyers' recognition that in lieu of filing the notice of an intention to cease to act it needed to bring the application to withdraw much earlier than it did.
9. I do not accept Prominent Lawyers' argument that the defendant was equally responsible for this omission. Nor do I accept that the defendant was equally responsible for the omission to notify the Court that the hearing date was in jeopardy. These were matters which, being the solicitor on the record for the plaintiff, was the cardinal responsibility of Prominent Lawyers.
10. Nor do I accept Prominent Lawyers' argument that the plaintiff should be regarded as responsible for the costs. Not only did Prominent Lawyers fail to take the formal procedural steps which its obligation demanded, but it did so with notice of the plaintiff's indication from earlier this year that she looked to Prominent Lawyers to assist her with the application to vacate. In this regard, whilst I am mindful that on applications of this kind there may be some constraints upon what solicitors can say about communications they have with clients the issue here is not the disclosure of communications during a subsisting relationship of confidence, but rather the absence of evidence of communications that occurred after the retainer had been terminated. There was no impediment to Prominent Lawyers adducing evidence as to the nature of communications with the plaintiff after December 2021 and, as indicated in my reasons, it was of some significance that it did not, at the hearing, address the points raised in the correspondence suggesting that from early 2022 the plaintiff wanted Prominent Lawyers to assist her.
11. By its procedural omissions, I agree with the defendant's submission that Prominent Lawyers fell short of the standard of conduct expected by practitioners in not complying with the rules of the Court or the requirements of the Practice Note. In this way it did not comply with its duty to the Court. I further find that Prominent Lawyers caused the defendant to incur costs without reasonable cause and that it was responsible for those costs being incurred. The procedural omissions, occurring over a period of weeks, led to the result of a very late application being made to the Court which, if acceded to, would have resulted in a vacation of the hearing. The defendant had good cause to attend in opposition to an application which would produce that result.
12. There is no evidence as to the capacity of the plaintiff to pay the defendant's costs. I agree further with the defendant's submission that the application was made entirely for the applicant's benefit and not for the benefit of the plaintiff. In the circumstances, in my view, it is appropriate for Prominent Lawyers to indemnify the defendant against costs payable by the defendant to its lawyers in relation to its opposition to the application, pursuant to s 99(2)(c) of the CP Act.

The position concerning Stacks Goudkamp

1. Section 98(1) indicates the breadth of the discretion in the Court to order costs. In particular, s 98(2) provides that subject to rules of Court and the CP Act (or any other act) the Court has "full power to determine by whom, to whom and to what extent costs are to be paid". There have been a number of cases in which costs orders have been made against 'non-parties', including Knight v FP Special Assets Ltd (1992) 174 CLR 178. What is rarer is an order for costs in favour of a non-party, absent contrary statutory provision or the grant of leave from the court to the non-party to participate in the proceeding as if it was a party: Re Pan Pharmaceuticals Ltd; Selim v McGrath (2004) 48 ACSR 681; [2004] NSWSC 129 at [20].
2. Stacks Goudkamp did not appear at the hearing of the application as amicus. Further, it is a stretch to regard it as a 'party'. Nevertheless, it was effectively joined and served with the application, presumably in the applicant's belief that the firm's interests were affected by the application. I regard that belief as entirely reasonable: the applicant raised submissions which, in my view, at least affected the firm's reputation. Moreover, the success of the application depended to a degree upon the Court's acceptance of the applicant's various submissions about the firm's conduct. The applicant contended, in substance, that Stacks Goudkamp was seeking to resile from a representation that it unequivocally or unconditionally would act for the plaintiff at the hearing which contributed to the applicant's omissions that I have referred to. The assessment of that contention inherently required the firm to indicate its position. The applicant itself suggested it was 'forced' to join Stacks Goudkamp to the application. The firm appeared, by Counsel, and advanced submissions. No point was taken by the applicant that this course was inappropriate or that the firm should not be heard on the application. The applicant does not contend that, as a matter of principle or power, Stacks Goudkamp, as a non-party, should not obtain a costs order in its favour. The applicant did not point to any rule of Court or legislative provision derogating from the Court's power to award costs in Stack Goudkamp's favour. The applicant's point is that it should not receive costs as a matter of discretion. In all of these circumstances, if there is a requirement for exceptional circumstances as justifying an order for costs in its favour, then that requirement is satisfied. In my opinion, the issue turns on the Court's discretion.
3. As to the merits of the debate, as touched upon earlier, Stacks Goudkamp and Prominent Lawyers essentially repeated arguments made during the hearing of the application. My reasons plainly indicate that I rejected the latter's arguments. I am not persuaded that the repetition of Prominent Lawyer's arguments in its written submissions on costs alters the usual position that costs should follow the event. I find, for the same reasons essentially applicable to the defendant's position, that Stacks Goudkamp incurred expenses, without reasonable cause, by the conduct of Prominent Lawyers in breach of its duty to the Court; although the reasons for Stacks Goudkamp appearing at the motion were different to those of the defendant. It justifiably appeared to refute matters put against it which, if accepted, would be detrimental to its reputation. It necessarily incurred legal expenses in doing so.
4. As to who should bear the liability for those costs, being Prominent Lawyers or the plaintiff, the position is again not materially dissimilar to what I found in relation to the position of the defendant. Prominent Lawyers had no basis for making assumptions or forging expectations as to what the plaintiff would do, or say, to Stacks Goudkamp. To the contrary, it was on notice that the plaintiff wanted its help on her vacation application and had tried, unsuccessfully to communicate with the firm to help her to do so. (There was no explanation by Prominent Lawyers as to why it did not respond). I propose to make the same order as to costs in favour of Stacks Goudkamp as I do in relation to the position of the defendant.

Orders

1. Pursuant to s 99(2)(c) of the Civil Procedure Act 2005 (NSW), the Court directs Prominent Lawyers to indemnify the defendant and Stacks Goudkamp against legal costs payable by that party and that firm to their respective lawyers acting for each of them of and in connection with the plaintiff's notice of motion filed at 6:25pm on 23 March 2022.

Endnote

1. Sukkar v Haoui [2022] NSWDC 83 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: 14 April 2022