Touma v Gold Holdings

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

JUDGMENT 1 MASTER: The plaintiff is a builder. He brought proceedings in the Local Court against the defendant. It was a claim to recover a fee for services rendered. The services related to the obtaining of an approval from a Local Council. It was alleged that there was an agreement to pay the sum of $28,000. A sum of $16,000 had been paid. The proceedings were brought to recover a further sum of $12,000. 2 The proceedings were heard by J Fleming LCM. The learned Magistrate found in favour of the defendant. She heard evidence from both the plaintiff and Mr Chiang (on behalf of the defendant). The defendant had denied the alleged agreement. The learned Magistrate considered the evidence. She expressed adverse views as to the evidence of the plaintiff. She had regard to the paucity of the evidence adduced on behalf of the plaintiff (including the lack of writing). She reached her decision on the basis that the plaintiff had not discharged the onus. 3 These proceedings were commenced by Summons filed on 16 July 2002. It purports to propound an appeal from the decision of the learned Magistrate. 4 The Summons identified three grounds of appeal. The grounds are as follows:- "Grounds 1. Her Worship erred in law in deciding not in accordance with the evidence submitted. 2. Her Worship failed to take proper account of admissions made by the Defendant. 3. The Court should have not dismissed the Applicant's claim with costs." 5 The defendant regarded these grounds as being unhelpful. An order was made for the furnishing of particulars of the grounds of appeal. The order was not complied with. After some further delay, a letter dated 31 October 2002 purported to furnish particulars. It was said to do little to identify an arguable ground of appeal. 6 There was but a narrow avenue of appeal open to the plaintiff. The onus of demonstrating an error of law justifying the disturbing of the decision was borne by him. 7 On 25 September 2002, the Summons came before Senior Deputy Registrar Whitehead. He allocated a special fixture for the hearing of the appeal. It was fixed for 26 November 2002. 8 Prior to the hearing date, the matter was referred to me on 28 October 2002 for the purposes of hearing an application for security for costs. The application was defended by the plaintiff. It was heard and determined on that day. 9 By letter dated 12 November 2002, the solicitors for the plaintiff gave notice of an intention to discontinue. There followed some unsuccessful negotiations by correspondence on the question of the terms of discontinuance. 10 On 20 November 2002, the plaintiff filed a Notice of Motion seeking leave to discontinue. The plaintiff proceeded to move on this Notice of Motion at the commencement of the hearing of the appeal. In support of it, the plaintiff relied on an affidavit sworn by his solicitor (Mr Chahoud) on 25 November 2002. 11 The hearing of the appeal did not proceed. In lieu thereof, argument took place between the parties concerning the terms upon which the plaintiff should have leave to discontinue. 12 There is no dispute that, save for past orders as to costs, the plaintiff should pay the costs of the Summons. However, there was dispute as to two questions. Firstly, the defendant seeks that the costs be paid on an indemnity basis. Secondly, the defendant seeks an indemnity from the plaintiff's solicitor for the costs payable by the plaintiff. Both of these matters were contested by the plaintiff. 13 At the outset, I should mention that the parties have referred me to a number of decided cases (including Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd & Ors 81 ALR 397; Colgate-Palmolive Company & Anor v Cussons Pty Limited 46 FCR 225; Deputy Commissioner of Taxation v Levick 168 ALR 383; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) 156 ALR 169; Gersten v Minister for Immigration & Multicultural Affairs [2001] FCA 260; Cahill v Ekstein & Anor BC9807241 and Harley v McDonald (PC) [2001] 2 AC 678). This matter can be disposed of without the need for specific reference to the cases.

14 Following the delivery of judgment in the Local Court, Mr Chahoud wrote to his client and applied for a transcript of the evidence and judgment. On the last day for the filing of an appeal, Mr Chahoud sought instructions and gave advice as to the prospects of an appeal. He advised that he did not think that the plaintiff had a strong case. Mr Chahoud was instructed to file the appeal.

15 When the transcript became available, a conference was had with Mr Chippindall of counsel on 26 September 2002. He gave advice that he was not optimistic in respect of the chances of success of the appeal. This advice was confirmed by letter of the same date sent by Mr Chahoud to his client.

16 On 8 November 2002, Mr Chahoud was instructed to withdraw the appeal. He then prepared a Notice of Discontinuance. An attempt to file it was rejected by the court. He then entered into the earlier referred to correspondence with the solicitors for the defendant.

17 The issue on indemnity costs is a narrow one. The defendant contends that the appeal is hopeless. The plaintiff disagreed with this contention. It was said that it was not a case which could be described as having no chance of success. A limited avenue of challenge was identified. It was put forward that the learned Magistrate had misconstrued the evidence. This was said to be evidence involving admissions said to have been made by Mr Chiang on behalf of the defendant.

18 I have had regard to the relevant evidence and what was said by the learned Magistrate in her judgment. In my view, she did not misconstrue the evidence. I do not accept the arguments put by the plaintiff on this question. In my view, the appeal was hopeless (and as such an abuse of process) and the defendant is entitled to its costs on an indemnity basis. 19 There is no dispute that the court has power to direct a solicitor to indemnify a party (other than his or her client) against costs payable by that party. 20 Apart from the inherent jurisdiction of the court, express power has been conferred by s 76C of the Supreme Court Act 1970 (the Act) and Pt 52A r 43 of the Supreme Court Rules 1970 (the Rules). The case presented by the defendant looks to both s 76C and Pt 52A r 43. 21 In resisting the relief sought by the defendant, the plaintiff has placed emphasis on Harley. A consideration of what was said in the judgment must bear in mind that the client in that case was seeking relief against his own legal adviser and that the court was concerned with a question of inherent jurisdiction. 22 The defendant's entitlement to the relief sought depends on it satisfying the relevant provisions. These provisions must be considered in the context of the particular facts of the case before the court. 23 Section 76C was introduced into the Act in 1991. It is headed "Costs - liability of solicitor". It only has operation in respect of a solicitor whose serious neglect, serious incompetence or serious misconduct delays or contributes to delaying those proceedings. 24 Part 52A r 43 was introduced into the Rules in January 2000. It is headed "Liability of solicitor". It only has operation where costs are incurred improperly or without reasonable cause or are wasted by undue delay or by any other misconduct or default. 25 Sub-rule (6) thereof is in the following terms:- "This rule is in addition to and is intended to operate independently of the provisions of section 76C of the Act and does not apply in circumstances where section 76C of the Act applies." 26 This sub-rule expressly resolved one of the matters raised during argument. The rule provides an additional remedy which is intended to operate independently of s 76C and does not apply in circumstances where that section has application. 27 In my view, when regard is had to the particular circumstances of this case, I am of the view that the defendant has failed to demonstrate that the requirements of either s 76C or of Pt 52A r 43 have been satisfied. Accordingly, I take the view that the defendant is not entitled to a direction that the solicitors for the plaintiff indemnify the defendant against costs payable by the plaintiff. 28 Leave is granted to the plaintiff to discontinue on terms that the costs payable by the plaintiff in these proceedings are paid on an indemnity basis. 29 Save as to past orders for costs, the plaintiff is to pay the costs of the proceedings on an indemnity basis.

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