Vagg v McPhee

Judgment 1HER HONOUR: The Court has before it an amended notice of motion seeking three orders. The respondents now consent to orders 1 and 2 in the amended notice of motion. The only extant issue is as to whether the respondents should pay the appellants' costs of the notice of motion which the appellants seek on an indemnity basis. 2The original notice of motion was filed on 11 July 2012. It sought an order in identical terms to paragraph 1 of the amended notice of motion and also a costs order. The amendment effected in today's notice of motion was to add a second order seeking a stay of the costs assessment in respect of the orders made by the court below on 7 March 2012 pending the hearing and determination of the appeal in the matter. 3Prior to filing the original notice of motion of 11 July, Mr Goldberg of Turner Freeman, the appellants' solicitors, wrote to Colin Biggers & Paisley ("CBP"), the respondents' solicitors, referring to a bill of costs and application for assessment served by CBP on 14 June 2012. That bill of costs and application for assessment followed from the respondents taking steps to pursue the order made by the court below to the effect that the appellants pay their costs of the proceedings on the bases referred to in paragraph 1 of the amended notice of motion. 4Turner Freeman's letter of 5 July 2012 sought CBP's advice as to whether that firm intended to proceed with the assessment or whether it was prepared to wait until the appeal was completed. The letter contended that if the appellants were successful in the appeal then the costs sought in the bill would not be payable. It advised that in the event the respondents sought to proceed with the assessment, the appellants would seek an order for a stay. It does not appear that a reply was received to that letter. The next step which was taken was that Turner Freeman filed the notice of motion which brings the matter before the Court. It also filed a supporting affidavit from Mr Goldberg of 10 July 2012, the only part of which Mr A P Webb QC, who appears with Mr Young for the appellants, has drawn to the Court's attention for the purposes of today's application being Turner Freeman's letter of 5 July to which I have already referred. 5The notice of motion was returnable on 23 July 2012. On 18 July, Turner Freeman wrote to CBP referring to the notice of motion and Mr Goldberg's affidavit, both of which had been served on 11 July, and advising in substance that if the respondents insisted on taking steps in relation to the costs orders of which they were the beneficiaries but which were the subject of appeal, it would "simply lead to more costs being incurred by both sides which may be simply wasted in the event that our clients are successful on appeal." The letter suggested that such an approach was "both inefficient and unreasonable," and sought advice in light of those matters as to whether the respondents intended to pursue the costs assessment process prior to the determination of the appeal or in "any other way take any step to execute or enforce the present costs order prior to the determination of the appeal." 6On 19 July 2012, CBP wrote to Turner Freeman. That letter was marked "without prejudice except as to costs". It referred to the notice of motion and Mr Goldberg's affidavit and advised that the respondents would consent to the first order sought on condition that the appellants make payment into court of a sum of $216,000 representing the respondents' "present costs entitlements," that sum to be held in an interest bearing account pending the outcome of the appeal. The letter continued that if the appellants consented to that proposal, the notice of motion could be dispensed with. 7On 20 July 2012, Turner Freeman wrote to CBP enclosing an affidavit sworn by Mr Goldberg of 18 July 2012. That affidavit has not been relied upon this morning. However, it is common ground that in that affidavit the appellants set out their financial circumstances. 8On 23 July 2012, Turner Freeman wrote again to CBP, a letter which referred to matters which had transpired when the notice of motion was returnable before the registrar on 23 July. The letter referred to the fact that at that time they had intended to seek a hearing date for the motion and that Ms Slabacu, who appeared for the respondents, had sought an adjournment of the matter for seven days based, in substance, on what she contended was the comparatively late service of Mr Goldberg's 18 July affidavit in respect of which she wished to seek instructions. 9The Turner Freeman letter of 23 July 2012 continued with reference to the Registrar reserving the costs of 23 July and noted that a costs order for the wasted appearance would be sought. The letter then continued to press the proposition that the motion as a whole should be unnecessary and had only been filed as a result of the respondents' determination to proceed with a costs assessment despite the matter being the subject of an appeal. It referred to the 18 July letter and its suggestion that the respondents' approach was inefficient and unreasonable. It continued to the effect that if the respondents were prepared to undertake to the Court that they would not proceed with the assessment of their costs or execution of the costs orders until after the determination of the appeal, then the appellants would be prepared to agree to consent orders that the motion be dismissed and that the costs of and incidental to it be the appellants' costs in the cause. The offer was described as an open one, available and open for acceptance until 4pm on 25 July 2012. Finally, the letter stated that if the offer was not accepted the appellants would seek that the costs of and incidental to the notice of motion be paid on an indemnity basis due to what was asserted, again, to be the respondents' unreasonable approach and failure to allow the matter to be resolved on the "swift and inexpensive basis" suggested in that letter. 10Ms Slabacu's affidavit refers to Turner Freeman's letter of 23 July and suggests that it did not purport to respond to her letter of 19 July 2012. She deposed that on 24 July 2012 she made an attempt to speak to Mr Goldberg to raise her 19 July letter with him. The same day she forwarded a letter to Mr Goldberg drawing attention to her telephone call and asking him to respond to her letter of 19 July with his clients' instructions by close of business on 24 July. 11On 25 July, Ms Slabacu again telephoned Turner Freeman and sought to speak to Mr Goldberg. She was told that he was not available and left a message for him to call her. On the same day CBP wrote to Turner Freeman again, noting that the letters of 19 and 24 July 2012 remained unanswered as with the telephone messages left for Mr Goldberg on 24 and 25 July. The letter advised that instructions had been obtained to make one further attempt to dispose of the need for a hearing of the notice of motion. That offer was to consent to the first order sought conditional upon the appellants executing a judgment in the amount of $175,000, such judgment to be held in escrow by CBP pending the outcome of the appeal. The respondents would, on the basis of the offer, undertake not to file that judgment unless the appellants' appeal was unsuccessful. The letter also sought that each party pay their own costs of the motion. The letter sought a response prior to close of business on 26 July 2012. It does not appear there was any response in terms to that letter. 12On 27 July, CBP wrote to Turner Freeman again referring to their previous correspondence both in writing and by telephone. That letter advised that the respondents were instructed to agree to the first order on condition that each party bear their own costs of and associated with the motion, and advising that, in the event the appellants sought a costs order, that correspondence to which I have referred would be drawn to the Court's attention as well as the lack of response to the communications. 13On 27 July, Turner Freeman wrote to CBP referring to each of that firm's letters of 5 July, 18 July, 23 July, and noting there had been no response to any except "without prejudice" responses. The letter sought an "unequivocal open response" to each of the letters including an unequivocal undertaking that the respondents would not seek to have the costs assessed unless they were successful in resisting the appeal and advising that unless an affirmative answer was received, the appellants would have little option but to proceed with the notice of motion. That letter also enclosed an amended notice of motion which, as I earlier said, added a second prayer for relief concerning a stay in respect of the actual costs assessment process. 14At 8.47am this morning, CBP faxed to Turner Freeman a letter agreeing to the first and second orders in the amended notice of motion and advising that any application for costs would be opposed. 15Mr Webb has informed me that the reason the second prayer for relief was added to the notice of motion was based on a proposition which he said emerges from Tobias JA's judgment in Trad v Harbour Radio Pty Limited [2010] NSWCA 41 to the effect that there is a distinction between a stay of execution of judgment, which was the effective order sought in paragraph 1 of the original notice of motion, and a stay of the actual process of costs assessment which, as I have said, is the subject of the second order now sought in the amended notice of motion. 16The correspondence to which I have referred reveals resistance on the respondents' part, at virtually all stages until last Friday, to the substantive order which the appellants then sought seeking a stay of the costs orders of which the respondents were the beneficiaries. The appellants had first sought on 5 July to persuade the respondents to await the outcome of the appeal before they proceeded with the application for assessment which had been served on 14 June 2012. 17The outcome which was achieved today is, in my view, that which could have been achieved by agreeing to the course proposed in Turner Freeman's letter of 5 July 2012. Nothing in the material which is before me today suggests any reason to resist the stay the appellants sought, apart from the respondents' apparent desire to secure the benefit of a bird in the hand, so to speak, by having either the payment of a sum of money into court or indeed a judgment in their favour which could be enforced immediately upon an unsuccessful appeal. There is no suggestion as to the strength or otherwise of the weakness of the appellants' appeal being such that the stay orders were inappropriate, nor is any matter, other than the correspondence relied on before me today, advanced as a basis for not making the costs order now sought. Rather, the substantial submission appears to be to the effect that the appellants' failure to respond in terms to each of CBP's letters is a basis for resisting the costs order. 18The inference I draw from the Turner Freeman correspondence, although it does not refer in terms to the various CBP letters, is that Turner Freeman was insisting that the orders sought in the original notice of motion be made and that those orders could be made by consent, thus avoiding any costs orders. That firm had taken that position from 5 July by requesting an agreement not to proceed with the assessment of costs or execution of the costs orders. This position is evident from the 23 July letter. At that stage, Turner Freeman was prepared to agree to the costs of the notice of motion being their costs in the cause. In my view, CBP's failure to agree to that course as at the deadline for that offer on 25 July 2012 was unreasonable conduct and has led to further costs being incurred which could have been avoided. 19Although as at 25 July 2012 CBP did not have the amended notice of motion seeking the second order for relief, that, in substance, was the purport of the undertaking sought from the respondents at that stage. In my view, it was unreasonable, as I have said, for the respondents not to accede to an out of court resolution of the matter at that stage. It does not accord with the requirement that parties and their legal representatives assist the Court to pursue its objectives of the just, quick and cheap resolution of proceedings pursuant to s 56 of the Civil Procedure Act 2005. In such circumstances, I am of the view that the respondents should pay the appellants' costs of the motion on an indemnity basis. 20I make the following orders: