ABIGAIL AND CO v DAVIES [1993] NSWCA 303

ABIGAIL AND CO v DAVIES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MAHONEY, CLARKE and MEAGHER JJA 22 November 1993, 14 December 1993

[1993] NSWCA 303

COSTS — INDEMNITY COSTS COSTS — Indemnity costs award by Master in compromised proceedings — appealed — respondent suffered at injury at work — appellant was the former solicitor of the respondent — appellant was sued and admitted liability consequent upon her failing to commence proceedings on respondent's behalf within the limitation period — award by Master of indemnity costs. HELD: The award was incorrect in principle and was based upon matters which had no relevance to the action compromised. These matters included: the fiduciary relationship of solicitor and client; pain and suffering occasioned to the respondent; commencing of proceedings by solicitors for the respondent against other parties in respect of whom no action lay. Discussion of the basis upon which an order for indemnity costs may be made.

Mahoney JA I agree with the judgment of Clarke JA and generally with his reasons. In deference to the arguments addressed to the court, I shall add some additional reasons of my own.

A decision as to costs involves a discretionary judgment. The judgment is no less of a discretionary nature because the decision involves the choice between different bases of costs. Accordingly, this Court may interfere with such a decision only if it appears that the decision involves an error or otherwise a departure from principle: see generally Lippe v Hedderwick (1922) 31 CLR 148 at 154, 155; Federal Commissioner of Land Tax v Jowett (1930) 45 CLR 115 at 121.

I agree with Clarke JA that the reasons given by the Master for making an order for indemnity costs disclose no, or an erroneous, basis for his exercise of the discretion and his award of indemnity costs. The Master properly indicated why he made that order. He was, I think, impressed by the fact that though, in his opinion, "the plaintiff was forced to take this action", ie, to sue the three defendants, the order for costs to be made in the plaintiff's favour "ought not include costs of the first and third defendants". And he was impressed by the fact that, because of the negligence of the second defendant, her original solicitor, she had had to incur costs additional to the costs she would have incurred if she had not, because of that solicitor's negligence, "lost the cause of action" against her employer the first defendant and had been able to recover damages by suing the employer upon it. It was, he said, "in the light of that I am of the view that the plaintiff is entitled to costs against the second defendant on an indemnity basis".