New South Wales District Court CITATION: Wakaniuci v Adecco Australia Pty Limited; re Abboud [2008] NSWDC 174 HEARING DATE(S): 24 July 2008 JUDGMENT DATE: 25 July 2008 EX TEMPORE JUDGMENT DATE : 25 July 2008 JURISDICTION: District Court Civil Jurisdiction JUDGMENT OF: Johnstone DCJ at 1 DECISION: Application dismissed. Applicant to pay the defendant's costs. CATCHWORDS: COSTS - a non-party solicitor failed to comply with a subpoena to produce his file - the defendant incurred costs by reason of serious neglect, incompetence and misconduct on the part of the solicitor - costs orders against the solicitor not set aside Civil Procedure Act 2005: s 99 LEGISLATION CITED: Uniform Civil Procedure Rules (UCPR) Legal Profession Act 2004 Blake v Norris (unreported, NSWSC, 3 July 1997) Carson v Legal Services Commissioner [2000[ NSWCA 308 Erhard v Bhatia [2002] NSWCA 388 at [43] Ideal Waterproofing Pty Ltd v Buildcorp Australian Pty Ltd [2006] NSWSC 155 Karwala v Skrzypczak re Estate of Ratajczak [2007] NSWSC 931 CASES CITED: Marsh v Joseph (1897) 1 Ch 213 Myers v Elman [1940] AC 282 at 318 - 319 RDCW Diamonds Pty Ltd v Da Gloria [2007] NSWSC 1325 Ridehalgh v Horsfield [1994] Ch 205 White Industries (Queensland) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 Whyked Pty Ltd v Yahoo!7 Pty Ltd [2008] NSWSC 477 PARTIES: Michael Abboud (Applicant) Adecco Australia (Defendant) FILE NUMBER(S): 2390/06 COUNSEL: Mr D Baran (Applicant) Mr D Weinberger (Defendant) SOLICITORS: Farah Lawyers (Applicant) Lander & Rogers (Defendant) JUDGMENT 1. The applicant, a solicitor, Mr Michael Abboud, asks the court to set aside costs orders made against him by Judge Gibson on 30 March 2007. 2. In 2006 the plaintiff in the substantive proceedings brought an application for an extension of time under s 60C of the Limitation Act 1969. That application was fixed for hearing on 23 February 2007. On that day however the defendant successfully sought an adjournment. Subsequently on 9 March 2007 that defendant filed a notice of motion seeking an order that Mr Abboud, the plaintiff's former solicitor, personally pay its costs wasted by the adjournment by reason of his failure to produce documents that he had been subpoenaed to produce (see Exhibit A). 3. The plaintiff's motion for an extension of time was adjourned to 30 March 2007. The subsequent motion brought by the defendant against Mr Abboud was also listed for hearing on the same day; namely 30 March 2007. The two motions came before Judge Gibson on that day. Mr Abboud did not appear and her Honour proceeded ex parte to make orders against him requiring him to pay certain costs, namely: (a) the defendant's costs of the adjournment of the plaintiff's motion listed for hearing on 23 February 2007 'for reason of his failure to produce documents under subpoena'; and (b) the defendant's costs of and incidental to the bringing of its motion of 9 March 2007 against Mr Abboud. These are the orders that Mr Abboud seeks to have set aside: 4. The application was originally brought against Mr Abboud by the defendant under r 42.3(2)(b) of the UCPR. In my view the correct rule would have been r 42.27(1). In any event Judge Gibson dealt with the matter under s 99 of the Civil Procedure Act 2005 and, despite some initial reservations as to the applicability of that section, on reflection I agree that was the appropriate provision in the circumstances for disposal of the application. 5. Judge Gibson proceeded to make her orders ex parte in the absence of Mr Abboud who had failed to appear, notwithstanding he knew the motion was returnable that day. 6. Her Honour found, on the basis of the material before her, that Mr Abboud's conduct had caused that adjournment and that it came within the definition of serious neglect, serious incompetence and/or serious misconduct: "This is not a case where a costs sanction should be withheld because there may well be some reasonable explanation of Mr Abboud's conduct. Mr Abboud knows about the proceedings and he has elected not to come to court, and if he did indeed speak to Ms Dassanayake in the matter set out in her affidavit, which I have no reason to doubt, that was a most improper response of him to what was a reasonable request for documents made not once but a number of times. In my view it is appropriate that I should make an order for costs to be payable by Mr Abboud." I pause here to note that costs are compensatory in nature, not punitive. 7. The proceedings before me arise from an application now made by Mr Abboud to set aside the orders of Judge Gibson. The application was argued on the basis of r 36.16(2)(b) which gives the court power to set aside an order made in the absence of a party. It was not disputed that I have the power to set aside the orders. The defendant's contention was that I should, however, not exercise my discretion to do so. Should the costs orders be set aside? 8. Mr Abboud submits that the court in its discretion should set aside the costs orders made by Judge Gibson because his failure to appear before her and defend the application that day was based on a misunderstanding as to the requirement for him to attend that was caused by the conduct of the defendant's solicitor, Ms Dassanayake, from the firm Lander and Rogers. 9. This contention however needs to be put in context. 10. Following the adjournment of the plaintiff's motion on 23 February 2007, Ms Dassanayake filed the notice of motion joining Mr Abboud seeking an order that the costs of the adjournment be paid by him personally by reason of his failure to comply with the subpoena to produce. That Notice of Motion was served on Mr Abboud on 12 March 2007. The Notice of Motion was very clear; it named Mr Abboud as the respondent. The hearing details specified the matter as being listed at Sydney at 9.30am on 30 March 2007. It sought an order that Mr Abboud be ordered to pay the costs of the first Notice of Motion listed for hearing on 23 February 2007 for failing to produce documents under the subpoena. It then gave information that one would have thought a solicitor should know anyway, but it was there in black and white: "If you have not already filed an originating process appearance or defence, you must enter an appearance before your solicitor or barrister, your representative or you can appear before the Court." 11. But what did Mr Abboud do? Nothing. He did not file an Appearance. He did not retain a solicitor or barrister to appear for him. He did not prepare an affidavit. He did not write a letter. He did not tell Ms Dassanayake that he was going to appear and defend the application. Nothing. Yet he asks me to believe that he was simply going to turn up on the day and defend the application. 12. Two weeks went by. Ms Dassanayake had heard nothing from Mr Abboud. Because she thought Mr Abboud might be needed as a witness in the plaintiff's extension of time application, she took the sensible precaution of issuing and serving on him a subpoena to give evidence. This subpoena was served on him on 12 or 13 March 2007. But still Mr Abboud did nothing. 13. On 27 March 2007 Ms Dassanayake served on Mr Abboud her affidavit in support of the motion. If he had been in any doubt up to that point of time, this affidavit informed him in no uncertain terms what the application was about. In para 14 she said: "I seek that the court orders (sic) that Michael Abboud and Co pay the costs of the adjournment of the notice of motion of 23 February 2007 on the basis that the adjournment would not have been necessary had Michael Abboud and Co produced documents in accordance with the subpoena or advised that there were no documents to produce. The sole reason for the adjournment application of the notice of motion was the failure by Michael Abboud and Co to respond adequately to the subpoena." Mr Abboud still made no contact with Ms Dassanayake. 14. Mr Abboud submits that the court in its discretion should set aside the costs orders because he did not appear before Judge Gibson on 30 March 2007 due to confusion in his mind as to the time he was to be available to attend court for the matter to be dealt with. That confusion, he says, arose from a letter from Ms Dassanayake which he received two days earlier, on 28 March 2007. That letter read: "We refer to the subpoena to give evidence served upon you and returnable on 30 March 2007. We will provide you with two hours' notice of your requirement to attend court. Please therefore remain on standby at all times whilst you are under subpoena." 15. Mr Abboud says that in response to this letter he waited for a notification, but it never came: "On 28 March 2007 at 12.02pm I received a facsimile transaction from Lander & Rogers. Annexed hereto and marked with the letter 'M' is a copy of the facsimile dated 28 March 2007. I confirm that on 30 March 2007 and in compliance with the directions of Ms Dassanayake I remained on standby awaiting notice to attend court to answer the subpoena to give evidence. I was in my office located in Parramatta and I confirm that I did not at any time receive any notice whether by phone, fax or email, that the matter was called on nor was I called upon to give evidence on that day. I state and confirm that had I received a call to attend court and give evidence, I would have made myself available to attend court and to have the matter dealt with." 16. It was submitted by Mr Abboud that against the background of that letter of 28 March 2007 the defendant should not have proceeded ex parte against him. It was contended that he should have been notified in accordance with that letter of a need to attend. Alternatively, he should have been advised as a matter of professional courtesy: see Erhard v Bhatia [2002] NSWCA 388 at [43]. 17. In my view, however, this was not a situation where such niceties prevailed. Questions of professional courtesy work both ways and having regard to the history of the dealings between Ms Dassanayake and Mr Abboud I do not think she had any obligation to him as contended. She was perfectly entitled to believe, as I accept she did, that because he had done nothing by way of contact or in preparation for the hearing of the motion against him, that he had no intention of appearing to defend it. To this extent Mr Abboud was the sole author of his own misfortune. 18. That alone is sufficient for me to decline to exercise my discretion against him. But there is more. Even when the costs orders were made against him he took some six months to do anything about them. A person seeking indulgences from the court, particularly solicitors, should not be dilatory: see for example the Civil Procedure Act 2005 at s 53(3) and s 58(2)(iv) and (v). 19. For all I know all sorts of different things may have been done by this defendant, to its prejudice, relying upon the inactivity or inaction on the part of Mr Abboud. 20. For all these reasons I decline to set aside the orders of Judge Gibson. Would the orders be different in any event? 21. Even if I had been minded to set aside the orders of Judge Gibson, I would not in any event have made any different orders. 22. Much of the factual background to the adjournment on 23 February 2007 is not in dispute. Certain aspects of it are the matter of heated contest as a result of which I am called upon to perform the unpleasant task of deciding which of the versions given by two solicitors on these issues I should prefer. 23. Mr Abboud acted for Mr Wakaniuci, the plaintiff in the substantive proceedings, in respect of the accident and injuries which are the subject of the present proceedings. He made certain claims for workers' compensation benefits on his behalf. He kept a file which I have not seen but by all accounts it was fairly sparse in its contents. It contained no file notes nor any letters confirming any advice given to the plaintiff. The question of what advice, if any, Mr Abboud gave the plaintiff as to any common law rights he might have had arising out of his injuries, as opposed to his workers' compensation rights, It was highly relevant to his application for an extension of time. 24. In August 2003 the plaintiff changed his solicitors and retained a new firm, Buttar Caldwell & Co. There followed a dispute between the new solicitors and Mr Abboud about his fees and Mr Abboud's file was not transferred to the new solicitors until April 2004. Mr Abboud said he kept no copies of any material relevant to the plaintiff's injuries or his advice to him, although he conceded in cross-examination that some documents may have remained in his computer. 25. In an endeavour to discover what was in Mr Abboud's file, the defendant's solicitors issued a subpoena for its production. At that stage they were unaware where the file was or whether Mr Abboud kept copies of any of its contents. The subpoena was served on Mr Abboud on 8 January 2007. Service was not disputed. It was suggested that the subpoena was not sealed but this point was not taken at the time. 26. The subpoena was returnable on 29 January 2007 but Mr Abboud took no steps to communicate with the defendant's solicitors in relation to the subpoena. He simply ignored it. He said in cross-examination (but not in his affidavit) that upon receipt of the subpoena he instructed his secretary to locate the file. Just why he would do that when he had forwarded it to the new solicitors and kept no copies of anything in it was not explained. But even if he did give those instructions he did not do the defendant's solicitors the courtesy of informing them. 27. After the return date the defendant's solicitors made inquiries of the court only to be informed that no documents had been produced in answer to the subpoena. The solicitor with conduct of the matter for the defendant, Ms Dassanayake, from Lander & Rogers, wrote to Mr Abboud on 31 January 2007 enclosing a further copy of the subpoena and advising him that the return date had been extended to 5 February 2007. She was criticised by counsel for Mr Abboud for not asking the court to issue a warrant for his arrest. Of course any application at that stage for a warrant would have been refused. In my view, what Ms Dassanayake did was entirely appropriate. 28. But still Mr Abboud did nothing. The solicitors again attended court after the new return date, but still no documents. Ms Dassanayake instructed her secretary to telephone Mr Abboud. On 13 February 2007 Ms Beresford phoned Mr Abboud. A file note of the conversation is as follows: "Spoke with Michael Abboud re subpoenaed docs which had not been produced. Advised him that motion was being heard on 23/2 so docs had to be produced by then….He said file was closed but that wouldn't be a problem and docs would be produced on time." Mr Abboud disputes this version of the conversation. He says he told Ms Beresford the file had been uplifted and said, "Sorry, cannot help, this is an old matter." 29. In any event Ms Dassanayake then wrote to Mr Abboud in these terms: "We refer to the subpoena for production originally served upon you on 8 January 2007 and to the conversation between you and Anna Beresford from our office on 13 February 2007. We confirm that the District Court has allocated a final return date of 23 February 2007. The documents must be produced by that date which is the hearing date for the notice of motion." 30. Mr Abboud did not respond to the Lander & Rogers letter. According to his affidavit he did however ring the plaintiff's new solicitors and spoke to someone there and confirmed that they had his file. But he did not ring or write to Ms Dassanayake to tell her. 31. So it was on 22 February 2007 Ms Dassanayake was still trying to locate the file. She again arranged for her secretary to ring Mr Abboud. Ms Beresford's file note of that conversation reads: "Rang Mr Abboud to ask re subpoenaed docs. He said that the file was in storage offsite and not in the office as he had thought and he couldn't retrieve until Saturday 24/2. I said motion was on for Friday and docs had to be produced on that day. He said he didn't know what was going to be discussed Friday, but he didn't think that the docs would be required anyway. So he would retrieve on Saturday." Mr Abboud's version of this conversation was somewhat different. He says he said: "The matter has long been finalised. The file is closed, gone to Buttar Caldwell & Co. Go chase them." 32. In any event, after Ms Beresford reported the conversation to Ms Dassanayake, she was sufficiently concerned that she also rang Mr Abboud that day, at about 4.45pm. The terms of this conversation are the subject of a dispute between the two solicitors. The conversation clearly became heated. Ms Dassanayake's version, which is supported by a detailed file note, was: "Me: we need the documents by tomorrow otherwise the notice of motion will need to be adjourned. Abboud: I was under the impression that the documents were in the office but they are in archives. I cannot get them there by tomorrow myself. Me: That's not good enough Abboud: So sue me, go on, sue me." Her file note is even more explicit: "T/C - Michael Abboud. Told him that I was calling him regarding a subpoena that was served upon him on 8 January. He said he was aware of the history. I said we wrote to him on 14 February advising of the notice of motion tomorrow. I said we need the documents by tomorrow otherwise the motion will need to be adjourned. He said that he was under the impression that the documents were in the office but they were in archives. 'I cannot get them there by tomorrow.' I said, 'That's not good enough.' He got aggressive and then said, 'So sue me, go on, sue me.' I said, 'I beg your pardon?' He said, 'Right, I'm going to terminate this call now,' but he stayed on the line and I said, 'We'll leave it in the hands of the court tomorrow then.' He then hung up." Mr Abboud's version of that conversation was somewhat different: "Dassanayake: We need the documents by tomorrow otherwise the notice of motion will need to be adjourned. Abboud: Once again I don't have the file. It is not in the office. It has gone to his new lawyers. Dassanayake: That is not good enough. Abboud: I can look in storage if need be but I cannot help. I do not hold any documents. Dassanayake: The motion will need to be adjourned with costs. Abboud: Are you trying to sue me? I'm not interested in talking to you. I will now terminate this call. Put everything in writing from now on." His file note of that conversation reads as follows: "Call from Lander & Rogers. Hishani ?? told once again no file, not in office has gone to new lawyer. Can look in storage if need be but can't help, don't have any documents. She threatened with costs. Told trying to sue me ?? Not interested in talking. Will terminate call. Put all in writing from now on (indecipherable)." Nevertheless, on 24 February 2007 Mr Abboud went to the warehouse which was situated in Harris Park at Kennard's Storage where he kept his archive files. He said that after a lengthy and extensive search he located the file in box 23 and retrieved the file. He looked through the file and could not find any documents that he had not forwarded to Buttar Caldwell & Co except for a copy of a tax invoice and some correspondence relating to negotiating outstanding workers' compensation costs with the then workers' compensation insurer. Why would he do this if he was, as contended, adamant that he had nothing to produce? 33. I prefer Ms Dassanayake's version of the conversation with Mr Abboud on 22 February 2007. In doing so I rely not just on her demeanour in the witness box. She was, however, much more assured and direct in her evidence than he was. But it was the extrinsic circumstances which led me to favour her version. It is abundantly apparent from the quality of her correspondence and file notes that she was the more accurate historian. Her version is consistent with Ms Beresford's file notes. Mr Abboud's professionalism was of a very low standard and he never responded to correspondence. His file notes were sloppy and his courtesy to fellow practitioners less than satisfactory. Her version was also consistent with what the counsel told the list judge on the morning of 23 February 2007 at court (the irony is that there were file notes in respect of this application but none on the plaintiff's file). 34. I am satisfied that the adjournment of the plaintiff's application on 23 February 2007 was caused solely as a result of Mr Abboud's conduct, his lack of courtesy and his lack of professionalism. 35. It was submitted that I should not visit such a draconian penalty on Mr Abboud. As I have said before costs are not in the nature of a penalty. Costs are compensatory. It was further submitted that his conduct, even if less than satisfactory, did not amount to serious neglect, serious incompetence or serious misconduct. I disagree. Whilst there may not have been conduct amounting to misconduct in the sense of professional misconduct under the Legal Profession Act 2004, his conduct was reflective of serious neglect and incompetence. 36. But even if it was not, it was certainly conduct sufficient to attract the provisions of s 99(1)(b) such that I am satisfied that costs wasted by the adjournment were incurred without reasonable cause in circumstances for which this legal practitioner was responsible. It is trite law that misconduct resulting in costs being unnecessarily incurred or otherwise wasted may lead to orders for costs against the legal practitioner, either in favour of the client or former client, or in favour of another party: Blake v Norris (unreported, NSWSC, 3 July 1997), Marsh v Joseph (1897) 1 Ch 213 at 244 to 245. Solicitors are required to act professionally and to conduct themselves in accordance with their to the duty to the court as described in s 56(4) of the Civil Procedure Act 2005: RDCW Diamonds Pty Ltd v Da Gloria [2007] NSWSC 1325. See also Ideal Waterproofing Pty Ltd v Buildcorp Australian Pty Ltd [2006] NSWSC 155; Myers v Elman [1940] AC 282 at 318 - 319; Karwala v Skrzypczak re Estate of Ratajczak [2007] NSWSC 931 at [6] - [10]; Whyked Pty Ltd v Yahoo!7 Pty Ltd [2008] NSWSC 477 at [12] - [20]; White Industries (Queensland) Pty Ltd v Flower & Hart (a firm)(1998) 156 ALR 169; 29 ACSR 21; Ridehalgh v Horsfield[1994] Ch 205 at 232 and Carson v Legal Services Commission [2000] NSWCA 308 at [113]. 37. Even if I did set aside the orders of her Honour Judge Gibson, I would in any event just be making the same orders again. For all these reasons the application to set aside the orders of Judge Gibson is dismissed. 38. Costs should follow the event: r 42.1. 39. I therefore order Mr Abboud to pay the defendant's costs of this application. 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.