New South Wales Court of Appeal CITATION : YONAN v LACE [2001] NSWCA 232 FILE NUMBER(S) : CA 40923/99 HEARING DATE(S) : 2 July 2001 JUDGMENT DATE : 2 July 2001 PARTIES : ALBERT YONAN v S LACE JUDGMENT OF : Mason P at 1; Meagher JA at 15; Stein JA at 16 LOWER COURT JURISDICTION : Supreme Court LOWER COURT FILE NUMBER(S) : LOWER COURT Master Harrison JUDICIAL OFFICER : COUNSEL : Appellant: Mr Knaggs (Sol) Respondent: Mr R A Smith SOLICITORS : Appellant: Douglas Knaggs Respondent: Abbott Tout CATCHWORDS : Application for leave to appeal - costs assessment - whether may include costs owing to former solicitor who is not presently seeking payment - leave refused on discretionary grounds without prejudice to claimant's right to renew application (ND) DECISION : Leave to appeal dismissed with costs. THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40923/99 MASON P MEAGHER JA STEIN JA Monday 2 July 2001 Albert YONAN v S LACE JUDGMENT 1 MASON P: Shorn of inessentials, the facts are these. The claimant is the beneficiary of a costs order as between party and party relating to one aspect of some proceedings in the District Court. The costs relate to arbitration proceedings in which the claimant was represented by the firm Smith Monti Costa, his former solicitors. It appears that counsel may have been involved as well. 2 Following the arbitration, there were proceedings in the District Court in which the claimant recovered considerably less than what he got under the arbitration. He is unhappy with the outcome and contends that his former solicitors were negligent. Nothing before us enables us to rule in any way upon that contention. 3 Acting through his present solicitor, the claimant obtained the file from the former solicitors and prepared an assessment of what he claims are the costs that would be due to the former solicitor for the arbitration. Probably prematurely, in light of subsequent events, the matter was referred out by the proper officer of the Supreme Court to a costs assessor to be dealt with under Div 6 of the Legal Professional Act 1987. The costs assessor calculated that the costs and disbursements owing to the former solicitor were some 24,000 odd dollars. That determination implicitly, if not explicitly, proceeds on the basis that the work done by the former solicitor in reference to the arbitration itself, was done properly, at least to the extent of $24,000. 4 The order which is the subject of this application for leave to appeal, is an order by Master Harrison. She upheld an appeal against the decision of the costs assessor and set aside that decision. The factual basis was that the evidence before her indicated that the former solicitor probably would not be charging any costs for the arbitration but would be making some inquiries of LawCover and the Law Society as to what they could do in relation to disbursements such as counsel's fees. 5 The claimant's solicitor seeks leave to appeal, contending that the claimant has incurred a liability to his former solicitor and that since the former solicitor has not forsworn any entitlement to recover for costs and disbursements, then the claimant is entitled to recover what can be assessed as the money due, even though the former solicitor does not presently claim any money. 6 In my view, the issue is not without its difficulties. The earlier cases to which we have been taken state fairly absolute propositions but in factual context that are removed from the present. I do not think any of them squarely address the present situation which involves the assessment of costs as distinct from the making of an order for costs; and which involves that assessment at a time when the person, and the only person to whom the costs will ultimately be payable, does not make a present claim for those costs. 7 I am not persuaded that the Court should grant leave to appeal at the present time. 8 Accordingly I would dismiss the application indicating in these reasons that it is without prejudice to the right of the claimant to renew it. The matter at stake is a comparatively small amount of money and what has emerged this morning is that the claimant is prepared, if he must, to pay the entirety of the $24,000 to the former solicitor and to do so immediately. What the claimant really wants to achieve, and I am not suggesting anything improper in this, is to have those costs available as some sort of an offset against his independent claim for professional negligence relating, not to the arbitration proceedings, but to the way in which the retainer was performed by the former solicitors after the arbitration. 9 Evidence put before us today indicates that a partner in the former solicitor's firm is still of the view that he does not want to waive his rights to issue a bill of costs, rather that he has just not done so at this stage, in his words "as far as I can recall". Mr Monti also said, I would like to see the bill of costs that was prepared for all the work that we did. 10 I would hope and expect that this essentially tripartite dispute can be resolved without further intervention of the Court, particularly the Court of Appeal. Surely it is possible for the former solicitor to be shown the bill of costs and to indicate whether he is satisfied with it. If not he may at least be able to persuade the opponent to agree upon an appropriate modification of the sum due. 11 The opponent accepts that the outstanding costs order renders him liable, in due course, to pay such sum as is found properly to be due to the former solicitor, at least when and if it is found properly to be due. 12 The difficult legal question is a rather dry one, given the attitude expressed now by the three parties to the essential underlying dispute. 13 By refusing leave, the immediate parties will be forced to address the underlying dispute but without the certainty that this Court would not, if it became absolutely necessary to do so, revisit the issue of the correctness of the Master's reasoning. 14 For those reasons I would refuse leave and I would propose to hear from the parties about the issue of costs. 15 MEAGHER JA: In this matter, the appellant's solicitors took it upon themselves to have assessed the costs of the former solicitor of the appellant without the authority of that solicitor. In the result, the figure found on the assessment, that is approximately $24,000 is, in my opinion, neither owing by the respondent, nor payable by anyone to the appellant. The application for leave should be dismissed with costs. 16 STEIN JA: I agree with the President. 17 MASON P: What application is made as to costs in view of the fact that the majority of the Court have not yet formed a view, or expressed a view. 18 SMITH: I would seek costs of the leave application. The matter, as I see it, what might have transpired today in terms of sorting out the question of costs would have come earlier but it would have required, I submit, steps to be taken by Mr Knaggs as the intermediary between the former solicitor and the opponent and for those reasons I would seek that costs follow the events. 19 KNAGGS: I submit that the costs order that should be made is that each party pay its own costs of the appeal. I say that because of the errors that your Honour, the President, and I think Justice Stein has already identified in the decision of Master Harrison. There is no sign that the other side has been active in trying to work out a way in which this matter should be resolved by them paying costs direct to the solicitor who formerly acted in the matter. One of the cases cited by my friend, McCallum v Einfield quotes the Archbishop of Canterbury with approval and we say that if the Court were to ever go into it thoroughly on an appeal which one would hope, if I can echo, that there would not be any need for but if one were, I submit the matter, as your Honour said, is not without difficulty but certainly in our submission, the Archbishop of Canterbury case was a case where it was not simply a matter of disputing an order for costs and an order should have been made, but in their Honour's judgment, they were turning to estimating what the amount of those costs are which we say is equivalent to an assessment in modern terms and we submit, given that we made an undertaking to the Master, given that you don't have any evidence that the Master was pressing us to go any further than what we did give to the Master, and given that we have renewed it and taken it a step further here, but not very much further, we submit each side should pay its own costs. 20 MASON P: The Court is unanimously of the view that costs should follow the event. The summons is dismissed with costs. ************ 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.