New South Wales Supreme Court CITATION : Mednis v Chand (No 4) [2003] NSWSC 727 HEARING DATE(S) : 07/08/03 JUDGMENT DATE : 8 August 2003 JUDGMENT OF : Gzell J DECISION : Plaintiff to have order for costs of proceedings. No order as to costs of summary termination applications CATCHWORDS : PROCEDURE - Costs - Whether costs should be awarded on an indemnity basis - Cross claim with no prospect of success adding little to hearing time - Summons in part seeking order for costs before the expiration of 30 days from rendering bills of costs contrary to the Legal Profession Act 1987, s 192 - Plainitff unsuccessful on applications for summary termination of proceedings LEGISLATION CITED : Supreme Court Rules 1970 Legal Profession Act 1987 Oshlack v Richmond River Council (1998) 193 CLR 72 CASES CITED : Wentworth v Rogers [1999] NSWCA 403 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Aivars Rolands Mednis t/a MacElbing Mednis & Associates - Plaintiff PARTIES : Harry Chand - 1st Defendant Mark Rumore - 2nd Defendant Leichardt Municipal Council - 3rd Defendant FILE NUMBER(S) : SC 3389/01 COUNSEL : Mr M Campbell - For the Plaintiff Mr M K Rollinson - For the 1st Defendant MacElbing Mednis & Associates Solicitors SOLICITORS : Johnston Vaughan Solicitors Mark Rumore Solicitor Pike, Pike & Fenwick Solicitors IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J FRIDAY 8 AUGUST 2003 3389/01 AIVARS ROLANDS MEDNIS T/A MACELBING, MEDNIS & ASSOCIATES v HARRY CHAND & 2 ORS (No 4) JUDGMENT 1 On 31 July 2003, I published my reasons for judgment in this matter and directed the parties to bring in short minutes of orders to reflect those reasons. There is a difference between the parties as to appropriate orders. 2 I indicated in my reasons for judgment that the plaintiff was entitled to a lien over the settlement moneys arising from District Court proceedings. In addition to a declaration to that effect, the plaintiff proposes an injunction restraining the third defendant from paying the moneys to the first defendant, an order that the third defendant pay the moneys to the plaintiff to be held in trust until his application for assessment of costs is determined, with liberty to use the settlement moneys in satisfaction of assessed costs, to satisfy agreed or assessed costs of these proceedings and to pay the balance if any to the first defendant. 3 The first defendant does not cavil with these orders. He suggests that the plaintiff be required to give 14 days' written notice of intention to apply the settlement moneys in accordance with the orders and submits that the parties have liberty to apply before the Registrar on 14 days' notice in the event that the assessment of costs is not determined by 30 November 2003 or otherwise in the event of a dispute as to the carrying out of the orders. 4 In my view these additional orders have utility. They enable any dispute with respect to the application of the moneys to be resolved in advance and they seek to place some limit upon the time within which the costs assessment is to be carried out. In my view, however, the period of notice should be reduced to 7 days. 5 The first defendant resisted an order that he pay the plaintiff's costs of the proceedings. He submitted that he should not have to pay costs incurred up to 4 October 2001. 6 The basis for this submission was that the plaintiff's bills of costs were not served on him until that date under cover of a letter dated 26 September 2001. The summons filed before that date sought an order that the first defendant pay the plaintiff's costs as agreed or assessed contrary to the Legal Profession Act 1987, s 192(1) which provides that proceedings for the recovery of costs by a solicitor for providing legal services must not be commenced or maintained against any person unless at least 30 days have passed since a bill for those costs was given to the person in accordance with the Act. 7 While the summons contained that claim, its major thrust was the protection of the lien over the settlement moneys arising from the District Court action. In my view the plaintiff, who has been successful in these proceedings, should not be denied his costs because of the inclusion of a premature claim for an order for costs agreed or assessed. I reject the submission that the first defendant should not pay costs incurred up to 4 October 2001. 8 The plaintiff seeks costs on an indemnity basis. That presupposes some relevant delinquency on the part of the first defendant (Oshlack v Richmond River Council (1998) 193 CLR 72). I was referred to Wentworth v Rogers [1999] NSWCA 403 at par 81 as an example of an order for costs on an indemnity basis where a party had misled the court. I was referred to Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 and Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 as examples of awards of indemnity costs in proceedings that had no real prospects of success. 9 At par 25 of my reasons for judgment, I preferred the evidence of the plaintiff, Mr Stewart and Mr Potts, to that of the first defendant. I referred to a direct conflict in the evidence between them and to internal inconsistencies in the first defendant's evidence. It was submitted that these findings were equivalent to a finding that the first defendant had misled the court. I reject that submission. My finding was no more than a preference for one lot of evidence rather than another. 10 At par 34 to par 37 in the reasons for judgment, I discussed an incident with respect to a notice of discontinuance. It was submitted that in this regard the first defendant had misled the court. In par 37, I made it clear that it was unnecessary for me to make any findings with respect to the origin of the notice of discontinuance and I did not do so. I made no finding that the first defendant misled the court. 11 It was submitted that the cross claim alleging employment and negligence did not have any real prospect of success even on the first defendant's evidence. 12 With respect to the claim to employment, there was no prospect of success and counsel for the first defendant conceded, properly as I found, that there was no evidence of employment. The claim in negligence was also doomed in light of the fact that the settlement was ultimately effected with another solicitor on the record. 13 Were I minded to make separate orders with respect to the costs of the cross claim, this aspect would loom large. But the cross claim was subsumed within the overall proceeding and, in the absence of evidence as to employment added no additional time to the hearing. 14 Since I am of the view that it is appropriate to deal with the costs of the proceedings as a whole, I will not exercise my discretion to order an assessment of costs on an indemnity basis. 15 On the first day of the hearing, the plaintiff sought summary judgment. The application was dismissed. The first defendant argues that he should have the costs of the motion as following the event. 16 The hearing of the summary judgment application did not extend the hearing of the proceedings. The case was set down for three days and concluded in two. In my view, it is appropriate that each party bear its own costs of the application and I will make no order as to costs with respect to it. 17 Immediately following the hearing of the notice of motion, I entertained an application by the plaintiff to strike out the defence. I dismissed the application. That application, too, was brief and did not add to the hearing time of the proceedings. I approach it in the same way. I will make no order as to costs with respect to it. 18 The plaintiff seeks an order that, failing satisfaction of the costs of the proceedings, the first defendant's solicitors, John McEncroe and Michael Vaughan indemnify the plaintiff for his costs limited to the periods during which they were solicitors on the record. 19 The Supreme Court Rules 1970, Pt 52A r 43 enables the Court, after giving a solicitor a reasonable opportunity to be heard, to direct the solicitor to indemnify parties other than his clients against costs payable by the party indemnified where costs are incurred improperly or without reasonable cause or are wasted by undue delay or by any other misconduct or default for which it appears to the Court that the solicitor is responsible. 20 It was submitted that the solicitors for the first defendant did not exercise any proper control and allowed the first defendant to run his own case. I was invited to infer that all the affidavits relied upon by the first defendant were prepared by him. 21 Reference was also made to the Legal Profession Act 1987, s 198M(1) which provides that if it appears to a Court on a claim for damages that a solicitor has provided legal services to a party without reasonable prospects of success, the Court may, of its own motion or on the application of any party, make an order directing a solicitor to indemnify any party other than the party to whom the services were provided against the whole or any part of the costs payable by the party indemnified. 22 I am not prepared to make such an order. At least since Mr Rollinson was retained in the matter, the conduct of the proceedings on behalf of the first defendant were conducted with dispatch and matters which had no prospect of success were not agitated. I make the following declaration and orders. 23 I declare that the plaintiff has a lien over the settlement moneys in the sum of $62,500 arising out of District Court proceedings by the first defendant against the third defendant numbered 313 of 1998. 24 I order that: (a) the third defendant be restrained from paying the sum of $62,500 to the first defendant being the settlement moneys payable by the third defendant in District Court proceedings between the first defendant and the third defendant numbered 313 of 1998. (b) the third defendant pay to the plaintiff the said sum of $62,500. (c) upon receipt of the said sum of $62,500, the plaintiff is to hold the moneys in trust until his application for assessment of costs dated 5 February 2002 and numbered 90189 of 2002 is determined. (d) the plaintiff have liberty to use the said sum of $62,500 to satisfy professional costs disbursements incurred in the said District Court proceedings as assessed in accordance with the preceding paragraph. (e) the plaintiff have liberty to use the said sum of $62,500 to satisfy the agreed costs of these proceedings or, failing agreement, as assessed (f) the first defendant pay the plaintiff's costs of these proceedings as agreed or, failing agreement, as assessed. (g) the plaintiff pay the balance, if any, of the said sum of $62,500 to the first defendant. (h) the plaintiff give 7 days prior written notice to the first defendant of the plaintiff's intention to apply or pay any part of the said sum of $62,500 in accordance with these orders. (i) the plaintiff and the first defendant have liberty to apply for directions by listing the proceedings before the Registrar on 7 days prior notice to the other party in the event that the application for assessment of costs dated 5 February 2002 is not determined by 30 November 2003 or, otherwise, in the event of a dispute as to the carrying out of these orders. ********** Last Modified: 08/12/2003 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.