New South Wales Supreme Court CITATION : DUBOW v FITNESS FIRST AUSTRALIA PTY LTD AND 1 OR [2007] NSWSC 1390 HEARING DATE(S) : 14 September 2007 JUDGMENT DATE : 5 December 2007 JUDGMENT OF : Hulme J at 1 DECISION : (i) Extend the time for the Plaintiff to appeal from the order of the Consumer, Trader and Tenancy Tribunal made on 5 May 2005 to the effect that the Plaintiff is to pay 75% of the costs of Fitness First Australia Pty Ltd as agreed or as assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act, 1987.; (ii) Order that the order of the Consumer, Trader and Tenancy Tribunal made on 5 May 2005 to the effect that the Plaintiff is to pay 75% of the costs of Fitness First Australia Pty Ltd as agreed or as assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act, 1987 be quashed.; (iii) Order that the Plaintiff pay the costs of Fitness First Australia Pty Ltd of the application for the assessment of the costs ordered on 5 May 2005 to be paid insofar as …(COMPLETE).; (iv) Order that the First Defendant pay half of the Plaintiff's costs of these proceedings, as assessed or agreed.; (v) Stay any execution of orders (iii) and (iv) until further order, providing however that such stay shall not operate to prevent the assessment of costs pursuant to those orders or the taking of any steps incidental thereto. Yolande Dubow PARTIES : Fitness First Australia Pty Limited Consumer Trader and Tenancy Tribunal FILE NUMBER(S) : SC 30095/2005 COUNSEL : In person Mr P Thew In person SOLICITORS : Kent Attorneys IV Knight Crown Solicitor - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION HULME J 30095/2005 Wednesday 5 December 2007 Yolande DUBOW v FITNESS FIRST AUSTRALIA PTY LIMITED AND THE CONSUMER, TRADER AND TENANCY TRIBUNAL JUDGMENT 1 HIS HONOUR: On 24 August last I delivered reasons in this matter indicating that the Plaintiff should have an extension of time to appeal from a decision of the Consumer, Trader and Tenancy Tribunal (hereinafter referred to as "CTTT"), that an order of the CTTT that the Plaintiff pay certain costs be quashed, and that the matter should be remitted to the CTTT. I expressed the view that the extension of time should be on terms that the Plaintiff pay certain costs incurred during a period of delay, but that I saw virtue in achieving the same result by ordering the Plaintiff to pay costs rather than reflecting the object in a condition. The appropriate orders as to the costs of the proceedings before me were also left to be dealt with. These matters are the subject of these reasons. Primarily the parties have sought to deal with the matters by way of written submissions. 2 Prima facie, the Plaintiff's success over the opposition of the First Defendant (hereinafter referred to as "FFA") means that there should be an order for costs in favour of the Plaintiff against the First Defendant. The Defendant resisted such an order relying on the number of amendments the Plaintiff had sought to make and on the Plaintiff's failure to comply with pre-trial directions. One may add to these the fact that the hearing time was longer than it would otherwise have been by reason of an argument as to whether the Plaintiff should be given an extension of time and allowed to file a Further Amended Summons. 3 For her part the Plaintiff submitted that the costs should be on an indemnity basis, relying on:- (i) Attempts by FFA to have the CTTT vary its decision or reasons, (ii) The vigour with which FFA resisted the appeal, (iii) FFA had never sought to conciliate, negotiate or arbitrate before "forcing matters on" in this Court. (iv) An assertion that FFA is a large organisation that sought to "bully" the Plaintiff, and (v) that the Plaintiff needed representation by Senior Counsel. 4 FFA undoubtedly resisted strongly the Plaintiff's claim for relief but this does not constitute "bullying" and I see no other evidence to support that claim. In any event I do not regard any of the matters referred to in sub-paragraphs (iii) to (v) as of any weight on the topic of whether costs should be on an indemnity basis. Considered in isolation, the same can be said to the matter referred to in sub-paragraph (ii). However, it is the fact that after the decision of the CTTT that was the subject of challenge in these proceedings, on 16 May 2006 Mr Kent, the solicitor for FFA, wrote to the Tribunal drawing attention to the Plaintiff's appeal, that the Plaintiff was alleging that the word "special" had been used in the reasons when, according to Mr Kent the Member "probably meant to use the term 'exceptional' ", and that in those circumstances "there may have been a manifest error in the text of the judgment". Mr Kent went on to request that consideration be given to amending the text of the judgment accordingly. 5 The substance of the Plaintiff's argument is that, the Defendant having recognised that there was error by the CTTT, its conduct in opposing the appeal (vigorously) was unreasonable. I do not agree. Although I have held that there was error in the respect the subject of Mr Kent's request to the CTTT, the contrary was arguable; that issue took only a limited amount of the time during the hearing; and the appeal raised a number of other issues on which the Plaintiff did not succeed. Accordingly, there is nothing in the Defendant's conduct of the appeal which would justify any order for costs against it being on an indemnity basis. 6 So far as the matters relied on by FFA in opposition to any order for costs being made against it are concerned, the transcript makes clear that the argument about amendment took up something of the order of one-third of the first of 3 hearing days. Although the Plaintiff was, on one view, seeking an indulgence, it was an argument that FFA lost (although it succeeded in having a condition imposed) and the Plaintiff's ultimate success was on a basis for which no extension of time was needed. It is proper to record also that, in furtherance of the interests of the Defendant, its counsel seemed to me to somewhat exaggerate rather than minimize the difficulties which the defaults of the Plaintiff's side of the record caused. 7 That said, the transcript does make clear that the failure by the Plaintiff or her advisers to comply with the rules and orders for the filing or supply of documents delayed or made more difficult the conduct of the proceedings. Indeed, it was not until the afternoon of the second day that the file of the CTTT was obtained, a file which revealed information very useful to the resolution of the issue of whether legal representation was validly permitted. That these sorts of matters were of concern to me at the time is apparent from remarks I made at the end of the first day when I said, inter alia:- "… I am concerned that a deal of the day has been spent on matters other than the merits of the case, and an issue arises as to whether the litigants, Plaintiff or Defendant, should have to pay those costs. … it just seems to me at the moment – a tentative view – that some of the costs of today and possibly of the proceedings generally have been due to a failure on the part of lawyers to run the proceedings as efficiently as they might have. As a general proposition I take the view that if that occurs, the clients should not have to bear the costs. …" 8 Any attempt to precisely quantify the extent of costs incurred by the Defendant in consequence of these inadequacies on the Plaintiff's side of the record is likely to be impossible. Nevertheless in one way or another, these extra costs should clearly be debited against the Plaintiff's side of the record. Furthermore, the Plaintiff should not recover from the Defendant costs to the extent to which they were incurred unnecessarily in consequence of failures to prepare the case adequately. How I given effect to these conclusions is a topic to which I will return. 9 In paragraph 2 of her submissions, the Plaintiff seems to be seeking an order against the legal practitioners who acted for her in the proceedings. The paragraph is in terms:- Costs awards may be made against legal practitioners for unnecessary costs incurred in a number of inculpatory (sic) ways. (s 99 Civil Procedure Act 2005). In this case there were more than six preliminary directions hearings ordering the solicitor retained for the Plaintiff to file the Statement of Facts and Contentions. (See Court File on the 19th April, 2006 the Solicitor for the Plaintiff failed to attend the directions hearing necessitating a further directions hearing a week later for further orders to file the Statement Facts and Contentions. It should be noted that the progress of the Plaintiff's case did not actually occur until she commenced employment with the solicitor then acting, for which she was not paid. Further, the compromise position taken regarding the costs for delay in filing the Notice of Appeal, which originally sought prerogative relief, was not ever agreed to by the Plaintiff and was an instruction given by the solicitor then acting for the Plaintiff to the Counsel so instructed. It is and was always the position of the Plaintiff that the Consumer Trader and Tenancy Tribunal is not defined as a Tribunal under the Legal Profession Act 1987 and as such costs could not be assessed by Costs Assessors under that Act. 10 That such orders can be made is clear from the terms of s 99 of the Civil Procedure Act 2005 which, inter alia, provides:- (1) This section applies if it appears to the court that costs have been incurred: (a) by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or (b) improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible. (2) After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following:- (a) … (b) It may, by order, direct the legal practitioner: (i) … (ii) In the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs. (c) … 11 However, the Plaintiff has provided no evidence that she gave the notice contemplated by the section, nor has she invited the Court to do so. Although in the paragraph of her submissions that I have quoted she makes assertions suggestive of the failures to comply with the Court's orders being those of her solicitor rather than herself, there is no evidence to that effect. In these circumstances it is not appropriate for any such orders to be made at this time. 12 Should the Plaintiff be given more time to give such notice? At least so far as these proceedings are concerned, I do not believe she should. She qualified as a legal practitioner and was for a time a registrar of this Court. She presumably knows the elementary principles governing the Court's exercise of the power she appears to want employed. A large amount of time and cost has already been employed in and about these proceedings and those from which the appeal was brought with relatively little benefit overall to the parties or the community. Furthermore, on the present state of the evidence, it cannot be said that there is a probability that an order against the Plaintiff's solicitor would be made. 13 (I make it clear that nothing I have said in the immediately preceding paragraph is intended to limit any rights the Plaintiff may have against her solicitors otherwise than as part of these proceedings.) 14 In paragraph 2 of her submissions the Plaintiff also asserts that she did not authorise a concession made by her counsel in respect of the imposition of a condition in granting an extension of time or leave to file an amended pleading. Again there is no evidence of these matters and they are of a nature such that it is inappropriate to act simply on the basis of the Plaintiff's assertions. (I should perhaps add that counsel's primary submission was that no condition should be imposed and, although I am not positive, my recollection is that the Plaintiff was in court at the time the, very qualified, concession was made.) 15 In the first part of paragraph 3 of her submissions, the Plaintiff seems to be canvassing the decision in my principal reasons to the effect that the Plaintiff should bear certain costs incurred by the Defendant during the period of delay prior to proceedings being instituted in this Court. I decline to revisit that topic. In the second part of that paragraph the Plaintiff also suggested there was ambiguity in the order I proposed to give effect to that decision. The order proposed was:- Order that the Plaintiff pay the costs of Fitness First Australia Pty Ltd of the application for the assessment of the costs ordered on 5 May 2005 to be paid insofar as such costs were incurred after 2 June and prior to 29 September 2005. 16 The Plaintiff expressed her concern as being that the terms used:- "may mean the filing fee for the Assessment or the Filing Fee and Legal Fee, (preparation for a bill not being costable?) incurred by Fitness First for the nominated period. The Cost Assessor's Fee and Certificate not being dated until 30 October, 2005. It is also relevant that the Cost Assessor at first instance agreed that the $25,000 odd sought was excessive and reduced the bill to some $12,000 plus disbursements, practically halving the Bill at first instance." (sic)." 17 The order substantially followed the form of a condition suggested by counsel for the Plaintiff - and was formulated against a background of evidence, quoted in those principal reasons, to the effect that: (i) On 5 September 2005 an application for assessment of party/party costs was filed in this court. It extended to something of the order of 50 pages, many of which appear from their nature to be photocopies of other documents but the bill and its explanation extended to about 19 pages; (ii) On 18 September 2005 a letter from the costs assessor asking for copies of accounts and for submissions was received; (iii) On 21 September 2005 the Plaintiff wrote indicating objections in relation to various items and the application for assessment; (iv) On 17 October 2005 the solicitors for FFA wrote to the costs assessor making submissions, providing documents he had requested, making a number of assertions and providing other documents. The submissions and assertions extended to some 6 pages, the total to about 155 pages; (v) On 30 October 2005, the costs assessor made his determination in the amount of $14,067.70. On the same day he also issued an assessment of his own costs in an amount of $2,213.75. 18 On reflection I can understand some of the Plaintiff's concern. While any filing fee paid on 5 September would seem clearly to come within the words of the order proposed, it is not clear whether a fee or other costs arising (wholly or partly) in consequence of the application made in the period specified but payable or falling due after 29 September would do so. 19 The rationale for the order or condition proposed was that the Plaintiff should pay costs wasted in consequence of her delay in commencing the proceedings. It is also relevant that, although the original summons, filed on 29 September 2005, did not seek an extension of time, there was filed and presumably served at the same time an affidavit clearly directed to the topic of the delay that had occurred. 20 From the time of receipt of the summons, the solicitors for FFA were on notice that the order for costs in their favour was liable to be set aside. Although the process of assessment of those costs had by that time been commenced, it could clearly have been interrupted. That interruption may have led to some costs additional to those involved in an uninterrupted assessment but would have had the advantage of avoiding what I would infer were the vast bulk of the costs of the response of 17 October and much of the assessor's costs. There is much to be said for the view that the failure of FFA's solicitors to stay the assessment at that time or, to put the matter the other way, to elect to continue it in the face of the Plaintiff's summons (not all of which required an extension of time), was a decision for which the Plaintiff had no, or minimal, responsibility. 21 On that view the order proposed is arguably too wide. In FFA's submissions in response to those of the Plaintiff, it was contended that the proposed order was clear in its terms and that it encompassed:- "(a) Filing fees incurred by the First Defendant in respect of the application for an assessment of costs; (b) The legal fees incurred by the First Defendant in respect of preparing the application for an assessment of costs; or (c) The Costs Assessor's fees incurred by the First Defendant in respect of the assessment of costs." 22 The First Defendant did not address the issues of whether there should be an order in different terms or of any such terms. It should have an opportunity of doing so. However, given the passage of time, there is something to be said for me at least providing a tentative alternate form of order, viz. Order that the Plaintiff pay the costs of Fitness First Australia Pty Ltd of the application for the assessment of the costs ordered on 5 May 2005 to be paid insofar as such costs were incurred after 2 June and prior to 29 September 2005 (OR SAY ? OCTOBER) for work actually carried out or events that occurred during that period. 23 Before I leave the topic of the Plaintiff paying for costs wasted during the period of her delay, I should refer to an argument on behalf of FFA to the effect that, given the extent to which prior orders of the Court have not been obeyed by the Plaintiff, and the extent of the costs incurred by the Defendant in consequence of the costs orders of the Tribunal, it would be preferable for a condition relating to such costs to be imposed rather than that they be the subject of an order. Counsel also drew attention to the fact that there appeared to be disputes between the Plaintiff and the solicitor who had acted for her in the proceedings and submitted that the possibility of delay associated with that dispute was a further reason why a condition rather than an order was preferable. The Plaintiff's submissions in reply did not deal with these arguments. 24 Certainly, each has some force. However the Plaintiff's success in the proceedings means that there will be an order for costs in her favour. As I said during the course of argument:- "I don't know what her (the Plaintiff's) financial situation is. I would not wish for a situation to arise where, because she can't afford to pay you, if I can put it that way, things come to a stop even if ultimately you owe her more in costs than she owes you. …" 25 There is much to be said for the view that the parties' respective entitlements to costs – at least those arising from events in this court – should be set off before payment is required. In these circumstances I am disposed to adhere to the approach taken in my reasons of 14 September but staying any orders for a time so as to enable such set off to be effected prior to payment being made. Obviously such a stay should not be such as to enable any party by delay or unreasonable conduct to prevent the other from deriving benefit from any costs order but that is something that can be dealt with if and when a problem arises. 26 In paragraph 4 of her submissions, the Plaintiff submitted that the number and extent of the failings of the CTTT meant that the Plaintiff should be indemnified "for the period of delay in filing the notice of appeal". I infer the subject of the indemnity sought are the costs which I indicated the Plaintiff should pay the Defendant referable to that period. 27 To some extent, the issues debated during the appeal arose for consideration because of errors of Ms Borsody, the member of the CTTT whose decision was the subject of the appeal. While error is an occupational hazard for judges and members of various tribunals and rarely justifies an order for costs against a tribunal, a number of the errors in this case should not have occurred. One was the adoption of a test of "special circumstances" in the face of the provision in the CTTT's own regulations requiring that "exceptional circumstances" exist. Another was to implicitly assert that FFA's representation was the result of an order made in chambers (in respect of which the Plaintiff had no opportunity to be heard) when, as the Tribunal's own file showed, the relevant order was made on 23 August 2004 in the presence of the parties or their representatives. A third was to regard an order for representation throughout proceedings, made in chambers and without the opportunity to which I have referred, as a mere irregularity. Such a procedure would have been a clear denial of natural justice. 28 In these circumstances, and notwithstanding that the CTTT had filed a submitting appearance, it was given notice that an order for costs might be sought against it. In due course submissions were made on its behalf. Those submissions included reference to Krslovic Homes v Sparkes [2004] NSWSC 374 where Shaw J, after an extensive review of previous authorities declined to make an order for costs against the CTTT notwithstanding its conduct had the effect of misleading the parties to those proceedings. Although holding that an analogy between the CTTT and decisions involving magistrates was not perfect, his Honour drew attention to statements that had been made in relation to the latter group. Included in these references were the following:- "25. … In Sankey v Whitlam [1977] 1 NSWLR 333 at 363 Hutley JA took the view that the established case law meant that only where a magistrate has been guilty of "serious misconduct, corruption, gross ignorance or has been perverse" should a costs order be made against the magistrate. 26. In ex parte Vincent (1990) 16 WN (NSW) 215 the Full Court held that, although a magistrate had made "an extraordinary and astounding blunder …" that nonetheless he had not been guilty of such perverseness as to render him liable to an order for costs. The court noted that it was hard on the applicant that she should have to pay the costs of the application but with regret came to conclusion that the circumstances did not justify such an order. 27 In Cummins v McKenzie [1979] 2 NSWLR 803, Sheppard J was faced with the situation where a magistrate had been dealing with an offence of failure to stop and declined to hear evidence from the defendant. His Honour referred to earlier cases including ex parte Blume; re Osborn (1958) SR (NSW) 334 at 339 and Carr v Werry [1979] 1 NSWLR 144 at 147 in holding that in order to justify an order for costs against the magistrate there must be "a clear case of serious misconduct" and that an "astounding blunder" is not sufficient to lead to the conclusion that a magistrate has acted perversely. Though there was a denial of natural justice in Cummins , there was not demonstrated a "gross ignorance or perversity in the relevant sense" (p 810). These and other cases were distilled and applied by Brooking JA in the Victorian Court of Appeal, which judgment was approved of by Charles and Buchanan JJA in the Magistrates' Court of Victoria at Heidelberg v Robinson (2000) 2 VR 233. After referring to the case law, his Honour formulated the test as to the award of costs against an inferior court as requiring the commission of "some serious misconduct or serious impropriety, including a failure to observe some fundamental principle of justice…". But a mere blunder would not attract an award of costs. The approach should be benign, or reasonably so, where a bona fide mistake has been made ([10] - [11]). …" 29 I agree with Shaw J that the analogy between the CTTT and decisions involving magistrates is not perfect. However, given that there is nothing to suggest that Ms Borsody's errors in this case were not bona fide, Shaw J's decision and the passages cited lead me to the view that the number, extent and nature of the Tribunal's failings were not such as to justify the making of an order for costs against it in this case. In the case of the error by Ms Borsody as to the circumstances in which the order for representation was made, it is also relevant to bear in mind that both parties were present on 23 August 2004 when what I have found to be the operative order for representation was made. 30 In paragraph 6 the Plaintiff made a number of submissions concerning the Suitors Fund Act. Given that the submissions are in writing, it is not necessary for me to repeat them here beyond recording that the Plaintiff suggested she should receive, at least the benefit of, such a certificate and that FFA should not. 31 In Krslovic Homes v Sparkes Shaw J took the view that, because of the errors of the CTTT, the parties before him should both have certificates. However he had previously decided that it was inappropriate the there should be an order in favour of one of the parties against the other. Here I have decided that the Plaintiff should be the beneficiary of an order for costs against the First Defendant, the only limitations on that order arising from inadequacies or other faults in the conduct of the proceedings by the Plaintiff or her advisers. At this time there is no reason to think that the First Defendant is not in a position to make payment of any costs ordered and so long as that remains the situation it is inappropriate to make in favour of the Plaintiff an order under the Suitors' Fund Act 1951. 32 It remains to formulate the order for costs in favour of the Plaintiff that should be made. When regard is had to the totality of the factors relevant, in particular those referred to in paragraph 8 above and that the Plaintiff should be responsible in some way for the costs of amendments, the First Defendant should be ordered to pay half of the Plaintiff's costs of the proceedings. 33 I am conscious that in effecting a notional set off rather than making a more generous order in favour of the Plaintiff and another order in favour of the Defendant, I am placing an impediment in the way of at least some of the orders that, at least theoretically, could be made under s 99 of the Civil Procedure Act. However, I have indicated that there are other reasons for not giving any more time for orders under that section to be made and the course I have adopted means that only one assessment of the costs of the appeal rather than 2 will be necessary. 34 Accordingly, subject to the matter dealt with in and circa paragraph 22 above, the orders that seem to me appropriate (including those foreshadowed in my reasons of 24 August last) are:- (i) Extend the time for the Plaintiff to appeal from the order of the Consumer, Trader and Tenancy Tribunal made on 5 May 2005 to the effect that the Plaintiff is to pay 75% of the costs of Fitness First Australia Pty Ltd as agreed or as assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act , 1987. (ii) Order that the order of the Consumer, Trader and Tenancy Tribunal made on 5 May 2005 to the effect that the Plaintiff is to pay 75% of the costs of Fitness First Australia Pty Ltd as agreed or as assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act , 1987 be quashed. (iii) Order that the Plaintiff pay the costs of Fitness First Australia Pty Ltd of the application for the assessment of the costs ordered on 5 May 2005 to be paid insofar as …(COMPLETE). (iv) Order that the First Defendant pay half of the Plaintiff's costs of these proceedings, as assessed or agreed. (v) Stay any execution of orders (iii) and (iv) until further order, providing however that such stay shall not operate to prevent the assessment of costs pursuant to those orders or the taking of any steps incidental thereto. ********** 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.