New South Wales Supreme Court CITATION : DJZ Constructions Pty Ltd v Paul Pritchard trading as Pritchard Law Group and Ors [2010] NSWSC 1472 HEARING DATE(S) : 9 December 2010 JUDGMENT DATE : 17 December 2010 JUDGMENT OF : Schmidt J CATCHWORDS : PROCEDURE - judgment and orders - notice of motion seeking to stay judgment, pending the determination of an appeal - stay granted - security for costs - costs - various departures from the general rule - whether costs were wasted costs - orders sought under section 99 of the Civil Procedure Act 1995 - orders not made LEGISLATION CITED : Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 CATEGORY : Principal judgment Cachia v Isaacs (1985) 3 NSWLR 366 Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1163 DJZ Constructions Pty Ltd v Paul Pritchard trading as Pritchard Law Group [2009] NSWSC 359 DJZ Constructions Pty Ltd v Paul Pritchard trading as Pritchard Law Group and Ors [2010] NSWSC 1024 Holmes v DMS Pacific Exports [2007] NSWSC 563 In the Marriage of CJ and KM Anstis and Anor [1999] FamCA 842; (1999) 26 FAM LR 548 James & Ors v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296 James Hardie v Wyong Shire Council [2000] NSWCA 107; (2000) 48 NSWLR 679 CASES CITED : Knight v FP Special Assets [1992] HCA 28; (1992) 174 CLR 178 FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; (2005) 63 NSWLR 300 McLaughlin v Dungowan Manly Pty Ltd [2010] NSWSC 306 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) 46-105 South Eastern Sydney Area Health Service v King [2006] NSWCA 2 TPC v Nicholas Enterprises Pty Limited (1979) 24 ALR 201 Ventouris Enterprise Pty Limited v Dib Group Pty Limited No 2 [2010] NSWSC 1317 Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328 DJZ Constructions Pty Ltd - Plaintiff Paul Pritchard t/as Pritchard Law Group - First Defendant/Cross Claimant PARTIES : Joseph John Gilles - Second Defendant/First Cross Defendant Gregory George Eliades - Third Defendant/Second Cross Defendant David McGovern SC - Fourth Defendant/Third Cross Defendant FILE NUMBER(S) : SC 2005/269375 Mr C Birch SC with Mr M Cleary - Plaintiff COUNSEL : Mr A McInerney with Mr P Livingston - First Defendant/Cross Claimant Ms KJ Williams - Second and Third Defendants/First and Second Cross Defendants Mr S Gibb SC - Fourth Defendant/Third Cross Defendant Pryor Tzannes & Wallis - Plaintiff SOLICITORS : Yeldham Price O'Brien Lusk - First Defendant/Cross Claimant Sparke Helmore - Second and Third Defendants/First and Second Cross Defendants McCabe Terrill Lawyers - Fourth Defendant/Third Cross Defendant - 34 - THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROFESSIONAL NEGLIGENCE LIST SCHMIDT J FRIDAY, 17 DECEMBER 2010 2005/269375 DJZ CONSTRUCTIONS PTY LTD v PAUL PRITCHARD TRADING AS PRITCHARD LAW GROUP AND ORS JUDGMENT 1 HER HONOUR: By motion filed on 9 December 2010 the first defendant, Mr Pritchard sought orders staying the judgment and orders to be made, pending the determination of an appeal; orders departing from the usual costs order, in a variety of ways and dealing further with an order for security for costs. 2 The parties were agreed as to certain orders necessary to be made to give effect to the judgment, namely: "1. Judgment for the plaintiff against the first defendant in the sum of $728,857.39 being damages of $471,598.27 together with interest in the amount of $257,259.12. 2. Judgment for the plaintiff against the second and third defendants in the sum of $127,574.91 being damages of $95,676.50 together with interest in the amount of $31,898.41. 3. Judgment for the fourth defendant against the plaintiff. 4. Judgment for the cross-claimant against the first and second cross-defendants. 5. Judgment for the third cross-defendant against cross-claimant." 3 Belatedly, Mr Pritchard and DJZ reached agreement as to the terms of a stay: 10. That the judgment and orders for costs given in favour of the plaintiff against the first, second, and third defendants, and order for discharge of security, be stayed until further order of the Court, such stay being ordered by the Court on the undertaking to the Court of the first defendant to expeditiously prosecute any appeal against the judgment in the proceedings." 4 They departed from each other in various ways, as to the other orders sought: "6. The Orders requiring the plaintiff provide security for costs for the first defendant are discharged. 7. The first defendant to pay the plaintiff's costs as agreed or assessed. 8. The first and second cross-defendants' pay the cross-claimant's costs as agreed or assessed. 9. The cross-claimant pay the third cross-defendant's costs as agreed or assessed. 5 Giles Payne & Co ('Giles Payne'), second and third defendants/first and second cross-defendants, also sought a stay of the judgment and costs orders as between it and Mr Pritchard. Security for Costs 6 In a judgment of 7 May 2009 (see DJZ Constructions Pty Ltd v Paul Pritchard trading as Pritchard Law Group [2009] NSWSC 359), I dealt with the question of an increase in the security which the plaintiff, DJZ Constructions Pty Ltd ('DJZ'), was obliged to provide the defendant by $50,000. Earlier in the proceedings, consent orders had been made as to the provision of security in the amount of $135,000. As the result of a misunderstanding, the security given had recently lapsed. When that came to be appreciated, steps were put in train in order to reinstate the security. 7 In those circumstances, DJZ sought that the orders for security be discharged and Mr Pritchard sought an order that the discharge be stayed, pending the hearing of the appeal. 8 In the circumstances, for reasons which will became apparent from the matter I next turn to, I am satisfied that justice demands the making of these orders, in the expectation that DJZ will have completed the steps necessary to ensure that the security is reinstated. If there is any difficulty in that regard, the parties have liberty to approach. Stay DJZ 9 An appeal has been taken by Mr Pritchard. In the circumstances of DJZ's financial situation, about which there is no dispute and which was dealt with in the principal judgment (see DJZ Constructions Pty Ltd v Paul Pritchard trading as Pritchard Law Group and Ors [2010] NSWSC 1024), the just order is that a stay be granted on terms agreed. That it is now a judgment creditor in my view is not a sufficient basis on which to take a different view. Giles Payne 10 In the circumstances, as between Giles Payne and DJZ, it seems to me, just that the judgment and orders should also be stayed. Mr McGovern 11 For his part, Mr McGovern opposed any stay, submitting that no reasonable ground of appeal had been identified and that no basis for departure from the usual order had been established, namely that the judgment is presumed to be correct and is appropriate for enforcement. 12 I am satisfied in these circumstances, where the judgment and orders are otherwise to be stayed, that justice demands that the same approach be adopted in relation to Mr McGovern's aspect of the proceedings. Costs between DJZ and Mr Pritchard 13 Costs arise to be dealt with under s 98 of the Civil Procedure Act 2005 and Rule 42 of the Uniform Civil Procedure Rules 2005. The usual order is that costs follow the event, they are not punitive, but compensatory in nature. Mr Pritchard sought orders that: (a) he pay 50% of DJZ' costs as between them, as agreed or assessed; (b) DJZ pay 50% of his costs as between them, as agreed or assessed; and (c) Mr Palmieri and another of his companies, Palmieri's Developments be jointly and severally liable to pay any costs DJZ is liable to pay him. Mr Palmieri and Palmieri's Developments 14 It is convenient to deal with the third order sought. It was opposed for Mr Palmieri and Palmieri's Developments on the basis that DJZ was no longer a 'man of straw', given that it had succeeded in these proceedings. It was now a judgment creditor. 15 I am satisfied, nevertheless, that were orders to be made in favour of Mr Pritchard, justice would demand that the orders sought be made against Mr Palmieri and Palmieri's Developments (see Knight v FP Special Assets [1992] HCA 28; (1992) 174 CLR 178). On the evidence dealt with in the principal judgment, it cannot be doubted that it was Mr Palmieri and Palmieri's Developments, non-parties, who promoted and funded the litigation, for their financial benefit; who played an active part in the proceedings, and who had a substantial interest in the subject of the litigation (see for example the discussion in the principal judgment at [267] and [287]). This is a proper basis for the orders sought being made (see FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340). 16 It was also argued that it was unnecessary to deal with this application and that it could await determination by the Court of Appeal. I disagree. The proper course is for the trial judge to deal with all of the matters in dispute in the litigation, including in relation to costs, so that the appeal court may resolve whatever matters the parties wish to agitate on appeal, as arising out of those decisions. That is the most efficient and cost effective approach, consistent with the requirements of s 56 of the Civil Procedure Act. 17 Nevertheless, such orders are only necessary if DJZ is ordered to pay Mr Pritchard the costs which he seeks. For reasons which I will explain, I do not propose to make such orders and so these orders, too, fall away. DJZ and Mr Pritchard 18 DJZ advanced two claims against Mr Pritchard in the proceedings:. "(a) The first in relation to advice given by Mr Pritchard in 1999 about the terms of a July 1999 deed, under which DJZ invested in a real estate business, known as Chris Burke Real Estate, by acquiring units in a unit trust known as the Surf Road Unit Trust ('SRUT'). (b) The second, advanced in the alternative, concerned guarantees given under the 1999 deed and advice given by Mr Pritchard as to the basis upon which the plaintiff settled certain disputes with the ultimate purchasers of the real estate business and related entities, pursuant to a deed dated 1 February 2001 and later sold its interest in the business, under a sale agreement dated 5 November 2003 and their impact upon those guarantees." 19 DJZ failed on the first claim and succeeded on the second. The usual order is that costs follow the event, even if the successful party loses on some issues. That ordinary rule may be departed from in cases where distinct issues have been litigated and the successful party has failed on an issue which is clearly dominant or separable (see the discussion in Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328 at 330-31 and James & Ors v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296 at [31] - [36]). 20 Mr Pritchard argued that there should be such a departure from the usual position in this case, given the outcome, which resulted in an award in respect of only two of the four heads of damages claimed, items 2 and 4. The order in respect of item 4 was reduced by 30%, on account of contributory negligence found on the cross claim brought by Mr Pritchard against Giles Payne, another firm of solicitors who had advised DJZ in relation to the matters the subject to the second claim. DJZ itself succeeded in a claim against Giles Payne, only brought after Mr Pritchard had brought his cross claim. The cross claim brought by Mr Pritchard against DJZ's former counsel, Mr McGovern, failed as did DJZ's claim against him. 21 Mr Pritchard's claim was that while the cross claim had to be considered, the simplest and fairest way of reflecting the parties' respective success was to allow DJZ only to recover 50% of its costs against him Alternatively, it was put, the matter could be assessed by reference to the 38 issues which the parties had advanced. Mr Pritchard had succeed on 21, DJZ on 14, Giles Payne on none and Mr McGovern on 2. 29 issues lay between Mr Pritchard and DJZ. They each succeeded on 14 and one did not arise. 22 It was also argued that these circumstances were such that there would be a further departure from the usual order in favour of Mr Pritchard, namely that DJZ would be ordered to pay 50% of his costs, reflective of his success in the proceedings. 23 DJZ's case was that the issues were not discreet or severable in the way urged for Mr Pritchard. Mr Palmieri had been cross examined over a range of issues for approximately two and a half days. The greater part of the cross examination went to the second claim. Both claims rested on the nature of the original transaction, resting as it did on the 1999 deed, which was the foundation of the venture in question. Mr Pritchard was cross examined for half a day on all issues and the only other witness to the first claim, Mr Wilson was also examined for half a day. Submissions on all matters took 2-3 days and the balance of the time was taken up with the cross claims. 24 DJZ succeeded on only one claim. It would not be just to make the orders Mr Pritchard sought. Effectively they would cancel each out. The relatively minimal resulting difference would reflect who had spent most on legal fees in prosecuting their case. That would not be a just result. Such an order would involve even further departure from the usual order. An order of this kind required particular circumstances to be established, which were not present here (see TPC v Nicholas Enterprises Pty Limited (1979) 24 ALR 201 at 208, and Ventouris Enterprise Pty Limited v Dib Group Pty Limited No 2 [2010] NSWSC 1317 at [27]). 25 I am satisfied that the circumstances are such that there should be a departure from the usual costs order in favour of DJZ, but not to the extent Mr Pritchard urged. DJZ advanced two relatively distinct claims against him. While there was some overlap in relevant evidence, for example going to matters of credit, there was not such an intermingling of these issues that justice demands that his application be refused entirely. To the contrary, I am satisfied that justice demands that the costs order reflect Mr Prichard's success in resisting a very substantial part of the case brought against him. 26 Account must be taken, however, of the impact of the cross claims which Mr Pritchard brought and the resulting claims DJZ advanced against Giles Payne and Mr McGovern. All claims were heard together, but the cross claims occupied a substantial part of the total 12 days of hearing. That had an impact on the parties' costs, which may not be ignored. The case advanced in relation to the 1999 deed occupied a smaller part of the trial than did the second claim. In my view a just assessment is that the order in favour of DJZ should be reduced by 35%, to reflect Mr Pritchard's success in relation to the claim on which he succeeded. 27 I am also satisfied that this not a case where a further departure from the ordinary costs order is warranted. Three particular matters were said to warrant such an order. Firstly, that the issue on which Mr Pritchard succeeded was substantial, he successfully resisting a claim for $1.669 million. Secondly, that the negligence claim was inconsistent with the case which had been advanced by DJZ in the Supreme Court proceedings and thirdly, that the claim rested to a significant part on the question of Mr Palmieri's credit, which was not established. 28 In my view, while these matters support a departure from the usual costs order, justice does not demand that there should also be a costs order in Mr Pritchard's favour in relation to the issue which he successfully defended. His success in resisting part of the case brought against him is properly reflected in the conclusion which I have reached, which results in him being obliged to meet only 65% of DJZ's costs. The particular circumstances required to be established before an order of the kind sought may be made, are in my view, not present in this case. Costs between DJZ and Giles Payne 29 DJZ succeeded in the case it brought against Giles Payne. It was submitted for DJZ however, that the claim advanced was a defensive one, in the event that the proportionality argument succeeded. DJZ had partial success, but sought no costs order in its favour, unless one was made against it in relation to Mr McGovern. 30 For reasons which I will explain in relation to Mr McGovern, I take the view that there can here be no departure from the usual costs order against Giles Payne in favour of DJZ. 31 For reasons which will become clear, I also take the view, however, that Giles Payne must bear the additional costs incurred by DJZ, as the result of having to engage new solicitors, when they had to withdraw. Those costs were the result of Giles Payne's failure to earlier identify its conflict. I will discuss this matter further below, but indicate at this stage, that in my view, DJZ should not have to bear the costs resulting from Giles Payne's earlier failure to identify its conflict. Costs between DJZ and Mr McGovern 32 DJZ failed against Mr McGovern. It argued that no costs order should be made against it, notwithstanding that loss. That was opposed by Mr McGovern. I can see no basis for any departure from the usual costs order in Mr McGovern's favour, other than in relation to the additional costs incurred by DJZ, as the result of having to engage new senior counsel, when Mr McGovern had to withdraw. Again, in my view DJZ should not have to bear the costs resulting from his failure to earlier identify his conflict. 33 It was argued for DJZ that given the nature of the defensive case which it brought against Mr McGovern and the small amount of costs involved in the prosecution of the claim, in the overall costs incurred in the proceedings, that the efficient way of dealing with those costs is simply to treat them as costs of the parties on the main issue. It was argued, in the spirit of pragmatism, consistently with the requirements of s 56 of the Civil Procedure Act, that there should be no separate order as to these costs. That course was opposed for Mr McGovern, who argued that the usual order would permit an agreement as to these costs, which it was envisaged could readily be reached. The possibility of a Bullock or Sanderson type order was suggested as a way of dealing with the circumstances. That was not embraced by the other parties. 34 I am all in favour of pragmatism and indeed urge it upon the parties, by making sensible accommodations with each other. I do not, however, see that it can provide a basis for departure from the ordinary approach flowing from s 98 of the Civil Procedure Act and the Court's Rules, even despite what s 56 of that Act provides. 35 Nor do I see that justice requires that an order should be made requiring Mr Pritchard to indemnify DJZ against the result of this order, as DJZ also sought. It was, DJZ which elected to take a defensive position, following the cross claim Mr Pritchard brought against Mr McGovern. I cannot see why it should be relieved of the consequences of that decision, other than in the respects I have earlier outlined. 36 These costs will be as agreed or assessed. It should be well within the parties' reach to arrive at a sensible agreement in relation to these costs, which it was common ground would be modest. 37 Unless some common ground emerges, when the formal order is formulated, which I would obviously consider, it seems to me that the usual order must be made in favour of Mr McGovern, other than in relation to the additional costs incurred as the result of his withdrawal, which he stood over. Costs between Mr Pritchard and Giles Payne on the cross claim 38 Mr Pritchard succeeded against Giles Payne. He urged a departure from the usual order, relying on a Calderbank offer of 23 April 2010, in which he made an offer to all parties to settle the proceedings on the basis of a payment of $500,000 to DJZ, with Giles Payne and Mr McGovern each to pay DJZ $50,000, that is, $600,000 in total, in full settlement of all claims. The offer was rejected, but DJZ was prepared to settle for $675,000, inclusive of costs, on the basis that Mr McGovern and Giles Payne waive their unpaid legal fees, of $90,000 and $110,000. They refused. 39 This was submitted to have caused a significant road block to the settlement negotiations, a position taken by Giles Payne and Mr McGovern without reasonable justification, given that they were not entitled to recover their fees. DJZ had a right to resist their payment, on the ground of breach of fiduciary duty or breach of retainer, particularly in relation to fees wasted or rendered futile. 40 I am unable to accept Mr Pritchard's case. This is not a case where a solicitor has acted, despite being conscious of a conflict. Nor has it been shown that DJZ suffered any loss or damage as the result of Giles Payne acting in the proceedings, other than in relation to the additional costs incurred as the result of having to engage new solicitors, which I have already dealt with. DJZ itself advances no claim for damage. The need to cease acting did not become apparent to Giles Payne until the filing of Mr Pritchard's amended defence, after the hearing had commenced, with the result the bringing of the cross claim, whereupon Giles Payne ceased acting. It appears that to that point the work undertaken for DJZ, if not undertaken by Giles Payne, would have had to have been undertaken by some other solicitor. Even when there was a change of solicitor, there was no apparent alteration in the course which DJZ pursued in the proceedings. 41 The need for DJZ to obtain new legal representation certainly had the result of delay and the incurring of some additional costs, because DJZ had to obtain new legal representation (except in relation to junior counsel). Had Giles Payne never acted for DJZ, Mr Pritchard's belated amendment of his defence and the bringing of the cross claim, would still have resulted in delay and additional cost, albeit not those associated with instructing new solicitors. 42 As to the costs incurred while Giles Payne acted, it has to be considered that this is not a situation like that dealt with in Cachia v Isaacs (1985) 3 NSWLR 366 at 371, on which Mr Pritchard relied. That case was concerned with the consequences of negligence, it being observed at 376 that the applicable principal is: "A solicitor forfeits his right to receive costs for work done by him which is useless as a result of his negligence." 43 Here there was no attempt to show that Giles Payne had been negligent in the conduct of these proceedings, or that it had undertaken useless work. To the contrary, DJZ makes no complaint about the work which was undertaken and only reluctantly joined Giles Payne as a defendant in the proceedings. DJZ appears to have received the benefit of what was done beforehand. 44 The complaints advanced against Giles Payne concerned its negligence in relation to the matters the subject of the second complaint brought by DJZ against Mr Pritchard, not any negligence in the conduct of these proceedings. It was apparent on the evidence, that Giles Payne did not recognise any failures on its part in relation to the work undertaken for DJZ in relation to the matters relied on in Mr Prichard's cross claim. Its resistance to the claims Mr Pritchard eventually brought against it failed, for the reasons explained in the principal judgment. That Giles Payne also did not appreciate that it had a conflict, in later acting for DJZ in these proceedings, prior to the amendment of Mr Pritchard's defence, must also be accepted. 45 Mr Pritchard's complaint that Giles Payne ought to have recognised its conflict from the outset and ought never to have acted for DJZ in these proceedings at all, does not support what was advanced in relation to the rejection of the April 2010 Calderbank offer. It is not a question of Giles Payne acting unreasonably in not accepting this offer. The offer was made to all parties and was not accepted by any of them, including DJZ. The offer was thus not one capable of acceptance by Giles Payne, or any other party, alone. For its part Giles Payne offered to settle the issues in dispute on the basis that it would separately resolve the question of its unpaid fees with DJZ. Mr Pritchard did not respond to that proposal. 46 It follows that Mr Pritchard's 23 April offer cannot ground a basis upon which there may be any departure from the usual costs order. 47 For its part Giles Payne argued that an order that it bear 25% of Mr Pritchard's costs of the cross claim, excluding those that related to Mr McGovern, would properly reflect the limited measure of success achieved by Mr Pritchard on the cross claim (see McLaughlin v Dungowan Manly Pty Ltd [2010] NSWSC 306). 48 This followed, it was argued, because Mr Pritchard had argued that Giles Payne was the principal adviser in the litigation before Einstein J and should bear a very significant proportion of any damages which DJZ suffered. That case was not established. 49 I do not accept that submission. There was here no disentitling conduct on Mr Pritchard's part, such as the unreasonable pursuit of unmeritorious claims, or discreditable conduct in the proceedings. Mr Pritchard succeeded on the cross claim, contribution was assessed, with the result the orders made in recognition of Giles Payne's contribution to the damages DJZ incurred. 50 Hammerschlag J's discussion in Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1163 at [32] is pertinent: "28 Part 42 r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") provides as follows: "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs." 29 The general rule that costs follow the event and that a successful litigant receives his costs in the absence of special circumstances justifying some other order is of very long standing: see eg Ritter v Godfrey [1920] 2 KB 47. 30 The general rule can, in the discretion of the Court, be displaced in appropriate cases. Relevant authorities have been recently and conveniently collected by White J in Short v Crawley (No 40) [2008] NSWSC 1302 at [25]-[32]. 31 Examples of instances where the general rule may be displaced include the following: a a costs order in favour of a successful party can be modified to reflect its failure on particular issues even if the successful party did not act unreasonably in raising those issues: Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (Supreme Court of New South Wales, Hodgson CJ in Eq, 3 June 1998, unreported, BC9802305 at 10-11); b if a party unreasonably pursues or persists with points which have no merit, such conduct will constitute a consideration relevant to the ordering of costs even in circumstances where that party is generally successful: Oshlack v Richmond River Council (1998) 193 CLR 72 at 122; c conduct in relation to the matter may be discreditable to an extent warranting a party being deprived of costs: Jamal v Secretary Department of Health (1988) 14 NSWLR 252 at 271; d where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed: Hughes v Western Australian Cricket Association (Inc) (1986) 8 ATPR 40-748 at 48,136; e where the proceedings involve multiple issues departure from the general rule may be warranted particularly where the losing party has succeeded on issues which occupied significant time. Nevertheless the application of the general rule may involve hardship where a party succeeds on some issues but fails on others particularly where the losing party succeeds on some issues. However unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Ritchie's Uniform Civil Procedure NSW at [42.1.15]; Waters v PC Henderson (Australia) Pty Ltd (New South Wales Court of Appeal, 6 July 1994, unreported, BC9404952 at 5); Short v Crawley (No 40) at [27]-[28]; f a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them: Hughes v Western Australian Cricket Association (Inc) at 48,136. 32 In Hughes v Western Australian Cricket Association (Inc) Toohey J (in a passage cited by White J in Short v Crawley (No 40)) referred to what was said by Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 12 in the following terms: "His Honour sounded what he described as 'a note of cautious disapproval' of applications to apportion costs according to the success or failure of one party or the other on the various issues of fact or law which arise in the course of a trial. His Honour commented: 'But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.'" " 51 I am satisfied that the just order in the circumstances of this case is that Giles Payne bear the costs of the cross claim brought against it, as agreed or assessed. Indemnity by Giles Payne for Mr Pritchard's costs 52 As to the costs Mr Pritchard is ordered to pay DJZ, he sought an order that Giles Payne: "Indemnify Pritchard in the following proportions for the costs the subject of order 2: (a) 25% up to 29 April 2010, and 100% thereafter; or (b) in the alternative, 25%." 53 Mr Pritchard has succeeded on the cross claim and will have his costs, which reflect that success. His resistance of the case DJZ brought against him and its success and failure is reflected in the departure from the costs order made in favour of DJZ, in relation to its costs. 54 As to the costs incurred in unsuccessfully resisting part of DJZ's claim, for Mr Pritchard reliance was placed on s 5 of the Law Reform (Miscellaneous Provision) Act 1946 ("Law Reform Act") and the finding that Giles Payne was a joint tort feasor. The result was, it was submitted, that it followed that there was right to the indemnity sought. For Giles Payne it was submitted that there was no such right. 55 In James Hardie v Wyong Shire Council [2000] NSWCA 107; (2000) 48 NSWLR 679, it was observed by Handley JA at [23] and Giles JA at [40]: "23 In my judgment the right to contribution conferred by s 5 extends, as a matter of right, to the costs payable to the plaintiff in addition to the damages. The third party's responsibility for the damage assessed under s 5(2) will determine his contribution to both damages and costs. This construction does not leave a third party at the mercy of a defendant's unreasonable conduct in defending the plaintiff's action. The defendant may well have no right to contribution in respect of the costs he incurs to his own solicitors, and the third party can protect himself by an offer to contribute under the Rules of Court which deal with offers of compromise, or by a Calderbank letter. 40 Returning to s 5 of the 1946 Act, the tort feasor found liable and the contributing tort feasor are under coordinate liabilities to make good the one loss as to damages. The 1946 Act reinstated the principle of natural justice by abolishing the rule in Merryweather v Nixan , and went further by specifically providing for unequal contribution between the tort feasors. The tort feasor found liable and the contributing tort feasor are in one sense not under coordinate liabilities to make good the one loss as to costs, because the order in favour of the plaintiff is only made against the tort feasor found liable. But if there is to be complete recognition of the principle of natural justice, and equality of benefit and burden, costs should be treated in the same way as damages. The plaintiff could have sued either the tort feasor found liable or the contributing tort feasor, or both. Recovery from the tort feasor found liable will discharge the contributing tort feasor. If the plaintiff had sued the contributing tort feasor instead of, or as well as, the tort feasor found liable, the contributing tort feasor would have been ordered to pay the costs. So it is just and equitable that the burden of the plaintiff's costs should be shared between the tort feasors, so that the burden will not fall on one of them to the exclusion of the other because the plaintiff chose to sue only the one." 56 DJZ initially pursued Mr Pritchard. He later brought a cross claim against Giles Payne, with the result that it also became a defendant in the proceedings. Mr Pritchard and DJZ succeeded in the case which they brought against Giles Payne and will each have a costs order which reflects that success. The order sensible in these circumstances, given what was discussed in James Hardie, it seems to me, is that up to the time that Giles Payne became a defendant in the proceedings, Giles Payne should indemnify Mr Pritchard for 25% of the costs he has been ordered to pay DJZ. Costs between Mr Pritchard and Mr McGovern on the cross claim 57 Mr Pritchard failed against Mr McGovern. While breach of retainer was established, causation was not. Mr McGovern sought an indemnity costs order, relying on two Calderbank letters and an offer of compromise. Mr Pritchard sought an order that each side bear its own costs. 58 The cross claim was brought on 11 May 2009. The first Calderbank offer was made by Mr McGovern on 21 September 2009 on a walk away basis, before the pleadings were closed. There was an amended defence to the cross claim filed on 8 December. At that time, Mr McGovern's affidavit evidence was not on. It was filed on 29 March 2010 and a second affidavit on 1 April. 59 It was submitted for Mr McGovern that it should have been apparent that the claim against him would fail, given the true basis of the Court of Appeal's judgment, on which the question of causation turned. This was a matter always known to Mr Pritchard and his advisers. It was accepted, however that at this time, Mr McGovern's pleadings did not make his reliance on that judgment clear. 60 In the circumstances it seems to me that it was not unreasonable for this offer to have been refused, given the state of the pleadings and the evidence. It was not until the amended defence that the causation issue on which Mr McGovern eventually succeeded, resting as it did on the matters on which the Court of Appeal's judgment turned, was made clear. 61 The second offer was an offer of compromise made under Rule 20.26 on 15 April 2010. There was a second Calderbank offer made on the same date, which was open until 22 April, the day on which a mediation between the parties had been arranged. That offer required Mr Pritchard to give up his claim and that McGovern's costs of $65,000 be paid. The letter explained the basis on which Mr McGovern would resist the claim. That was the basis on which he eventually succeeded. There is no question that Mr McGovern bettered the offer. 62 Mr Pritchard's case against Mr McGovern was that the loss in question had been caused by earlier difficulties, not advanced by the James interests before the Court of Appeal and on which its decision did not rest, despite some obiter observations about those difficulties. At the time of this offer, the nature of the contest between the parties was clear. Mr Pritchard's case was not made out at trial. 63 In the circumstances I can see no basis upon which Mr McGovern could be deprived of a costs order in his favour. He succeeded in resisting the claim brought against him. A departure from the usual order ordinarily requires that there be some misconduct in the proceedings by the successful party. (See Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72). In my view that was not shown here, despite Mr Pritchard's reliance on the rejection of his April offer made to all parties, which I have dealt with above and the road block which he complained Mr McGovern's refusal to settle without payment of his fees presented in the negotiations. I will deal further with that matter below. 64 As to the offer of compromise, Pt 42 r 42.15A provides: "42.15A Where offer not accepted and judgment as or more favourable to defendant (cf SCR Part 52A, rule 22; DCR Part 39A, rule 25; LCR Part 31A, rule 20) (1) This rule applies if the offer concerned is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim concerned as favourable to the defendant, or more favourable to the defendant, than the terms of the offer. (2) Unless the court orders otherwise: (a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis: (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made." 65 A different order will only be made in exceptional circumstances. In South Eastern Sydney Area Health Service v King [2006] NSWCA 2; it was observed: "83 Part 52 rule 22 provides that, where a plaintiff who has made an offer of compromise in accordance with Part 22 (Division I) which is not accepted by the defendant, and where the plaintiff obtains a judgment no less favourable than the terms of the offer, then, unless the Court otherwise orders, the plaintiff will be entitled to an order against the defendant for costs on an indemnity basis in relation to his costs incurred from the day after the offer was made. The onus is on the defendant to persuade the Court that indemnity costs should not be ordered. He must demonstrate the basis on which an order should be made denying the plaintiff's entitlement to indemnity costs. He must establish that he had given serious thought to the risk involved in non-acceptance of the offer, and that he had assessed the plaintiff's case properly and in the context of the rule and the achievement of its purpose — to encourage the proper compromise of litigation, in the private interests of the litigants and in the public interest of the prompt and economical disposal of litigation. Generally, exceptional circumstances are required to justify such an order denying the plaintiff's entitlement. See, generally, Fowdl v Fowdl , Court of Appeal, 4 November 1993, unreported, per Kirby P at 12, 16; Hillier v Sheather (1995) 36 NSWLR 414 at 422-423; Morgan v Johnson (1998) 44 NSWLR 578 at 581-582. 84 Although the Court may take into account the particular features of a case and the difficulty of putting an accurate estimate on its value in advance of the litigation, those considerations do not provide a basis by themselves for denying the party making the offer an order for indemnity costs: Hillier v Sheather (at 423). In Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 725, it was said that a miscalculation in a case with large imponderables, where the course taken by the party to whom the offer was made may have been perfectly reasonable, would provide a basis for denying an order, but the subsequent decision in Hillier v Sheather suggests that, whilst "large" imponderables may be a relevant factor in the particular case in denying an order for indemnity costs, in the general case a party's reasonable belief as to his own chances of success does not alone provide a basis for denying an order for indemnity costs." 66 Here the case brought by Mr Pritchard against Mr McGovern succeeded, but for causation. The conclusion which I came to on causation rested on the view which I took of the effect of the way in which the James interests advanced their case in the Court of Appeal and the matters on which the Court of Appeal's judgment turned. Had I taken a different view of that matter, as was Mr Pritchard's case, given the obiter observations on which the Court of Appeal made, which supported the view which Mr Prichard pressed, the case against Mr McGovern would have succeeded. 67 That Mr Pritchard took the view which he did and thus rejected the offer made, may be understandable, in the face of his then assessment of the prospects of his case. That case did not, however, succeed. That there was a risk that the view which Mr Prichard proposed to agitate would not succeed, must have been apparent. On the approach discussed in South Eastern Sydney Area Health Service in the course which Mr Prichard decided to pursue, is not a basis on which an indemnity costs order can justly be refused, given the offer of compromise which was rejected. Fees payable by DJZ to Giles Payne and Mr McGovern 68 In an unusual application, Mr Pritchard pressed for orders under s 99 of the Civil Procedure Act that: "a. as between Giles Payne, as solicitor, and DJZ, as client, the whole of the costs in the proceedings which otherwise would have been payable by DJZ to Giles Payne in respect of services provided by Giles Payne during the period in which Giles Payne acted for DJZ as its solicitor in these proceedings; and b. as between Mr McGovern SC, as barrister, and Giles Payne, as instructing solicitor, the whole of the costs in the proceedings which otherwise would have been payable by Giles Payne to Mr McGovern SC in respect of services provided by Mr McGovern SC during the period in which Mr McGovern SC, as briefed by Giles Payne, advised or appeared for DJZ as Senior Counsel in these proceedings." 69 There was no question as to the power to make such orders, but they were opposed as unwarranted in the circumstances. 70 Giles Payne and Mr McGovern acted for DJZ in the proceedings up to the time that Mr Pritchard filed an amended defence and brought the cross claims, relying on what was claimed to have been their negligence in respect of the same matters for which DJZ was pursuing him in negligence. They then withdrew and themselves became parties to the proceedings. In brief compass, Mr McGovern had earlier advised DJZ in relation to taking other proceedings which it was then contemplating. He had also come to give advice which had an impact on the litigation in which Mr Pritchard was acting for DJZ. The case brought against him by Mr Pritchard on the cross claim and that brought by DJZ both failed, causation not having been established. Giles Payne had briefed Mr McGovern and had also come to give advice which had an impact on the litigation in which Mr Pritchard was acting. The case brought against it by Mr Pritchard and DJZ succeeded. They were found to have been joint tort feasors. 71 It was Mr Pritchard's complaint that in the those circumstances, Mr McGovern and Giles Payne always had a conflict of interest, which should have resulted in them advising DJZ of the conflict and declining to act for it, in the proceedings it brought against him. That his defence was not amended and the cross claim brought until the commencement of the hearing, did not alter that fact. Accepting instructions for DJZ in the proceedings amounted to improper conduct within the meaning of s 99 if the Act, or at least conduct undertaken without reasonable cause. It was not necessary to come to the view that there had been serious misconduct or a serious dereliction of duty. 72 It was argued that both Mr McGovern and Giles Payne were shown to have breached their duty to DJZ. The conflict which they had was thus actual. This resonated with the situations dealt with in Holmes v DMS Pacific Exports [2007] NSWSC 563 and Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) 46-105. The order sought would be made if the consensus of judicial or professional opinion was that the conduct was improper, even if it did not violate the letter of a professional code. 73 Section 99 provides: "99 Liability of legal practitioner for unnecessary costs (cf Act No 52 1970, section 76C; SCR Part 52A, rules 43 and 43A) (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) it may, by order, disallow the whole or any part of the costs in the proceedings: (i) in the case of a barrister, as between the barrister and the instructing solicitor, or as between the barrister and the client, as the case requires, or (ii) in the case of a solicitor, as between the solicitor and the client, (b) it may, by order, direct the legal practitioner: (i) in the case of a barrister, to pay to the instructing solicitor or client, or both, the whole or any part of any costs that the instructing solicitor or client, or both, have been ordered to pay to any other person, whether or not the solicitor or client has paid those costs, or (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) it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party. (3) Before making such an order, the court may refer the matter to a costs assessor (within the meaning of Part 3.2 of the Legal Profession Act 2004) for inquiry and report. (4) The court may direct that notice of any proceedings or order under this section with respect to a legal practitioner be given: (a) in the case of a barrister, to the instructing solicitor or client, or both, as the court may direct, or (b) in the case of a solicitor, to the client. (5) The court may give ancillary directions to give full effect to an order under this section, including directions to a legal practitioner to provide a bill of costs in assessable form: (a) to the court, or (b) to a party to the proceedings, or (c) in the case of a barrister, to the instructing solicitor or client, or both, or (d) in the case of a solicitor, to the client. (6) A party's legal practitioner is not entitled to demand, recover or accept: (a) in the case of a barrister, from the instructing solicitor or client, or (b) in the case of a solicitor, from the client, any part of the amount for which the legal practitioner is directed by the court to indemnify any party pursuant to an order referred to in subsection (2) (c). (7) In this section, client includes former client." 74 It should be noted that for its part, DJZ did not press such orders, but in the event that they were made, sought orders against Mr McGovern and Giles Payne indemnifying it against the consequences of the order sought by Mr Pritchard. For reasons which will become apparent, it is not necessary that I consider making such orders. Giles Payne 75 Mr Pritchard's case was that in acting for DJZ in these proceedings, Giles Payne had an obvious conflict, even before it withdrew. It had been found to have provided services to DJZ beyond the narrow retainer it claimed it had received and to have acted negligently and in breach of that retainer. In accepting instructions in these proceedings, later brought by DJZ against Mr Pritchard, it followed that there was an inherent conflict of interest, because the allegations of negligence brought by DJZ against Mr Pritchard, were similar to the negligence it was eventually found that Giles Payne had engaged in, in their provision of legal services to DJZ in respect of the same transactions. 76 Giles Payne had advised on the proceedings the subject of the second claim brought against Mr Pritchard and its settlement. Negligence and breach of retainer were found against it. From the outset there was thus a real possibility that the DJZ would have a similar claim against Giles Payne, to that which it wished to pursue against Mr Pritchard in respect of the second claim brought against him. It ought to have been apparent to Giles Payne that it ought not to have acted for DJZ in the proceedings, when there was an actual or potential apprehension or risk of liability on their part in relation to the same matter. 77 To avoid conflict, instructions in these proceedings ought to have been refused. In the result DJZ did not receive independent legal advice; there was no evidence that DJZ was ever advised of the conflict, or that it gave informed consent to Giles Payne acting, notwithstanding the conflict. The Solicitor's Rules dealt expressly in cl 24 with conflict, providing: Solicitors Rules - 10 - Avoiding a conflict between a client's and a practitioner's own interest 10.1 A practitioner must not, in any dealings with a client - 10.1.1 allow the interests of the practitioner or an associate of the practitioner to conflict with those of the client; 10.1.2 exercise any undue influence intended to dispose the client to benefit the practitioner in excess of the practitioner's fair remuneration for the legal services provided to the client; 10.2 A practitioner must not accept instructions to act for a person in any proceedings or transaction affecting or related to any legal or equitable right or entitlement or interest in property, or continue to act for a person engaged in such proceedings or transaction when the practitioner is, or becomes, aware that the person's interest in the proceedings or transaction is, or would be, in conflict with the practitioner's own interest or the interest of an associate. 78 It was submitted that: "The misconduct of Giles Payne and Mr McGovern SC was compounded in the present case by their consistent refusal to acknowledge their position of conflict of interest. The Court should conclude from the position adopted by Giles Payne and McGovern SC at all relevant times that neither Giles Payne nor Mr McGovern SC appreciated that they were acting in a position of conflict." 79 It was also relevant, it was argued, that in this case there were practical consequences for the proceedings, flowing from the failure of Giles Payne to deal with its obvious conflict before the amendment of the pleadings which expressly raised that issue. Giles Payne's later insistence on payment of its fees for work undertaken for DJZ in these proceedings, became an impediment to the settlement negotiations. 80 The result was wasted costs. The proceedings would have been brought to hearing more promptly, had Giles Payne not acted. The adjournment resulting from its joinder, so that DJZ could obtain new representation, led to unnecessary costs being incurred. Neither DJZ nor Mr Pritchard should have to bear the costs of the provision of their services: "... during the period of their serious misconduct or such costs as were incurred improperly, or without reasonable cause, in circumstances for which Giles Payne or Mr McGovern SC were responsible." 81 Giles Payne's case was that its situation was far removed from those dealt with in the authorities and that the order sought would not be made. There was no assertion made against it that it was aware of any conflict until the amendment of the pleadings, which caused it to withdraw in March 2009. Nor was there any real suggestion that the costs incurred to that point were wasted. 82 That it had a conflict was submitted not to have been obvious, even given the findings made against it, which really turned on the circumstances in which it came to give DJZ highly qualified advice in relation to the settlement of the proceedings in which Mr Pritchard was acting, at a time when it had limited access to relevant information. There was no suggestion that DJZ might have any claim against it, until Mr Pritchard amended his pleadings and no basis for it to perceive any potential conflict, before that time. Once the decision was made, Giles Payne promptly withdrew. 83 Care had to be taken not to consider this application in a way which attributed perfect hindsight to Giles Payne in relation to its conduct before March 2009 (see Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; (2005) 63 NSWLR 300 at 321). The case that there should have been an appreciation of the conflict from the outset, given the circumstances revealed on the evidence, would not be accepted. The circumstances make it understandable that the conflict was not appreciated at the time. The fact that the Court has taken a different view and concluded that there was relevant negligence, did not alter that neither negligence nor conflict were in fact perceived at the time. This was not a case where conflict was perceived and the solicitor acted any way, the kinds of situations dealt with in the authorities relied on for Mr Pritchard. 84 In my view, this claim has not been established. It may firstly not be overlooked that the order sought by Mr Pritchard is not one which DJZ pursues. In the Marriage of CJ and KM Anstis and Anor [1999] FamCA 842; (1999) 26 FAM LR 548, the compensatory nature of orders such as here sought was discussed and at [49] orders directed to the result of a failure to recognise a conflict, namely where adjournments resulted, the solicitor's conduct there being found inadequate and unacceptable. A compensatory order was made in respect of the resulting additional costs incurred. This is not such a case, for reasons which I have already outlined. 85 In Lemoto, the development of the idea of the 'wasted costs order' was explained by McColl JA at [91], in relation to circumstances in which a wasted costs order would be made against a legal representative 'whose conduct had led to the incurring of unnecessary costs'. 86 The orders here sought are not directed to costs which have been shown to have been unnecessary. If that work in question had not been performed by Giles Payne, it would have still been necessary for DJZ to have had it performed by someone else. The principles McColl JA extracted from the authorities were discussed at [92]: 92 The new Division 5C should be construed against the background of the following principles which can be gleaned from the English and Australian authorities which have considered the power to order legal practitioners to pay the costs of proceedings in which they have represented parties: "(a) The jurisdiction to order a legal practitioner to pay the costs of legal proceedings in respect of which he or she provided legal services must be exercised "with care and discretion and only in clear cases": Ridehalgh (at 229), Re Bendeich (1994) 53 FCR 422; Deputy Commissioner of Taxation v Levick [1999] FCA 1580; (1999) 168 ALR 383 per Hill J at [11]; Levick v Deputy Commissioner of Taxation [2000] FCA 674; (2000) 102 FCR 155 at [44]; Gitsham v Suncorp Metway Insurance Ltd [2002] QCA 416 at [8] per White J (with whom Davies and Williams JJA agreed); De Sousa v Minister for Immigration (1993) 41 FCR 544; Money Tree Management Service Pty Ltd v Deputy Commissioner of Taxation (No 3) [2000] SASC 286; (b) A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he or she acts for a party who pursues a claim or a defence which is plainly doomed to fail: Ridehalgh (at 233); Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120 at [56] per Lord Hobhouse; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 (affirmed on appeal, Flower & Hart (a firm) v White Industries (Qld) Pty Ltd [1999] FCA 773; (1999) 87 FCR 134); Levick v Deputy Commissioner of Taxation; cf Steindl Nominees P/L v Laghaifar [2003] QCA 157; [2003] 2 Qd R 683; (c) the legal practitioner is not "the judge of the credibility of the witnesses or the validity of the argument": T ombling v Universal Bulb Co Ltd [1951] 2 TLR 289 at 297; the legal practitioner is not "the ultimate judge, and if he reasonably decides to believe his client, criticism cannot be directed to him": Myers v Elman (at 304, per Lord Atkin); Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] HCA 26; (2001) 47 ATR 1 at [34] per Callinan J; (d) A judge considering making a wasted costs order arising out of an advocate's conduct of court proceedings must make full allowance for the exigencies of acting in that environment; only when, with all allowances made, a legal practitioner's conduct of court proceedings is quite plainly unjustifiable can it be appropriate to make a wasted costs order: Ridehalgh (at 236, 237); (e) A legal practitioner against whom a claim for a costs order is made must have full and sufficient notice of the complaint and full and sufficient opportunity of answering it: Myers v Elman (at 318); Orchard v South Eastern Electricity Board (at 572); Ridehalgh (at 229); (f) Where a legal practitioner's ability to rebut the complaint is hampered by the duty of confidentiality to the client he or she should be given the benefit of the doubt: Orchard v South Eastern Electricity Board (at 572); Ridehalgh (at 229); in such circumstances "[t]he court should not make an order against a practitioner precluded by legal professional privilege from advancing his full answer to the complaint made against him without satisfying itself that it is in all the circumstances fair to do so": Medcalf (at [23] per Lord Bingham); (g) The procedure to be followed in determining applications for wasted costs must be fair and "as simple and summary as fairness permits ... [h]earings should be measured in hours, and not in days or weeks ... Judges ... must be astute to control what threatens to become a new and costly form of satellite litigation": Ridehalgh (at 238 - 239); Harley v McDonald [2001] UKPC 18; [2001] 2 AC 678 at 703 [50]; Medcalf (at [24])." 87 In this case, it was argued for Giles Payne, there were no wasted costs, or any complaint by DJZ that costs had been unnecessarily incurred, as the result of its failure to appreciate any conflict. That submission, it seems to me must be accepted, other than in relation to the additional costs flowing from the need to instruct other solicitors, when Giles Payne had to withdraw, which I earlier dealt with. Those costs were not the subject of Mr Pritchard's application under s 99. Mr McGovern 88 Mr Pritchard advanced a similar case against Mr McGovern, given the conclusions reached as to negligence, notwithstanding that the case on causation failed. It was resisted on the basis that an order under s 99 would only be made in a case where serious dereliction of the kinds specified in s 99(1)(a) or (b) were established. Such allegations ought not to be made lightly. Conduct of the impugned kind was far removed from Mr McGovern's circumstances. 89 The possibility of conflict arising in the circumstances could not have been appreciated, when Mr McGovern accepted instructions to appear for DJZ in these proceedings, years after the advice he had given DJZ. It was also relevant that there was no complaint on Mr Pritchard's part, about Mr McGovern's application until the amendment of his defence. As soon as the possibility was raised, Mr McGovern withdrew. The basis of such an order could simply not be established in those circumstances. Conclusion 90 It seems to me that the orders sought cannot be made. As was submitted for Giles Payne, an order under s 99 may not be made merely upon the basis that a conflict existed. Considerably more must be shown, if the requirements of either s 99(1)(a) or (b) are to be satisfied. In this case that was absent. 91 Firstly, it must be accepted that any conflict was not appreciated when Giles Payne and Mr McGovern accepted instructions to act for DJZ in these proceedings. Nor was it shown that while they acted, they ever sought to protect or advance their own interests, rather than those of DJZ. 92 It is also difficult to see that there were wasted costs incurred by DJZ as the result of any failure by Giles Payne and Mr McGovern to appreciate any conflict, before Mr Pritchard advanced his claim against them. After they withdrew, DJZ does not appear to have altered its course. It had to deal with the consequences of the withdrawal, by engaging new solicitors and senior counsel, but makes no complaint itself as to any wasted costs, which it incurred while represented by Giles Payne and Mr McGovern before their withdrawal. 93 DJZ brought proceedings which succeeded in part and failed in part. The aspect which failed was not as the result of what Giles Payne or Mr McGovern did, or failed to do, in these proceedings. That costs were unnecessarily incurred in the pursuit of these claims, before they withdrew, is not apparent. The work undertaken would undoubtedly have been performed by others, if Mr McGovern and Giles Payne had not been retained. Thereby DJZ would have incurred costs. That they would have been less than were incurred as the result of Giles Payne and Mr McGovern acting was also not shown. 94 This was not a case where a legal practitioner acted notwithstanding known and obvious conflict, which resulted in unnecessary costs being incurred, as were the circumstances in the various authorities relied on for Mr Pritchard. DJZ having itself no complaint about the work performed for it, before Giles Payne and Mr McGovern withdrew and there having been no waste established, it is difficult to see why it ought to be relieved of the obligation to pay for the work undertaken on its behalf in these proceedings. If DJZ is not entitled to such relief, it is difficult to see on what basis an order could be made in favour of Mr Pritchard under the section. 95 Unquestionably there must have been some additional costs incurred by DJZ as the result of the need to alter its representation when Giles Payne and Mr McGovern withdrew, once conflict became apparent, but that is not a cost with which s 99 is concerned, nor is that the complaint to which Mr Pritchard addressed this part of his case. I have already dealt with these costs, which I am satisfied Giles Payne and Mr McGovern should, as a matter of justice between the parties, themselves bear. Unquestionably, it would have been desirable that Giles Payne and Mr McGovern did not accept instructions to act for DJZ in these proceedings. That, is not however, a proper basis for making orders under s 99, which must be reserved for only clear cases of a particular kind. 96 The situation which resulted in Giles Payne and Mr McGovern being joined in the proceedings, was as a consequence, at its highest, of conflicts which were not recognised, until raised in the amended defence. Even if it be accepted that they ought to have been recognised beforehand, given the circumstances, that there was serious misconduct or serious neglect involved in the failure to have earlier appreciated the conflicts, does not follow. The evidence does not suggest that any failure to recognise conflict was deliberate, or that, for example, Mr McGovern and Giles Payne sought to mislead DJZ, in order to protect themselves. Rather, there was a failure to appreciate that there was anything which they might have to protect. Nor was it shown that the proceedings might have taken any different course, had the conflict been recognised earlier, with the result that Giles Payne and Mr McGovern acted for DJZ from the outset. The impediment allegedly caused by the fees incurred by DJZ in instructing Giles Payne and Mr McGovern would not have existed, but other difficulties would have. Namely, the fees incurred in instructing other solicitors and senior counsel to act for DJZ. 97 In all of the circumstances, I am unable to come to the view that the basis necessary for orders of the kind sought by Mr Pritchard under s 99 was established. Orders 98 The parties are directed to bring in final orders reflecting the orders agreed and otherwise, in accordance with the conclusions reached on the matters over which they joined issue. ********** 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.