Supreme Court New South Wales Medium Neutral Citation: Young v Annis-Brown t/as Lincoln Smith & Co & Anor (No 2) [2011] NSWSC 1150 Hearing dates: 15 September 2011 Decision date: 26 September 2011 Jurisdiction: Equity Division Before: Black J Decision: Plaintiff to pay the Defendants' costs in the matter 2011/00094912 No order as to costs in the matter 2010/00100783 Plaintiff to pay the Defendants' costs in the matter 2010/00214241 Catchwords: COSTS - factors relevant to the award of costs following settlement. COSTS - whether appropriate to order costs based on contested issues of fact without a final hearing Legislation Cited: - Legal Profession Regulation 2002 (NSW) - Legal Profession Act 1987 (NSW) Cases Cited: - McNamara v Bau San [2010] NSWSC 809 - Metro Hotel Sydney Pty Ltd v Kol Tov Pty Ltd [2010] NSWSC 1195 - Re Minister for Immigration and Ethic Affairs; ex parte Lai Qin (1997) 186 CLR 622 Category: Costs Parties: Maureen Mary Young (Plaintiff) Wayne Vincent Annis-Brown t/as Lincoln Smith & Co (Defendant) Representation: Counsel: J. Jobson (Plaintiff) M.J. Stevens (Defendant) Solicitors: Beazley Singleton (Plaintiff) Lincoln Smith & Co (Defendant) File Number(s): 2010/00100783, 2010/00214241, 2011/00094912 Judgment Costs assessment appeal 1On 17 August 2011, I delivered judgment in proceedings number 2011/00094912 ("Costs Assessment Appeal") ([2011] NSWSC 890) brought by the Plaintiff, Ms Maureen Mary Young ("Ms Young") against Mr Wayne Vincent Annis-Brown trading as Lincoln Smith & Co ("Mr Annis-Brown"). In those proceedings, Ms Young had brought an appeal under s 208L of the Legal Profession Act 1987 (NSW) from a Costs Assessment and Certificate as to Determination of Costs issued on 4 March 2011, seeking an order that it be set aside. I held that two grounds of the appeal filed by Ms Young should be struck out and that Ms Young had failed to make good the third ground of appeal against the costs assessor's decision. I indicated that, subject to hearing from Counsel, I proposed to order that Ms Young should pay Mr Annis-Brown's costs of those proceedings. 2Mr Annis-Brown now seeks orders that Ms Young pay his costs of the Costs Assessment Appeal including the costs of the motion filed on 13 April 2011. Ms Young makes no submissions in opposition to that course. Since Mr Annis Brown was successful in the Costs Assessment Appeal, I order that Ms Young pay his costs of the Costs Assessment Appeal including the costs of the motion filed on 13 April 2011. Two associated proceedings 3I should now deal with two associated proceedings which were previously dismissed by consent but are listed before me in respect of costs. 4I should first refer to several factors that are relevant to the award of costs following a settlement which were helpfully summarised in the submissions made by Mr Stevens who appears for Mr Annis-Brown. UCPR r 42.20(1) provides that: "If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed. 5That rule applies not only when proceedings are dismissed after a hearing on the merits but also where proceedings are dismissed by consent. The applicable principles were summarised in McNamara v Bau San [2010] NSWSC 809 at [12], (applied in Metro Hotel Sydney Pty Ltd v Kol Tov Pty Ltd [2010] NSWSC 1195 at [8]), where Hallen AsJ observed that: "Generally, there must be some proper justification, sound positive ground, or a good reason, for departing from the ordinary position ... [C]ircumstances in which it has been held appropriate to depart from the ordinary position include where the proceedings have been rendered unnecessary by circumstances beyond the plaintiff's control; where the plaintiff achieved practical success in the proceedings, or where costs have been significantly increased by the unreasonable conduct of the defendant." Hallen AsJ also observed, consistent with the approach previously adopted in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-625, that the Court cannot try a hypothetical action between the parties to determine the question of costs where proceedings are dismissed prior to a hearing on the merits, and that it may be necessary to analyse the whole of the proceedings to determine the appropriate costs order including all relevant circumstances and not just the fact of the dismissal. In Metro Hotel Sydney Pty Ltd v Kol Tov Pty Ltd at [6]-[7], Hamilton AJ noted that the effect of the authorities considering r 42.20 was that the rule: "does not give rise to a presumption that costs will be ordered against the plaintiff, but merely creates a starting point that will govern costs unless the outcome is displaced by a discretionary decision." The Annis-Brown proceedings 6The first of the two associated proceedings ("Annis-Brown proceedings") was commenced by Mr Annis-Brown in the District Court of New South Wales by which he claimed the amount of $85,420.02 and interest and costs against Ms Young. The Annis-Brown proceedings were subsequently transferred to this Court and renumbered as proceedings 2010/00100783 to be heard together with proceedings that were subsequently commenced by Ms Young in this Court numbered 2010/00214241 ("Young proceedings"). 7There is evidence before me that, prior to commencement of the Annis-Brown proceedings, Mr Annis-Brown had communicated an offer to Ms Young's solicitors to accept $70,000 in full satisfaction of the costs that he claimed and that offer was not accepted by Ms Young (Affidavit of Annis-Brown sworn 7 July 2011 para 2). Ms Young has not led evidence to the contrary. 8Ms Young filed a Defence in the Annis-Brown proceedings pleading numerous grounds of defence. First, Ms Young pleaded that Mr Annis-Brown was not entitled to commence or maintain those proceedings by reason of a failure to comply with the provisions of s 175 of the Legal Profession Act 1987 (as it then stood) by reason of an alleged failure to disclose the amount of the costs and billing arrangements. Second, Ms Young also pleaded that a tax invoice that had previously been issued by Mr Annis-Brown in respect of his costs was not a bill of costs complying with cl 45 of the Legal Profession Regulation 2002 because that tax invoice did not include the range of information specified in those regulations, and that s 192 of the Legal Profession Act provided that Mr Annis-Brown could not commence or maintain the Annis-Brown proceedings until he had first rendered a bill of costs. 9Third, Ms Young's Defence pleaded that the bill of costs that had been served on her in accordance with s 195 of the Legal Profession Act did not contain Counsel's fees that were subsequently claimed by Mr Annis-Brown in the Annis-Brown proceedings and that section required personal service on her of the bill of costs. Ms Young also took a point as to whether Counsel's fees were a disbursement authorised by her. In submissions before me, Ms Young refers to Mr Annis-Brown's evidence that he did not recall whether he forwarded a copy of the costs agreement issued by Counsel to Ms Young although it was his normal practice to do so. 10In the Annis-Brown proceedings, Mr Annis-Brown also relied on the Tripartite Agreement to which I referred in my earlier judgment ([2011] NSWSC 890) to support his claim to recover the amount of $85,420.02. That agreement provided that Ms Young would, subject to the provisions of that agreement including her statutory right to assessment, pay Mr Annis-Brown's costs and disbursements. Ms Young in turn contends before me that the Tripartite Agreement envisaged a costs assessment procedure being completed before Ms Young's liability for costs arose and that the consideration for the Tripartite Agreement had failed, because, she contends, Mr Annis-Brown had failed to hand over all the files required to be handed over under that agreement. 11The defences raised by Ms Young in the Annis-Brown proceedings, and repeated in her submissions before me in respect of costs of those proceedings, were to some extent qualified by concessions made by Ms Young by her Counsel when the matter was listed before Bergin CJ in Eq on 7 October 2010. Inter alia, those concessions were to the effect that money was owing to Mr Annis-Brown and to Counsel previously retained by Mr Annis-Brown on behalf of Ms Young and the bill of costs previously issued by Mr Annis-Brown could be used as the basis for a costs assessment. On that date, orders were made by Bergin CJ in Eq by consent providing that the amount claimed by Mr Annis-Brown should remain in Court pending further order; that the Annis-Brown proceedings should be dismissed; and the costs of the Annis-Brown proceedings should be reserved pending the outcome of an application for assessment of Mr Annis-Brown's bill of costs. 12Mr Annis-Brown subsequently lodged the bill of costs for assessment and the costs assessor issued a Costs Certificate in favour of Mr Annis-Brown in the amount of $76,058.83 on 4 March 2011. 13UCPR r 42.20 has the consequence that, unless the Court orders otherwise, Mr Annis-Brown would be required to pay Ms Young's costs of the Annis-Brown proceedings. Mr Annis-Brown seeks orders that Ms Young pay his costs of the Annis-Brown proceedings. Ms Young submits before me that the costs of the Annis-Brown proceedings should be awarded in her favour because Mr Annis-Brown was not entitled to maintain those proceedings and because the amount of the Costs Certificate was substantially less than the amount claimed in the Annis-Brown proceedings. 14I am satisfied that there is proper justification, sound positive ground and good reason from departing from the ordinary position in respect of the Annis-Brown proceedings and ordering that there should be no order as to the costs of the proceedings. On the one hand, in my view, it would be inappropriate to require that Mr Annis-Brown pay the costs of the Annis-Brown proceedings. The merits of the numerous issues raised by Ms Young in defence of those proceedings depend in part on contested issues of fact and cannot fairly be determined without a hearing on the merits which has not proceeded by reason of the consent orders made in those proceedings. I should not assume those defences would have succeeded or seek to determine them in the absence of a proper factual inquiry. Mr Annis-Brown has also achieved a substantial degree of practical success in the proceedings, arising from the consent orders which referred the costs to assessment, the result of that costs assessment in which he was held to be entitled to a substantial sum, and nearly 90% of the costs claimed, and the dismissal of the Costs Assessment Appeal. Moreover, the amount of the costs which the assessor has determined should be paid to Mr Annis-Brown significantly exceed the amount which he had offered to accept in full satisfaction of the costs owing prior to the commencement of the Annis-Brown proceedings. 15On the other hand, I consider that it would also be inappropriate to require that Ms Young pay the costs of the Annis-Brown proceedings. For the same reasons that I should not assume Ms Young's defences to Mr Annis-Brown claim would have succeeded, I should not assume they would have failed had they been pursued in a contested hearing. Although Mr Annis-Brown contends that there was unreasonable conduct of Ms Young in the manner in which she approached the Annis-Brown proceedings, I do not consider that I should reach that finding, where the evidence of both parties has not been tested in cross-examination given the consent orders made on 7 October 2010. 16In these circumstances, I consider that the appropriate order in the Annis-Brown proceedings is that there be no order as to costs. Young proceedings 17In the Young proceedings, Ms Young sought, inter alia, orders against Mr Annis-Brown that the Tripartite Agreement between Ms Young, Mr Annis-Brown and a subsequent firm of solicitors acting for Ms Young be set aside and a declaration be made that she was not liable under her costs agreement with Mr Annis-Brown because the "conditional event" entitling Mr Annis-Brown to payment (namely Ms Young reaching a settlement of her proceedings with NSW Maritime) had not occurred. 18On 7 October 2010, orders were made by Bergin CJ in Eq by consent that the Young proceedings should be dismissed and the costs of the Annis-Brown proceedings should be reserved pending the outcome of an application for assessment of Mr Annis-Brown's bill of costs. As noted above, Mr Annis-Brown lodged the bill of costs for assessment and the costs assessor issued a Costs Certificate in favour of Mr Annis-Brown in the amount of $76,058.83 on 4 March 2011. 19UCPR r 42.20 has the consequence that, unless the Court orders otherwise, Ms Young would be required to pay Mr Annis-Brown's costs of the Young proceedings. I do not consider that any basis has been shown to depart from the position which is supported by the order that I propose to make, for the reasons set out below, that a large part of the funds held in Court be paid to Mr Annis-Brown. Ms Young accepted in her submissions that the treatment of the funds in Court was a substantial consideration in determining the position as to costs in the Young proceedings. 20Ms Young submits before me that she is presently considering her position in relation to an appeal from the my decision in respect of the Costs Assessment Appeal and that a determination of costs in the Young proceedings should be deferred until the expiry of the statutory period for filing of an appeal, or determination by the Court of Appeal of that appeal. I do not consider that I should defer making an order as to costs in the Young proceedings on that basis. Mr Annis-Brown presently has the benefit of my judgment in the Costs Assessment Appeal, unless and until that judgment the consequential order for payment of funds out of Court is stayed by this Court or by the Court of Appeal. 21I therefore order that Ms Young pay Mr Annis-Brown's costs of the Young proceedings as agreed or as assessed. Payment of monies out of Court 22Mr Annis-Brown seeks an order pursuant to UCPR R 41.3 that there be paid to him the funds ordered to remain in Court pursuant to the consent orders made on 7 October 2010 amounting to $85,420.02, together with interest earned on those funds as from the date of payment in, and that those funds be applied first to the payment of costs ordered by the costs assessor and second to such costs as may be found to be due to him pursuant to orders for costs made in the proceedings. 23In my view, the decision of the costs assessor and my dismissal of the Costs Assessment Appeal have the result that I should now order that the amount of $76,058.83 which was the subject of the Costs Certificate and interest from 4 March 2011 should be paid to Mr Annis-Brown from the monies held in Court. Mr Annis-Brown fairly conceded in his submissions before me that there had been no agreement between the parties that the monies paid into Court should be applied in respect of future orders as to costs. Although it seems likely that the amount of costs payable by Ms Young to Mr Annis-Brown in respect of the proceedings will exceed the balance of the monies remaining in Court, I think it preferable that I do not order the release of the balance of those funds out of Court to Mr Annis-Brown where an assessment of costs has not been completed. 24I also order that Mr Annis-Brown be paid 89% of the interest earned on the funds in Court from the date of payment in, which is the proportion that the amount now paid to him bears to the amount of monies initially paid into Court. 25In circumstances that this payment to Mr Annis-Brown will discharge the purpose for which the monies were paid into Court, I should order that the balance of the funds paid into Court which is not payable to Mr Annis-Brown (which I understand to be $9,361.19) and 11% of the interest earned on the funds in Court should be paid to Ms Young. Stay of judgment 26Mr Annis-Brown conceded that I should stay this judgment for 28 days and, if an appeal from my judgment in the Costs Assessment Appeal is brought within that period, until the determination of that appeal by the Court of Appeal. I will order such a stay, subject to further order of the Court. I do not consider that I should extend the initial period of that stay for a longer period, as Ms Young contended, since the five weeks which have elapsed since my judgment on the Cost Assessment Appeal, and a further 28 days, should allow Ms Young sufficient time in which to decide whether to pursue an appeal against my judgment. Summary 27In summary, I order that: 1 Ms Young pay Mr Annis-Brown's costs of proceedings number 2011/00094912 including the costs of the motion filed on 13 April 2011 as agreed or assessed. 2 There be no order as to the costs of proceedings number 2010/00100783. 3 Ms Young pay Mr Annis-Brown's costs of proceedings number 2010/00214241. 4Pursuant to UCPR R 41.3: (a) the amount of $76,058.83 plus 89% of any interest earned on the monies in Court be paid to Mr Annis-Brown; (b) the balance of the funds held in Court plus 11% of the interest earned on the monies in Court be paid to Ms Young. 5 Subject to further order, these orders be stayed for 28 days and, if an appeal by Ms Young from my judgment in proceedings 2011/00094912 is commenced, then until final judgment in that appeal. ********** 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. Decision last updated: 27 October 2011