Supreme Court New South Wales Medium Neutral Citation: Rural and General Insurance v Goldsmiths Lawyers (No 2) [2012] NSWSC 1566 Hearing dates: 10 May and 17 September 2012 (written submissions) Decision date: 14 December 2012 Jurisdiction: Common Law Before: Hall J Decision: The defendant is to pay 85% of the plaintiff's costs of and incidental to the proceedings on the ordinary basis. Catchwords: COSTS - Costs assessment - Misdescription of applicant for costs assessment (the plaintiff in the present proceedings) - Costs Assessor found no jurisdiction to amend original application - subsequent application out of time - Review Panel found no error on part of Costs Assessor - Supreme Court found Review Panel fell into error in determining matter in favour of costs respondent - plaintiff successful in obtaining limited order for itemised bill per s 728 of the Legal Profession Act 2005 - whether plaintiff entitled to costs order against defendant - plaintiff not entitled to indemnity costs but entitled to 85% of costs on the ordinary basis because he was largely successful in obtaining itemised bill of costs. Legislation Cited: Civil Procedure Act 2005 Legal Profession Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Rural and General Insurance v Goldsmiths Lawyers [2012] NSWSC 358 Category: Costs Parties: Rural and General Insurance Broking Pty Ltd (Plaintiff) Barrie Goldsmith t/as Goldsmiths Lawyers ACN 093 483 928 (Defendant) Representation: Solicitors: Charles Pratten (Plaintiff) Goldsmith Lawyers (Defendant) File Number(s): 2010/390368 Judgment 1In this matter I delivered judgment on 27 April 2012; Rural and General Insurance v Goldsmiths Lawyers [2012] NSWSC 358. In relation to costs it was noted that as the plaintiff had succeeded in obtaining orders set out in [91] of the judgment it would ordinarily be entitled to the cost of the proceedings. However, the defendant was provided with the opportunity to lodge any written submissions in relation to costs. 2The defendant, in his written submissions at paragraph [2], disputes the plaintiff's entitlement to costs on a costs-follow-the-event basis. Reliance was placed upon Part 42 Rule 1 of the Uniform Civil Procedure Rules 2005 and the discretionary power of the Court in relation to costs as provided for in s 98(1) of the Civil Procedure Act 2005. 3The defendant relied upon a number of matters, many of which were directed to the following: (1) The plaintiff's conduct generally including its conduct in allegedly encouraging the defendant to contest the proceedings; and (2) The plaintiff's success in the proceedings was only attributable to matters raised on the first day of the hearing. 4The defendant relied upon the following matters in relation to the plaintiff's conduct: (a)Its conduct in relation to the application for an assessment of costs; (b)Its conduct in relation to the application for a review by the Review Panel; and (c)Its conduct in seeking an order in accordance with prayer 6 of the Summons 5The written submissions detailed the matters under each of the above headings. 6In paragraph [9] of the submissions, the defendant contended that it was "indisputable" that the fundamental cause of the litigation and the protracted correspondence with the Costs Assessor and with the Review Panel was the plaintiff's failure to correctly identify itself as the client in the application for an assessment of costs. It said that it did that twice. 7It was argued that this was a fundamental error on the plaintiff's part and that it could have filed a new application carrying the correct name of the company to "Rural and General Insurance Broking Pty Limited." 8The defendant submitted that he was not the fundamental cause of the litigation. 9He submitted that the plaintiff pursued arguments before the Review Panel which were not relied upon before this Court. It was contended that the defendant's position in the case was clearly predicated upon a belief created by the plaintiff: at [11]. 10These matters were said to disqualify the plaintiff from a costs order in its favour. 11It was additionally argued that the plaintiff did not raise before the Review Panel issues that were pursued before this Court and that this had led to the crucial finding by the Panel. 12Finally, in relation to the claim for an order that the defendant deliver an itemised bills of costs in respect of legal services from June 2006, the fact that the plaintiff had only been partially successful in obtaining a more limited order than that claimed was a matter to be taken into account. 13The defendant's submissions made reference to principles established by the case law: Paragraphs [16] to [19] of the written submissions. 14The contention for the defendant was that, depending upon the degree to which it was determined that the plaintiff should not be entitled to be compensated by a costs order, due to its conduct of the proceedings, there was a range of possible costs orders that were available. 15In relation to an argument by the plaintiff that the proceedings could have been avoided had the defendant merely agreed to the plaintiff being treated as the costs applicant as had been proposed by the Manager, Costs Assessment, the defendant submitted that it was not unreasonable or inappropriate for him to have taken the course he did. Submissions for the plaintiff 16In written submissions dated 17 September 2012 it was argued on behalf of the plaintiff that the Court should exercise its discretion and award costs to it on an indemnity basis. 17The plaintiff submitted that an award of indemnity costs was justified on the basis that the defendant exhibited an "unconscionable disregard" of the relevant facts and circumstances in maintaining and pursuing the defence of the proceedings. It was contended that the defendant had been "delinquent in his professional obligations." The plaintiff relied upon the defendant's objection to the application for the assessment of costs based on the fact that the applicant was mistakenly referred to as "RGIB Insurance Brokers." 18It was submitted that the plaintiff was prejudiced by being unable to proceed with the costs assessment due to the defendant's failure to comply with the orders made on 27 April 2012. It was also contended that the defendant had deliberately engaged in conduct aimed at preventing the plaintiff from obtaining copies of the itemised bills. 19The plaintiff submitted that on three occasions in a period of 14 months the defendant had sought to wind up the company by bringing a series of Creditor Statutory Demands flowing from costs incurred ($13,935.24) in defending the very last bill of the APRA defamation proceedings. It was contended that the defendant was in breach of s 335 of the Legal Profession Act 2004 because a law practice is not entitled to commence or maintain any proceedings to recover the legal costs until the costs assessment has been completed: s 355(b) of the Legal Profession Act. 20Consequentially, as a result of the abovementioned actions on part of the defendant the plaintiff asserted that it is entitled to an award of costs on an indemnity basis. Consideration 21The circumstances that led to this unfortunate litigation are set out in the judgment. The material facts established by the documentation annexed to the relevant affidavits are set out in paragraphs [10] to [42] of the judgment. The determination of the issue of the correct identity of the "client" revealed that the misdescription was a mere "misnomer" and not an issue concerning the true identity of the client such as to create an issue of substance. The relevant material, including the costs agreement, left no doubt as to who the real client was (the plaintiff). It was plain on the evidence that there had been a misdescription only of it in the application. 22However, the correspondence in evidence established that the defendant consistently maintained a vigorous and entrenched position that what was a "misnomer" was in fact a fundamental issue affecting the validity of the proceedings. In the letter dated 12 January 2009, referred to at [16] of the judgment, it was noted, inter alia, that the defendant maintained: "In the absence of satisfactory clarification, the application should be dismissed at this time." 23It appears that the Assessor had been initially persuaded to deal with the misdescription by accepting an amendment. However, the defendant on 1 May 2009 wrote to the Costs Assessor urging that he should find and certify, inter alia, that: "... there is no assessment of costs to be undertaken in relation to the current application." 24Identity of the costs claimant was raised by the defendant as an issue going to the jurisdictional power of the Costs Assessor: "We note that the application as filed in the Registry was not made by that company. It was made...by RGIB Insurance Broking Pty Ltd or perhaps even by RGIB Insurance Brokers. On any version, the application was not made by the client, being Rural & General Insurance Broking Pty Ltd...we have found no provision that confers a discretion that permits an amendment of the type proposed:" Letter from Defendant to Costs Assessor dated 1 May 2009 at p3 25The defendant asserted that the misdescription by the plaintiff of the defendant was not cured by an amendment: "...the letter from Mr Pratten simply does not, and cannot, cure the defect in the application filed on 22 December 2008...:" Letter from Defendant to Costs Assessor dated 1 May 2009 at p3 26The Costs Assessor, in his letter of 1 June 2009, directed the plaintiff "subject to leave by the Court or consent" to file an Amended Application in the name of Rural & General Insurance Brokering Pty Ltd. 27The defendant advised in its letter of 5 June 2009 that it would not consent to the filing of an Amended Application out of time and that any application for leave to proceed with the Application for costs assessment would be opposed. 28The amendment resulted in Costs Assessor dismissing costs application: "34. The CA had filed an application on 27 December 2008 in respect of the bills subject of the present application. 35. The CA had incorrectly stated the name of the costs applicant so that it was necessary to file an Amended Application which was done on 30 June 2009. 36. However at that time the original invoices sought to be taxed were outside the 12 month period prescribed in s 350 of the [Legal Profession] Act (12 months from the date the bill was given). 37. The original application filed on 22 December 2008 incorrectly nominated RGIB Insurance Brokers Pty Ltd as the cost applicant. 38. The parties have accepted that this was the wrong title and accordingly it was necessary to amend the application. 39. A subsequent application stating the correct name of the CA was filed however that application was outside the time limits prescribed under s 350. 40. In my opinion I have no jurisdiction to amend to original Application and accordingly it was necessary for the CA to proceed by a further Application. 41. For reasons stated above the subsequent Application is out of time under s 350 and leave of the Court is required:" Decision of Costs Assessor dated 9 November 2009. 29In due course, the unhappy history of this matter revealed that the Costs Assessor declined to proceed with the assessment upon the basis argued by the defendant, namely that he did not have jurisdiction. 30The stance taken up by defendant was perpetuated in proceedings by Review Panel: "20 The Review Panel agrees with the Costs Assessor's determination that he had no power to deal with the assessment because the Supreme Court had not made a determination that the application to be dealt with after the 12 month period (s 350(5)):" Decision of Review Panel dated 15 September 2010. 31This Court found that the Review Panel fell into error in determining the point in the defendant's favour: "67 I have concluded that the assessor accordingly was wrong in determining that he had no jurisdiction and was wrong in concluding that an Amended Application was necessary:" Rural and General Insurance v Goldsmiths Lawyers (supra). 32There can be no doubt, in my opinion, that the attitude and stance taken by the defendant was both the occasion and the substantive cause of the present proceedings. The opposition to the costs assessment by the defendant was based on a complete misapprehension as to the Costs Assessor's jurisdiction and his ability to proceed with the assessment. The determination of both the Costs Assessor and the Review Panel resulted in significant delay and the incurring of expense. 33On a close evaluation of the circumstances, there is, in my opinion, no basis for denying the plaintiff benefit of the costs-follow-the-event rule. 34The plaintiff was partly successful in obtaining an order for an itemised bill: "80 Having regard to the evidence and the submissions of the parties I have come to the firm conclusion that an order in terms of paragraph 6 in the summons should not be made. In reaching that conclusion I have in particular had regard to the matters which I have set out above. An unrestricted order under s 728 [of the Legal Profession Act] would, in my assessment, operate unfairly and impose considerable hardship and expense upon the defendant:" Rural and General Insurance v Goldsmiths Lawyers (supra). 35Accordingly, in relation to the further relief sought under s 728 of the Legal Profession Act, considered at [77] to [90] of the judgment, the plaintiff did not succeed in obtaining an order to the extent sought. Nonetheless, it did establish an entitlement to an order under s 728. An order, as noted above, was made in the plaintiff's favour pursuant to that provision: Order 7 of the Orders. 36I do not consider that there is any conduct by the plaintiff which could be characterised or construed as having occasioned the litigation notwithstanding the initial mistake on its part as to the description of the "client". A common sense approach ought to have been taken to the issue of "misnomer" but regrettably this was not to be. That left the plaintiff in the position whereby its only course was to initiate the present proceedings. Determination 37Whilst I have concluded that the plaintiff is entitled to an order for costs against the defendant I do not consider that there exists a proper basis for making an indemnity costs order. Some of the matters relied upon by the plaintiff post date the judgment in these proceedings and have been put forward by way of assertions rather than as evidence. 38In the circumstances the plaintiff was the successful party and there do not, in my assessment, exist any disqualifying circumstances as contended by the defendant. The order made under s 728 of the Legal Profession Act was, as earlier noted, a limited one. In those the circumstances I consider that the appropriate order is that the defendant pay 85% of the plaintiff's costs on the ordinary basis. Order 39The defendant is to pay 85% of the plaintiff's costs of and incidental to the proceedings on the ordinary basis. ********** 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: 18 December 2012