Colbron v Freeman (No 2) [2014] NSWSC 1528

Supreme Court New South Wales

Medium Neutral Citation: Colbron v Freeman (No 2) [2014] NSWSC 1528 Hearing dates: 2 September 2014 Decision date: 02 September 2014 Before: McCallum J Decision: Judgment entered against Mr Colbron in the Local Court set aside and the proceedings against him dismissed. Mr Freeman to pay Mr Colbron's costs as agreed or assessed on the ordinary basis up to and including 17 July 2014 and thereafter Mr Freeman to pay Mr Colbron's costs of the appeal as agreed or assessed on the indemnity basis. Catchwords: COSTS - Local Court - Calderbank Offer - application of Practice Note Legislation Cited: Legal Profession Act 2004 Cases Cited: Colbron v Freeman (2014) NSWSC 1210 Ada Evans Chambers Pty Limited v Santisi (No 2) (2014) NSWSC 592 Category: Costs Parties: Warwick Archibald John Colbron (plaintiff) Rodney Paul Freeman (defendant) Representation: Counsel: W Colbron (plaintiff) R Carey (defendant) Solicitors: Colbron & Associates (plaintiff) Photos Legal (defendant) File Number(s): 2014/195872 Publication restriction: None

Judgment - ex tempore 1HER HONOUR: This is an appeal against a judgment entered in the Local Court in proceedings commenced by a barrister against a solicitor for unpaid fees. I determined the appeal on 18 August 2014: see Colbron v Freeman [2014] NSWSC 1210). It remains to determine the issue of costs. 2Mr Colbron, having been successful in the appeal, seeks his costs of the appeal. Mr Freeman accepts that Mr Colbron is entitled to his costs of the appeal on the ordinary basis. However, Mr Colbron seeks his costs of the appeal on the indemnity basis on the strength of a Calderbank offer dated 17 July 2014. In that letter, Mr Colbron offered to settle the proceedings on a "walk away and each party pay his own costs" basis. He proposed that the appeal be upheld with no order as to costs; that the judgment and costs order as against him in the Local Court be set aside and that the proceedings in the Local Court be dismissed with no order as to costs. 3Mr Freeman submits that the offer entailed no element of compromise and was, in substance, an offer inviting Mr Freeman to capitulate. Further, Mr Freeman submits that his position in the appeal was supported by the obiter dicta of Hodgson JA in Doyle v Chadwick discussed in my principal judgment. 4Mr Colbron submits that the offer does entail an element of genuine compromise. He relied in support of that submission on the decision of Adamson J in Ada Evans Chambers Pty Limited v Santisi (No 2) (2014) NSWSC 592. 5In Santisi, the relevant offer of compromise was a walk-away offer in a defendant's application to have the plaintiff's summons summarily dismissed. There is, to that extent, a difference in that the offer in the present case was to invite a respondent to an appeal to capitulate to the outcome of the appeal. However, as recorded in my principal judgment, Mr Freeman did, to a degree, capitulate at the outset of the appeal, conceding in argument that the Magistrate ought to have determined the issue raised by Mr Colbron's defence as to whether the proceedings in the Local Court were effectively precluded by s 355 of the Legal Profession Act 2004. 6In all the circumstances, I am persuaded that Mr Colbron's offer did entail a genuine element of compromise and ought to have been accepted by Mr Freeman. Accordingly, it follows that the costs order sought by Mr Colbron in respect of the costs of the appeal should be made; that is, an order that the costs of the appeal be paid by Mr Freeman on the ordinary basis until the date of the Calderbank offer. 7The position as to the costs in the Local Court is more complicated. Mr Freeman has filed a summons seeking leave to appeal against the costs order of the Magistrate. In my view, each of the grounds of appeal, in effect, assumes as a premise the success enjoyed by Mr Freeman at first instance. Mr Carey, who appears for Mr Freeman, contended otherwise, but I think a fair consideration of the grounds reveals that there is no residual utility in the appeal, the result at first instance now having been reversed by my judgment. 8Accordingly, I would not accede to Mr Freeman's submission that the appropriate course is for the question of costs of the proceedings below to be determined along with the application for leave to appeal against the costs judgment below. 9It does not necessarily follow, however, that Mr Colbron should have all of his costs of the proceedings in the Local Court as sought by him. It may be noted that costs in the Local Court are governed by a practice note which invites proportionality between the amount in dispute or the outcome for either party to the costs awarded. In these proceedings, Mr Colbron was ordered to pay 75% of Mr Freeman's costs of the proceedings below, which represented a departure from the practice note. The warrant for departing from the practice note recorded by the Magistrate in his costs judgment was that both the plaintiff and the first defendant had conducted the litigation in a manner inconsistent with their obligations under the Civil Procedure Act and that "the first defendant in particular was unwilling to make reasonable concessions when giving oral evidence". 10Conversely, albeit for the technical reason (as Mr Carey characterised it) recorded in my principal judgment, the conclusion I have reached is that the maintenance of the proceedings by Mr Freeman in the Local Court was precluded by statute and, in that sense, the proceedings were, at least technically, an abuse of process. 11Mr Colbron submitted with some force that, having regard to the unhappy history of litigation between these two gentlemen, there is at least one interest which may be regarded as a powerful one which is the interest in bringing these proceedings to finality today. 12I have also to have regard to two letters sent by Mr Colbron to Mr Freeman prior to the hearing of the proceedings in the Local Court, the first dated 27 May 2013 offering that Mr Colbron would bear his own costs if the proceedings were dismissed, and the second offering dated 29 August 2013 that Mr Colbron would pay Mr Freeman the amount of $3,600 and pay one quarter of his costs on a party party basis. That second letter set out in detail Mr Colbron's complaints about Mr Freeman's fee notes which were the subject of the underlying dispute. 13Leaving aside any other considerations, those two letters would form a proper basis for Mr Colbron to have his costs on the indemnity basis. Against that consideration, however, I have to have regard to the practice note and the remarks of the Magistrate to which I have referred. An award of indemnity costs on the basis of a Calderbank offer is not mandatory. The Court must always take all circumstances into account and act in accordance with the dictates of justice. In all the circumstances, I consider the appropriate order to be that Mr Freeman pay Mr Colbron's costs of the proceedings below as agreed or assessed on the ordinary basis. 14The orders I propose, accordingly, are that the appeal be allowed; that the judgment entered against Mr Colbron in the Local Court be set aside and the proceedings against him dismissed; that Mr Freeman pay Mr Colbron's costs as agreed or assessed on the ordinary basis up to and including 17 July 2014 and that thereafter Mr Freeman pay Mr Colbron's costs of the appeal as agreed or assessed on the indemnity basis.