Supreme Court New South Wales Medium Neutral Citation: Stefanoff v Ward [2015] NSWSC 350 Hearing dates: 18 March 2015 Date of orders: 18 March 2015 Decision date: 18 March 2015 Jurisdiction: Common Law Before: Garling J Decision: (1)The summons commencing an appeal filed 24 September 2014 and the proceedings are dismissed; (2)Order the plaintiff to pay the defendant's costs on the usual basis, up to and including 17 November 2014; (3)Order the plaintiff to pay the defendant's costs on an indemnity basis after 17 November 2014. Catchwords: APPEAL – leave to appeal decision of Costs Assessor – application made five years after decision of Costs Assessor – no explanation for delay – summons commencing appeal dismissed – proceedings dismissed - whether costs on usual or indemnity basis – no question of principle Legislation Cited: Civil Procedure Act 2005 Legal Profession Act 1987 Uniform Civil Procedure Rules 2005 Cases Cited: Not Applicable Texts Cited: Not Applicable Category: Costs Parties: Koste Stefanoff (P) Warwick Robert Ward (D) Representation: Counsel: B Lloyd (P) In person (D) Solicitors: O'Neill Partners (P) Self-Represented (D) File Number(s): 2014/280796 Publication restriction: Not Applicable ______________________________________________________________ ex tempore Judgment 1. This is a judgment which deals with an application for costs. Procedural History 1. In light of the fact the plaintiff has now abandoned proceedings commenced by him on 24 September 2014, some procedural background is necessary. The plaintiff was a defendant in District Court proceedings which took place in 2001 and 2002, through to about 2004, when the proceedings were ultimately resolved. 2. In those proceedings the plaintiff instructed a solicitor, Mr Jordan, of Jordan Djundja Lawyers. The solicitor, so it appears, retained the defendant, Mr Ward, as a barrister to appear for the plaintiff. 3. On 9 August 2004, the solicitor rendered a tax invoice to the plaintiff, Mr Stefanoff, in the total of $41,715.85. That tax invoice was for professional fees and disbursements. Disbursements included an amount of $34,818.75 as fees owing to the defendant, Mr Ward. 4. The proceedings in the District Court, so it appears from Mr Ward's tax invoice, were the subject of an arbitration on a single day on 22 August 2001, were then fixed for hearing variously in August 2002, March 2003, December 2003, and May 2004. Prior to the hearing in May 2004 the proceedings settled at a mediation. The great bulk (i.e. over 70%) of the fees claimed by Mr Ward, being a total of 13 days at his daily rate of $1,980 plus GST, appear to have been charged for days when a hearing was fixed but no hearing actually took place. 5. The evidence discloses that from an early time Mr Stefanoff was not prepared, having received the bill of Jordan Djundja and Mr Ward's invoice, to pay for the days charged as full days when there had in fact been no hearing. Mr Stefanoff, the plaintiff, describes them under the rubric "cancellation fees." 6. In 2007, the fees being outstanding, Mr Ward made an application for a costs assessment. It was filed on 15 May 2007. The application was referred to an Assessor, Mr Scammell. Mr Stefanoff accepts, although he has no recollection that this was so, that he was notified on 15 May 2007 of the filing of the application. In July 2009, a costs certificate was issued. It was registered by Mr Ward at the Local Court as a judgment in that month. 7. By a letter dated 20 June 2013 Mr Ward wrote to Mr Stefanoff, informing him that the fees which he claimed had been assessed, that an order for judgment had been made and he was owed the sum of $33,569.90 and that as at June 2013, together with interest, the total debt was about $47,000. The letter of Mr Ward pointed out that it was his view that the fees incurred were a tax deduction. It pointed out that previous proposals with respect to the fees were unacceptable. He threatened bankruptcy proceedings if a resolution were not reached. Mr Ward offered to discount the total fee to a sum of $40,000 and indicated that if the sum were not paid he would proceed to engage the mechanism of bankruptcy. It seems nothing further was heard by Mr Ward from Mr Stefanoff. 8. However, it does appear that in mid-2013 Mr Stefanoff telephoned the Local Court and satisfied himself there was a Local Court judgment entered against him on 10 July 2009, in the sum to which I have drawn attention. Mr Stefanoff's method of dealing with the demand, based upon a court judgment, was to telephone Mr Jordan and tell him, in effect, that he was not prepared to pay Mr Ward's total fees and to tell Mr Jordan that he, Mr Jordan, could sort it out as it was not his problem. He did nothing more. 9. In August 2014 Mr Stefanoff was served with a Bankruptcy Notice, and has, since that time, commenced a multitude of proceedings in an attempt to prevent the bankruptcy proceedings taking their natural course. 10. He commenced proceedings in the Federal Circuit Court to have the Bankruptcy Notice set aside, which proceedings were dismissed on 16 September 2014. He commenced proceedings by the filing of a Notice of Motion to seek an order that the Local Court judgment of 2009 be set aside - I am informed that those proceedings have been dismissed. Supreme Court Proceedings 1. On 24 September 2014, he commenced proceedings by filing a Summons in this Court, purportedly appealing from the whole of the decision of the Costs Assessor of 2 June 2009. He was well out of time to do this. He sought leave for the extension of time to enable this appeal to occur. 2. The affidavit in support of the Summons commencing the appeal was based upon two assertions: the first that Mr Stefanoff had no recollection of receiving any documents at all with respect to the costs assessment process, and had no recollection of being informed that a costs certificate had been issued in 2009, and, as well, he asserted he had a sound basis to overturn the Cost Assessor's decision. 3. It is convenient at this point to notice that, in making his decision, the Cost Assessor himself noted that he had sought submissions from Mr Stefanoff with respect to a number of the issues raised, but he had not received any submissions at all from him objecting to the costs claimed by Mr Ward. 4. The Assessor correctly drew attention to the provisions of s 208A(2) of the Legal Profession Act 1987, which requires a costs assessor to "confirm the bill of costs unless satisfied that the disputed costs are unfair or unreasonable." The Costs Assessor noted that there had been no disputed costs. He further noted that, during the course of the assessment he had raised some issues regarding the costs claimed, but none of the issues had been taken up by or on behalf of Mr Stefanoff. The Costs Assessor then concluded: "Notwithstanding some concerns I have with regard to the costs claimed, I must apply the provisions of the Act and must confirm, in full, the costs claimed..." 1. Counsel for Mr Stefanoff has argued before the Court this morning that, provided that a proper explanation for the delay seeking leave to appeal against the certificate as to determination of costs issued on 2 June 2009 was a satisfactory one, the appeal had reasonable prospects of success. It appears from reading the grounds, which are part of the Summons commencing the appeal, that considerable argument would turn on the question of whether there had been a Costs Agreement entered into, and whether disclosure had been made as required by the relevant Act. As well, it was asserted that the Assessor had wrongly taken the view there were no disputed costs. Ultimately, the grounds assert that the Costs Assessor ought to have determined that no costs were to be paid by the plaintiff to the defendant. 2. The alternative argument advanced was that the Costs Assessor ought to have determined that the defendant was unable to charge cancellation fees for scheduled court hearing dates. 3. By a letter dated 17 November 2014, Tsolakis Solicitors, who were acting for the defendant, Mr Ward, whilst responding to a Notice to Produce, included the following paragraphs in a letter: "In all of the circumstances, we believe that your application in the Supreme Court is doomed to fail precisely as the application by your client in the Federal Court has already failed with costs adverse. And we further note that the Local Court has refused to grant your application as well. We put you yet again on full and fair notice that we will be seeking costs in this matter in the fullness of time on an indemnity basis." 1. I am told by counsel for Mr Stefanoff that recently documents have been produced by the former solicitor for Mr Stefanoff, which demonstrated that his client was aware at the time, that the costs assessment process was being undertaken. Further, that he was aware of the decision of the Costs Assessor in 2009, together with the Certificate of Determination of Costs, because it was specifically drawn to Mr Stefanoff's attention by a letter from his solicitor. Apparently Mr Stefanoff continues to assert that, although this is so, he has no present recollection of that fact. Costs – the Parties' Submissions 1. Mr Stefanoff accepts that he should be ordered to pay the costs of the proceedings of the defendant and submits, consistent with r 42.2 of the Uniform Civil Procedure Rules 2005 ("UCPR"), that the costs payable ought be assessed on the ordinary basis. 2. Although initially unclear as to precisely what order for costs Mr Ward was seeking, it is now apparent that he submits, pursuant to r 42.2 of the UCPR, that the Court should "order otherwise", and order that the costs be payable on an indemnity basis. 3. Mr Ward submits that the proceedings were always doomed to fail because, at no time, did the plaintiff, Mr Stefanoff, ever provide a reasonable explanation for the delay in seeking leave to appeal. Mr Ward points, at the very least, to a period from sometime in July or August 2013, (when Mr Stefanoff accepts that the existence of the costs certificate was drawn specifically to his attention) and the commencement of these proceedings in September 2014, namely about 13 or 14 months, during which Mr Stefanoff did nothing and took no action. Mr Ward submits that, whatever may be the position with respect to earlier circumstances, this significant delay period could not be, and has not been, adequately explained. 4. Counsel for Mr Stefanoff submits that the explanation for that period is to be obtained from the interaction between Mr Stefanoff and Mr Jordan, his solicitor, where Mr Stefanoff informed Mr Jordan that he regarded the matter as Mr Jordan's problem and left the matter to Mr Jordan to deal with. Counsel for Mr Stefanoff submits that once the relevant material came to light, which indicated his client had knowledge of the Costs Assessment Certificate since 2009, he was unable to advance any argument of there being any reasonable explanation for the delay in commencing these proceedings. Discernment 1. The Court has ample power with respect to making a costs order, and an uncircumscribed discretion with respect to the appropriate costs order. The discretion, of course, must be exercised judicially. 2. The power with respect to costs is to be found in s 98 of the Civil Procedure Act 2005, which, in short, indicates that the Court can make any order as to costs including the basis upon which costs are to be paid, the date upon which the costs are to be paid from (depending upon the basis of them) and ultimately, it can assess in a gross sum, if requested so to do. A gross sum costs order has not been sought in these proceedings. 3. The important facts associated with this proceeding are these. First, that the plaintiff was seeking leave to appeal against a Costs Assessor's Certificate and Reasons over five years after the Certificate had been issued. This is a very long time. 4. Secondly, that although Mr Stefanoff may have forgotten about it, the fact is he was aware, in 2009, that a Costs Certificate had been issued, and chose not to take any action with respect to it. 5. Thirdly, the Costs Certificate has, by registration, become a judgment of the Local Court. The Local Court has declined to set that judgment aside. 6. Fourthly, on any view of the evidence, Mr Stefanoff was specifically aware of the existence of the Local Court judgment in June 2013, was aware in July 2013 that Mr Ward was seeking to proceed to execute on that judgment, and was aware by sometime in August 2013, that Mr Ward was seeking to proceed upon the entirety of the judgment. Thereafter he did nothing with respect to it. 7. I do not accept that Mr Stefanoff was entitled to say to his solicitor, Mr Jordan, that it was a matter for him, Mr Jordan. It clearly was not. A Certificate of Assessment of Costs had been obtained, Mr Stefanoff had not bothered to put in any submissions to the Costs Assessor with respect to the claim for costs. A judgment had been entered against Mr Stefanoff. It was not a matter for his solicitor to sort that out. Mr Stefanoff was the debtor. He did not wish to comply with the judgment of the Court, and he needed promptly to take steps so to do. 8. Delaying taking steps for over 12 months, without any satisfactory explanation as to what had transpired in that time, could not, in my view, have been adequately explained in these proceedings. 9. In my view, these proceedings, when they were filed, were hopeless. There was no prospect of them succeeding, and that must have been clear to Mr Stefanoff. 10. However, notwithstanding such an obvious position, it seems to have taken until 17 November 2014, on the evidence which has been put before this Court, for the solicitors acting for Mr Ward to draw the attention of the solicitors acting for Mr Stefanoff to the hopelessness of the application, and to give them notice that they would seek indemnity costs. 11. It would be unfair to Mr Stefanoff to require him to pay indemnity costs from any earlier date because, on the evidence before me, that is the first date upon which he was notified that Mr Ward would be seeking indemnity costs. Conclusion 1. What is my conclusion? I would put it this way. Mr Stefanoff brought a claim which, in my view, was so far out of time that he could not give any rational or proper explanation for what had occurred. An explanation which says "I have no recollection" of something, is not, in fact, a real explanation. But in any event, his explanation was wholly unsatisfactory with respect to a period of over a year between August 2013 and August 2014 when, knowing that a judgment had been entered against him, he declined or failed to do anything about it. 2. As to whether he had reasonable prospects of success in having the Costs Assessor's Certificate set aside, I make no comment. I do note, however, he was given many opportunities by the Costs Assessor to put submissions before the Costs Assessor, and did not avail himself of any of those opportunities. No doubt that would have been a discretionary matter of some significance for the Court to take into account. 3. This is a case in which Mr Ward has been the subject of proceedings brought against him. As I have now said, I am not satisfied that the proceedings had any reasonable prospect of success at any time. Accordingly, they are proceedings in which it is appropriate to order that costs be assessed on an indemnity basis. However, I am not prepared to allow costs on an indemnity basis prior to 17 November 2014, when the letter to which I have earlier referred was first sent. 4. I make the following orders: 1. The summons commencing an appeal filed 24 September 2014 and the proceedings are dismissed; 2. I order the plaintiff to pay the defendant's costs on the usual basis, up to and including 17 November 2014; 3. I order the plaintiff to pay the defendant's costs on an indemnity basis after 17 November 2014. ********** 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: 02 April 2015