Supreme Court New South Wales Medium Neutral Citation: Raad v VM & KTP Holdings Pty Ltd as Trustee for VM & KTP Nguyen Family Trust (No. 2) [2016] NSWSC 1233 Hearing dates: 19 August 2016 Date of orders: 07 September 2016 Decision date: 07 September 2016 Jurisdiction: Common Law Before: Davies J Decision: (1) The Defendant is to pay the Plaintiff's costs on an ordinary basis up to and including 4 September 2014; (2) The Plaintiff is to pay the Defendant's costs on an indemnity basis from 5 September 2014; (3) The Defendant is to pay the whole of the judgment of $75,547 into Court; (4) Stay the execution of the judgment including the orders for costs until the determination of any appeal or the determination of the costs and disbursements properly payable to the Plaintiff's solicitor whichever is the later; (5) Liberty to apply on 2 days' notice. Catchwords: COSTS – personal injuries claim – occupiers liability – judgment for less than $100,000 – UCPR 42.34 – proceedings commenced in District Court – transferred to Supreme Court – transfer not opposed by Defendant – transfer reasonable on then state of medical evidence – joint reports of expert doctors received subsequently – reports unfavourable to plaintiff – whether reasonable to continue proceedings in Supreme Court – hearing date fixed – continuation in Supreme Court reasonable COSTS – offer of compromise and Calderbank offer by Defendant – offer not accepted – plaintiff recovered less than offer – form of offer of compromise – whether invalid for non-compliance with Rules - UCPR r 20.26 - whether offer included costs – whether reasonable for plaintiff to reject offer – whether reasonable period given for acceptance of offer – whether offer was a genuine compromise – plaintiff ordered to pay defendant's costs on indemnity basis from day following offer COSTS – judgment for less than $100,000 – s 338 Legal Profession Act 2004 – effect of judgment on plaintiff's costs LEGAL PRACTITIONERS – solicitors – solicitor's lien over judgment obtained Legislation Cited: Civil Liability Act 2002 (NSW) Civil Procedure Act 2005 (NSW) District Court Act 1973 (NSW) Health & Other Services (Compensation) Act 1995 (NSW) Health & Other Services (Compensation) Care Charge Act 1995 (NSW) Legal Profession Act 2004 (NSW) Legal Profession Uniform Law Application Act 2014 (NSW) Legal Profession Uniform Law Application Regulation 2015 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Abbott v Pilot Development Cooperation Pty Ltd [2006] NSWSC 1178 Anderson Group Pty Ltd v Tynan Motor Pty Ltd (No 2) (2006) 67 NSWLR 706; [2006] NSWCA 120 Australian Beverage Distributors v Evans & Tate Premium Wines Pty Ltd [2006] NSWSC 560; (2006) 58 ACSR 22 Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd (2007) 69 NSWLR 374; [2007] NSWCA 57 Chaina v Presbyterian Church (NSW) Property Trust (No. 26) [2014] NSWSC 1009 Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141 Firth v Centrelink (2002) 55 NSWLR 451; [2002] NSWSC 564; Khoury v Gonzales [2006] NSWSC 1290 Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 Pittorino v Yates [2009] NSWCA 87 Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 Raad v VM & KTP Holdings Pty Ltd as Trustee for VM & KTP Nguyen Family Trust [2016] NSWSC 888 Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd (No 2) [2009] NSWCA 336 Robb Evans of Robb Evans and Associates v European Bank Ltd (No 2) [2009] NSWCA 170 Category: Costs Parties: Abdul Raad (Plaintiff) VM & KTP Holdings Pty Ltd as Trustee for VM & KTP Nguyen Family Trust (Defendant) Representation: Counsel: V Jurisich (Plaintiff) R Gambi (Defendant) Solicitors: P K Simpson & Co. Pty Limited (Plaintiff) Curwoods Lawyers (Defendant) File Number(s): 2013/144125 Judgment 1. On 29 June 2016 I gave judgment for the Plaintiff for $75,547: Raad v VM & KTP Holdings Pty Ltd as Trustee for VM & KTP Nguyen Family Trust [2016] NSWSC 888 ("the principal judgment"). The matter was adjourned to hear submissions on costs in the light of the judgment sum and r 42.34 Uniform Civil Procedure Rules 2005 (NSW). 2. Subsequently, the Defendant filed a Notice of Motion on 3 August 2016 seeking orders staying the judgment pending the determination of what costs are payable by either party, an order pursuant to r 42.34 UCPR that the Plaintiff is not entitled to any costs of the proceedings, an order pursuant to r 42.15 that the Plaintiff pay the Defendant's costs from 5 September 2014 on an indemnity basis and an alternative order that the Defendant pay the Plaintiff's costs up to 4 September 2014 with the Plaintiff paying the Defendant's costs on an indemnity basis from that date. 3. In an affidavit of the Plaintiff's solicitor sworn 17 August 2016 a claim was made by the Plaintiff's solicitors for a lien over the judgment sum. 4. Accordingly, there are four issues to be determined: (1) To what costs is the Plaintiff entitled? (2) To what costs is the Defendant entitled? (3) Should a stay on the Plaintiff's judgment be imposed? (4) Do the Plaintiff's solicitors have a lien over the judgment sum and does that lien take priority over any costs set-off to which the Defendant is entitled? (1) The Plaintiff's costs 1. The parties were agreed in the first instance that because the judgment did not exceed $100,000 the Plaintiff's costs were limited under s 338 Legal Profession Act 2004 (NSW). That section relevantly provides: 338 Maximum costs fixed for claims up to $100,000 (1) If the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed as follows: (a) in the case of legal services provided to a plaintiff - maximum costs are fixed at 20% of the amount recovered or $10,000, whichever is greater, (b) in the case of legal services provided to a defendant—maximum costs are fixed at 20% of the amount sought to be recovered by the plaintiff or $10,000, whichever is greater. … (4) When the maximum costs for legal services provided to a party are fixed by this Division the following provisions apply (subject to sections 339–341): (a) a law practice is not entitled to be paid or recover for those legal services an amount that exceeds those maximum costs, (b) a court or tribunal cannot order the payment by another party to the claim of costs in respect of those legal services in an amount that exceeds that maximum, (c) in assessing the amount of those costs that is a fair and reasonable amount, a costs assessor cannot determine an amount that exceeds the maximum set by this section. (5) In this Division: (a) a reference to legal services provided to a party is a reference to legal services provided to the party by a law practice (including by an associate of the law practice), and (b) a reference to costs for legal services does not include costs charged as disbursements for services provided by any other person or other disbursements. … 1. Although the Legal Profession Act 2004 was repealed by Legal Profession Uniform Law Application Act 2014 (NSW) clause 59 of the Legal Profession Uniform Law Application Regulation 2015 (NSW) provides: The provisions of the Legal Profession Act 2004 and the Legal Profession Regulation 2005 relating to ordered costs continue to apply to a matter if the proceedings to which the costs relate commenced before 1 July 2015. 1. The Plaintiff's lawyers are limited therefore to costs of $15,109 plus disbursements. Counsel's fees are not disbursements for the purpose of the section and are included in the figure of $15,109. 2. The second issue in relation to the Plaintiff's costs concerns r 42.34 UCPR. Rule 42.34 provides: 42.34 Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court (1) This rule applies if: (a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. (2) An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted. 1. It is necessary to say something about the history of the proceedings. 2. The proceedings commenced by a Statement of Claim filed in the District Court on 9 May 2013. A Defence was filed on 18 June 2013 that included an objection to the District Court's jurisdiction under s 51(2)(b) of the District Court Act 1973 (NSW). The effect of the objection was to limit the District Court's jurisdiction to $750,000. The matter proceeded in the District Court and was fixed for hearing on 27 May 2014. 3. On 9 May 2014 the Plaintiff filed a Summons in this Court to transfer the proceedings to this Court. A Schedule of Damages was prepared totalling a little less than $1.3 million plus costs. 4. On 20 May 2014 an order was made transferring the proceedings to this Court, there being no objection from the Defendant. It is necessary to examine the state of the medical evidence at or about the time of the transfer. 5. In the principal judgment I summarised the views of Dr Giblin and Dr Winer who examined the Plaintiff in 2012. Dr Giblin's conclusions are set out at [74] and [75] of the principal judgment and Dr Winer's conclusions are at [80]-[82] of that judgment. 6. The Plaintiff was examined by Dr Elias Matalani, a consultant occupational physician, on 26 August 2013. Dr Matalani concluded that the Plaintiff suffered an acute crush fracture of T5 with a further fracture at T3. He said the fall on 13 June 2011 had been a substantial contributing factor to the development of the Plaintiff's then back disabilities. Dr Matalani found that he was unfit to return to his pre-injury occupation as an electrician's labourer but he was fit for permanently modified duties with restrictions that avoided prolonged standing, repetitive bending of the spine, heavy lifting and heavy manual handling activities. Dr Matalani considered the Plaintiff would need the involvement of a rehabilitation provider and that he was likely to find it difficult to obtain suitable employment in the open labour market because of his very limited education, poor English and his illiteracy. 7. The Plaintiff was also examined by Dr Robert Adler, another rehabilitation specialist, on 6 August 2014. Dr Adler considered that x-rays of the Plaintiff's lumbar spine taken in May 2013 were consistent with his complaints of low back pain and he said that there were no pre-existing spinal conditions in relation to the mid-thoracic fracture complaint. Dr Adler thought that he would not be suitable to return to his pre-existing employment. He thought he was fit for work in a limited range of occupations given his unskilled work background and illiteracy. 8. Apart from Dr Adler's report that was largely the state of the Plaintiff's medical evidence at the date of transfer to this Court. With Dr Adler's report it was also the state of the Plaintiff's medical evidence at 20 February 2015 being the date the proceedings were fixed for hearing in this Court. Although the opinion of the doctors relied upon the Plaintiff's complaints to a substantial extent there was objective evidence that pointed to the fall being the cause of the disabilities. The Plaintiff had had undoubted fractures at T3 and T5. It does not appear that any of those doctors, at that time, identified that the Plaintiff suffered from pre-existing Scheuermann's Disease. (Of the Defendant's doctors, Dr Maxwell did identify this congenital condition and Professor Jones thought that there was a predisposing factor including pathology to explain the Plaintiff's complaints.) In the light of the medical evidence to which I have referred, the substantial claim for economic loss both past and present made it not unreasonable for the proceedings to be brought into this Court where there was objection on the Defendant's part to the District Court's jurisdiction being increased. 9. Things changed considerably on receipt of the joint report of the rehabilitation doctors dated 20 August 2015 and the joint report of the orthopaedic surgeons on 26 August 2015. It was those reports which were significant in leading to the relatively modest verdict that the Plaintiff was ultimately awarded. 10. As noted in the principal judgment at [95], neither the rehabilitation specialists nor the orthopaedic specialists related the Plaintiff's ongoing problems to the accident. The question for present purposes is, therefore, whether the continuation of the proceedings in this Court was warranted after those joint reports were received. 11. In my opinion it was reasonable for the proceedings to remain in this Court given the impending hearing date of 26 October 2015 and in circumstances where the proceedings had been removed into this Court on reasonable grounds and without objection. I do not consider that r 42.34 UCPR should prevent a costs order in favour of the Plaintiff. (2) The Defendant's costs 1. On 4 September 2014 the solicitors for the Defendant served an Offer of Compromise for the Defendant to pay the Plaintiff the sum of $320,000. On the same day a Calderbank letter was served offering the same amount. The Plaintiff did not accept the offer. That offer and the judgment ultimately ordered formed the basis for the Defendant's seeking that the Plaintiff should pay the Defendant's costs on an indemnity basis from 5 September 2014. 2. Rule 42.15 provides: 42.15 Where offer not accepted and judgment no more favourable to plaintiff (1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the plaintiff obtains an order or judgment on the claim no more favourable to the plaintiff than the terms of the offer. (2) Unless the court orders otherwise: (a) the plaintiff is entitled to an order against the defendant for the plaintiff'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. 1. Because there is a challenge to the validity of the Offer of Compromise it is necessary to set out parts of the Offer of Compromise served. It relevantly provided: The Defendant offers to compromise the whole of this claim on the following terms: 1. By making payment of the sum of $320,000 00. 2. The offer is inclusive of all or any interim or other payments made to or on behalf of the Plaintiff by the Defendant. 3 The Defendant, undertakes to pay the said sum within twenty-eight (28) days of acceptance of this offer or within twenty-eight (28) days of receipt by the Defendant's insurer of a final notice pursuant to the Health & Other Services (Compensation) Act 1995, whichever is the latter, and the costs within twenty-eight (28) days of assessment or agreement as to costs as the case may be. 4. By electing to accept the Defendant's offer, the Plaintiff acknowledges that the Defendant and its insurer have informed the Plaintiff pursuant to s 22(1)(a) of the Health & Other Services (Compensation) Act 1995 that the Plaintiff may be liable to pay amounts under that Act or the Health & Other Services (Compensation) Care Charge Act 1995 as a result of the settlement being made. 5. … 6. This offer of compromise is open for acceptance for a period of 28 days from the date of this offer. 7. This offer of compromise is made in accordance with rule 20.26 of the Uniform Civil Procedure Rules 2005. 1. The Plaintiff submitted that the Offer of Compromise was not valid because it was not made in accordance with UCPR r 20.26 in the following ways: (a) The offer did not provide the amount of the monetary judgment because it allowed for deductions of unspecified Medicare deductions and Centrelink deductions; (b) The Plaintiff was provided with no particulars of the Defendant's claim as was necessary to enable the Plaintiff to consider fully the offer and to enable the Plaintiff to assess the reasonableness of the Defendant's offer. Reference was made in that regard to sub-r 26(4); (c) The offer referred to costs as "costs as agreed or assessed" which was invalid under r 20.26(c)(sic); (d) There was not a reasonable time for acceptance; (e) The offer did not comprise an element of compromise but amounted to capitulation on the Plaintiff's part; and (f) It was reasonable for the Plaintiff to reject the offer. 1. Rule 20.26 relevantly provides: 20.26 Making of offer (1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms. (2) An offer under this rule: (a) must identify: (i) the claim or part of the claim to which it relates, and (ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and (b) if the offer relates only to part of a claim in the proceedings, must include a statement: (i) in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or (ii) in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and (c) must not include an amount for costs and must not be expressed to be inclusive of costs, and (d) must bear a statement to the effect that the offer is made in accordance with these rules, and (e) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and (f) must specify the period of time within which the offer is open for acceptance. (3) An offer under this rule may propose: (a) a judgment in favour of the defendant: (i) with no order as to costs, or (ii) despite subrule (2) (c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff's costs, or (b) that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or (c) that the costs as agreed or assessed on the ordinary basis or on the indemnity basis will be met out of a specified estate, notional estate or fund identified in the offer. (4) If the offeror makes an offer before the offeree has been given such particulars of the offeror's claim, and copies or originals of such documents available to the offeror, as are necessary to enable the offeree to fully consider the offer, the offeree may, within 14 days of receiving the offer, give notice to the offeror that: (a) the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents, and (b) in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14 (2). (5) The closing date for the acceptance of an offer: (a) in the case of an offer made two months or more before the date set down for commencement of the trial – is to be no less than 28 days after the date on which the offer is made, and (b) in any other case – is to be such date as is reasonable in the circumstances … (12) A notice of offer that purports to exclude, modify or restrict the operation of rule 42.14 or 42.15 is of no effect for the purposes of this Division. (a) Deductions 1. Paragraph 3 of the Offer of Compromise was unnecessary because the claim was not one involving the Health Acts referred to. As the Plaintiff well knew, he was not entitled to the benefits of Medicare nor were there Centrelink deductions. In any event, there is nothing in r 20.26 that precludes the inclusion of paragraphs such as 3 and 4 in an appropriate case. Even if there were deductions the amount offered is specified. (b) Particulars 1. There was no obligation to provide particulars by the Defendant because the Defendant as offeror was making no claim on the Plaintiff. Rule 20.26(4) appears to apply only where the Plaintiff is the offeror. This is for two reasons. First, in the ordinary course a claim is made by a plaintiff and not a defendant. Secondly, r 42.14 (referred to in r 20.26(4)) is a rule which operates only where the offer has been made by a plaintiff. 2. However, even if r 20.26(4) concerns offers by defendants, at the time of service of the Offer of Compromise medical reports from the Defendant's doctors had been served as follows: 1. Dr Maxwell on 14 November 2013; 2. Professor Richard Jones on 3 April 2014; 3. Professor Jim Bright on 3 April 2014. Those doctors did not accept the Plaintiff's complaints at face value for a number of stated reasons and Dr Maxwell and Professor Jones thought that sequelae from the accident should have ceased or largely subsided. The Defendant had, therefore, identified its position as least as far as its expert doctors opined. The Plaintiff had for assessment the opinions of the various medical experts engaged on both sides. (c) Inclusion of costs reference 1. It is not clear whether the Plaintiff is referring to r 20.26(2)(c) or (3)(c). However, the reference in paragraph 3 to the assessment or agreement as to costs did not contravene either sub-rule. It did not include an amount for costs and was not expressed to be inclusive of costs: (sub-rule (2)(c)). Sub-rule (3) makes specific provision for a statement concerning costs as agreed or assessed. In any event, paragraph 3 was a statement only of the time for the payment of the amount offered and costs if there was acceptance. (d) Time for acceptance 1. The Plaintiff submitted that the time for expiry of the offer (28 days) was not reasonable because the matter had not been fixed for hearing in this Court and the joint reports had not been served. Reliance was placed on Pittorino v Yates [2009] NSWCA 87 and Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85. Those cases both concerned an Offer of Compromise made within two months of the trial and the position was, accordingly, governed by r 26(5)(b). The present Offer was governed by r 26(5)(a) and it complied with that part of the Rule. The distinction between the two paragraphs was emphasised by Tobias JA in Pittorino at [29]. 2. Nor is there any evidence that the Plaintiff requested the Defendant to keep the Offer open until some further event occurred (cf Pittorino at [22], [36] and [38]) or because the Plaintiff required longer to consider it. If r 20.26(4) applies to an offer by the Defendant the sub-rule makes provision for the offeree to give a notice saying that s/he is unable to assess the reasonableness of the offer because of a lack of particulars. It seems fairly clear why that was not done. The Plaintiff considered at that point and right up to the trial that he would recover well in excess of what the Defendant had offered. That was the risk he took in circumstances where reasonableness as to acceptance time was not a consideration when the Offer was served outside the two months period leading up to the trial. (e) Offer not a compromise 1. The Plaintiff relied on a number of authorities to submit that the Offer made was not a genuine offer, required capitulation on the Plaintiff's part and was done simply to trigger the costs provision in r 42.15. These authorities included Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd (No 2) [2009] NSWCA 336; Robb Evans of Robb Evans and Associates v European Bank Ltd (No 2) [2009] NSWCA 170; Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141; Anderson Group Pty Ltd v Tynan Motor Pty Ltd (No 2) (2006) 67 NSWLR 706; [2006] NSWCA 120 and Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344. 2. The Plaintiff's submission that the offer was not a compromise is difficult to understand. The submission was that when the Plaintiff was claiming $1.2 million an offer of $320,000 could not be said to be a compromise and, in fact, amounted to requiring a capitulation. However, the Defence filed by the Defendant disputed liability and specifically traversed issues of breach and causation. The Defence pleaded an obvious risk as far as the claim to warn was concerned (ss 5F and 5H of the Civil Liability Act 2002 (NSW)) and pleaded that any risk of injury was an inherent risk under s 5I of that Act. These defences were not without any merit although the Defendant was ultimately unsuccessful on liability. Further, the Plaintiff had the Defendant's medicals that largely disputed causation for ongoing problems. 3. In those circumstances, an offer by the Defendant in the face of a denial of liability, to pay $320,000 must be regarded as a compromise. Further, it was an invitation to the Plaintiff who was claiming $1.2 million to settle the proceedings on the basis of a compromise that would pay the Plaintiff $320,000 together with his costs. 4. It has been accepted that an offer to "walk away" or its equivalent may be a compromise: Refrigerated Roadways at [17]; Dean v Stockland at [6] and [15]. What was offered in the present case could not be considered to be trivial or contemptuous (Robb Evans at [23]) and, on the basis of the Defendant's medical reports at the time the Offer was made, was the offer of a substantial sum, albeit less than the Plaintiff considered his claim was worth. (e) Not unreasonably rejected 1. The Plaintiff relied principally on his submissions in relation to (c) and (d) above to say that it was not unreasonable for him to have rejected the offer. He also relied on what was said to be his reasonable refusal of the Calderbank offer for the same reasons. In my opinion, where a substantial sum was offered and where no request was made for the Offer to be kept open for a further period, whether to await the joint reports or otherwise, the Plaintiff's refusal to accept the Offer was not reasonable. 2. The Offer of Compromise was a valid one. I reject all of the objections to it. The result must be that r 42.15 operates to deny the Plaintiff his costs from 5 September and to require the Plaintiff to pay the Defendant's costs on an indemnity basis from that time. 3. Whilst it is not necessary, therefore, to consider the Calderbank offer, the conclusions in (c), (d) and (e) would result in a determination that the Calderbank offer was also valid. (3) Stay of the judgment 1. The Plaintiff agreed that it was appropriate that the judgment be stayed until the issue of costs had been determined. Accordingly, an order to that effect was made on 19 August 2016. 2. Counsel for the Plaintiff informed me that a Notice of Intention to Appeal had been filed by the Plaintiff. In circumstances where, if the appeal is unsuccessful, there is a substantial likelihood that the Defendant would be entitled to set off costs against the Plaintiff's judgment, subject to what appears below, there should be a stay until the determination of the appeal pursuant to s 135 of the Civil Procedure Act 2005 (NSW). 4. Solicitor's lien 1. The Plaintiff's solicitor claims a lien over the Plaintiff's judgment sum. The solicitor relies on what was said by Campbell J in Firth v Centrelink (2002) 55 NSWLR 451; [2002] NSWSC 564 particularly at [33]-[38]. 2. The position is conveniently summarised in Abbott v Pilot Development Cooperation Pty Ltd [2006] NSWSC 1178 by Bergin J (as her Honour then was) as follows: [5] In Firth v Centrelink (2002) 55 NSWLR 451 Campbell J reviewed the authorities and set out the principles applicable in relation to a solicitors' lien in respect of costs. His Honour summarised the principles, at 463, relevantly to this case as: (1) the solicitors' right exists over money recovered through obtaining judgment in litigation and also over money recovered through the settlement of litigation; (2) such right exists over both the amount of a judgment in favour of the client and the amount of an order for costs in favour of the client; (3) it exists over the money which is in the possession of the solicitor and also over money which is in court; (4) the solicitor need not be retained at the time that the money is recovered; and (5) for the right to arise it must be shown that there is a sufficient causal link between solicitors' exertions and the recovery of the fund of money; see also pages 464 and 465. [6] In Roam Australia Pty Limited v Telstra Corporation Limited [1997] FCA 980 Lehane J said: The questions seem to be, first, did the proceeding result in a judgment award or compromise under which money is payable to the party for whom the solicitors acted; and secondly, was the part played by the solicitors sufficient to justify the conclusion that there is a sufficient causal link between the solicitors' efforts and the result so that the solicitors may be regarded as having been instrumental in obtaining the result? [7] In Doyles Construction Lawyers v Harsands Pty Limited & Others, unreported 24 December 1996, McLelland CJ in Eq said: It is sufficient to give rise to the equitable right that the settlement resulting in payment to the client came about as a result of the legal proceedings and that the solicitor had acted for the client in those proceedings, this being treated as a sufficient causal link. See also Khoury v Gonzales [2006] NSWSC 1290. 1. The Defendant does not dispute the principles in those cases nor that the solicitor has a lien. The Defendant's point is only that the lien will arise when the solicitor's proper costs including disbursements are properly determined as between him and the Plaintiff. At the present time, the Defendant submitted, there is no evidence as to what the solicitor's costs and disbursements are. For that reason, the Defendant submits that the judgment sum should be paid into Court pending the determination of the solicitor's entitlement to costs. 2. Given the effect of s 338 of the Legal Profession Act on the costs recoverable by the Plaintiff's solicitor, I do not think that there can be any doubt that if the solicitor is otherwise entitled, he will recover the costs of $15,109 being 20% of the judgment sum. However, the disbursements to which he is entitled at this time remain undetermined. Further, the precise contractual arrangements between the solicitor and the Plaintiff are not in evidence. 3. I consider, therefore, that the appropriate course is what the Defendant suggests, namely, that the whole of the judgment sum should be paid into Court until such time as the solicitor's right to costs and disbursements are properly determined. 4. Once the issue of the lien has been resolved it may be that the Defendant is entitled to set off its entitlement to costs against the Plaintiff's judgment: Australian Beverage Distributors v Evans & Tate Premium Wines Pty Ltd [2006] NSWSC 560; (2006) 58 ACSR 22 at [68]-[70] (this matter not disturbed on appeal: Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd (2007) 69 NSWLR 374; [2007] NSWCA 57; see also Chaina v Presbyterian Church (NSW) Property Trust (No. 26) [2014] NSWSC 1009 at [59]-[61]. 5. Although passing reference was made to setting off the costs in prayer 2 of the Defendant's Notice of Motion, the matter was not addressed in submissions apart from the suggestion by counsel for the Plaintiff that the question of set-off should be dealt with after the lien had been resolved. 6. I will not make any order at the present time in relation to set-off. The issue will arise when the balance of the judgment is sought by some party to be paid out of Court. That cannot happen until the stay is lifted or expires as provided below. Conclusion 1. Accordingly, the orders I make are these: (1) The Defendant is to pay the Plaintiff's costs on an ordinary basis up to and including 4 September 2014; (2) The Plaintiff is to pay the Defendant's costs on an indemnity basis from 5 September 2014; (3) The Defendant is to pay the whole of the judgment of $75,547 into Court; (4) Stay the execution of the judgment including the orders for costs until the determination of any appeal or the determination of the costs and disbursements properly payable to the Plaintiff's solicitor whichever is the later; (5) Liberty to apply on 2 days' notice. ********** 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: 07 September 2016