Abi-Rizk v BB Dundas Pty Ltd in its capacity as Trustee of the BB Dundas Trust

Case •

[2025] NSWSC 1063

•

18 September 2025

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Abi-Rizk v BB Dundas Pty Ltd in its capacity as Trustee of the BB Dundas Trust [2025] NSWSC 1063
Hearing dates: On the papers
Date of orders: 18 September 2025
Decision date: 18 September 2025
Jurisdiction:Equity
Before: Richmond J
Decision:

(1) The second and third defendants to pay the plaintiffs’ costs of the notice of motion dated 20 May 2025 and any costs thrown away by the vacation of the hearing dates of 26 to 29 May 2025 on the ordinary basis, as agreed or assessed, such costs to be payable forthwith.

Catchwords:

COSTS — Party/Party — Orders against non-parties — Personal costs order against lawyer

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213

I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Kendirjian v Ayoub [2008] NSWCA 194

King v Muriniti (2018) 97 NSWLR 991; [2018] NSWCA 98

Lemery Holdings Pty Limited v Reliance Financial Services Pty Ltd [2008] NSWSC 1114

Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd (No 2) [2025] NSWCA 185

March v E & MH Stramare Pty Ltd (1991) 171 CLR 506; [1991] HCA 12

Newell; Muriniti v De Costi (2018) 97 NSWLR 398; [2018] NSWCA 49

NHB Enterprises Pty Ltd v Corry (No 5) [2020] NSWSC 1838

O’Reilly v Law Society of New South Wales (1988) 24 NSWLR 204

Prescott v Legal Practitioners Conduct Board [2012] SASCFC 145

Rahman v Al-Maharmeh (No 2) [2021] NSWCA 151

Re Felicity; FM v Secretary, Dept of Family and Community Services (No 4) [2015] NSWCA 19

ReSM Project Developments Pty Limited (in liquidation) [2017] NSWSC 1010

Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA (1989) 63 ALJR 519

Tuitupou v Davis [2019] NSWSC 160

Whyte v Brosch (1998) 45 NSWLR 354

Texts Cited:

GE Dal Pont, Law of Costs (5th ed, 2021, LexisNexis)

Practice Note SC Gen 5

Category:Costs
Parties:

Antonios Abi-Rizk (First Plaintiff)
Koukab Rizk (Second Plaintiff)
Sonia Rizk (Third Plaintiff)

BB Dundas Pty Ltd t/as in its capacity as Trustee of the BB Dundas Trust (ABN 65 355 767 782) (First Defendant)
Habib Boustany (Second Defendant)
Danny Basseal (Third Defendant)
BB & B Penrith Pty Ltd (Fourth Defendant)
Representation:

Counsel:
N Li (Plaintiffs)

Solicitors:
Solve Legal (Plaintiffs)
CH Earnest (Solicitor for Mr Arraj)
File Number(s): 2020/63010
Publication restriction: Nil

JUDGMENT

  1. On 22 May 2025, I vacated the hearing for this matter set down for 26 to 29 May 2025, on the application of the second and third defendants by notice of motion dated 20 May 2025 (the Motion). The application was granted in circumstances where the solicitor on the record for the second and third defendants, Mr Jason Arraj (Mr Arraj), had failed to bring to their attention that the Registrar had on 28 November 2024 set the matter down for final hearing on those dates. The first time the second and third defendants became aware of the hearing dates was on 16 May 2025 in the circumstances referred to below.

  2. This judgment deals with the outstanding question of costs. Having foreshadowed at the hearing of the Motion that there was cause for a personal costs order to be made against Mr Arraj due to his responsibility for the vacation of the hearing dates, I made directions for Mr Arraj to file and serve submissions and any evidence on which he wished to rely as to why such an order should not be made and a timetable for the other parties to file and serve submissions on costs, with Mr Arraj having the opportunity to file and serve submissions in reply. This was in accordance with s 99(2) of the Civil Procedure Act 2005 (NSW) (CPA) and paragraph 11 of Practice Note SC Gen 5.

Evidence and submissions

  1. Mr Arraj, represented by CH-Earnest (the law firm which currently employs him), relied on his affidavit made on 21 May 2025, his written submissions dated 29 May 2025 opposing a personal costs order, attaching four documents on which he relied (Support Documents), and further submissions in reply dated 24 June 2025.

  2. Mr Arraj states in his affidavit of 21 May 2025 that:

  1. on or about 25 November 2024, he received an email from the online court registry;

  2. on the same day he forwarded an email to Mr Boustany stating ‘I will be filing a Notice of Ceasing to Act’;

  3. on or about 26 November 2024, he received another email from the online court registry and on the same day he forwarded that email to Mr Boustany stating ‘you need to reply to this’;

  4. he has not received any instructions from Mr Boustany since 26 November 2024 in respect of this matter;

  5. on or about 28 November 2024, an administrator was appointed for his firm formerly known as Forward Legal Pty Limited, and as a result of the firm going into administration and the stress associated with that process, he failed to file the notice of ceasing to act.

  1. The plaintiffs relied on three affidavits made by their solicitor, Mr Kyle Kutasi, dated 15 May 2025, 21 May 2025 and 6 June 2025, and written submissions dated 6 June 2025. In their written submissions the plaintiffs contended that Mr Arraj had not shown sufficient cause as to why a personal costs order should not be made against him. In the alternative, if the Court finds that Mr Arraj and the defendants were jointly responsible for the costs thrown away, the plaintiffs submitted that liability for costs should be apportioned between them. To avoid the additional costs involved with a cost assessment, the plaintiffs submitted that a lump sum costs order should be made pursuant to s 98(4) of the CPA in the amount of $41,324.50 (including GST).

  2. The second and third defendants who were self-represented relied on an affidavit of Mr Boustany made on 20 May 2025 in support of the Motion, and written submissions dated 12 June 2025. Mr Boustany stated in his affidavit: ‘The third defendant and I acknowledge, with regret, that for several months we were effectively paralysed, overwhelmed by the breakdown of our legal representation, the lack of communication from our former solicitor, and the growing complexity of the proceedings’.

Background

  1. The proceedings relate to a failed joint venture property development between the plaintiffs and the defendants. The only active defendants in the proceedings are the second defendant, Habib Boustany (Mr Boustany), the third defendant, Danny Basseal (Mr Basseal) and the fourth defendant, BB & B Penrith Pty Ltd. The first defendant, BB Dundas Pty Ltd in its capacity as trustee of the BB Dundas Trust, filed a submitting appearance on 12 May 2025. Mr Arraj was the solicitor on the record for Mr Boustany and Mr Basseal when the matter was set down for final hearing by the Registrar on 28 November 2024.

  2. The chronology of the procedural steps in the proceedings leading up to the directions hearing on 28 November 2024 can be summarised as follows:

  1. On 9 September 2024 the plaintiffs were granted leave to file any expert evidence on which they wished to rely by 24 September 2024 and the defendants were granted leave to file any lay or expert evidence on which they wished to rely by 8 October 2024. The plaintiffs complied with these orders by serving an expert report on 23 September 2024. The defendants did not file any evidence by 8 October 2024.

  2. On 24 October 2024 orders were made by the Registrar extending the time for the defendants to serve any lay and/or expert evidence upon which they rely to 21 November 2024 and standing the matter over to 28 November 2024 for directions before the Registrar. No further evidence was filed by the defendants in accordance with these orders.

  3. In the lead up to the directions hearing on 28 November, the solicitors for the parties, including Mr Arraj, received a number of emails from the Registrar. He mentions in his affidavit of 21 May 2025 that he received emails from the Registrar via online court on 25 and 26 November 2024 but does not state their contents. The Court’s records show that the solicitors for the parties received emails on 22, 25 and 26 November stating that the matter had been activated for online court and that a ‘request’ should be submitted as soon as possible and no later than 11:00am on Tuesday, 26 November. Read in the context of earlier emails, the relevant ‘request’ was for the allocation of a hearing date. No response having been provided by any of the parties by that deadline, a further email was sent to the solicitors for the parties on 26 November at 11:26am extending the deadline to 11:00am on the following day. Later on 26 November, the plaintiffs’ solicitor sent an email on online court stating that the matter was ready for hearing, attaching a trial timetable and seeking the allocation of a hearing date. The Registrar responded by an email which relevantly stated that the matter would remain in the list and seeking available dates from April 2025 onwards. The plaintiffs’ solicitor responded giving their available dates as any date from 30 April 2025 onwards.

  4. On 27 November, the Registrar sent an email via online court stating ‘Noted – a hearing date will be set in Court on Thursday’. The ‘Thursday’ referred to was the next day, 28 November.

  5. No email messages were sent by Mr Arraj via online court in the period from 22 November to 27 November. He states in his affidavit of 21 May 2025 that he forwarded to Mr Boustany the emails of 25 and 26 November but makes no mention of passing on the email sent on 27 November stating that a hearing date will be set at the directions hearing on the next day, being 28 November.

  6. On 28 November 2024 the Registrar set the proceedings down for final hearing commencing on 26 May 2025 for four days, including the usual orders for hearing.

  1. In the meantime, on 26 November 2024, Mr Boustany, the second defendant, sent a text message to Mr Arraj which said (emphasis added): ‘Hi Jason, have you filed the NoM and did you receive a date, can you please let me know when it is to be heard. I will need to be there given you have ceased to act. Thanks’ (Support Document No 1). The evidence does not disclose what ‘NoM’ Mr Boustany was referring to, but it seems likely that it is the notice of motion which was ultimately filed by Mr Boustany on 12 May 2025 referred to below seeking, among other relief, leave to file further evidence. This is because of the nature of the relief sought in the motion, the contents of the supporting affidavit of Mr Boustany filed with the motion which was dated 25 November 2024, and the fact that this affidavit was sworn by Mr Boustany in the presence of Mr Arraj.

  2. On 27 November 2024, a clerk from Mr Arraj’s office sent an email to the plaintiffs’ solicitors enclosing ‘by way of service’ an unfiled notice of ceasing to act (Form 80) signed by Mr Arraj (Support Documents No 2 and No 3). However, as noted above, this document was never filed and was not effective to remove Mr Arraj as solicitor on the record for the second and third defendants.

  3. On 28 November 2024, the law firm which employed Mr Arraj, Forward Legal Pty Ltd, had an administrator appointed. Mr Arraj says that as a result of his firm going into administration and the associated stress of the process, he failed to file the notice of ceasing to act.

  4. There was no appearance for the second and third defendants before the Registrar on 28 November 2024. However, Mr Arraj was aware of the directions hearing because he appeared before the Registrar at the previous directions hearing and he received the email from the Registrar on 27 November 2024 stating that a hearing date would be set at the directions hearing on 28 November 2024.

  5. By 31 December 2024 Mr Arraj had commenced working at his present firm, CH-Earnest, and by this time all the files of Forward Legal had been transferred to CH-Earnest (Support Document No 4). On that day Mr Jean-Pierre Chaina (Mr Chaina), the principal of CH-Earnest, sent an email to Mr Boustany and Mr Basseal, copying in Mr Arraj, stating ‘We confirm that CH-Earnest has acquired the files of Forward Legal’ and went on to offer to act for them in another matter. Notwithstanding this email, Mr Arraj did nothing further in these proceedings after that time. In particular, he did not access JusticeLink to find out what orders had been made on 28 November 2024 or take any steps to transfer the matter file to Mr Boustany and Mr Basseal to enable them to find alternative legal representation. Mr Boustany and Mr Basseal still did not have possession of the file when the Motion was heard on 22 May 2025.

  6. There is no evidence to suggest that the defendants took any steps to contact Mr Arraj or CH-Earnest between December 2024 and May 2025. Indeed, it may be inferred from Mr Boustany’s affidavit sworn on 20 May 2025 extracted at [6] above that they took none.

  7. The lack of preparation of the matter for hearing became apparent to the Court when on 12 May 2025 Mr Boustany and Mr Basseal filed a notice of motion seeking various relief including leave to file further evidence in the proceedings. The motion was dismissed with costs at a hearing on 16 May 2025, during which Mr Boustany and Mr Basseal stated that they were unaware of the impending hearing dates. I made orders at the conclusion of the hearing requiring Mr Arraj to:

  1. produce to Mr Boustany and Mr Basseal by 5pm that day all pleadings, evidence or other materials required for inclusion in the court book for the matter in accordance with the orders for hearing made on 28 November 2024; and

  2. (b) to inform the Court by 2:00pm on 19 May 2025 by an affidavit sent by email to my associate as to what steps he took to inform Mr Boustany and Mr Basseal of the orders made by the Court on 28 November 2024 setting the matter down for hearing on 26 to 29 May 2025.

  1. Mr Arraj complied with the second direction, albeit two days late, but not the first. It is clear from his affidavit of 21 May 2025 that in fact he did not take any steps to tell the defendants that the matter was set down for hearing on 26 May 2025, and no mention was made in that affidavit or his later affidavit of a claim for a solicitor’s lien over the matter file. The unsigned written submissions filed on Mr Arraj’s behalf state that he kept possession of the file pursuant to a solicitor’s lien for unpaid legal fees but he has provided no evidence to substantiate that submission and I reject it.

  2. I am satisfied that Mr Boustany and Mr Basseal were not made aware of the hearing dates until this was drawn to their attention on 16 May 2025.

  3. On 2 June 2025 the Registrar re-listed the proceedings for final hearing on 18 to 21 August 2025. Mr Arraj was given leave to be removed from the record on 17 June 2025 and he filed a notice of ceasing to act on 19 June 2025.

Relevant principles

Jurisdiction to award personal costs order against a legal practitioner and exercise of discretion

  1. Under s 98 of the CPA, the Court has full power to determine by whom, to whom and to what extent costs are to be paid. In my view, the appropriate order in the present case if the potential application of s 99 of the CPA did not arise, is that the second and third defendants be ordered to pay the plaintiff’s costs of the Motion and any costs thrown away by vacation of the hearing dates, on the ordinary basis, such costs payable forthwith. This is the price of the indulgence given to the second and third defendants by the Court making the orders sought by the Motion.

  2. The question which arises is whether a different order should be made to recognise the responsibility of Mr Arraj, when he was the solicitor on the record for the second and third defendants, in the incurring of those costs. Section 99 of the CPA provides relevantly:

99 Liability of legal practitioner for unnecessary costs

(1)    This section applies if it appears to the court that costs have been incurred:

(a)    by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or

(b)    improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.

(2)    After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following:

(a)    it may, by order, disallow the whole or any part of the costs in the proceedings:

…

(ii)    in the case of a solicitor, as between the solicitor and the client,

(b)    it may, by order, direct the legal practitioner:

…

(ii)    in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs,

(c)    it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party.

(3) Before making such an order, the court may refer the matter to a costs assessor (within the meaning of Part 7 of the Legal Profession Uniform Law Application Act 2014) for enquiry and report.

…

(7)   In this section, client includes former client.

  1. The exercise of the Court’s power to make an order under s 99(1)(a) and s 99(2) involves the application of a three-stage approach: first, whether the conduct of the legal representative of whom complaint is made constitutes serious neglect, serious incompetence or serious misconduct; secondly, if so, whether such conduct caused the applicant to incur unnecessary costs; and thirdly, if so, whether it is in all the circumstances just to order the legal representative to compensate the applicant for the whole or any part of the relevant costs: Muriniti v Kalil [2022] NSWCA 109 at [45]; Rahman v Al-Maharmeh (No 2) [2021] NSWCA 151 at [22]. The party seeking the order bears the burden of proof.

  2. The second stage requires the demonstration of a causal link between the impugned conduct of the legal practitioner and the unnecessary costs. What is required is that the impugned conduct ‘must have caused costs to have been incurred that would not otherwise have been incurred but for that conduct’: Newell; Muriniti v De Costi (2018) 97 NSWLR 398; [2018] NSWCA 49 at [71] per Beazley P (Gleeson JA agreeing at [241] and White JA in apparent agreement at [242] and [253]); see also NHB Enterprises Pty Ltd v Corry (No 5) [2020] NSWSC 1838 at [51].

  3. This approach to the causation requirement appears to adopt the ‘but-for’ test of causation as a negative criterion of causation rather than as a comprehensive test: see eg March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 at 515-516 per Mason CJ (Toohey and Gaudron JJ agreeing) and 522-533 per Deane J; [1991] HCA 12.

  4. In Muriniti v Kalil, Brereton JA (Macfarlan and Leeming JJA agreeing) noted at [45] (footnotes omitted):

‘The jurisdiction to make such orders is to be exercised “with care and discretion and only in clear cases”. It is to be observed that the section speaks of “serious neglect, serious incompetence or serious misconduct of a legal practitioner, or improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible”. This indicates that it is only engaged by egregious conduct: mere (as distinct from serious) neglect, incompetence or misconduct does not attract it.’

  1. In Tuitupou v Davis [2019] NSWSC 160 at [61]-[65], Ward CJ in Eq (as her Honour then was) stated:

‘There is both inherent and statutory jurisdiction to make such an order if there is evidence that there has been a serious dereliction of duty, serious misconduct or gross negligence on the part of the legal practitioner (see Myers v Elman [1939] 4 All ER 484; [1940] AC 282 at 209, 304, 319; and G E Dal Pont, Lexis Nexis, Solicitor Manual, revised ed (at 16 January 2019) at [25,000.10]) — the former in the exercise of the Court’s supervisory jurisdiction over its officers; the latter pursuant to s 99(1) of the Civil Procedure Act.

The statutory jurisdiction is enlivened if it appears to the Court that costs have been incurred: by the serious neglect, serious incompetence or serious misconduct of a legal practitioner; or improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible. Section 99(2)(c) provides that, after giving the legal practitioner a reasonable opportunity to be heard, the Court may by order direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party.

For a costs order against a legal practitioner to be made, a causal connection must be established between the client’s loss (whether the opposing client or the legal practitioner’s own client) and the legal practitioner’s serious dereliction of duty, serious misconduct or gross negligence. Mere negligence (or incompetence) is not sufficient to permit (or warrant) the making of such an order …

As with costs orders generally, the purpose of such a costs order is not to punish the relevant legal practitioner nor to prove that he or she is guilty of professional misconduct; rather, such orders are primarily compensatory in nature.’

  1. Her Honour further stated at [65], that the jurisdiction should be ‘exercised sparingly … with considerable caution’, ‘with care and discretion and only in clear cases’ and thereby ‘not with the benefit of hindsight’.

  2. It is now clear that s 99(2)(c) permits, where s 99(1) is satisfied, the making of an order directing that the legal practitioner concerned pay the wasted costs of a party who is not the client of the legal practitioner: see King v Muriniti (2018) 97 NSWLR 991; [2018] NSWCA 98 at [9] per Basten JA, [51] per Gleeson JA and [56]-[57] per Emmett AJA.

  3. In Re Felicity; FM v Secretary, Dept of Family and Community Services (No 4) [2015] NSWCA 19, Basten JA (Ward and Emmett JJA agreeing) noted at [14] that the awarding of costs against a solicitor under s 99 requires a ‘balancing of the public interest in maintaining and nurturing a legal profession which provides vigorous representation for litigants in court, uncompromised by a fear of personal sanctions for failure, against the need to maintain and nurture the obligation to provide independent advice to litigants and to give proper weight to the public interest in the efficient administration of justice’.

  4. In Lemery Holdings Pty Limited v Reliance Financial Services Pty Ltd [2008] NSWSC 1114, Hammerschlag J (as his Honour then was) made the following observations regarding the terms of s 99(1)(a) (at [69]-[74]):

‘Under s 99(1)(a) of the Civil Procedure Act, the jurisdiction to order a legal practitioner to pay costs is enlivened if costs have been incurred by serious neglect, serious incompetence or serious misconduct on the part of that legal practitioner.

The power in s 99 read with s 56 of that Act is to be exercised in accordance with the particular terms of the sections: Newmont Yandal Operations Pty Ltd v J Aron Corporation (2007) 70 NSWLR 411 at [116]; Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 at [29]; Whyked Pty Ltd v Yahoo !7 Pty Ltd [2008] NSWSC 477 at [12] and following.

Nevertheless, what is meant by “neglect” and “misconduct” on the part of legal practitioners has been considered by the Courts in this country and in England and guidance is to be derived from such authorities.

Undoubtedly “serious neglect” within the meaning of s 99(1) would include a substantial omission on the part of a legal practitioner which no member of the profession who was reasonably well-informed and competent would have omitted to do: see Wentworth v Rogers [1999] NSWCA 403; Ideal Waterproofing Pty Ltd v Buildcorp Australia Pty Ltd [2006] NSWSC 155; Ridehalgh v Horsefield [1994] Ch 205 at 223-233.

Undoubtedly, “serious misconduct” within the meaning of s 99(1) includes a substantial breach by a practitioner of the Professional Conduct and Practice Rules and a substantial breach by a practitioner of his or her duty to the Court or of his or her fiduciary duties to the client.

In Myers v Elman [1940] AC 282 at 318-319 Lord Wright said of the term “professional misconduct”: It would perhaps be more accurate to describe it as conduct which involves a failure on the part of a solicitor to fulfil his duty to the court and to realise his duty to aid in promoting, in his own sphere, the cause of justice.’

  1. In Whyte v Brosch (1998) 45 NSWLR 354 at 355, the Court emphasised that legal practitioners have a duty to ensure that proceedings before the Court are conducted efficiently and expeditiously and that the profession should understand that if an adjournment of proceedings was by reason of a late filing of submissions, the Court could order costs thrown away by the adjournment to be paid by the legal practitioner responsible for the failure.

  2. In considering whether to make an order under s 99, a relevant consideration is the degree to which the legal practitioner failed to comply with s 56(4) of the CPA: Kendirjian v Ayoub [2008] NSWCA 194 at [209]; Re Felicity at [15]. Section 56(5) of the CPA expressly permits the court in exercising a discretion with respect to costs to take into account any failure of a legal representative to comply with s 56(4) of the CPA which requires him or her to not, by their conduct, cause a party to the proceedings to be in breach of that party’s duty to assist the court to further the overriding purpose of facilitating the just, quick and cheap resolution of the proceedings.

  3. In addition, as a solicitor admitted to practise in NSW, Mr Arraj owes a paramount duty to the court and the efficient administration of justice under r 3.1 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) (ASCR).

  4. Paragraph 6 of Practice Note SC Gen 5 reminds practitioners of their duty to the Court to ensure the efficient and expeditious conduct of proceedings, and paras 5 and 8 of that practice note makes it clear that costs sanctions may be imposed on practitioners when they fail to comply with their obligations referred to in those paragraphs, including directly or by giving appropriate advice to their clients.

Procedure for a solicitor’s withdrawal from proceedings

  1. Rules 7.29 and 7.30 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) set out the proper procedure for a solicitor to withdraw from proceedings:

7.29 Withdrawal of solicitor

(1)    A solicitor who ceases to act for a party in any proceedings may file notice of the change and serve the notice on the parties.

(2)    Except by leave of the court, a solicitor may not file or serve notice of the change unless he or she has filed and served on the client a notice of intention to file and serve the notice of change--

(a)    in the case of proceedings for which a date for trial has been fixed, at least 28 days before doing so, or

(b)    in any other case, at least 7 days before doing so.

(3)    Unless notice of the change is filed with the leave of the court, a solicitor filing such a notice must include in the notice a statement as to the date on which service of the notice of intention required by subrule (2) was effected.

(4)    A solicitor may serve a notice of change or notice of intention under this rule on the former client by posting it to the former client at the residential or business address of the former client last known to the solicitor.

7.30 Effect of change

A change for which notice is required or permitted to be given under this Division does not take effect--

(a)    as regards the court, until the notice is filed, and

(b)    as regards any person on whom it is required or permitted to be served, until a copy of the notice, as filed, is served on that person.

  1. Mr Arraj’s unfiled notice does not comply with r 7.29: first, it was not filed and second, he had not previously filed and served on his clients a notice of intention to file and serve a notice of ceasing to act (Form 79). Consequently, pursuant to r 7.30(a) the unfiled notice did not take effect as regards the Court, nor were the plaintiffs or defendants bound by it pursuant to r 7.30(b). Mr Arraj acknowledges in his written submissions that he failed to comply with r 7.29, and that this ‘is a substantial failure on his part’.

  2. Black J described the purpose of r 7.29 in ReSM Project Developments Pty Limited (in liquidation) [2017] NSWSC 1010 at [2] as being ‘to address the risk that a solicitor’s ceasing to act, after a hearing date has been set, has the capacity to cause significant prejudice to the client; also to the community, so far as it may have the consequence that the hearing cannot proceed; and also to the wider interests of justice which include the interest in the timely determination of proceedings.’

Gross sum costs order

  1. Under s 98(4)(c) of the CPA, the court may, at any time before costs are referred for assessment, make an order to the effect that the party to whom costs are to be paid is to be entitled to a specified gross sum instead of assessed costs.

  2. The relevant principles relating to an application for a gross sum costs order were recently summarised by Free JA (McHugh and Ball JJA agreeing) in Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd (No 2) [2025] NSWCA 185 as follows (at [30]-[38]):

‘In Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 (Harrison v Schipp) at [21] Giles JA described the power to make a gross sum costs order instead of ordering assessed costs, conferred at that time by Pt 52A r 6(2)(c) of the Supreme Court Rules 1970 (NSW), as being unconfined and apt to be exercised whenever the circumstances warrant its exercise. The same approach applies to s 98(4) of the Civil Procedure Act: Hamod v State of New South Wales [2011] NSWCA 375 (Hamod) at [813].

One of the circumstances that has been recognised as potentially warranting the making of a gross sum costs order is where the assessment of costs would be protracted and expensive, and in particular if it appears that the party obliged to pay the costs would not be able to meet a liability to pay the order likely to result from the assessment: Harrison v Schipp at [21]. That was the situation in Harrison v Schipp, where at [30] Giles JA found that Mrs Schipp “should not have to spend a lot more money which she will not recover” in order to obtain the costs payable to her.

Even where the element of impecuniosity is not present, the length and/or complexity of the underlying proceedings and the associated likelihood of a lengthy and complex assessment are material considerations that can favour a gross sum costs order. A contested costs assessment in a matter with these characteristics is likely to involve expense, delay and aggravation of the kind that it is desirable to avoid by making a gross sum costs order: Hamod at [817]. Where there is a lack of proportionality between the complexity and cost of the assessment process and the amount at stake, that is also a factor favouring the making of a gross sum order: Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99 (Zepinic v Chateau Constructions) at [28], [31]. A related circumstance warranting such an order is where the total costs of litigation will become even more disproportionate if the costs are referred for assessment: Bechara (t/as Bechara and Company) v Bates [2016] NSWCA 294 (Becharav Bates) at [18].

In Hamod at [816] the Court held that in determining whether the sum sought is appropriate and meets these standards, factors that merit particular consideration include the relative responsibility of the parties for the costs incurred, the degree of any disproportion between the issue litigated and the costs claimed, the complexity of proceedings in relation to their costs and the capacity of the unsuccessful party to satisfy any costs liability.

A court entertaining an application for a gross sum costs order is not required to undertake a detailed examination of the kind that would be appropriate to a taxation or formal costs assessment: Hamod at [819], [823]. To require something akin to a formal costs assessment would defeat the purpose of the gross sum costs order: Bechara v Bates at [14].

A corollary of that principle is that a broad brush approach is necessarily required: Bechara v Bates at [14]; Zepinic v Chateau Constructions at [31]. In Harrison v Schipp at [22] Giles JA referred with approval to the proposition that a gross sum “can only be fixed broadly having regard to the information before the Court” (quoting Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 (Beach Petroleum) at 124) and that the rule contemplates a court adopting a “much broader brush than would be applied on taxation”: Hadid v Lenfest Communications Inc [2000] FCA 628 at [35].

At the same time, as Giles JA emphasised in the same passage in Harrison v Schipp at [22], the approach taken to estimating costs must be “logical, fair and reasonable” and the power should be exercised “only when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available”: citing Beach Petroleum at 123 and Wentworth v Wentworth (Court of Appeal, 21 February 1996, unreported). The need for the Court to have confidence in arriving at an appropriate sum was emphasised in Colquhoun v District Court of New South Wales) (No 2) [2015] NSWCA 54 at [6], where the deficiencies in the material in that regard were decisive.

In Baychek v Baychek [2010] NSWSC 987 at [11] Ball J referred to the principle that the Court is entitled to take a broad brush approach provided that the approach is logical, fair and reasonable, and observed that it is implicit in this that the gross sum “bear a reasonable relationship to the actual costs of the party making the application, and to the costs that that party might reasonably be expected to recover on assessment. That means, among other things, that there must be a reasonable evidentiary basis for the order the court makes”. To similar effect, in Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2011] NSWSC 11, Barrett J at [21] held that a decision as to what is a sufficiently reliable calculation or estimate of an appropriate costs sum “will depend to a large extent on reaching some kind of view of what the outcome on assessment might be”.

As a matter of practice, courts typically apply a discount in assessing costs on a gross sum basis: Hamod at [814]. Indeed, in Zepinic v Chateau Constructions at [38] the Court described this as the invariable practice of the courts when calculating a gross sum costs order. That may involve “an impressionistic discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment”: Hamod at [820]. Such an approach tends to minimise the risk of a gross sum costs order creating unfairness by allowing for the recovery of costs in excess of the amount that would in fact have been recovered if the matter had proceeded to costs assessment.’

Parties’ submissions

Plaintiffs’ submissions

  1. The plaintiffs submit that the evidence which has been filed and served by the defendants and their solicitor respectively give rise to a number of evidentiary concerns:

  1. The first is that Mr Arraj has not provided an explanation as to why he has not complied with order 2 made on 16 May 2025, which compelled him to surrender to the defendants any files to do with their matter in his possession; nor is there evidence from the defendants as to what efforts (if any) they took to obtain the files.

  2. The second is that there is no evidence Mr Arraj took any steps to inform the second and third defendants of the hearing dates in May 2025. Mr Arraj asserts that he forwarded Mr Boustany an email on 25 and 26 November 2024, as sent by the online registry, and indicated that he would be ‘filing a notice of ceasing to act’ and that the latter ‘needed to respond’. However, neither email could have informed the defendants of the hearing dates as these were not fixed by the Registrar until 28 November 2024. Mr Arraj claims he was not aware of the dates fixed by the Registrar, as he had ceased acting by 28 November 2024 and did not appear at the directions hearing, however, he knew the directions hearing had been stood over to 28 November 2024 on the last occasion and failed to inform the defendants to attend or arrange alternative representation.

  3. The third is that there is a complete evidentiary lacuna as to what efforts Mr Arraj took, if any, to file his notice of ceasing to act. In his affidavit, Mr Arraj stated at paragraph [8] that the reason he did not file a notice of ceasing to act was due to his ‘firm going into administration’ and the ‘stress associated’ with the process. However, the unfiled notice was served on the plaintiffs, on behalf of Mr Arraj, via a law clerk at his current firm CH-Earnest on 27 November 2024, the day before the hearing was set down. This, in combination with the fact that his new firm held the matter files (see Support Document 4), runs contrary to his assertions that there was some administrative chaos in dealing with this matter caused by the wind-up of Forward Legal.

  4. Likewise, there is also a factual lacuna in respect of the efforts taken by the defendants to contact Mr Arraj, or his firm CH-Earnest (whom they had actual knowledge, for over five months, were in possession of their files without a lien) between December 2024 and May 2025. There is no explanation proffered by the defendants as to what the alleged ‘breakdown’ of relations was, and why the defendants did not seek to instruct Mr Arraj’s new firm to act for them in these proceedings as early as December 2024. Moreover, there is no explanation as to why the defendants were ‘paralysed’, or for what period of time this ‘paralysis’ occurred, such that they were unable to instruct new legal representatives.

  1. The plaintiffs submitted that the Court may draw adverse inferences against Mr Arraj (and the defendants) in respect of the unexplained absence of such evidence: Jones v Dunkel (1959) 101 CLR 298 at 320; [1959] HCA 8.

  2. In relation to the application of the three-stage approach required by s 99(1)(a), the plaintiffs made the following submissions.

First stage: did the legal representative against whom complaint is made act improperly, unreasonably, or negligently?

  1. It was submitted that Mr Arraj engaged in conduct which involved serious neglect, serious incompetence or serious misconduct in two ways. The first was his failure to comply with UCPR r 7.29. As noted above, Mr Arraj accepts that his failure to do so satisfies this requirement.

  2. The plaintiffs submitted that r 7.29 was designed to prevent precisely the species of prejudice to the administration of justice identified by Black J in SM Project Developments which occurred in these proceedings. Namely, that had Mr Arraj complied with the requirement in r 7.29, his role in the proceedings would have been clear to the parties and the Court as early as November 2024, such that the parties would not have been prejudiced in their understanding of who had carriage of these proceedings and might have secured alternative representation.

  3. A failure to observe and comply with the rules of civil procedure has been long held by the High Court to be a basis for a personal costs order against a practitioner. In Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA (1989) 63 ALJR 519, Brennan J, Dawson and McHugh JJ relevantly found (at 519):

‘It is the duty of a solicitor who undertakes to conduct an appeal to this Court to be or to become familiar with the applicable rules which apply to the proceedings and to observe them. The rules are designed to promote efficiency in litigation and to avoid the useless incurring of costs… Where costs are uselessly incurred by the solicitor's failure to observe the rules, the costs thrown away are properly to be paid by the solicitor.’

  1. The Court of Appeal has also found that serious neglect of a matter by a legal practitioner while on the record, when it results in the loss of a final hearing, can be the basis for a personal costs order: see Stafford v Taber [1994] NSWCA 293 at 5-6 per Kirby P (Sheller and Handley JJA agreeing at 7).

  2. The second kind of serious neglect, serious incompetence or serious misconduct of Mr Arraj was his failure to inform the second and third defendants of the hearing dates. Rule 7.1 of the ASCR requires a solicitor to provide ‘clear and timely advice to assist the client to understand relevant legal issues’. As the South Australian Full Court (Kourakis CJ, Peek and Blue JJ) said in Prescott v Legal Practitioners Conduct Board [2012] SASCFC 145 said at [196], ‘it is an important duty owed by practitioners to their clients to communicate with them and keep them informed.’

  3. The plaintiffs submitted that Mr Arraj’s retainer had not been terminated, such that he continued to owe duties to the second and third defendants as his clients until he was removed from the record. ASCR r 13.1 outlines the circumstances in which a retainer can be terminated:

13   Completion or termination of engagement

13.1    A solicitor with designated responsibility for a client’s matter must ensure completion of the legal services for that matter UNLESS—

13.1.1   the client has otherwise agreed,

13.1.2   the law practice is discharged from the engagement by the client,

13.1.3   the law practice terminates the engagement for just cause and on reasonable notice, or

13.1.4   the engagement comes to an end by operation of law.

  1. The plaintiffs submitted that Mr Arraj has not evidenced any basis upon which, pursuant to ASCR 13.1, he was entitled to, without completion of his legal services, cease acting. Specifically, it appears that the second and third defendants did not agree with his ceasing to act, pursuant to r 13.1.1. The decision appears from Mr Arraj’s affidavit to be a unilateral decision he made. There is no evidence that the defendants discharged the engagement of Mr Arraj by agreement, prior to 27 November 2024, pursuant to r 13.1.2.

  2. Moreover, Forward Legal going into administration could not be considered an automatic ‘discharge’ or termination by operation of law, within the meaning of r 13.1.4, as Mr Arraj’s evidence indicates that he intended to cease acting before the firm’s administrator was appointed on 28 November 2025. Further, by that date Mr Arraj had already sent the unfiled notice via his new firm, CH-Earnest. The plaintiffs’ submitted that this exemplifies that Mr Arraj understood his duties to the Court as transcending the legal personality of his former practice and that legal practitioners owe their duties to the Court and their clients, not law firms.

  3. The only remaining basis for Mr Arraj’s termination of the engagement would be pursuant to r 13.1.3, on the basis that he had ‘just cause’ for the termination of the engagement. No evidence has been provided to establish that Mr Arraj had any cause for allegedly ceasing his involvement in the proceedings or provision of legal services to the second and third defendants. Moreover, the correspondence from CH-Earnest in November and December of 2024, and the fact that they retained the second and third defendants’ files, is indicative that Mr Arraj understood his ongoing responsibilities.

  4. In the absence of such a valid termination, Mr Arraj during the period between 28 November 2024 and May 2025, continued to have an obligation to advise his clients of their rights in respect of these proceedings, including by informing them of the hearing dates. A solicitor owes to their client a duty to reveal everything which the solicitor knows will be of assistance to the client in relation to matters within the solicitor’s retainer: see O’Reilly v Law Society of New South Wales (1988) 24 NSWLR 204 at 213.

  5. By way of analogy in these proceedings, by failing to ensure the second and third defendants were properly appraised of the hearing dates, and provide them with the information and files required to conduct the proceedings, it is open to the Court to determine that Mr Arraj acted in a manner that was seriously neglectful of his obligations to his clients and the Court pursuant to s 56 of the CPA.

Second stage: did such conduct cause the applicant to incur unnecessary costs?

  1. The plaintiffs submitted that but for Mr Arraj’s neglectful conduct, the hearing dates would not have been vacated and consequently the plaintiffs would not have suffered the resulting wasted costs. They rely on the third affidavit of Mr Kutasi which sets out the expected costs thrown away as a consequence of the hearing being vacated, which included significant time spent in preparing the matter for a hearing to commence the following week.

Third stage: is it just in all the circumstances to order the legal representative to compensate the applicant for the whole or any part of the relevant costs?

  1. The plaintiffs submitted that it would be just to order Mr Arraj to pay all, or part, of the costs thrown away by consequence of the hearing being vacated, because these wasted costs could have been avoided had Mr Arraj complied with his obligations. Alternatively, if the Court is satisfied that Mr Arraj is only partly responsible for the costs thrown away and that the defendants share in the responsibility, the Court ought to apportion liability for the costs between the defendants and Mr Arraj.

  2. To avoid the additional costs involved with assessment of the plaintiffs' costs, the plaintiffs seek a lump sum order pursuant to s 98(4) of the CPA in the amount of $41,324.50 (including GST). In light of Mr Kutasi’s third affidavit, the Court can be confident that such a lump sum order may be made fairly: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [22]. In the alternative, should the Court not feel it appropriate to make a lump sum order, the Court has the power pursuant to s 99(3) of the CPA to first refer the matter for an assessment of costs for the provision of a report.

Defendants’ submissions

  1. The second and third defendants, unsurprisingly, submitted that the plaintiffs’ costs should be borne entirely by Mr Arraj, given the nature and extent of his procedural failures and neglect, which include failing to formally cease acting, failing to notify them of the hearing dates and failing to provide them with access to their files. While they admit they were generally aware that this matter remained on foot, they submit that they were not informed by Mr Arraj of significant developments in the proceedings, including the orders made on 28 November 2024.

  2. The second and third defendants submit that not all of the plaintiffs’ claimed ‘thrown away’ costs of $41,324.50 (including GST) can properly be classified as ‘thrown away’ or wasted per s 99 of the CPA. A substantial portion of the costs were incurred in preparing for the final hearing that was scheduled to commence on 26 May 2025. These include costs for drafting affidavits, preparing court books, reviewing evidence, and briefing counsel. However, the hearing has not been abandoned; it has merely been adjourned to a future date. As such, the materials prepared will still be used or adapted for the rescheduled hearing; the plaintiffs will not need to reproduce that work from scratch and these expenses are effectively deferred, not wasted. Moreover, the invoices and Annexure ‘KK-3’ to the affidavit of Mr Kutasi dated 6 June 2025 lack specificity as to the actual tasks performed, their relevance to the hearing or the stage of proceedings the work related to.

  3. The Court in similar circumstances has cautioned against awarding ‘wasted costs’ where the work remains substantively relevant to a future hearing. The purpose of s 99 of the CPA is compensatory, not to grant a windfall or duplication of costs for work that will ultimately be utilised at the hearing. The plaintiffs’ counsel fees totalling over $22,000 in a short period include multiple entries for ‘preparation’ and ‘appearance’ without evidence that such work is incapable of reuse. Absent precise itemisation distinguishing reusable, as opposed to wasted effort, a substantial portion of the fees claimed are excessive and the defendants submit that an independent costs assessment should occur.

Mr Arraj’s submissions

  1. Mr Arraj submits that he should not be liable to pay the costs of the plaintiff as all the relevant parties in the proceedings were aware of the fact that he had ceased to act for the second and third defendants, who had not indicated that they wanted or intended for Mr Arraj to continue to act for them after 26 November 2024.

  2. The text message from Mr Boustany to Mr Arraj on 26 November 2024 stated that ‘I will need to be there given you have ceased to act’ (emphasis added), which Mr Arraj submits shows the second and third defendants were aware and acknowledged that he was no longer acting for them in the proceedings from the date of the message. On 28 November 2024, Mr Arraj’s clerk served the unfiled notice of ceasing to act (Support Document 2) on the plaintiffs’ solicitors (Support Document 3), such that the plaintiffs also had actual knowledge that Mr Arraj had ceased to act for the second and third defendants.

  3. On or around 28 November 2024, in anticipation of Forward Legal Pty Ltd going into liquidation, Mr Arraj’s files were transferred to the firm CH-Earnest, and he commenced working for CH-Earnest on or around 29 November 2024. Mr Chaina attempted to contact the defendants in relation to another matter (Support Document 4). No response was received from the second and third defendants, and they have not indicated an intention to retain him or CH-Earnest on any matter since 28 November 2024.

  4. Mr Arraj submitted that he did not take any steps to inform the second and third defendants of the May hearing dates because having ceased to act for them by 28 November 2024, he was not aware of the orders made on that day setting the matter down for final hearing and there is no evidence that the plaintiffs or the second and third defendants made any attempt to contact him, or held any belief that he continued to act for the second and third defendants.

  5. Addressing the three-stage enquiry required by s 99(1)(a), Mr Arraj accepted that his failure to file the notice of ceasing to act in accordance with r 7.29 of the UCPR was a substantial failure on his part. However, he submitted that this conduct was not causative of the subsequent costs thrown away by the vacation of the May hearing dates. This is because the second and third defendants were aware from 26 November 2024 that he no longer acted for them in the matter.

  6. The plaintiffs were also aware that he had ceased to act from his email enclosing the unfiled notice of ceasing to act sent on 27 November 2024.

  7. Mr Arraj submitted that in circumstances where he had no knowledge of the hearing dates set down on 28 November 2024, the parties had knowledge of his position and had accepted that state of affairs and the defendants knowing they were unrepresented had made no attempt to liaise with the plaintiffs to deal with the matter or secure alternative representation in the period from late November 2024 to May 2025, the plaintiffs had failed to establish any causative link between his failure to file the notice of ceasing to act and any loss associated with vacating the hearing dates in May 2025.

  8. Finally, Mr Arraj submitted that even if the causation requirement is met, it would not be just to order that he compensate the plaintiffs for any costs thrown away by vacation of the hearing dates because any prejudice which is intended to be avoided by filing and serving a notice of ceasing to act pursuant to r 7.29 of the UCPR has been avoided by the actions taken to inform all parties of his ceasing to act for the defendants. The prejudice identified by Black J in SM Project Developments did not arise because the parties were informed of his intention to cease to act before the matter was set down for hearing and any prejudice is not to his previous clients, the defendants, but rather to the plaintiffs.

  9. In the alternative, should the Court decide notwithstanding the lack of the requisite causative connection between his conduct and the wasted costs, any order that he bear costs should be limited to the plaintiffs’ costs of preparing for and attendance at the hearing of the Motion, as the only costs which have been incurred by the plaintiffs in connection with vacating the hearing date are the costs of the Motion.

Consideration

  1. As noted above, Mr Arraj accepts that his failure to comply with the requirements of UCPR r 7.29 was a substantial failure on his part. In my view it amounts to serious neglect, incompetence or misconduct which engages s 99(1)(a), in light of the important role played by that rule as indicated by Black J’s observations in SM Project Developments.

  2. In my view, his failure to notify the second and third defendants of the outcome of the directions hearing on 28 November 2024 was also serious neglect, incompetence or misconduct engaging s 99(1)(a). This is notwithstanding that I accept Mr Arraj’s submission that his engagement to act for the second and third defendants had been terminated by 26 November 2024 because Mr Boustany’s text message on that day indicates that he and Mr Basseal agreed that he had ceased to act for them, and hence r 13.1.1 of the ACSR applies. The subsequent conduct of the second and third defendants in not engaging with Mr Arraj any further in the matter is consistent with this conclusion, confirmed by Mr Boustany’s affidavit extracted at [6] above.

  3. Nevertheless, whether or not his retainer had been properly terminated on 26 November 2024, as the solicitor on the record he had a duty both to his clients and to the Court to inform his clients that the matter had been set down for hearing, what the hearing dates were and what the usual orders for hearing required the parties to do. He was aware from the emails sent via online court referred to earlier that the matter was to be set down for hearing on 28 November 2024 and he could easily have discovered what the outcome of the directions hearing on that date was by accessing the orders on JusticeLink.

  4. It is not an adequate excuse for Mr Arraj to say, as he did in his written submissions, that he had ceased acting for the second and third defendants by 26 November 2024 and did not know what orders were made on 28 November 2024. As the solicitor on record he had a continuing duty to the Court to ensure that the proceedings were conducted efficiently and expeditiously and this included making his clients aware of the orders made on 28 November 2024 so that they could comply with them.

  5. However, I am not satisfied that the causal requirement in s 99(1)(a) is satisfied for the following reasons.

  6. The failure of Mr Arraj to comply with r 7.29 and to inform the second and third defendants of the orders made on 28 November 2024 can be seen as part of the sequence of events leading to the vacation of the May hearing dates because if these failures on the part of Mr Arraj had not occurred, the second and third defendants would have been aware of the hearing dates and their lack of knowledge of this and the orders for final hearing was a material factor in the Court granting the adjournment application. However, it does not follow that these failures caused the wasted costs resulting from the vacation of the May hearing dates.

  7. The second and third defendants had accepted by 26 November 2024 that they needed to find a new solicitor to act for them in the proceedings. On 31 December 2024 they were told that CH-Earnest had the matter file and, by implication, that they were entitled to call for it. Under r 14.1 of the ASCR, on termination of a solicitor’s engagement, the solicitor is required to give the client or former client any client documents as soon as reasonably possible when requested to do so by the client (unless there is an effective lien, but as noted above there is no evidence that there was a lien in this case). Although the second and third defendants were entitled to call for the matter file, they did not do so. Mr Boustany accepts in his affidavit that the second and third defendants did not take any steps to find a new solicitor despite the breakdown of their relationship with their ‘former solicitor’, Mr Arraj, and there is no suggestion that any conduct of Mr Arraj or CH-Earnest inhibited them from doing so. Had they taken the necessary steps following CH-Earnest’s email of 31 December 2024 to engage a new solicitor in a timely fashion or taken possession of their files to conduct the matter themselves without legal representation, they would have become aware that the proceedings were set down for hearing some 5 months later and what was required to be done. In my view, their failure to take these steps promptly was the cause of the situation which arose in early May and ultimately lead to the vacation of the May hearing dates.

  8. Even if Mr Arraj’s conduct identified at [73] above had a causal connection with the wasted costs because it contributed to the state of affairs which arose in May in which the second and third defendants were unaware of the impending hearing, the independent and unreasonable failure of the second and third defendants to respond proactively to Mr Arraj’s decision to terminate his retainer over a period of some five months constitutes a novus actus interveniens which ‘[broke] the chain of causation which would otherwise have resulted from [the] earlier wrongful act’: March v E & MH Stramare at 517. It is apparent from the evidence referred to at [79] below that any wasted costs relate to work done during May 2025. As such, I am not satisfied that Mr Arraj’s conduct some five months earlier caused costs to have been incurred that would not otherwise have been incurred but for that conduct.

  9. It is relevant when considering the approach to causation to consider the purpose of the enquiry: I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41 at [56]. Here, the purpose is to ascribe responsibility for wasted costs arising out of the vacation of the May hearing dates. For the reasons given above, and bearing in mind that s 99 of the CPA applies only to clear cases, that responsibility rests with the second and third defendants.

  10. For these reasons, s 99(1)(a) does not apply.

Application for lump sum costs order

  1. The reasons given by the plaintiffs for seeking a lump sum costs order are that it would avoid additional costs involved with an assessment of the plaintiffs’ costs and in light of the third affidavit of Mr Kutasi dated 6 June 2025, the Court can be confident that such a lump sum order may be made fairly.

  2. The third affidavit of Mr Kutasi attaches a two-page spreadsheet taken from the database of his firm, Solve Legal, setting out the time and resulting fees recorded on the matter per day, and a brief description of the work done, for the period from 29 November 2024 to 4 June 2025, and the disbursements for the matter. This shows a total of $68,830.10 (including GST), comprising professional fees of $33,061.60 and total disbursements of $35,768.50 (including counsel’s fees of $22,060), the vast bulk of which were for work done on and after 6 May 2025. Mr Kutasi also attaches the invoice for the fees of the plaintiffs’ counsel, Mr Li, which is for work done in the period from 13 May to 22 May 2025 in preparing the matter for hearing, as well as the various court appearances in that period.

  3. Mr Kutasi states in his third affidavit that ‘I expect that the costs thrown away will be $41,324.50 (incl GST), calculated as the matters highlighted on the itemised spreadsheet of professional fees of Solve Legal, the motions-related items on Mr Li’s bill, and printing of the court books and hearing fees, which will need to be duplicated for August’s hearing’.

  1. The costs thrown away in the present case are the plaintiffs’ costs reasonably incurred for work already done but wasted as a result of the vacation of the May hearing: GE Dal Pont, Law of Costs (5th ed, 2021, LexisNexis) at [1.23].

  2. In my view, it would not be appropriate on the limited material before the Court to make a lump sum costs order. Mr Kutasi’s third affidavit does not disclose how he went about identifying the extent to which the relevant costs will be wasted by reason of the vacation of the May hearing and his spreadsheet does not permit the Court to undertake that task in a manner fair to the parties. Further, this is not a complex case and the assessment of the wasted costs would not be protracted or expensive. The appropriate course is that the wasted costs be assessed in the usual way if agreement cannot be reached.

Conclusion

  1. For the above reasons, the order of the Court is as follows:

  1. The second and third defendants to pay the plaintiffs’ costs of the notice of motion dated 20 May 2025 and any costs thrown away by the vacation of the hearing dates of 26 to 29 May 2025 on the ordinary basis, as agreed or assessed, such costs to be payable forthwith.

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Decision last updated: 19 September 2025

Most Recent Citation
Cases Citing This Decision

1

Johnson v Hone & Anor (No.2) [2025] NSWDC 395
Cases Cited

37

Statutory Material Cited

3

Harrison v Schipp [2002] NSWCA 213
Harrison v Schipp [2002] NSWCA 213
Harrison v Schipp [2002] NSWCA 213