Bevan v Bingham

[2024] NSWSC 1349

Supreme Court

New South Wales

Medium Neutral Citation:

Bevan v Bingham [2024] NSWSC 1349

Hearing dates:

6 September 2024

Date of orders:

6 September 2024

Decision date:

25 October 2024

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

1. The plaintiff to pay the defendant’s costs until the 20 June 2024 on an ordinary basis and as from the 21 June 2024 on an indemnity basis. The costs are to include the costs of the defendant’s Notice of Motion dated 2 July 2024

Catchwords:

COSTS ORDER – Appeal – Costs Assessment Review Panel – excessive materials – dismissed – jurisdiction – legal fees – barristers fees – costs agreement – retainer --

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 98

District Court Act 1973 (NSW), s 127

Legal Professional Uniform Law 2014 (NSW), s 171, s 172, s 178

Legal Profession Uniform Law Application Act 2014 (NSW), ss 71-89

Uniform Civil Procedure Rules 2005, s 42.1, s 42.15A

Cases Cited:

Amirbeaggi v EB [2023] NSWCA 108

Bevan v Bingham & Ors [2023] NSWSC 19

Bingham v Bevan [2024] NSWSC 1045

Bolton v Atanaskovic Hartnell [2024] NSWSC 833

Cat Media Pty Ltd v Allianz Australia Insurance Ltd [2006] NSWSC 790

Commonwealth of Australia v Gretton [2008] NSWCA 117

Davidson v Seachange Living NSW Pty Ltd [2023] NSWSC 292

Fordyce v Fordham & Anor (2006) 67 NSWLR 497

Foundas vArambatzis (No 4) [2023] NSWSC 1648

Leichhardt Municipal Council v Green [2004] NSWCA 341

Miwa Pty Ltd v Siantan Properties Pty Ltd (No. 2) [2011] NSWCA 344

Newcastle Walisend Coal Co Pty Ltd v Industrial Relations Commission (NSW) [2006] NSWCA 129

Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CKR 622.

Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111

Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474 (Wentworth v Rogers)

Texts Cited:

Nil

Category:

Costs

Parties:

Christopher John Bevan (Plaintiff)
John David Bingham (First Defendant)
Marilyn Filewood (Second Defendant)
Kerry Ross Jones (Third Defendant)

Representation:

Counsel:

D. Robertson (Plaintiff)
D. Robinson SC (Defendant)
M. Hazan (Defendant)

Solicitors:

Blackstone Legal Costing (Plaintiff)
Bicknell & Monteith (First Defendant)
Submitting appearances (Second & Third Defendants)

File Number(s):

2024/00202175-1

Publication restriction:

Nil

JUDGMENT

1. This judgment initially involved an appeal from a costs order made by Bellew J on 7 February 2023. There has been a sad history of litigation between the parties. This judgment is confined to the issue of the costs of this appeal.

2. At the outset of the hearing before me, the plaintiff’s counsel advised that the plaintiff would discontinue the appeal or in the alternative, that the appeal should be dismissed. I made an order that the appeal be dismissed as that was the preferable course because it means that this appeal could not be relitigated. Therefore, the only argument was one as to costs of the proceedings. These are my reasons for my decision.

3. The plaintiff is Christopher John Bevan (Mr. Bevan). He is a practicing barrister. The first defendant is John David Bingham (Mr. Bingham). He is a practicing solicitor. The second defendant is Marilyn Filewood and the third defendant is Kerry Ross-Jones, the second and third defendants constituted the Costs Review Panel. They have filed submitting appearances except as to costs. The plaintiff was represented D Robertson of counsel. The first defendant was represented D Robinson and M Hazan of counsel.

4. Mr. Bevan seeks that there be no order as to costs such that each party pay their own costs of the appeal. Mr. Bingham seeks that Mr. Bevan pay his costs of the appeal until 20 June 2024 on an ordinary basis and as of 21 June 2024 on an indemnity basis.

Background

5. On 7 February 2023 Bellew J in Bevan v Bingham & Ors [2023] NSWSC 19 (the Bellew J proceedings) made a costs order flowing from an appeal of a Costs Review Panel. The costs order was that Mr. Bevan, a barrister in those proceedings, pay the costs of the defendants as agreed or assessed.

The Bellew J proceedings

6. In the Bellew J proceedings, the plaintiff was Mr. Bevan. The first defendant was Mr. Bingham. The second defendant was Angelina Francesca Kessly (Ms. Kessly). She was the client of the Mr. Bingham, as solicitor, Mr. Bevan was retained as counsel. Both Mr. Bevan and Mr. Bingham acted for Ms. Kessly in bankruptcy proceedings. She was self-represented at the hearing before Bellew J. The third defendant was John Anthony Livingston. The fourth defendant was Francesca Alexandra Hutley. The third and fourth defendants, who collectively constituted the Review Panel (the Review Panel), filed submitting appearances.

7. On 17 November 2023, costs assessor Maurice Castagnet (the Costs Assessor) issued two Certificates of Determination:

1. The Certificate of Determination of Costs by the Costs Assessor was in the sum of $98,640.16, payable by Mr. Bevan to Mr. Bingham, comprised of the following,

2. The Certificate of Determination of the Costs Assessor’s Costs, payable by Mr. Bevan to Mr. Bingham was in the amount of $14,447.10.

8. On 19 April 2024, the Review Panel affirmed the Costs Assessor’s determination under ss 70 and 71 of the Legal Profession Uniform Law Application Act 2014 (NSW) (the Application Act).

9. On 30 May 2024, the Review Panel issued two further certificates, being a Certificate of Determination of Review in the amount of $2,200, and a Certificate of Determination of Review Panel Costs in the amount of $6,688.00. Those certificates were sent by the Manager, Costs Assessment to the parties.

The current Appeal before me

10. On 31 May 2024, Mr. Bevan filed his summons commencing the current appeal in these proceedings.

11. On 28 June 2024, Mr. Bingham wrote to Mr. Bevan’s solicitors to advise that he objected to the competency of the appeal as the amount of costs in dispute was less than $100,000. The correspondence invited Mr. Bevan to consent to orders dismissing the appeal, failing which Mr. Bingham would file a motion seeking to dismiss the proceedings on the basis that they were incompetent.

12. On 2 July 2024, Mr. Bingham filed a notice of motion objecting to the competency of the proceedings.

13. On 26 July 2024, Mr. Bevan filed an amended summons, seeking that leave to appeal be granted, and in the alternative, an order transferring the proceedings to the District Court of New South Wales. Mr. Bevan is no longer seeking to have these proceedings be transferred to the District Court.

The Costs Agreement

14. On 16 September 2019 Mr. Bevan and Mr. Bingham entered into a costs agreement and retainer that included the following relevant clauses:

“3. [Mr Bevan] estimates his total fees for the Brief at $60,000 plus OST plus travelling and out-of-pocket expenses for the three likely stages of the proceedings, made up as follows:

(a)   initial advice and conferences - $12,000 plus UST;

(b)   commencement of the Federal Court proceeding - $20,000 plus GST;

(c) commencement of the Supreme Court proceedings - $24,000.

…

7. Subject to paragraph 4 above, [Mr Bingham’s] obligations under this agreement are personal to him. [Mr Bingham] is liable to [Mr Bevan] for his fees rather than the Client being liable. [Mr Bingham] will use his best endeavours at his expense to recover [Mr Bevan’s] fees from either the Client or the respondent to the appeal, Scott Darren Pascoe, expeditiously, irrespective of the outcome of the proceedings which are the subject of this costs agreement and the Brief.” (my emphasis added)

Would leave to appeal have been granted had the Appeal not been dismissed prior to the hearing?

15. In Davidson v Seachange Living NSW Pty Ltd [2023] NSWSC 292 at [50]-[51], I said:

“[50] In BHP Billiton Ltd v Dunning [2013] NSWCA 421 (‘BHP Biliton’) the Court of Appeal set out the following principles with respect to a grant of leave to appeal in this Court at [19] and [20]:

Principles relevant to leave applications

[19] In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary judge was arguably wrong in the conclusion arrived at: Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69 per Sheller JA; Zelden v Sewell [2011] NSWCA 56 at [22] per Campbell JA (Young JA agreeing).

[20] Ordinarily it is appropriate to grant leave to appeal only in matters that involve issues of principle, questions of public importance or an injustice which is reasonably clear, in the sense of going beyond merely what is arguable: Carolan per Kirby P; Jaycar Pty Ltd v Lombardo [2011] NSWCAS 284, Campbell JA (Young and Meagher JJA agreeing) at [46]. See also Lee v New South Wales Crime Commission [2012] NSWCA 276 per Bathurst CJ (Macfarlan and Barrett JJA agreeing).

[51] In Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWSA 164 (‘Das’), Basten JA at [35] stated:

[35] In Coulter v The Queen [1988] HCA 3; 164 CLR 350, dealing with a challenge to a refusal of the South Australian Full Court to grant leave to appeal in a criminal matter, the majority noted that a leave requirement was a preliminary procedure ‘recognised by the legislature as a means of enabling the court to control in some measure the volume of appellate work requiring its attention’: at 356 (Mason CJ, Wilson and Brennan JJ). That statement is clearly applicable to civil, as well as criminal, appellate jurisdiction.”

16. So far as leave to appeal is concerned, Mr. Bingham submitted that no issues of principle in respect of the assessment of costs arise with respect to the subject matter of Mr. Bevan’s amended summons, nor do they raise any point of public importance.

17. This appeal does not raise any issue of principle or question of public importance. The only basis upon which leave could have been granted to Mr. Bevan is if there was an injustice that goes beyond what is arguable.

18. Mr Bingham submitted that the amount of costs in dispute in these proceedings is, at its highest, is the sum of $88,505, and having regard to Mr. Bevan’s concession that,

“he takes no issue on appeal with assessed costs payable to [Bicknell & Monteith] for its own profit costs just as he took no issue with it on review”.

19. The plaintiff’s written submissions do not address why leave ought to be granted. Mr. Bevan maintained his position that the costs are $126,443.46.

20. The requirement for leave to appeal depends upon the operation of s 127 of the District Court Act 1973 (NSW), which relevantly states:

127 Right of appeal to Supreme Court

(1) A party who is dissatisfied with a Judge’s or a Judicial Registrar’s judgment or order in an action may appeal to the Supreme Court.

(2) The following appeals lie only by leave of the Supreme Court:

(a) an appeal from an interlocutory judgment or order,

(b) an appeal from a judgment or order as to costs only,

(c) an appeal from a final judgment or order, other than an appeal:

(i) that involves a matter at issue amounting to or of the value of $100,000 or more...

...

(e) an appeal from an order made with the consent of the parties.

(3) In any other case, an appeal lies as of right.

21. The jurisprudential discretion regarding appeals under $100,000 is well settled. Mr. Bingham also submitted that leave under s 89 of the Application Act ought not to be granted.

89 Appeal on matters of law and fact

(1) A party to a costs assessment that has been the subject of a review under this Part may appeal against a decision of the review panel concerned to--

(a) the District Court, in accordance with the rules of the District Court, but only with the leave of the Court if the amount of costs in dispute is less than $25,000, or

(b) the Supreme Court, in accordance with the rules of the Supreme Court, but only with the leave of the Court if the amount of costs in dispute is less than $100,000.

(2) The District Court or the Supreme Court (as the case requires) has all the functions of the review panel.

(3) The Supreme Court may, on the hearing of an appeal or application for leave to appeal under this section, remit the matter to the District Court for determination by that Court in accordance with any decision of the Supreme Court and may make such other order in relation to the appeal as the Supreme Court thinks fit.

(3A) The Supreme Court may, before the conclusion of any appeal or application for leave to appeal under this section in the District Court, order that the proceedings be removed into the Supreme Court.

(4) An appeal is to be by way of a rehearing, and fresh evidence or evidence in addition to or in substitution for the evidence before the review panel or costs assessor may, with the leave of the Court, be given on the appeal.

22. Mr. Bingham further submitted that no order should be made transferring the proceedings to the District Court on the basis that the appeal lacked merit. It is true that Mr Bevan could have commenced the appeal, as of right, in the District Court, however that is no longer the issue.

23. In Amirbeaggi v EB [2023] NSWCA 108 (Amirbeaggi), after setting out the statutory framework, Basten JA (with whom Kirk JA and Simpson AJA agreed) said,

“[43] The sequential order in which these various steps in the process operate indicates that the subject of assessment is, at each stage, an assessment of the Uniform Law costs or the ordered costs to which the Part applies. If that is correct, the reference to “the amount of costs in dispute” refers to the amount of the Uniform Law costs or the ordered costs which remains in dispute following the first two stages of the process of assessment. (The appeal is only provided from the determinations of a review panel.) The identity of those costs does not increase at each stage of the assessment, so that what is the subject of an appeal to the District Court or the Supreme Court is a different set of costs from those the subject of assessment by the costs assessor at stage 1.

[44] It is undoubtedly true that both the review panel and the court may vary a determination of the costs assessor as to the amount of the professional costs which may be allowed and as to which party is to pay those costs and the costs the subject of a secondary certificate. Similarly, the District Court may award costs of the appeal to it, but those costs will, if necessary, become the subject of a separate costs assessment, and do not form part of the original costs assessment, although they are themselves “ordered costs”.

[45] This analysis leads to the conclusion that the “costs” referred to in s 89(1)(a) and (b) are the “ordered costs” or the “Uniform Law costs”, as the case may be, which formed the subject matter of the initial application for a costs assessment. That conclusion is consistent with the approach to other legislation imposing thresholds on appeals as of right, including s 127(2) of the District Court Act 1973 (NSW) and s 101(2) of the Supreme Court Act. The right to appeal in each case turns on so much of the original claim remains in dispute. In the case of s 89, the point is blurred by the fact that the subject matter of the original claim is itself costs. However, as in the case of the other statutory provisions, and as the primary judge forcefully observed, to include in the phrase “costs in dispute” any costs subsequently incurred in the course of the dispute would tend to reduce the threshold to insignificance. The better view is that the phrase “amount of the costs in dispute” refers to the subject matter of the costs assessment still in dispute, and does not include the “costs of the costs assessment”.

[46] A different result could have been achieved if the reference to “the amount of costs in dispute” had instead been “the amount of the determination in dispute”. This is a distinction which is found within Pt 7 of the Application Act. Thus, in dealing with the contents of a certificate, s 70(1) (set out at [21] above) requires that “the amount of costs determined” and “the amount of any costs of the costs assessment” be separately identified. That distinction is important and, if it were not intended to be maintained in s 89, that intention could have been made clear.”

24. It is my view the amount of costs in dispute in this Appeal is $88,505.00 Therefore, the plaintiff requires leave to appeal the determination of the Review Panel.

25. The central point of contention in this appeal was the issue of the indemnity principle. On the facts which are not in dispute, the indemnity principle is covered by binding authority. The remaining issues raised by Mr. Bevan fell well within the parameters of the discretion of the Review Panel.

Mr. Bevan’s position

26. Mr. Bevan accepts that there is no longer any issue in respect of the indemnity principle, that issue having been cured by Mr. Bingham’s late payment of the costs that are the subject of this appeal.

27. That being the case, Mr. Bevan accepts that grounds 1, 2, 4, 7, 8 and 9 of the Amended Summons cannot succeed.

28. The plaintiff had not provided any reasons as to why leave should be granted in circumstances where the costs were under $100,000.

Resolution

29. It is my view that Mr. Bevan commenced the proceedings in the wrong jurisdiction as the amount in dispute is $88,505. This is below the $100,000 threshold so there is no right of appeal to this court as set in Amirbeaggi. However, Mr. Bevan explained that there was a change in circumstances after he filed a notice of appeal and an amended notice of appeal.

30. The indemnity principle does not require that the costs have been paid, but it does require that there be a legal liability to pay costs: Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474 (Wentworth v Rogers) at [126]; Foundas v Arambatzis (No 4) [2023] NSWSC 1648 at [151]. There is not only a clear legal liability for Mr. Bingham to pay the costs, but in any event they have now already been fully paid by him (Monteith Affidavit sworn 2 August 2024 at [8]). The fact that the sum in dispute has now been paid is common ground. Mr. Bevan as applicant filed an application for costs assessment against the respondent on 6 June 2023.

31. If I am wrong, I will briefly address as to whether Mr. Bevan’s grounds of Appeal demonstrated an injustice in that it goes beyond what is arguable.

The Costs Assessor’s decision

32. On 17 November 2023 the Costs Assessor addressed the indemnity principle in his reasons and he stated,

“[88] The respondent made a general objection challenging the recovery of any costs under the Costs Order on the basis of the indemnity principle.

[89] The respondent contended that the assessment of fair and reasonable costs pursuant to the Costs Order should be “NIL” because the applicant has breached the indemnity principle in that he has failed to establish a liability to his own legal representatives for legal costs. It therefore follows that the respondent in turn has no liability to indemnify the applicant for any legal costs by payment of ordered costs to the applicant.

[90] The basis of the respondent’s contention may be summarised as follows:

a) Costs agreements are not conclusive as to what is fair and reasonable for ordered costs claimed (s. 77(2) of the LPULA Act). They are nonetheless conclusive for the purposes of the indemnity principle. Costs agreements are conclusive of the applicant’s liability to his solicitor for professional costs and disbursements which includes counsel’s fees payable to counsel by his solicitor.

b) In the absence of a costs assessment of the applicant’s own legal costs payable to his solicitor, the applicant can only satisfy the indemnity principle of costs recovery by a contractual liability for the costs claimed as ordered costs

c) According to the costs agreement between [Mr Bingham] and the applicant dated 20 May 2021, the applicant’s contractual liability for legal costs to his solicitors is capped at $8,360, being the costs disclosed to the applicant in the costs agreement. No counsel’s fees were ever disclosed under s. 175(1) of the LPUL to the applicant because the costs agreement records disbursements as “$000”. Accordingly, there has been no disclosure by [Mr Bingham] to the applicant of any counsel’s fees. On that basis, those fees are not recoverable by [Mr Bingham] from the applicant in the absence of an assessment of his solicitor/client costs due to the operation of sub-s 178(1)(b) of the LPUL. That is, there is no liability for any counsel’s fees owed by the applicant for which he can obtain indemnity from the respondent in the absence of a determination of solicitor/client costs of his liability for counsel’s fees as a client disbursement to [Mr Bingham] under the LPULA Act.

d) The automatic voiding of the costs agreement for material non­disclosure of costs negates any liability of the applicant to [Mr Bingham] unless and until [Mr Bingham’s] legal costs have first been assessed as solicitor/client costs in accordance with the bar on recovery of costs by [Mr Bingham] under sub-s 178(1 )(b) of the LPIJL due to his material non­disclosure of his costs.

Accordingly, the costs applicant has no right of recovery of any costs at all under the statutory regime. (See ss 3 and 169 - the objectives of the LPUL). If there were a right of recovery it would be limited to the $8,360 disclosed. The mere fact that each counsel has a right of recovery of fees from [Mr Bingham] under their separate contractual arrangements with [Mr Bingham] is of no consequence to the applicant’s liability to [Mr Bingham] for purposes of satisfying the indemnity principle.

Discussion and findings

[91] Court ordered costs are awarded by way of indemnity, not a punishment. The underlying rationale is that it is fair that the unsuccessful party who caused the successful party to incur the costs of litigation, should reimburse that party for those costs.

[92] The indemnity principle means that the applicant must have a liability to pay legal costs and the extent of the indemnity cannot exceed the amount of the applicant’s liability for his own legal costs.

[93] I must therefore conduct an enquiry firstly, to establish whether the applicant has a liability to pay legal costs and secondly, to establish whether the amount that I have determined for fair and reasonable costs would not be greater than the costs that the applicant has paid or is liable to pay to his solicitor for the legal services rendered.

[94] To facilitate the first stage of my enquiry s 77(1) of the LPULA Act provides that a costs assessor may have regard to a costs agreement when assessing court ordered costs.

[95] I have reviewed the costs agreement of 20 May 2021. It is apparent from the terms of the costs agreement that the applicant has retained Mr Monteith to act on his behalf to defend the proceedings. I am satisfied that the applicant has a liability to pay legal costs to his solicitor in relation to the matter being assessed for court ordered costs.

[96] I have reviewed the fee agreements of both Counsel, Mr Robinson SC and Mr Hazan. I am also satisfied that the applicant has a liability to pay their fees as disbursements incurred as part of the retainer with his solicitor,

[97] In conducting the second stage of my enquiry, I am not restricted to considering an estimate of total legal costs given to an applicant by his solicitor at the commencement of a retainer in a costs agreement. As I have indicated previously, s 77(2) of the LPULA Act provides that, for the purposes of this assessment, a costs agreement is not conclusive as to what is the fair and. reasonable amount of costs for the work concerned.

[98] For that part of my enquiry, I was provided with the tax invoice issued on 27 February 2023 to the applicant by his solicitor for the legal services rendered in the matter. The total of that invoice was $135,316.50 inclusive of GST, which included the professional fees of [Mr Bingham] and disbursements for counsel fees.

[90] On 24 May 2023, the solicitor for the applicant submitted that a revised tax invoice was provided to the applicant in the amount of $107,987 inclusive of GST.

[100] On 27 October 2023, I was provided with a letter from the applicant of even date, confirming that the revised invoice has been partly paid, that he accepts liability to pay the balance and that he has no intention to pursue a solicitor/client costs assessment as a result of the amendment of the invoice.

[101] My assessment of fair and reasonable costs amounts to $88,505 exclusive of GST.

[102] On that basis, I was satisfied that the amount of legal costs for which the applicant is liable to his solicitor would be in excess of the amount that I determined as fair and reasonable costs.

[103] Taking into account all of the above evidence, I was comfortably satisfied that the indemnity principle will not be breached. (my emphasis)

[104] It follows that the respondent’s general objection must be rejected. In that regard, I make the following brief observations.

[105] First, there is nothing in the Uniform Legislation to suggest that in conducting an assessment of ordered costs or in determining the amount of fair and reasonable costs payable, I am required to conduct an enquiry under Part 4.3 of the LPUL to satisfy myself of the existence a valid costs agreement between the applicant and his solicitor, or to conduct an enquiry as to whether his solicitor has complied with the disclosure obligations of that Part. Nor is there anything in the Uniform Legislation to suggest that I must first establish the exact amount of the applicant’s liability for solicitor/client costs under a costs agreement in order to proceed with the assessment or make my determination.

[106] Secondly, the respondent’s contentions are not supported by the authorities.

[107] For example, in Royal v El Ali (No 3) [2016] FCA 1573, in considering a similar contention under the Legal Profession Act 2004 (now repealed), Davies J stated at [31]:

‘It is, however, unnecessary for me to form a view on whether [the solicitors] Watson Mangioni failed to comply with any disclosure requirements as asserted, or the likely impact on the costs recoverable by it from the applicants if they did, as it is well established any failure is only relevant to an assessment of costs as between solicitor and client, not to the assessment of costs as between party and party. A failure to comply with the disclosure requirements entitles a client to postpone payment of the costs until assessed by a cost assessor and until that has been done the lawyer has no actionable claim for those costs. If there has been non-disclosure, on an assessment, the costs assessor may reduce the amount of those costs by an amount proportionate to the seriousness of the failure to disclose. The section does not apply to a party liable for [inter-parties] costs. As between party and party, the section gives no right to the party liable to pay the costs of the other party to argue that the solicitor/client costs of the other party should be reduced by reason of some failure by the other party’s lawyer in making disclosure to that party as required by statute: Catto v Hampton Australia (in /iq) [2008] SASC 231, Shaw v Yarranova Pty Ltd & Anor [2010] VSC 567 at [25]; Sun/and Waterfront (BVI) Limited v Prudent/a Investments Pty Ltd (No 4) [2013] VSC 669 (“Sun/and Waterfront”) at [99]-[1 03].’

And at [34]:

‘Contrary to Ms Castle’s assertion, Ventouris Enterprises Pty Ltd v DIB Group Pty Ltd (No 4) [2011] NSWSC 720 provides no support, by analogy or otherwise, for the proposition that a party ordered to pay costs can rely on a contravention of the disclosure requirements by the other party’s solicitor to argue that the solicitor/client costs incurred by the other party should be reduced:’

And at [35]:

‘In this case, the applicants have not made any complaint to their lawyers that there may have been non-compliance with disclosure obligations and the evidence was to the effect that the applicants do not intend to have their solicitor/client costs assessed, In the circumstances, there is no basis for reducing the amount which the applicants are entitled to recover from the respondents because of alleged breaches of the disclosure requirements by the applicants’ solicitors’,

[108] In a more recent matter in the Federal Court of Australia, Capello v Homebuilding Pty Ltd (formerly known as Hammond & Simonds NSW Pty Ltd) (No2) [2023J FCA 1205, Katzmann J considered a similar challenge under the Uniform Legislation. The Capellos contended that the ordered costs on taxation should be “NIL” because Homebuilding has not proved that its lawyers complied with s 174 of the LPUL, thereby “enlivening the prohibition in s 178” of the LPUL. Katzmann J dismissed the challenge as “misconceived” and stated at [5]:

‘Even if the lawyers did not comply with s174 of the Uniform Law, non­compliance does not have the effect of preventing the lawyers from recovering their taxed costs.’

[109] Lastly, I note that the applicant in this matter is and was at the material time a sole practitioner. Section 6 of the LPUL defines a “law practice” to include a sole practitioner. According to s 170 of the LPUL, Part 4.3 of the LPUL (which includes all the provisions regarding cost disclosure and cost agreements) do not apply to a solicitor/client retainer where the client is a law practice.” (CB 52-57)

The decision of the Review Panel

33. On 19 April 2024, the Review Panel also gave their reasons why the assessor did not make an error regarding the indemnity principle. The Review Panel relevantly stated its reasons for determination,

“[11.2] GENERAL COMMENTS REGARDING SUBMISSIONS THAT THE INDEMNITY PRINCIPLE WAS BREACHED

[11.2.1] In Royal v El Ali (No.3) [2016] several important issues in the area of costs were raised

…

2. The application of the indemnity principle - there was a contingent costs agreement between the Applicants and their solicitors — how the indemnity principle should be applied.

…

[11.2.3] The second basis on which the order was opposed was that the costs agreement in question fell foul of Wentworth v Rogers [2006] NSWCA 145.

[11.2.4] Her Honour held that a breach of the disclosure provisions under the LPA by a successful party does not impact on the recovery of its party/party (or court ordered) costs due to a breach of disclosure obligations.

[11.2.5] Her Honour noted further that the client applicants had not made any complaint to their lawyers as to non-compliance and did not intend to have their costs assessed.

[11.2.6] In Cappello v Homebuilding Pty Ltd (formerly known as Hammond & Simmonds NSW Pty Ltd (No 2) [2023] FCA 1205 at paragraph 36 Her Honour Justice Katzmann stated: Even if the disclosure obligations were contravened and the costs agreements are void, that does not mean that there was no liability to pay legal costs. The consequences of non-compliance are exhaustively described in s 178(1) of the Unform Law. For relevant purposes it only means that Homebuilding was not required to pay the legal costs until they were assessed; see s 178 (1)(b).

[11.2.7] The Panel determines that there was no error by the assessor in relation to the indemnity principle.”

Mr Bingham’s submissions

34. Mr Bevan’s argument that “where a contract that is intended to comply with a statutory regime for that class of contracts fails to comply with that statutory regime, there is no contract at all in existence for the purposes of common law contractual principles”, ought to be rejected for the reasons set out in Bolton v Atanaskovic Hartnell [2024] NSWSC 833 (Bolton). There, at [66]-[89] Faulkner J said,

“[66]: Before considering the consequences, the nature and content of costs agreements need to be identified. The starting place is a question of construction about the meaning of the term “costs agreement” as it is used in Part 4.3 of the LPUL.

[67]: The word “agreement” is well understood and is, in any event, confirmed by s 184 of the LPUL which provides:

184 Effect of costs agreement

Subject to this Law, a costs agreement may be enforced in the same way as any other contract.

[68]: The word “agreement” is qualified by the word “costs”. The intent of the qualification is not specified other than by that which is implicit in the word “costs” itself. Within Part 4.3 (including the definitions in s 6), the composite term “costs agreement” is not defined. However, “costs agreements” are alluded to. Provision is made for five specific aspects of the content of costs agreements:

(a) apart from the law practice, the parties to costs agreements may be the client, another law practice or an ATPP (s 180(1));

(b) costs agreements may “disclose” legal costs (s 172(4));

(c) costs agreements may provide that payment of legal costs will be contingent (s 181(1)) (with or without disbursements (s 181(6));

(d) they may provide for payment of an “uplift fee” (s 182(1)), which is defined to mean additional legal costs payable “under the costs agreement” on the successful outcome of the matter (s 6(1)); and

(e) they may provide for interest to be charged on unpaid legal costs (s 195(1)).

[69]: These references, various and limited as they are, make it difficult to distil an exhaustive definition of what is a “costs agreement” for the purposes of Part 4.3. In Anderson v Hill [2017] NSWSC 1149 at [35], Hallen J said that “costs agreement” simply means an agreement about the payment of legal costs, although Anderson v Hill was a case which was relevantly concerned with the adequacy of disclosure to the Court of a party’s potential costs liability for the purposes of family provision. It was not concerned with the operation of Part 4.3 of the LPUL. Bevan v Bingham  was a case which was concerned with the operation of Part 4.3 and s 178(1)(a) in particular, in which Walton J referred to Hallen J’s description with apparent approval. It does not follow that every agreement “about costs” is a costs agreement for the purposes of Part 4.3, nor that every provision in such an agreement is part of the costs agreement.

[70]: Further illumination of the meaning of “costs agreement” comes from a consideration of the purposes of Part 4.3, which are apparent from s 169:

Objectives

The objectives of this Part are –

(a) to ensure that clients of law practices are able to make informed choices about their legal options and the costs associated with pursuing those options; and

(b) to provide that law practices must not charge more than fair and reasonable amounts for legal costs; and

(c) to provide a framework for assessment of legal costs.

[71]: Within Part 4.3 there are six substantive Divisions which address legal costs generally, costs disclosure, costs agreements, billing, unpaid legal costs and costs assessment. In Carkeek v Aubrey F Crawley & Co [2024] NSWSC 86 at [24]-[25], Fagan J said:

[24]: In common with grounds (3) and (4), which are pressed by both plaintiffs, the first plaintiff’s ground (2) seeks to raise a contention that he is not contractually liable to the defendant for costs in any amount at all. In Pt 4.3 of the Uniform Law and Pt 7 of the Application Act, all the provisions governing assessment of Uniform Law costs and review of an assessment are concerned only with quantification. The provisions proceed on the assumption that the parties to an assessment or review of Uniform Law costs will be a legal practitioner and either a client who is liable to pay the practitioner for his services, pursuant to a contract of retainer or under principles of quasi contract or unjust enrichment, or a third party payer. Section 172 of the Uniform Law requires that the amount charged by legal practitioner – and hence the amount assessed – must be “no more than fair and reasonable in all the circumstances”. The assessment and review processes are concerned with arriving at a certified monetary amount that may, pursuant to ss 70 and 87(2) the Application Act, be converted to a judgment for that sum.

[25]: From these considerations it is plain that the existence of a legal obligation of a costs respondent to pay the legal practitioner’s costs is a jurisdictional requirement for a valid assessment or review. The first plaintiff’s ground (2) is a jurisdictional point. If it should be established by evidence that the defendant agreed to undertake the legal work that he did for no monetary payment but in consideration for acquiring a 5% share in a business, then there would be no liability of the first plaintiff to pay a fair and reasonable amount and the review panel would have had no jurisdiction to assess such an amount. The first plaintiff argued the existence of such an agreement, both before the assessor and before the review panel. Even if he had not done so, it would be open to him to agitate a question going to jurisdiction on this appeal: Amirbeaggi v EB [2023] NSWCA 108 at [52] (Basten AJA, Kirk JA and Simpson AJA agreeing).

[72]: Part 4.3’s concern with quantification is apparent from the provisions in Part 4.3 read as a whole. At a high level they are directed to an amount which is fair and reasonable (eg, s 172(1)), what must be disclosed by the law practice (eg, s 174) and how the legal costs are to be definitively quantified if the parties cannot agree. The focus on quantification also accords with the s 169 objectives set out above.

[73]: Read in context, and having regard to the purposes of Part 4.3, a costs agreement is an agreement which addresses the quantification of the legal costs which are payable to the law practice. More particularly, a costs agreement is not concerned with the anterior legal obligation of the client to pay the legal costs once quantified: Carkeek v Aubrey F Crawley & Co at [24] and [42] (Fagan J).

[74]: A Part 4.3 costs agreement is not the same thing as the client’s contract of retainer which arises where the law practice is retained: Carkeek v Aubrey F Crawley & Co at [36] and [42]. Part 4.3 makes clear that they are intended to be discrete, with the former the subject of regulation under Part 4.3 and the latter only incidentally referred to. “After instructions are initially given in a matter”, the law practice must inform the client that it has a right to negotiate a costs agreement with the law practice (ss 174(1)(a) and 174(2)(i)). The client has “the right to require and to have a negotiated costs agreement” (s 179), but there is no obligation. For the provision of particular legal services, there must be a retainer but there may or may not be a costs agreement. Section 178(1)(a) recognises that there may be no costs agreement when it provides that the thing which is rendered void is the costs agreement “if any”.

[75]: The distinction between the retainer and the Part 4.3 costs agreement was recognised in Bingham v Bevan. That was a case where a costs agreement between a solicitor and a barrister contained a provision by which the solicitor’s obligation to pay the barrister’s legal costs was made conditional upon success. The costs agreement was “void” under s 178(1)(a), yet the solicitor’s anterior obligation to pay the barrister’s costs continued. Basten AJA, with whom Meagher & White JJA agreed, evidently regarded the anterior payment obligation to have subsisted in contract: at 297, [46], Basten AJA said:

…the effect of inadequate disclosure is not to terminate the retainer, but to allow that the services may yet be provided (or have been provided) on the basis that the practitioner can only recover fair and reasonable costs for those services.

[76]: The distinction between the retainer (“a contract for the provision of legal services”) and the costs agreement was also apparent under the Legal Profession Act 1987 (NSW) and the Legal Profession Act 2004 (NSW), in each case in accordance with the different provisions of those statutes: Branson v Tucker [2012] NSWCA 310 at [68]-[69] (Campbell JA with whom Beazley and Barrett JJA agreed). The current statute, the LPUL, is not intended to operate to conflate the two distinct concepts.

[77]: The survival of the retainer and the law practice’s entitlement to be paid under the retainer avoids the possibility that there will be an unpaid worker, which outcome was described as “draconian” by Mason and Wilson JJ in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 229. Absent agreement on quantum, the worker’s entitlement to be paid will be limited to reasonable fees which, by definition, are reasonable: Branson v Tucker at [83]; Champion Homes Sales Pty Ltd v DCT Projects Pty Ltd [2015] NSWSC 616 at [134]-[135]; K Lewinson and D Hughes, The Interpretation of Contracts in Australia (2012) at 6.16. It is not necessary to construe s 178(1)(a) so that it denies the legal effect of the client’s obligation to pay under the retainer. Section 178(1)(a) is open to another construction, namely that it applies only to the costs agreement and not to the retainer.

[78]: Carkeek v Aubrey F Crawley & Co was a case primarily about a client which (it was alleged) had a retainer with the law practice. In the case of an ATPP, the provisions of Part 4.3 no less proceed on the assumption that the ATPP is liable to pay the law practice’s costs. The term “third party payer” is relevantly defined as a person who “is under a legal obligation to pay all or any part of the legal costs for the legal services provided to the client” (s 171(1)(a)). The third party payer is an ATPP if the legal obligation “is owed to the law practice” (s 171(1)(b)).

[79]: There will be no retainer between the law practice and the ATPP because the ATPP is, by definition, not the client (s 171(1)(a)). The definitional relationship between the ATPP and the law practice is the legal obligation which the ATPP owes the law practice to pay the legal costs for the legal services provided to the client. The legal obligation may arise under a contract (s 171(2)). For example, it may arise under a general guarantee and indemnity granted by the ATPP to the law practice. The ATPP may also have a costs agreement with the law practice (s 180(1)(d)) but it may not (s 178(1)(a) — “if any”). For the purposes of Part 4.3, any such costs agreement is distinct from the contract which records the ATPP’s anterior obligation to pay the legal costs to the law practice.

[80]: As a practical matter, the law practice and the client may record their agreement about the retainer in the same document which addresses the quantification of costs, including some or all of the specific provisions referred to in [68] above. The law practice and the ATPP may do the same. The fact that a single document contains provisions about the quantification of costs does not mean that every provision in the document is part of the costs agreement for the purposes of Part 4.3: Carkeek v Aubrey F Crawley & [Co] at [36]. Contrary to Mr Bolton’s submission, no issue arises about the review panel needing power to “splice out” parts of a single document. The relevant issue is to identify the provisions which constitute the “costs agreement” for the purposes of Part 4.3.

[81]: Having identified the “costs agreement”, the consequences of the Firm’s failure to comply with its costs disclosure obligations in Div 3 of Part 4.3 can be considered. The first consequence arises from s 172 which provides:

172 Legal costs must be fair and reasonable

(1) A law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are –

(a) proportionately and reasonably incurred; and

(b) proportionate and reasonable in amount.

(2) In considering whether legal costs satisfy subsection (1), regard must be had to whether the legal costs reasonably reflect –

(a) the level of skill, experience, specialisation and seniority of the lawyers concerned; and

(b) the level of complexity, novelty or difficulty of the issues involved, and the extent to which the matter involved a matter of public interest; and

(c) the labour and responsibility involved; and

(d) the circumstances in acting on the matter, including (for example) any or all of the following –

(i) the urgency of the matter;

(ii) the time spent on the matter;

(iii) the time when business was transacted in the matter;

(iv) the place where business was transacted in the matter;

(v) the number and importance of any documents involved; and

(e) the quality of the work done; and

(f) the retainer and the instructions (express or implied) given in the matter.

(3) In considering whether legal costs are fair and reasonable, regard must also be had to whether the legal costs conform to any applicable requirements of this Part, the Uniform Rules and any fixed costs legislative provisions.

(4) A costs agreement is prima facie evidence that legal costs disclosed in the agreement are fair and reasonable if –

(a) the provisions of Division 3 relating to costs disclosure have been complied with; and

(b) the costs agreement does not contravene, and was not entered into in contravention of, any provision of Division 4.

[82]: Under s 172(4), a costs agreement is prima facie evidence that legal costs disclosed in the agreement are fair and reasonable, but only if the provisions of Div 3 relating to costs disclosure have been complied with. It follows that the Bolton Agreement is not prima facie evidence that the legal costs disclosed in it are fair and reasonable.

[83]: Further consequences of non-compliance are set out in s 178. Section 178 provides:

178 Non-compliance with disclosure obligations

(1) If a law practice contravenes the disclosure obligations of this Part –

(a) the costs agreement concerned (if any) is void; and

(b) the client or an associated third party is not required to pay the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority; and

(c) the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority or under jurisdictional legislation; and

(d) the contravention is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention.

(2) In a matter involving both a client and an associated third party payer where disclosure has been made to one of them but not the other, this section –

(a) does not affect the liability of the one to whom disclosure was made to pay the legal costs; and

(b) does not prevent proceedings being maintained against the one to whom the disclosure was made for the recovery of those legal costs.

(3) The Uniform Rules may provide that subsections (1) and (2) –

(a) do not apply; or

(b) apply with specified modifications – in specified circumstances or kinds of circumstances.

[84]: The thing which is rendered void by s 178(1)(a) is “the costs agreement concerned (if any)”. Section 178(1)(a) is not intended to affect the retainer. Were it otherwise, significant disruption may occur. Amongst other things, there may be implications for the law practice’s obligation to continue to act, the implied duty of care, the fiduciary duty of loyalty which is coterminous with the retainer, confidentiality, privilege, agency, authority and representation before the Court. If it is intended to interfere with the retainer, the clearest possible words would be required, which words do not appear in s 178(1)(a).

[85]: Where the retainer and the costs agreement are recorded in a single document, the consequence is that some provisions will be rendered void by s 178(1)(a) but not others. In the case of a client, provisions which establish the retainer and the client’s anterior obligation to pay the law practice’s legal costs are not rendered void by s 178(1)(a): Carkeek v Aubrey F Crawley & Co at [42]–[43].

[86]: As for the ATPP, there is nothing in s 178(1)(a) which reveals an intention to affect any anterior contractual obligation of the ATPP to pay the client’s legal costs. If the anterior contractual obligation is recorded in the same document as a costs agreement, some provisions of that document will be rendered void by s 178(1)(a) but not others.

[87]: Ultimately, Mr Bolton’s contention that the entire Bolton Agreement is void depends upon it being treated as a single, indivisible contract because all the provisions are located in a single physical document. There is some artificiality in that position, highlighted by Mr Bolton’s acceptance that the position might be different if his promises to pay the Firm’s legal costs had been contained in a separate or collateral contract.

[88]: There may be cases where it is not clear whether a particular provision is part of the costs agreement which is rendered void by s 178(1)(a). In this respect, the proper construction of the word “void” does not mean that the costs agreement ceases to exist, but only that the legal effect or consequence of the costs agreement is denied for a purpose consistent with Part 4.3 of the LPUL: Bingham v Bevan at 295; [40]–[41]. For the reasons set out above, the purposes of Part 4.3 relate to quantification of legal costs, including the fair and reasonable amount payable, disclosure to the client and how the legal costs are to be quantified if the parties cannot agree. In any given case, those purposes will determine the extent to which the legal effect of the provisions in a particular costs agreement is denied under s 178(1)(a): Bingham v Bevan at 297, [45].

[89]: In any event, it is not part of the purposes of Part 4.3 to render void the anterior obligation of the client (or the ATPP) to pay the firm’s legal costs. In the case of the Bolton Agreement, it may be accepted that some of the provisions constitute a Part 4.3 costs agreement as stated in the annexures (eg see [16] above). It does not follow that every provision in the document is part of the costs agreement. Paragraphs 7 and 8 are not part of the costs agreement. They are not rendered void by s 178(1)(a). The Firm may enforce paragraphs 7 and 8 in accordance with their terms.”

35. Associated third party payer (ATPP) is defined in s 171 of the Legal Professional Uniform Law (NSW). (LPUL).

171 Third party payers

(1) For the purposes of this Law—

(a) a person is a “third party payer” , in relation to a client of a law practice, if the person is not the client and—

(i) is under a legal obligation to pay all or any part of the legal costs for legal services provided to the client; or

(ii) has already paid all or a part of those legal costs under such an obligation; and

(b) a third party payer is an “associated third party payer” if the legal obligation referred to in paragraph (a) is owed to the law practice, whether or not it is also owed to the client or another person; and

(c) a third party payer is a “non-associated third party payer” if the legal obligation referred to in paragraph (a) is owed to the client or another person but not the law practice.

(2) The legal obligation referred to in subsection (1) can arise by or under contract or legislation or otherwise.

(3) A law practice that retains another law practice on behalf of a client is not on that account a third party payer in relation to that client.

(4) The Uniform Rules may provide that particular references in this Law to a client include references to an associated third party payer.

Costs

36. What order should be made as to costs of this appeal? Mr. Bevan submits that there should be no order as to the costs of the appeal, with the effect that each party bears their own costs. Mr. Bingham seeks his costs of the appeal.

37. The starting point is s 98 of the Civil Procedure Act 2005 (NSW). It relevantly reads,

98 Courts powers as to costs

(1) Subject to rules of court and to this or any other Act:

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

38. Rules 42.1 and 42.15A of the Uniform Civil Procedure Rules 2005 (UCPR) are relevant. They read,

42.1 General rule that costs follow the event

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.

42.15A Where offer not accepted and judgment no less favourable to defendant

(cf SCR Part 52A, rule 22; DCR Part 39A, rule 25; LCR Part 31A, rule 20)

(1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer.

(2) Unless the court orders otherwise--

(a) the defendant is entitled to an order against the plaintiff for the defendant’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.

Mr. Bevan’s submissions

39. Mr. Bevan submitted that it was appropriate that there be no order as to costs in circumstances where:

1. Mr. Bingham was late in filing his motion objecting to the competency of the appeal pursuant to UCPR r 50.16A. The objection came more than 14 days after being served with the summons, which was filed and served on 31 May 2024, and after the first directions hearing in the proceedings, during which the first defendant had pressed for the proceedings to be set down for final hearing at the earliest opportunity. It was only after the proceedings had been set down for final hearing that the first defendant filed his motion on 2 July 2024.

2. Mr. Bingham was late in remedying his indemnity principle problem, which was Mr. Bevan’s primary challenge to the costs determinations: see the Costs Assessor’s reasons for decision at [68] (PTB 2/34/542). It was only when Mr. Bingham’s written submissions were served on 21 August 2024 that it became clear that he had paid all of the costs the subject of this appeal. Prior to the service of Mr. Bingham’s written submissions, his evidence only stated that he had paid all of his senior counsel’s fees and was silent as to whether he had paid his junior counsel’s fees and solicitor’s fees: see the affidavit of Graeme Monteith affirmed 2 August 2024 at [8]. There was no explanation for Mr. Bingham’s very late payment of these costs, nor why those costs were not paid during the assessment process which would have cured his indemnity principle problem at the outset.

3. It is not appropriate to make any order as to costs where there has not been any final hearing on the merits of the case, and where the plaintiff acted reasonably in commencing the proceedings and is acting reasonably in seeking to discontinue the proceedings. The Court should not engage in a hypothetical trial between the parties in order to determine any issues as to costs: see Re Minister for Immigration and Ethnic Affairs_; Ex parte Lai Qin (1997) 186 CKR 622.

40. Where a plaintiff discontinues proceedings, the Court retains the discretion to not make any order as to costs, with the effect that each party bears their own costs. One circumstance where it may be appropriate to exercise the costs discretion is where the plaintiff has acted reasonably in commencing the proceedings and there is a subsequent change in circumstances which makes it reasonable for the plaintiff to discontinue the proceedings: see Newcastle Walisend Coal Co Pty Ltd v Industrial Relations Commission (NSW) [2006] NSWCA 129 at [21]-[26] and [38]-[39]; see also Bingham v Bevan [2024] NSWSC 1045 at [62]-[69].

41. The facts of the present Appeal before this Court are very similar to those in Bingham v Bevan [2024] NSWSC 1045, (the Rothman J decision) was to make no order as to costs in circumstances where Mr Bingham had commenced proceedings against Mr. Bevan, and where during the proceedings there were some related legal controversies which were resolved and which had the effect of rendering the proceedings otiose. In these circumstances, Rothman J decided that each party should bear their own costs of the proceedings.

42. Similarly, in the present case Mr. Bevan acted reasonably in commencing his appeal of the Review Panel’s determination. However, since the commencement of the appeal there has been a material change in circumstances: namely, the late payment by the first defendant of the costs the subject of the appeal, which has cured the indemnity principle problem that was the primary challenge to the costs determinations. The indemnity principle issue was the main issue of law raised by the appeal which warranted the grant of leave to appeal, which raised for the first time the issue of whether a costs agreement purportedly made under the Uniform Law but to which the Uniform Law did not apply nevertheless satisfied the indemnity principle in a party-party Costs Assessment. Now that issue been resolved, and acting reasonably as an officer of the court, the plaintiff recognises that the remaining matters in dispute would not warrant the Court granting leave to appeal and would not warrant him further prosecuting his appeal. That being the case, the plaintiff has taken the reasonable course of seeking to have the proceedings discontinued or alternatively dismissed. In those circumstances, the Court should not make any order as to costs, with the effect that each party bears their own costs of the proceedings.

Mr. Bingham’s submissions

43. On 8 May 2024, he registered the certificates of determination of the Costs Assessor and Review Panel as judgments of the Local Court as he was entitled to do pursuant to r 36.10 of the UCPR, crystalising his entitlement to post judgment interest.

44. On 31 May 2024, Mr. Bevan filed his summons commencing the appeal in these proceedings.

45. On 20 June 2024, a solicitor for Mr. Bingham sent a Calderbank offer to Mr. Bevan. Mr. Bingham offered to accept the sum of $100,000 in full and final settlement of his entitlement to the certificates. The letter continued,

“This offer represents a 20% reduction in the amount that [Mr Bingham] is entitled to be paid by [Mr Bevan] following the decisions of the costs assessor and the review panel.

This offer is made in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333…” (Ex 1)

46. Mr. Bevan did not reply to the Calderbank letter.

47. Mr Bingham seeks his costs of the proceedings until 20 June 2024 (the serving of the Calderbank offer) on a normal basis and as of 21 June 2024 on an indemnity basis. In oral submissions, counsel for Mr Bingham stated, “That leaves then the consideration of the Calderbank letter against that background for which we seek indemnity costs from that date.” (T20 [30])

48. On 26 July 2024, Mr. Bingham received funds which he applied in satisfaction of the judgments registered from the certificates of the Costs Assessor and Review Panel.

49. On 12 August 2024, Mr. Bevan filed his written submissions which consisted of 27 pages. He pressed all of the 11 grounds of appeal and further argued that he did not need leave of the Court to continue the prosecution of his summons. As set out earlier and addressed in this judgment Mr. Bevan claimed that $126,443 was in issue in the appeal. This was his principal submission on the grant of leave.

Calderbank offer

50. On 20 June 2024, Mr. Bingham sent a Calderbank offer to Mr. Bevan, the terms of which were set out above.

51. In Cat Media Pty Ltd v Allianz Australia Insurance Ltd [2006] NSWSC 790, Bergin J at [9] confirmed the relevant principles in relation to Calderbank offers by reference to Leichhardt Municipal Council v Green [2004] NSWCA 341. Her Honour stated that the costs consequences attendant under the general law upon an offer of compromise made in a Calderbank letter are in the court’s discretion, to be exercised having regard to all of the relevant circumstances of the case. Firstly, there is not a prima facie presumption in favour of an award for indemnity costs if the Calderbank offer is not accepted and is not bettered; secondly, a Calderbank offer that has no real element of compromise in it, which is designed merely to trigger costs sanctions, will not be treated as a genuine offer of compromise; thirdly, there is no rule that an optimistic offer is not a genuine offer. Whether or not it was reasonable to reject an offer is a question that may figure in the discretionary balance, but it is not a question which affects the genuineness of the offer; and fourthly, an applicant for an order for indemnity costs consequent upon an unaccepted Calderbank offer must show that the rejection of the offer was unreasonable. Thus, the questions for the court are (a) whether the offer was a genuine offer of compromise; and (b) whether it was unreasonable for the recipient of the offer not to accept the offer: see Miwa Pty Ltd v Siantan Properties Pty Ltd (No. 2) [2011] NSWCA 344 at [8].

50. It is my view that the offer was a genuine offer of compromise and it was unreasonable for Mr. Bevan not to accept the offer.

51. The usual order upon dismissal is that the plaintiff pays the defendant’s costs: r 42.20 UCPR.

52. In Fordyce v Fordham & Anor (2006) 67 NSWLR 497, a case concerning an umbrella tree, Santow JA observed at [3]:

“I would wish to add this observation on one aspect of the reasons on UCPR 42.19 and 42.20. I consider the fact of discontinuance is likely to be a factor of some weight in exercising the discretion to determine whether the discontinuing party should be ordered to pay the other party’s costs. While it is true the Court may otherwise order, the onus remains on the discontinuing party to justify such an order by reference to the circumstances said to justify exception to the normal cost outcome in such event. That the Court retains a discretion to accommodate such circumstances does not alter their character as being by way of exception nor the consequence in terms of onus. That said, the discretion remains to otherwise order.”

55. In support of departing from the usual order as to costs, Mr. Bevan argued two matters:

1. Mr. Bingham’s late payment of his own legal fees “cured” the issues raised by grounds 1, 2, 4, 7, 8 and 9 of the appeal; and

2. Mr. Bevan “acted reasonably in commencing the proceedings and is acting reasonably in seeking to discontinue the proceedings”.

Payment of legal fees

56. As was stated by the Court of Appeal in Wentworth v Rogers at [126]

“… [I]t is beyond dispute that the purpose of an adverse costs order is to compensate or partly indemnify one party to litigation (usually the successful party) for the legal costs incurred in the course of the proceedings. The principle does not require that the costs have been paid, but it does require that there be a legal liability to pay costs.”

57. The actual payment by Mr. Bingham of costs for which he had a liability is not a relevant consideration in the Court’s determination of whether the indemnity principle has been breached. At the time of the assessment there was either a legal liability in existence or there was not. Whether or not there has been a payment by Mr. Bingham does not resolve the relevant inquiry. If Mr. Bingham has paid an amount that was not owed, then that is simply a gratuitous payment and Mr. Bevan would not need to reimburse Mr. Bingham for that payment. It must be noted here that it was found by each of the Costs Assessor and the Review Panel that Mr. Bingham had a clear contractual liability to pay his own legal costs. It is therefore untenable for Mr. Bevan to argue that he has sought to discontinue the proceedings only by reason of the intervention of some supervening event, the actual payment Mr. Bingham of his liability.

58. Put simply, Mr. Bevan, since his application for assessment, has always maintained that the indemnity principle had been breached. Both the Costs Assessor and Review Panel found that it had not. Mr. Bevan nonetheless pursued the appeal to this Court, which he now abandons. By reason of Wentworth v Rogers at [126], the argument advanced by Mr. Bevan is contrary to binding authority.

Reasonableness

59. Mr. Bevan always required leave to commence this appeal, as he accepted at [2] of his reply to submissions. Mr. Bevan’s position is that his ground of appeal concerning the indemnity principle was the only ground of appeal which warranted a grant for leave. There was nothing novel about the application of the indemnity principle to a liability incurred but not yet paid. The case of Wentworth v Rogers puts the matter beyond doubt. The proceedings should never have been commenced in this Court, when Mr. Bevan had an appeal, as of right, to the District Court pursuant to s 89(1)(a) of the Application Act.

60. On 24 June 2024, Mr Bingham made an offer of compromise to Mr. Bevan. As I have already set out, I find that the offer was a genuine offer of compromise and it was unreasonable for Mr. Bevan to not accept the offer of compromise. Therefore, from 21 June 2024, Mr. Bevan is liable to pay costs on a indemnity basis.

61. On 28 June 2024, Mr. Bingham invited Mr. Bevan to consent to orders dismissing his appeal on the basis that each party pay their own costs. That offer was rejected. Instead, Mr. Bevan filed an amended notice of appeal and in excess of 700 pages of documents annexed to his affidavit of 19 July 2024 or otherwise contained in the plaintiff’s tender bundle.

62. On 24 July 2024, the Registrar ordered that Mr. Bevan notify Mr. Bingham, by 29 July 2024 as to the pages of Mr. Bevan’s tender bundle to be relied upon in support of the grounds of Appeal. The written notification provided by Mr. Bevan confirmed that he relied on the majority of the bundle.

63. Mr. Bevan has not acted reasonably in commencing or continuing his appeal in the face of an invitation from Mr. Bingham to consent to the appeal being dismissed with no order as to costs or taking up the Calderbank offer. Paragraph [15] of Mr. Bevan’s 3 September 2024 affidavit is the foundation for his excuse as to why the proceedings were brought. That cannot be accepted as the funds that were applied to the judgments were first received on 26 July 2024, two months after the commencement of these proceedings. It is disingenuous to now submit that the proceedings would not have been commenced had Mr. Bevan known the funds had been received. It is also contrary to Mr Bevan’s email of 7 May 2024 (PTB p679).

64. Mr. Bevan has instead caused Mr. Bingham to incur costs in considering and responding to the plethora of material he sought to put before the Court. A corresponding approach was taken by Mr. Bevan in the actual proceedings in which the costs order was made.

65. Although the passage from the actual proceeding is lengthy, it is instructive. It is set out here for ease of reference. Justice Bellew stated at [2]-[8]:

“[2] Before setting out the evidence which was ultimately relied upon by the parties, it is necessary for me to make some preliminary observations.

[3] Prior to the hearing, the plaintiff’s solicitor filed with the Court:

(1) 3 volumes of documentary material labelled “Court Book”, extending to more than 900 pages;

(2) 2 further volumes labelled “Plaintiff’s tender bundle”, extending to a further 520 pages; and3 further volumes labelled Plaintiff’s bundle of authorities - Legislation and extrinsic materials cited in oral argument”, extending to what I estimate was in excess of 1,200 pages.

(3) 3 Further volumes labelled “Plaintiff’s bundle of authorities – Legislation and extrinsic materials cited in oral argument”, extending to what I estimate was in excess of 1,200 pages.

[4] In the course of reading the material prior to the hearing, it became increasingly apparent that there was a considerable degree of duplicity within it. I also formed the preliminary view that much of it seemed surplus to what appeared would be likely to be necessary in order to allow the issues between the parties to be considered and determined.

[5] These preliminary views and impressions were confirmed at the outset of the hearing when senior counsel for the plaintiff, in response to observations made by me about the amount of material which had been filed, commented that “not very much of it matters”. Senior counsel for the first defendant took a similar view, before observing that I would “never have to read the whole of the material”. Subsequently, senior counsel for the plaintiff candidly acknowledged that there was “not only too much material, there (was) a duplication of it,” to the point where I could “ignore the tender bundles”.

[6] These various observations beg the obvious question, although in saying that I emphasise that I level no criticism whatsoever towards senior counsel for the plaintiff, or senior counsel for the first defendant. Their respective assessments of the material, and the relevance of much of it, were completely in accordance with my own. I accept that neither had any input into this aspect of the preparation of their respective cases. Nevertheless, a number of matters need to be emphasised.

[7] To begin with, when preparing any proceedings for hearing there is a fundamental obligation upon all legal practitioners to give careful consideration to, and to identify, the evidence which is necessary to put before the Court to allow the issue(s) to be determined. That obligation was not discharged by the plaintiff’s solicitor in the present case. In SDW v Church of Jesus Christ of Latter-Day Saints Simpson J (as her Honour then was) made a number of observations which are particularly apt:

‘[35] To my observation, it has become too common a practice for legal practitioners to produce to the court copies of every document that has come into existence associated with the facts the subject matter of the litigation. It denotes, at best, the exercise of no clinical legal judgment and the abdication of the responsibility that lies upon legal practitioners to apply thought and judgment in the selection of the material to be presented to the court. A common example is the photocopying and presentation of hospital files, from which every page is reproduced, and copied multiple times — documents such as histology reports, x-ray reports, nursing notes, and quite irrelevant charts and print outs of complex investigations. This case is no different The costs to the parties are astronomical. The practice casts immense burdens on the legal representatives of the opposing party, who are obliged to read all of the material, further increasing the costs.’

[36] The practice must cease. If legal representatives will not voluntarily accept the responsibility of making appropriate selections of the material to be put before the court, then judicial officers must act to ensure that they do. One appropriate sanction, in cases of excess, is an order that, no matter what the outcome of the proceedings, no costs be recoverable from the losing party in respect of the excess, and, further, no costs be recoverable by the solicitor from the client for the excessive copying. I propose to make such an order.’

[8] The plaintiff’s solicitor engaged in the common practice to which her Honour referred. He failed to exercise the requisite clinical legal judgment, and he abdicated his responsibility to determine what evidence was actually necessary to allow the issue(s) to be determined. It is self-evident that the costs incurred in preparing such material, and the costs incurred as a result of counsel for each party having to read it, would have been significant. It is sadly ironic that all of this occurred in a case concerning costs of $349,360.00 which are said to be owing to a legal practitioner, in circumstances where it was originally estimated that such costs would be $60,000.00.”

66. When considering a departure from the ordinary rule, the Court should have regard to the purpose, rationale and principles of fairness which inform that rule. In particular, the award of costs should reflect the relative responsibilities of the parties for the incurring of costs. In Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121], Hodgson JA (with whom Mason P agreed) observed that:

“underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs.”

67. The onus lies on the unsuccessful party to demonstrate a basis for departing from the usual rule: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [101].

68. By reason of the matters set out above, there is no basis to depart from the ordinary rule that Mr. Bevan pay Mr. Bingham’s costs of these proceedings.

Resolution

69. It is my view that Mr Bevan incorrectly commenced these proceedings in this court rather than the District Court. These proceedings were bound to fail in this Court. If the Appeal was transferred to the District Court, I consider that they would have similarly failed there.

70. Even though Mr Bevan did not provide any reasons as to why leave should be granted, applying the test for leave to appeal (set out earlier in this judgment) leave would not be granted as the grounds of appeal had little merit.

71. Further, both the Costs Assessor and the Review Panel gave reasons as to why Mr Bevan’s submissions on the indemnity principle failed. Those reasons are uncontroversial. It is clear the appeal would have failed even if Mr Bevan had not been paid in full due to the terms of the retainer.

72. Further, Mr Bevan unreasonably rejected a Calderbank offer dated 20 June 2024 as it represented a 20% deduction of the monies, he was liable to pay.

73. Since the Rothman J decision and in his Appeal before me, Mr Bevan relied mostly on irrelevant documents and submissions. Further, On 24 July 2024, the Registrar directed Mr Bevan to notify Mr Bingham as to the pages of Mr Bevan’s tender bundle to be relied upon in support of the grounds of appeal. Mr Bevan’s reliance on voluminous and irrelevant materials had previously been the subject of criticism by Bellew J.

74. Despite the previous criticism by Bellew J of Mr Bevan’s approach to his Appeal dealing with costs and the subsequent direction of the Registrar in this current Costs Appeal, Mr Bevan did not take heed of either. As a result, Mr Bingham had to incur additional costs in preparing to meet the grounds of appeal and considering and addressing the voluminous material. I find that Mr Bevan’s conduct has been unreasonable. The application for leave to Appeal and the Appeal itself were always doomed to fail. The law as to indemnity costs was well settled. Mr bevan was unsuccessful both before the Costs Assessor and the review Panel. In the exercise of my discretion and in these circumstances I make an order that Mr. Bevan pay Mr. Bingham’s costs.

75. At the hearing before me that took place on 6 September 2024, I ordered that the appeal be dismissed. I now order that the plaintiff pay the defendant’s costs on an ordinary basis up until 20 June 2024 and from 21 June 2024 on an indemnity basis, including the costs of the defendant’s Notice of Motion filed on 2 June 2024. Even if the Appeal was discontinued, I would have exercised my discretion to make an otherwise order. Rather than having yet another round of costs assessment and possible review by the Review Panel, the parties would be best served by attempting to settle the quantum of costs. I understand that Mr. Bevan took no issue on appeal,

“he takes no issue on appeal with assessed costs payable to [Bicknell & Monteith] for its own profit costs just as he took no issue with it on review”.

The Court Orders that

1. The plaintiff to pay the defendant’s costs until the 20 June 2024 on an ordinary basis and as from the 21 June 2024 on an indemnity basis. The costs are to include the costs of the defendant’s Notice of Motion dated 2 July 2024.

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Decision last updated: 25 October 2024