Byrne v Turner Freeman Lawyers and Casselden No 2 (costs)

[2025] NSWDC 88

District Court

New South Wales

Medium Neutral Citation:

Byrne v Turner Freeman Lawyers and Casselden No 2 (costs) [2025] NSWDC 88

Hearing dates:

31 October 2024, 13 February 2025

Date of orders:

28 March 2025

Decision date:

28 March 2025

Jurisdiction:

Civil

Before:

Cole DCJ

Decision:

(1) The plaintiff is to pay the first defendant’s costs of the proceedings on the indemnity basis, including the costs of the motion filed on 2 September 2024.

(2) The plaintiff is to pay the second defendant’s costs of the proceedings on the indemnity basis, including the costs of the motion filed on 10 September 2024.

Catchwords:

COSTS — Indemnity basis – applications by both defendants - basis

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Legal Profession Uniform Law (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

ACCC v Colgate-Palmolive Pty Ltd (No 5) (2021) 151 ACSR 26

Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359

Byrne v Turner Freeman Lawyers and Casselden [2025] NSWDC 5

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd [1988] FCA 364

Huntsman Chemical Co Australia Ltd v International Pools Australia Pty Ltd (1995) 36 NSWLR 242

Pisante and ors v Logothetis and ors [2022] EWHC 2575

Trad v Harbour Radio Pty Ltd [2017] NSWCA 64

Category:

Costs

Parties:

Robert Byrne (Plaintiff)
Turner Freeman Lawyers (First Defendant)
Adam Casselden SC (Second Defendant)

Representation:

Counsel:
P Doyle Gray (Plaintiff)
S Scott (First Defendant)
S Thomson (Second Defendant)

Solicitors:
Wilson Fox Lawyers (Plaintiff)
Moray & Agnew (First Defendant)
Kennedys Law (Second Defendant)

File Number(s):

2024/202126

Publication restriction:

Nil

JUDGMENT

1. A decision in this matter was delivered on 13 February 2025 (see Byrne v Turner Freeman Lawyers and Casselden [2025] NSWDC 5 (‘the first decision’).

2. The following orders were made:

1. Pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 14.28, the Statement of Claim filed on 31 May 2024 (Statement of Claim) is struck out.

2. Pursuant to UCPR r 13.4(1)(b) these proceedings are dismissed.

3. The parties have now provided written submissions with respect to the question of costs.

First Defendant’s claim for indemnity costs

4. The first defendant seeks costs on the indemnity basis for the whole of the proceedings, including the motion filed by it on 2 September 2024, which sought the orders set out above (see [2]).

5. The first defendant submits that the discretion to award costs must be exercised judicially having regard to the objects of the Civil Procedure Act 2005 (‘the Act’).

6. The Uniform Civil Procedure Rules 2005 (UCPR) say, in rule 42.1:

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.

7. The court’s order must suit the justice of the particular case.

8. Indemnity costs will be awarded where there has been some relevant unreasonable action in the conduct of the matter. The existence and content of prior notice of an intention to make the claim for indemnity costs will be relevant, particularly where a party has maintained proceedings which they should have known had no real prospect of success (see Huntsman Chemical Co Australia Ltd v International Pools Australia Pty Ltd (1995) 36 NSWLR 242 (‘Huntsman’)).

9. Indemnity costs orders may be made where there has been an abuse of process (see Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 at 362), where the proceedings were doomed to fail or had no prospects of success (see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd [1988] FCA 364 (‘Fountain’), Trad v Harbour Radio Pty Ltd [2017] NSWCA 64 at [35]) and where the litigant’s conduct of the proceedings is unreasonable (see Pisante and ors v Logothetis and ors [2022] EWHC 2575 at [66]). The circumstances for the making of an indemnity costs order are not closed.

10. The first defendant submitted that an indemnity costs order in its favour ought to be given on the following bases:

1. The statement of claim was misleading to the point of being an abuse of process. The statement of claim relied upon a Heads of Agreement of 31 May 2018 which had been entirely superseded by a Deed of Settlement of 10 September 2018 and the Deed of Settlement was not mentioned in the statement of claim. Other critical information was omitted from the statement of claim. The claim in the statement of claim was linked to proceedings in the District Court of New South Wales in 2014 (‘the 2014 proceedings’). The information omitted from the statement of claim included the dates of hearing of the 2014 proceedings in the District Court, the dates upon which trial dates were vacated, the circumstances of the vacation of trial dates and the date upon which the matter was finalised in the District Court. All were relevant to the plaintiff’s claim. The plaintiff’s claim was only partly set out in the statement of claim and was inadequately and misleadingly described (see the first decision at [75] and [90]). This amounts to a “wilful disregard of known facts” (see Fountain) sufficient, by itself, to justify an indemnity costs order against the plaintiff.

2. It was determined in the first decision that the component of the plaintiff’s claim which was based upon allegations of negligent advice in relation to the Heads of Agreement of 31 May 2018 did not disclose a triable issue (see [76] - [77] of the first decision). The component of the plaintiff’s claim which was based upon s 177 of the Legal Profession Uniform Law (NSW) also disclosed no cause of action (see [76] - [80] of the first decision).

3. The finding in the first decision that the case was a clear case for summary dismissal (see [87] – [88] of the first decision) implies that the Court has accepted that the claim set out in the statement of claim had no reasonable prospects of success and was doomed to fail.

4. The first defendant notified the plaintiff that it intended to seek indemnity costs if it were placed in a position where it was necessary to apply to have the statement of claim struck out. The first defendant also, however, gave the plaintiff several opportunities to particularise its claim and went to some effort to obtain information and set out clearly to the plaintiff why his statement of claim could not succeed. The first defendant pointed out critical deficiencies in the statement of claim and asked for particulars of paragraph 12. The plaintiff did not provide those particulars. An invitation to explain why the plaintiff was unable to particularise his claim was not taken up. Instead, the plaintiff’s response was polemical and inappropriate and included unfair and unfounded allegations that the first defendant’s attempts to have the claim particularised were an attempt to delay the proceedings, badgering and insulting.

5. The plaintiff’s conduct was unreasonable.

Second Defendant’s claim for indemnity costs

11. The second defendant also sought an order for costs on an indemnity basis in relation to the whole proceedings, including the second defendant’s Notice of Motion of 10 September 2024 which sought the orders made in the first decision.

12. The second defendant sought costs on an indemnity basis on the grounds that it was unreasonable of the plaintiff to subject the second defendant to the costs of the proceedings.

13. The second defendant relied on the principles in ACCC v Colgate-Palmolive Pty Ltd (No 5) (2021) 151 ACSR 26 at [8] to [12]:

[8]  The discretion to depart from an order for party and party costs will not be exercised unless there is some special or unusual feature or the justice of the case so requires: Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Ltd) (No 2) [2007] FCA 179 at [3] (Cirillo); Seven Network Ltd v News Ltd (2009) 182 FCR 160; 262 ALR 160; [2009] FCAFC 166 at [1102] (Seven Network); Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 at [5] (Melbourne City Investments).

[9]  The purpose of a costs order is to compensate the successful party, not to punish the unsuccessful one: R v Yurisich (No 2) [2007] FCAFC 51 at [19], citing Latoudis v Casey (1990) 170 CLR 534; 97 ALR 45; Seven Network at [1099]. An award of indemnity costs is to “serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs”: Hamod v New South Wales (2002) 188 ALR 659; [2002] FCAFC 97 at [20] (Hamod); see also Kazal v Independent Commission Against Corruption (No 2) [2020] NSWSC 17 at [60]–[62]; Cirillo at [4]–[5]; Melbourne City Investments at [5].

[10]  The circumstances in which it may be found to be unreasonable for the successful party to be subjected to the expenditure of any costs are not fixed or closed, but have been found to include, relevantly: where “the applicant, properly advised, should have known that he had no chance of success” (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401; De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77 at [7]); where the moving party “persists in what should on proper consideration be seen to be a hopeless case” (J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 at 303); where the applicant’s case was “always clearly foredoomed to fail” and “they ought to have known this to be so” (Smolle v Page 29 Australian and New Zealand Banking Group Ltd (No 2) [2007] FCA 1967 at [25]); where an application is “wholly untenable and misconceived” (Henke v Carter [2002] FCA 492 at [22]); and where an applicant persists in prosecuting a proceeding without regard to the evidentiary difficulties in the case (Yates Property Corporation Pty Ltd v Boland (No 2) (1997) 147 ALR 685 at 693): see generally Melbourne City Investments at [5]; Seven Network at [1102]; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233; 118 ALR 248 at 256–7; 28 IPR 561 at 569–70.

[11]  Two things should perhaps be noted about these descriptions of the types of cases in which an indemnity costs order may be warranted. First, they use expressions which suggest a high degree of certainty concerning the deficiencies in the losing party’s case. It would appear not to be enough that the losing party’s case was simply weak or tenuous. Second, and relatedly, the deficiencies must be sufficiently manifest and clear such that it can be inferred that the losing party would or should have appreciated them when the action was commenced or continued, at least if they had given proper consideration to, or been properly advised about, the merits of their case.

[12]  In assessing whether a case can be said to “have no chance of success”, or to be “hopeless” or “foredoomed to fail”, and that the losing party should have known that to be the case, it is also necessary to be wary of reasoning with the benefit of hindsight. As Goldberg J said in Re Kingsheath Club of the Clubs Ltd (in liq) [2003] FCA 1589 at [5] (Kingsheath Club), it is “easy with hindsight to make an observation that an action has no chance of success, after the matter has been fully argued and has enjoyed considered attention of experienced solicitors and senior and junior counsel”.

14. The second defendant submitted that there are five reasons to grant costs on an indemnity basis:

1. The Court decided, in the first decision, that the plaintiff’s claims set out in the statement of claim were untenable (see [87] – [90] of the first decision). It was plain, on the basis of the deficiencies in the statement of claim, that there was a high degree of certainty that the plaintiff would not succeed. There was no need to resort to the benefit of hindsight.

2. The plaintiff’s claim was filed on the final day of the applicable 6 year limitation period. It should be inferred that the timing was not a coincidence. Rather, the plaintiff filed a hopeless claim without regard to its flaws. This inference is supported by the following:

1. The plaintiff’s ‘Advice Claim’ was premised upon the Owners’ Corporation breaching its obligations. However, the Plaintiff could not particularise the source and content of those obligations and nor could he particularise the conduct which allegedly constituted the breach. He said that he could not particularise his claim unless and until the Supreme Court of NSW transferred the District Court of NSW’s file back to the District Court and access to that file was then granted to the plaintiff.

2. Although ‘negligent advice’ was pleaded in the statement of claim against both defendants, the content of the advice alleged to be negligent was not and apparently could not be pleaded nor particularised, and the advice that should have been given but was not given could not be pleaded or particularised either.

3. It became evident in the interactions between the parties in this matter that, although the plaintiff pleaded the Settlement Authority, and based part of his claim upon it, he could not produce a copy of that document.

4. The statement of claim did not plead any facts in relation to the Deed of Settlement, despite the fact that it superseded the Settlement Authority. It did not plead the circumstances of the vacation of the trial of the 2014 proceedings nor the date that the matter was finalised in the District Court.

3. The second defendant requested particulars of the statement of claim prior to filing his defence. The plaintiff persisted with the claim and failed to provide particulars. On 14 August 2024, the plaintiff’s lawyers wrote:

The constant insults by the First Defendants legal representatives will not be taken lightly, and should the Defendants fail to file their defences’ we have instructions to take adverse action against them. [sic] (AB 77).

The plaintiff’s conduct in commencing and maintaining his claim whilst refusing to give particulars, in circumstances where he knew he could not provide particulars, was unreasonable and merits an order for indemnity costs.

4. The plaintiff should always have known that the allegations in the statement of claim were unsustainable and should not have been made. In order to succeed, the plaintiff would have had to show that the defendants’ advice caused him to enter into the Heads of Agreement and settle the 2014 proceedings. However, it was found in the first decision that the plaintiff, through his solicitors, admitted in a letter of 13 September 2024 that the Deed of Settlement of 10 September 2018 settled the proceedings, and not the Heads of Agreement of 31 May 2018. The plaintiff’s former solicitors wrote to the first defendant on 13 May 2021 saying that settlement between the parties to the 2014 proceedings had not been reached. The plaintiff knew, therefore, well prior to filing his statement of claim in these proceedings, that the Heads of Agreement did not settle the 2014 proceedings and could not found a cause of action against the second defendant. It was unreasonable of him to file a claim in these circumstances.

5. These proceedings amount to an abuse of process because the statement of claim pleaded that the Heads of Agreement and the Settlement Authority “settled the 2014 Proceedings”, despite the plaintiff’s admissions that he knew that this was not the case. The Court found, in the first decision, that the pleading set out the events relied upon in a way which was “so incomplete as to be misleading”.

15. The second defendant has incurred costs in defending the proceedings and bringing his Notice of Motion on account of the plaintiff’s unreasonable conduct and an order for costs on the indemnity basis ought to be made in his favour.

Plaintiff’s submissions on costs

16. The plaintiff, in his written submissions, expressed concern that the first defendant may have been suggesting that the giving of notice by a party that it intends to seek indemnity costs is a reason, in the event that it becomes entitled to costs, to award indemnity costs. The plaintiff has misunderstood what the first defendant was submitting. The first defendant was referring to the decision of Kirby P (as he then was) in Huntsman, where His Honour said:

The merit of the present motion is that it calls attention to the distinct possibility that, in some circumstances, a special costs order will be made, including for indemnity costs. If such an order is to be made, it would be preferable that it should follow due and timely warning by the successful party to the unsuccessful that indemnity costs will be sought: cf Insurers' Guarantee Fund NEM General Insurance Association Ltd (In Liq) v Baker (Court of Appeal, 10 February 1995, unreported). In short, if the legal representatives of parties to an appeal (particularly perhaps in commercial litigation such as the present) consider that the appeal, or points in it, are obviously hopeless and doomed to fail, they would be well advised to warn their opponents that continued prosecution of the appeal, or of the hopeless points, will result in an application to the Court for a special costs order. This is the practice which is uniformly followed by this Court in respect of applications for dismissal of an appeal for want of prosecution. It alerts the opposing party. It activates the provision of advice by that party's legal representatives. Properly proved to the Court, it affords the occasion for making the special order in full knowledge that the risk has been appreciated and the party has pressed on regardless. No such warning was given in the present case.

17. The first defendant was simply pointing out that, in this matter, fair advance warning had been given to the plaintiff of the application for costs on the indemnity basis.

18. The plaintiff’s submissions put forward no other substantive submission against the applications for costs on the indemnity basis.

Conclusion

19. For all of the reasons advanced by the first and second defendants, and set out above, the first and second defendants ought to be awarded costs on the indemnity basis.

20. The following orders will issue:

1. The plaintiff is to pay the first defendant’s costs of the proceedings on the indemnity basis, including the costs of the motion filed on 2 September 2024.

2. The plaintiff is to pay the second defendant’s costs of the proceedings on the indemnity basis, including the costs of the motion filed on 10 September 2024.

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Decision last updated: 28 March 2025