Byrne v Turner Freeman Lawyers (No 2)

[2025] NSWCA 158

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Byrne v Turner Freeman Lawyers (No 2) [2025] NSWCA 158

Hearing dates:

On the papers

Decision date:

18 July 2025

Before:

Mitchelmore JA

Decision:

(1)    Vary order (2) of the orders made on 4 July 2025 to add, after the words “second respondent”, the words “of the proceedings on an indemnity basis”.

(2)   Each party is to bear its own costs of the applications to vary order (2) made on 4 July 2025.

Catchwords:

COSTS — basis of quantification — indemnity basis — letter of offer — where appeal had no reasonable prospects of success — whether to make personal costs order — whether to order gross sum costs

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 98.

Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 20.29, 36.16, 42.15A, 51.41, 51.47, 51.48.

Cases Cited:

Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39

Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353

Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358

Langdon v Carnival plc (2024) 115 NSWLR 78; [2024] NSWCA 168

Leichhardt Municipal Council v Green [2004] NSWCA 341

Litigation Fund WCX Pty Ltd v Mitchell (No 4) [2025] NSWCA 106

Macatangayv State of New South Wales (No 2) [2009] NSWCA 272

Mega-Top Cargo Pty Ltd v Moneytech Services Pty Ltd [2016] NSWCA 3

Schepis v Commonwealth of Australia [2013] NSWCA 354

Taheri v Vitek (No 2) [2014] NSWCA 344

Category:

Procedural rulings

Parties:

Robert John Byrne (Appellant/Respondent on the motions)
Turner Freeman Lawyers (First respondent/Applicant on motion)
Adam Casselden SC (Second respondent/Applicant on motion)

Representation:

Counsel:
P Doyle Gray (Appellant)
S Scott (First respondent)
S Thomson (Second respondent)

Solicitors:
Wilson Fox Lawyers (Appellant)
Moray & Agnew Lawyers (First respondent)
Kennedys (Australasia) Partnership (Second respondent)

File Number(s):

2025/00097151

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

District Court

Jurisdiction:

Civil

Citation:

[2025] NSWDC 5

[2025] NSWDC 88

Date of Decision:

13 February 2025

Before:

Cole DCJ

File Number(s):

2024/202126

JUDGMENT

1. On 4 July 2025, I dismissed with costs a notice of appeal on the basis that it was incompetent, on the separate applications of each of the respondents: Byrne v Turner Freeman Lawyers [2025] NSWCA 146 (principal judgment). These reasons assume familiarity with the principal judgment.

2. In the penultimate paragraph of the principal judgment, I noted that both respondents sought their costs on an indemnity basis and had served offers of compromise under r 20.26 (read with r 51.47) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) on the appellant on 27 May 2025. In circumstances where no submissions were advanced specifically in relation to the offers of compromise, I awarded costs to the respondents on the ordinary basis and directed that, if any party wished to press for a different order for costs, written submissions of no more than 3 pages should be provided to chambers by 9 July 2025, with any reply of the same length to be provided by 14 July 2025. I took that course with a view to giving the respondents an opportunity to press for an order for indemnity costs relying on their respective offers of compromise together with submissions to which the appellant would have an opportunity to respond.

3. On 9 July 2025, the first respondent provided written submissions in support of an order “that the appellant pay Turner Freeman’s costs of the proceedings, including the motion filed on 27 May 2025, on an indemnity basis”. On the same date, the second respondent provided submissions seeking an order that his costs of the proceeding be paid on an indemnity basis and as a specified gross sum pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), and further submitting that the Court should consider whether the appellant’s solicitor should be asked why those costs should not be ordered against him personally. The second respondent also sought leave to rely on a further affidavit of the second respondent’s solicitor on the record, Ms Bartlett, affirmed on 9 July 2025, in support of that relief.

4. On 11 July 2025, I received submissions from the appellant, contending that the appropriate costs order was the one I had made but adding an exclusion with respect to the costs incurred after the delivery of the principal judgment. The appellant resisted the second respondent’s application for a gross sum costs order and resisted any consideration of a personal costs order against his solicitor. The appellant did not directly address the offers of compromise made pursuant to the UCPR.

5. Ordinarily, an application under r 36.16 of the UCPR is required to vary the Court’s orders. Consistently with order (3) of the orders I made on 4 July 2025, I treated the respondents’ respective submissions as applications to vary order (2) of those orders.

6. In support of its application for indemnity costs of the whole proceedings, the first respondent relied on the following matters:

1. The appellant was informed by both respondents that the appeal was hopeless yet maintained the proceedings “in wilful disregard of the known facts”. The first respondent emphasised the responsive correspondence from the appellant’s solicitor after the first respondent’s solicitor drew the issues with the appeal to his attention, which asserted that the respondents’ position reflected incompetence and suggested that a motion to dismiss the appeal could be in breach of r 3.1 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (which provides that a solicitor’s paramount duty is to the court and the administration of justice). Additionally, the first respondent emphasised that the appellant could have sought leave to appeal and chose not to do so.

2. The appellant declined to accept an offer of compromise served pursuant to the UCPR on the same day as it filed the notice of motion I dealt with in the principal judgment, by which the first respondent offered to compromise the whole of the claim on the basis that the appeal be dismissed, that each party bear its own costs, and that there be no order as to costs. The first respondent submitted that the offer of compromise should inform the Court’s discretionary power as to costs, and did not preclude the Court from considering whether it should exercise its discretion as to costs so as to make some other order than costs follow the event.

7. Specifically in relation to the offer of compromise, the first respondent accepted that the offer made was in the nature of a “walk away” offer, but submitted that it was not a mere demand for capitulation but rather was “a reasoned suggestion of capitulation which alerted the [appellant] to what [the first respondent] saw as the deficiencies in the [appellant’s] case”, relying on Leichhardt Municipal Council v Green [2004] NSWCA 341 at [30].

8. In support of its application for indemnity costs, the second respondent submitted that the case involved “three ‘special or unusual features’ involving a ‘relevant delinquency’” on the part of the appellant:

1. The appellant refused the second respondent’s offer of compromise, which was also served on the day of filing the notice of motion to dismiss the appeal and was in identical terms to that served by the first respondent. The second respondent submitted that the offer of compromise was genuine in circumstances where it included forgoing costs, and it was not an “invitation to surrender” since it did not prevent the appellant from seeking an extension of time to seek leave to appeal.

2. The appellant persisted in an incompetent appeal in wilful disregard of clearly established law. The second respondent also emphasised the tone of the responsive correspondence from the appellant’s solicitor as well as the appellant’s acknowledgement in submissions that the argument it was advancing in support of the competency of the appeal was inconsistent with earlier authority that was binding on me.

3. Before the Registrar listed the notices of motion for hearing, the second respondent proposed that the appellant agree to orders dismissing the appeal, while extending time for him to file a summons seeking leave to appeal and deferring costs until the summons was heard, to which the appellant did not agree.

9. The second respondent submitted that the second and third of these matters concerned the conduct of the appellant’s solicitor in respect of which the Court should consider making a costs order against him personally. The second respondent submitted that whether leave to appeal was required was a technical legal question with a clear answer. The Court could infer, the second respondent submitted, that the appellant relied on his solicitor’s advice when filing the appeal without first seeking leave and when maintaining that appeal. The second respondent sought leave to rely on evidence, in the form of screenshots from the firm’s website, as indicating that the firm shared the risk of the litigation’s failure.

10. The letter in which the appellant’s solicitor responded to the points raised by the respondents warrants comment. The assertion of incompetence and breach of the paramount duty to the court and the administration of justice on the part of the respondents’ solicitors was both unnecessary and unfounded. The issues the respondents raised were entirely legitimate, particularly having regard to r 51.42(2) of the UCPR, and were ultimately upheld. The points of substance in the letter could readily have been made without those assertions, which were of a nature that any solicitor would take very seriously and which did not follow from the points made. However, the correspondence of itself does not provide a basis on which I consider that indemnity costs are warranted.

11. The Court recently observed in Litigation Fund WCX Pty Ltd v Mitchell (No 4) [2025] NSWCA 106 at [5], referring to Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [106]-[113], that “one circumstance where it may be appropriate to order an unsuccessful party to pay costs on an indemnity basis is where the claim or application had no reasonable prospects of success”. In the principal judgment, I concluded at [16] that the primary judge did not determine the merits of the issues raised in the pleadings in the District Court, finally or otherwise. As the respondents observed in their correspondence with the appellant before they filed the notices of motion, on the basis of decisions including Macatangayv State of New South Wales (No 2) [2009] NSWCA 272 (“Macatangay”), the appeal was incompetent. The appellant resisted the applications on the basis of arguments that were acknowledged to be inconsistent with Macatangay. Should the appellant wish to take the arguments further, the approach he took preserved the point; but on the law as it is I am of the view that the appeal had no reasonable prospects of success and the respondents are entitled to their costs of the proceedings on an indemnity basis. For the avoidance of doubt, I will specify in the order that it relates to the costs of the proceedings and not merely the costs of the application.

12. Further, the respondents served offers of compromise under the UCPR. Rule 42.15A (which applies to offers of compromise made in proceedings in the Court of Appeal: see r 51.48) establishes a presumption that, where the plaintiff rejects an offer of compromise but receives no better a result, the defendant is entitled to indemnity costs from the date of the offer. The applicable principles were summarised by Ward P in Langdon v Carnival plc (2024) 115 NSWLR 78; [2024] NSWCA 168:

“[187] At the outset, it should be noted that a rule such as r 42.15A has been treated as conferring a conditional entitlement to indemnity costs subject to the discretion to order otherwise: see Hillier v Sheather (1995) 36 NSWLR 414. Exercise of the discretion to order otherwise does not necessarily require that there be ‘exceptional circumstances’: see Barakat v Bazdarova [2012] NSWCA 140 at [42]-[49] (Tobias AJA; Bathurst CJ and Whealy J agreeing). More recently, it has been said that ‘the prima facie position should only be departed from for proper reasons which, in general, only arise in an exceptional case’, rather than the court's discretion being impermissibly fettered by a requirement of exceptional circumstances: see Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 at [36]-[37] (Gleeson JA and Tobias AJA), citing Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) (2004) 212 ALR 281; [2004] FCA 1437 at [17] (Hely J).

[188] What is required is that the court be satisfied that in the particular circumstances of the case a departure from the rule is justified. Courts have declined to define exhaustively the factors that may justify displacing this entitlement: see New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 at 102 (Gleeson CJ). However, what has been accepted is that the reasonableness of the rejection or non-acceptance of the offer is a relevant (though not determinative) consideration: see Uniting Church in Australia Property Trust (NSW) t/as Northaven Retirement Village v Takacs (No 2) [2008] NSWCA 172 at [15] (Hodgson JA, McColl JA agreeing). When considering the reasonableness or otherwise of a party's rejection of the offer, there are again a number of factors that may be taken into account: see Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25] (Warren CJ, Maxwell P and Harper AJA) (approved by Basten JA in Miwa Pty Ltd v Siantian Properties Pte Ltd (No 2) [2011] NSWCA 344 at [12]). Those may include the offeree’s prospects of success assessed at the date of the offer (which in turn may depend on the state of awareness by the offeree of adverse material evidence).”

13. A “walk away” offer by a defendant or respondent on an appeal is capable of being a genuine compromise for the purpose of the UCPR: Schepis v Commonwealth of Australia [2013] NSWCA 354 at [33] (Leeming JA, Beazley P agreeing); Taheri v Vitek (No 2) [2014] NSWCA 344 at [8] (Bathurst CJ, Emmett and Leeming JJA) (“Taheri”). The offer will only be a genuine compromise if, in the circumstances, the offeror is giving something away: Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368 (Giles J).

14. The offers were made on 27 May 2025, only 14 days after the notice of appeal was filed on 13 May 2025. If an offer is made so early in the appeal that only minimal costs have been expended by the offeror, this will not generally amount to a real compromise: Taheri at [10], quoted with approval in Mega-top Cargo Pty Ltd v Moneytech Services Pty Ltd [2016] NSWCA 3 at [5] (Gleeson and Leeming JJA, Emmett AJA). However, by that stage the respondents had prepared their applications to dismiss the appeals as incompetent and, as the appeal was incompetent on the state of the law, they were offering to forgo a near-certain costs order in their favour. Notwithstanding the early stage at which the offer was made, having regard to the circumstances I do not consider that the case warrants departure from the ordinary position that would flow from non-acceptance of that offer. Accordingly, the offers of compromise also provide a basis on which the appellant should pay the respondents’ costs on an indemnity basis from the date of the offer, which was 27 May 2025.

15. In relation to the second respondent’s application for a gross sum costs order under s 98(4)(c) of the Civil Procedure Act, the discretion should only be exercised where the Court “considers that it can do so fairly and where an appropriate sum can be determined from the available materials”: Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39 at [17]. The amount that the second respondent sought was $21,250, which was said to be 80% of all fees and disbursements incurred by the second respondent up to 8 July 2025 (being $26,562.50 (excluding GST)). That is not significant in the scheme of litigation generally but to my mind it appears significant for the work on the present appeal, which involved an application to dismiss for incompetence with appropriately limited evidence and brief written submissions (the appellant’s material was lengthier but the evidence comprised material from the court below, with which the respondents were well familiar, and the bulk of his submissions comprised extracts of legislative provisions and extrinsic materials), and an efficiently conducted hearing. In circumstances where both respondents were represented and made the same applications, I am not inclined to exercise the discretion to make an order as to the second respondent’s costs on a gross sum basis on the available materials.

16. As to the second respondent’s submission that I should consider asking the appellant’s solicitor to show cause why costs should not be ordered against him, I have commented on the correspondence above but I do not consider that course to be warranted in the circumstances.

17. I consider that each party should bear its own costs of the application to vary the order. Accordingly, I make the following orders:

1. Vary order (2) of the orders made on 4 July 2025 to add, after the words “second respondent”, the words “of the proceedings on an indemnity basis”.

2. Each party is to bear its own costs of the applications to vary order (2) made on 4 July 2025.

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Amendments

18 July 2025 - Amended date in cover page

Decision last updated: 18 July 2025