John Clement Preston v Leon Nikolaidis t/as MD Nikolaidis and Co

[2011] NSWSC 1074

Supreme Court

New South Wales

Medium Neutral Citation:	John Clement Preston & Anor v Leon Nikolaidis t/as MD Nikolaidis & Co [2011] NSWSC 1074
Hearing dates:	25-26 August 2011
Decision date:	13 September 2011
Jurisdiction:	Equity Division
Before:	Black J
Decision:	Held that not open to Plaintiffs to raise issue that First Plaintiff not personally liable for costs where such liability was necessary basis of orders for taxation of bills of costs previously made in proceedings.
Catchwords:	PRACTICE AND PROCEDURE - whether matters had previously been determined in proceedings - determination of matters necessary to orders previously made in proceedings - withdrawal of admissions - leave to withdraw admissions not granted.
Legislation Cited:	- Civil Procedure Act 2005 (NSW) - Legal Profession Reform Act 1993 (NSW) - Legal Profession Act 1987 (NSW) - Legal Profession Regulation 2005 (NSW) - Limitation Act 1969 (NSW) - Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	- Blair v Curran (1939) 62 CLR 464 - Brewer v Brewer (1953) 88 CLR 1 - Doyle v Hall Chadwick [2007] NSWCA 159 - Drabsch v Switzerland General Insurance Co Ltd (Unreported, Supreme Court of New South Wales, Santow J, 16 October 1996) - EGRI v DRG Australia Ltd (1988) 19 NSWLR 600 - Hill End Gold Ltd v First Tiffany Resource Corp [2008] NSWSC 866 - Hoystead v Commissioner of Taxation [1926] AC 155 - Hunter v Chief Constable of the West Midlands Police [1982] AC 529 - Jiwira Pty Ltd v Phillips Fox (Unreported, Supreme Court of New South Wales, Simpson J, 24 November 1997) - Limit (No 3) Ltd v ACE Insurance Ltd (No 2) [2009] NSWSC 1060 - Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558 - Preston v Nikolaidis [2010] NSWSC 131 - R v Hartington Middle Quarter Inhabitants (1855) 4 E&B 780; 119 ER 288 - Ramsay v Pigram (1968) 118 CLR 271 - Repatriation Commission v Nation (1995) 57 FCR 25 - Rogers v The Queen (1994) 181 CLR 251 - SLE Worldwide v WGB & Ors [2005] NSWSC 816 - Stafford v Kekatos (No 2) [2008] NSWSC 1044 - Yates Property Corporation Pty Ltd v Boland (1998) 89 FCR 78
Texts Cited:	Spencer Bower and Handley, Res Judicata, 4th ed
Category:	Principal judgment
Parties:	John Clement Preston (First Plaintiff) Western Suburbs Constructions Pty Limited (formerly Preston Erections Pty Limited) (Second Plaintiff) Leon Nikolaidis t/as MD Nikolaidis & Co (First Defendant) Michael John Zwar (Second Defendant) Estate of Mitrofanis D Nikolaidis (Third Defendant)
Representation:	Counsel: B Zipser (Plaintiffs) TS Hale SC (Defendants) Solicitor: Livingstone & Company (Plaintiffs) Diamond Conway (Defendants)
File Number(s):	93/23395

Judgment

1. It is first necessary to identify the matters that are now before me. On 9 May 2011, Bergin CJ in Eq listed this matter for hearing on 24-26 August 2011 and also referred the matter to mediation which her Honour directed occur no later than 1 July 2011. Her Honour made those directions in circumstances that it was common ground before her that the remaining issue to be decided by the Court was the hourly rates which were to be applied by a costs assessor in assessing bills rendered by the Defendants to the Plaintiff, Mr Preston, and companies associated with him.

1. Prior to the hearing date, the proceedings were restored before me and I was advised that the parties had reached agreement at the mediation as to the hourly rates which were to be applied in the costs assessment, being the issue to which I referred in paragraph 1 above. I was also advised that Mr Preston and the Second Plaintiff, Western Suburbs Constructions Pty Limited (formerly Preston Erections Pty Limited) ("Western Suburbs Constructions") wished to have determined an issue as to whether Mr Preston was personally liable under the bills rendered by the Defendants ("the Preston Liability issue"). Mr Preston contends that he is personally liable to pay the accounts rendered by the Defendants in two matters but is not personally liable to pay those accounts in the remaining matters. The Defendants contend that it is not open to the Plaintiffs to raise that issue, having regard to the orders which had previously been made in the proceedings. The Plaintiffs indicated that they could, with difficulty, prepare their evidence in respect of that issue so that it could be heard on the dates allocated before me. The Defendants indicated that they would not be in a position to file their evidence as to that issue by those dates.

1. The hearing proceeded before me on 25-26 August 2011 for the primary purpose of determining whether the Preston Liability issue was presently open in the proceedings. The Plaintiffs did not make any application before me for leave to amend the Summons originally filed in these proceedings on 24 August 1993 to raise the Preston Liability issue as a new issue in the proceedings. Accordingly, unless that matter was already in issue in the proceedings prior to the commencement of the hearing before me, then it is not now in issue in these proceedings.

1. I directed the parties file written submissions and, in their written submissions, the Plaintiffs also identified a further issue as to whether the question of the quantum of costs payable should now be referred to a referee rather than to a costs assessor so that the Plaintiffs could agitate a number of further matters before the referee.

History of the proceedings

1. I should first indicate something of the history of the proceedings although I do so in a summary way since that history has been comprehensively reviewed in the judgment of Barrett J in Preston v Nikolaidis [2010] NSWSC 131 ("2010 judgment"). I gratefully adopt his Honour's comprehensive review of that history.

1. On 24 August 1993, the proceedings were commenced by Summons filed by Mr Preston as Plaintiff and Western Suburbs Constructions as Second Plaintiff. Relevantly, the Summons provided:

"The Plaintiff claims:

1. ORDERS pursuant to section 208 of the Legal Profession Act 1987, that Bills of Costs be delivered by the Defendants to the Plaintiff:

(a) In respect of the matters set out in Schedule A hereto;

(b) Alternatively, in respect of such of the matters set out in Schedule A hereto wherein accounts were rendered by the Defendants to the Plaintiff within twelve (12) months of the commencement of these proceedings.

2. ORDERS pursuant to section 199 and section 200 of the Legal Profession Act 1987, that there be referred for taxation:

(a) The matters set out in Schedule A;

(b) Alternatively, such of the matters set out in Schedule A as the court deems appropriate.

3. AN ORDER pursuant to section 208 of the Legal Profession Act 1987, that the Defendants deliver up to the Plaintiff, on such terms, if any, that the Court deems appropriate, the Plaintiff's documents in the matters of: [specified matters].

4.AN ORDER that accounts be taken:

...

(b) Of the payment of $50,000.00 into the Defendants' trust account in or about July 1989 and the disbursement or application hereof, in respect of the matter Western Suburbs Constructions Pty Limited (formerly Preston Erections Pty Limited) and G K N Australia Limited .

The Summons also sought other orders that are not presently relevant.

1. The orders which I have set out above were sought only by Mr Preston and expressly referred to the delivery of the "Plaintiff's documents" to Mr Preston. Orders were not sought by the Second Plaintiff, Western Suburbs Constructions, although it was joined and remained a party to the proceedings, possibly because it was affected by the order sought in paragraph 4(b) to which I referred above.

1. It is also convenient at this point to set out the relevant sections of the Legal Profession Act 1987 ("LPA") at the time the Summons was filed, as follows:

"173. In this Part: ...

"Client" includes:

(a) Any person who (whether as principal or agent and whether in the capacity of a trustee or otherwise) retains, or is about to retain, a solicitor; and

(b) Any other person who is, or who may become, liable to pay a solicitor's costs;

199(1) An application for taxation of a Bill of Costs may be made to the Supreme Court:

(a) By any person who has paid, or is liable to pay, those costs; and

(b) If any such person is a trustee - by any other person who has an interest in the property out of which those costs have been paid or are payable. ...

200(1) The Supreme Court may make an order referring a Bill of Costs for taxation subject to such conditions as it considers appropriate, which may include a condition requiring money to be brought into Court before the Bill is taxed. ...

(3) If the applicant for taxation of a Bill of Costs is a person who is not liable to pay those costs but has an interest in the property out of which those costs are payable, the Supreme Court may take into consideration the nature and extent of that interest in deciding whether or not to make such an order. ...

208(1) On the Application of a solicitor's client, the Supreme Court may order the solicitor:

(a) To give to the client a Bill of Costs in respect of any business transacted by the solicitor; and

(b) To give to the client, on such conditions as the Supreme Court may determine, such of the client's documents as are held by the solicitor in relation to that business."

1. On 9 November 1993, RS Hulme J made orders under LPA s 208 for delivery of bills of costs in taxable form in relation to all matters referred to in the Schedule annexed to the Summons.

1. On 16 December 1993, RS Hulme J made an order under LPA s 200 that there be referred for taxation the Defendants' bills of costs in respect of the matters listed in the Schedule to the Summons. His Honour gave reasons for those orders in a judgment delivered on that date. His Honour noted that:

(taken from Barrett J's judgment at para [86]

"...the Plaintiffs sought orders for the delivery of Bills of Costs, reference of such bills to taxation, for delivery up of files which the Defendants, former solicitors for the Plaintiffs, held and for an order for the taking of accounts".

His Honour referred to orders sought by the "Plaintiffs", although the orders in respect of delivery of Bills of Costs on taxation were in fact sought only by Mr Preston and provided for delivery of the Bills of Costs to Mr Preston. His Honour noted that "there turned out to be no significant dispute concerning the Plaintiffs' claim" for the orders as to delivery of the bills of costs and taxation and accordingly the orders sought would be made.

1. On 9 June 1994, RS Hulme J made further orders for reference of an account to the Honourable G D Needham QC and those orders included a definition of "Plaintiffs" for those purposes as referring to 18 entities. However, those 18 entities were not then or later joined as plaintiffs in the proceedings and had not sought the orders for delivery of bills of costs or taxation of those bills to which I referred above and the orders for a reference did not relate to the taxation of costs. Mr Preston and Western Suburbs Constructions subsequently indicated that it was not necessary for that reference to proceed.

1. Orders were thereafter made by RS Hulme J on 28 February 1995 which dismissed the Summons except so far as orders had previously been made in the proceedings. In his judgment delivered on that date, RS Hulme J observed that:

"By Summons filed on 24 August 1993 the plaintiffs sought orders against their former solicitors firstly for the delivery of bills of costs in respect of identified matters, and secondly that those bills be referred for taxation, thirdly for the delivery up of the Plaintiffs' documents in four specified matters, and fourthly an order for the taking of accounts."

His Honour also noted that the matter was before him on that day in respect of the question of costs "as in substance the substantive relief sought has now all been the subject of orders." As Barrett J observed in paragraphs [57]-[59] of the 2010 judgment, the matters that remained in the proceedings were, from 28 February 1995 on, only the taxation of costs. Barrett J also noted that the dismissal of the balance of the proceedings on 28 February 1995 did not affect that part of the relief claimed in the Summons that was concerned with quantification of solicitor-client costs ie the orders sought pursuant to LPA s 208 (as to delivery of Bills of Costs to Mr Preston) and pursuant to LPA ss 199-200 (as to the reference of those bills to taxation) (at [61]).

1. In a judgment delivered on 25 July 1996, Young J held that reg 80 made under the Legal Profession Reform Act 1993 (NSW) (which had subsequently taken effect) operated to amend the order for taxation made by RS Hulme J on 16 December 1993 and directed the Proper Officer of the Court to refer the Defendants' Bill of Costs for assessment. In his judgment delivered on that date, his Honour noted that:

"There is an issue between the parties not that the solicitors were retained by the client, but as to the terms of the retainer. It seems sensible to isolate that issue and refer it to the decision of the same person who makes the assessment of costs."

In the 2010 judgment, Barrett J observed at [66] that the decision of Young J on 15 July 1996 allowed an assessment to go ahead under the new costs assessment regime.

1. By Notice of Motion filed on 26 July 2000, Mr Preston sought leave to file an Amended Summons by which eleven new plaintiffs would be joined as the third to thirteenth Plaintiffs in the proceedings. Western Suburbs Constructions did not join in that application. The Amended Summons did not seek to expand the persons seeking the orders under LPA s 199-200 and 208, which in any event had previously been made. In dealing with that matter on 25 August 2000, Master McLaughlin accepted the Defendants' submission that the relief sought in the Summons had been the subject of final orders made by RS Hulme J on 28 February 1995 and that the amendment application sought "in effect to resurrect proceedings that had been totally and finally dealt with". Master McLaughlin noted that the validity of that submission was not affected by the fact that the process of conducting the taxation and the assessment which was the subject of Orders 1 and 2 sought in the Summons had not yet been concluded and that what Mr Preston was attempting to do was to "reinstate proceedings which, if they should have been instituted at all, should have been instituted no later than the making of the final orders by Hulme J 5 1/2 years ago". Master McLaughlin dismissed the Notice of Motion.

1. On 25 June 2001, Windeyer J ordered that the question of the terms of the retainer so far as costs are concerned be determined by the Court and directed the filing of Amended Points of Claim and Amended Points of Defence in respect of that issue.

1. Mr Preston and Western Suburbs Constructions subsequently filed Amended Points of Claim on 13 July 2001 which raised a contention that parties other than them were liable for costs. Mr Preston and Western Suburbs Constructions then filed Further Amended Points of Claim on 15 April 2002 which contended that it was a term of the retainer that the Defendants would charge a company in the Preston Group of companies for work done in most of the relevant matters and that company would pay the Defendants. If that contention were correct to the exclusion of any liability of Mr Preston to pay those amounts, then Mr Preston would not have had standing to seek or obtain the orders which he had in fact sought and obtained under LPA ss 199-200 by the filing of the Summons in August 1993 and the Orders made by RS Hulme J in December 2003. That contention was also inconsistent with the matters alleged in a Statement of Claim which Mr Preston subsequently verified and filed, and a further Amended Statement of Claim which Mr Preston subsequently verified and sought to file, to which I refer in paragraphs 19-20 below.

1. In the 2010 judgment, Barrett J noted that the filing of the Further Amended Points of Claim was the subject of a grant of leave by Gzell J in respect of the particular document so that, to the extent there was a need for leave to amend, the leave granted by Gzell J necessarily included leave to amend (2010 judgment at [49] and [72]). However, I do not understand Barrett J to have held, and I would not hold, that Gzell J either permitted the Plaintiffs to expand the proceedings beyond the matters raised by the Summons which was not then amended or to reopen matters previously decided by the Court by filing the Further Amended Points of Claim. I also do not understand Barrett J to have held, and I would not hold, that the leave granted by Gzell J to amend the Points of Claim extended to leave to withdraw any admissions made by Mr Preston by the filing of the Summons almost 10 years earlier, so far as Mr Preston had sought orders under ss 199, 200 and 208 of the LPA. There is no evidence before me that any application for such leave was made before Gzell J. I will deal with this matter further in paragraphs 36-41 below.

1. The proceedings were thereafter stayed from November 2002 until 12 May 2009, by reason of other proceedings involving one of the Defendants. In the 2010 judgment, Barrett J observed at [72] that the claims by Mr Preston and Western Suburbs Constructions, immediately before that stay was lifted on 12 May 2009, were those in the Further Amended Points of Claim of 15 April 2002, and that:

"Those claims went entirely to the question of the terms of the retainer, that being a question that, pursuant to the order made by Windeyer J on 25 June 2001, was to be determined by the Court in order that the matter of quantification of solicitor-client costs raised by the Summons filed on 24 August 1993 might be properly addressed in the light of the consequences of the operation of the transitional measures under the Legal Profession Reform Act 1993 upon the orders of 9 November 1993 and 16 December 1993."

1. Mr Preston and Western Suburbs Constructions sought to file a Statement of Claim seeking amended relief in these proceedings in 2009. That Statement of Claim was verified by affidavit sworn by Mr Preston dated 19 June 2009, and pleaded that:

"4. In or about November or December 1983 the first plaintiff entered into a general retainer with the defendants whereby the Defendants were retained to provide legal services generally;

a. to the first plaintiff and/or to the second plaintiff;

b. to the first plaintiff as the disclosed principal of various entities and/or controlled by the first plaintiff, including those entities list (sic) in the Schedule to the Summons filed in these proceedings; or alternatively

c. for the first plaintiff in relation to other entities or companies of which the first plaintiff was a director and principal shareholder, and controlling mind ("the retainer"). ...

6. It was an express term and condition of the retainer that:

a. the defendants would issue invoices to the first plaintiff personally, or the second plaintiff or any other entity or entities at the direction of the first plaintiff,

b. at all times the first plaintiff was liable for the defendant's fees in relation to all legal services rendered pursuant to the retainer referred to in paragraph 4 above.

That Statement of Claim filed in 19 June 2009 was struck out by Barrett J for the reasons given in his 2010 judgment.

1. The Plaintiffs subsequently sought leave to file a Further Amended Statement of Claim by Motion filed on 30 March 2010 which contained allegations to the same effect. Barrett J dismissed the application for leave to file the Further Amended Statement of Claim in a further judgment delivered on 11 May 2010.

The matters previously determined by the Court

1. In my view, the judgments of RS Hulme J delivered in November and December 1993 and his consequential orders are to be treated as determining all matters which it was necessary to decide and which were actually decided as the basis of the relevant decision. A corresponding approach is adopted in respect of res judicata and issue estoppel.

1. In R v Hartington Middle Quarter Inhabitants (1855) 4 E&B 780 at 797; 119 ER 288, Coleridge J observed that a judgment sought to found a res judicata concluded "not merely as to the point actually decided, but as to a matter which it was necessary to decide, and which was actually decided, as the ground work of the decision itself, though not then directly the point in issue" (at 794) and that such a judgment was "conclusive evidence not merely of the fact directly decided, but of those facts also which are ... necessary steps in the decision" (at 797). The principle is summarised in Spencer, Bower & Handley, Res Judicata , 4 th ed, as that:

"Where the decision necessarily involves a judicial determination of some issue of law or fact, because it could not have been legitimately or rationally pronounced without determining or assuming a particular answer, that determination, though not expressed, is an integral part of the decision."

1. In Hoystead v Commissioner of Taxation [1926] AC 155 at 170, the Privy Council expressed the principle of issue estoppel as follows:

"[If] in any Court of competent jurisdiction a decision is reached, a party is estopped from questioning it in a new legal proceeding. But the principle also extends to any point, whether of assumption or admission, which was in substance the ratio of and fundamental to the decision."

1. In Blair v Curran (1939) 62 CLR 464 at 532, Dixon J observed at 532:

"In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order ... [T]he judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous."

1. In Ramsay v Pigram (1968) 118 CLR 271 at 276, Barwick CJ observed that:

"[A]n estoppel is available to prevent the assertion in those proceedings of a matter of fact or of law in a sense contrary to that in which that precise matter has already been necessarily and directly decided by a competent tribunal in resolving rights or obligations between the same parties in the same respective interests or capacities. ..."

1. I have noted above that the order for delivery of bills of costs in taxable form made by RS Hulme J on 24 November 1993 was sought by Mr Preston alone and the making of that order necessarily reflected a finding that Mr Preston was a client of the Defendants (within the extended definition of that term in LPA s 173) since Mr Preston would not have been entitled to such an order under LPA s 208 and the Court could not have made it unless that condition was satisfied. However, in my view, the order made by RS Hulme J under LPA s 208 did not go further to determine that Mr Preston was a person liable to pay the Defendants' costs. A finding to that effect was not necessary to the making of such an order, since such an order could also be made in favour of Mr Preston if he was a person who (whether as principal or agent) had retained the Defendants.

1. The order for taxation of the bills of costs made by RS Hulme J on 16 December 1993 was also sought by Mr Preston alone and the making of that order necessarily reflected a finding that Mr Preston was a person who had paid, or was liable to pay, those costs for the purposes of LPA s 199(1)(a) (no basis having been shown for LPA s 119(1)(b) to apply) since Mr Preston would not have been entitled to such an order and the Court could not have made it unless that condition was satisfied. It is not surprising that his Honour readily made that finding where Mr Preston had invoked the Court's jurisdiction under that section, impliedly asserting his standing to do so, and the Defendants accepted his standing to do so.

1. The Plaintiffs contend that Mr Preston was entitled to apply to the Court for taxation of the bills of costs under LPA s 200(3) as "a person who is not liable to pay costs but has an interest in the property out of which those costs are payable". However, that provision plainly refers to the situation referred to in LPA s 199(1)(b) where an application for taxation of a bill of costs is made by a person who is a trustee. As noted above, no basis has been shown for any suggestion that the bills of costs were rendered to a trustee for the purposes of s 199(1)(b). Even if LPA s 200(3) had a wider application, it would not allow standing to Mr Preston as a director or shareholder of the relevant companies, rather than as a person liable to pay the relevant costs, since a director or shareholder has no legal or equitable interest in a company's property.

1. The Plaintiffs point out that the accounts issued by the Defendants were addressed, variously, to Mr Preston in his personal capacity, or to a company in the Preston Group of companies marked to Mr Preston's attention or to Mr Preston as an officer of a company in the Preston Group of companies. The Plaintiffs also draw attention to correspondence between Mr Preston and the Defendants in which he asserted that he had not personally instructed the Defendants on company matters. It is apparent from that correspondence that the Defendants did not accept that contention. Moreover, at least some of that correspondence precedes the filing of the Summons by which Mr Preston at least impliedly asserted he was a person liable to pay the Defendants' fees so as to invoke the jurisdiction to have the Defendants' bills of costs taxed which was available to such a person.

1. The Plaintiffs also point to Mr Preston's supporting affidavit sworn 13 August 1993 in support of the Summons which appears to assert that at least on some occasions Mr Preston's companies were the "immediate client". However, I see nothing in that affidavit which asserts that Mr Preston was not a person liable to pay the relevant fees and that is not surprising in circumstances that Mr Preston had sworn that affidavit in support of a Summons which sought orders which were only available if he was a person liable to pay those fees. The Plaintiffs refer to other affidavits sworn in the proceedings which refer to issues as to the retainer in connection with the work done on behalf of the Plaintiffs and other companies associated with the Plaintiffs. However, nothing which has been drawn to my attention in those materials involves a denial by Mr Preston of his liability to pay the relevant bills of costs. In any event, it seems to me that such a denial would have had no effect after the Court had determined the contrary in granting the orders to which I have referred.

1. When Mr Preston filed Notices of Objection to the Defendants' bills of costs in December 1996, he contended that he was not a person liable to pay those bills and that the entities liable to pay those bills were companies in the Preston Group of companies and he took a similar position in further objections filed in remaining matters in February 1997. I do not consider that Mr Preston's assertion of this position assists him, after the Court had exercised its jurisdiction on the basis that he was a person liable to pay the relevant accounts.

1. I do not consider that the form of the accounts issued to Mr Preston and his companies, the correspondence to which he refers, the content of Mr Preston's affidavits or the notices of objection assist Mr Preston. The question before me depends upon the matters which have previously been decided by the Court in these proceedings. The fact that Mr Preston may have made contrary assertions in correspondence between the parties or other documents does not assist in avoiding the result that he is bound by the matters necessarily decided by the judgments delivered and orders previously made by RS Hulme J.

1. There was some debate before me as to the extent of issue estoppel where orders are made by consent. In my view, that issue does not arise since the orders made by RS Hulme J on 9 November 1993 and 16 December 1993 were not orders made by consent. Those orders were made by the Court following argument between the parties, notwithstanding that his Honour had noted that the issues between them had narrowed. In particular, in respect of the orders made on 16 December 1993, his Honour noted that "[t]o a significant degree though not completely , the orders have been the subject of acquiescence after a limited degree of judicial intervention" (emphasis added).

1. My finding that the Preston Liability issue has already been determined by the judgments and orders made by RS Hulme J in the proceedings is sufficient to resolve, adversely to Mr Preston, the question whether he is now entitled to agitate the Preston Liability issue. Had it been necessary to do so, I would also have held that Mr Preston's contention that he is not a person liable in respect of the Defendants' costs constitutes a direct challenge to the determination necessarily made by RS Hulme J in making the orders for taxation on Mr Preston's application, and therefore also constitutes an abuse of process under the principles identified in Hunter v Chief Constable of the West Midlands Police [1982] AC 529 and Rogers v The Queen (1994) 181 CLR 251 per Mason CJ at 255, Deane and Gaudron JJ at 280 and McHugh J at 288.

1. The Defendants also submitted that, even if Mr Preston was not precluded in law from putting his liability in respect of the Bills of Costs in issue, they should not be permitted to do as a matter of case management. In my view, this issue does not arise in these terms. I have held that the issue of Mr Preston's Liability has previously been determined adversely to Mr Preston, as a necessary basis for granting the orders for taxation of the Defendants' bills which he sought. I do not consider that the Amended Points of Claim previously filed in the proceedings could reopen matters which had previously been determined by the Court. In these circumstances, the Preston Liability issue is not an open issue in the proceedings, having previously been determined adversely to him. The Plaintiffs do not now seek leave to amend the Summons so as to reopen that issue so no question of my granting leave to do so arises under sections 56-58 of the Civil Procedure Act 2005 (NSW). Had such a question arisen, the history of the proceedings which I have set out above indicates that there would have been compelling reasons to decline to grant such leave.

Admissions made by Mr Preston

1. In my view, the filing of the Summons also necessarily amounted to an admission made by Mr Preston that he was a person liable to pay the relevant costs, since his having that characteristic (in the absence of any basis for a finding the relevant bills had been issued to a trustee) was necessary to his standing to seek the relief which he claimed under LPA ss 199-200. The Statement of Claim and Amended Statement of Claim to which I have referred in paragraphs 20-21 above contain admissions to the same effect.

1. The Plaintiffs submit that an application by Mr Preston for orders under LPA ss 199-200 cannot amount to an admission that he is liable under those sections and indeed submit that such an interpretation would be "Kafka-esque". I do not accept that submission. In my view, Mr Preston's invoking a jurisdiction that was only available to him on the basis that he was a person liable to pay the Defendants' fees is necessarily an admission to that effect. If he wished to assert the contrary, it was at all times open for him to seek a declaration that he was not such a person or for the companies (which he now asserts are liable to those costs to his exclusion) to bring the application which he personally brought on the basis that he was a person liable to pay those costs.

1. The Plaintiffs also submit that eight of twenty matters listed in the Schedule to the Summons involved the Second Plaintiff and, even if an application under LPA ss 199-200 involves an admission by the relevant party of liability to pay the relevant costs, "the application by the Second Plaintiff in respect of the eight matters in which the Second Plaintiff was a party only involves an admission of liability by the Second Plaintiff". However, as I have pointed out above, the only application under LPA ss 199-200 was made by Mr Preston and this is sufficient to answer that contention.

1. The Plaintiffs rely on the decision in Jiwira Pty Ltd v Phillips Fox (Unreported, Supreme Court of New South Wales, Simpson J, 24 November 1997) to submit that an application for taxation of a bill of costs and the making by the Court of an order for taxation under LPA s 200 do not amount to an "irrevocable admission" that the applicant has standing under LPA s 199(1). I do not consider that decision assists the Plaintiffs. First, the question whether the applicant for assessment of the bill of costs was bound by an admission that he was liable to pay such costs as the basis of the application for taxation did not arise in those proceedings; to the contrary, the person who had been subjected to such an order (who was plainly not bound by an admission made by the party seeking it) did not seek to hold the applicant to such an admission, but instead challenged the basis on which the order was made by reason of the applicant's lack of standing. The fact that a party who is adversely affected by such an order may challenge the basis on which it is made does not establish that the person who has sought it and obtained it is not bound by the basis on which it was sought. Second, there is no suggestion that an admission is "irrevocable", as distinct from only being able to be withdrawn with the court's leave.

1. Mr Preston contended that the application he had made to the Court for the issue of bills of costs and for taxation of the bills of costs did not give rise to any admission but, to the extent that I might reach a different view, he sought leave to withdraw that admission. The principles applicable to whether an admission may be withdrawn were summarised by Santow J in Drabsch v Switzerland General Insurance Co Ltd (Unreported, Supreme Court of New South Wales, Santow J, 16 October 1996) as including the following:

• An application to withdraw an admission should not be freely granted.
• The parties seeking the withdrawal must provide a strong reason why the Judge should agree to "disturb what was previously common ground or conceded".
• It is usually appropriate to grant leave to withdraw an admission where the admission is contrary to actual facts or was made inadvertently without due consideration of material matters. However, leave may be refused if one party has changed its position in reliance upon an admission.

Those principles have frequently been applied in this Court: SLE Worldwide v WGB & Ors [2005] NSWSC 816 at [55]-[56]; Hill End Gold Ltd v First Tiffany Resource Corp [2008] NSWSC 866 at [14]-[15]; Stafford v Kekatos (No 2) [2008] NSWSC 1044 at [14]-[15]; Limit (No 3) Ltd v ACE Insurance Ltd (No 2) [2009] NSWSC 1060 at [14]-[18].

1. I do not consider that I should grant leave to Mr Preston to withdraw the admission which was necessarily made by seeking the orders under LPA ss 199-200 in the Summons. The Court has acted consistently with that admission in granting orders for taxation of the bills of costs to which Mr Preston was only entitled (absent a basis for a finding that the bills were rendered to a trustee) on the basis that he was a person liable for the relevant costs. The Defendants have suffered detriment by being required to take steps to comply with those orders on that basis. There is also a compelling case for declining to grant such leave on case management grounds having regard to the principles set out in s 56-58 of the Civil Procedure Act 2005 (NSW).

Whether Plaintiffs can lead further evidence as to the Preston Liability issue

1. The Plaintiffs submitted that directions should be made to allow them to prepare and serve further evidence as to the Preston Liability issue. For the reasons set out above, I have concluded that question has already been determined by the Court adversely to Mr Preston and, alternatively, Mr Preston should not be granted leave to withdraw the admission which he necessarily made as to that liability in invoking the Court's jurisdiction under LPA ss 199-200. For this reason, no question as to directions for the filing of further evidence by any party in respect of that question arises.

Whether the proceedings should be referred to a costs assessor or a referee

1. Mr Preston also submits that, rather than the matter being referred to a costs assessor, it should now be referred to a referee under UCPR Pt 20 Div 3. Mr Preston indicates that he wishes to advance several submissions to such a referee.

1. First, Mr Preston wishes to contend that, following the termination of the retainer between the parties in October 1992, the Defendants may have created documents and placed them in the relevant files in order to provide evidence of work claimed to have been done but which was not in fact done. That is not a matter which is presently raised in these proceedings and, indeed, it appears to be a matter which Mr Preston sought to raise in the Further Amended Summons which Barrett J declined leave to file. Since that matter is not presently in issue, I would not refer it to a referee who would have no jurisdiction to determine it. I also do not consider that that matter could properly be raised before a costs assessor, since it is an allegation which would require investigation by curial processes which are not available to a costs assessor: Doyle v Hall Chadwick [2007] NSWCA 159. The consequence is that, in my view, it is not now open to Mr Preston to pursue this matter.

1. Mr Preston contends that he has already paid for work done prior to 1991. I express no view as to whether this is a matter which can be determined by a costs assessor, and it is possible that it is a matter which would instead arise in respect of any enforcement of a judgment arising from the costs assessment. This is not a matter which is presently in issue in these proceedings and there is therefore no basis for it to be referred to a referee. Mr Preston also indicates that he wishes to make a submission that the Defendants must prepare amended Bills of Costs. This matter, if it arises at all, should properly be addressed during the assessment process.

1. Mr Preston also identifies a further submission that, if the Defendants have not yet paid Counsels' fees and Counsel are now barred by the Limitation Act 1969 (NSW) from suing the Defendants, the Plaintiffs cannot now be liable to the Defendants for Counsels' fees. It would seem to be a surprising and unfortunate result that, if an assessment was not concluded within six years of the date of Counsels' fees, a solicitor who considered that he or she should pay those fees when placed in funds to do so by his or her client could not recover them through the assessment process. That is again a question which, if it arises at all, should be addressed in the assessment process.

1. Accordingly, I do not propose to make an order referring this matter to a referee. As I noted above, Young J had previously made an order referring the relevant bills of costs to a costs assessor. It may be a further order will now need to be made to facilitate the costs assessment process, by reason of the time which has passed since the orders made by Young J and the possibility that the costs assessor previously nominated to undertake the work will no longer be available to do so.

1. I direct the parties to bring in Short Minutes of Order to give effect to the agreement as to the rates to be applied in the costs assessment which they reached in the mediation and otherwise to give effect to my judgment. The Plaintiffs should pay the costs of and incidental to this hearing. I grant leave for those costs to be assessed forthwith to the extent that such leave is necessary.

**********

Decision last updated: 15 September 2011