Kelly v Norris

[2004] NSWCA 260

CITATION:	Kelly v Norris & 1 Ors [2004] NSWCA 260
HEARING DATE(S):	11 June 2004
JUDGMENT DATE:	30 July 2004
JUDGMENT OF:	Hodgson JA at 1; Santow JA at 2; Bryson JA at 39
DECISION:	Grant of leave to appeal refused. Ordinary summons dismissed.
CATCHWORDS:	PRACTICE AND PROCEDURE - Costs - matter arose out of complex and exceptionally lengthy proceedings in relation to a motor vehicle accident in which plaintiff suffered severe brain damage - application for leave to appeal - submitting appearances filed by first and second opponents - costs incurred by plaintiff's solicitors in connection with those legal proceedings reviewed by trial judge of his own motion - whether appellate court should give leave to appeal when small sum involved - orders sought to be appealed from may affect reputation of plaintiff's solicitor, the claimant in this matter - dealt with only a small part of the costs which the claimant had charged the plaintiff, his tutor and the guardian of his protected estate regarding the conduct of the litigation - those orders concerned the cost of an expert's report and its copying, costs of copying exhibit and copying costs of solicitor's letter in relation to briefing a potential witness - trial judge made the orders at his own initiative and not on the motion of any party - trial judge did not lack power to make the orders - whether circumstances justify appellate intervention - whether the undoubted discretion to charge the legal adviser with costs incurred improperly or without reasonable cause, had been properly exercised.
LEGISLATION CITED:	Local Court (Civil Claims) Act 1970 s69(2A) Supreme Court Act s76; s101 Supreme Court Rules 1970 Pt 52 r66
CASES CITED:	Blake v Norris (SC 12247 of 1989) Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl (Court of Appeal, 16 November 1995, unreported) BC9501771 Dunn v. Ross Lamb Motors [1978] 1 NSWLR 26 House v The King (1936) 55 CLR 499 Micallef v ICI Australia Operations Ltd [2001] NSWCA 274 Norris v Blake (by his Tutor Porter) (No. 2) (1997) 41 NSWLR 49 Ozpinar v. Assaily [2001] NSWCA 23 Piglowska v. Piglowski [1999] 1 WLR 1360 Re Veron (1966) 84 WN(Pt 1)(NSW) 136 Rumortex Pty Ltd v. Rodgers & Anor [2000] NSWCA 18 Wentworth v. Rogers (No. 3) (1986) 6 NSWLR 642
PARTIES :	Timothy Denis KELLY (Claimant) Walter Thomas Patmore NORRIS (First Opponent) The estate of Paul Jonathan BLAKE by his tutor Brian Edward PORTER (Second Opponent)
FILE NUMBER(S):	CA 40339/03
COUNSEL:	G R GRAHAM (Claimant) Ms M HOLZ (First Opponent) P KENNEDY (solicitor) (Second Opponent)
SOLICITORS:	T D Kelly & Co (Claimant) Ferguson Lawyers (First Opponent) Mooney & Kennedy (Second Opponent)

LOWER COURTJURISDICTION:	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S):	SC 12242/89
LOWER COURT JUDICIAL OFFICER :	Hulme J

CA 40339/03
SC 12242/89

HODGSON JA
SANTOW JA
BRYSON JA

30 JULY 2004

Timothy Denis KELLY v Walter Thomas Patmore NORRIS & 1 Ors

Judgment

1 HODGSON JA: In my opinion, there is substantial force in the views expressed by Santow JA concerning the issues sought to be raised by an appeal in this case. However, I agree with Bryson JA that leave to appeal should be refused. The challenge sought to be made to the judgment below does not in my opinion involve any principle of general significance, nor does the judgment cause such injury to the claimant’s professional reputation as might justify the grant of leave in a case concerning about $4,000.00.

2 SANTOW JA:

INTRODUCTION
This is an application for leave to appeal and, if granted, by way of appeal from the orders made by Hulme J on 19 August 1998 and 28 March 2003 in the matter of Blake v Norris (SC 12247 of 1989): Those orders sought to be appealed from directly affect the solicitor for the plaintiff, T D Kelly & Co. They were to the following effect:

(a) as between the plaintiff in those proceedings Paul Jonathan Blake and his solicitors T D Kelly & Co there be disallowed the sum of $1,400.00 costs charged in respect of the report of Mr J J Newlin-Mazaraki of Bryant Mazaraki Murphy Pty Ltd dated 24 August 1994;

(b) that T D Kelly & Co pay the plaintiff’s costs of and incidental to:

(i) the copying and consideration of the document which became Exhibit BN in the proceedings in the sum of $2,656.00; and

(ii) the furnishing to Mrs Blackman (of Dial-an-angel) with the solicitor’s letter of 1 September 1993 of copies of medical reports, in the sum of $134.00.

3 The first and second opponents filed submitting appearances so that it is apparent that those responsible for Paul Blake’s affairs continue to wish to take no role in these proceedings.

4 While the monetary amounts involved are small the Claimant T D Kelly & Co contends that the principle involved is of the utmost importance to the administration of justice and to the professional standing of Mr Kelly as principal of his firm. The possibility of future disciplinary proceedings, particularly if the claimant were to take a similar stance are not such as could be discounted altogether, as the trial judge himself observed (judgment 28 March 2003 at [34], quote below:

“[34] …. On one view the smallness of the amounts involved argues strongly against the expenditure of the time and effort which has been involved in the topic with which these Reasons are concerned. On the other hand, simply ignoring the issue is calculated to encourage solicitors generally and Mr Kelly in particular, who said, as recorded in my Reasons of 19 August 1998, that he would prepare the case the same way again, to indulge in unnecessary waste of their clients’ money. Mr Kelly is obviously at risk in the future, should he choose to ignore the principles upon which my decision is based, of orders more serious than ones dealing only with money .” [emphasis added]

5 The claimant contends that the trial judge’s discretion miscarried in making these orders. T D Kelly & Co’s claim is not that the trial judge lacked power to make these orders but rather that, factually, the occasion had not arisen for making them. That is a more precise and plausible statement of the question posed than that stated in the draft Notice of Appeal; with its premise that a judge is precluded, in a proper case, from substituting the Court’s own judgment for that of legal adviser, as to the appropriate steps to be taken in preparing and presenting a quantum claim.

6 Indubitably the Court in a proper case may exercise the powers conferred on it where “costs are incurred improperly or without reasonable cause” (Pt 52 r66 Supreme Court Rules and s76 of the Supreme Court Act). The question here is whether the circumstances are such as to justify appellate intervention, in what is clearly a discretionary determination concerning a (costs) matter of practice and procedure, where the scope for that intervention is constrained according to long-settled principles; House v The King (1936) 55 CLR 499 at 505 and more recently Micallef v ICI Australia Operations Ltd [2001] NSWCA 274 at [45] per Heydon JA.

SALIENT FACTS

7 The matter arises out of proceedings brought in the Common Law division in matter No. SC 12242 of 1989 on behalf of Mr Jonathan Blake with respect to brain damage suffered by him in a motor vehicle accident on 1 December 1986 in the State of South Australia. He has since that time been in what in broad lay terms might be described as a comatose condition and has for most of the time since the accident lived at the home of his mother, Mrs Mascot Blake.

8 The proceedings at first instance were heard by Hulme J over 26 hearing days between 5 September 1994 and 26 October 1994. The trial judge then reserved judgment in the matter. Judgment was delivered by the trial judge on 5 and 11 December 1995 and on 11 December 1995 judgment was entered for the plaintiff in the amount of $31,824.041.31.

9 That judgment was set aside by the Court of Appeal in February 1997 (Norris v Blake (by his Tutor Porter) (No. 2) (1997) 41 NSWLR 49) and on 12 February 1997 the Court of Appeal substituted a judgment in favour of the plaintiff in the amount of $7,672,010.33.

10 It is not without importance that the orders that are challenged in this application were made by the trial judge at his own initiative and not on the motion of any of the parties. None of the parties joined with the trial judge in urging upon him the action that he took which was solely of his own motion. I emphasise this, not to suggest that it was in any way inappropriate for a trial judge so to act on his or her own initiative. Quite the contrary, in a proper case it is important that the court exercise does its supervisory role and that appellate courts respect the familiarity of the trial judge with the circumstances that have led to that course. Rather it has relevance to the implications, professional and reputational, of so acting. This is especially when the circumstances are perceived by the trial judge as so serious as to justify that exceptional course though unprompted by any other party. Should that discretion miscarry the consequences can be severe indeed.

11 The claimant is no longer in possession of the file papers in relation to this matter and does not presently know where the file papers are. They were forwarded by T D Kelly & Co either to the Protective Commissioner’s Office or to some costs consultants engaged by the Protective Commissioner’s Office. This was in the latter case to negotiate the party and party costs of the proceedings with the solicitors for the then South Australian Government Insurance Office. At some later stage in or about July 2000 it is the understanding of the claimant that a private trustee was substituted for the Protective Commissioner as the manager of the plaintiff’s estate upon the application of Mrs Blake. This appears to be the case reported in (2000) 50 NSWLR 24. The claimant was not involved in those proceedings and is unaware of the detail of those proceedings.

12 The draft Notice of Appeal posed the question to be answered in the terms quoted below. But the matter was argued in a more defensible way. The claimant acknowledged that the question was rather whether the undoubted discretion to charge the legal adviser with costs incurred improperly or without reasonable cause had been properly exercised.

“Whether the trial judge in making the orders the subject of this summons erred in law in the exercise of his discretion by substituting his judgment for the judgment of the plaintiff’s legal advisors in the appropriate steps to be taken in preparing and presenting the plaintiff’s quantum claim.”

13 The claimant contended that the steps taken in the various matters the subject of the primary judge’s orders were entirely proper, reasonable and appropriate in the preparation of a claim of this nature, having regard to its complexity, size and the intensity of dispute. Thus the claim gave rise to a judgment from Hulme J of, in round figures, $47 million reduced in round figures to $31 million by reasons of the plaintiff’s contributory negligence (subsequently reduced by the Court of Appeal to $7,672,010.73). The bill prepared on a party/party basis for legal costs was, in round figures $1.5 million taxed back to around $850,000. The amounts here disallowed or charged to T D Kelly & Co total a mere $4,190. That represents a miniscule percentage of the bill, even taxed, in what was a large and complex adversarial proceeding.

14 However, the principle that practitioners must carry out litigation in accordance with the overriding requirement of the Rules, to be “just, quick and cheap”, with its corollary that charges are not to be incurred which are unnecessary and unjustified, remains of fundamental importance. That is true, though that was not yet made an express requirement in the Rules, at the time the costs in question were incurred. It is not to be subordinated just because the amounts involved may be relatively small. But in judging whether a practitioner was guilty of incurring unnecessary and unjustified charges so as to warrant being required to bear such a charge rather than the client, one should judge the appropriateness of imposing such a sanction against a perspective which looks realistically at the nature of the litigation and how it could be reasonably expected to be conducted. That necessarily encompasses the nature of the legal engagement and of the proceedings themselves, their inherent complexity, as well as the way they have in fact proceeded in terms of requiring strict proof and with what degree of adversariality on both sides, as well as the likely requirements of the court.

Leave to appeal?

15 Where the appeal threshold is at such variance with the amount in issue ($100,000 under s101(2)(r) as against $4,190) and where the subject matter of the appeal involves an exercise of discretion in a matter of practice and procedure where constraints on appellate intervention need no rehearsal, those factors weighed heavily against the grant of leave. This is unless there be some real issue of general principle or public importance involved in the case; compare Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl (Court of Appeal, 16 November 1995, unreported) BC9501771, per Kirby P. Moreover, as Sheller JA observed in that case,

“In order to be granted leave to appeal the applicant must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at”. Moreover, there is the consideration emphasised by Cole JA in that case that “it will be an exceptional case in which an appeal to this Court is likely to receive leave whether the sum involved is less than [the] limit … it should be recognised that where such small claims are involved there must be an early finality and determination of litigation, otherwise the costs which will be involved are likely to swamp the money sum involved in the dispute.”

16 These principles necessarily call for a consideration of the merits of the claimant’s contentions were leave to appeal granted. I record that the claimant, were leave granted and the appeal succeed, does not seek costs from the estate of Mr Blake but only, if entitled, a certificate under the Suitor’s Fund Act. It is unclear whether there would be any practical implications in terms of refunding any amounts paid by way of the relevant cost items.

17 I will consider each of the costs questions in the order in which they were dealt with in Hulme J’s judgment of 3 July 1997, noting that that judgment was followed by a series of other judgments relating to costs culminating in his judgment of 28 March 2003.

18 Thus on 3 July 1997 Hulme J handed down a decision ordering costs against T D Kelly & Co as follows:

(i) he disallowed $1,400 in respect of an expert’s report of Bryant Mazaraki Murphy Pty Ltd re the cost of alterations to a home for Mr Blake;

(ii) he required T D Kelly & Co to pay costs of $2,656 for photocopying and consideration of exhibit BN consisting of a certificate of South Australian law at the time of the accident; that certificate contained copies of seventy-seven different Acts, original and amending and regulations, original and amending, as were said to constitute the South Australian statutory law dealing with the subject matter of motor accidents and road traffic as well as civil wrongs, without any attempt to differentiate which of such legislation was relevant and which irrelevant to the particular circumstances of the case.

(iii) he required T D Kelly & Co to pay costs of $134 for sending an expert witness, Mrs Blackman, of Dial-an-angel, copies of a letter and medical reports in September 1993, being attachments to the particulars of negligence, prior to her delivering her report on the plaintiff’s care needs of 2 November 1993.

First Item

19 I start with the $1,400 item in respect of the expert report of Bryant Mazaraki Murphy Pty Ltd.

20 First, it is appropriate that I record what Hulme J said in his judgment of 3 July 1997 concerning the origin of the report:

“In support of the claim that allowance should be made for Mr Blake to be accommodated in premises acquired or adapted for Mr Blake there was prepared and tendered a report from an architect, Mr Mazaraki. On this topic I said:-
“The claim for a purpose-built residence is quantified in accordance with a report of a Mr Mazaraki in the sum of $237,316. In his report Mr Mazaraki costed two residences. One consisted principally of three bedrooms, a living room, dining room, kitchen, laundry, bathroom, hall, entry and garage. It was of brick veneer construction and cost $724 per square metre.
The second included a housekeeper’s flat, a nurses’ or carers’ room where equipment for Mr Blake’s care could be accommodated, a larger main bedroom for wheelchair use and attendant access, an ensuite bathroom designed to an Australian standard and to allow for trolley access, a much larger garage, wider passages and larger spaces for better mobility between items of furniture. Its construction was in cavity brick to resist wheelchair impact. The cost per square metre was $824. The cost of the former house was estimated at $96,709, the cost of the second at $334,025 and the difference of $237,316 is the Plaintiff’s claim.
Mr Mazaraki was not cross-examined nor was any competing report tendered by the Defendant. So far as my notes record no submissions were advanced by the Defendant against my acceptance of the evidence contained in Mr Mazaraki’s report if I took the view that accommodation in his own residence was appropriate for the Plaintiff.
Notwithstanding this approach by the Defendant I am not prepared to include in the Plaintiff’s damages under this heading anything like the amount claimed. The Plaintiff is for all practical purposes immobile. He is presently carried in some fashion from his bedroom to a bathroom and to what I may call an exercise and feeding room. There is no evidence which indicates that he himself needs significantly greater facilities than these although the evidence of Miss Wilson is that his existing accommodation is cluttered and, at least in part, too small. I accept that the Plaintiff’s bedroom and bathroom need to be bigger than usual. The exercise room may well also need to be somewhat larger than a main bedroom or lounge room of average size. Obviously the means of access between these rooms should be wider than a normal doorway and access from those rooms to the outside of the house should follow suit.
But apart from such matters I do not see any need for a residence in which the Plaintiff can be looked after on his own to be any different from many ordinary houses. Obviously the house must be easily accessible by wheelchair but, with minimal alteration many houses are. The claim as advanced is in my view ridiculous.
Mr Mazaraki’s report included arguments against the alteration of an existing residence. Some of these no doubt have some validity in some situations but it requires no knowledge beyond that of the community generally to recognise that the addition of “granny flats” is by no means an unknown phenomenon in Sydney. A “granny flat” to accommodate the Plaintiff might well be larger than usual but again many homes have quite sufficient land for this.
Given the absence of debate on this topic during the course of the hearing I think I should be willing to hear the parties further on the topic of the appropriate quantum of any allowance for a private residence for the Plaintiff. However, my tentative inclination is that the appropriate amount is a sum of $67,500. this is calculated by adopting Mr Mazaraki’s $824 per square metre, multiplying this figure by 57.6 square metres being the area allowed by him for the Plaintiff’s bedroom and ensuite (3.6m x 8m) and adding a similar area for an exercise room and storage, adding a sum of $10,000 for contingencies and a similar amount for consultant’s fees and escalation.”
My offer to hear the parties further was not taken up.

In my reasons of 11 December 1995 also I observed that there was a deal of duplication in the documentation on the topic of the cost of accommodation for the Plaintiff and that the work involved in its preparation must have been significantly more than was necessary or appropriate to the facts of the case. I also took into account the effect on the Defendant’s costs an excess of zeal on the Plaintiff’s side of the record would have had.” (at pp3-5).

21 To that should be added what Hulme J said at pages 15-18 of that judgment omitting less relevant matters:

“Firstly, given the nature of adversarial litigation it is appropriate and indeed necessary for solicitors engaging in such an exercise to ensure that any claim made and the evidence obtained in support do not sell their clients short by reason of being too little. In this regard I do not intend by anything I say to suggest that any nice judgment is required, error in which lays a solicitor open to the risks of an order for costs being made against him. Nevertheless, it is incumbent on solicitors to ensure that any claim bears a reasonable relationship to the facts of a case as those facts are known to the solicitor. The duty solicitors owe to the Court and to their clients may at times require them to take steps to check or have checked information given to them. The duty requires them to exercise a reasonable degree of care in the giving of instructions to experts such as Mr Mazaraki to ensure that the task undertaken by the experts is itself one which has a reasonable relationship to those facts. After all, someone will have to face the costs of an expert’s work and in many if not most cases a response from the opposite side in the litigation can be expected to be influenced by the terms of any report served .
Secondly, I accept that there is considerable scope for the exercise of judgment in the formulation and in the method of preparation of cases and that the test is not whether, particularly with the benefit of hindsight, that formulation or preparation should or could have been done differently and less expensively.
………
Turning to Mr Mazaraki’s report, it was clearly appropriate for the solicitor to make a claim in the proceedings for the cost of accommodation for Mr Blake and in that connection to obtain a report from someone such as Mr Mazaraki. However that is not the issue. The issue concerns the extent of the claim made, and of the report from Mr Mazaraki. It was submitted that the approach of the Defendant’s legal representatives to which I have referred in the passage quoted argues, if it does not demonstrate, that the approach taken by the Plaintiff’s solicitors and Mr Mazaraki was justified and that the Plaintiff’s solicitor would have been guilty of professional negligence if he had not advanced the claim as he did. I agree that the approach of the Defendant’s legal advisers is a factor to which I should have regard. However it cannot be determinative. I must make my own judgment.
Reconsideration has not caused me to depart in any way from the views I have previously expressed. The claim that the Plaintiff’s accommodation needs were such as to justify a new and purpose built house and that he should therefore recover the cost of that, to the extent to which it exceeded the cost of a more modest and, one might say, usual standard residence was not justified. I do not mean by that it failed. Its bringing was not justified by the facts the solicitor must have known.
To the extent to which costs were incurred as a result of what may be described in the extravagance in the claim they should in my view be laid at the solicitor’s door. However, that some accommodation claim and report from Mr Mazaraki was justified means that it is only those extra costs which should be treated in that way.
Rule 66 enables me to seek a report from a taxing officer before making any order under the rule. However that if the Court can deal with the matter on its own the Court should do so. The costs and expenditure of resources involved in the obtaining of such a report, even if some greater reliability in the quantification of amounts involved, is not unlikely to exceed the benefits of greater precision. In this case there is enough material before me to make what I regard as a proper order although in light of the fact that I feel unable at this stage to adopt this approach to the other matters, I will refer this matter also for taxation or assessment if the solicitor desires me to do so.
Mr Mazaraki’s firm charged $4078 for three reports including $1400 for the report with which I have the greatest concern, that of 24 April 1994. To that sum there were added amounts for interest. The interest rate since 30 September 1994 seems to have been about 14%. The approach taken by Mr Mazaraki involved him in costing two residences, each larger than the accommodation which Mr Blake reasonably needed and this topic took up about 6 pages of a 13 page report. The balance of the report contains some introductory material, about 2 pages of material copied from an earlier report and deals also with ongoing costs. Some of the latter reflects aspects of the claim I regard as extravagant. I have no doubt that the vast bulk of work reflected in the $1400 charged was the work I regard as unnecessary. …..” [emphasis added]

22 The actual report is to be found in Addendum A to the White Book at 2. The report is prepared by an undoubted expert architect on the accommodation needs of handicapped persons. Essentially, it sets out what the expert considers to be the appropriate course. He recommends building a new home in which the plaintiff’s horrendous disabilities would be properly accommodated. In the expert’s opinion, this was preferable to altering an existing house by reason of what the expert considered to be “invariably practically double the related new cost” (para 6.4). The report concluded with a comparison of cost of housing for an able-bodied person ($96,709) and the cost of housing for a handicapped person ($334,025), so deriving an estimate of additional capital costs of $237,316.

23 As can be seen from the trial judge’s rejection of that figure, he concluded not only that the additional cost would be unjustified but that the bringing of such a claim was “not justified by the facts the solicitor must have known”, being “costs … incurred as a result of what may be described in the extravagance in the claim”.

24 Nonetheless, the trial judge did allow a lesser figure of $67,500 calculated by adopting Mr Mazaraki’s own expert assessment of $824 per square metre.

25 The fundamental problem with this approach was not that no report was prepared in opposition and no attempt made to cross-examine Mr Mazaraki by the defendant. All of that may be explicable on the basis that the defendant did not consider that necessary in order to refute the extra cost. Rather, the objection that the claimant makes is that nowhere does the trial judge articulate reasons why it was not proper for the plaintiff to have engaged Mr Mazaraki to prepare such a report. I mean by that, reasons distinct from the trial judge’s reasons for rejecting the claim based on that report, when

(a) the rejection was not in toto, and

(b) the architect’s report was necessary support for the claim, even if it was ultimately rejected as extravagant.

26 In particular, one might imply from the trial judge’s disallowance of the cost of the report that there was some inferred unreasonableness in instructing the architect in the first place. But if that were so, no basis is set out in for such an inference as, for example, medical reports or some other source for suggesting that the reference to Mr Mazaraki as an expert on housing for a disadvantaged person was unreasonable. The cost of the report, $1,400, does not appear excessive. There is no suggestion in the trial judge’s reasons that the architect must have been misled in the instructions given him. Nowhere does the trial judge conclude that the solicitor concerned should have gone to another architect or gone with different instructions. Indeed had he done so, no doubt further costs would have been incurred.

27 Underlying all of this is the implication that the argument put for the costs of a new purpose-built house for Mr Blake in his severely handicapped state was not merely wrong, but an argument improperly put, such that the cost of the disbursement should be disallowed; and that, notwithstanding that an allowance was made for conversion costs for which such an expert’s report could not be irrelevant. Indeed the trial judge himself drew on the per square metre cost of construction of Mr Mazaraki. The reasons the trial judge give relate to why the argument was wrong, not why it was improperly put.

28 In all of this, the role of the costs assessor should not be disregarded. To the extent that Mr Mazaraki charged, as the trial judge explains, $4,078 for three reports including $1,400 for the report of 24 August 1994, there could have been a disallowance to the extent unjustified. It does not appear that there was any such disallowance. It is conceivable that the trial judge, proceeding by impression, had considered that the $4,078 for the three reports was excessive and therefore $1,400 should be required to be borne by the solicitor concerned for that reason also. But if so, that is again nowhere expressly stated.

29 The emphasised portion of what the trial judge says contains trenchant criticism of the solicitor concerned. I refer in particular to the statement that “the duty [solicitors owe to the court and to their clients] requires them to exercise a reasonable degree of care in the giving of instructions to experts such as Mr Mazaraki to ensure that the task undertaken by the experts is itself one which has a reasonable relationship to those facts …”. That suggests that the solicitor concerned was negligent in employing Mr Mazaraki. But this is again without reasons for that assertion, save as some kind of carry over from the reasons leading the trial judge to reject the claim for a new house, yet allow $67,500 for conversion costs. There is no explanation for why an argument for the larger figure, an argument that ultimately failed, should, even if extravagant, lead to mulcting of the solicitor with the costs.

30 In reaching the conclusion that the cost of this item should not have been effectively imposed on the solicitor Kelly rather than the client, I base it essentially on a lack of reasons. There is also in the unreasonableness of the result, absent reasons explaining it, as to indicate error of the kind identified in House v the King, though the precise error is not readily identifiable where reasons are lacking.

Conclusion – First Item

31 Accordingly, I would give leave to appeal in relation to that aspect of the trial judge’s orders and I would grant the appeal so far as that item is concerned.

Second Item

32 I turn now to the costs of copying and consideration of Exhibit BN whereby some 500 pages of the copied South Australian legislation was attached to the certificate of South Australian law. Here, the claimant contends that it could not assess which part of the legislation might or might not be relevant or at any rate could not do so save with hindsight of the kind that the trial judge says was an inappropriate basis for assessing whether the costs were incurred improperly or without reasonable cause. This assessment, necessarily calling on some legal judgment, might have itself involved costs. But no doubt that cost would have eventually had to be incurred anyway, in framing an appropriate argument. Mindless copying carries its own multiplier effect, as each party may be expected to replicate it. One can well understand the trial judge taking the stance he did.

Conclusion

33 The exercise of discretion by the trial judge does not disclose any failure to make the necessary findings upon which that exercise of discretion must necessarily depend. I do not consider that leave to appeal should be granted in respect of this item. The exercise of discretion does not warrant any appellate intervention, applying the principles of House v the King (supra).

Third Item

34 I turn finally to the costs of $134 for sending Mrs Blackman of Dial-an-angel copies of a letter and medical reports in September 1993, prior to her delivering her expert report of 2 November 1993. These items basically concern a number of letters, principally consisting of medical reports and associated material, which were attached to the pleaded particulars. The claimant by way of example referred to a letter of 14 March 1990 from one of the medical experts, Dr Yeo, to the solicitor concerned dealing with the needs of Mr Blake in terms of feeding. That clearly had a direct relevance to the expert Mrs Blackman when reporting on his need for care. More broadly, none of this material would appear to be irrelevant in the context of a witness who faced cross-examination. Such a witness clearly requires proper briefing else otherwise how could she withstand the criticism that she had not made herself sufficiently informed of the plaintiff’s relevant circumstances before giving her opinion.

35 The trial judge in his judgment of 28 March 2003 at [32] refers to “the inappropriate actions of the solicitor in sending the medical reports to Dial-an-angel”. Such a criticism bears directly on the competence at the least of the solicitor concerned It may well go further, given what is said at [34] in the same judgment: “Mr Kelly is obviously at risk in the future … of orders more serious than ones dealing only with money”.

36 That reference may even suggest that the solicitor charged extortionate or grossly excessive costs as might amount to professional misconduct (Re Veron (1966) 84 WN(Pt 1)(NSW) 136 at 144(CA). While that may be going further than the veiled reference quoted above, nonetheless that implication is still there.

Conclusion

37 In all the circumstances and for similar reasons to item (i), I would allow the appeal in relation to this item, small as it is, and would conclude that the appeal should succeed in relation to that item.

OVERALL CONCLUSION

38 It is important that trial judges should continue to intervene, and even when warranted of their own motion, where costs have been incurred improperly or without reasonable cause. The role of an appellate court is ordinarily to respect the greater familiarity of the trial judge in such interventions. An appellate court should refrain from substituting its own judgment on such a matter of practice and procedure, unless there is indeed good ground for doing so. While one may understand the concerns that led the trial judge in this case to take the position he did, I consider that the discretion did miscarry in the two instances identified so as to warrant appellate review, given also significant adverse implications for the reputation and professional standing of the solicitor concerned. I would propose the following orders:

(1) Leave to appeal granted, but only in respect of the disallowance of $1,400 in respect of the expert’s report of Bryan Mazaraki Murphy regarding the costs of the alteration to her house, and the costs of $314 disallowed for sending Mrs Blackman of Dial-an-angel copies of a letter and medical reports in September 1993.

(2) The appeal in respect of the items in (1) above is allowed and the orders of the trial judge in respect of those items, set aside.

(3) The claimant is to have a certificate under the Suitor’s Fund Act 1951, if entitled.

(4) The claimant is to file a Notice of Appeal within fourteen days.

39 BRYSON JA: In proceedings 12242 of 1998 in the Common Law Division Mr P J Blake was the plaintiff and Mr W P T Norris was a defendant. The claimant is a solicitor and he acted for the plaintiff on the instructions of the plaintiff’s tutor in those proceedings. The claimant applies for leave to appeal against orders made by Hulme J on 19 August 1998 and 28 March 2003. These orders dealt with a small part of the costs which the claimant is entitled to charge Mr Blake, his tutor and the guardian of his protected estate, relating to the conduct of the litigation. The relevant part of the order of 19 August 1998 is:

As between the Plaintiff … and [the claimant’s firm], I disallow the sum of $1,400 costs charged in respect of the report of Mr J J Newlin-Mazaraki of Bryant, Mazaraki Murphy Pty Limited, dated 24 August 1994.

40 The relevant part of the order of 28 March 2003 is in these terms:

That [the claimant’s firm] pay the Plaintiff’s costs of and incidental to,
(i) the copying and consideration of the document which became Exhibit BN in the proceedings, in the sum of $2,656, and
(ii) the furnishing to Mrs Blackman (of Dial-an-Angel) with the solicitor’s letter of 1 September 1993 of copies of medical reports, in the sum of $134.

41 These orders were made in exercise of the powers in s.76 of the Supreme Court Act 1970 and Pt.52 r.66 of the Supreme Court Rules 1970.

42 Although Mr Blake and the guardian of his estate, and less directly Mr Norris appear to have interests in these orders, they did not take any significant part in the proceedings before Hulme J which led to the orders; his Honour undertook consideration of his own motion. On the application for leave to appeal those persons filed submitting appearances.

43 The terms of the orders show that the total of the costs to which the orders relate is $4,190. The claimant does not ask for any order for costs of the proposed appeal against any other party, but asks for an order for costs, if available, out of the Suitors’ Fund.

44 The proposed appeal would be brought under s.101 of the Supreme Court Act 1970. Leave is necessary under subs.101(2)(c) as the orders relate to costs which are in the discretion of the Court. According as the orders are classified on the characteristically difficult divide between interlocutory and final orders, leave may also be necessary under subs. 2(e) relating to interlocutory judgments, or subs.2(r) which relates to final judgments and claims over $100,000.

45 The merits of the proposed challenges are relevant to the grant of leave to appeal. In my view the challenge on appeal to each of the orders is reasonably arguable, although not with uniform strength; the judgment of Santow JA shows why this is so. However where leave to appeal against a costs order is sought more has to be shown than that the orders under appeal are reasonably open to reconsideration; see Wentworth v. Rogers(No. 3) (1986) 6 NSWLR 642 at 644 (Kirby P) and 651 (Priestley JA). When the amount involved in a proposed appeal is small, it is not usually regarded as sufficient that the orders under appeal are arguably wrong; see Dunn v. Ross Lamb Motors [1978] 1 NSWLR 26 at 28. That case has been followed several times but does not expound any principle upon which leave may be granted or refused in small appeals. The enunciation of general principles is inherently difficult, and in view of the discretionary nature of the power to grant leave, may not be possible. Among the relevant considerations is the principle of proportionality described in these terms by Lord Hoffmann in Piglowska v. Piglowski [1999] 1 WLR 1360 at 1373:

… there is the principle of proportionality between the amount at stake and the legal resources of the parties and the community which it is appropriate to spend on resolving the dispute. In a case such as the present, the legal system provides for the possibility of three successive appeals from the decision at first instance. The first is as of right and the second and third are subject to screening processes which themselves may involve more than one stage. If one includes applications for leave, the facts of this case, by the time it reached the Court of Appeal, had been considered by five differently constituted tribunals. This cannot be right. To allow successive appeals in the hope of producing an answer which accords with perfect justice is to kill the parties with kindness.

46 The full force of Lord Hoffmann’s observations does not bear on the present application as there have not been successive appeals, but the small amount involved directs attention to the proportionality between the amount at stake and the resources of the parties and of the community which it is appropriate to use and spend on resolving the dispute. In my opinion the public interest is not well served if a discretionary decision allows or requires litigants to go to appeal on a sum as small as $4,190. The community cannot afford to provide the resources to entertain such appeals, and if it is the perception of litigants that they can afford to do so they must be mistaken. In illustration of this, the prescribed filing fee on the Summons was $656 and the filing fee on a Notice of Appeal if leave to appeal is granted will be $1,380.

47 As a further measure of scale, the amount initially claimed in the plaintiff’s bill of costs was $1,505,793.35 of which $874,952.18 was allowed by the assessor. The sum of $4,190 involved in the orders under challenge is a tiny fragment of both the amount of costs initially claimed and the amount of costs disallowed on assessment of costs inter partes.

48 The relevance of the observations by Lord Hoffmann has been recognised in Rumortex Pty Ltd v. Rodgers & Anor [2000] NSWCA 18 at [8].

[8] What is justice in the circumstances of this case involves more than this submission of the applicant recognises. Amongst other things, the fourth consideration mentioned by Lord Hoffman (referred to in argument today) in Piglowska v Piglowski (1999) 1 WLR 1360 at 1373 could well be relevant in a case of the present kind. His Lordship there mentioned that a matter for consideration is the principle of proportionality between the amount at stake and the legal resources of the parties and the community which it is appropriate to spend on resolving the dispute.

49 In Ozpinar v. Assaily [2001] NSWCA 23 at 13 the Court said:

[13] The object sought to be achieved [in] the provisions contained in s127(2) of the District Court Act 1973, and the like provisions in s101(2)(r) of the Supreme Court Act 1970, is to discourage small appeals where the amount in issue does not justify the cost delay and inconvenience of the appeal process and to ensure that the Court is not burdened by appeals which do not warrant the Court’s time. In an endeavour to ensure that the parties appreciate that that is so SCR Pt51 r8 provides:

"Where an appeal to the Court of Appeal is restricted by reference to any Act to a specified amount or value the appellant shall, within the time limited for instituting the appeal, file and serve on each necessary party an affidavit stating facts which show that the restriction does not apply.”

50 The concept that justice is best served by preventing appeals in very small controversies also finds expression in s.69(2A) of the Local Court (Civil Claims) Act 1970, which severely limits appeals in proceedings in the Small Claims Division of Local Courts relating to sums up to $10,000.

51 In submissions in support of the application for leave to appeal the claimant referred not only to the merits and the likelihood of obtaining a favourable decision on appeal but also gave the following reasons:

12.2 The principle inherent in the judgments of the primary judge if sustained is undermining to the principle of fearless and independent advocacy in the preparation and presentation of claims in the Court.
12.3 It is contended that what the Claimant says is the vice inherent in the judgments of the primary judge is highlighted by his remarks in paragraph 34 of the judgment of 28 March 2003 as follows:
34. Finally I would add this. On one view the smallness of the amounts involves argues strongly against the expenditure of the time and effort which has been involved in the topic with which these Reasons are concerned. On the other hand, simply ignoring the issue is calculated to encourage solicitors generally and Mr Kelly in particular, who said, as recorded in my Reasons of 19 August 1998, that he would prepare the case the same way again, to indulge in unnecessary waste of their clients’ money. Mr Kelly is obviously at risk in the future, should he choose to ignore the principles upon which my decision is based, of orders more serous than ones dealing only with money.

52 In the Draft Notice of Appeal the first of these contentions was stated with greater emphasis in these terms:

That the primary judge erred in the exercise of his discretion as to costs by substituting his own judgment for that of the Plaintiff’s legal advisors as to the appropriate steps to be taken in the preparation and presentation of the Plaintiff’s claim, which it is submitted with respect was a matter within the province and responsibility of the Plaintiff’s legal advisors and not of the primary judge.
This contention should in my view be rejected. The existence and the potential application of Pt.52 r.66 of the Supreme Court Rules 1970 must co-exist with fearless and independent advocacy in the preparation and presentation of claims in the Court. It is for the Court to decide whether an order should be made under that rule.

53 Paragraph 34 of Hulme J’s judgment of 28 March 2003 and particularly its third and fourth sentences, operate as an admonition to Mr Kelly pointing out that ignoring the principles expressed in Pt.52 r.66 upon which the decision was based would expose him to the risk of further orders, an oblique allusion to possible exposure to professional discipline.

54 The contention that the paragraph, including the admonition, reflects adversely on Mr Kelly and his personal and professional reputation were the primary grounds put forward in support of the grant of leave. It was said that this places the proceedings in a special category notwithstanding the small amount involved. Counsel said that Mr Kelly was rebuked, and that he is entitled to have the record set straight or to have a clear statement of the grounds upon which he was rebuked.

55 Hulme J’s admonition was oblique indeed and it must, on any reasonable understanding, be understood that the prospect that professional discipline may be applied to Mr Kelly is quite remote, and could not mature into reality unless he were found to have repeatedly incurred costs improperly without reasonable cause or otherwise in breach of Pt.52 r.66, or to have made a practice of so doing.

56 In my opinion it should be understood, by those in the professional circles in which Mr Kelly’s personal and professional reputation is valued, that there has been no finding of misconduct by Hulme J, and that exposure to any such finding could not occur without some future series of infractions. Indeed other passages in the judgment are to the contrary of a finding of misconduct. There is no finding of any moral failing, or of manipulation or exploitation of the opportunity to incur and charge costs. While the admonition is a rebuke of a kind, on the scale of rebukes it is no more than a mild one. I would think that few people pass through professional lives without incurring some corresponding mild admonitions, and without having some grounds, or some strong sense of grounds for feeling that an admonition was unjustified or excessive. Unless there is some true threat to professional reputation the best recourse is to endure mild actual or perceived injustices with ordinary adult fortitude, not to take them on appeal.

57 Hulme J’s admonition in my view takes a very small place indeed in the professional career and standing of Mr Kelly, who has been practising as a solicitor for more than 40 years. In such a career, and in handling business of such importance as Mr Blake’s claim, it is in my opinion altogether out of scale to see the admonition directed at him by Hulme J, if it should be found not to have been well based, as of sufficient importance to call for appellate intervention. Solicitors with busy practices have their successes and failures on costs questions, and on many other questions, all the time. Their reputations do not depend on particular instances, and it is not appropriate to seek to contest an adverse instance, when it occurs, to the uttermost.

58 In my opinion the Court of Appeal will do best service to justice in most cases by setting its face against granting leave to appeal in circumstances which will enable litigants to use resources, of themselves, of other litigants and of the community, in controversies relating to matters of such a small scale as $4,190, and against allowing the time and attention of the Court of Appeal and other public resources to be involved in any such appeals. This is so no matter how strongly a party is convinced that some matter of principle is involved, or that the adverse decision has in some way been an affront. There are limits to what justice can achieve.

59 In my opinion the Court of Appeal should not grant leave to appeal and should order: the Ordinary Summons is dismissed.

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Last Modified: 08/09/2004