Kowalski v Cole

[2016] SASCFC 142

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court: Permission to Appeal in Private)

KOWALSKI v COLE

[2016] SASCFC 142

Judgment of The Full Court

(The Honourable Chief Justice Kourakis, The Honourable Justice Kelly and The Honourable Justice Blue)

22 December 2016

PROFESSIONS AND TRADES - LAWYERS - COMPLAINTS AND DISCIPLINE - DISCIPLINARY PROCEEDINGS - SOUTH AUSTRALIA - PROCEEDINGS IN TRIBUNALS

PROCEDURE - COSTS - APPEALS AS TO COSTS

PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT

Application for permission to appeal against costs order made by Legal Practitioners Disciplinary Tribunal.

The applicant brought two charges of unprofessional conduct against the respondents in the Legal Practitioner’s Disciplinary Tribunal. The Tribunal dismissed the charges after a hearing. The Tribunal ordered that the applicant pay the respondents' costs of each action.

The applicant seeks permission to appeal against the costs orders on the ground that the Tribunal erred in adopting as a starting point that costs should follow the event.

Held by the Court:

1. As a general principle, it is appropriate for the Tribunal to adopt a starting point that costs follow the event, provided that the Tribunal takes into account any relevant circumstances by reason of which such an order would not be appropriate (at [10]).

2. There were no special circumstances in the present case by reason of which an order that costs follow the event was not appropriate (at [10]).

3. Permission to appeal refused (at [12]).

Legal Practitioners Act 1981 (SA) s 31, s 41, s 85, referred to.
Mericka v Rathbone [2016] SASCFC 95, discussed.

KOWALSKI v COLE
[2016] SASCFC 142

Full Court: Kourakis CJ, Kelly and Blue JJ

THE COURT:

1. This is an application for permission to appeal against a costs order made by the Legal Practitioners Disciplinary Tribunal.

2. In 2007, Kazimir Kowalski laid in the Tribunal a charge of unprofessional conduct against Russell John Cole (no 14 of 2007) and a second charge of unprofessional conduct against Russell John Cole and William Andrew Sim (no 13 of 2008).

3. The first charge alleged that on 28 March 2007 Mr Cole made a false statement to Mr Ward SM by stating that Mr Kowalski had not made a request to RJ Cole & Partners under subsection 41(2) of the Legal Practitioners Act 1981 (SA) (the Act) for a detailed cost breakdown of RJ Cole & Partners’ 20 March 1992 account within six months of receiving RJ Cole & Partners’ account or indeed at all.

4. The second charge alleged that Messrs Cole and Sim either made a false statement in their particulars of claim in the Magistrates Court action heard by Mr Ward SM by stating that the $9,118.45 held in their trust account was not trust money (count 3) or deliberately breached subsection 31(6) of the Act by intermixing in their trust account $9,118 of their own funds with trust monies held for Mr Kowalski (counts 1 and 2).

5. On 5 August 2015, the Tribunal delivered reasons for dismissing both charges. In relation to the first charge, the Tribunal found that handwritten annotations by Mr Kowalski on RJ Cole & Partners’ account did not amount to a request for a detailed cost breakdown and in any event Mr Kowalski had not proved that this document was delivered to RJ Cole & Partners within six months. In relation to the second charge, the Tribunal found that count 3 was not made out because the relevant “statement” in the particulars of claim was the seeking of relief by way of a declaration that the monies were not trust monies, and seeking a declaration did not amount to a statement of fact. The Tribunal found that counts 1 and 2 were not made out because, although firm money was paid into trust, when that occurred it took on the mantle of trust money.

6. After the Tribunal delivered its reasons for dismissing the charges, Messrs Cole and Sim sought orders pursuant to subsection 85(1) of the Act that Mr Kowalski pay their costs of the proceedings. Both parties made written submissions on the question of costs.

7. On 8 September 2015, the Tribunal made orders that Mr Kowalski pay the practitioners’ costs of and incidental to each action. The Tribunal gave reasons for its decision, holding that the starting point was that costs follow the event and there was no reason why it should not make such an order. The Tribunal said:

   Section 85 of the Legal Practitioners Act … gives the Tribunal power to award costs.

   The general principle is that costs follow the event. Under those circumstances there needs to be some reason established on behalf of Mr Kowalski why an order for costs against Mr Kowalski as the unsuccessful complainant should not be made.

   …

   [Mr Kowalski contends] that it is not just and reasonable for the Tribunal to make an order for costs against him on the grounds set out at paragraphs 2.1 and 2.2 of his written submissions dated 9 August 2015.

   The Tribunal has carefully considered all of Mr Kowalski’s submissions. If the Tribunal does not repeat a submission in these reasons it does not mean that it has not given it careful consideration.

   …

   Notwithstanding Mr Kowalski’s written submissions, the Tribunal considers that it is just and reasonable that the Practitioners have an order in their favour for the costs of the hearing. There is nothing which Mr Kowalski raises that persuades the Tribunal that the ordinary rule should not apply.

8. Mr Kowalski seeks permission to appeal against the costs orders on the ground that the Tribunal erred in adopting as a starting point that costs should follow the event. Mr Kowalski contends that the Tribunal’s power to order costs, as conferred by subsection 85(1), is conditioned upon a costs order being “fair and reasonable” and that this is a different test to an approach under which the starting point is that costs follow the event.

9. Subsection 85(1) of the Act provides:

   The Tribunal may make such orders as to costs against any person on whose application an inquiry has been held, or against any legal practitioner or former legal practitioner whose conduct has been subject to inquiry, as the Tribunal considers just and reasonable.

10. In Mericka v Rathbone,[1] this Court recently considered the question whether the appropriate starting point for consideration of an order for costs under subsection 85(1) is the general principle that costs follow the event. This Court held that this is an appropriate starting point, albeit the Tribunal is required to take into account any relevant circumstances by reason of which such an order would not be appropriate. Examples of such circumstances were identified. There were very unusual circumstances in Mericka v Rathbone which justified a departure from the usual starting point that costs follow the event. No such circumstances exist in the present case.

    [1] [2016] SASCFC 95.

11. The circumstances that proceedings are not frivolous, vexatious and/or foredoomed to fail is not sufficient reason in itself not to order that costs follow the event.

12. For these reasons, we refuse permission to appeal.