Lahoud v Lahoud - [2012] NSWCA 401

This decision has been amended. Please see the end of the decision for a list of the amendments.

Court of Appeal

New South Wales

Case Title: Lahoud v Lahoud

Medium Neutral Citation: [2012] NSWCA 401

Hearing Date(s): 20 September 2012

Decision Date: 11 December 2012

Before: Meagher JA (at [1]), Barrett JA (at [2]), Tobias AJA (at [123])

Decision:
1. Appeal dismissed.
2. Order that the appellants pay the respondents' costs of the appeal.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords: PROCEDURE - judgments and orders - amending varying and setting aside - order for payment of interest - express reservation of further consideration - whether subsequent order may vary existing regime by removing entitlement to interest already accrued - INTEREST - order for payment of interest - rights thereunder - common law rule as to accrual of interest - APPEAL - review of factual findings - whether evaluation attended by error

Legislation Cited: Legal Profession Act 2004, Part 3.2, s 368(5)

Cases Cited: Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201 Caboolture Park Shopping Centre Pty Ltd v White Industries (Qld) Pty Ltd (1993) 45 FCR 224 Certain Lloyds Underwriters v Giannopolous [2009] NSWCA 56 Chow Yoong Hong v Choong Fah Rubber Manufactory [1962] AC 209 Davidson v Greedy [2012] VSC 202 Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593 Juul v Northey [2010] NSWCA 211 Kyabram Property Investments Pty Ltd v Murray [2006] NSWSC 54 Lahoud v Lahoud [2005] NSWSC 509 Lahoud v Lahoud [2005] NSWSC 1019 Lahoud v Lahoud [2006] NSWSC 126 Lahoud v Lahoud [2006] NSWCA 169 Lahoud v Lahoud [2007] HCATrans 128 Lahoud v Lahoud [2011] NSWSC 994 Preston Banking Company v William Allsup & Sons [1895] 1 Ch 141 Remington Products Australia Pty Ltd v Energizer Australia Pty Ltd [2008] FCAFC 47; (2008) 246 ALR 113 Re Scowby; Scowby v Scowby [1897] 1 Ch 741 Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 Willingale v International Commercial Bank [1978] AC 834

Category: Principal judgment

Parties: Victor Lahoud - First Appellant Castle Constructions Pty Ltd - Second Appellant Solidaire Pty Ltd - Third Appellant Joseph Lahoud - First Respondent Joseph Lahoud & Associates - Second Respondent

Representation

- Counsel: M L D Einfeld QC/J S Phillips - Appellants I M Neill SC - Respondents

- Solicitors: McLachlan Thorpe Partners - Appellants Verekers Lawyers - Respondents

File Number(s): 2007/255809

Decision Under Appeal

- Before: Campbell JA

- Date of Decision: 01 September 2011

- Citation: Lahoud v Lahoud [2011] NSWSC 994

- Court File Number(s): 2001/3606

JUDGMENT

MEAGHER JA: I agree that the orders proposed by Barrett JA should be made for the reasons that his Honour gives.
BARRETT JA: The appellants are Victor Lahoud and companies associated with him. They are referred to as "the VL parties". The respondents are Joseph Lahoud and a company associated with him. They are referred to as "the JL parties".
The VL parties appeal against certain orders made on 1 September 2011 in Equity Division proceedings between the JL parties as plaintiffs and the VL parties as defendants. The proceedings were determined, as to all substantive matters, as long ago as May 2005. The JL parties were successful: Lahoud v Lahoud [2005] NSWSC 509. There was dispute about the orders that should be made to give effect to the substantive decision. That aspect was determined on 13 October 2005: Lahoud v Lahoud [2005] NSWSC 1019.
The trial judge then proceeded on extended leave and applications concerning the costs of the proceedings were later heard and determined by Campbell JA who was at that time a judge of the Equity Division.
His Honour :
(a) made certain orders on 10 March 2006 concerning the costs of the proceedings; and
(b) in response to a subsequent application by the VL parties, made further orders on 1 September 2011 in relation to the subject matter of the 2006 orders.
Certain of the orders made on 1 September 2011 are challenged upon the present appeal.

The March 2006 orders

The orders of 10 March 2006 were as follows:
"1. Order the defendants to pay, on an indemnity basis, the costs of the plaintiffs concerning the issue propounded in paragraphs 12, 13 and 14 and prayers 7 and 8 of the Amended Notice of Cross-Claim, being costs incurred in the period commencing 18 June 2004.
2. Subject to Order 1 and any other costs orders previously made, order the defendants to pay the costs of the plaintiffs of these proceedings, and of proceedings 6132 of 2005, 6079 of 2005 and 2530 of 2004.
3. In this order:
X - equals the total amount of costs and disbursements which the plaintiffs have paid or are liable to pay to their legal advisers in connection with these proceedings.
Y - equals the total amount of costs and disbursements allowed on assessment to the plaintiffs in connection with these proceedings.
The Allowed Percentage equals ((y/x ) x 100)%
Order the defendants to pay to the plaintiffs interest on costs and disbursements, at the rates set out in Schedule 5 Uniform Civil Procedure Rules, on the Allowed Percentage of each amount of costs and disbursements actually paid by the plaintiffs, from the date of payment by the plaintiffs of each such amount of costs and disbursements until the first to occur of:
(a) such time as the defendants have paid the costs due to the plaintiffs under any order made in these proceedings, or
(b) any further order relating to interest on costs in these proceedings.
4. Reserve further consideration of whether interest on costs should continue to run.
5. Order the plaintiffs to pay 40% of the costs of the defendants of the plaintiffs' application for indemnity costs and interest on costs.
6. All applications not previously decided in proceedings 6132 of 2005, 6079 of 2005 and 2530 of 2004, in the Equity Division of this Court are dismissed.
7. Direct Orders 2, 5 and 6 not be entered for 21 days after the date of delivery of these reasons for judgment.
8. Reserve liberty to either party to apply, at a time arranged with my Associate within 14 days of the date of delivery of these reasons for judgment, to vary Orders 5 and 6, and to vary Order 2 insofar as it makes costs orders concerning proceedings 6132 of 2005, 6079 of 2005 and 2530 of 2004 in the Equity Division of this Court."
The reasons of the primary judge for the making of these orders of 10 March 2006 were published on the day on which the orders were made: Lahoud v Lahoud [2006] NSWSC 126.
For present purposes, it is sufficient to quote [88] of those reasons of 6 March 2006 which relate to interest on costs:
"When judgment is given for a sum of money which is ascertained, it is usual for post-judgment interest to run on that sum of money until such time as the judgment has been paid. An order for payment of interest on costs operates somewhat differently, in that the amount of the costs is not quantified at the time of making of the order. Further, a measure of co-operation is needed to quantify that order for costs. If it were to happen that Joseph's interests were to delay in obtaining an assessment of costs, the result could be that Victor was obliged to pay interest, at the comparatively high rates of Schedule 5, during the period that Joseph was delaying. There is no basis in the evidence for concluding that it is likely that Joseph will delay assessment of the costs, but I do not think it right that Victor should be at risk of having to continue to pay interest if Joseph were to delay assessment of the costs, either deliberately, or through some unplanned happening like illness. I will deal with that possibility by making an order that the interest on costs runs until the payment of the costs is made, or further order, and reserving further consideration of the question of whether interest on the costs should continue to run."
An appeal from the first instance decision as a whole was dismissed on 30 June 2006: Lahoud v Lahoud [2006] NSWCA 169. An application to the High Court for special leave to appeal dismissed on 18 April 2007: Lahoud v Lahoud [2007] HCATrans 128. A stay ordered by the trial judge was in place at all material times up to 30 June 2006.

The September 2011 orders

In June 2011, Campbell JA (then a Judge of Appeal) sat again in the Equity Division to hear two notices of motion filed in the proceedings, one by the JL parties and the other by one of the VL parties. These raised three issues described as follows by his Honour in reasons he published on 1 September 2011 (Lahoud v Lahoud [2011] NSWSC 994):
"(1) The manner of calculating interest on costs. The Costs Orders required interest to be paid at the rates set out in Schedule 5 Uniform Civil Procedure Rules . However Schedule 5 has now been repealed. At the same time as that repeal took effect UCPR 36.7 was amended so that interest on costs was to be calculated by reference to a formula dependent upon the Reserve Bank cash rate, rather than by reference to a table that stipulates particular rates of interest for particular periods.
(2) Whether, in exercise of the further consideration that was reserved, there should now be an order that interest not run on costs during four particular periods of time.
(3) Whether a particular judgment that the JL Parties obtained on 17 November 2010, for an amount of costs and interest, on the basis of a Costs Determination Certificate, should be set aside or varied."
The primary judge dealt with the first matter in a way that is of no present relevance. As to the third matter, he made (by consent, ultimately) an order setting aside a judgment that the JL parties had obtained by the filing of a costs assessment certificate (Legal Profession Act 2004, s 368(5)).
It is the judge's treatment of the second matter that is in issue on the present appeal.
As to that second matter, the VL parties contended before the primary judge that the JL parties had been guilty of delay in and about the processes related to the obtaining of a quantification of the costs awarded to them by the orders of 2006. Because there had been no agreement as to the amount of the costs, the JL parties took steps to have the costs assessed under Part 3.2 of the Legal Profession Act. A costs assessor, Mr Connery, delivered a certificate of assessment. The VL parties applied for review of the assessment and the matter was referred to a review panel consisting of Mr Webley and Ms Workman. They in due course delivered their determination, whereupon the VL parties exercised a right of appeal to the District Court where the matter came on for hearing before Judge Armitage on 26 May 2011. At the start of the hearing on the second day, the parties announced that they had reached an agreement under which the appeal was to be allowed and the question of quantification was to go back into the costs assessment system. There it remains.
The case that the VL parties sought to make before the primary judge in 2011 was, in substance, that they should have a measure of relief from their obligation to pay interest on costs under the March 2006 orders because the principal event that would bring that obligation to an end and stop interest running against them (that is, payment by them of the assessed costs) had been delayed by conduct of the JL parties in relation to the assessment process. That, the VL parties said, was the very contingency that the primary judge had recognised at [88] of the reasons of 6 March 2006.
Two issues were debated before and determined by the primary judge regarding this contention of the VL parties. The first concerned the meaning and effect of the March 2006 orders and, in substance, whether the court could, by subsequent order, re-shape the obligation of the VL parties to pay interest so as to reduce the sum to which, at the time of the making of the subsequent order, an entitlement had accrued by force of the original order; or whether the only permissible intervention by subsequent order was one that dealt with the future only and left intact everything that had already flowed from the original order. Stated in more concrete terms, the question was whether if, at a particular time, the original order had operated in such a way that a particular sum had accrued as interest up to that time, the subsequent order could cause that accrued sum to become some smaller sum.
The second question was whether, as a factual matter, the JL parties should be regarded as relevantly responsible for delay of the kind with which a subsequent order of the type contemplated by the 2006 orders could deal.
The primary judge decided both these questions adversely to the VL parties.

The present appeal

The VL parties contend, on appeal, that the primary judge adopted an erroneous construction of orders 3(b) and 4 of the March 2006 orders and an erroneous approach to the power to make a new or further order; and that his Honour's decision on the factual matters was affected by errors in fact finding.
It will be convenient to consider the matters in the sequence in which they have been described.

Construction of the orders - principles

The VL parties say that, because of the way in which the March 2006 orders were framed, it was open to the court to make, in response to the VL parties' 2011 motion, an order that interest not run on costs during four periods which, at the time the motion was filed, lay in the past.
At both the time the 2011 motion was filed and the time it was determined, the VL parties were in a position where interest had been running for a considerable time under the March 2006 orders but no amount of interest had yet become due or payable by the VL parties to the JL parties. The orders operated in respect of each amount of costs and disbursements actually paid out by the JL parties. The requirement the orders imposed was for the payment of interest on part of each such amount at a specified rate "from the date of payment by the plaintiffs [JL parties] of each such amount of costs and disbursements until the first to occur of" two events. The events are specified in paragraphs (a) and (b) at the end of Order 3. They are, in essence, payment by the VL parties of the costs they were ordered to pay (paragraph (a)) and the making of any further order of the court relating to interest on costs (paragraph (b)). In 2011, neither of those events had happened; and that remains the position today.
The orders also made two reservations. There was, in general terms, a reservation of "liberty to apply". In a more specific way, the orders reserved "further consideration of whether interest on costs should continue to run".
Submissions made by counsel for the VL parties to this Court addressed the power of a court to vary orders already made and entered, with particular reference to the meaning and effect of a reservation of "further consideration" and the scope such a reservation allows for alteration of the regime created by the orders concerned.
It was submitted for the VL parties that, whether or not there is a reservation of further consideration, the court has a power to reconsider existing orders based on subsequent events. Several cases were mentioned in submissions.
The first is Preston Banking Company v William Allsup & Sons [1895] 1 Ch 141. The court had made an order for the appointment of receivers of the property of a company. Subsequent orders were made with respect to sale of property of the company. They were to the effect that, upon the payment of certain security by the applicant, the registrar was to appoint a person to conduct the sale; but if the security was not duly provided, the only order was that the applicant pay the costs of the application. The applicant failed to provide the security and made an application to be relieved from the costs obligation arising by default. It was held by the Court of Appeal that there was no jurisdiction to review or change the perfected order. But as Lord Halsbury confirmed (at 143):
"Any application which may be made to the Vice-Chancellor for an order in the nature of a supplemental order is, of course, still within his jurisdiction."
Reference was next made to Re Scowby; Scowby v Scowby [1897] 1 Ch 741, a case of trustees in whose favour orders for taxation and payment of costs out of a deceased estate had been made in 1892. The trustees committed certain defaults before taxation was undertaken and therefore before any payment of costs had been made. New trustees applied for an order staying payment of the costs under the earlier orders until the former trustees had remedied their default. That order was made in 1897 and the question on appeal was whether the judge had had jurisdiction to make it. The substance of the decision appears from the following passage in the judgment of AL Smith LJ (at 754-5):
"Now, first of all, had the learned judge jurisdiction to make this order of December 17, 1896? He did not touch the previous orders of February 4 and December 23, 1892, nor had he any jurisdiction to do so. What he did was to make a supplemental order, to the effect that the two orders of February 4 and December 23, 1892, are not to be further acted upon until the trustees who are in default have put themselves out of default by bringing the money into court as they were ordered to do in 1897, and which they have never done up to the present moment. That he had jurisdiction appears to me to be clear from the judgment of the Lord Chancellor in Preston Banking Co. v. William Allsup & Sons, to which I was a party, and which is to the effect that there is jurisdiction to make a supplemental order upon new facts, although there is no jurisdiction to alter an order when once it has been drawn up and entered. That being so, I think that my brother Kekewich no doubt had jurisdiction to make the order now appealed against."
The VL parties also referred to Caboolture Park Shopping Centre Pty Ltd v White Industries (Qld) Pty Ltd (1993) 45 FCR 224. In that case, substantial proceedings had been litigated to a point where the plaintiff's claims were dismissed and the plaintiff was ordered to pay the defendant's costs. After the judgment and orders had been entered, the successful defendant applied for an order that the plaintiff's solicitors pay its costs on an indemnity basis. The Full Federal Court held, referring to Re Scowby, that there was no jurisdiction to vary or alter the perfected orders but that the application concerning the solicitors merely sought a "supplemental order", leaving the original orders unchanged. Lee, Hill and Cooper JJ said at 235-6:
"There are many cases where supplemental orders will be made and the jurisdiction, while no doubt requiring caution, is not limited merely, as the respondents say, to the making of orders in aid of the enforcement and working out of original orders, although the making of supplemental orders may be appropriate in such cases. Cases such as Ford-Hunt v Raghbir Singh [1973] 1 WLR 738; Universal Homes Ltd v Kloet [1976] 1 NZLR 246; Neylon v Dickens [1987] 1 NZLR 402; and Cowan v Cavanagh [1978] VR 665, are all examples of supplemental orders being made in proceedings where an order for specific performance has initially been made. But it does not follow that the power to make supplemental orders is limited to such a case. That the present case involves the making of a supplemental order is made more apparent when the form of the appropriate order is considered. In purview that order would be that the solicitors pay the costs of White Industries (Qld) Pty Ltd on an indemnity basis and that payment by the solicitors operate to discharge the liability of Caboolture. So framed it is clear that the court has no need in any way to vary or alter any order previously made by it.
The principle behind denying the right of a court to vary or alter a judgment regularly given and entered is the need for finality of litigation. The court has adjudicated upon the facts of the claim brought by a plaintiff against a defendant, found for one side and entered the relevant judgment. Neither the facts nor the law are to be agitated again, save on an appeal. But the issues involved where a claim is made against a solicitor for costs by a party to the litigation have not been determined by the judgment which has been entered. They remain yet to be resolved."

The VL parties also rely on Remington Products Australia Pty Ltd v Energizer Australia Pty Ltd [2008] FCAFC 47; (2008) 246 ALR 113. In December 2007, final orders were made permanently restraining the defendant from making certain representations about batteries. Some three months later, in March 2008, additional orders were made requiring the respondent to remove certain batteries from public display or to mask certain representations printed on them. The Full Federal Court was required to decide whether there had been power to make the later orders. That question was seen as turning on whether those orders operated to vary the earlier orders or merely to supplement them. The decision was that the later orders were of a supplementary nature. They were not inconsistent with the earlier orders but, rather, were "incidental to or in aid of the enforcement and working out of those orders".
None of these cases concerned a reservation of "further consideration" of the original order. In each of them, the question was whether a subsequent order purported to detract from, countermand or cut across an earlier order, or whether its effect was such as to leave the operation of the earlier order intact and to add to, build upon or otherwise supplement the state of affairs it had created.
Where the court makes an order and reserves further consideration, there is an explicit indication that the court may, upon later application, give further attention to some aspect of the consequences of the making of the order. But even then, the principles already noticed apply. This is made clear by the decision of this Court in Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201.
The principal judgment in Australian Hardboards was that of Campbell JA with whom Tobias JA agreed. Young CJ in Eq dissented but, in relation to the relevant part of Campbell JA's judgment, said (at [92]) that he had "little difficulty" with it. After considering the effect of a reservation of liberty to apply, Campbell JA turned to the separate matter of reservation of further consideration and said (at [72] to [75]):
"If the orders in a suit also reserve further consideration, that enables matters not disposed of by the orders made thus far in the suit to be dealt with on a later occasion.
As Young J held in Rosser v Maritime Services Board of New South Wales (No 2) (1996) 14 BCL 375 at 382:
'Reservation of further consideration does not permit the judge to review and reconsider what has been decided by him at an earlier hearing. I so held in NSW Egg Corp v Peek (No 3) (unreported, 13 June, 1986) which was based on what Lord Gifford MR said in Le Grand v Whitehead (1826) 1 Russ 309 at 311; 38 ER 120 at 121, supported by Pritchard v Draper (1830) 1 Russ & M at 191 at 198; 39 ER 74 at 77; Lyne v Lyne (1856) 8 De G M & G 553 at 559; 44 ER 503 at 506 and Haviland v McLeary (1894) 15 LR (NSW) (Eq) 22.'
Further, neither liberty to apply nor reservation of further consideration can be used to obtain an order outside the scope of those sought in the initiating process: Haviland v McLeary (1894) 15 LR (NSW) (Eq) 22; 10 WN (NSW) 146.
One circumstance in which an order for further consideration was traditionally made was if an inquiry or taking of accounts was ordered before an Associate Justice, and the judge who had directed that inquiry or taking of accounts intended to give further consideration to the suit once the outcome of the proceedings before the Associate Justice was known."
Campbell JA had earlier surveyed the case law on the effect of reservation of liberty to apply. His Honour's general conclusion (after a warning that generalisations in judgments must be read secundum subjectam materiam) was stated at [56]:
"[W]hat can be done under a reservation of liberty to apply depends on what needs to be done, in the particular case, to work out the particular orders that have been made. If an order is one the working out of which of its nature involves deciding complex questions, or questions that were not specifically raised at the time that the order was made, those questions can be raised and decided in the original suit pursuant to liberty to apply."
Among the cases referred to by Campbell JA in this part of his judgment was Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593 where McPherson SPJ said at 598:
"... a judgment or order that expressly reserves to parties a leave or liberty to apply can be varied on an application pursuant to such leave only so far as may be necessary for the purpose of working out the actual terms of the order so as to make it more efficacious in matters of detail. What is meant in this context by "working out" the terms of an order is considered in some of the cases on the point. In Cristel v Cristel [1951] 2 K.B. 727, 728, Somervell LJ said it "involves matters on which it may be necessary to obtain the decision of the court. Prima facie, certainly, it does not entitle people to come and ask that the order itself shall be varied". A simple judgment for a money sum requires no "working out" in any sense, so that liberty to apply is quite inappropriate in such a case. On the other hand, there are many orders, particularly on the equity side, as to which the process of carrying the primary judgment into effect may require supervision, with the consequence that further or supplementary orders or directions may be needed to enable it to achieve its purpose. An example commonly encountered in practice is specific performance, where, because the consent or approval of some person or instrumentality may be needed to authorise a preliminary step, the judgment sometimes takes the form only of a declaration that the contract be specifically performed, together with subsidiary orders compelling particular acts to be done. See Egan v Ross (1928) 29 SR (NSW) 382, 388; Hasham v Zenab [1960] AC 316; Brown v Heffer (1967) 116 CLR 344, 350. The primary order may then need to be supplemented by further orders from time to time before the stage is reached at which the defendant can finally be ordered to perform specifically what he contracted to do in the way of transfer or payment as the case may be: Brown v Heffer (1967) 116 CLR 344, 350.
In Penrice v Williams (1883) 23 Ch D 353, 356-357, Chitty J spoke of an order that is 'clearly not of a final character, and also when there is necessarily something to be done irrespective of what appears on the face of the order'. His Lordship was there explaining that in some cases an order may by its very nature need to be supplemented to give full effect to it, in which event liberty to apply is implied and need not be expressly reserved. See also Fritz v Hobson (1880) 14 Ch D 542, 561; Cristel v Cristel [1951] 2 KB 725, 731. A decree of specific performance in the limited form previously described nevertheless is a "final" order for the purpose of appeal and otherwise, and so, at least as to issues litigated, cannot be discharged or varied under liberty to apply, notwithstanding that further decisions and orders may yet have to be made in working out its consequences. What cannot be done under the guise of "working out" an order is to vary it."
As Campbell JA observed at [58] to [60], liberty to apply may be exercised to deal with new facts or circumstances that have arisen since the original order was made. His Honour gave as an example a case where a particular procedural method ordered by the court proves incapable of producing the result to be secured by the order: Kyabram Property Investments Pty Ltd v Murray [2006] NSWSC 54.
The position was summarised by McColl JA (with the concurrence of Basten JA and Campbell JA) in Juul v Northey [2010] NSWCA 211 at [194]:
"The fact that issues have been reserved for further consideration does not mean that any such decision in so far as it decided 'the rights of the parties' can be overturned or varied as a consequence of the inquiry or the further consideration of the matter; the judge cannot review and reconsider what he or she has decided at an earlier hearing."
In the decision from which this present appeal is brought, the primary judge said the following about the scope and effect of reservation of further consideration (at [54]):
"Reservation of further consideration does not permit a judge to review and reconsider a matter that he or she, or another judge, has already decided at an earlier hearing: Rosser v Maritime Services Board of NSW (No 2) (1996) 14 BCL 375 at 382 per Young J; Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201 at [73]; Kara Kar Holdings Pty Ltd v Brookton Holdings [1997] NSWCA 171 at [4] per Powell JA (Sheller JA agreeing)."
The primary judge then stated the following (at [55]) by way of his conclusion as to the application of the relevant principle to the case before him:
"The Costs Orders operate so that interest continues to run at the Schedule 5 rates until the costs are paid or further order. It is possible consistently with what has already been decided by the Costs Judgment, for a further order to be made at a time when the costs remain unpaid, providing that interest on costs should not run for a period of time in the future, or perhaps indefinitely in the future. However, an order made pursuant to further consideration cannot undo what has already been decided. Consistently with the order already made it is only payment, or the making of a further order, that can stop interest on costs from running."

Construction and effect of the orders - consideration

It is necessary at this point to say something about the general nature and effect of stipulations for interest. The foundation of any provision for interest is the notion of compensation for delay in payment - that the party who is subjected to some delay in obtaining a financial benefit is entitled to receive interest to compensate for the need to wait.
The common law rule is that interest accrues from day to day: see, for example, Chow Yoong Hong v Choong Fah Rubber Manufactory [1962] AC 209 at 217; Willingale v International Commercial Bank [1978] AC 834 at p 845. In the normal course of events, therefore, the indebtedness of the person obliged to pay interest is "ever increasing": Davidson v Greedy [2012] VSC 202. At any given time, that person's unsatisfied obligation is an obligation that extends to the principal sum plus the interest accrued up to that time; and this is so even though the time at which payment of principal and interest is to be made lies in the future.
Under the orders of March 2006, each principal sum is, in a sense, notional, being the "Allowed Percentage" of each sum paid out by the JL parties for costs or disbursements. I say that it is notional because, although it is the sum on which interest is calculated, the sum paid out by the VL parties for costs or disbursement is not itself payable at any point by the VL parties to the JL parties. Ultimate payment and receipt will involve the costs the subject of the costs orders, once quantified by assessment.
The period for which interest is to be computed on each such notional principal sum is the period beginning upon the making by the JL parties of the relevant payment for costs or disbursements and ending at the earlier of two alternative points - payment of an assessed costs sum by the VL parties to the JL parties or the making by the court of a further order relating to interest on costs.
If the possibility of a further order of the court is put to one side, the obligation is an obligation to pay interest on each notional principal sum, with the interest computed from the time of payment out by the JL parties until payment by the VL parties to the JL parties of the costs due under the relevant costs order. The clear implication is that, when costs due under a costs order are paid by the VL parties, they must also pay the interest that has accrued at the specified rate, in the way already noted, on the specified part of the sum paid out by the JL parties.
A hypothetical example will illustrate the point. Assume the following:
1. The JL parties paid out $1,000 for costs on 1 January 2005.
2. The "Allowed Percentage" as defined by the orders is 60%.
3. The applicable rate of interest (ie, the Schedule 5 rate) is, at all times, 10% per annum.
4. Following assessment of costs, payment of those costs by the VL parties to the JL parties is made on 31 December 2013.
The effect of the orders, in this hypothetical case, is that, when the VL parties pay the assessed costs on 31 December 2013 (and regardless of the quantum of those costs), they must also pay interest on 60% of $1,000 (ie, $600) for the period 1 January 2005 to 31 December 2013 (ie, a period of nine years) at 10% ($60) per annum - that is, total interest of $540.
At June 2011 when the primary judge heard the applications (or September 2011 when he gave his decision), interest had been running for more than five years and had accrued in such a way that it was possible to calculate the sum that would have been payable as interest had the interest payment obligation become due for discharge at that time. But the fact was that it had not become due for discharge at that time and there would be no requirement actually to make payment until some unascertainable point in the future.
As the orders of March 2006 stand, the total ultimately to be paid consists of the assessed costs and the interest sum calculated in the way for which the orders provide. Until the costs are assessed, the VL parties are not required to pay anything by way of interest. On one possible view of matters, therefore, the court could, without disturbing the March 2006 orders, now stipulate for the eventual payment of some smaller amount of interest or even eliminate the interest requirement altogether.
It seems to me, however, that the accruing nature of interest at common law must be taken to be recognised by and implicitly incorporated into the March 2006 orders, with the consequence that the orders, on their proper construction, stipulate for the results of accrual as I have described them. Reduction or elimination of the kind just mentioned would, for that reason, be inconsistent with those orders. By this I mean that an order that purported to eliminate the accrued interest obligation or to curtail it in such a way as to deny some part of what had already accrued up to the time the order was made would be an order that sought to countermand the aspect of the existing orders involving continuing accrual, with the result that it could not properly be said to be an order supplementing or operating in aid of the existing orders.

The power to make further orders was limited

For this reason I am of the opinion that the primary judge was correct in his conclusion that he had no power to re-shape or qualify the March 2006 orders by denying interest in respect of the four past periods relied upon and thereby to reduce the aggregate interest sum that had already accrued pursuant to those orders.
The same objection would not apply to a new order that left the pre-existing accrual intact and denied only the whole or some part of the interest that the March 2006 orders would otherwise cause to accrue after the making of the new order. The possibility of an order of that kind was expressly contemplated by the existing orders. It was contemplated at two points. First, Order 3(b) envisaged the possibility of a future order causing interest to cease running. Second, the reservation of further consideration in Order 4 related to "whether interest on costs should continue to run". Expressly contemplated, therefore, was the possibility of a subsequent order regarding continuation of the accrual of interest after the making of that order.
I shall return to these matters after assessing the factual issues raised by the VL parties.

The approach to the factual issues

The primary judge proceeded on the basis that, assuming the existence of a power to vary the regime created by the 2006 orders in the way the VL parties sought, that power should not be exercised unless it was just that it be exercised; and that it was for the parties seeking variation (that is, the VL parties) to make a positive case for the exercise of the power. That general approach is not challenged on appeal.
Nor is there challenge to the proposition that it was necessary for the VL parties not only to prove the conduct (including, as relevant, inaction) of the JL parties on which they relied but also to demonstrate that the conduct was causative of relevant delay.
The primary judge referred on several occasions to "undue" delay. It is clear that he approached the matter on the footing that a number of factors were likely to have combined to dictate the pace at which events moved; and that any entitlement to relief on the part of the VL parties would depend on its being shown that conduct of the JL parties was a substantial operative cause of delay. The assessment was made against a standard of reasonable prompt and diligent attention to necessary action.
The VL parties do not seek to question the primary judge's approach.
That approach necessarily shapes the appeal. The JL parties contended before this Court and I accept that:
(a) the primary judge's conclusions on the factual matters were evaluative;
(b) the correct approach on appeal is not that applicable to a review of a discretionary decision but, rather, that the appeal court should consider facts that are accepted and facts which are not accepted but are established by the findings of the primary judge and, on the basis of all such facts, decide the proper inferences to be drawn from them: Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 at 551;
(c) it is accordingly for the VL parties to identify error in the primary judge's evaluation such as to make it objectively wrong: Certain Lloyds Underwriters v Giannopolous [2009] NSWCA 56 at [103].
The VL parties challenge to the primary judge's findings of fact concentrated on four distinct periods of alleged delay. I shall deal with them separately, as the primary judge did.

The first period - the facts and the judge's decision

The primary judge found that the first indication of action by the JL parties towards obtaining an assessment of costs is found in a letter of 26 March 2007 written by Ms Davitt, a costs consultant retained to prepare a bill of costs. The letter referred to instructions recently received by her from the JL solicitors.
The stay ordered by the trial judge had been operative until the dismissal of the appeal by this Court on 30 June 2006. The VL parties say that Ms Davitt's letter indicates that she had been instructed shortly before 26 March 2007 and that the JL parties should have moved more quickly after 30 June 2006 in relation to the preparation of a bill of costs.
The VL parties point out that the JL parties did not hesitate to move towards enforcement of the substantive orders in their favour. They made plain to the VL parties their intention of doing so, assuming there was no renewed stay.
This brought a response from the VL parties on 25 July 2006 that they intended to seek special leave to appeal to the High Court and that moves towards enforcement by the JL parties was therefore "premature and completely inappropriate".
The JL parties nevertheless took steps towards enforcement. In February 2007, they instituted proceedings for contempt because the VL parties had not handed over documents of title as required by the trial judge's orders. In March 2007, they took steps to initiate an inquiry into damages that the trial judge had ordered. Yet, the VL parties point out, the JL parties did not take any real steps towards costs assessment until after the application to the High Court on 18 April 2007.
The first period of delay alleged by the VL parties was the period 1 July 2006 to 28 February 2007. The primary judge's findings and decision in relation to that period were as follows:
"80 I am not persuaded that the failure of the JL Parties to start preparation of the bill of costs in the period between the Court of Appeal stay being lifted, and the application for special leave being dismissed, occurred in circumstances that make it just for the JL Parties not to receive interest on costs during that period. Nor am I persuaded that the steps that the JL Parties took towards obtaining compliance with the orders of Palmer J during the period during which the High Court application was pending show that, if the JL Parties were to continue to receive interest on costs during that period, they should also have been preparing a bill of costs during that time. The VL Parties, by not handing over the indicia of title to the home units, were in breach of orders of Palmer J that were presently performable and enforceable. While those orders required some co-operation on the part of the JL Parties, that co-operation had been proffered. The task involved in preparation of the bill of costs was very large: ultimately the bill was over 600 pages long. The effort involved in taking steps towards enforcing the orders of Palmer J concerning the handing over the indicia of title of the two home units was vastly less. If the application for leave to appeal succeeded, and the appeal itself succeeded, and a new trial produced a different result, the work involved in the preparation of a bill of costs would be totally wasted. By comparison, if there came to be a new trial that altered Palmer J's orders concerning the home units giving restitution concerning the units would not seem to be particularly difficult. It was the VL Parties themselves who had cast a cloud over the enforceability in the longer term of the Costs Orders, in the period immediately following the judgment of the Court of Appeal, by lodging, on the last available day, their application for special leave to appeal.
81 Further, though the JL solicitors had discussions with Ms Davitt about the basis on which she might prepare the bill of costs before the High Court's decision was known, there is no evidence of Ms Davitt having done work of any substance before the High Court's decision was known. The communications between the solicitors in May 2007 ([69] above) are consistent with that. Indeed, lining Ms Davitt up to be ready to prepare the bill of costs, if the High Court application were to fail, is consistent with the JL Parties pressing on with enforcing the costs order.
82 Similarly, it has not been shown that any work of substance was done concerning the enquiry as to damages before the High Court decision, or that the filing of the notice of motion to initiate the enquiry was anything other than a necessary first step. These comparatively small steps bear no comparison with the very large task of preparation of the bill of costs, and do not show that preparation of the bill of costs should have commenced earlier.
83 In all these circumstances, I am not persuaded that there has been undue delay on the part of the JL Parties during the First Delay Period."

The first period - assessment

The VL parties say that there is a distinct incongruity between the finding that, pending the outcome of the special leave application, the documents of title should have been handed over by the VL parties in accordance with the trial judge's orders and the finding that, at the same time, it was, as it were, in order for the JL parties to be inactive in the matter of costs assessment.
The VL parties challenge, in particular, the primary judge's finding that, if there were a new trial, as a result of a High Court appeal, there would be no difficulty in effecting restitution of the home unit properties if they had been transferred in accordance with the trial judge's order. Reference was made to the possibility that the transferred properties might be sold, mortgaged or dissipated, so that restitution became problematic or impossible.
The JL parties' response is that monetary restitution could have been ordered but, in any event, that no error has been shown in the evaluation that the primary judge undertook.
These submissions of the JL parties should be accepted. The possibility that a new trial might be ordered by the High Court existed until 18 April 2007. There was nothing to preclude attempts - even opportunistic attempts - by the JL parties to obtain the fruits of their victory in the meantime. It may be noted that their attempt by way of contempt motion was unsuccessful, that motion being dismissed on 27 February 2007.
It is, to my mind, significant that, after the initiation of the High Court application by the VL parties in or soon after late July 2006, there was a request by the VL parties that the JL parties hold off enforcement and similar action pending determination of that application and, in particular, that the JL parties did not initiate any such action until 15 February 2007 which cannot have been very much before the "recent letter" concerning costs assessment referred to by Ms Davitt in her letter of 26 March 2007. It thus appears that action by the JL parties on the two relevant fronts (enforcement of orders and initiation of steps towards assessment of costs) was initiated at more or less the same time; and that, until then, they had acted as the VL parties wished them to act, that is, by desisting from actions on the basis of the Court of Appeal's dismissal of the appeal until the outcome of the High Court application was known.
The primary judge's evaluation in relation to the first period is, in my opinion, not shown to be affected by error.

The second period - facts and the judge's decision

The second period referred to by the VL parties is the period from about February 2008 to July 2008. They allege that Ms Davitt had completed the bill of costs by some date in February 2008 and that the JL parties did not take steps to serve it until 10 July 2008.
Relevant facts as found by the primary judge were, in summary, as follows:
1. Ms Davitt wrote to the JL parties' solicitors on 7 January 2008 saying that she had "the first draft of the primary bill of costs ready" and that it "may be helpful" for Joseph Lahoud to "go through the draft prior to my finalising it".
2. On 26 February 2008, Ms Davitt wrote to the solicitors saying that she had prepared the bill of costs. She enclosed the file and her tax invoice.
3. On 3 March 2008, Joseph Lahoud emailed the JL solicitors referring to Ms Davitt's bill "delivered to your office this morning" and attaching "my schedule of invoices for professional fees and disbursements since 2001". He asked that the solicitors "check my invoices and calculations so we can serve the correct claim ASAP".
4. On 15 May 2008, Ms Davitt wrote to the JL solicitors outlining a suggested procedure for notification by them of suggested amendments to the bill.
5. On 19 June 2008, Joseph Lahoud emailed the JL solicitors saying that he had "discussed figures and documents" with Ms Davitt and that she would "attend to it this weekend so we can send to the other side early next week".
6. On 27 June 2008, the JL solicitors wrote to the VL solicitors asking whether they had instructions to accept service of bills of costs. A letter sent by the JL solicitors on 1 July 2008 referred to a telephone conversation on 30 June 2008 in which the VL solicitors said they did not have such instructions.
7. It appears that the bills totalling more than 700 pages were then copied and served on the three VL parties in accordance with the applicable rules.
The primary judge's assessment in relation to this period was as follows:
"93 I am not persuaded that Victor Lahoud has established that these events demonstrate that the JL Parties engaged in any undue delay in advancing assessment of the costs in the period between January and July 2008. The evidence does not establish what particular bills of costs were the subject of Joseph's email of 3 March 2008, or Ms Davitt's letter of 7 June 2008. Further, the delay between 27 June 2008 and 10 July 2008 is attributable to the VL Parties' failure to co-operate by facilitating service of the bills, and requiring the pointless effort of preparation and personal service of three copies of the bills.
94 Mr Neil submits that the evaluation of the evidence that relates specifically to the January to July 2008 period should be carried out bearing in mind evidence relating to other periods, and in particular during the period when Ms Davitt was preparing the bill. On 19 June 2007 Joseph faxed her, saying:
'I refer to my last fax dated 30 May 2007. I have not received a response.
Please advise as a matter of urgency what work has been done to date and by what date you will be able to complete the bill of costs.
I can not afford to have this matter delayed.'
95 Ms Davitt had made arrangements to travel overseas between 12 June and 29 June 2007. On 3 July 2007 she wrote to the JL solicitors referring to two faxes that she had received from Joseph Lahoud just prior to and during her leave overseas. She said:
'Having spoken to Mr Lahoud at the time of delivery of the file, I understand his anxiousness to have the costing completed in as short a time as possible. No doubt, the whole affair has been an emotional and financial drain on him for many years. Nevertheless, I believe Mr Lahoud does not really comprehend what is involved in a costing job such as this and the time consuming nature of going through every piece of paper in the file and cross referencing that material with numerous court orders and complex proceedings.
...
Would you please discuss this matter with Mr Lahoud as I would prefer not to continue with the matter if I am to be subjected to fairly regular requests for progress reports and pressure to finish the task in a timeframe which is physically impossible for me to achieve. Again, I fully understand your client's position and have a great deal of sympathy for him, but I can only do what I can do in a day's work and I feel quite uncomfortable with being required to push myself beyond my limitations.'
96 On 14 August 2007 someone from the office of the JL solicitors emailed Joseph saying that the JL solicitor had,
'... communicated with Chris Davitt on even date and advised her that all future communication will be through our firm. [He] also apologized on your behalf for being "over anxious" ...'
97 Those communications lead to an inference that, while the bill was being prepared, the JL Parties were anxious that it be prepared as soon as possible. That tends to make it unlikely that they engaged in any unjustified delay once a draft bill was available. However, it suffices, given where the onus lies, to conclude that it has not been established that the JL Parties engaged in undue delay during the Second Delay Period."

Second period - assessment

The VL parties contend that the primary judge's assessment reflects error, in that, while there were expressions by Joseph Lahoud of intention to move quickly, these were not matched by actions. They also say that there was no substantive progress in the assessment process between February 2008 and June 2008.
The VL parties say that no error is shown.
Ms Davitt was first retained in about March 2007. The evidence does not indicate precisely what she was given at that time but it is clear that the letter of instruction from the JL solicitors attached some material.
By late June 2007, Joseph Lahoud was anxious regarding progress being made by Ms Davitt. In a letter of 3 July 2007 to the JL solicitors, Ms Davitt referred to having received "the file", but precisely when she received it was not stated. She then referred to the very substantial nature of the task before her:
"I believe Mr. Lahoud does not really comprehend what is involved in a costing job such as this and the time consuming nature of going through every piece of paper in the file and cross referencing that material with numerous court orders and complex proceedings. I recently completed a Federal Court bill for another firm which consisted of about one third of the material in your client's matter and the final bill comprised over 600 pages. As I have previously advised, I work from home 7 days per week and average 9-10 hours of work per day. At that rate; it took me just over 2 months to complete that bill of costs - it takes a long time and there is no way around that fact."
On 30 October 2007, the JL solicitors wrote to Ms Davitt enclosing "the following files for your costs assessment". The letter then referred to 39 separate folders of documents.
From 30 October 2007, it took Ms Davitt a little over two months (until 7 January 2008) to prepare what she referred to in her letter of the latter date as a "first draft of the primary bill of costs". This reference to a "primary bill" and the references in later correspondence to three completed bills (one for each of three proceedings) indicates that the 7 January 2008 document was a draft of one bill only. A letter of 26 February 2008 from Ms Davitt refers to a single bill that "encompasses various proceedings in both the IRC and in the Supreme Court". The JL solicitors' letter of 1 July 2008 to the VL solicitors concerning service refers to "the Bills of Costs in the Supreme Court, Court of Appeal and Federal Court proceedings" and to photocopying of "each of the Bills".
From all this it may be inferred that the document Ms Davitt enclosed with her letter of 7 January 2008 and described as "the first draft of the primary bill of costs" was merely a draft of only the most substantial of the several bills that it was her task to prepare (the proceedings as finally determined in the Supreme Court were a consolidation of several actions, some commenced in other courts). On that footing, further work remained to be done at that point.
The primary judge's evaluation in relation to the second period is, in my opinion, not shown to be affected by error.

The third period - facts and the judge's decision

The third period of delay alleged by the VL parties is the period 1 October 2009 to 30 June 2010. The start of this period is the point at which the VL parties initiated steps for review of Mr Connery's costs assessment by a review panel. The VL parties say that, from that point until June 2010, the JL parties failed to furnish to the review panel relevant information about the status of the JL parties under the goods and services tax legislation and thereby kept from the panel something essential to its decision-making.
It is not necessary to discuss the particular reasons why that information may have been required for the purposes of assessment or what impact it might have had on the result. It is sufficient to note that, by way of reversal of the decision of this Court in Boyce v McIntyre [2009] NSWCA 185, the Legal Profession Act was altered in 2010 to require that a costs assessor or review panel, when making or reviewing a determination of legal costs, take into account the goods and services tax referable to the provision of legal services. That statutory provision did not, however, apply to this case because the initial assessment application pre-dated its commencement. Goods and services tax and its incidence were nevertheless matters properly to be taken into account in the assessment process.
This tax matter had been referred to soon after the JL parties first took steps to obtain an assessment of costs. The amount claimed in their assessment application filed on 5 November 2008 included the goods and services tax component of both costs and disbursements. Mr Connery sent a standard document to the JL solicitors on 14 November 2008 raising and noting numerous relevant matters, one being:
"Please advise if the Costs Applicant or Costs Respondent has an entitlement to an input tax credit for the GST paid on its solicitor/own client, costs. If so, it is not entitled to illicit [sic] a claim reimbursing for GST from the party ordered to pay the costs herein."
A copy of this standard document was sent by Mr Connery to the VL solicitors also.
As regards the matter of goods and services tax, notification of both solicitors, by means of the standard document, was consistent with the message in that document that the input tax credit entitlements of both parties - the costs applicants (the JL parties) and the costs respondents (the VL parties) - were regarded as relevant or potentially relevant.
No one gave any information to the assessor in response to the note in the standard document or made any submission to the assessor concerning goods and services tax; nor did the assessor make any specific inquiry on the matter. The assessment by Mr Connery was completed without reference to any tax aspect beyond the initial message to both parties by means of the standard document.
On 4 March 2010, Mr Webley, on behalf of the review panel, wrote to the VL solicitors raising a specific question about goods and services tax. This was some five months after the VL parties had applied for referral of the assessor's assessment to a review panel. Mr Webley referred to "the question of GST and the decision in Boyce v McIntyre" and asked whether it was "conceded that Joseph Lahoud and Joseph Lahoud & Associates are registered for GST and would be entitled to an Input Tax Credit for the costs payable". Mr Webley enclosed documents downloaded from a government website identifying entities registered for goods and services tax. He said that "on the face of it", the individuals were so registered. Mr Webley's letter was copied to the JL solicitors.
The VL solicitors replied on 11 March 2010 to the effect that it was for the JL parties to answer the questions that had been posed in relation to them. The VL solicitors also said that their clients' position was reserved and that they would seek further instructions from their clients if the JL parties confirmed their entitlement to input tax credits.
On 26 March 2010, the JL solicitors informed Mr Webley by letter that Joseph Lahoud & Associates Pty Ltd and the Joseph Lahoud Family Trust were both registered for goods and services tax and that Joseph Lahoud himself was not. Mr Webley replied on 30 March 2010 again enclosing the same documents from the government website. He asked whether it was conceded that all three JL parties were registered. On 14 April 2010, the JL solicitors wrote to Mr Webley saying that they expected to reply "comprehensively" soon and were finalising certain inquiries. Mr Webley replied on the same day that a "comprehensive response" was not needed and that a "succinct answer " to the letter of 30 March 2010 would suffice, the question being a simple one.
On 15 April 2010, the JL solicitors wrote to Mr Webley:
"We concede an entitlement to claim an input tax credit for GST."
The VL solicitors wrote to Mr Webley on 16 April 2010 saying that a person named Joseph Lahoud referred to in one of the documents obtained by Mr Webley from the website was not the relevant Joseph Lahoud and that it appeared that the relevant Joseph Lahoud was not registered for goods and services tax, so that the concession conveyed by the JL solicitors' letter of 15 August 2010 "would be false".
The review panel's final determination of 23 June 2010 reduced the sum assessed by Mr Connery but only by deduction of the goods and services tax component determined by him.
The primary judge's decision in relation to the third period was as follows:
"134 Mr Philips submits that the whole of the period during which the Review Panel procedure was being invoked is a period of delay attributable to the JL Parties. He submits that this conclusion arises because it was the failure of the JL Parties to advise whether they had an entitlement to input tax credits for the GST, that led the assessor to include in his determination an amount of approximately $90,000 for GST. He submits that, had the information been provided to the assessor when requested, the issue of GST would have been dealt with correctly by the assessor, and there would have been no need for the VL Parties to apply to have the assessor's determination reviewed, successfully, on that ground. He submits that this would have led to an earlier conclusion of the assessment process.
135 I am not persuaded that this argument should succeed. There were numerous grounds apart from GST on which the Review Panel was asked to review the assessor's assessment. Those additional grounds included that the assessor:
- had given insufficient reasons in relation to disbursements, and insufficient reasons for allowing the professional costs claimed;
- had failed to comply with s 367A Legal Profession Act because he allowed certain objections and did not allow others without making a positive determination that the costs were fair and reasonable;
- had made no reference to any costs agreement in breach of s 361;
- had engaged in procedural unfairness in denying the VL Parties access to the costs agreement between the JL Parties and their solicitors from time to time, and
- had, in fixing the amount of assessed costs, contravened the indemnity principle by reason of the costs having been paid by the family trusts connected with the JL Parties.
136 The statement of reasons of the Review Panel dealt with each of those issues. When the VL Parties presented so many and varied issues to the Review Panel for determination, I am unable to conclude that the Review Panel's procedures would have taken any less time if the GST issue had never arisen. Particularly is that so when the members of the Review Panel upheld some of the objections to the inadequacy of reasons of the assessor, but reviewed the items in question themselves and satisfied themselves about the reasonableness of the items claimed."

The third period - assessment

The VL parties contend that the primary judge's decision was erroneous because there was no evidence that the inclusion of grounds of review other than those concerning goods and services tax played a part in the length of time taken for the review. The true position, they say, is that the only respect in which the review panel modified the assessment made by Mr Connery concerned goods and services tax, from which it should be inferred that events concerning goods and services tax were the only events bearing upon the question of delay.
As noted earlier, the parties to this appeal do not challenge the proposition that it was for the VL parties, who sought variation of the regime created by the 2006 orders, to make a positive case for the exercise of the power to vary. In relation to the matters relevant to the third period, therefore, the VL parties must prove that it was failure to the JL parties to deal with relevant matters with reasonable despatch that caused the particular delay.
It is, in my opinion, incorrect to regard the content of Mr Connery's standard document sent on 14 November 2008 as relevant in any way to questions about what the JL parties ought properly and reasonably have done in the context of the review by the review panel. Upon completion of Mr Connery's assessment, the parties were entitled to think that all relevant information requirements for the assessment had been satisfied and that, to the extent that anything requested by Mr Connery had not been given, it was no longer required. The application for review marked a new departure and the commencement of a new phase in which information requirements were dictated by, first, the prescribed steps for seeking review and, second, such specific inquiries, if any, as the review panel might make.

The parties on both sides were accordingly in a position where, from 1 October 2009, any requirement that information be given about goods and services tax status could come only from a specific inquiry made by the review panel. The request in Mr Connery's standard document was no longer operative. An inquiry by the review panel was communicated to the VL solicitors on 4 March 2010. Correspondence ensued. While the request could perhaps have been dealt with more promptly by the VL solicitors and their clients, it cannot be said that they were guilty of unreasonable delay. The inquiry was resolved by the VL solicitors' letter of 15 April 2010.
The evidence does not disclose what steps the review panel took beyond receiving the referral consequent upon the VL solicitors' application of 1 October 2009, engaging in the correspondence with the JL solicitors between 4 March 2010 and 15 April 2010 and making the final determination of 23 June 2010.
Matters already mentioned about the size and complexity of the bills indicate that the review, like the assessment itself, could not have been a simple and straightforward task. There were multiple grounds put forward in support of the review application. The fact that the only change the review panel made concerned goods and services tax by no means dictates or justifies any conclusion that goods and services tax was the only matter (or the only matter of substance) that the panel addressed.
Apart from responding to the inquiries about goods and services tax, the JL parties had no way of influencing the speed at which the review panel proceeded. This, coupled with the finding that the JL parties were not guilty of unreasonable delay in dealing with the request for information on goods and services tax, means that the allegation made by the VL parties in relation to the third period is not proved.
The primary judge's evaluation in relation to the third period is, in my opinion, not shown to be affected by error.

The fourth period - facts and the judge's decision

The fourth period of delay alleged by the VL parties is the period September 2010 to June 2011.
The appeal to the District Court by the VL parties was commenced on 3 September 2010. The consent orders allowing the appeal were made on the second day of the hearing, 27 June 2011, and the matter was remitted to the review panel. The period in question is therefore that from the commencement of the District Court proceedings to their conclusion.
After the District Court judge had been told on 27 June 2011 of the parties' agreement to settle, he said:
"I think I should say that this is a sensible settlement because without canvassing the other issues it seemed to me likely, although I hadn't made up my mind that I would order along the lines of orders one, two and three, because I had formed the view that the decision of the review panel in respect of not providing a copy of the costs agreement to the plaintiff was in error, for reasons that you have no doubt explained to your respective clients. That was not a certain result, it would be wrong for me to say that it was because I hadn't heard the parties to conclusion in their submissions. But it was quite a likely result and in those circumstances I think I would have taken the view that it was sufficient ground to set aside the decision of the review panel as you've done by these orders, and that it was unnecessary for this court to examine all of the other reasons why that result was claimed. In other words this is a settlement which in my view very closely mirrors a most likely result ..."
The VL parties say that the whole of the period between commencement and conclusion of the District Court proceedings represented delay along the path to quantification of costs and that that delay was caused by an erroneous and unfounded insistence by the JL parties that legal professional privilege attached to the costs agreements between the JL parties and their lawyers.
The VL parties submitted to both the costs assessor and the review panel that they were entitled to inspect those agreements, as well as the tax invoices submitted by the JL lawyers to their clients. The JL parties produced those documents to the assessor and the review panel but refused to provide them to the VL parties, claiming that they were privileged.
After the District Court proceedings were commenced, the VL parties subpoenaed the costs agreements which were then produced to the court by the JL parties. Following that, the VL parties received copies on 4 November 2010. Objection to access (whether on the ground of privilege or otherwise) was apparently not made by the JL parties.
The VL parties first sought the costs agreements in October 2008, that is, before the initiation of the costs assessment application by the JL parties in November 2008. The request was refused by a letter of 21 October 2008 which also asserted the existence of privilege. When the costs assessor subsequently sought the agreements, the JL parties continued to assert privilege but provided copies to the assessor. In May 2009, the VL parties made further submissions to the assessor on the matter of privilege. For some time until that point, the focus had moved away from the costs agreements and on to an argument about the indemnity principle which, if decided in a particular way, would have determined that matter. It was only after that result did not eventuate that attention returned to the costs agreement and the agreement about their privileged status.
The costs assessor ultimately did not accede to the request by the VL parties for access to the costs agreements and his determination of 28 July 2009 was made without the VL parties having seen the agreements.
The assessor's refusal to allow access was one of the matters about which the VL parties appealed to the review panel. The panel said, in its statement of reasons, that the VL parties had not suffered any procedural unfairness as a result of the assessor's failure to provide access to the costs agreements.
The primary judge considered the privilege question for himself. He expressed the opinion that, in the context of the costs assessment processes, that was no room for the operation of the Evidence Act 1995 and that matters of privilege fell to be determined according to the common law. The decision was that privilege had never subsisted in them and that it was not seriously arguable that privilege attached.
The primary judge dealt as follows with the proposition that, in the absence of the making and maintaining of the privilege claim (ultimately not pressed and found to be without substance), the District Court appeal would not have been brought:
"188 ... The evidence before me includes what I take to be the latest version of the amended summons commencing the appeal in the District Court. The appeal grounds identified in it included matters arising from the failure to provide the costs agreements to the VL Parties, and the consequent inability of the VL Parties to make submissions concerning the costs agreements. However, it also contended that the Review Panel had erred in confirming the findings of the costs assessor based on the order of 10 March 2006 rather than the order as varied on 28 March 2006, and also made some more general complaints, namely:
'4 The Panel erred, with respect to a matter of law, in:
...
c. Failing to give any, or any adequate, statement of reasons for its determination, contrary to s 380(2) of the Legal Profession Act 2004 (" the Act ") and cl 134(1)(d) of the Legal Profession Regulation 2005 .
...
7 The Panel erred, with respect to a matter of law, in holding at [7.5] of the Reasons that s 361 of the Act was irrelevant to the Application.
8 Having set aside the determination of the Costs Assessor, the Panel erred, with respect to a matter of law, in failing, contrary to s 375(1)(b) and (2) of the Act, to:
(a) determine for itself the Application in the manner that a Costs Assessor would be required to determine an application for costs assessment under Part 3.2 of the Act; and
(b) substitute the Costs Assessor's determination with its determination.
9 The Panel erred, with respect to a matter of law, in failing to apply or have regard to s 369(1)(c) and (3)(c) of the Act, which apply to the Application as the quantum of costs was reduced by more than 15%, or to substitute its own determination of the extent to which the Costs Applicant should share the costs of assessment.'
189 To give content to ground 7, s 361 LP Act appears in Subdivision 2 of Division 11 of the LP Act . Subdivision 2 contains general matters relating to all types of assessment, whether party/party or of other types. Section 361 provides:
'(1) A costs assessor must assess the amount of any disputed costs that are subject to a costs agreement by reference to the provisions of the costs agreement if:
(a) a relevant provision of the costs agreement specifies the amount, or a rate or other means for calculating the amount, of the costs, and
(b) the agreement has not been set aside under section 328 (Setting aside costs agreements),
unless the assessor is satisfied:
(c) that the agreement does not comply in a material respect with any applicable disclosure requirements of Division 3 (Costs disclosure), or
(d) that Division 5 (Costs agreements) precludes the law practice concerned from recovering the amount of the costs, or
(e) that the parties otherwise agree.
(2) The costs assessor is not required to initiate an examination of the matters referred to in subsection (1)(c) and (d).'
190 In para 7.5 of its reasons, the Review Panel had said:
'Non Compliance with Section 361 LPA
The Costs Assessor's Reasons make no reference to the determination having been conducted by reference to any provision or Costs Agreement in breach of Section 361.
The section which founds this ground for review applies to the conduct of assessments as between a law practice and a client and has no application to a party/party assessment.
The Review Panel does not therefore consider that a Section 361 Statement is required where Section 361 is irrelevant i.e. in this Party/Party Assessment. There is no indication that the Assessment proceeded on any other basis than that set out in Section 364. The Ground is not made out.'
191 Thus, ground 7 raises a legal question concerning the interrelationship of ss 361 and 365. That legal question is separate to whether failure to provide the costs agreements resulted in procedural unfairness.
192 Grounds 8 and 9 in the District Court appeal also raised matters that were separate to that question of procedural unfairness alleged to arise from failure to provide the costs agreements to the VL Parties.
193 There was no argument before me concerning whether the VL Parties were caused practical injustice by the denial of the opportunity to make submissions concerning the costs agreements, even if (as I have found) the JL Parties had no real basis for claiming privilege for the costs agreements. Without seeking to express any view concerning it, there is scope for argument about whether wrongly making the costs agreements unavailable has caused any practical injustice. There are three relevant costs agreements, one with each of three different firms of solicitors who have worked on the matter. The client in two of those agreements is Joseph Lahoud, while the client in the third agreement is both Joseph Lahoud and Joseph Lahoud & Associates Pty Ltd. It would be arguable that those clients had a contractual obligation to pay the solicitors' costs, and that a principle similar to that recognised by Mason P at [8] in Dyktynski (set out at [169] above) had the consequence that the indemnity principle would not prevent the JL Parties (namely, Joseph Lahoud, and Joseph Lahoud & Associates Pty Ltd) from receiving indemnity pursuant to the Costs Order, even if the contractual liability that they had to their solicitors had been met by some other entity. Further, none of the costs agreements imposed any cap on the amount of costs the solicitor might receive.
194 Another matter is relevant to whether the erroneous claim of privilege will be the cause of delay while the Review Panel reconsiders the matter. It is that the orders of the District Court place no limitation on the issues that might be argued when the matter is remitted to the Review Panel. It is not as though the only matter that the Review Panel will be free to consider is whether failure to provide the costs agreements caused practical injustice.
195 For these reasons, it could not be said that it is only the wrongful claiming of privilege for the costs agreements that has caused the District Court appeal to be brought, or caused the settlement of the District Court appeal, or will cause delay by reason of the remittal to the Review Panel."
The primary judge later said (at [200]):
"Similarly, concerning the Fourth Delay Period, the conduct of the JL Parties in making an unjustified claim of privilege was one of the circumstances that together resulted (and, insofar as the remittal to the Review Panel has yet to be completed, will result) in delay in the assessment of costs. However, there are other circumstances involved in that delay, and I reach the same conclusion as I reached concerning the Third Delay Period."

The fourth period - assessment

The VL parties say that the finding that the JL parties' "unjustified claim of privilege" was "one of the circumstances that together resulted" in delay in the assessment of costs was sufficient to justify the relief they sought by reference to the fourth period. This is so, they say, because the finding shows that the privilege claim alone was a substantial operative cause of delay.
I am of the opinion that no weight can be given to the District Court judge's comment set out at [#104] above to the effect that he would have been minded to allow the appeal and that the appeal panel's decision not to give copies of the costs agreements to the VL parties was in error. The comment was no more than that. It was not a considered decision. Nor did it expressly or by necessary implication convey any view at all about the merits of the several other matters that were in contention in the District Court appeal.
The primary judge said that it was not only the wrongful claiming of privilege for the costs agreements that caused the District Court appeal to be brought or caused the settlement of that appeal. It is pertinent to note the effect of the obtaining of access to the agreements by the VL parties. Access was obtained on 4 November 2010 - slightly less than two months after the initiation of the appeal and almost eight months before the parties' agreement to settle. Removal or defeating of the privilege objection at that point did not bring about an immediate capitulation by the JL parties.
The bringing of the District Court appeal did cause delay. The factors just mentioned about the consequences (or lack of consequences) of disclosure of the agreements in the early stages of the appeal indicate that the appeal would not have come to an end more quickly had the costs agreements been disclosed at an earlier point. If withholding of the agreements was a barrier to resolution of the District Court case, that case would logically have ended when the barrier was removed. But it did not. There was significantly more to the proceedings than the privilege question and when the matter eventually came on for trial, there were several live issues that would have required resolution by the court had the parties not agreed on a settlement.
The primary judge was correct in his conclusion that the several other matters in issue in the appeal caused that appeal to continue for as long as it did.
The primary judge's evaluation in relation to the fourth period is, in my opinion, not shown to be affected by error.

Conclusion

The VL parties' challenges to the primary judge's evaluative findings on the allegations of delay have not been successful. It follows that no basis for any supplementation of the September 2011 orders has been established.
Had some such basis been made out, the most that might have been ordered is the cessation or interruption of the accrual (or continued running) of interest after the date of the making of the September 2011 orders. For the reasons I have stated, the primary judge was correct when he decided that it would not have been open to him to take away any part of the interest that had accrued up to the date on which he made those orders and thereby to reduce retrospectively, as it were, the quantum of the accrued entitlement.
In the result, the orders I consider to be appropriate to dispose of this appeal are:
1. Appeal dismissed.
2. Order that the appellants pay the respondents' costs of the appeal.
TOBIAS AJA: I agree with Barrett JA.
**********

Amendments

14 Dec 2012 paragraph numbering corrected Paragraphs: [42] - [123]

Case Title:	Lahoud v Lahoud
Medium Neutral Citation:	[2012] NSWCA 401
Hearing Date(s):	20 September 2012
Decision Date:	11 December 2012
Before:	Meagher JA (at [1]), Barrett JA (at [2]), Tobias AJA (at [123])
Decision:	1. Appeal dismissed. 2. Order that the appellants pay the respondents' costs of the appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	PROCEDURE - judgments and orders - amending varying and setting aside - order for payment of interest - express reservation of further consideration - whether subsequent order may vary existing regime by removing entitlement to interest already accrued - INTEREST - order for payment of interest - rights thereunder - common law rule as to accrual of interest - APPEAL - review of factual findings - whether evaluation attended by error
Legislation Cited:	Legal Profession Act 2004, Part 3.2, s 368(5)
Cases Cited:	Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201 Caboolture Park Shopping Centre Pty Ltd v White Industries (Qld) Pty Ltd (1993) 45 FCR 224 Certain Lloyds Underwriters v Giannopolous [2009] NSWCA 56 Chow Yoong Hong v Choong Fah Rubber Manufactory [1962] AC 209 Davidson v Greedy [2012] VSC 202 Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593 Juul v Northey [2010] NSWCA 211 Kyabram Property Investments Pty Ltd v Murray [2006] NSWSC 54 Lahoud v Lahoud [2005] NSWSC 509 Lahoud v Lahoud [2005] NSWSC 1019 Lahoud v Lahoud [2006] NSWSC 126 Lahoud v Lahoud [2006] NSWCA 169 Lahoud v Lahoud [2007] HCATrans 128 Lahoud v Lahoud [2011] NSWSC 994 Preston Banking Company v William Allsup & Sons [1895] 1 Ch 141 Remington Products Australia Pty Ltd v Energizer Australia Pty Ltd [2008] FCAFC 47; (2008) 246 ALR 113 Re Scowby; Scowby v Scowby [1897] 1 Ch 741 Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 Willingale v International Commercial Bank [1978] AC 834
Category:	Principal judgment
Parties:	Victor Lahoud - First Appellant Castle Constructions Pty Ltd - Second Appellant Solidaire Pty Ltd - Third Appellant Joseph Lahoud - First Respondent Joseph Lahoud & Associates - Second Respondent
Representation
- Counsel:	M L D Einfeld QC/J S Phillips - Appellants I M Neill SC - Respondents
- Solicitors:	McLachlan Thorpe Partners - Appellants Verekers Lawyers - Respondents
File Number(s):	2007/255809
Decision Under Appeal
- Before:	Campbell JA
- Date of Decision:	01 September 2011
- Citation:	Lahoud v Lahoud [2011] NSWSC 994
- Court File Number(s):	2001/3606