(1) Order that the judgment in favour of Joseph Lahoud and Joseph Lahoud & Associates Pty Ltd in the sum of $1,186,398.90 dated 17 November 2010 be set aside.
(2) Otherwise dismiss the Amended Notice of Motion filed by Victor Lahoud on 31 January 2011.
(3) Dismiss the Notice of Motion filed by Joseph Lahoud and Joseph Lahoud & Associates Pty Ltd on 7 December 2010.
(4) Order Victor Lahoud to pay 33% of the costs as agreed or assessed of Joseph Lahoud and Joseph Lahoud & Associates Pty Ltd concerning the two Notices of Motion.
Catchwords:
COSTS - Interest on costs - rate of interest - UCPR 36.7(1) - earlier order that interest be paid "at the rates set out in Schedule 5" UCPR - effect of repeal of Schedule 5 and amendment of r 36.7(1) - rate at which interest payable prior to 1 July 2010 - proper construction of order
COSTS - Interest on costs - time during which interest runs - earlier order reserving consideration of whether costs should continue to run - whether power to make order denying interest over past periods - power to make order denying interest over future periods - whether delay that makes it just for the successful parties not to receive interest on costs for a particular time - delay in preparing bill of costs before High Court special leave application determined - delay while Review Panel reviewed cost assessor's assessment - delay while appeal from Review Panel to District Court was on foot
COSTS - Effect of the entitlement to an input credit for GST on extent of indemnity -
COSTS - failure of costs assessor to disclose costs agreement between other party and solicitor - client legal privilege - procedural fairness
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Lahoud v Lahoud [2011] NSWSC 994
Case
[2011] NSWSC 994
Decision Date
CaseChat Overview and Summary
In the matter of Lahoud v Lahoud, the dispute revolved around the calculation and interest on legal costs, the effect of amendments to the Uniform Civil Procedure Rules (UCPR), and procedural fairness in the disclosure of costs agreements between parties and their solicitors. The case was heard in the Supreme Court of New South Wales. The primary legal issues concerned the interpretation of the UCPR regarding interest on costs, the effect of legislative changes on pre-existing orders, and the admissibility of costs agreements under client legal privilege.
The court considered whether the earlier order for interest on costs at rates set out in the repealed Schedule 5 of the UCPR should still apply post-amendment. It determined that the amendment did not retrospectively affect the rate of interest for periods prior to the amendment's effective date. Regarding the time during which interest should run, the court held that interest should not accrue during periods of justified delay, such as the time taken to prepare a bill of costs before a High Court special leave application was determined and while an appeal to the District Court was pending. The court also addressed the issue of client legal privilege in the context of costs agreements, concluding that such agreements were not privileged as they were commercial contracts rather than communications protected by legal professional privilege.
Ultimately, the court ruled that the costs agreements were not privileged and could be disclosed to the costs assessor. The court found that the JL Parties unreasonably delayed in preparing a bill of costs, leading to an order that the VL Parties should bear 33% of the costs associated with both parties' Notices of Motion. This decision highlighted the importance of timely action in cost recovery proceedings and the court's discretion to allocate costs in cases of unreasonable delay.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
In contrast, once the appeal was taken to the District Court against the review panel's determination, the proceedings in the District Court were "in a NSW court" , within the meaning of the Evidence Act , and thus any questions of privilege would be decided in the District Court in accordance with the Evidence Act . On their face the costs agreements are unexceptional commercial agreements between a solicitor and client. They give no legal advice. They contain no record of a confidential communication between the client and another person or between a lawyer acting for the client and another person, that was made for the dominant purpose of the client being provided with legal services. If tendered in evidence, they would not disclose the contents of any confidential document that was prepared for the dominant purpose of the client being provided with professional legal services. They are part of the contract pursuant to which the various solicitors were retained. They are not advice given or tasks performed in performance of the professional relationship between solicitor and client. As Basten JA said in CSR Ltd v Eddy at [62]: Where the costs agreements were not privileged to start with, no question arises of whether the privilege has been waived. Waiver would have occurred if the costs agreements had been privileged and making them available to the costs assessor in connection with a dispute about the quantum of costs was conduct inconsistent with the maintenance of the confidentiality which the privilege is intended to protect ( Mann v Carnell(1999) 201 CLR 1 at [29]; Thomason v Campbelltown Municipal Council(1939) 39 SR (NSW) 347; cf Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar, the Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand[2006] NSWCA 160; (2006) 66 NSWLR 112 at [53]). Further, if this be the relevant test, the actual contents of the costs agreements are such that it was not seriously arguable that privilege attached to them. On 27 June 2011 the following orders were made by consent in the District Court proceedings: The District Court judge hearing those proceedings also made the following direction and notation: After the judge had been told of the terms of the orders that the parties had agreed, he said: I accept the submission of the JL Parties that reliance should not be placed on the remarks that the judge made after making the orders, direction and notation. As the judge said, they were preliminary views, formed without having heard all the submissions that might have been made if the matter had been argued to completion. While it is a fair inference, from note number 6, that either the parties agreed, or the judge was of the view, that the costs agreements should be available to the VL Parties, the note was of no practical utility. By the time it was made, the VL Parties already had a copy of the costs agreements, and by virtue of those agreements having been tendered in court there would be no inhibition on the VL Parties using them in a different set of proceedings to that in which they had been obtained: cf Hearne v Street[2008] HCA 36; (2008) 235 CLR 125.
Decision
Reasons for decision
The principal issues in the litigation between the JL Parties and the VL Parties had been decided by Palmer J, in a judgment delivered on 30 May 2005: Lahoud v Lahoud[2005] NSWSC 509 (" the Palmer J Judgment "). The effect of the Palmer J Judgment was that the JL Parties were successful. However his Honour did not make orders at the time of delivering judgment. The costs questions came to be decided by me when Palmer J was absent on long leave. The VL Parties instituted an appeal to the Court of Appeal concerning the Palmer J Judgment on 28 June 2005. On 13 October 2005 Palmer J delivered a judgment concerning the form of the final orders (other than as to costs), and stayed those orders, pending the determination of the appeal: Lahoud v Lahoud[2005] NSWSC 1019. All issues in the appeal related to the correctness of the Palmer J Judgment. While clearly the orders made pursuant to the Costs Judgment would have needed to be reconsidered if any of the orders made pursuant to the Palmer J Judgment were set aside or altered, the appeal did not involve any separate attack on the correctness of the Costs Judgment. On 30 June 2006 the appeal was dismissed with costs: Lahoud v Lahoud[2006] NSWCA 169. The stay that Palmer J had ordered on 13 October 2005 thus expired on 30 June 2006. On 28 July 2006 the VL Parties filed in the High Court an Application for Special Leave to Appeal from the Court of Appeal's decision. The application for special leave to appeal stated that one of the orders that the VL Parties sought from the High Court was an order that there be a new trial of the action. The High Court dismissed the application for special leave on 18 April 2007: Lahoud v Lahoud[2007] HCA Trans 128. The first indication in the evidence of the JL Parties taking any steps to prepare a bill of costs is a letter dated 26 March 2007 from Ms Chris Davitt, Costs Consultant, to the solicitors for the JL Parties (" the JL solicitors "). That letter refers to "your recent letter relating to this matter and the attached material" , and goes to set out the basis on which she would charge fees for preparation of the bill of costs. I infer that it was shortly before 26 March 2007 that the JL solicitors took the first step towards the preparation of a bill of costs, by contacting Ms Davitt. On 10 May 2007 the JL solicitors wrote to the solicitors for the VL Parties (" the VL solicitors ") making a settlement offer concerning the quantum of the costs. The VL solicitors replied on 15 May 2007 saying they had insufficient information to assess the proposal, and requested a draft bill. On 21 May 2007 the JL solicitors wrote to the VL solicitors, saying that they would instruct the costs consultant to prepare a draft bill. Mr Philips submits that the JL Parties engaged in undue delay in waiting until March 2007 to commence preparation of the bill of costs. He submits that that period of delay runs from the beginning of July 2006 to the end of February 2007. Mr Philips submits that, once the stay ordered by Palmer J had been dissolved, nothing was stopping the JL Parties from proceeding to prepare a bill of costs. He points out that there were some respects in which the JL Parties took active steps for enforce the orders of Palmer J. Those orders required (amongst other things) the VL Parties to hand to the JL Parties various title documents concerning two home units.
Ratio Decidendi
Legal Principle Established
It was only on the day of the hearing that it became apparent that the JL Parties agreed that the judgment dated 17 November 2010 should be set aside. However, there was some preparation relating to that aspect of the VL Parties' Notice of Motion, both in the form of evidence and submissions. A costs order should take into account that the JL Parties should bear those costs. This is one of those situations where, even though there has not been litigation of the question of whether the judgment should be set aside, the court can conclude that the JL Parties acted so unreasonably in obtaining the judgment that the other party should obtain the costs of that part of the notice of motion: Re Minister for Immigration and Ethnic Affairs; ex parte Lai Quinn(1997) 186 CLR 622 per McHugh J at 624-625. The time involved in the aspect of the Victor Lahoud Notice of Motion that was argued, in gathering of evidence, in written submissions and in court time, substantially exceeded what was involved in the JL Parties' Notice of Motion. In my view, the appropriate order is that Victor Lahoud pay 33% of the costs of the JL Parties concerning both Notices of Motion. Neither Notice of Motion sought an order for payment of interest on the costs associated with that Notice of Motion.