Lawrence v Shaw

[2013] NSWDC 91

District Court

New South Wales

Medium Neutral Citation:	Lawrence & Anor v Shaw & Anor [2013] NSWDC 91
Hearing dates:	6 June & 13 June 2013
Decision date:	13 June 2013
Before:	Murrell SC DCJ
Decision:	See paragraphs [42] - [43]
Catchwords:	CIVIL- appeal against cost assessment - costs review panel - gross sum costs order
Legislation Cited:	Civil Procedure Act 2005 (NSW), ss 98(4)(c), 98(1) Legal Profession Act 1994 (NSW), ss 312(2)(iv), 317, 375(3), 382, 384(1), 385
Cases Cited:	Sherborne Estate (No 2) (2005) 65 NSWLR 268
Category:	Principal judgment
Parties:	Mr Wayne Lawrence (First appellant) Minsden Pty Ltd (Second appellant) Mr James Shaw (Respondent) Lawrence Waterhouse Pty Ltd (Second respondents)
Representation:	Self represented Mr R D Marshall (Respondent) Harris Wheeler Lawyers (Respondents)
File Number(s):	DC 2013/152076

Judgment

1. The appellants appeal against a determination of the Costs Review Panel (the Panel) that was made on 22 March 2013 and delivered on 3 May 2013.

1. The appellants are self-represented by Mr Lawrence. He has represented himself in a number of proceedings that are related to the appeal and he does so with confidence.

1. On 6 June 2013 the appeal was fixed for the Court to determine a notice of motion seeking a stay of the Panel's determination. However, the parties agreed that the substantive appeal should be considered because, in order to determine the motion, the Court would need to consider the issues that would determine the appeal itself.

1. During the hearing of the appeal, Mr Lawrence was reminded repeatedly that the appeal was confined to errors of law. At one point, he expressed disquiet because he had not appreciated the limited nature of the appeal. He was offered an adjournment so that he could seek legal advice, provided he paid the respondents' costs of the day. He withdrew the application for adjournment.

1. On the issue of the costs of the appeal, the respondents' read the affidavit of Ms Ivers and invited the Court to make a gross sum costs order under s 98(4)(c) of the Civil Procedure Act 2005 (the CPA). As Mr Lawrence was not in a position to respond to this application, the issue of costs was adjourned to 13 June 2013 to await the outcome of the substantive appeal and to enable Mr Lawrence to make submissions, should that become necessary.

1. Following the adjournment, the Court received written submissions from Mr Lawrence dated 13 June 2013. The written submissions were not confined to the application for a gross sum costs order. They canvassed matters that had been the subject of argument on 6 June 2013. Nevertheless, the Court read and considered the submissions.

1. The Court also received e-mail correspondence from Mr Lawrence in which he sought a stay of the costs assessment, an order that the amount of the costs assessment be offset against the value of a unit in the name of Lawrence Waterhouse Pty Ltd (the company) as trustee, and orders that various alleged improprieties be referred to various nominated regulatory bodies. These orders were not sought in the summons commencing the appeal.

The Supreme Court Proceedings and the Costs Order

1. Mr Lawrence was a director of Minsden Pty Ltd (Minsden), a company that engaged in building/development. He was also a director of the company. As a result of an order made by the Land and Environment Court in 2007, the company owed Port Stephens Council approximately $57,000 in legal costs. The costs were not paid. The company was wound up. The respondent was appointed as liquidator. Shaw Gidley is the respondents' insolvency practice.

1. The respondent became aware that the company had transferred land to Minsden. The respondent initiated Supreme Court proceedings to set aside the transfer and to set aside a charge granted in favour of the appellant. He retained Harris Wheeler (the solicitors). There was no costs agreement between the respondent and the solicitors.

1. Complex litigation ensued in the Supreme Court. The parties to the proceedings were the respondent and the company (as plaintiffs) and Mr Lawrence and Minsden (as defendants). The respondent claimed that Mr Lawrence had breached his statutory duties as a director of the company by failing to keep proper books and records or otherwise account for loan transactions between the company and other entities. The proceedings were heard before Ward J. over five days. On 24 August 2011, Her Honour delivered a lengthy judgment (Exhibit 3). Her Honour ordered that the land that had been transferred to Minsden be charged with payment of the costs owed to the Council. She ordered that accounts be taken. She referred the taking of accounts to Associate Justice Macready.

1. On 21 September 2011, Her Honour ordered that the appellants pay the costs of the respondent and the company as agreed or assessed of the proceedings to date on a party/party basis (Exhibit 4). In making the costs order, Her Honour balanced considerations favouring the making of an indemnity costs order in favour of the respondent and the company against the consideration that there had been "a mixed outcome" in relation to the issues litigated (Exhibit 5).

1. The proceedings before Associate Justice Macready were settled on the basis that there would be no order as to costs.

The Costs Assessment

1. The respondent filed a bill of costs with the Manager, Costs Assessment. The parties to the costs assessment were the respondent and the company (as costs applicants) and Mr Lawrence and Minsden (as costs respondents). The matter was referred to Mr Forster, a costs assessor (the Assessor). In October 2012, he issued reasons and certificates, assessing the costs of the Supreme Court proceedings at $286,837.31 and the costs of the assessment proceedings at $6,056.02.

1. The Assessor received and considered lengthy submissions from the appellant. Because the Panel adopted the Assessor's reasons, I set them out.

1. The Assessor identified six key submissions, in relation to which he made the following findings:

(1)    Mr Lawrence submitted that there should be no allowance for a report prepared by the respondent and his staff because the respondent and the relevant staff member had been unavailable to give evidence in the proceedings. The Assessor allowed only 20% of the very substantial sum that had been claimed.

(2)   Mr Lawrence submitted that, in breach of s 317 of the Legal Profession Act (the LPA) there was no costs agreement between the respondent and the solicitors. Consequently, the respondent was not liable to pay the solicitors and the appellants were not liable to pay the respondent. The Assessor found that, as the respondent was a "sophisticated client" within the meaning of s 312(2)(iv) of the LPA, the absence of a costs agreement was no impediment to the solicitors recovering their costs.

(3)   Mr Lawrence contended that the respondent had breached "the indemnity rule". Pursuant to the rule, a litigant cannot recover a sum of costs that exceeds the sum for which it is liable to its solicitors. The Assessor considered all the invoices rendered by the solicitors and was satisfied that there was no breach of the indemnity rule. Part of the argument advanced by Mr Lawrence was that the solicitor's tax invoices were addressed to the respondents' firm, Shaw Gidley, rather than to the respondent himself and that, as a consequence, the respondent was not directly liable for the costs. The Assessor found that the respondent was the client and decided that the fact that the invoices were addressed to Shaw Gidley was irrelevant.

(4)   Mr Lawrence submitted that counsel's fees were not fair and reasonable. The Assessor made adjustments to the sum claimed.

(5)   Mr Lawrence claimed that some of the solicitors' costs were excessive. The Assessor disallowed part of those costs.

The Panel's Decision

1. The appellant appealed to the Panel. The Panel dismissed the application for review and affirmed the Assessor's certificates of determination of costs. The Panel ordered the appellant to pay the costs of review.

1. The Panel considered the lengthy submissions that the appellant had provided to the Assessor. The Panel noted that, under s 375(3) of the LPA, the review was to be conducted on the evidence received by the Assessor and (unless it otherwise determined), the Panel was not to receive submissions or fresh evidence. The Panel did its best to distil the grounds upon which the appellant relied. The Panel concluded that the appellant relied upon eleven substantive grounds. The Panel made the following findings in relation to those grounds:

(1)   The appellant contended that there had been duplication of the GST that was claimed. The Panel was unable to find any duplication or error in the approach of the Assessor.

(2)    The appellant contended that no GST should have been awarded on wages paid to a Shaw Gidley employee, Mr Irving. The Panel agreed with the reasons of the Assessor.

(3)   The appellant relied upon "Errors in bill specified at items IV and V". The Panel agreed with the reasons of the Assessor.

(4)   The appellant referred to "Exhibit A 15". The Panel agreed with the reasons of the Assessor.

(5)   The appellant claimed that there was an error in relation to "Mr Ackermann's determination relating to a question of credit". The Panel agreed with the reasons of the Assessor.

(6)   The appellant referred to a referral to the Legal Services Commissioner. The Panel agreed with the reasons of the Assessor.

(7)   The appellant complained of "the acceptance by the Assessor of certain statements made". The Panel agreed with the reasons of the Assessor.

(8)   The appellant claimed that the Assessor had given "inadequate reasons". The Panel agreed with the determination and the reasons of the Assessor.

(9)   The appellant claimed that the solicitors had acted for Shaw Gidley rather than the respondent. The Panel agreed with the reasons of the Assessor.

(10)    The appellant claimed that the sum allowed the counsel's fees was excessive. The Panel agreed with the reasons of the Assessor.

(11)   The appellant claimed that there had been a breach of the indemnity rule. The Panel agreed with the reasons of the Assessor.

1. On 16 May 2013, judgment was entered in the District Court based on the costs certificates for $296,281.71.

The Appeal

1. Pursuant to s 384 of the Legal Profession Act 1994 (the LPA), the appellant appealed from the decision of the Panel. Section 384 provides:

384(1) A party to an application for a costs assessment who is dissatisfied with a decision of the costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the District Court, appeal to the Court against the decision.

1. The entitlement to appeal extends to a determination of a Panel: s 382(1) of the LPA.

1. There is a separate right to seek leave to appeal to the court or tribunal that made the costs order against the determination of a costs assessor: s 385 of the LPA. Apart from the entitlement to seek leave to appeal to the court/tribunal that made the costs order and the right to appeal to the District Court on the basis of an error of law, the determination of a Panel is binding on all parties to the assessment and no appeal or other review lies in respect of the determination: s 382(2) of the LPA.

Grounds of Appeal

1. Forty-three grounds of appeal are set out in the summons.

1. The grounds may be summarised as follows:

(1)   The Panel should have disallowed the whole of the sum claimed in relation to the Shaw Gidley report (rather than confirming the Assessor's allowance of 20%).

(2)   The Panel should have found that there had been a breach of the indemnity rule.

(3)   Because Ward J. acknowledged the appellant's success on some issues, the costs order that she made should not be interpreted to encompass all issues argued before her. The Panel erroneously confirmed the Assessor's determination, which covered the costs of litigating all issues.

(4)   Subsequent interlocutory court applications affected the costs order made on 21 September 2011, but the Assessor and the Panel disregarded the subsequent applications.

(5)   The Assessor and the Panel allowed disbursements that were not proper disbursements.

(6)    A schedule prepared by Mr Irving, an employee of Shaw Gidley, was not used in relation to the proceedings and no costs should have been allowed in relation to it.

(7)   The costs order did not cover the issue of the taking of accounts, but the Assessor and the Panel proceeded on the basis that it did.

(8)   The costs were incurred by Shaw Gidley rather than by the respondent.

(9)   There should have been no assessment of costs while there remained outstanding issues.

(10)   Costs covered by one costs order were wrongly included in another costs order.

(11)    The respondent and the company had given an undertaking as to damages as a quid pro quo for a Supreme Court injunction.

(12)   The sum received by the respondent and the company was inappropriate.

(13)   The Panel failed to understand and consider all the submissions contained in the appellant's submission document.

Determination

1. Of the thirteen grounds, grounds 1, 5, 6, 8, 10 and 12 raise merit issues and do not allege an error of law. Further, grounds 5, 10, and 12 were not canvassed before the Panel and for that reason they cannot raise an error of law on the part of the Panel.

1. The determination of ground 2 (the alleged breach of the indemnity rule) depended upon findings of fact i.e. whether it was the respondent or Shaw Gidley that incurred the costs (ground 8), and the quantum of just and reasonable costs. The Panel adopted the Assessor's reasoning in relation to the alleged breach of the indemnity rule. The Assessor's statement of the law was correct.

1. Grounds 3, 4, 7 and 9 involve a misunderstanding of the substance and effect of the Supreme Court's costs order of 21 September 2011. The terms of the order are plain. The order in favour of the respondent covered the litigation of all issues in the proceedings up to the date of the order. Subsequent interlocutory applications did not retrospectively alter the order. It was a matter for the Supreme Court to determine the scope of the costs order that it made. In any event, these grounds do not refer to matters that were considered by the Panel, let alone wrongly decided.

1. Nor does ground 11 raise a matter that was considered by the Panel. There is no jurisdiction in this Court to assess damages for an undertaking as to damages given as a quid pro quo for a Supreme Court injunction.

1. As to ground 13, the appellant's written grounds and oral submissions did not assist the Court to understand the nature of any key submissions that the Panel had failed to understand and consider. If the Panel failed to consider a matter that the appellant intended to communicate but did not articulate in a manner that could be comprehended, then that does not raise an error of law.

1. The appeal will be dismissed.

Costs of the Appeal

1. In relation to the costs of the appeal, the respondent sought a gross sum costs order under s 98(4)(c) of the CPA. The respondent claimed costs of $17,470 up to 6 June 2013 (as set out in the affidavit of Ms Ivens) and the costs of $1552 in relation to counsel's costs of appearing on 13 June 2013. In her affidavit, Ms Ivens noted that the respondent has outstanding costs orders against the appellants in the assessed value of approximately $327,000, including the assessed costs to which this appeal relates. The respondent was prepared to accept a discounted amount because of the respondents' desire to finally resolve the litigation between the parties.

1. Mr Lawrence objected to the Court specifying a gross sum for costs. He asserted that the costs claimed were excessive, that insufficient detail had been provided in relation to the costs and that the body primarily liable for the costs was Port Stephens Council. By the same token, Mr Lawrence stated that he too would welcome a finalisation of the litigation.

1. In relation to the contention that the Council was the body primarily responsible for the respondents' costs, at least one stage the Council indemnified the respondent in relation to his costs. However, that fact is irrelevant to a determination of the fair and reasonable costs incurred by the respondent and owed to the solicitors. Ms Ivens, a solicitor, has deposed to the fact that the solicitors acted for the respondent and the company.

1. Section 98 provides:

98 (1) Subject to rules of court and to this or any other Act:

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

...

(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.

(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to:

...

(c) a specified gross sum instead of assessed costs,

1. While the court may quantify costs itself pursuant to s 98(4)(c), generally it will be reluctant to do so and will consider that costs should be assessed in the usual way because an assessor is in a better position to carefully consider a claim for the purpose of reaching a fair and reasonable assessment of the costs: Sherborne Estate (No 2) (2005) 65 NSWLR 268 at [50].

1. In this case, there are special reasons for making a gross sum costs order. The dealings between the parties have been protracted. They commenced years ago with an order that the company pay to the Council the sum of $57,000. The appellants are now liable for hundreds of thousands of dollars. It is in the interests of both parties that all issues be finalised.

1. As the Court is relatively inexperienced in the assessment of fair and reasonable costs, it takes a very conservative approach. Looking at the amounts set out in the affidavit of Ms Ivens, the following reduced amounts appear to be reasonable:

Solicitors' costs to 6 June (including GST)	$4,000
Solicitors' costs of 6 June (including GST)	$2,288
Disbursements	$475
Counsel's fees to 6 June (including GST)	$3,000
Counsel's fees of 6 June (including GST)	$2,500
Counsel's fees of 13 June (including GST)	$1,552
Total	$13,785

1. However, taking a conservative approach to what is fair and reasonable, I specify a gross sum of $12,500.

Orders Sought by Mr Lawrence in Email of 13 June

1. Mr Lawrence sought a stay of the appeal proceedings for at least 21 days to allow him to pay the costs assessed, an order that the amount of the costs assessment be offset against the value of a unit at Old Bar held in the name of the company as trustee (?), an order that an affidavit filed by a solicitor in other proceedings be referred to the Legal Services Commissioner, an order that an affidavit of the respondent filed in other proceedings be referred to ASIC, and an order that matters involving claims for GST be referred to the Australian Taxation Office. As noted above, these orders were not sought in the summons commencing the appeal.

1. In relation to the application for a stay, apart from the costs order there is nothing for the Court to stay. The Court declines to make a stay order.

1. In relation to the application for an offsetting order the Court has no jurisdiction to make such an order, even if it considered it appropriate to do so.

1. In relation to the applications that various alleged improprieties be referred to various regulatory bodies, it is not for this Court to consider the propriety of affidavits filed in other proceedings, let alone refer matters arising from those affidavits to regulatory bodies, and the Court declines to do so.

Orders

1. Appeal dismissed.

1. The appellants are to pay the costs of the appeal of the respondents (the respondent and the company). Pursuant to s 98(4)(c) of the Civil Procedure Act 2005, I specify that the appellants are to pay those costs in the gross sum of $12,500.

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Decision last updated: 17 June 2013