State of New South Wales v Hamod

[2009] NSWSC 1042

CITATION:	State of New South Wales v Hamod [2009] NSWSC 1042
HEARING DATE(S):	25 September 2009
JUDGMENT DATE :	2 October 2009
JUDGMENT OF:	Harrison J
DECISION:	The parties to bring in Short Minutes of Order to reflect these reasons.
CATCHWORDS:	COSTS – solicitor's lien – interlocutory proceedings over discovery – where plaintiff succeeds on discrete issue - where order made in favour of plaintiff for costs to be assessed and paid forthwith – where costs neither finally assessed nor paid – plaintiff ultimately unsuccessful in principal proceedings and ordered to pay defendants' costs – where solicitor claims lien over costs of interlocutory proceedings pursuant to order – where defendant asserts right to set off costs of interlocutory proceedings against costs of principal proceedings – factors relevant – declaration that solicitor entitled to lien
LEGISLATION CITED:	Legal Profession Act 2004
CATEGORY:	Procedural and other rulings
CASES CITED:	Ex parte Patience; Makinson v Minister (1940) 40 SR (NSW) 96 Fiduciary v Morningstar [2002] NSWSC 432; (2002) 55 NSWLR 1 Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451 Hamod v State of New South Wales [2007] NSWSC 600 Hamod v State of New South Wales [2007] NSWSC 707 Hamod v State of New South Wales (No 12) [2009] NSWSC 242 Hamod v State of New South Wales (No 13) [2009] NSWSC 756 In re A Debtor, No 21 of 1950 (No 2) Ex parte The Petitioning Creditors v The Debtor [1951] 1 Ch 612 State of New South Wales v Anthony Hamod [2007] NSWCA 186 Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 Traderight (NSW) Pty Ltd v Bank of Queensland Ltd (No 2) [2008] NSWSC 589 Wentworth v Wentworth (Supreme Court of New South Wales, Young J, 12 December 1994, unreported)
PARTIES:	State of New South Wales (Plaintiff) Anthony Hamod (First Defendant) Simon Diab (Second Defendant)
FILE NUMBER(S):	SC 16809/2008
COUNSEL:	M T Hutchings (Plaintiff) R T McKeand SC (Second Defendant)
SOLICITORS:	I V Knight, Crown Solicitor (Plaintiff) J Stonham & Co, Lawyers (First Defendant) Simon Diab & Associates (Second Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HARRISON J

2 October 2009

16809/2008 State of New South Wales v Anthony Hamod and Simon Diab

JUDGMENT

1 HIS HONOUR: This case involves an appeal by the State of New South Wales against the determination of costs by a Costs Review Panel in favour of Mr Hamod. That appeal is yet to be heard. These reasons for judgment deal only with the determination of a related claim by Mr Diab, who was at one time Mr Hamod's solicitor in the principal proceedings decided earlier this year: see Hamod v State of New South Wales(No 12) [2009] NSWSC 242. Mr Diab asserts a lien over costs for legal work he performed, which Simpson J ordered the State to pay to Mr Hamod: see Hamod v State of New South Wales [2007] NSWSC 707. The costs related to an argument about discovery. Mr Hamod won that argument and her Honour ordered the State "forthwith" to assess and pay Mr Hamod's costs. They were not assessed or paid. Instead they became the subject of an unsuccessful application for leave to appeal to the Court of Appeal: see State of New South Wales v Anthony Hamod [2007] NSWCA 186. Still the costs were not paid. On the contrary, a drawn-out assessment process began involving appeals and applications for review. These proceedings are the latest round in that dispute. Mr Diab's entitlement to a lien over those costs is now opposed by the State upon the basis that following his loss in the principal proceedings Mr Hamod was ordered to pay it $1,475,765 in costs: see Hamod v State of New South Wales (No 13) [2009] NSWSC 756. The State contends that, rather than being presently obliged to pay Mr Hamod anything, it can set off costs owed against costs owing. The issue is effectively whether the State's claimed right of set-off trumps Simpson J's order that the costs should be paid forthwith.

Background

2 The source of the present dispute is to be found in the reasons for judgment of Simpson J. Although the parties took me to some of her Honour's remarks during the course of argument, it is in my view instructive to refer to the decision in more detail. Having earlier dismissed an appeal from Harrison AsJ (see Hamod v State of New South Wales [2007] NSWSC 600), her Honour subsequently proceeded to deal with the question of costs. She referred to the applicable rules as follows:

"[2] I dismissed the appeal (confirming the order for discovery made by Harrison AsJ) and ordered that the first defendant pay the plaintiffs' costs. On delivery of the judgment senior counsel who appeared for the plaintiffs sought an order that costs be ordered to be payable forthwith. The statutory authority for taking such a course is to be found in UCPR 42.7, which is in the following terms:

' 42.7 Interlocutory applications and reserved costs

(1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including:



(a) costs that are reserved, and

(b) costs in respect of any such application or step in respect of which no order as to costs is made,
are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.


(2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.'

[3] As will be seen from sub-r (2), prima facie an order for costs made with respect to an interlocutory application do not become payable until the substantive proceedings are concluded. This, however, is subject to the discretion of the court otherwise to order.

[4] The predecessor to r 42.7 was Pt 52A, r 9 of the Supreme Court Rules 1970 . Although framed in different terms, the effect of sub-r (1) of that rule was similar to that of r 42.7(2) – that is, the prima facie position is that costs of interlocutory skirmishes are not to be paid or payable until the conclusion of the proceedings. That, too, was subject to a discretion to order otherwise. Circumstances in which it is appropriate to make such an order are spelled out in sub-r (3). Those circumstances arose where it appeared to the court that:


'(1) A party has been subject to unreasonable delay or default on the part of any other party;

(2) the proceedings are unreasonably protracted; or

(3) justice otherwise demands it …'

[5] Sub-r (3) was not an original component of r 9 but was added with effect from January 2000. Even before the insertion of sub-r (3), r 9(1) had contained such a power, and had been the subject of judicial consideration, and delineation of circumstances in which departure from the prima facie rule would be appropriate. The authorities are collected in (now defunct) Ritchie: Supreme Court Procedure NSW at 3154.1-3154.2. In Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; 55 NSWLR 1, Barrett J concluded that sub-r (3) was not intended to confine the discretion conferred by sub-r (1). Thus the authorities relevant to SCR Pt 52A r 9(1) are of guidance in the construction of UCPR 42.7. Barrett J identified three relevant factors. They may be paraphrased as follows:


(i) where the costs order is relevant to a discrete, separately identifiable aspect of the proceedings;

(ii) where there is demonstrated some unreasonable conduct on the part of the party against whom the costs have been ordered;

(iii) where the proceedings have some distance and time to run, and it may be some time before ultimate disposition.

[6] I see no reason not to regard these as relevant to the application now made."

3 Having thus described the principles that are to apply, her Honour came to the following conclusions:

"[7] Senior counsel who appeared for the plaintiffs disclaimed (for reasons I do not understand) reliance upon the first – that is, that the costs ordered to relate to the separately identifiable component of the proceedings. He relied upon the second, what he described as unreasonable conduct on the part of the first defendant; and he relied upon the third, that the proceedings have some distance to travel before finalisation could be envisaged.

[8] In this respect it is apposite to note that the substantive proceedings are a claim for damages for, inter alia, malicious prosecution and false imprisonment. They are set down for a hearing, estimated to be at least seven weeks, with respect to liability only, to commence at the end of October of this year. Given that that hearing is confined to issues of liability, it cannot confidently be anticipated that that hearing will bring the proceedings to finality. That will be so only if the plaintiffs are unsuccessful.

[9] Senior counsel also pointed out that the proceedings involve an individual (and a company of which he is the principal) against the State of NSW, with its considerably – immeasurably – greater resources.

[10] The unreasonableness upon which senior counsel relied was said to be the intransigence of the first defendant in responding to the plaintiffs' application for discovery. This, it was said, was illustrated by its failure to make any offer of discovery more limited than that which the plaintiffs sought. It is true that, in the appeal before me, the first defendant set its face against the order made by Harrison AssJ, but failed, until prompted to do so by myself, and after the conclusion of the hearing, to put an alternative proposal.

[11] As will be apparent from the judgment, I took the view that the first defendant's legal representatives misconceived the nature and extent of the issues raised by the pleadings, and the extent to which particularisation of the plaintiffs' claim confined what they could hope to achieve by discovery. But that is not necessarily unreasonable conduct. The evidence as to the first defendant's failure to negotiate on the extent of discovery was scanty, and drawn, really, from inferences to be drawn from the materials put before me on the appeal. I am not satisfied that the first defendant's conduct was unreasonable in the sense that it calls for sanction in the form of an immediate payment of the costs order.

[12] I am, however, troubled by the plaintiffs' abandonment of discreteness as a basis for such an order. In my opinion, this is a classic instance of a discrete issue having arisen and being determined adversely to the first defendant. Further, and as I have already indicated, the substantive proceedings have some distance to go before they are likely to be resolved. The plaintiffs have been put to considerable expense in a proceeding in which they are pitted against the resources of State. It is not difficult to infer, from examination of the pleadings, and the historical matters referred to in the appeal, to infer that the plaintiffs' resources are limited. Nor could it be suggested that an order of the kind now sought would work any hardship to the first defendant.

[13] Whatever the outcome of the substantive proceedings, the first defendant will be liable to the plaintiffs for the costs of the discovery application. I can see no reason why it should not be required to make that payment forthwith. I recognise that, should the first defendant ultimately prevail, there may be some risk that its recovery of costs that could be then expected to be ordered against the plaintiffs would not be recoverable, and that, in the ordinary course, the costs of the discovery application would be offset against whatever the first defendant was entitled to.

[14] However, in the end, I am of the view that the interests of justice are best served by making an order of the kind sought on behalf of the plaintiffs.

[15] Accordingly, I order that the costs be assessed and payable forthwith."

4 Although there was no argument before me on the point, I take her Honour's order to be an order made in accordance with UCPR 36.4(3).

5 The costs were not assessed or paid "forthwith", but the assessment process commenced in a timely way. It is instructive to understand the course of that process to date, which can be summarised briefly. On 25 September 2007, following the Court of Appeal's dismissal of the State's application for leave to appeal against the decisions of Simpson J, Mr Hamod's solicitors served a bill of costs claiming costs of the discovery argument in the sum of $459,095. The solicitors then filed an application for assessment of the costs on 20 December 2007. On 27 December 2007 that costs application was referred to a costs assessor, Mr Joseph Harris, for assessment. The State provided a notice of objections to the bill of costs to the costs assessor on 16 January 2008. On 19 February 2008 Mr Hamod's solicitors wrote to the State enclosing copies of correspondence to the costs assessor and enclosures including their concessions and responses in relation to the objections. Mr Harris issued a certificate of determination of costs on 6 June 2008 in an amount of $273,660. On 15 July 2008 the State filed an application for review of the costs assessor's determination. A Costs Review Panel consisting of Mr John Sharpe and Mr John McGruder issued a certificate of determination of costs on 19 August 2008, which was sent to the parties on 27 August 2008. The panel did not vary the sum of $273,660. No order staying the operation of the panel's decision was sought or made. Notice of the State's intention to appeal against the panel's decision was given to Mr Diab by letter dated 11 September 2008.

6 These proceedings are by way of appeal by the State under ss 384 and 385 of the Legal Profession Act 2004 against the determination of the Costs Review Panel. They were originally commenced in the District Court but later removed to this Court. At first only the State and Mr Hamod were parties. However, on 3 October 2008 Mr Diab filed an application to be joined as a defendant in the proceedings together with an application for leave to file a cross-claim against the State. Mr Diab became a defendant on 25 November 2008 and leave to file his cross-claim was granted. The orders sought by Mr Diab in that cross-claim are the orders that I am now asked to make. They include a claim for a declaration that Mr Diab is entitled to a lien over the costs payable by the State to Mr Hamod and a declaration that Mr Diab has an equitable charge over those costs. Mr Diab also seeks an order that the costs be paid to him when ascertained, meaning presumably when the State's appeal is determined.

7 On 3 April 2009, R A Hulme J ordered, "the costs proceedings be stayed" with liberty to restore on three days' notice. That stay was apparently granted in anticipation of my then pending decision in the principal proceedings. The stay appears in terms to relate to the State's appeal rather than to Mr Diab's cross-claim for the present relief. I do not consider that the stay is an impediment to my hearing Mr Diab's application and I would in any event order that it be removed if it were.

8 Mr Hamod was separately represented before me. He first sought to argue that the issue should not be determined in advance of the hearing of his appeal to the Court of Appeal against my decision in the principal proceedings. Despite his obvious, or at least apparent, sponsorship of or acquiescence in the assessment process throughout, Mr Hamod also contended that Mr Diab was in any event not entitled to the costs that have been assessed. This was because Mr Diab is said to have acted in breach of his retainer or negligently and so to have become disentitled, in an unexplained way, to payment for the legal work he had performed. Mr Hamod argued that the costs should therefore be paid directly to him but offered no principled reason why that should occur. He then appeared in a contradictory way to support the State's contention that it had the right of set-off that it claimed. However, that submission is otherwise perfectly explicable given the significant costs order that has been made against him in the principal proceedings.

Mr Diab's submissions

9 Mr Diab contends that Simpson J's judgment makes it clear that in making an order that the costs be payable forthwith she intended that the State would not be entitled, "as in the ordinary course", to a set-off against any costs Mr Hamod may ultimately be ordered to pay it. This was so despite the risk that once they were paid the State may never be able to recover such costs from Mr Hamod. Her Honour took into consideration the fact that Mr Hamod's resources were limited, that he was engaged in very substantial litigation and that immediate payment of the costs would undoubtedly assist him to continue to retain legal representation. The State by comparison had "considerably – immeasurably – greater resources". In the events that occurred Mr Hamod was unrepresented for significant periods throughout the case. The Court of Appeal did not interfere with her Honour's order for costs in any way.

10 Significantly Mr Diab argues that the current relative positions of the State and Mr Hamod were patently within her Honour's contemplation when the order was made. That includes the possibility, now the reality, that Mr Hamod may have come to owe more to the State in costs than the State owes him, where ordinary common sense accounting principles would on their face favour the making of book entries rather than an exchange of cheques or similar. Moreover, Mr Diab contends that the later dismissal of the State's appeal provided no basis for departing from her Honour's order or the reasons for making it, but on the contrary gives additional support for maintaining its integrity. Whilst not denying the Court's power to order a set-off between competing costs entitlements, the present position has prevailed for two years and should continue to apply in the absence of any circumstances derogating from the applicability or relevance of her Honour's decision. Mr Diab contends that no evidence of any relevant change in circumstances has been offered. Mr Diab conceded that he had no greater entitlement to payment from the State pursuant to the lien than Mr Hamod would have had absent the lien.

11 The solicitor's lien is fully described and discussed by Campbell J in Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451 at [33] – [44]. For presently relevant purposes at least the following propositions from his Honour's judgment can be noted:

1. The solicitor's right exists over both the amount of a judgment in favour of the client, and the amount of an order for costs in favour of the client.

2. It exists over money that is in the possession of the solicitor, and also over money that is in court and money that is owed to the client but not paid into court.

3. The quantum of money for which the solicitor has the equitable right is the amount which is properly owing to the solicitor by the client, whether that amount be ascertained by taxation of a bill of costs, or assessment, or pursuant to a costs agreement. In relation to those situations where taxation is necessary to ascertain the quantum owing to the solicitor, the solicitor's right exists in the fund prior to the occurrence of the taxation.

4. The solicitor's equitable right exists before the court is asked to intervene to protect it; it "arises immediately upon the recovery of monies through the exertions of the solicitor". If the lien is over the proceeds of an order for costs, it comes into existence at the time of making of that order for costs. If the lien is over the proceeds of a settlement, it arises when the settlement agreement is entered into.

5. The right of the solicitor is one that the solicitor can enforce against the client, entitling the solicitor to an injunction to prevent the payment of the fund to the client without notice to the solicitor until such time as the quantum of the solicitor's entitlement to be paid from the fund is ascertained. If the quantum of the solicitor's entitlement has been ascertained, the solicitor is entitled to an order that the amount of his entitlement be paid to him from the fund, notwithstanding opposition from the client.

12 The entitlement to a charge is explained in Ex parte Patience; Makinson v Minister (1940) 40 SR (NSW) 96.

The State's submissions

13 The State in contrast says that the circumstances have in fact changed. Her Honour's contemplation that they might change should not now be permitted to prevail in disregard for what has occurred. The current realities include the fact that Mr Hamod is on his own account impecunious and without the ability to pay the costs he owes the State or the prospect of acquiring it. Even if the costs of the discovery argument were paid directly to Mr Diab, Mr Hamod was never likely to pay the costs he has been ordered to pay so that in combination the specific enforcement of her Honour's order according to its terms would work an undeniable injustice upon the State. Such a result could be conveniently avoided by permitting the State to set off the competing amounts of costs.

14 The State referred to the decision of Harman J in In re A Debtor, No 21 of 1950 (No 2) Ex parte The Petitioning Creditors v The Debtor [1951] 1 Ch 612 at 620-621 as follows:

"It seems to me, as it seemed to Kay, J., in Blakey v. Latham , that as between the parties there can be no equity to refuse a set-off and that to suggest that there is some equity obliging one party to pay the costs of the solicitor to the other is absurd. Kay, J.'s observations are as follows: 'If this case were absolutely free from authority I confess it seems to me difficult to see why the solicitor's lien should intercept the right. Take the simplest case one can imagine. A brings an action against B, and it is dismissed with costs. B brings another action against A, and that is dismissed with costs. The order in each case is, A to pay B his costs in the one action, B to pay A his costs in the other action. Well, when those costs are taxed, and the Master's allocatur is issued, there is a judgment in each case for a definite amount, and there is no doubt whatever that those judgments could be set off one against the other. That being so, just suppose the case (which is the only case in which the matter becomes the least material), that one of those parties, A, was insolvent and unable to pay anything; why B should pay costs to A for the sake of A's solicitor is what I cannot understand. I cannot see how there could be any equity for that'; and, having quoted certain words of Cockburn, C.J., in Mercer v. Graves , Kay, J., added, 'how can A's solicitor possibly have an equity against B to make B pay the costs which B is ordered to pay to A, when B cannot recover from A the costs which A is ordered to pay to B - how can A's solicitor have an equity to make B pay instead of setting them off? If this matter were free from authority, I should say that is the most extraordinary equity I ever heard of'.

I am therefore of opinion that there is nothing in the point about the solicitor's lien. As to the other reason, I cannot see that any question of undue preference arises. There is no bankruptcy here; and in any event money set off under an order cannot constitute an undue preference." (footnotes omitted)

15 The State also referred to Wentworth v Wentworth (Supreme Court of New South Wales, Young J, 12 December 1994, unreported) in which his Honour said this at 3-4:

"There appears to be little doubt that the Court has a discretion to allow a set-off of costs orders made in the one set of proceedings. In Edwards v Hope (1885) 14 QBD 922, 926, Brett MR said of the old practice in the Common Law Courts that they 'always had an equitable jurisdiction, for the purpose of preventing absurdity of injustice in cases where there had been judgments for damages between the same parties in distinct actions, to set-off one judgment against the other and to allow execution to issue in respect of the balance only'. In Reid v Cupper [1915] 2 KB 147, 149, Buckley LJ noted that what was meant by the words 'equitable jurisdiction' meant a jurisdiction to do that which was fair. Montagu on Set-Off . . . says at pp 6-8, 'Opposite demands arising from judgments may upon motion be set-off against each other, whenever such set-off is equitable though the judgments are in different courts, and though the parties to the different records are not the same. Costs may be set-off against costs only, or against debt and costs'.

*****

Later cases flesh out the content of this right of set-off. It is clear from Reid v Cupper that the judge has an inherent power to direct set-off vested in the Judge because of the Judge's power over the suitors in the Court. The existence of such power may, in an appropriate case, lead to a stay of execution being ordered, Re a Debtor [1951] Ch 612, 618. The inherent power is additional to the power of the taxing officer to order set-off under the relevant rules of Court . . ."

Consideration

16 The principles outlined by Campbell J in Firth v Centrelink (supra) to which I have earlier referred were not contested as an accurate statement of the principles concerning the circumstances when a solicitor's lien will arise. Nor did I perceive there to be a genuine dispute that in accordance with those principles Mr Diab would be entitled to the lien he asserts if it were not for the question of set-off that the State propounds. With the exception of a concession made on behalf of Mr Hamod that Mr Diab was at the highest entitled to a charge, no debate about Mr Diab's entitlement to such relief was argued before me. The issue remained throughout the one identified by me in [1] above.

17 In a consideration of that issue there are several apparently unique facts or combinations of facts that mark out the present case. In my opinion they support Mr Diab's claim to a lien. This is for the following reasons.

18 First, the discretion exercised by Simpson J was exercised with a full and articulated knowledge of what might occur. Her Honour was aware that the State might become entitled to its own costs order and presumably appreciated that if it were entirely successful in the proceedings it would become entitled to an award of costs in a substantial amount. The prospect that the State would be denied the ability to set off these costs if paid forthwith must also have been apparent. Notwithstanding these matters, her Honour decided to order that costs were to be assessed and paid forthwith. In terms of the applicable rule, her Honour "otherwise ordered".

19 Secondly, nothing that might have been in her Honour's reasonable contemplation at the time that she made the order has turned out to be different. This is not a case of a decision that in retrospect sits uncomfortably with later unanticipated or unexpected events that render it meaningless or unfair or unjust. Mr Hamod's impecuniosity is not such a factor. Nor is my decision in the principal proceedings or my orders as to costs. The drawn out and still incomplete costs assessment process is by no means in such a category. A successful challenge in the Court of Appeal to her Honour's order might have been such a circumstance but that did not occur. The State has not identified and cannot point to a single supervening event or circumstance that makes her Honour's order futile or nugatory or glaringly wrong. It was neither made based upon unreasonable assumptions about the future nor reasonable assumptions that turned out to be wrong.

20 Thirdly, there is no suggestion that her Honour's discretion somehow miscarried by reason of a failure to take account of some relevant factor or the consideration of some irrelevant matter. In any event, since the Court of Appeal saw no reason to interfere with her Honour's decision it is not open to the State or to me now to review it in such light.

21 Fourthly, any different approach by me would raise the spectre of what would amount to inconsistent decisions by two judges at the same level on identical facts. The only basis proffered by the State for a different order is that the anticipated costs order in its favour has become a reality. However, that is in my opinion an illegitimate attempt to promote to some greater level of significance what is known as a fact over what her Honour correctly appreciated would in all reasonable likelihood become a fact. It would be highly unsatisfactory to permit a second judge to revisit the same facts for no good purpose other than the inconvenience of the order to one of the parties.

22 Fifthly, it is not correct to say that the maintenance of her Honour's order would produce an absurd or unjust result. This Court retains a discretion to order a set-off in an appropriate case. The very notion of an exercisable discretion by definition permits of the notion of more than one outcome from its exercise. It is not the case that a failure to order a set-off that produces a loss to one party thereby renders the exercise of the discretion invalid. Such a contention forecloses on the very essence of a discretion in the first place. The decision of Harman J is distinguishable on at least two grounds. The first is that in the present case there is an order of long standing that the costs owing or due were to be paid forthwith. We are not concerned with competing entitlements for costs arising in circumstances where the terms of the respective orders give no particular weight to one over the other. The second is that her Honour's order specifically contemplated that the costs would, or might, not be set off. She took this very possibility into account in terms. This is not a case of two competing orders made at different times when the question of set-off was not even adverted to or conversely where the orders were made close in time where a set-off almost unarguably applied in the ordinary course. The very order that the costs of the discovery issue were to be paid forthwith suggests that the payment was intended to occur, and should have occurred, before any right of set-off crystallised.

23 Sixthly, the argument that a set-off should occur is only available to the State as a result of delays in the assessment process, although not in my opinion as the result of any unreasonable conduct on the part of the State. By its 11 September 2008 letter the State's solicitor asked Mr Diab "to refrain from taking any steps in relation to the question of costs". The letter went on to say that "[i]n the event that any step is taken I am instructed to make an application for [a] stay of such proceedings". No step was ever taken by Mr Diab or Mr Hamod to enforce the costs order following the panel's decision on 19 August 2008 and certainly not after the receipt of that letter. However, within four weeks of 19 August 2008 the State had commenced the present proceedings challenging the panel's decision. At one level it seems inappropriate to permit the State to rely on circumstances that delayed the finalisation of the assessment process when the delays were considerably contributed to by the State itself and solely created by the State in the sense that it commenced the present proceedings. Moreover, the whole process will remain stalled until the proceedings are finalised.

24 Seventhly, in purely objective terms her Honour's order in the present case appears unambiguously to qualify as one payable forthwith by reason of the interests of justice, the discrete nature of the subject matter of the dispute that generated the costs in the first place and the length of time that the case might have been expected to run when all viewed at the time that the order was made. With respect to the first of those issues Olney J said the following in Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297, cited by Barrett J in Fiduciary v Morningstar [2002] NSWSC 432; (2002) 55 NSWLR 1 at [8] as follows:

"[8] That the demands of justice determine how an exception of the kind in rule 9(1) should be approached is borne out by the following observation of Olney J in Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297, a decision on the provision of the rules of the Federal Court similar to that in rule 9(1):

'The rule does not suggest any particular criteria by which the court should be guided in approaching such an application, and accordingly I take the view that the discretion should be exercised in favour of a party who establishes that the demands of justice require that there be a departure from what appears to be the general practice envisaged by the rule, namely, that an order for costs of an interlocutory proceeding should not entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded.' "

25 The State was wholly unsuccessful before Harrison AsJ and Simpson J on the substantive discovery issue. It was in the circumstances an unwanted, unnecessary and costly diversion for Mr Hamod. His ability to attract and retain legal representation, or to continue to fund the proceedings representing himself, were at the very least placed under considerable strain by the need to attend to an issue that should not have become an issue. It was clearly in the interests of justice that a special costs order be made in such circumstances.

26 Barrett J also dealt with the question of discreteness at [10] in the same case in the following way:

"[10] It becomes necessary now to consider the factors which have caused courts to depart from the normal rule in Part 52A rule 9(1) that costs are payable at the conclusion of the proceedings. A convenient and useful starting point is the following passage in the judgment of Priestley JA in Horrobin v Australia & New Zealand Banking Group Ltd (unreported, NSWCA, 6 June 1997):

'None of the cases is on all fours with the present one; indeed, a reading of them emphasises the need for cases to be considered by reference to their own particular facts. Nevertheless, those relied on by counsel for H and S show there is a tendency for costs orders to be made payable forthwith and without waiting for the conclusion of further proceedings when the proceedings in respect of which the costs orders have been made are regarded as sufficiently self-contained and detached or detachable from proceedings yet to be heard, whether between the same or associated parties, as to make it seem just for an actual payment to be made in the meantime.' "

27 There is no contest that the discovery debate was a separate and discrete issue.

28 With respect to the third of those issues his Honour referred to the following authorities at [13]:

"[13] A third factor is, as it was put by Giles J in Doran Constructions Pty Ltd v University of Newcastle (unreported, NSWSC, 16 December 1994), that 'there is much to come in the proceedings' and 'one can see a fairly long time before the proceedings are disposed of'. In Horrobin (above), the decision of Priestley JA to order that costs be payable forthwith was influenced to some extent by the fact that the controversy between the parties would run for at least a further year. In Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (unreported, FCA, 18 August 1995), Lindgren J said that it may be appropriate for greater use to be made of the analogous provision in the Federal Court Rules, 'particularly in cases such as this one where the final determination of the proceedings is so far away'".

29 The issue of the anticipated remaining length of the proceedings was also referred to by Palmer J in Traderight (NSW) Pty Ltd v Bank of Queensland Ltd (No 2) [2008] NSWSC 589.

30 The costs order that is the subject of the present controversy was made on 6 July 2007. My decision in the principal proceedings was delivered on 3 April 2009 and my decision on the costs of the proceedings was delivered on 5 August 2009. There remains in addition to this two year period such further delay as may be occasioned by the outstanding appeal to the Court of Appeal in the principal proceedings and the final disposition of these proceedings. It is likely that her Honour's expectations about probable delays were more than exceeded in the events as they ultimately occurred.

31 Finally, and as a general proposition, any result in these proceedings that had the effect, or even the appearance, of encouraging either delay in the payment of costs by a party that had been ordered to pay them forthwith, or disregard by that party for such an order, would be most regrettable. As I have earlier observed, I do not consider that the State has done either of these things in this case. However, it would in my opinion be a less than satisfactory outcome if support were given to the notion that an order for the payment of costs in a particular way or by a particular time could be subverted or ignored without apparent sanction until by the passage of time an opportunity arose to argue that changed circumstances rendered the strict enforcement of the order absurd or commercially unrealistic or burdensome. Wholly unpredictable or unforeseeable events apart, such a development would be potentially inimical to the authority of the original order and should be avoided as far as possible.

Conclusion

32 In all of the circumstances I consider that Mr Diab is entitled to a declaration that he has a lien in the terms sought. However, there are a number of matters of concern that make it uncertain when Mr Diab will actually be able to receive a specific sum of money to enforce the lien in a practical way. These matters include the pendency of the current appeal against the panel's determination, Mr Hamod's appeal to the Court of Appeal against my decision in the principal proceedings and the prospect of an appeal by the State against the present decision. I am also concerned that I have not had the benefit of full argument on Mr Diab's claimed entitlement to an equitable charge or even whether such an order can, or should, yet be made.

33 It seems to me to be appropriate to permit the parties an opportunity to consider these reasons in the hope that some mutually convenient and suitable regime can be implemented so as to take account of the factors I have identified. It would appear to be appropriate thereafter to re-list the matter for mention by arrangement with my Associate. If that is not possible I will make orders that otherwise give effect to my reasons. I will also deal with the question of costs of these proceedings at that time.

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