Studio B Hair Design Pty Ltd t/as Studio B Hair Design v Kerrison t/as Kerrisons Legal Services

[2025] NSWSC 924

Supreme Court

New South Wales

Medium Neutral Citation:

Studio B Hair Design Pty Ltd t/as Studio B Hair Design v Kerrison t/as Kerrisons Legal Services [2025] NSWSC 924

Hearing dates:

9 July 2025

Date of orders:

15 August 2025

Decision date:

15 August 2025

Jurisdiction:

Common Law

Before:

Schmidt AJ

Decision:

Judgment for Mr Kerrison

Catchwords:

LEGAL PRACTITIONERS – practice and procedure – solicitor’s lien –solicitor’s general lien over proceeds of sale of a business held in trust – where extension of time for application to have assessed costs reviewed granted by this Court – whether lien applies to the assessed costs and to costs of these proceedings – s 144 of the Legal Profession Uniform Law 2014 (NSW) – whether it permits solicitor’s lien to be exercised in respect of the disputed costs

Legislation Cited:

Civil Procedure Act 2015 (NSW)

Legal Profession Uniform Law 2014 (NSW)

Legal Profession Uniform Law Application Act2014 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Atlantic 3-Financial (Aust) P/L & Anor v Marler & Anor [2003] QCA 529

Bolster v McCallum (1966) 85 WN (Pt 1) 281

Breen v Williams (1996) 186 CLR 71

Dinmore Meatworks Pty Ltd v Kerr [1962] HCA 47

Firth v Centrelink & Anor (2002) 55 NSWLR 451; [2002] NSWSC 564

Goldberg v Beckett [2015] NSWSC 1966

Johns v Law Society of NSW [1982] 2 NSWLR 3

Kerrison’s Legal Services v Studio B Hair Design Pty Ltd [2022] NSWSC 1801

Magnamain Investments Pty Ltd v Baker Johnson Lawyers [2008] QSC 245

Maguire v Makaronis (1997) 188 CLR 449

Majeau Carrying Co Pty Ltd v Costal Rutile Limited (1973) CLR 48

WFM Motors Pty Ltd v Maywell (Unreported 7 March 1984)

Category:

Principal judgment

Parties:

Studio B Hair Design Pty Ltd t/as Studio B Hair Design (Plaintiff/First Cross-Claimant)

Robert Francis Kerrison T/as Kerrisons Legal Services (First Defendant/First Cross-Defendant)
(First Defendant)
Amanda O’Brien (Second Defendant/Second Cross-Defendant)

Representation:

Counsel:
A Crossland (Plaintiff)
J Dooley (Defendants)

Solicitors:
Watson Law (Plaintiff)
Gilchrist Connell (Defendants)

File Number(s):

2022/161245

JUDGMENT

1. In July 2020, Studio B Hair Design, a trustee, sold a hairdressing business which Ms O’Brien, its director, operated through trust arrangements which involved a second trustee which was also a party to the sale agreement. The resulting net proceeds of the sale, $147,521.60, were transferred into the trust account of its then solicitors.

2. Studio B later engaged another solicitor, Mr Kerrison, into whose account the proceeds were transferred. As the result of the events which later unfolded, despite directions given to Mr Kerrison, he still retains a large part of the proceeds of the sale in trust and resists paying them to Studio B, claiming that he has properly exercised his right of general lien over those funds.

Issues

3. Affidavit evidence was given by Ms O’Brien and Mr Kerrison. Neither were required for cross examination. The parties also agreed relevant facts which are annexed to this judgment.

4. There is no issue about the events which led to the claims and counter claims advanced in the proceedings. Pertinently, they include:

1. At the time of the sale there was a dispute between Studio B and Ms Chick, a former employee, about her claimed 50% interest in the proceeds of the sale, which was not resolved until October 2021;

2. In 2020 Mr Kerrison and Studio B entered a legal services agreement when it retained him to act in respect of its dispute with Ms Chick;

3. In December 2020 Studio B terminated Mr Kerrison’s retainer;

4. In January 2021 Studio B directed Mr Kerrison to transfer the proceeds of the sale to its new solicitors, Watson Law;

5. Mr Kerrison did not make that transfer, he then pursuing payment of his $37,940 legal fees.

6. In February 2021, Mr Kerrison refused Studio B’s offer to pay him $16,000, with the result that Studio B pursued a costs assessment;

7. In October 2021 Studio B directed Mr Kerrison to pay Ms Chick $24,994 out of the trust account, but he also did not make that payment;

8. In November 2021 Mr Kerrison’s costs were assessed to be $29,328.81;

9. In December 2021 Watson Law advised Mr Kerrison that he should pay $96,537.57 into its trust account; that he should retain $25,990.03, that reflecting the costs assessment certificate and that he should pay $24,994 to Ms Chick;

10. Mr Kerrison paid Ms Chick, but did not make the other payments, instead pursuing a review of the costs assessment;

11. In June 2022 Studio B brought these proceedings, seeking orders that Mr Kerrison transfer to it all of the funds he still held on trust. Its claim was amended in August 2022 and further amended in September 2023, to seek restitution of $122,527.60;

12. Mr Kerrison’s review application was closed because it had been brought out of time, but in December 2022 Garling J extended time even though what was in issue between the parties then appeared to amount only to between $5,000 and $8,000: Kerrison’s Legal Services v Studio B Hair Design PtyLtd [2022] NSWSC 1801. Studio B was also ordered to pay the costs of those proceedings;

13. In April 2023, the Review Panel issued a certificate which increased Mr Kerrison’s assessed costs to $30,035.56;

14. Mr Kerrison eventually obtained a garnishee order in the Local Court and then withdrew $31,347.22 from trust to pay those assessed costs, interest and fees, but he still did not transfer any funds to Studio B;

15. In December 2024 Mr Kerrison’s costs of the proceedings before Garling J were assessed to be $18,334.25, but he did not file the resulting costs certificate in court, nor did he transfer those costs out of trust; and

16. For its part Studio B has never directed Mr Kerrison to take those assessed costs out of trust, or to pay the balance held on trust to it.

5. Mr Kerrison defended the case Studio B finally pressed, contending that he had a right to retain all the money held on trust until his assessed costs were paid and his costs of defending Studio B’s claims in these proceedings were also paid, given his general right of lien.

6. Even at the hearing, despite the obligations imposed upon them by s 56 of the Civil Procedure Act2005 (NSW) to assist the Court to achieve its overriding purpose of the just, quick and cheap resolution of the real issues in the proceedings, the parties were unable to agree about the transfer of any of the funds, or their use for payment of Mr Kerrison’s fees, even those which have been assessed and still remain unpaid.

7. That remained the position despite there being no issue between them that solicitors have a general lien over money held on trust for unpaid costs. Studio B contending that the course Mr Kerrison had pursued had involved a breach of his fiduciary duties, given that he had never transferred the balance of what he held on trust, even though initially only some $37,000 costs had been in issue between them.

8. It was the scope of that lien and its interaction with provisions of the Legal Profession Uniform Law 2014 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW), which lay in issue between the parties. Although what was in issue was reduced further after written submissions were filed, as well as during the course of the hearing.

The unpleaded claim

9. Despite this at the hearing one claim was advanced by Studio B which had not been pleaded and which was not addressed by the evidence led. This was that Mr Kerrison could have no lien over the funds he held in trust because they were not beneficially owned by Studio B. Objection was taken to the case so advanced, reliance being placed on r 14.4 of the Uniform Civil Procedure Rules 2005 (NSW), which requires that a party plead specifically any matter that might take the opposing party by surprise.

10. Mr Kerrison’s case was that this claim not having been pleaded, with the result that the relevant trust deed and other evidence was not in evidence, this claim had not been investigated, dealt with by a notice to produce being issued, evidence being led, or Ms O’Brien being cross examined. In the result Studio B was not entitled to pursue the case so advanced.

11. In all of the circumstances I am satisfied that it must be accepted that what is here in issue cannot turn on this belatedly advanced submission. That not being what the just, quick and cheap resolution of the real issues in the proceedings permits, the Court always having to pay regard to the overriding purpose of the Civil Procedure Act in s 56, as well as what the surrounding statutory provisions provide.

12. Justice requiring that if Studio B wished to advance its case on the basis that it did not own the funds held in trust, it had to disclose this before the hearing, by advancing a properly pleaded claim and leading evidence to support that claim. Not having done so, what lies in issue on the pleaded cases cannot be resolved on the basis of what it sought to advance about the ownership of the funds, without prior notice, only in submissions.

The concessions at the hearing

13. In the parties’ signed statement of agreed facts and issues, the issues were identified to be:

“1. Whether on about 30 October 2020, the parties entered into an oral agreement for the Defendant to provide legal services to the Plaintiff (Oral Agreement).

2. Whether the Defendant owes a fiduciary duty to repay the reduced Trust Monies to the Plaintiff.

3. Whether the Defendant has an entitlement to the reduced Trust Monies.

4. Whether the Defendant is unjustly enriched by the reduced Trust Monies.

5. Whether the Defendant is liable to remit the reduced Trust Monies to the Plaintiff.

6. Whether the Defendant is liable to otherwise give restitution of the reduced Trust Monies to the Plaintiff.

7. Whether the Defendant is in breach of his fiduciary duty owed to the Plaintiff.

8. Does the expression “legal costs” in s 144(2)(a) and (b) extend to costs orders made as between solicitor and client, and if so, when?

9. What is the extent of the Solicitor’s rights to exercise a lien otherwise than provided for in the LPUL, as per s 144(1)(a)?

10. When was the Defendant obligated to repay to the Applicant the Trust Monies, or part of the Trust Monies.”

14. Much of this fell away during the hearing.

15. A balance of $91,180.38 now remains in Mr Kerrison’s trust account. In written submissions Mr Kerrison identified three categories of costs to be in issue:

1. The assessed costs, interest and fees of $31,347.22 he had taken from trust and paid to himself;

2. The costs Garling J ordered, which were later assessed to be $18,334.25 and appear to relate to counsel’s fees; and

3. The costs of these proceedings.

16. Studio B properly did not finally pursue orders in respect of the $31,347.22 Mr Kerrison had withdrawn from trust to pay his first assessed costs. Nor did Mr Kerrison pursue the declaratory relief sought by his cross claim in relation to the trust funds, his lien and steps he had taken.

The issues which remain to be resolved

17. Mr Kerrison identified that what was in issue in respect of the two remaining classes of costs he claimed to have a general lien over was:

1. Whether the assessed costs fall within the expression “legal costs” used in s 144(2)(a) of the Legal Profession Uniform Law; and

2. What right a solicitor has to exercise a lien otherwise than provided in s 144.

18. Studio B’s written submissions had not been directed to these questions. But it accepted that these issues arose to be determined, as did the scope of Mr Kerrison’s lien and whether it extended to the costs of these proceedings. The interaction between s 144 and various provisions of the Uniform Civil Procedure Rules also being in issue.

19. During the course of these submissions I raised with the parties the taking of the available step of directing Mr Kerrison to take out of trust the long-assessed costs and to pay the balance to Studio B, that appearing to accord with the obligations imposed on the parties by s 56.

20. Studio B submitted that Mr Kerrison’s position stood in the way of such a direction. That is difficult to accept.

21. His position was then explained to be that he having now also been put to the cost of defending these proceedings, his lien having been challenged as it was, he was also entitled to rely on that lien in respect of the further costs he had incurred in these proceedings.

22. That was also in issue.

The parties’ cases

23. Studio B’s case was that Mr Kerrison had no right under his general lien to retain all of the money he still held on trust, given the limited scope of the disagreement about his costs of acting in respect of the dispute with Ms Chick; the obligations imposed on him by the legislative scheme in respect of charging only reasonable costs; and the consequences of the right he claimed, to be entitled to retain an exorbitant sum in trust, beyond any sum he was reasonably owed.

24. That being a result which was argued to be unintended by the statutory scheme, uncommercial, irrational and unfair, in circumstances where he was acting for a trustee, not its beneficiaries.

25. On its approach, the costs order Garling J made was not the subject of Mr Kerrison’s lien, it not covering costs in litigation between the solicitor and the client. That there was no evidence that Mr Kerrison had ever given notice that he was exercising such a lien was also argued to be relevant. When the proceedings were commenced, he having been pursuing costs of some $63,000. And after the issue of the $18,000 costs assessment certificate, he not having pursued its payment in accordance with the claimed lien.

26. Mr Kerrison’s case was that the lien was a broad one, extending to all that he held in trust, irrespective of the amount of the costs in issue. Further, that this position had not been altered by the legislative scheme. A lien being a valuable right which was there recognised as one which continued to be protected and which applied to all that a solicitor held on behalf of the client, the general lien not being limited in the way that a “fruits of the action” lien is.

27. It followed that not only had the withdrawal which he had made from trust as the result of the garnishee order been permitted, he was still entitled to retain all of the balance he held on trust, until the rest of the costs he was owed was paid by Studio B. That including the assessed costs of the proceedings before Garling J and costs ordered in these proceedings. An analogy being drawn with a repairer’s right to retain a Ferrari over which a lien was held, until its repair costs were paid, irrespective of the value of the vehicle far exceeding those costs.

28. The orders Garling J had made alone did not him to withdraw further funds from trust. Unless authority was given for their withdrawal by Studio B, on Mr Kerrison’s approach he still had to pursue their enforcement by available means, despite the release of the remaining funds providing Studio B with a practical inducement to give him the necessary instructions to pay the costs he was owed out of trust.

29. As to the exercise of the lien, he contended that notice was not required in the way for which Studio B contended but that it had, in any event, clearly been given by his defence and cross claim.

30. In reply, it was argued that Mr Kerrison’s Ferrari analogy was inapt, given that it was money that was held in trust over which the general lien had purportedly been exercised.

The orders finally pressed

31. The orders which Studio B finally pressed were:

“1. Order that the defendant pay to the plaintiff the residue (being $91,180.38) of the sum received from Kalde Legal in the defendant’s trust account on about 10 October 2020

In the event the Court refuses to make that order:

2. Order that the defendant pay to the plaintiff the residual of the sum received from Kalde Legal into the defendant’s trust account but only after retention by the defendant for his own benefit the sum of $18,180.38, that residual sum being $69,905,63.

3. Order the defendant pay interest on the sums in Orders (1) and (2) at the rates [set out in] s 100 of the Civil Procedure Act 2005.”

32. For reasons which follow I am satisfied that they cannot be made.

What is the scope of Mr Kerrison’s general lien?

33. I am satisfied that Mr Kerrison has a general lien over the funds which he still holds in trust which he is entitled to exercise in respect of both the costs Garling J ordered, which have been assessed, as well as in respect of the costs of these proceedings, given that I have concluded that the orders Studio B pressed cannot justly be made.

34. There is no issue that a solicitor owes a fiduciary duty to clients: Maguire v Makaronis (1997) 188 CLR 449 at 463. That there is a risk of a person who holds a fiduciary position being swayed by interest rather than by such a duty, with resulting prejudice to the fiduciary, is also well recognised: Breen v Williams (1996) 186 CLR 71. This is what Studio B contends has occurred in this case.

35. It is also long recognised that solicitors and certain others may have a general lien at common law which entitles them to retain property in their possession until they are paid their professional costs. Conceptually, a lien may be particular or general: Dinmore Meatworks Pty Ltd v Kerr (1962) 108 CLR 628; [1962] HCA 47 at [2].

36. Solicitors have a general retaining lien over both personal property and money which extends to all costs due to the solicitor and is not limited to costs incurred in relation to particular instructions in consequence of which the property came into the solicitor’s hands: Atlantic 3-Financial (Aust) P/L & Anor v Marler & Anor [2003] QCA 529 at [31].

37. Whether the money which the solicitor holds for the client comes from the client or a third party, the solicitor has a general lien for costs: Johns v Law Society of New South Wales [1982] 2 NSWLR 1. That is the right to withhold until payment is made, but it does not provide a right of payment out of the money the subject of the lien: at 19. The right being merely to retain the money until payment is effected, with the funds in trust thus remaining the client’s money until the solicitor is authorised to transfer the money for costs, at which time it should be transferred out of the trust account to the solicitor’s general account: at 20-21. There being no power to remove money from trust until an entitlement to be paid costs arises: at 21.

38. The assertion of a recognised lien, which owes its origin to custom, does not call for evidence, arising as it does as a matter of law: Majeau Carrying Co Pty Ltd v Costal Rutile Limited (1973) 129 CLR 48 at 54-55. It extending to all costs due to the solicitor and not being limited to those incurred in respect of the particular instructions: Bolster v McCallum (1966) 85 WN (Pt 1) 281.

39. In the case of funds which result from a judgment or award or compromise of the client’s claim, by way of comparison, a “fruits of the action” lien attaches to such funds: Firth v Centrelink & Anor (2002) 55 NSWLR 451; [2002] NSWSC 564 at [33]-[35]. There it was explained at [113] that:

“The solicitor’s costs in relation to which a lien exists include not only those incurred in recovering the judgment, but also expenditure which is “immediately incidental thereto”: In Re Meter Cabs[1911] 2 Ch 557 at 559 per Swinfen Eady J; Carew Council Pty Ltd v French [2002] VSCA 1 at [33]. The lien can include the cost of litigation which the solicitor engages in to establish his lien against someone who denies that the solicitor was retained by the client: In Re Meter Cabs [1911] 2 Ch 557 at 562.”

40. The parties agreed that in Mr Kerrison’s case it was a general lien, rather than a fruits of the action lien, which arose to be considered. That was because the trust funds came into his hands as the result of the sale of the business, not the settlement of litigation, even though he was retained to act in respect of the dispute about Ms Chick’s entitlement to a share of the proceeds of the sale.

40. In Firth it was also concluded that the proceedings there taken to the Local Court by the solicitor to establish the quantum of what he was owed properly fell within his lien, which covered the court costs, service fees and professional costs. As were the costs of the application to set aside the Local Court’s judgment, as well as those incurred on the taxation of those costs: at [117].

41. Still Studio B contended that Mr Kerrison’s lien did not extend to costs which he incurred because he came to be a litigant, relying on observations in WFM Motors Pty Ltd v Maydell (Unreported, Young J, 7 March 1994). There his Honour observed, “The retaining lien under the general law, applied not only to personal property, but also to actual money.” His Honour also observed, “however, it is also clear that if the money is held not for the person against whom the lien is claimed, but beneficially for a third party, there is no lien”.

42. But that is not this case.

43. The funds here in issue are held in trust for Mr Kerrison’s former client Studio B. His claim is that he is entitled to exercise a lien over those funds not only in respect of his costs of acting for it, but also those he incurred in the proceedings before Garling J where he sought and obtained leave to pursue a review of the original costs assessment and those he incurred in these proceedings, in which the nature and extent of his lien was challenged by Studio B.

44. Conceptually, I cannot see why a solicitor is not entitled to exercise a general retainer lien in respect of all such costs. They having been incurred in the successful pursuit of a review of the assessment of the costs of acting for the client and in resisting the client’s claim that the solicitor is not entitled to exercise his lien in respect of funds held in trust, as he purported to do. They all only having been incurred as the result of the solicitor having been retained by the client to provide legal services.

45. In Johns v Law Society of New South Wales Hope JA explained at 18-19:

“Over all money which the solicitor holds for his client, as well as other property of his client which he holds, the solicitor has a general lien for costs. This lien, however, is a mere retaining lien, ie, it gives a right to withhold the property from the client until payment of costs; it does not give any right to payment out of money (or other property) which is the subject of the lien. In the case of money recovered by a solicitor for his client, the solicitor has a particular lien which he can enforce by application to the court. If the money is in his hands the solicitor may retain his costs out of the recovered money and pay the balance to his client. In respect of either class of money, the client may, quite apart from the lien, agree with his solicitor that he, the solicitor, may take his costs out of moneys held by him for the client, and such an agreement may be express or implied.”

47. That also supports the conclusion that Mr Kerrison’s general lien over the funds which he still holds on trust extends to all of the costs in issue. That also accords with the conclusion in Magnamain Investments Pty Ltd v Baker Johnson Lawyers [2008] QSC 245 on which Studio B relied, where it was concluded that “a solicitor can only claim a lien to the extent of his or her “taxable costs, charges and expenses”, [which] must necessarily be specified with some precision before a payment out of court pursuant to a purported lien could be made”: at [29]. The evidence did not there establish a sufficient basis for an order, but that is not the position in this case.

48. Despite Mr Kerrison having received written directions for the transfer of the disputed funds to Studio B’s current solicitors, I am satisfied that he is entitled to exercise his general lien over those funds as he has.

What does section 144 permit?

49. It is also necessary to consider the regulation of trust monies and solicitor’s trust accounts in Chapter 4 of the Legal Profession Uniform Law. Its objectives are specified in s 126 to be:

“(a)    to ensure appropriate safeguards are in place for maintaining the integrity of legal services; and

(b)    to apply those safeguards regardless of the type of business structure used for the delivery of legal services.”

50. The objective of Pt 4.2 is “to ensure that trust money is held by law practices in a manner that protects the interests of the persons for whom or on whose behalf it is held”: s 127. But still a solicitor’s right to exercise a general lien over trust funds continues to be recognised.

51. Legal costs are dealt with in Part 4.3 of the Legal Profession Uniform Law. They must be “no more than fair and reasonable in all the circumstances”: s 172(1). It also requires disclosure of costs and regulates the making of costs agreements and billing, as well as the assessment of disputed costs. Division 7 regulates how such costs assessments are to be conducted, as well as providing for appeals and reviews: s 205.

52. It is the Legal Profession Uniform Law Application Act2014 (NSW) which regulates how costs assessment are to be conducted: Pt 7. It provides for assessment, review and appeals in limited circumstances. It also provides for enforcement, providing that if a costs assessment certificate is not paid, “on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, [the certificate is] taken to be a judgment of that court for the amount of unpaid money”: s 70(5).

53. Section 144 appears in Ch 4, Division 2 Trust money and trust accounts, of the Legal Profession Uniform Law, where a number of offences are created. What is there regulated also includes how trust money is to be dealt with by law practices in accordance with the Law and the Uniform Rules: s 135. The Law also requiring that a general trust account be maintained, specifying monies which must be deposited in such accounts and how such moneys must be held, disbursed and accounted for: ss 136-138.

54. Pertinently, ss 138, 142 and 144, relevantly provide:

“138   Holding, disbursing and accounting for trust money in general trust account

(1)   Except as otherwise provided in this Part, a law practice must—

(a)   hold trust money deposited in the law practice’s general trust account exclusively for the person on whose behalf it is received; and

(b)   disburse the trust money only in accordance with a direction given by the person.

Civil penalty: 50 penalty units.

(2)   Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law.

(3)   …

142   Trust money subject to a written direction

(1)   A law practice that receives a written direction to deal with trust money (other than cash) in a particular way must comply with that direction within the period specified in the direction, or otherwise, as soon as practicable after it is received.

Civil penalty: 50 penalty units.

(2)   …

144   Withdrawal of trust money:

(1)   …

(2)   A law practice may do any of the following, in relation to trust money held in the practice’s general trust account or controlled money account—

(a)   exercise a lien, including a general retaining lien, for the amount of legal costs reasonably due and owing by the person to the law practice, where the law practice is otherwise entitled to do so;

(b)   withdraw money for payment to the law practice’s account for legal costs owing to the practice if the relevant procedures or requirements specified in the Uniform Rules for the purposes of this Division are complied with;

(c)   deal with the balance as unclaimed money, after—

(i)   deducting any legal costs properly owing to the practice; and

(ii)   exhausting any other means of distributing it in accordance with the client’s instructions.”

55. These sections must be read together. It follows that a solicitor who has not been paid costs owed does not have to comply with a client’s direction to pay funds held in trust, over which the solicitor exercises a general lien: s 144(2)(a). That lien being available to be exercised “for the amount of legal costs reasonably due and owing by the person to the law practice”.

56. The term “legal costs” is defined in s 6 to mean:

“(a) amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services; or

(b) without limitation, amounts that a person has been or may be charged, or is or may become liable to pay, as a third party payer in respect of the provision of legal services by a law practice to another person —

including disbursements but not including interest;”

57. The parties agreed that paragraph (b) of that definition did not here arise to be considered.

58. That the phrase in paragraph (a), “amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services”, includes the costs Garling J ordered and those Mr Kerrison incurred in successfully defending these proceedings, was in issue.

59. Studio B relied on r 36.4 of the Uniform Civil Procedure Rules, which regulates when a judgment or order takes effect, contending that since Mr Kerrison never filed the second costs assessment certificate, those costs are not payable.

60. I am satisfied that cannot be accepted.

61. The Rule provides:

“(1)    A judgment or order takes effect—

(a) as of the date on which it is given or made, or

(b) if the court orders that it not take effect until it is entered, as of the date on which it is entered.

(2) Despite subrule (1), if an order of the court directs the payment of costs, and the costs are to be assessed, the order takes effect as of the date when the relevant cost assessor’s certificate is filed.

(3) Despite subrules (1) and (2), the court may order that a judgment or order is to take effect as of a date earlier or later than the date fixed by those subrules.”

62. Studio B became liable to pay the costs which Garling J ordered, when the orders made were entered. His Honour’s orders having extended the time in which the application for review of the costs assessment could be made and required Studio B to pay Mr Kerrison’s costs. The costs order which will be made in these proceedings will also take effect when it is entered.

63. That the funds now held in trust exceed the amount of legal costs reasonably due to Mr Kerrison and owing by Studio B for the assessed costa and the costs of these proceedings, was not established on the evidence.

64. It is the Legal Profession Uniform Law Application Act which deals with the assessment of costs: Pt 7. Section 71 providing for certificates of assessment to be issued by a costs assessor, which can then be filed in a court with the relevant jurisdiction, whereupon it is taken to be a judgment of that court, then becoming enforceable against the party to the assessment: s 71(3).

65. Such costs determinations are final: s 73. Albeit subject to the review provided for in Division 4. An application for review suspends operation of a determination until the suspension is ended by the review panel: s 86. The panel may also set aside a determination and issue a new certificate: s 87. Such a certificate is then final: ss 88 and 71.

66. The result of the review of the assessment which was successfully pursued by Mr Kerrison was thus that the certificate which evidenced the outcome of the review of the costs Garling J had ordered, $18,334.25, was final. He is entitled to enforce that certificate, Studio B still not having paid those costs, by filing the certificate in court.

67. That he has not done so and that Studio B has not directed him to pay those costs out of the funds he holds on trust, does not have the result that the costs Garling J ordered are not payable. Those which I will order will also become payable on entry of the order, even though Studio B may also pursue their assessment. I am thus satisfied that the rule Studio B relied on does not preclude Mr Kerrison’s exercise of his lien over the disputed trust funds.

68. I am also satisfied that it must be accepted that Studio B became liable to pay Mr Kerrison the disputed costs because of the legal services it engaged him to provide it in respect of its dispute with Ms Chick. It having pursued an assessment of his costs for acting for it in respect of that dispute, but then having unsuccessfully resisted his extension of time application and the review of his assessed costs, as well as having unsuccessfully pursued its challenge to the exercise of his general lien over the funds he holds on trust.

69. Logically, Mr Kerrison would not have incurred any of these costs if Studio B had not retained him to provide it with the legal services it required. Section 144 thus does not preclude his exercise of his general lien over the funds he holds on trust in respect of any of those costs, it having become liable to pay all of them as the result of the legal services it originally engaged him to provide, it having disputed both his costs for the provision of those services and his exercise of his lien in respect of those costs.

70. Had Studio B directed Mr Kerrison to withdraw funds he held on trust to meet the costs Garling J ordered after their assessment and to pay the balance to it, s 138 would have required him to disburse those funds in accordance with its direction. Instead, it pursued these proceedings, contending unsuccessfully that he was not entitled to exercise his general lien over those funds. It must thus bear the consequences of the decision which it made.

71. One of them being that s 144 does not preclude Mr Kerrison’s exercise of his general lien over the funds he still holds on trust in respect of the costs he incurred in successfully pursuing his case on the review of the costs assessment and in resisting the relief Studio B pursued in these proceedings.

What orders should be made?

72. It follows that the orders which Studio B pressed cannot be made.

73. In Goldberg v Beckett [2015] NSWSC 1966 it was explained at [36] that:

“the solicitor’s right created by the lien exists in the fund prior to the occurrence of the assessment. It is not, however, clear that a solicitor is correspondingly entitled to pay himself or herself from funds over which a lien exists before the amount that is payable has been ascertained by assessment or otherwise. The very nature of the lien suggests that its fundamental characteristic is that of a security, not a device for effecting satisfaction of an outstanding account whose precise quantification remains in doubt.”

74. In that case the payment of the costs out of funds held in trust before assessment of the costs was refused: at [39].

75. In this case the costs which Garling J ordered have been assessed and so can be ordered to be paid out of trust. The parties may also be able to agree on the appropriate costs order to be made in these proceedings, even though they earlier indicated that they wanted to be heard about costs. The usual order under the Uniform Civil Procedure Rules being that costs should follow the event: r 42. That being an order that Studio B bear Mr Kerrison’s costs, given the conclusions I have reached.

76. Given the ongoing obligations which s 56 imposes upon them, the parties are directed to confer about the appropriate orders.

77. In the event that they are unable to agree, they should approach within 21 days with short written submissions and final proposed orders. Otherwise, agreed orders can be made in chambers.

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Annexure (180 KB, pdf)

Decision last updated: 15 August 2025