Tu v Lu

No judgment structure available for this case.

Local Court of New South Wales

CITATION: Tu v Lu [2006] NSWLC 30

JURISDICTION: Civil

PARTIES: Thi Ha Tu
Nga Lu
Elena Perla t/as Perla & Jordan lawyers

FILE NUMBER: 1832/04

PLACE OF HEARING: Downing Centre Local Court

DATE OF DECISION:
07/31/2006

MAGISTRATE: Magsitrate B A Lulham

CATCHWORDS: Practice and procedure - Commencement of proceedings - Requirement for plaintiff to authorize proceedings - Challenge to retainer of solicitor - Costs - Award of costs on a party/party or indemnity basis - consideration of authorities

LEGISLATION CITED:

CASES CITED: A.W. & L.M. Forest Pty Ltd v Beamish (1998) 146 FLR 450
Harry S Braggs Liquidation Warehouse Pty Ltd v Whittaker 44 NSWLR 421
Rancloud v Caban NSWSC Young J 9/2/88
Yonge v toynbee (1910) 1 kb 215
Australian Guangzhou Association Inc v Huang & Ors (2001) NSWSC 124
Zimmerman Holdings Pty Ltd v Wales (2002) NSWSC 447

REPRESENTATION: No appaerance - Solicitor
Mr J Sheller - Defendant's Counsel
DGB Lawyers - Defendant's Solicitor
Mr P Doyle Gray - Respondent's Counsel
Henry davis York - Respondent's Solicitor

ORDERS: The Statement of Liquidated Claim filed 17 February 2004 is dismissed pursuant to pt 14, r28.1C of the Uniform Civil Procedure Rules 2005. The respondent is to pay the Defendant's costs and disbursments of the proceedings on an indemnity basis. Such costs are to be as agreed, or in default of agreement within 28 days to be assessed under the Legal Profession Act. The respondent is to pay the defendant's costs and disbursements of the Motion on an indemnity basis. The costs are to be as agreed or in default of agreement within 28 days to be assessed under the Legal Profession Act. In relation to the costs of the proceedings I confirm my view that there appears to have been little work done in the proceedings after the Callover on 20 December 2004. In relation to the costs of the motion such costs will commence from 20 May 2005 when the Motion before the Court on 31 March 2006 was filed. It appears to me that no order was made in relation to the Motion filed on 24 December 2004. It appears to have been superseded by the Motion filed on 20 May 2005. In my view the Motion was inappropriately drawn and an appropriate order would be that each party is to pay its own costs in relation to that Motion, which I formally dismiss.

Reasons for Decision

1 Mrs Lu (hereinafter referred as ‘the defendant’) by Amended Notice of Motion filed in court on 31 March 2006 sought the following orders against the respondent Perla & Jordan;

(i) The Statement of Liquidated Claim filed/issued 17 February 2004 be dismissed pursuant to pt 14 r28(1)(c) of the Uniform Civil Procedure Rules 2005.

(ii) The respondent pay the defendant’s costs of the proceedings on an indemnity basis.

2 The orders were sought based on an allegation that the firm of solicitors Perla & Jordan was at no time retained to bring the proceedings on behalf of the plaintiff Mrs Tu. On 31 March 2006 the matter proceeded with Perla & Jordan asserting that the firm was retained by the plaintiff. On the commencement of evidence on the second day, the 30th June 2006, a concession was made by Mrs Perla on behalf of Perla & Jordan that the firm was not retained by the plaintiff, and on that basis there was no opposition to the proceedings brought by the plaintiff being dismissed. Those matters having been resolved, the only question left for the court was what orders should be made for the costs of the proceedings and for the costs of the Motion. Mr Sheller for the defendant submitted that Perla & Jordan should be ordered to pay the costs of the proceedings and of the Notice of Motion on an indemnity costs basis.

3 Mr Doyle Gray for Perla & Jordan submitted that in both the proceedings and the Motion each party should pay their own costs. Alternatively he submitted that if the respondent was to be ordered to pay the costs of either the proceedings or the Notice of Motion, the order for costs should be on a party/party basis and that any costs payable by the respondent on the Motion, should be capped in the sum of $10,000 pursuant to Rule 42.4.

4 The decision as to who is to pay the costs will require discussion and findings in relation to the following matters:

1. The general practice and procedure followed by Perla & Jordan in motor vehicle third party property damage claims.

2. The procedure followed in these proceedings and as to what occurred.

3. Findings as to the progress of these proceedings and the actions of the parties to the proceedings.

4. Consideration of the legal position and authorities in relation to payment of costs.

5. Consideration of submissions.

The general practice and procedure followed by Perla & Jordan in motor vehicle third party property damage claims.

5 The respondent Elena Perla relied on two affidavits, the first sworn 8 June 2005 and the second sworn 28 March 2006. Ms Perla gave evidence on 30 June 2006. She was cross-examined. A transcript was not obtained and I have relied on my notes in relation to her evidence.

6 Ms Perla deposed that the firm Perla & Jordan was formed in April 2000. She was the principal and she had one partner Mr Acram Oberdat. He had legal training but did not hold a practising certificate. The partnership was a multi disciplinary partnership. She deposed that the firm had embarked on a scheme to attract work from persons (clients) involved in motor vehicle accidents in the following circumstances;

(i) The client was not at fault in the accident.

(ii) The driver of the other vehicle involved in the collision was insured.

She deposed that the intention was that her firm would act for such clients on the basis that the firm would recover as costs the amounts ordered to be paid by the defendant according to the court scale. In a claim for $2,500.00 the scale fees would be $523.60. She deposed that because of the small amount of costs she was anxious to minimise expenses and to maximise turnover. She said she developed a form of questionnaire and blank authority which she left with various smash repairers who were able to identify prospective clients and refer them to her firm. She said most of the work was done by Mr Oberdat under her supervision. At one stage she had a Vietnamese solicitor, but he left. One of the smash repairers who referred work was Mr Hong Ly of Linda Smash Repairs. She said instructions were received in these proceedings through Mr Ly to act on the recovery of the cost of repairs to the plaintiff’s vehicle of $2,530. She deposed that her employed Vietnamese solicitor Mr Khang Lu resigned in March 2004 and subsequently she relied on Mr Ly to act as an intermediary with clients where Vietnamese language difficulties arose. Ms Perla deposed that Statements of Claim would be prepared on the basis of the information supplied in the motor vehicle questionnaire form and relying on the authority and direction attached to that form. In this matter the authority and direction was in the usual form and was as follows;

‘I Giang Do of 8 Cronan Place, Bonnyrigg, do hereby authorise Perla & Jordan, Lawyers to act, represent, collect, receive and direct payments, incur expenses, engage agents and assessors and sign any documents on my behalf where it may be appropriate in relation to my motor vehicle accident of (the at in ).

Dated 24/07/03

…………………….Signature’

7 In cross examination Ms Perla conceded that it was not her practice to serve on clients in motor vehicle accident claims a Cost Fee Agreement and the Cost Disclosure forms required to be served under s175, s176 and s177 of the then Legal Practitioners Act. She agreed it was not done in this case. She said she did not make a disclosure because it was her intention not to charge the client, but to rely on recovering the party/party costs from the other side. She conceded that the practice she adopted did not amount to proper disclosure under the Act. She said her general practice was that the repairer would also make a contribution to her costs. She said it was of an amount of about $300. When it was put to her that the amount paid by the repairer was a percentage of the repairs, she replied “absolutely not”. Mr Ly, the repairer, gave evidence that he paid a fee to Perla & Jordan in each matter which was about 7% to 8% of the repairs charged for the repaired vehicle. Ms Perla denied that her client in the proceedings was the repairer and said her client was the owner of the motor vehicle. She conceded that it was the repairer who arranged for the referral who paid part of her fees and who was looking to recover the cost of the repairs. She conceded that the repairer facilitated the obtaining of the evidence and also conceded that she would look to the repairer for instructions on questions of settlement. Ms Perla said that if a person came to her seeking independent advice as to whether the form of authority relied upon by her firm was appropriate and should be signed, that she would not advise such person not to sign the form of authority.

8 The vehicle 1988 Toyota Camry registration number MR2331 involved in the accident on 12 June 2003 was owned by Mrs Thi Ha Tu. It was being driven by her son-in-law Giang Do. His wife and the daughter of the plaintiff Thi Ha Tu, is Hien Thi Nguyen.

9 Mrs Tu’s evidence contained in her Affidavit (Exh.4) was that after the accident she took the vehicle to the smash repairer Hong Lee of Linda Smash Repairs. She said the repairer said that he would fix it up and seek payment from the NRMA. Subsequently she said she received a telephone call to pick up the vehicle and that she went to the smash repairer with her son-in-law Giang Do. She said she did not sign any documents. In particular she said she did not sign the Vehicle Release Agreement form dated 26 July 2003, Annexure B to the Affidavit of Hong Ly dated 12 July 2005 (Exh.7). She was shown a statement MF13 prepared by Perla & Jordan in relation to the court proceedings. It was purported to be signed by Mrs Tu. She said it was not her signature. The statement was Annexure B to the Affidavit on her daughter Hien Nugyen (Exh.11). It was her witness statement setting out her evidence in the proceedings. It was filed and served by Perla and Jordan

10 Mr Do gave evidence. His Affidavit sworn 13 October 2005 was tendered as Exh.1. He said he signed the Motor Vehicle Questionnaire form and the Form of Authority when he went with his mother-in-law to pick up her vehicle. He said it was not explained to him what the forms were and he was told by Mr Ly that he would take care of everything. He said whilst the form bore the name of Perla & Jordan on the front page, he did not recall seeing that name. He said when he went to pick up the vehicle his mother-in-law and wife went with him. He said neither of them signed any forms.

11 During the first day of the proceedings when Ms Perla was maintaining that she had a valid retainer, she was relying on the evidence of Mr Do that the Vehicle Release Form was signed by the owner Mr Tu when the vehicle was picked up and the witness statement was also signed by the Mrs Tu. Alternatively Ms Perla maintained the documents were signed by Mrs Tu’s daughter as Mrs Tu’s agent, therefore ratifying or confirming her retainer.

12 In his Affidavit sworn 12 July 2005 Mr Ly at paragraph 9 deposed as follows;

‘ On or about the 26th of July 2003 Mrs Tu signed a document. A photocopy is annexed to this document and marked ‘B’.

That document was the Vehicle Release Form.

13 At para 14 he deposed that on or about 11 September 2004 he received by facsimile a statement which Mr Oberdat asked him to arrange to have Mrs Tu sign. He said he telephoned Mrs Tu and later in the afternoon a lady attended and signed the document.

14 In evidence in chief on 31 March 2006 Mr Ly changed his position and said that the signature on the Vehicle Release Form, (Annexure B to his Affidavit) was the signature of Mrs Tu’s daughter. In cross-examination (T31/03, p43/L55) he said he wasn’t a hundred percent sure it was Mrs Tu’s daughter. He was eighty percent sure.

15 Mr Ly then gave wholly unsatisfactory evidence as to the manner in which Mrs Tu had come to sign the witness statement.

16 Following the evidence on 31 March 2006 Mrs Tu’s daughter Hien Thi Nugyen swore an Affidavit on 30 May 2006 (Exh.11). She denied that she had signed the Vehicle Release Form dated 26 July 2003 (Annexure B to Affidavit of Mr Ly and Annexure A to her Affidavit). She denied that she had signed the statement of the plaintiff Thi Ha Tu dated 11 September 2004 (Exh.B to her Affidavit). She annexed to her affidavit copies of her passport and driver’s licence. It was based on those circumstances and evidence that I was informed at the commencement of hearing on 30 June that both parties had investigated the signature on the Vehicle Release Form and on the 11 September statement and were satisfied it was not signed by Mrs Tu’s daughter. The concession was then made that Ms Perla did not have a valid retainer to commence the proceedings.

17 I should add that the evidence indicated that on 8 July Perla & Jordan wrote to the plaintiff seeking a copy of the registration certificate. On the same day they wrote to Mr Ly asking him to obtain a copy of the registration certificate. They received the certificate on 10 July. The evidence of Mrs Tu and Mr Do was that at no stage did they receive any letters or communication from Perla & Jordan. It was open on the evidence that the repairer had obtained and forwarded the copy of the registration papers.

18 I propose to set out a chronology as to the progress of the proceedings before the court:

22 March 2004

1 June 2004
Defendant files Amended Grounds of Defence putting the plaintiff to strict proof of ownership.

12 November 2004

24 December 2004
Defendant files Motion seeking to have the Statement of Liquidated Claim dismissed and for plaintiff’s solicitor on record to pay the defendant’s costs on an indemnity basis. The Affidavit in support of the Motion was the Affidavit of the plaintiff Ms Tu sworn 13 September 2004. Mr Quinn, solicitor appeared for the plaintiff.

10 February 2005

12 May 2005

9 June 2005

31 March 2006

30 June 2006

19 On 31 March 2006 an order was made by consent dismissing the Motion against the first respondent David Quinn trading as Quinn & Quinn and the defendant was ordered to pay the costs of the first respondent on the Motion as agreed or assessed.

20 Between 9 June 2005 and 31 March 2006 there were numerous applications to the court in relation to this Motion. They included lengthy complicated proceedings whereby the defendant and the respondent each applied to strike out Subpoenas and Notices to Produce served by the other party. Those matters were dealt with mainly by Magistrate Dillon. Certainly the 23 and 24 August were two hearing dates in relation to such applications. Magistrate Dillon gave a written judgment on 2 September 2005. My understanding is that cost orders were made in relation to all of those proceedings which were in the nature of interlocutory proceedings to the main Motion which I heard. If I be wrong in that assumption then I grant leave to the parties to re-list the matters if there are outstanding cost applications following my decision in this matter.

THE PARTIES’ SUBMISSIONS AS TO LAW

21 The court’s power as to costs are set out in s98 of the Uniform Civil Procedure Act 2005 as follows;

S 98(1) Subject to the 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….

2. …

3. …

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;

(a) costs up to, or from a specified stage of the proceedings, or

(b) a specified proportion of the assessed costs, or

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

(d) such proportion of the assessed costs as does exceed a specified amount.

22 Those sections clearly give the court power to order costs against the respondent Perla & Jordan, although that firm was not a party to the original proceedings. It also clearly gives the court the power to order costs on an indemnity basis.

23 Mr Doyle Gray for the respondent referred me to s 60 of the Act which provides as follows;

’60. Proportionality of costs

In any proceedings the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject matter in dispute.’

24 Mr Doyle Gray relied on s 60 and also r42.4 of the Rules to submit that I should cap the amount of the costs payable by the respondent in the event that costs were ordered against the respondent to $10,000. R42.5 is as follows;

42.4 (1) The court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another.

(2) A maximum amount specified in an order under subrule (1) may not include an amount that a party is ordered to pay because the party:

(i) progress of the proceedings to trial or hearing, or

(ii) trial or hearing of the proceedings.

(3) An order under subrule (1) may include such directions as the court considers necessary to effect the just, quick and cheap:

(a) progress of the proceedings to trial or hearing, or

(b) trial or hearing of the proceedings.

(4) If, in the court’s opinion, there are special reasons, and it is in the interests of justice to do so, the court may vary the specification of maximum recoverable costs ordered under subrule (1).’

25 I have made several orders capping costs pursuant to r42.4. My view has been that such cost capping orders can only be made prospectively and cannot be made retrospectively. The learned authors of Ritchies Uniform Civil Procedure NSW support that view. At p2688 when referring to the power conferred by r42.4 they state;

‘The specific power conferred by r42.4 (to fix prospectively a maximum amount for recoverable costs).’

26 Mr Sheller for the applicant submitted that the relevant law to be applied is to be found in the decision of His Honour Justice Young in A.W & L.M. Forest Pty Limited v Beamish (1998) 146 FLR 450. I propose to discuss that case in some detail. I propose to give an oversimplified version of the facts. The case involved a family dispute in relation to a company A.W. & L.M. Forest Pty Limited. The plaintiff were members of the Forest Family. The defendants were members of the Beamish family. The company was incorporated in Canberra, and there was a provision in the Corporations Law that if directors did not reside in Canberra, Notice of Meetings could be given by notice publicised in the ACT paper. Austen William Forest, a director of the family company, relied on a notice in the ACT paper to convene a meeting of the company and at that meeting to pass motions contrary to the interests of the Beamish family. The plaintiffs relied on the Notice knowing almost full well that the Canberra paper would not come to the notice of the Beamish family. The plaintiffs were aware of the addresses of the Beamish family, but deliberately decided not to forward notice of the meetings to those addresses. One of the Motions passed at the Directors’ Meeting was for the commencement of proceedings by the company. In a Motion before His Honour Judge Young, the applicant/defendants submitted that the company meeting was invalid and that the Motions passed at such meeting were invalid, including the Motion appointing the solicitors to commence the proceedings and that therefore the plaintiff’s solicitors did not have a proper retainer.

27 His Honour found that the plaintiffs had no power to appoint the solicitors without the authority of the Board, and as the meeting was invalid they did not have the appropriate authority and found that it therefore followed that the challenge to the solicitors’ retainer must succeed.

28 His Honour Judge Young then went on to say;

“As to costs the ordinary rule is that the solicitors whose retainer is challenged pay all the costs of the proceedings up until the order is made.”

He referred to the decisions of Harry S. Bagg’s Liquidation Warehouse Pty Limited v Whittaker (1982) 44 NSWLR 421.

29 His Honour then went on to discuss the submissions made by the successful applicant on the Motion that the costs should be on an indemnity basis. It was submitted to him that it was the plaintiff’s solicitors who advised the plaintiffs to hold the purported General Meeting and drafted the Minutes and the form of retainer on which they now placed reliance. It was submitted that in a true sense they were the instigators of the misconceived proceedings. His Honour then reviewed the cases and came to the view;

(P460) ‘However in more recent times orders appear to have been made only on the party/party basis.

He went on to say;

‘Probably the rule now is that costs are in the discretion of the court and there is no presumption one way or the other. In the instant case the conduct of the solicitors in their attitude generally to Mrs Beamish and further in insisting on the proposition that she was not entitled to any notices of meeting, point towards making an indemnity order for costs.’

30 His Honour found that the arguments for making an order for indemnity costs outweighed the opposing factors and made an order for indemnity costs.

31 In A.W. & L.M. Forest Pty Limited there was also a submission from the respondents to the Motion submitted that the general rule was that a challenge to a retainer should be mounted early in the proceedings. Mr Doyle Gray for the respondent relied on the same submission and pointed out that the applicant was aware of the difficulty in relation to the retainer prior to the application made to the assessor for the assessor to disqualify himself on 28 September 2004. Mr Doyle Gray submitted that the present Motion was not filed until 20 May 2005.

32 Mr Sheller for the defendant submitted that in fact the applicant had lodged the first Motion on 24 December 2004 and whilst the Motion was in fact amended by the subsequent Motion on 20 May 2005 when the firm of Quinn & Quinn and Perla & Jordan were added as first and second respondents, that the delay between the applicant becoming aware of the possible problem with the retainer on or about 14 September and the date of the first Motion on 24 December 2004, was not evidence of delay.

33 In A.W. & L.M. Forest Pty Limited the point in relation to the retainer was raised in a Defence on 1 June 1996, but the Motion was not brought first before the court until 5 June 1998.

34 His Honour Judge Young found as follows;

Danish Mercantile Co Limited v Beaumont

(1951) Ch 680 at 687

35 I am not satisfied that the applicant’s challenge to the respondent’s retainer is defeated by delay. I am satisfied that there was no undue delay. Moreover, significantly once the first Motion was filed on 24 December, nothing further has been done at all in relation to the original proceedings. Indeed after the 28 September 2004 when the matter was transferred to the General Division, the only step taken was the holding of the Callover on 20 December when the order was made for the filing of the Motion.

36 I do not believe that there has been any exacerbation of costs by reason of the fact that the defendant did not make an application challenging the respondent’s retainer in the Small Claims Division on 28 September 2004. Of one thing I believe I can certain. If such application was made, it would certainly have been transferred to the General Division and the parties would have been ordered to file a Motion in relation to the matter. That subsequently was done on 20 December. The costs incurred in the meantime were minimal.

37 Mr Doyle Gray very helpfully took me though various decisions, copies of which he had included in his submissions. I do not propose to go through each of the cases in detail as the factual situations in some were quite complicated. I found the cases instructive and I propose to set out the following summaries and principles which I believe are established by such cases. I have already dealt with the decision in A.W. & L.M. Forest (supra). I did not find the case of Massey (T/a Massey Bailey Solicitors & Consultants v Wales (2003) NSW 212 particularly helpful. However I note that the Court of Appeal upheld Master McLaughlin’s decision that the solicitors who were found to have commenced the proceedings without proper retainer, were ordered to pay the defendant’s costs on an indemnity basis. In Harry S Bagg’s Liquidation Warehouse Pty Limited & Ors v Whittaker 44 NSWLR 421 where the solicitor on record for all of the plaintiff companies was found not to have been validly retained by any of them, the proceedings were dismissed and the solicitors ordered to pay the defendant’s costs of the proceedings and the application on a party/party basis.

38 In Ranclaud v Cabban (NSW) SC Young J, 9 February 1988 where a solicitor instituted proceedings pursuant to a Power of Attorney where it was found that his client did not have a capacity to execute the Power of Attorney, the solicitor was ordered to pay the defendant’s costs on an indemnity basis.

39 In Ranclaud v Cabban (supra) His Honour Young J referred to the decision of the English Court of Appeal in Yonge v Toynbee (1910) 1KB 215 as authority for the proposition that solicitors who continued to act when their authority to do so had ceased by reason of the unsoundness of mind of their client were, despite any lack of impropriety liable for the amount of the plaintiff’s costs thrown away in the proceedings on a solicitor and client basis, that is on an indemnity basis.

40 In Australian Guangzhou Association Inc. v Huang & Ors. (2001) NSWSC 124 Master McLaughlin ordered the solicitor who it was found commenced proceedings without a retainer, to pay the costs of the defendants of the Notice of Motion and the proceedings on a party/party basis. His client was ordered to pay the same costs on an indemnity basis.

41 The case I found particularly helpful was Zimmerman Holdings Pty Ltd v Wales (2002) NSWSC 447. This decision by Bryson J was one of the decisions the subject of the appeal before the Court of Appeal in Massey Solicitors v Wales (supra). The Court of Appeal upheld His Honour Judge Bryson’s decision to order the solicitors who commenced the proceedings without a proper retainer to pay the defendant’s costs on an indemnity basis. In his decision His Honour Bryson J referred to the approach of the English Court of Appeal in Yonge v Toynbee (supra) and stated;

‘(para 6) With respect, I do not think that the same approach should be taken by this court now in view of the provisions of sub-section 76(1) (now s98 Uniform Civil Procedure Act) which confer a discretionary power.’

(I note s 76(1) was in the same form as the present s 98 Uniform Civil Procedure Act).

His Honour Judge Bryson added the following;

Yongee v Toynbee

In Zimmerman (supra) His Honour Bryson J found that if proceedings are commenced without a retainer, the responsibility for the solicitors for costs may extend beyond the date on which they filed a Notice of Ceasing to Act. He stated as follows;

‘In my view the solicitors’ responsibility extends from the commencement of the proceedings and was not brought to an end when they ceased to act as the consequences of their having brought their proceedings continued.’

Finally, Bryson J referred to the quotation that I have set out from His Honour Young J in A.W. & L.M. Forest (supra) namely;

As to costs the ordinary rule is that the solicitors whose retainer is challenged, pay all of the costs of proceedings up until the order is made. In relation to that statement His Honour Bryson had this to say;

(Para 10) ‘His Honour thus stated the outcome which would usually be produced in a sound exercise of discretion; His Honour was not, of course, attempting to state a legal rule and the reference to the ordinary rule is an indication that on adequate grounds the ordinary rule may be departed from.’

Zimmerman Holdings

42 Mr Doyle Gray submitted that the applicant’s application for costs in the proceedings and on the Motion should fail because the challenge to the solicitor’s retainer had been made after the solicitor ceased to act. In this matter Perla & Jordan filed a Notice Ceasing to Act on 12 November 2004. I do not accept that submission. It would seem to me to be an intolerable situation if a solicitor, having commenced proceedings without a retainer, could avoid responsibility in relation to an application for costs by simply filing a Notice of Ceasing to Act before the Motion challenging the retainer was filed. I am satisfied that His Honour Bryson J made the position clear when he expressly rejected a similar submission in Zimmerman Holdings (supra). I adopt that decision and his reasoning.

43 I am satisfied that the combined effect of s 98 of the Uniform Civil Procedure Act and the recent cases are that there is no absolute or fixed rule in relation to the awarding of costs. Costs are in the discretion of the court and the court has full power to determine by whom and to what extent costs are to be paid. The decision to be made has to take into account the facts and all the circumstances of the particular case.

44 I have already dealt with Mr Doyle Gray’s submission on the question of delay. I rejected his submission. I also rejected his submission that the challenge to the respondent’s subpoena should have been made at the hearing before the assessor in the Small Claims Division. I rejected that submission on the basis that I am satisfied that if such an application was made, that the assessor would not have resolved the matter, but would have transferred the matter to the General Division and ordered that the applicant file a Motion in the General Division. Even without the benefit of hindsight the challenge to the retainer was not a matter which could have been heard in the Small Claims Division. It was always likely that the findings on the challenge to the respondent’s retainer would have possible consequences beyond this particular case. The evidence indicated clearly that the practice adopted by the respondent in this matter was in accordance with her usual practice. The challenge to the retainer was not one which could have been heard in the Small Claims Division. The failure to raise the matter before the assessor on 28 September 2004 but to do so at the first Callover in the General Division, had very little affect on the costs payable in the proceedings.

45 I have also found against the submission made for the respondent that any costs payable in the matter should be capped pursuant to r 42.4.

46 Mr Doyle Gray submitted that the respondent erred in relying upon the questionnaire form and was an innocent victim of an incorrect representation by Mr Ly and whoever signed the witness statement. He submitted that such incorrect representation would have occurred even if the signatory had attended the respondent’s practise to sign the form. He submitted that the respondent was reasonably entitled to rely upon the signature purportedly of the plaintiff, and that there was no obligation on the respondent to verify the person’s identity. He relied upon the evidence of Mr Quinn, solicitor who was called by the respondent. He gave evidence that on occasions he had acted for clients without personally meeting them. Mr Doyle Gray submitted that as soon as Ms Perla was aware that Mr Ly changed his story on the first day of the hearing, and that it was no longer reasonable to rely on Mr Ly, then she conceded as a matter of objective fact that she had no retainer. He submitted that it was Hong Ly and the person who signed the witness statement who were the authors of the misadventure, and if anyone should be ordered to pay the costs, it should be them.

47 Mr Doyle Gray submitted that if the respondent was to be ordered to pay the defendant’s costs of the proceedings, that such order should cease after the first opportunity had the defendant suspected or should have suspected that the respondent had not been obtained. He submitted the appropriate date was 28 September 2004.

48 Mr Sheller relied on the decision of His Honour Judge Young J in A.W. & L.M. Forest (supra) especially as it was explained by Bryson J in Zimmerman Holdings (supra). In effect he submitted that the defendant was successful in having the proceedings dismissed as a result of their challenge to the respondent’s retainer, and was successful in the Motion brought before the court. In those circumstances costs would ordinarily follow the result and the defendants would be entitled to their costs, except if there were adequate grounds for that ordinary rule not to apply. I am unable to find any grounds or discretionary matters which would mitigate in Ms Perla’s favour to avoid an order for costs in the proceedings and on the Motion.

49 In relation to the proceedings, I am satisfied that the legal work in relation to the proceedings themselves, that is the action between the plaintiff and the defendant, for all practical purposes, ceased at the Callover on 20 December 2004 when the defendant was directed to file the Motion challenging the respondent’s retainer. I am satisfied that Ms Perla should as a result of her concession that she did have a valid retainer, pay the defendant’s costs of the proceedings.

50 Ms Perla fought the Motion with extraordinary vigour. She was entitled to do so, but I am satisfied that she cannot now be heard to complain as to the amount of the costs involved in the hearing of the Motion, when to a large degree it was her action in issuing a large number of subpoenas and seeking to have subpoenas issued by the defendant set aside which led to a large amount of the time that this matter took before the court in hearings before Magistrate Dillon. The fact is that she vigorously contested the Motion brought in this matter. After a full day of hearing she conceded the issue in dispute was that she did not hold a valid retainer from the plaintiff. In those circumstances and in accordance with the authorities to which I have referred, in my view, it is clear that Ms Perla is liable for the costs of the Motion.

51 Mr Sheller submitted that the respondent should be ordered to pay the costs on an indemnity basis. He submitted that Ms Perla’s general practice and procedure in motor vehicle property damage claims, according to her evidence, was such that it almost ensured that what occurred in this matter, would occur from time to time. The practice she adopted on relying on instructions referred to her by repairers meant that her firm instituted proceedings having never spoken to the client. Mr Sheller submitted that the firm relied on instructions through a smash repairer, in this case Mr Ly, who was entirely ignorant of the law and as to what was required. He submitted that in this case it was clear that Perla & Jordan had issued the proceedings in the name of the plaintiff, when at the very highest it could be said that the firm had a questionnaire and an authority from a person other than the owner. Mr Sheller submitted that I would be concerned as to the absence of any Cost Agreement and the absence of any communication with the plaintiff in relation to costs at all. He submitted that I would be satisfied that the actions of the firm in this matter less honourable than the actions of the solicitors in the various cases to which I was referred, where costs on an indemnity basis were ordered.

I have previously set out Mr Doyle Gray’s submissions and I have taken all of them into account.
DECISION AND REASONS

52 I am satisfied that costs order against the respondent should be made on an indemnity basis.

53 I accept that to some extent the respondent was the victim of the actions of Mr Ly and whoever signed the vehicle release document and the witness statement. However, it was Ms Perla who established the practice and procedure that allowed that to happen. The practice she adopted in accepting instructions through repairers was a recipe for disaster. It was clear having seen Mr Ly give evidence, that he was completely ignorant as to the importance of the documents which he was arranging to have signed on behalf of the respondent. Unaware of their importance and significance, I find he gave little care or attention as to how the documents were completed. I am satisfied that it was completely inappropriate for the respondent to commence legal proceedings on the basis of instructions obtained in the manner as indicated in this matter. Moreover, I am satisfied that Ms Perla did not comply with the requirements of the Legal Profession Act in relation to cost disclosures. There was absolutely no attempt to do so, and I am not satisfied that Ms Perla could properly avoid her obligations by stating that she did not intend to look to her client for costs, but to seek only to rely on the costs recovered from the other party. An obvious danger in the practice which Ms Perla adopted was highlighted in this matter. The defendant filed a Confession. It was rejected. There was no evidence that Ms Perla had obtained instructions from the plaintiff in relation to the rejection of the Confession. There was no evidence that at any stage the respondent had advised the plaintiff of her possible liability for the costs of the defendant if a court, on the hearing of the matter, was to find that the fair and reasonable costs of repair did not exceed the amount confessed to in the Confession in the sum of $1,091.46 plus costs.

54 I accept Mr Sheller’s submission that the authority relied upon was not a retainer to commence legal proceedings. I do not accept that a reasonable person reading that document would understand it as giving instructions for legal proceedings to be commenced in his or her name. I was not impressed by Ms Perla’s evidence that she considered it appropriate and would advise, as an independent solicitor, a client to sign it in favour of some other firm.

55 Even if the authority could be relied upon, the signing of the authority by the driver Mr Do could not and did not authorise the commencement of proceedings in the name of Mrs Tu the owner.

56 There was no evidence that the plaintiff was aware that part of the legal costs would be paid by the repairer. I preferred the evidence of Mr Ly that the costs arrangement he had with Perla and Jordan was that they would deduct a fee equal to 7 or 8 % of the repairs recovered raising at least the possibility of a breach of section 181 of the Legal Profession Act.

57 I am satisfied after considering all of the discretionary matters, that the order for costs should be on an indemnity basis.

58 I note that Mr Doyle Gray did make a submission that the persons who should be ordered to pay the costs should be Hong Ly and/or the person who signed the witness statement. I reject that submission. There is no way I could make such order on the evidence before me.

59 I make the following orders:

1. The Statement of Liquidated Claim filed 17 February 2004 is dismissed pursuant to pt 14, r28.1C of the Uniform Civil Procedure Rules 2005.

2. The respondent is to pay the defendant’s costs and disbursements of the proceedings on an indemnity basis. Such costs are to be as agreed, or in default of agreement within 28 days to be assessed under the Legal Profession Act.

3. The respondent is to pay the defendant’s costs and disbursements of the Motion on an indemnity basis. The costs are to be as agreed or in default of agreement within 28 days to be assessed under the Legal Profession Act.

60 In relation to the costs of the proceedings I confirm my view that there appears to have been little work done in the proceedings after the Callover on 20 December 2004.

61 In relation to the costs of the Motion such costs will commence from 20 May 2005 when the Motion before the court on 31 March 2006 was filed.

62 It appears to me that no order was made in relation to the Motion filed on 24 December 2004. It appears to have been superseded by the Motion filed on 20 May 2005. In my view the Motion was inappropriately drawn and an appropriate order would that each party is to pay its own costs in relation to that Motion, which I formally dismiss.

63 I shall hear from the parties as to the form of the orders I have proposed.

B.A. LULHAM

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Citations

Tu v Lu [2006] NSWLC 30

Cases Citing This Decision

0

Cases Cited

3

Statutory Material Cited

0

Massey v Wales [2003] NSWCA 212

Jennings v Credit Corp Australia Pty Ltd [2000] NSWSC 210

CITATION:	Tu v Lu [2006] NSWLC 30
JURISDICTION:	Civil
PARTIES:	Thi Ha Tu Nga Lu Elena Perla t/as Perla & Jordan lawyers
FILE NUMBER:	1832/04
PLACE OF HEARING:	Downing Centre Local Court
DATE OF DECISION:	07/31/2006
MAGISTRATE:	Magsitrate B A Lulham
CATCHWORDS:	Practice and procedure - Commencement of proceedings - Requirement for plaintiff to authorize proceedings - Challenge to retainer of solicitor - Costs - Award of costs on a party/party or indemnity basis - consideration of authorities
LEGISLATION CITED:
CASES CITED:	A.W. & L.M. Forest Pty Ltd v Beamish (1998) 146 FLR 450 Harry S Braggs Liquidation Warehouse Pty Ltd v Whittaker 44 NSWLR 421 Rancloud v Caban NSWSC Young J 9/2/88 Yonge v toynbee (1910) 1 kb 215 Australian Guangzhou Association Inc v Huang & Ors (2001) NSWSC 124 Zimmerman Holdings Pty Ltd v Wales (2002) NSWSC 447
REPRESENTATION:	No appaerance - Solicitor Mr J Sheller - Defendant's Counsel DGB Lawyers - Defendant's Solicitor Mr P Doyle Gray - Respondent's Counsel Henry davis York - Respondent's Solicitor
ORDERS:	The Statement of Liquidated Claim filed 17 February 2004 is dismissed pursuant to pt 14, r28.1C of the Uniform Civil Procedure Rules 2005. The respondent is to pay the Defendant's costs and disbursments of the proceedings on an indemnity basis. Such costs are to be as agreed, or in default of agreement within 28 days to be assessed under the Legal Profession Act. The respondent is to pay the defendant's costs and disbursements of the Motion on an indemnity basis. The costs are to be as agreed or in default of agreement within 28 days to be assessed under the Legal Profession Act. In relation to the costs of the proceedings I confirm my view that there appears to have been little work done in the proceedings after the Callover on 20 December 2004. In relation to the costs of the motion such costs will commence from 20 May 2005 when the Motion before the Court on 31 March 2006 was filed. It appears to me that no order was made in relation to the Motion filed on 24 December 2004. It appears to have been superseded by the Motion filed on 20 May 2005. In my view the Motion was inappropriately drawn and an appropriate order would be that each party is to pay its own costs in relation to that Motion, which I formally dismiss.

[2006] NSWLC 30

31/07/2006