Warne v ACN 603 541 411 Pty Ltd trading as Chandlers International Lawyers (No 2)

[2025] NSWCA 92

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Warne v ACN 603 541 411 Pty Ltd trading as Chandlers International Lawyers (No 2) [2025] NSWCA 92

Hearing dates:

On the papers

Date of orders:

6 May 2025

Decision date:

06 May 2025

Before:

Ward ACJ; Mitchelmore JA; Kirk JA

Decision:

1.   For the avoidance of doubt, the order made on 3 April 2025 that the appellant pay the respondent’s costs is to operate as an order for costs on the ordinary basis.

Catchwords:

COSTS – application for indemnity costs

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 98

Cases Cited:

Calderbank v Calderbank [1975] 3 All ER 333; 3 WLR 586

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; [1988] FCA 364

Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298

Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721; [1992] NSWCA 721

Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344

Quach v Health Care Complaints Commission (No 2) [2015] NSWCA 311

Quach v New South Wales Civil and Administrative Tribunal [2015] NSWCA 63

Reimers v Health Care Complaints Commission [2013] NSWCA 366

Reimers v Health Care Complaints Commission [2012] NSWCA 317

Warne v ACN 603 541 411 Pty Ltd trading as Chandlers International Lawyers [2025] NSWCA 57

Category:

Costs

Parties:

Colin Phillip Warne (Appellant)
Chandlers International Lawyers (Respondent)

Representation:

Counsel:
C Warne (Appellant) (Self-represented)
J Granger with S Steinhoff (Respondent)

Solicitors:
HT Law Pty Ltd (Respondent)

File Number(s):

2024/00282252

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

District Court of New South Wales

Jurisdiction:

Civil

Citation:

[2024] NSWDC 284

Date of Decision:

2 July 2024

Before:

Newlinds SC DCJ

File Number(s):

2023/438934

JUDGMENT

1. THE COURT: On 3 April 2025, this Court dismissed with costs an appeal brought by Mr Warne challenging orders made against him in the District Court in relation to a claim by the assignee of his former lawyer in respect of unpaid legal fees (see Warne v ACN 603 541 411 Pty Ltd trading as Chandlers International Lawyers [2025] NSWCA 57). At that time, directions were made for the filing of any submissions as to the basis on which such costs should be ordered to be assessed, with a view to determining any such issue on the papers.

2. The respondent filed submissions accordingly on 11 April 2025. Mr Warne responded to those submissions by email on 17 April 2025. In that email, Mr Warne requested that the Court delay the “final costing” of the matter until he can have the 12 October 2018 costs agreement (i.e., the original costs agreement entered into with his former lawyer) “investigated by the correct court”. In circumstances where a costs order has already been made and we do not propose to order that this be on an indemnity basis, we do not see any basis for deferring our determination on the papers of the respondent’s submissions as to the basis of the costs order. These reasons now deal with the sole remaining issue in the proceedings in this Court. It is a matter for Mr Warne what steps he now chooses to take in relation to the investigation of the original costs agreement with his former lawyer.

3. The background to the dispute is outlined in the judgment of the presiding judge handed down on 3 April 2025. The nub of the dispute related to Mr Warne’s dissatisfaction with the basis on which he had been charged legal fees by the lawyers who formerly acted for him in relation to two claims for loans allegedly due to him; in particular, his assertion that this was inconsistent with oral agreements that he maintained had been reached with his former lawyer.

4. In its written submissions, the respondent seeks its costs against Mr Warne:

1. on an indemnity basis from the date on which Mr Warne filed his Amended Notice of Appeal (22 October 2024);

2. alternatively, on an ordinary basis up to 25 February 2025 and on an indemnity basis from 26 February 2025 (the former being the date of a Calderbank offer made by the respondent – see below);

3. alternatively, on an ordinary basis.

5. The last alternative is strictly unnecessary to articulate since, in the absence of a special order as to costs, the order that has already been made that the appeal be dismissed with costs would operate as an order for costs on the ordinary basis.

6. The principles on which the Court’s wide discretion to make a special costs order under s 98 of the Civil Procedure Act 2005 (NSW) are well-known and will not here be repeated save as necessary to enable Mr Warne to understand the outcome in relation to costs.

7. We deal in turn with the two bases on which a special (indemnity) costs order is sought by the respondent.

(a)   Conduct of Mr Warne in relation to the appeal

8. The basis on which the respondent seeks an order for costs on an indemnity basis from the date of the filing of the Amended Notice of Appeal (22 October 2024) is, in essence, a complaint as to Mr Warne’s persistence in pursuing the appeal (after the respondent had drawn attention to its very poor prospects of success) and in raising irrelevant matters (the respondent here referring to what was said in the appeal judgment at [4], [11] and [25]). The respondent also complains that Mr Warne failed to comply with court orders and rules in relation to the preparation of the appeal (including failing or refusing to serve documents), with the consequence that the respondent says additional costs were incurred by it in the preparation and filing of supplementary appeal books and in making detailed objections to the Appeal Books.

9. The respondent submits that the fact that Mr Warne was “warned” about the poor prospects of success of his appeal is a significant factor in the determination as to whether to grant indemnity costs (citing Reimers v Health Care Complaints Commission [2013] NSWCA 366 (Reimers)). In Reimers, Barrett JA said that the applicant’s case was “so obviously doomed to fail as an abuse of process” and should have been seen from the beginning to be of that quality, particularly in light of the “clear flagging” of that matter.

10. In this regard, the respondent has referred in its submissions to its various written communications to Mr Warne drawing his attention to deficiencies in the Amended Notice of Appeal and in the preparation of the Appeal Books and as to his poor prospects of success. The respondent notes that the findings made by this Court were as to matters to which Mr Warne’s attention had been drawn in the respondent’s submissions on the appeal and in its 24 February 2025 letter (in which the intention to seek indemnity costs was again raised).

11. The respondent says that a further basis for indemnity costs is that the allegations made in Mr Warne’s submissions against Chandlers, Mr Treisman and other legal practitioners were serious and unfounded.

12. Mr Warne’s response to the respondent’s submissions is to reiterate his complaint about the way in which his former lawyer had estimated the costs of the case, noting that the initial estimate was $60,000 but that the cost of the case has been nearly $300,000; and pointing out that Mr Treisman was aware of his limited cash flow.

Determination

13. As explained in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401; [1988] FCA 364, indemnity costs may be appropriate when the unsuccessful party “should have known that he had no chance of success” and pressed on regardless. The respondent accepts that allowances must be made in recognition of the difficulties faced by litigants in person. However, the respondent makes the (equally valid) point that account must be taken of the hardship and expense caused by allegations and claims that lawyers would recognise as allegations and claims that could not reasonably (or even properly) be made.

14. As to the complaint that Mr Warne persisted in raising irrelevant matters, the passages in the appeal judgment to which the respondent refers as examples of this do not greatly assist the respondent’s application.

15. At [4] of the appeal judgment, what was pointed out was a disconformity between the relief claimed (which included fees for the separate “Dominion” matter not the subject of the appeal) and the pleaded claim. This disconformity is in our view explicable by reference to Mr Warne’s lack of qualifications as a lawyer and can hardly have added greatly to the respondent’s costs of the appeal (it being able to be dealt with by a brief submission). While the complaints made by Mr Warne as to alleged non-compliance by Mr Treisman with his professional costs disclosure obligations or negligence were not appropriately raised on appeal from the District Court judgment, that again is likely to be explicable by reference to Mr Warne’s lack of representation on the appeal. Mr Warne’s apparent lack of appreciation that those matters would more appropriately be raised in a challenge, say, in the course of the costs assessment process (or perhaps by way of a complaint to the legal services commissioner) is likely attributable to unfamiliarity with the legal process. That said, the allegations by Mr Warne of dishonesty are of concern, as explained below.

16. As to the observations at [11], these again go to the proper forum for complaint as to the costs agreement process, to which we have referred above, and allegations of dishonesty (or a conspiracy of sorts) which we consider below.

17. The reference by the respondent in its submissions to [25] of the appeal judgment seems to be typographical error, since [25] simply sets out Chandler’s position, as at 3 September 2020, that there be no further financial accommodation for Mr Warne. It does not appear to have anything to do with the alleged raising of irrelevant matters by him.

18. Apart from the allegations and complaints of dishonesty, the fact that Mr Warne raised matters in the relief sought or submissions on appeal that were not matters raised at first instance nor properly dealt with on his appeal from the decision of the District Court judge goes in our view to his lack of qualifications as a lawyer, and does not of itself bespeak improper conduct on his part. And Mr Warne’s failure to comply with court orders and court rules in relation to the preparation of the appeal books and the like is hardly an uncommon experience when dealing with self-represented litigants to whom some latitude may be extended.

19. More troubling is the fact that Mr Warne was prone to make serious accusations of misconduct against his former legal representatives. Allegations of dishonesty and the like should not be made lightly (and, where pleaded without a proper basis and found to be without foundation, may well result in an order for indemnity costs). However, this is not a case where such allegations were made in a pleading against the legal practitioners; rather, they were made in written and oral submissions on the appeal. While we do not condone the indiscriminate making of serious allegations of dishonesty, some allowance must be made for the fact that Mr Warne is not legally qualified and clearly feels strongly that he has been poorly treated in the course of the litigation. There can be no doubt that the costs escalated dramatically over the period of the litigation in which Mr Warne was legally represented (although we note that Mr Treisman was at pains to notify Mr Warne in advance of those increases in the estimated fees). Considered in the context of the dispute between Mr Warne and his former lawyer in relation to the quantum of fees, the submissions raising misconduct or dishonesty on the part of the former legal representatives do not in our view warrant an indemnity costs order in respect of the appeal costs.

20. Finally, as to the conduct of Mr Warne in pursuing the appeal notwithstanding the respondent having drawn his attention to its poor prospects, we note that reliance has been placed by the respondent on Reimers, which was cited in Quach v Health Care Complaints Commission (No 2) [2015] NSWCA 311 (Quach).

21. In Reimers, the applicant had sought the Court’s intervention in relation to a determination made by the Medical Tribunal (the Tribunal) on 4 November 2003. The proceedings before the Court in Reimers were not the first in which Mr Reimers had sought the Court’s intervention in relation to the Tribunal’s decision. Mr Reimers initiated an appeal but did not do so until some eight years after the statutory deadline (see Reimers v Health Care Complaints Commission [2012] NSWCA 317). The earlier proceedings were disposed of on the footing that the passage of time warranted exercise of the Court’s discretion against the grant of the relief sought, even if some substantive basis for the grant of the relief had been shown. A further year had passed and the same considerations of prejudice through the passage of time operated even more strongly in favour of the same exercise of discretion. As such the Court was of the opinion that Mr Reimers should have seen that the case was obviously doomed.

22. In Quach, two notices of motion filed by Mr Quach were dismissed with costs. On two occasions prior to the hearing of these motions, Mr Quach was informed that his chances of successfully obtaining the relief sought in the underlying proceedings for judicial review were most doubtful. On 15 June 2015, the Registrar of the Court of Appeal advised Mr Quach that the Court may not make orders of the kind sought by him. This was also explained by Sackville AJA in proceedings brought in this Court in relation to a challenge to an earlier decision of the New South Wales Civil and Administrative Tribunal (see Quach v New South Wales Civil and Administrative Tribunal [2015] NSWCA 63 at [51]). On 18 June 2015, the solicitor acting for the Health Care Complaints Commission wrote to Mr Quach outlining why the first notice of motion was “misconceived and [would] not be granted by a court”. The Court determined at [11] that while the decision of Mr Quach to file the notices of motion might have been excused on account of his lack of legal expertise, no such allowance should be made after their difficulties were brought to his attention in June 2015. In these circumstances, the Court determined that Mr Quach’s conduct justified an order for the payment of costs on an indemnity basis.

23. In the present case, what is very clear both from the observations of the primary judge and from our observation of Mr Warne gleaned from his oral submissions in this Court, is that Mr Warne has a firmly held belief in the merit of his claims and a genuine sense of grievance in relation to the costs incurred in the unsuccessful litigation in which his former lawyer (Mr Treisman) acted for him and in relation to his proposed claim in the Dominion matter. However, it cannot be said that he has persistently revisited the same issues (as in Reimers) nor is it clear that judicial scepticism as the merits of his appeal (as opposed to deficiencies in his notice of appeal) was expressed to him in advance of the appeal itself (as in Quach). Indeed, it may be noted that the respondent’s attempt to strike out the claim as an abuse of process prior to the hearing by this Court was unsuccessful.

24. As a self-represented litigant, it might be expected that Mr Warne would be sceptical of protestations by his opponent as to the lack of merit of his appeal. In any event, we are not persuaded that it would necessarily have been obvious to Mr Warne, as a self-represented litigant, that his appeal was doomed to failure at the outset.

25. In all the circumstances, we do not consider that an order for indemnity costs should be made on the first basis put forward by the respondent for such an order.

(b)   25 February 2025 Calderbank Letter

26. The alternative basis on which indemnity costs are sought is in reliance on a without prejudice offer made by the respondent to Mr Warne on 25 February 2025 in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333; 3 WLR 586. The effect of that offer (after correction on 6 March 2025 of what is described as, and clearly must have been, a typographical error) was that the respondent was prepared to accept a discounted amount of its costs of the appeal ($43,000, against anticipated costs of $75,000) if Mr Warne’s appeal was withdrawn.

27. This offer was made two weeks after the respondent’s submissions had been filed and following the 24 February 2025 letter in which Mr Warne’s attention had been drawn to the poor prospects of the appeal. The offer was left open for acceptance until 7 March 2025 (5 days before the appeal hearing). The respondent submits that, by this stage, Mr Warne was properly able to assess his prospects of appeal. Pausing here, that involves a not obviously well-founded assumption as to Mr Warne’s ability to assess the force of the respondent’s submissions.

28. The respondent submits that the offer was a genuine compromise in that it was offering a discount on fees to which, if successful, it would have been entitled at least on an ordinary basis, and potentially on an indemnity basis. The respondent argues that the amount of the costs sought was also less than an amount which would be payable on any costs assessment, even on an ordinary basis; being approximately 57% of the respondent’s then anticipated costs. Hence, the respondent submits that the offer was a reasonable compromise which it was unreasonable for Mr Warne not to accept.

29. As to this alternative basis for an indemnity costs order, the rationale for special costs orders, where a party has not accepted an offer of compromise or Calderbank offer that is more favourable than the ultimate judgment, is that articulated in Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721; [1992] NSWCA 721. In summary, those are: to encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise; to save the public costs necessarily incurred in litigation ultimately found to have been unnecessary; and to indemnify the party making a reasonable offer of compromise because, from the time made, notionally the real cause and occasion of the litigation is the attitude adopted by the party rejecting the offer.

30. Where the offer is a Calderbank offer (and not an offer of compromise under the rules), it must be established by the offeror that the rejection of it (assuming it embodied a genuine element of compromise) was unreasonable in order to warrant an indemnity costs order.

31. In considering the reasonableness of the rejection of the offer, one takes into account factors such as the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree’s prospects of success, assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it (see Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 where it was noted that relevant factors include those identified by the Court of Appeal in Victoria in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298).

32. In the present case, addressing those factors, the Calderbank offer that was made allowed a reasonable time for its consideration, it offered a genuine compromise (though only as to costs of the appeal), and it was expressed in relatively clear terms (though there may have been some potential for uncertainty since the appeal itself concerned the question of costs in the form of unpaid fees and the offer when originally sent referred to an amount considerably more than the corrected offer). The offer certainly foreshadowed an application for indemnity costs and it may be accepted that the prospects of success of the appeal were poor (though Mr Warne clearly did not appreciate this).

26. However, in substance, the offer required complete capitulation by Mr Warne in respect of his appeal. Although there was an element of compromise in the offer in that it reduced the amount of costs that would otherwise be sought if the appeal was dismissed, it effectively required Mr Warne to accept that the prospects of a successful appeal were nil or so negligible as to discontinue his appeal.

27. In all the circumstances, we do not accept that rejection of the offer was unreasonable so as to warrant indemnity costs. True it is that Mr Warne lost on each of the “grounds” of appeal raised (as the respondent had foreshadowed would be the case). However, this offer required an abandonment of the appeal with a not insignificant payment of costs for the privilege of so doing.

Conclusion

35. Accordingly, the only order we now make (which will dispose of the matter in this Court) is to make clear, for the avoidance of doubt, that the costs order made on 3 April 2025 will operate as an order for costs to be assessed on the ordinary basis. Each party should bear its own costs of the submissions made on the respondent’s unsuccessful application for indemnity costs (noting that Mr Warne does not appear to have incurred any legal costs in responding to the respondent’s submissions on that issue).

Order

1. For the avoidance of doubt, the order made on 3 April 2025 that the appellant pay the respondent’s costs is to operate as an order for costs on the ordinary basis.

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Decision last updated: 06 May 2025