Balzola v Council of the Law Society of New South Wales (No. 2)

On 8 June 2018 I gave judgment on the plaintiff’s notice of motion filed 18 May 2018: Balzola v Council of the Law Society of New South Wales [2018] NSWSC 849. In the course of that judgment I said this:

After judgment was delivered on 8 June 2018, the proceedings were stood over to 14 June 2018 for the making of further directions. On that day, the solicitor for the plaintiff said that the plaintiff would like to be heard on the question of costs on the basis that the plaintiff was not invited to make submissions in relation to costs at the hearing of the notice of motion.

I have dispensed with the need for the plaintiff to file a further notice of motion in relation to costs and regarded the oral application made on 14 June as the plaintiff’s application. The effect of the application was to vary my judgment in relation to costs. Rule 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’), therefore, applied. On the basis that the application was made on 14 June 2018, r 36.16(3A) was complied with.

The plaintiff submitted that the question of costs should be reopened in circumstances where the plaintiff sought its costs of the motion, the plaintiff was successful on the motion, the defendant made no submission that costs should not follow the event, and the plaintiff was not afforded any opportunity to be heard on the question of costs.

The plaintiff submitted that the court should make the usual order that costs follow the event, namely, that the defendant pay the plaintiff’s costs of the notice of motion. The plaintiff submitted that that was so in circumstances where the plaintiff had not acted unreasonably and, on two occasions, offered to resolve the issue without the need for a motion, and clearly articulated the basis on which the motion was going to be successful.

The plaintiff submitted that not to reopen the question of costs would be a denial of procedural fairness to the plaintiff.

The defendant resists a reopening to reconsider the costs question, principally relying on what Heydon JA (as his Honour then was) said in R v Giri (No. 2) [2001] NSWCCA 234. His Honour there distilled the three issues central to the reopening jurisdiction which the High Court regarded as exercisable by appellate courts in only “extremely rare” or “quite exceptional” circumstances, and then only with “great caution”. Those matters were:

The defendant submitted that in the present case, the plaintiff has not demonstrated that the second or third elements are present to warrant setting aside the orders.

I consider that, in the circumstances, I should reopen the question of costs. Principles such as those articulated by Heydon JA in Giri are not necessarily applicable to decisions of single judges. Those principles and others discussed in cases such as Wentworth v Woollahra Municipal Council (No. 2) (1982) 149 CLR 672, State Rail Authority (NSW) v Codelfa Construction Pty Ltd (No. 2) (1982) 150 CLR 29 and Autodesk Inc v Dyason (No. 2) (1993) 176 CLR 300 are more applicable to appellate courts where different principles apply. I note the discussion by Barrett J (as his Honour then was) where his Honour discusses the difference between reopening at appellate level and at first instance in Wentworth v Rogers [2002] NSWSC 921 at [7] and [8].

Barrett J went on to say (at [9]):

While I do not accept the plaintiff’s submission that he was denied procedural fairness, a number of matters relevant to the issue of costs were not drawn to my attention in submissions that were made at the hearing of the notice of motion. The plaintiff was not denied procedural fairness because he was not denied the opportunity to make submissions on costs: Victims Compensation Fund Corporation v Nguyen (2001) 52 NSWLR 213; [2001] NSWCA 264 at [37]. Ordinarily, when motions are heard, and even final hearings, it is expected that counsel will address all matters relevant to what is before the court including the question of costs. Further, because parties choose to say nothing about costs, that does not preclude the judge from forming an opinion about how the costs are to be paid. In Wentworth v Rogers, Barrett J noted Lord Wilberforce’s observation in Saif Ali v Sydney Mitchell & Co [1980] AC 198 that “judges are more than mere selectors between rival views, they are entitled to and do think for themselves.”

A further consideration in the present case is that what is sought to be revisited is not the substantive relief which I granted but only in relation to costs.

My attention has now been drawn to correspondence passing between the lawyers for each party prior to the filing of the notice of motion. While this correspondence was annexed to an affidavit read on the hearing of the motion, no reference was made to that correspondence.

On 9 May 2018, solicitors for the plaintiff wrote to the Law Society. The letter noted the suspension of the plaintiff’s practising certificate pursuant to s 77 of the Legal Profession Uniform Law (NSW) and the commencement of the proceedings seeking a stay. After the stay was granted, the letter noted that the plaintiff filed and served his evidence and that,

The letter went on to say:

The solicitor for the Law Society replied on 11 May 2018 disputing that the 56-day period had expired and asserting that the period was suspended during the period of the stay. The solicitor indicated that the Law Society would consent to dismissing the plaintiff’s summons on the basis (inter alia) that the plaintiff paid the Law Society’s costs in relation to the proceedings.

On 14 May 2018, the solicitors for the plaintiff rejected the Law Society’s offer of settlement and restated the offer that had been made in the letter of 9 May 2018. The letter concluded by saying:

The Law Society replied on 14 May 2018 reaffirming its view that the stay operates to suspend the operation of the Council’s s 77 decision.

Whilst the Law Society’s submission is correct that until senior counsel was briefed by the plaintiff in May of 2018, all parties including the plaintiff had proceeded on the basis that the stay of the defendant’s decision was effective, that submission does not deal with the correspondence to which I have now made reference after senior counsel was briefed. The plaintiff thereafter asserted what he said was the proper construction of s 77, and that construction was disputed by the Law Society. At the same time, the plaintiff put an offer to the Law Society for the dismissal of the proceedings with each party to pay its and his own costs. That offer was not accepted by the Law Society. The plaintiff was ultimately successful in having its construction of s 77 accepted.

Further, whilst the Law Society’s submission is correct that I held at [28] of my first judgment in this matter that no explanation had been offered about why steps were not taken more promptly to have the proceedings brought on for hearing, the correspondence asserts, without denial by the Law Society, that the proceedings were adjourned at the Law Society’s request from September 2017 until February 2018. In those circumstances, the obligation was on the Law Society to explain why that course was requested. The request tends to minimise any fault on behalf of the plaintiff in not having the proceedings brought on for hearing more promptly.

The Law Society drew attention to my statement that the Law Society acted in good faith in not making a decision under s 82. That statement was not relevant to the issue of costs in relation to the notice of motion.

In circumstances where the correspondence between the lawyers preceding the issue of the notice of motion was not drawn to my attention, I consider that the issue of costs should be reviewed as a result of that misapprehension. In circumstances where the plaintiff had clearly set out the basis for the assertions put forward on the hearing of the notice of motion before that notice of motion was filed, where the Law Society resisted that particular construction of s 77 and was unsuccessful, and where some explanation has now been offered for the delay, being that the Law Society sought the lengthy adjournment of the proceedings, I consider that the previous order I made in relation to costs should be revoked. The appropriate costs order in those circumstances is that the defendant should pay the plaintiff’s costs of the notice of motion.

Accordingly, I make the following orders: