Preston v Nikolaidis

1. [1]

   The parties to these proceedings have been disputing an alleged debt of $95,749.40 for over 25 years. They now conduct the oldest unresolved litigation in the Registry of this Court. They tell the Court they have each accumulated legal costs of over $1,000,000. The proceedings have developed the character of a feud.

2. [2]

   Parts of the dispute were successfully mediated by Sir Laurence Street in August 2011. The success of that mediation gives the Court hope that the limited aspects of these proceedings that survive after this judgment may yet be able to be productively mediated to a final resolution. In the meantime, the Court will deal with the issues for decision.

3. [3]

   The plaintiff, Mr John Preston, was a client of the defendants, who represent a former firm of solicitors, Nikolaidis & Co (“the Firm”). Between April 1984 and October 1992, Mr Preston and companies he controlled (“the Preston interests”), retained the Firm to provide them with legal services. When the Preston interests terminated the Firm’s retainer in October 1992, the Firm sent Mr Preston a letter enclosing a summary of 22 final accounts for fees rendered between February and October 1992. The letter claimed that the Preston interests owed $95,749.40 to the Firm for legal professional costs. The letter claimed a lien over the files relevant to work performed for the Preston interests but did not include itemised bills of costs.

4. [4]

   The Taxation of Costs – 1993 to 1996. By July 1993 the Firm had not served itemised bills of costs or commenced proceedings for its fees and the Firm’s files had not been returned to the clients. In August 1993, Mr Preston, as first plaintiff, together with Western Suburbs Constructions Pty Ltd (“Constructions”), a Mr Preston-controlled company as the second plaintiff, commenced these proceedings by Summons (proceedings no. 1993/23395), seeking the delivery of client files and bills of costs and the referral of the bills to taxation under the Legal Profession Act 1987, ss 199, 200 and 208, together with an account of all payments made to the Firm.

5. [5]

   In November 1993 the Court ordered the delivery of itemised bills of costs. By mid-December 1993, the Firm delivered bills of costs in 16 disputed matters. The Court referred these bills of costs to taxation, and made costs orders against the Firm. In February 1994, the Court made procedural orders for the taking of accounts in relation to payments which the Preston interests had made to the Firm. Then in June 1994, the Court referred the taking of those accounts out to a referee for inquiry and report.

6. [6]

   After the commencement of the July 1994 amendments to the Legal Profession Act 1987, the taxation needed to be reconstituted as a costs assessment. That costs assessment did not commence for another two years. But as these reasons show, it was never completed.

7. [7]

   In November 1994, the Preston interests indicated to the Firm and the Court that they no longer sought to pursue the part of the reference requiring the taking of accounts. In February 1995 the Court dismissed the Summons, except in so far as orders (including costs orders) had been previously made, and made no additional order as to costs.

8. [8]

   By April 1995, the Preston interests had served their objections to the bills of costs under assessment. In early 1996 the Firm raised an issue in the costs assessment about the terms of the client’s retainer of the Firm. The Firm contended that a costs assessor did not have the power to make a determination as to the existence of, or the terms of any retainer. In mid-1996 the Firm also moved for an assessment of the costs orders that had originally been made against the Firm in December 1993, and the consolidation of that costs assessment with the assessment of the Firm’s 16 bills.

9. [9]

   Reference to Costs Assessment – 1996 to 2002. In July 1996 the Court formally ordered the reference of the bills of costs for assessment pursuant to Legal Profession Act 1987-1994, s 206(1). The Court also took the apparently efficient course of referring the question of the terms of the Firm’s retainer by the Preston interests to the same costs assessor, but in the additional capacity of referee, for inquiry and report.

10. [10]

    The original 1993 bills of costs needed to be amended to conform with the formal requirements for assessment under Legal Profession Act 1987-1994. The procedure under the 1994 Act required a costs assessment application to be filed for the assessment of the costs for each of the bills of costs. By January 1997, the Firm had filed applications for the costs assessment of the 16 bills of costs at the Registry of the Court.

11. [11]

    In January 1997 sealed copies of the Firm’s costs assessment applications, together with the bills of costs, were served on the Preston interests. In February 1997 the Preston interests completed the filing of objections against the 16 bills of costs in the Court’s Registry.

12. [12]

    Between April 1997 and May 2010 no steps were taken in the costs assessment to quantify the 16 bills of costs. As will be seen for eight years of that period, from 2002 to 2009, these proceedings were stayed.

13. [13]

    Between 1997 and 2002 the parties were pre-occupied with procedural disputes. During 1998 and 1999 the parties contested the question of the terms of the Firm’s retainer by the Preston interests.

14. [14]

    The material that the Firm advanced to the costs assessor contained a carbon copy of a letter apparently dated 19 April 1984. The costs assessor invited submissions on the letter and indicated that upon their receipt he would soon be in a position to conclude each assessment and issue a certificate of determination for the costs assessments.

15. [15]

    But the costs assessor hesitated to undertake the role of referee with which he had been invested. In November 1998 the Court decided to revoke the appointment of the costs assessor as referee on the issue of the terms of the retainer. Instead the Court ordered that Points of Claim and Points of Defence be served to isolate the issues joined between the parties about the terms of the retainer.

16. [16]

    The Preston interests moved by Motion in July 2000 for leave to amend the Summons to add 11 new plaintiffs, to add Mr Zwar as a defendant, and for other orders. The Motion was dismissed. The Court decided in April 2001 that it was impractical to remit the matter back to the existing costs assessor, or a new costs assessor, without determining the retainer issues. In June 2001 the Court decided that it would determine the issues about the terms of the retainer. In April 2002 the Preston interests filed Further Amended Points of Claim alleging fraud on the part of the second defendant in relation to the creation of the 19 April 1984 letter. This was followed by a forensic examination of the letter in question. The hearing of the retainer issues were fixed for February 2003.

17. [17]

    The Stay Period – 2002 to 2009. But the proceedings were stayed in 2002 and the listed February 2003 hearing was vacated. When these proceedings were first commenced, Mr Mitrofanis Nikolaidis, the father of the second defendant Mr Leon Nikolaidis, had been joined as the first defendant. Mr Mitrofanis Nikolaidis established the Firm. When he died in July 2002 his wife, Mrs Doreen Philomene Nikolaidis, his executrix, continued to represent his estate in the proceedings, until she also died in June 2012.

18. [18]

    Mr Leon Nikolaidis, the second defendant, is the executor of his mother’s estate and thereby in 2012 became the executor of his father’s estate. Thus, Mr Leon Nikolaidis now defends these proceedings in two capacities: as the first defendant in a representative capacity, as executor of his father’s estate, and personally, as the second defendant.

19. [19]

    Mr Leon Nikolaidis was until 2007 a principal of the Firm. But in 2002 he was charged under Crimes Act 1900, s 300(1) with one count of making a false instrument, namely the 19 April 1984 letter that he had used in the costs assessment. This criminal charge resulted in these proceedings being stayed from November 2002 until the second defendant’s criminal trial was concluded and relevant criminal appeal periods expired. He was convicted in 2007 of the Crimes Act, s 300(1) count and sentenced to imprisonment for one year. The same year, his name was struck from the roll of legal practitioners. The stay was formally discharged in May 2009 and action in these proceedings resumed.

20. [20]

    The third defendant, Mr Michael Zwar, was a principal of the Firm when the Firm undertook the legal work in issue. The Firm dissolved when the criminal charges were brought against Mr Leon Nikolaidis. Mr Zwar has since joined another firm but remains a defendant in this matter.

21. [21]

    After the Stay – 2009 to 2015. Shortly after the stay was discharged, in June 2009, the plaintiffs filed a Statement of Claim alleging fraud. On the Firm’s Motion in May 2010 the Statement of Claim was struck out, but the Firm’s Motion to dismiss the proceedings was itself dismissed. The Court also granted leave to the plaintiffs to amend the Summons by adding Mr Zwar as a defendant, which Amended Statement of Claim was filed in the proceedings in June 2010.

22. [22]

    The Court also made clear in May 2010 that the April 2002 Further Amended Points of Claim represented the extant portion of the proceedings which were a “coherent but confined claim” by the Preston interests, which was to proceed to trial.

23. [23]

    In October 2010 the Preston interests ultimately abandoned further attempts to file new pleadings. Instead, the Preston interests raised for the first time the issue of the application of Limitation Act 1969, ss 14 and 63 to the Firm’s recovery upon its bills of costs. The Preston interests then alleged for the first time that the applicable limitation period had expired by 1998 and the proceedings had become futile.

24. [24]

    The April 2002 Points of Claim that the Preston interests filed were listed for hearing in August 2011. But some of the issues for hearing (namely, the hourly rates applicable to the provision of the Firm’s legal services) were settled at mediation. In September 2011 the Court determined that, contrary to his denial of liability, the first plaintiff Mr Preston was personally liable in respect of all the bills rendered by the Firm.

25. [25]

    In September 2011 the Court directed the Manager, Costs Assessment, to refer the assessment of the Firm’s bills of costs to an accredited costs assessor pursuant to the 1994 Act, s 206. This order was in lieu of the Court’s July 1996 orders referring the bills of costs for assessment under the 1994 Act, s 206(1). This September 2011 referral assumed the terms of the retainer as found by the Court and as agreed during the mediation. The Preston interests’ application for leave to appeal against the September 2011 orders was dismissed in March 2012. The Preston interests’ various subsequent interlocutory applications in the Court of Appeal were also dismissed.

26. [26]

    But it emerged in August 2012 that the original bills of costs, applications for costs assessment and supporting documentation could not be located by the Court. And by December 2013 it was clear that the missing material had been administratively destroyed. In May 2013 the Court ordered the parties to agree on what had constituted these documents so that the costs assessment could proceed. In February 2014 the Court noted that the parties had agreed on the substance of the bills of costs and directed the parties to take steps to reproduce the form of those bills.

27. [27]

    The Preston interests subsequently advanced Statements of Issues concerning the remaining issues for determination in these proceedings. These included the present Limitation Act issues.

28. [28]

    In February 2015, the Preston interests filed a Motion seeking a declaration that the Firm’s entitlement to costs the subject of the bills of costs was extinguished by the Limitation Act. Between March and June of that year, the parties filed Points of Claim and Points of Defence in relation to the Limitation Act issues.

29. [29]

    During the initial hearing of the Motion in October 2015, because it was evident that it was seeking final rather than interlocutory relief, the Court directed that the Motion be converted into a Summons, which was duly filed in December 2015. From time to time throughout these reasons the proceedings so commenced in 2015 are sometimes referred to as “the 2015 proceedings” in a way that distinguishes them from the earlier proceedings.

30. [30]

    The Parties’ Contentions. The parties’ contentions may be briefly summarised. The plaintiff, Mr Preston and his company, Constructions, contend that the Firm has not sued them for the legal fees claimed. They seek a declaration, initially propounded by motion, and then by leave through the filing of an Amended Summons: that by the operation of Limitation Act, ss 14 and 63, any entitlement the defendants may have once had to the payment of the Firm’s costs has been extinguished. Ordinarily, the Preston interests would be taking such a limitation point in the role of defendants. But after the Preston interests filed their Summons seeking bills of costs and other relief, as earlier indicated, the Firm did not commence separate proceedings, a circumstance that led to the present Limitation Act argument.

31. [31]

    The defendants raise several answers to the Limitation Act issue. First, they contend that no pleaded limitation point has been raised either in the proceedings, or in the costs assessments. Secondly, they contend that raising the limitation issue now, some 16 years after the claimed expiry of the applicable limitation period, is an abuse of process. Thirdly, they submit Mr Preston and Constructions elected not to raise, or alternatively have waived their right to rely upon, the expiry of the limitation period. Fourthly, the defendants assert, that the operation of the alleged limitation period is displaced by one or more of three separate species of estoppel: an issue estoppel; a common assumption estoppel; or, an estoppel by encouragement, election or waiver.

32. [32]

    Mr J. Svehla of counsel, instructed by Diamond Conway Lawyers, appears for the plaintiffs. Mr B. Zipser of counsel, instructed by Livingstone & Company Lawyers, appears for the defendants. The Court has been much assisted on the present application by the careful submissions of the counsel and solicitors on both sides. Their diligent work has simplified the gathering and recording of the relevant history of this matter.

33. [33]

    The structure of the legislation applying to the taxation or assessment of costs and their recovery by legal practitioners in this State changed three times in the course of these proceedings. When the bills of costs in question in these proceedings were first issued in 1992 the applicable legislation was Part 11 of the Legal Profession Act 1987 (“the 1987 LPA”).

34. [34]

    On 1 July 1994 important amendments to the 1987 LPA came into force. The Legal Profession Reform Act 1993 introduced a system of costs assessment by costs assessors, to replace the former system of Court-administered taxation of costs. The Legal Profession Reform Act, enacted a new Part 11 into the 1987 LPA, commencing on 1 July 1994. In these reasons this amending legislation, operating from 1 July 1994, is referred to “1994 Amendments”. Transitional provisions introduced with the 1994 Amendments and associated regulations, preserved the operation of the 1987 LPA in respect of bills of costs issued before the commencement of the 1994 Amendments: 1987 LPA, Schedule 8, Part 7.

35. [35]

    When the Legal Profession Act 2004 (“2004 LPA”) was passed, the costs assessment regime changed again. The 2004 LPA commenced on 1 October 2005. The 2004 LPA repealed the 1987 LPA. But the savings provisions in Schedule 9. Clause 18(1) of the 2004 LPA preserved the application of Part 11 of the 1987 LPA, as amended by the 1994 Amendments.

36. [36]

    Finally, the passing of the Uniform Legal Profession Legislation in 2014 (the Legal Profession Uniform Law Application Act 2014 (“the Application Act”), Part 7 and the Legal Profession Uniform Law 2014 (“the Uniform Law”), Part 4.3, led to further changes to the costs assessment regime. The operation of the 2004 LPA was preserved in respect of matters being conducted under the 2004 LPA by the Application Act, Schedule 9, Part 1 and the Uniform Law, Schedule 4, Part 1 and the regulations made thereunder.

37. [37]

    At a pre-trial directions hearing on 13 October 2015, the Court ordered the parties to produce an agreed chronology in narrative form, setting out the main procedural steps in the litigation, the material changes to applicable legislation, and the relevant agreed facts. As the parties were familiar with the history of the proceedings, they readily agreed to produce a joint narrative.

38. [38]

    The parties completed that exercise. What follows immediately in these reasons is the parties’ agreed narrative chronology of the procedural steps, applicable law and the facts relevant to the issues presently before the Court, as formulated and agreed by them. It is called in these reasons “the agreed narrative”.

39. [39]

    The Court has had to resolve a small number of disputes about the text of the agreed narrative, principally in relation to factual matters. Where those disputes are resolved is made clear in the text of the agreed narrative, the whole of which represents the Court’s findings in the proceedings. The Court has also included a very limited number of additional findings that were missing from the original agreed narrative.

40. [40]

    After completion of the factual narrative these reasons make some supplementary factual findings, make further reference to the applicable legislation and undertake an analysis of the legal issues the parties have raised. This overview of these proceedings should be treated as a convenient summary of the history of the proceedings, taken from the agreed narrative, which contains the Court’s detailed findings.

The Agreed Narrative

1. [41]

   The first plaintiff, John Clement Preston (“Mr Preston”), and companies of which he was a director, which included the second plaintiff, Western Suburbs Constructions Pty Ltd (formerly Preston Erections Pty Ltd) (“Constructions”), were clients of the legal firm known as MD Nikolaidis & Co, Solicitors (“the Firm”) for whom the Firm performed legal services for approximately ten years from about April 1984 until 1992.

2. [42]

   The second defendant, Leon Nikolaidis (“Mr Nikolaidis”), a partner of the Firm, was the principal point of contact with Mr Preston and his companies.

3. [43]

   In early October 1992, Mr Preston and his companies terminated the retainer of the Firm for performing legal services.

4. [44]

   After the Firm’s retainer was terminated, on or about 16 October 1992, the Firm sent a letter to Mr Preston enclosing a document titled “Summary of Accounts” stating that $95,749.40 was owing. The “Summary of Accounts” summarised the amounts owing in 22 bills from the Firm to Mr Preston dated between 20 February 1992 and 15 October 1992. The letter added that Mr Preston could collect his files once he paid the Firm $95,749.40.

5. [45]

   Thereafter, between 17 October 1992 and July 1993, there were certain written communications between Mr Preston and the Firm which did not resolve:

   1. (1)

      payment by Mr Preston of the Firm’s fees in the amount of $95,749.40; and

   2. (2)

      delivery to Mr Preston of the Firm’s legal files.

6. [46]

   One communication was a letter from the Firm to Mr Preston dated 26 October 1992 in which the Firm wrote:

7. [47]

   The Firm did not prepare itemised bills of costs or institute legal proceedings prior to August 1993.

8. [48]

   As a consequence, the plaintiffs, Mr Preston and Constructions, commenced the Proceeding, namely Supreme Court of New South Wales Equity Division proceeding case no. 1993/23395 (“Proceeding”), by filing the summons on 24 August 1993 (“Summons”).

9. [49]

   The Summons sought orders as follows:

10. [50]

    Schedule A annexed to the Summons listed twenty client assignments undertaken by the defendants for the plaintiffs and other persons.

11. [51]

    The statutory framework within which the Summons was filed principally comprised:

    1. (1)

       Legal Profession Act 1987 (NSW) (“1987 LPA”), Part 11 prior to the repeal and substitution of Part 11 with effect from 1 July 1994; and

    2. (2)

       The Supreme Court Rules 1970, Part 52 Division 7.

12. [52]

    On 9 November 1993, Hulme J delivered reasons for judgment (“Hulme J November 1993 Judgment”); and made orders (“Hulme J November 1993 Orders”) as follows:

13. [53]

    The document entitled “Summary of accounts” initialled by Hulme J referred to in order 1 of the Hulme J November 1993 Orders was a photocopy of the “Summary of Accounts” which was attached to the 16 October 1992 letter from the Firm to Mr Preston referred to above (“Hulme J November 1993 Schedule”).

14. [54]

    Table 1 below identifies the 16 matters in the Hulme J November 1993 Schedule:

15. [55]

    At that point, therefore, the Court had taken steps to ensure that bills of costs in taxable form were brought into existence in relation to all 16 matters referred to in the Hulme J November 1993 Schedule and which Hulme J stood over to 6 December 1993 “with a view to making an order for taxation of such bills of costs” in the Summons.

16. [56]

    On 15 December 1993, Hulme J delivered reasons for judgment (“Hulme J December 1993 Judgment”).

17. [57]

    By the morning of 16 December 1993, the defendants had served on the plaintiffs the bills of costs (“Bills”) in the 16 matters.

18. [58]

    The matter of taxation of the Bills directed by the Hulme J November 1993 Orders to be prepared was dealt with by Hulme J on 16 December 1993 when Hulme J made orders (“Hulme J December 1993 Orders”) that included the following:

19. [59]

    The Proceeding was next before the Court on 3 February 1994 when Hulme J made certain orders for the filing and service of affidavits in relation to “paragraphs 4, 5 and 6 of the plaintiffs’ Summons dated 23 August 1993” (“Hulme J February 1994 Orders”), which concerned the prayers for relief sought by the plaintiffs in the Summons for the taking of accounts in relation to payments which the plaintiffs, and other companies controlled by Mr Preston, had made to the defendants from 1 January 1989 to 30 October 1992 (“Hulme J February 1994 Orders”).

20. [60]

    Between late February 1994 and late March 1994, the defendants served on the plaintiffs amended Bills in some of the 16 matters.

21. [61]

    Subsequent to the Hulme J December 1993 Orders, in the first part of 1994, Mr Timothy Ryback, costs consultant and expert engaged by the plaintiffs (“Ryback”), together with the then solicitor of the plaintiffs, attended the offices of the Firm on a number of occasions to inspect the Firm’s files relating to the 16 matters.

22. [62]

    The plaintiffs contended that the immediate previous paragraph of the agreed narrative should contain a statement that Mr Rybak attended the offices of the Firm “without Mr Preston who was not permitted to attend in light of the Hulme J December 1993 Orders”. But the Court declines to make this finding as the Court does not accept that the Hulme J December 1993 Orders required Mr Preston not to attend and whether or not he did attend does not seem to be a finding material to the Court’s reasoning.

23. [63]

    After several extensions of the timetable set on 3 February 1994, the matter came before Hulme J on 9 June 1994 and his Honour dealt with a notice of motion filed by the defendants on 27 May 1994 seeking the appointment of a referee:

24. [64]

    Upon the hearing of that notice of motion, Hulme J made a number of orders (“Hulme J June 1994 Orders”) , including for the appointment of the Hon. D. Needham QC (formerly Needham J) to be appointed referee for the purpose of the taking of such accounts:

25. [65]

    It is clear from the reference in order 1 of the Hulme J June 1994 Orders to “paragraph 3 below” – and from the terms of the notice of motion dated 27 May 1994 of the defendants - that the referee was to take an account of receipts and payments as between the plaintiffs and the defendants named in the Summons and that these orders were made by reference to the claims in paragraphs 4, 5 and 6 of the Summons.

26. [66]

    At the end of 1994, therefore, the matter of preparation of bills of costs and taxation of costs had become the subject of the Hulme J November 1993 Orders and the Hulme J December 1993 Orders; while the matter of an account had become the subject of the reference out ordered in the Hulme J June 1994 Orders.

27. [67]

    The first aspect, arising under paragraphs 1, 2 and 3 of the Summons, had been dealt with by orders for the preparation of bills of costs in relation to the relevant solicitor-client matters, an order for taxation of those bills and an order allowing access to the defendants’ files to a “costs expert” retained by the plaintiffs, no doubt to assist the plaintiffs in preparing their case in anticipation of proceedings before a taxing officer.

28. [68]

    The second aspect, concerning the taking of an account, covered by paragraphs 4, 5 and 6 of the Summons, had been referred out to a referee, namely Needham QC, for the taking of the relevant accounts.

29. [69]

    After the Hulme J June 1994 Orders were made, the defendants, although not envisaged or required by the Hulme J June 1994 Orders, commissioned Armstrong Wily, chartered accountants, to prepare the D.R.A.W. Report. The D.R.A.W. Report calculated that the plaintiffs were indebted to the defendants in the amount of $116,168.55.

30. [70]

    The Legal Profession Reform Act 1993 No. 87 introduced, with effect from 1 July 1994, a system of assessment of costs by legal practitioners appointed by the Chief Justice to be costs assessors, to replace the system of taxation of costs, which involved the delivery of bills of costs, notification of objections and taxing of the bills by an officer of the court. The Legal Profession Reform Act 1993 No. 87 effected this and other amendments concerning legal costs by repealing and substituting the Legal Profession Act 1987, Part 11. As explained below, in July 1996 the Court made orders in the Proceeding as a consequence of the introduction of the system of assessment of costs from 1 July 1994.

31. [71]

    At the same time, that is, 1 July 1994, the Legal Profession Regulation 1994 commenced. Part 9 Division 3, inter alia, contained transitional provisions associated with the replacement of the system of taxation of costs with a system of assessment of costs.

32. [72]

    Relevantly, clause 38(3) in Legal Profession Regulation 1994, Part 9, Division 3 stated:

33. [73]

    On 14 October 1994, Hulme J amended the Hulme J June 1994 Orders in relation to the taking of accounts (“Hulme J October 1994 Orders”).

34. [74]

    On about 15 November 1994, the plaintiffs informed the defendants that the Plaintiffs no longer pursued the reference before the Hon. Needham QC for taking of accounts by a letter dated 15 November 1994, from Mr Torrence Edward Kitamura, solicitor of Osborne Kitamura Lawyers (“Kitamura”), the then solicitor for the plaintiffs in the Proceeding, to the Firm (“Kitamura/the Firm 15 November 1994 Letter”).

35. [75]

    The Kitamura/the Firm letter dated 15 November 1994 letter read, in part, as follows:

36. [76]

    The plaintiffs contended, and the defendants disputed, that the agreed narrative should at this point include words to the following effect “The Kitamura letter expressly states that the plaintiffs’ accountants have been able to reconcile payments made by the plaintiffs to the Firm only”. But the Court declines to include these words in the findings as the Kitamura/Firm 15 November 1994 letter speaks for itself.

37. [77]

    As a consequence of the matters stated in the Kitamura/Firm 15 November 1994 Letter, at a practical level, the taking of accounts and reference before the Hon. D. Needham QC was at an end, although the orders revoking the reference were not made until mid-1996.

38. [78]

    On or about 6 December 1994, Kitamura served on the Firm Objections to 15 of the 16 Bills. The Objections, which were 133 pages in length, challenged or put in issue the retainer on which the Firm relied: see, for example, pages 2, 3, 19 and 27 of the Objections.

39. [79]

    On 28 February 1995:

    1. (1)

       there was a hearing before Hulme J;

    2. (2)

       Hulme J delivered reasons for judgment (“Hulme J February 1995 Judgment”);

    3. (3)

       Hulme J made orders to give effect to the Hulme J February 1995 Judgment (“Hulme J February 1995 Orders”).

40. [80]

    The Hulme J February 1995 Orders were:

41. [81]

    The Hulme J February 1995 Orders were made in the context of the Hulme J February 1995 Judgment. At the commencement of the Hulme J February 1995 Judgment, Hulme J stated:

42. [82]

    In relation to the first two orders in the Summons (delivery of Bills and referral of them for taxation), Hulme J stated:

43. [83]

    In respect of prayer 3 in the Summons (delivery up of certain of the plaintiff’s Documents), Hulme J stated that he had dealt with this in the hearing on 9 November 1993:

44. [84]

    In relation to prayer 4 of the Summons (taking of accounts), Hulme J stated:

45. [85]

    In relation to Hulme J’s statement that “the plaintiffs were conceding that the defendants’ claim for some $97,000 was ... correct”, Mr Preston’s position is that he did not make, and never made, such a concession. Mr Preston’s position then and now is that he is not liable for the monies claimed by the defendants. The defendants dispute Mr Preston’s denial. This issue is dealt with later in these reasons.

46. [86]

    Finally, Hulme J stated:

47. [87]

    One of the questions which Barrett J had to consider, which was the subject of the hearing before his Honour in December 2009, and formed part of the Barrett J March 2010 Judgment, was:

48. [88]

    In order to determine this question his Honour reviewed, and considered in detail, the history of the Proceeding from its commencement until the making of the Hulme J February 1995 Orders. In the Barrett J March 2010 Judgment, his Honour considered and interpreted the effect of the:

49. [89]

    In relation to Barrett J’s reference at [59] to a concession made by the plaintiffs, Mr Preston’s position is that he never made such a concession. In relation to Barrett J’s statement at [60] that “the plaintiffs were to pay a stated sum to the defendants”, Mr Preston disagrees that he had to pay a stated sum to the defendants. Mr Preston’s position then and now is that he is not liable for the monies claimed by the defendants. The defendants disagree with Mr Preston’s position. This disagreement reflects with one of the issues in the proceedings, an issue dealt with in the reasons below.

50. [90]

    Also, following the hearing in the Proceeding on 25 and 26 August 2011 before Black J, his Honour delivered reasons for judgment on 13 September 2011 (“Black J September 2011 Judgment”). Black J stated at [12]:

51. [91]

    On or about 18 April 1995, Kitamura served on the Firm the plaintiffs’ Objection to the defendants’ Bill in the Strong Brown Matter and, as a consequence, the plaintiffs had now served the plaintiffs’ Objections to all of the defendants’ 16 Bills.

52. [92]

    As stated above, on or about 6 December 1994, Kitamura served on the Firm Objections to 15 of the 16 Bills. Apart from service by Kitamura of the final Objection or about 18 April 1995, throughout 1995 and early 1996 neither the plaintiffs nor the defendants took steps to progress the taxation of the 16 Bills.

53. [93]

    On 22 March 1996, the Firm on behalf of the defendants wrote a letter to the Taxing Officer of the Court to formally ask that the taxation of the file be undertaken by the Supreme Court, in circumstances where the plaintiffs had “raised an issue as to the retainer” (which issue was raised in the Objections served by the plaintiffs on the defendants in December 1994). The Firm’s letter continued:

54. [94]

    As part of the Hulme J December 1993 Orders, Hulme J ordered:

55. [95]

    After the Hulme J February 1995 Orders were made, the plaintiffs took steps to have these costs order and some other costs orders in their favour assessed. On 16 February 1996, the plaintiffs served a bill of costs on the defendants as a step towards having their costs assessed.

56. [96]

    On 14 March 1996, the defendants filed a notice of motion (“Defendants’ March 1996 Motion”) in the Proceeding seeking an order:

57. [97]

    The language used by the defendants in this notice of motion reflected the fact that, in respect of the defendants’ bills of costs, orders had been made for the bills to be taxed under a system of taxation which existed up until 30 June 1994, while the plaintiffs’ application for assessment of some interlocutory costs orders in their favour was made under the system of assessment which commenced on 1 July 1994.

58. [98]

    The third defendant, Mr Michael Zwar swore an affidavit on 13 March 1996 in support of the defendants’ March 1996 Motion (“Zwar March 1996 Affidavit”).

59. [99]

    The Zwar March 1996 Affidavit indicated that the defendants sought an order that the plaintiffs’ assessment of some interlocutory costs orders in their favour “be consolidated” with the taxation of the 16 Bills and be “dealt with before a taxing master”.

60. [100]

    The Zwar March 1996 Affidavit, inter alia, stated:

61. [101]

    On 3 May 1996 Kitamura swore an affidavit in relation to the Defendants’ March 1996 Motion. He stated, inter alia:

62. [102]

    On 17 May 1996, Mr Zwar swore a further affidavit in support of the Defendants’ March 1996 Motion (“Zwar 17 May 1996 Affidavit”). Mr Zwar stated, inter alia:

63. [103]

    In May 1996, Mr Leonard Hattersley, solicitor, the assessor who had been appointed to conduct the assessment of the plaintiffs’ costs awarded in the Proceeding in the plaintiffs’ favour, up to 28 February 1995, when the Hulme J February 1995 Order was made, sent written communications to the parties stating he was proceeding with the assessment.

64. [104]

    On 10 May 1996, Mr Hattersley wrote a letter to the Firm stating:

65. [105]

    As at May 1996, Mr Hattersley was a “costs assessor” within the meaning of section 173(1) of the 1987 LPA, namely:

66. [106]

    To be a costs assessor, Mr Hattersley had to be appointed a costs assessor by the then Chief Justice of the Supreme Court of New South Wales.

67. [107]

    On 30 May 1996, the defendants filed and served a notice of motion in the Proceeding seeking an order that Mr Hattersley “be restrained until further order from conducting any further assessment in connection with the Bill of Costs delivered by the first and second respondents [plaintiffs] dated 13 March 1996.” The Motion was returnable before Hulme J on 31 May 1996.

68. [108]

    In the meantime, on 31 May 1996, Mr Hattersley informed the defendants’ solicitor that he had completed the assessment and he issued a certificate of determination in respect of his assessment.

69. [109]

    Around 4 June 1996 the defendants served an amended notice of motion (“Defendants’ Amended May 1996 Motion”) seeking an order that “the enforcement of any judgment taken out by the applicants [plaintiffs] be stayed until further order of the taxation of the respondents’ bills of costs delivered to the applicant in December 1993 and January 1994 be concluded”.

70. [110]

    In support of the Defendants’ Amended May 1996 Motion, Mr Zwar swore an affidavit dated 31 May 1996 (“Zwar May 1996 Affidavit”).

71. [111]

    The parties filed and served further affidavits in relation to the Defendants’ Amended May 1996 Motion, including the following affidavits:

72. [112]

    The Defendants’ Amended May 1996 Motion came before Young J as duty judge for hearing on 25 July 1996. After a contested hearing, Young J:

73. [113]

    In the Young J July 1996 Judgment, his Honour stated:

74. [114]

    Young J’s reasons for judgment concerning this issue were given effect to by order 3 of the Young J July 1996 Orders, namely:

75. [115]

    Young J made order 3 of the Young J July 1996 Orders in the context of the 1987 LPA, s 206(1), which provided:

76. [116]

    Young J directed “the proper officer of the court” to refer the 16 Bills for assessment pursuant to section 206 of the 1987 LPA to Mr Hattersley as Mr Hattersley was:

77. [117]

    The Young J July 1996 Judgment also dealt with the issue of the terms of the retainer between the plaintiffs and the defendants which had arisen by this time, as referred to in the Zwar March 1996 Affidavit, amongst others, in the following terms:

78. [118]

    Young J gave effect to this in orders 4, 5 and 6 of the Young J July 1996 Orders which provided:

79. [119]

    Thus, the issue of the question of the terms of the defendants’ retainer by the plaintiffs was referred to Mr Hattersley, not as a costs assessor under the then new Part 11 of the 1987 LPA, but as a referee under Supreme Court Rules 1970, Part 72 rule 8.

80. [120]

    Young J also granted the defendants the restraining order they sought. Order 1 of the Young J July 1996 Orders was:

81. [121]

    It only became apparent, when dealing with the Court after the Young J July 1996 Orders were made, that the Court required the:

82. [122]

    As a consequence, Mr Zwar, on behalf of the defendants, had to take steps to amend the defendants’ Bills in the 16 matters so that they conformed with Mr Zwar’s understanding of the procedural requirements for assessment of costs under the 1987 LPA, as amended.

83. [123]

    This occurred in two tranches:

84. [124]

    Mr Zwar, on behalf of the defendants, ascertained that the assessment procedures in the 1987 LPA required a separate costs assessment proceeding to be commenced by way of an application for assessment of costs (“Applications”) for the Bills in each of the 16 matters.

85. [125]

    At the very end of October 1996 or on 1 November 1996, Mr Zwar, on behalf of the defendants, prepared Bills in 10 of the 16 matters as follows:

86. [126]

    On 1 November 1996, the defendants attended and filed with the Registry of the Court the defendants’ Bills in 10 of the 16 matters identified in Table 2 below, in respect of which the defendants paid the applicable filing fee and a separate costs assessment file number was entered by the Registry of the Court in respect of each of the 10 matters, as identified in Table 2:

87. [127]

    On or about 6 November 1996, the Registry of the Court served sealed copies of the Applications, together with the attached Bills, in 10 of the 16 matters filed by the defendants on 1 November 1996.

88. [128]

    On 11 December 1996, the plaintiffs filed Objections to the Bills attached to the Applications in 10 of the 16 matters filed by the plaintiffs with the Registry of the Court on 1 November 1996.

89. [129]

    By 14 January 1997, in circumstances where the Defendants had not filed a response to the Objections within the requisite 21 day period, Ms Lena Ruggero, Proper Officer, Costs Assessment of the Court referred to Mr Hattersley for costs assessment the Applications, together with the attached Bills and Objections, 10 of the 16 matters in respect of the Applications filed by the Defendants on 1 November 1996.

90. [130]

    On 20 January 1997, the defendants’ solicitor attended the Registry of the Court and filed the Applications, together with the attached Bills, in the remaining 6 of the 16 matters, identified in Table 3 below:

91. [131]

    On 21 January 1997, Ms Ruggero notified the plaintiffs, and provided to them sealed copies of, the defendants’ applications, with the attached Bills, in respect of the remaining 6 of the 16 matters, which the defendants had filed in the Court Registry on 20 January 1997 and informed the plaintiffs that they had 21 days from receipt of such notice to file any Objections to such Bills.

92. [132]

    On 17 February 1997, the plaintiffs filed Objections with the Court Registry in respect of the Bills in the remaining 6 of the 16 matters.

93. [133]

    In about late March 1997, the defendants, not having filed any response to the plaintiffs’ Objections to the Bills in the remaining 6 of the 16 matters, these six Applications, with the attached Bills and Objections, were referred to Mr Hattersley for costs assessment.

94. [134]

    In the Objections filed by the plaintiffs to the Bills attached to the Applications in:

95. [135]

    From the time of the referral of the 16 Applications together with the attached Bills and Objections, in respect of the 16 matters, to Mr Hattersley for costs assessment, no steps were taken in relation to the quantification of the defendants’ costs in respect of the Bills in the 16 matters until after 11 May 2010.

96. [136]

    There was a very live issue between the plaintiffs and the defendants in relation to the question of the defendants’ retainer by the plaintiffs. In the period from 27 February 1998 to 22 October 1998, there were a series of written communications between Mr Hattersley and the legal representatives for the parties on the question of the retainer. In a letter from Mr Hattersley to the legal representative for the plaintiffs dated 27 February 1998, Mr Hattersley stated that, during an inspection of some files at the offices of the Firm, he had come across a copy of a letter dated 19 April 1984 which appeared to assist the defendants’ position on the dispute between the parties concerning the retainer (“19 April 1984 Letter”). Mr Hattersley suggested in his letter that, subject to receiving submissions from the parties in relation to the 19 April 1984 Letter, he was “in the position where I will be able to conclude each assessment and to issue a Certificate of Determination as to Costs in each matter”.

97. [137]

    In his letters dated 6 April 1998 to the legal representatives for the parties, Mr Hattersley observed that the process undertaken by a costs assessor was “totally paper driven” and that there were “no avenues available for me [Mr Hattersley] to hear and see any witnesses giving evidence scrutinised and tested through cross‑examination”. Mr Hattersley then wrote:

98. [138]

    On 4 November 1998, Mr Nikolaidis swore an affidavit in the Proceeding (“Mr Nikolaidis’ November 1998 Affidavit”).

99. [139]

    Mr Nikolaidis’ November 1998 Affidavit annexed a letter dated 12 June 1998 from the Firm to Mr Hattersley which, inter alia, stated:

100. [140]

     Mr Nikolaidis’ November 1998 Affidavit annexed a further letter dated 21 October 1998, from Mr Hattersley the plaintiffs’ then solicitors, Wheelers, copied to the Firm for the defendants. In this letter, Mr Hattersley referred to various correspondence from Wheelers between 24 June and 28 August 1998, and then, inter alia, stated:

101. [141]

     The Proceeding was listed before Young J on 5 November 1998, at which time, inter alia, Mr Nikolaidis’ November 1998 Affidavit was read.

102. [142]

     As a consequence of the difficulties which Mr Hattersley faced, on 5 November 1998, Young J ordered (“Young J November 1998 Orders”) that:

103. [143]

     As part of the Young J November 1998 Orders, Young J:

104. [144]

     The Proceeding came back before Young J on 18 February 1999. His Honour extended the timetable set on 5 November 1998 with respect to determination of the terms of the retainer so that the deadline for the final step was 7 June 1999 and the matter was to come back to court for mention on 17 June 1999. On that date, the timetable was extended to a date in September 1999 and the Proceeding was stood over to 27 September 1999 for mention. There was yet another extension of the timetable so that the last step was due to be taken by 6 December 1999 and the matter was to come back to court on 13 December 1999.

105. [145]

     There were also a number of affidavits filed in the Proceeding in relation to the question of retainer, including the affidavits of:

106. [146]

     On 26 July 2000, Mr Preston filed a notice of motion seeking leave to amend the Summons. The proposed amendments appeared from a form of amended summons annexed to the notice of motion which, in the usual way, showed the amendments by underlining. There were three proposed amendments, namely, the addition of eleven new plaintiffs (as third to thirteenth plaintiffs), the addition of Mr Zwar as a defendant and the addition of a prayer for an order “that any sums found, by virtue of the taxation and accounts referred to herein, to have been overpaid by any or all of the plaintiffs to the defendants be repaid”.

107. [147]

     The amendment application was heard and determined by Master McLaughlin on 25 August 2000. After referring to the parties and the relief sought by the Summons as originally filed, the Master said:

108. [148]

     In the meantime, progress concerning the parties’ dispute in relation to the terms of the retainer was slow. On 11 April 2001, Bryson J stated in reasons for judgment of that date:

109. [149]

     Following the case management of the Proceeding undertaken by Bryson J, on 25 June 2001, Windeyer J made orders in the Proceeding in relation to the determination of the question of the retainer as follows (“Windeyer June 2001 Orders”):

110. [150]

     The last step in the Windeyer/June 2001 Orders was to occur by 20 August 2001.

111. [151]

     Amended points of claim were filed on 13 July 2001. Amended points of defence were filed on 16 August 2001. On 27 August 2001, Windeyer J directed that the matter be placed in the next Registrar’s call over on 12 September 2001 for the appointment of a hearing of two to three days. On 14 November 2001, the Registrar fixed the proceedings for hearing by Santow J on 29 April 2002 with an estimate of two days. That fixture was afterwards vacated.

112. [152]

     On 15 April 2002, pursuant to leave granted by Gzell J, the plaintiffs filed further amended points of claim (“April 2002 Points of Claim”) in relation to the retainer issue, which contained allegations of fraud by Mr Nikolaidis, including allegations of fraud in relation to the 19 April 1984 Letter.

113. [153]

     On 14 June 2002, there were further directions concerning examination of the carbon copy letter by forensic experts. There were similar directions on later occasions.

114. [154]

     A hearing of the question of the terms of the retainer was fixed for 17 and 21 February 2003.

115. [155]

     By November 2002, Mr Nikolaidis had been charged with a single count under the Crimes Act, s 300(1) of making a false instrument, namely, the carbon copy of the 19 April 1984 Letter, with the intention of using it to induce another person, namely, Mr Hattersley, to accept it as genuine and because of that acceptance to do some act to the prejudice of Mr Preston.

116. [156]

     On 21 November 2002, orders were made in the Proceeding that the:

117. [157]

     On 11 December 2003, the stay order was varied so as to cause the stay to operate until 27 February 2004. The stay was later extended to 7 December 2004 and subsequently to 1 March 2005. While Mr Nikolaidis criminal proceedings and the appeal were in progress, the Proceeding remained in abeyance. It is not clear that any stay was in place beyond 1 March 2005.

118. [158]

     Mr Nikolaidis stood trial in the District Court in late 2007 and was convicted on a single count under Crimes Act, s 300(1) of making a false instrument with the intention of using it to induce another person to accept it as genuine and because of that acceptance to do some act to the prejudice of Mr Preston. Mr Nikolaidis was sentenced to a term of imprisonment. The sentencing remarks of Judge Knox SC appear in a written judgment of the District Court in its criminal jurisdiction dated 23 November 2007 (the defendants dispute that this sentence should be included in the agreed narrative but it is factually correct and is not a matter that is in serious dispute and therefore has been included here). An appeal against both conviction and sentence was dismissed on 17 December 2008: Nikolaidis v R [2008] NSWCCA 323. Thereupon, Mr Nikolaidis was incarcerated and was released from imprisonment in December 2009.

119. [159]

     In the meantime, the Law Society of NSW appointed a special investigator, Mr Hawthorn. On 27 January 2004 Mr Preston, with the assistance of Mr Hawthorn, swore an affidavit. The parties are in dispute as to whether any of the contents of this affidavit (or even the heading to this paragraph) should be included in the joint narrative. But the Court does not have to resolve this dispute as the contents of the affidavit are not relevant to the issues for determination, and are not included here.

120. [160]

     On 12 May 2009, Bergin CJ in Eq ordered that:

121. [161]

     On 12 May 2009, Bergin CJ also made the following orders:

122. [162]

     Pursuant to order 4 of the orders made by Bergin CJ in Eq, albeit late, on 12 May 2009, on 19 June 2009, the plaintiffs filed with the Court a Statement of Claim in the Proceeding in which the plaintiff made allegations of fraud against Mr Nikolaidis (“Plaintiffs’ June 2009 Statement of Claim”).

123. [163]

     On 2 October 2009, the defendants filed with the Court a motion to dismiss the Proceeding (“Defendants’ October 2009 Motion”).

124. [164]

     The Defendants’ October 2009 Motion was heard before Barrett J in December 2009 and is the controversy which is the subject of the Barrett J March 2010 Judgment.

125. [165]

     On 2 March 2010, Barrett J made orders, including the following in relation to the Defendants’ October 2009 Motion:

126. [166]

     Barrett J stated:

127. [167]

     Barrett J stated that in the April 2002 Points of Claim, the claim for declaratory relief (prayer 2) in the April 2002 Points of Claim as to:

128. [168]

     A few paragraphs earlier in the Barrett J March 2010 Judgment, his Honour stated (at [72]):

129. [169]

     On 30 March 2010, the plaintiffs filed with the Court a notice of motion (“Plaintiffs’ March 2010 Motion”) seeking leave to file a proposed Statement of Claim, which made further allegations of fraud in relation to the 19 April 1984 Letter and retainer issue against Mr Nikolaidis (“Plaintiffs’ Proposed March 2010 Statement of Claim”).

130. [170]

     On 11 May 2010, Barrett J:

131. [171]

     On 11 May 2010, Barrett J also made orders including an order, pursuant to Civil Procedure Act 2005, ss 64(1)(b) and 65(2)(b), granting leave to the plaintiff to amend the summons filed on 24 August 1993 by adding Michael John Zwar as a defendant: Preston v Nikolaidis [2010] NSWSC 427.

132. [172]

     On 4 June 2010 the plaintiffs caused an Amended Statement of Claim to be filed, which added Mr Zwar as a defendant.

133. [173]

     On 28 May 2010, Rein J made orders (“Rein J May 2010 Orders”) that:

134. [174]

     The plaintiff filed a Further Amended Statement of Claim which made allegations of fraud by Mr Nikolaidis and sought relief precluded by the Barrett J March 2010 Judgment.

135. [175]

     The defendants indicated that they would file a notice of motion to strike out this Further Amended Statement of Claim filed by the plaintiffs.

136. [176]

     On 6 July 2010, Rein J made orders (“Rein J 6 July 2010 Orders”), inter alia:

137. [177]

     Rein J made orders, inter alia:

138. [178]

     The hearing date of the defendants’ motion was refixed for 1 October 2010. On 1 October 2010, Mr Preston accepted that the Further Amended Statement of Claim filed in June 2010 could not be proceeded with and had to be struck out as it was contrary to the determinations made by Barrett J in the Barrett J March 2010 Judgment.

139. [179]

     Accordingly, consent orders were made by Rein J on 1 October 2010 (“Rein J October 2010 Orders”) striking out the Further Amended Statement of Claim filed by Mr Preston in June 2010.

140. [180]

     On 21 October 2010, Mr Preston’s solicitor wrote to the defendants’ solicitor and in that letter, inter alia, stated:

141. [181]

     On 4 November 2010, the defendants’ solicitor replied to this letter and relevantly stated:

142. [182]

     From October 2010 until April 2011, directions were made, including for the filing of evidence, in relation to preparation for hearing of the Plaintiffs’ April 2002 Points of Claim.

143. [183]

     On 9 May 2011, Bergin CJ in Eq:

144. [184]

     On 31 May 2011, Bergin CJ in Eq made an order vacating the 24 August 2011 hearing date.

145. [185]

     Black J stated:

146. [186]

     On 12 August 2011, conformable, albeit late, the parties engaged in a mediation before the Honourable Lawrence Whistler Street QC (“the Street Mediation”).

147. [187]

     At the Street Mediation, the plaintiffs and the defendants entered into a written agreement in relation to the hourly rates to apply to the costs assessment of the Bills (“the Street Mediation Agreement”).

148. [188]

     On 25 and 26 August 2011, the hearing before Black J occurred (“Black J September 2011 Hearing”) at which the plaintiffs:

149. [189]

     On 13 September 2011, Black J delivered the Black J September 2011 Judgment in respect of the Preston Liability issue.

150. [190]

     In the Black J September 2011 Judgment at [34], his Honour stated:

151. [191]

     On 16 September 2011, Black J made orders to give effect to his Honour’s decision in the Black J September 2011 Judgment (“Black J September 2011 Orders”).

152. [192]

     The Black J September 2011 Orders, inter alia, gave effect to the Street Mediation Agreement in the following terms:

153. [193]

     The Black J September 2011 Orders also referred the Bills in the 16 matters for assessment to an accredited costs assessor in the following terms:

154. [194]

     The Black J September 2011 Orders do not refer to Mr Hattersley. According to the records of the Law Society of New South Wales, Mr Hattersley’s current Australian practising certificate granted by the Law Society of New South Wales expired on 30 June 2007. Mr Hattersley ceased to be an accredited costs assessor either under the provisions of the 1987 LPA or the Legal Profession Act 2004 (NSW).

155. [195]

     Once Mr Hattersley ceased to hold a current Australian practising certificate, Mr Hattersley ceased to be eligible to be a costs assessor.

156. [196]

     The Chief Justice of New South Wales did not reappoint Mr Hattersley as a costs assessor from 1 October 2005. It is currently the usual practice for the Chief Justice of New South Wales to consent to costs assessors who are not to be reappointed to be permitted to finalise outstanding costs assessments. It is not known if this occurred with respect to Mr Hattersley. Thus, Mr Hattersley ceased to be a costs assessor, at the earliest, on 1 October 2005 and, at the latest, on 30 June 2007, when Mr Hattersley ceased to hold a current Australian practising certificate.

157. [197]

     On 15 December 2011, Mr Preston made an application, by Summons, seeking leave to appeal to the New South Wales Court of Appeal (“NSWCA”) (“Mr Preston’s Amended Leave to Appeal Summons”) in relation to:

158. [198]

     The findings in the Black J September 2011 Judgment at [44]‑[45] concern whether the claims by Mr Preston concerning fraud and that he had already paid for some work in the bills of costs could be referred to a referee and, if not, whether Mr Preston could raise the issues before the relevant costs assessor.

159. [199]

     On 30 January 2012, Mr Preston, as applicant, filed in the NSWCA a notice of motion, in which Mr Preston sought orders that the defendants make available to uplift and inspect, by a document examiner engaged by Mr Preston, certain original documents of the Firm (“Mr Preston’s January 2012 Motion”).

160. [200]

     On 12 March 2012, Mr Preston’s January 2012 Motion was heard by the NSWCA and Whealey JA:

161. [201]

     On 21 June 2012, the NSWCA heard and determined Mr Preston’s Amended Leave to Appeal Summons and MacFarlan JA (Meagher JA concurring):

162. [202]

     Following the dismissal of the Mr Preston’s Amended Leave to Appeal Summons, the question of the retainer of the defendants by the plaintiffs was finally determined:

163. [203]

     Thus, on 22 June 2012, the next step to progress resolution of the dispute between the parties was to give effect to order 3 of the Young J July 1996 Orders, namely:

164. [204]

     On 13 August 2012 the plaintiffs’ solicitor sent an email to the then Manager, Costs Assessment asking the Manager, in light of the Black J September 2011 Orders, to “refer to an accredited costs assessor the defendants’ bills of costs for assessment as soon as possible”. The Manager, Costs Assessment replied:

165. [205]

     In the period 1 September 2012 to 16 May 2013, the defendants unsuccessfully sought to have the Court locate the Applications, with the attached Bills and Objections thereto, in relation to the 16 matters filed in the period 1 November 1996 to 20 February 1997.

166. [206]

     On 17 May 2013, in circumstances where the Applications, attached Bills and Objections in relation to the 16 matters filed in the period 1 November 1996 to 20 February 1997, could not be located by the Court and neither the plaintiffs nor the defendants had filed copies of all of these documents, Young AJ made orders for the parties to agree on what constituted these documents or for this matter to be determined by the Court (“Young AJ May 2013 Orders”).

167. [207]

     Orders 1 to 3 of the Young AJ May 2013 Orders provided:

168. [208]

     The parties took steps to give effect to the Young AJ May 2013 Orders but were unable to agree upon the form of the documents which constituted the Applications, attached Bills and Objections in relation to the 16 matters filed in the period 1 November 1996 to 20 February 1997.

169. [209]

     In these circumstances, by consent, on 19 July 2013, Robb J made orders (“Robb July 2013 Orders”), inter alia:

170. [210]

     On 6 December 2013, Registrar Hedge, who replaced Registrar Howard as the Manager, Costs Assessment, informed counsel for the defendants that the Court’s computer system recorded “not proceeded with” in relation to the Applications, attached Bills and Objections in relation to the 16 matters filed in the period 1 November 1996 to 20 February 1997. The State Archive Guidelines is to keep costs assessment files for 7 years after the last action and then destroy them. In the circumstances of the recording in the computer system the very strong likelihood is that the original files had been destroyed.

171. [211]

     Also, Darke J, following the directions hearing on 6 December 2013, had all of the files in the Proceeding made available for inspection, which now constituted three boxes of files. The defendants’ legal representatives inspected those boxes on 9 December 2013 and ascertained that none of the original or copies of the Bills and Objections filed in the period 1 November 1996 to 20 February 1997 were on the Court file.

172. [212]

     The hearing to determine what were the Bills and Objections filed in the period 1 November 1996 to 20 February 1997, had been fixed before Darke J on 16 December 2013.

173. [213]

     On 10 December 2013, Darke J made orders, inter alia, to:

     1. (1)

        vacate the hearing date of 16 December 2013;

     2. (2)

        list the Proceeding for hearing on 13 February 2014, together with directions for service of evidence and written submissions.

174. [214]

     In preparation for the hearing on 13 February 2014, the defendants undertook searches and inquiries for further documents and, as a consequence of further documents becoming available, Mr Zwar swore the Zwar February 2014 Affidavit, which was served on the plaintiffs on that day.

175. [215]

     The Zwar February 2014 Affidavit amended the Zwar February 2013 Affidavit and provided more complete evidence as to what constituted the Applications, attached Bills and Objections in relation to the 16 matters filed in the period 1 November 1996 to 20 February 1997. Exhibited to the Zwar February 2014 Affidavit were: MJZ‑3 (pages 1-216); MJZ‑4 (pages 1-750); MJZ‑5 (pages 1-270); and MJZ‑6 (pages 1-107).

176. [216]

     On 12 February 2014, the defendants served on the plaintiffs an A4 ring binder folder titled “Amended Folder” which comprised 16 tabs and 45 pages, which the defendants contended comprised copies of the Applications, attached Bills and Objections in relation to the 16 matters filed in the period 1 November 1996 to 20 February 1997.

177. [217]

     On 13 February 2014, following receipt by the plaintiffs of the Zwar February 2014 Affidavit and the “Amended Folder”, the matter for hearing before Darke J on 13 February 2014, namely order 3 of the Young AJ May 2013 Orders, was resolved by the parties agreeing that the documents in the “Amended Folder” served by the defendants upon the plaintiffs on 12 February 2014 contained copies of the Applications, attached Bills and Objections thereto, filed in the 16 matters in the period 1 November 1996 to 20 February 1997. As a consequence, the parties agreed to consent orders in relation to order 3 of the Young AJ May 2013 Orders.

178. [218]

     The defendants tendered the “Amended Folder” subject to the agreement which was marked by Darke J as “Exhibit A”.

179. [219]

     On 13 February 2014, Darke J made orders to give effect to the agreement reached between the parties and for amended Bills to be prepared which gave effect to the hourly rates the subject of the Street Mediation Agreement given effect to in order 1 of the Black J September 2011 Orders (“Darke J February 2014 Orders”).

180. [220]

     The Darke J February 2014 Orders provided that:

181. [221]

     The Court made Orders 2 to 8:

182. [222]

     It took the parties from 14 February 2014 to 11 November 2014 to complete the steps contained in orders 3 to 6 of the Darke J February 2014 Orders so as to have a set of Annotated Bills prepared which the parties agreed gave effect to the terms of the Street Mediation Agreement the subject of order 1 of the Black J September 2011 Orders.

183. [223]

     On 14 August 2014, the plaintiffs served on the defendants their Statement of Issues with the plaintiffs’ position in summary form in respect of each issue in compliance with order 7 of the Darke J February 2014 Orders (“Mr Preston’s August 2014 Statement of Issues”).

184. [224]

     The Mr Preston’s August 2014 Statement of Issues raised the following matters:

185. [225]

     On 13 November 2014, Registrar Musgrave ordered that Mr Preston serve on the defendants any Amended Statement of Issues pursuant to order 7 of the Darke J February 2014 Orders by 27 November 2014.

186. [226]

     On 10 December 2014, albeit out of time, Mr Preston served on the defendants his Amended Statement of Issues (“Mr Preston’s December 2014 Amended Statement of Issues”).

187. [227]

     Mr Preston’s December 2014 Amended Statement of Issues, inter alia, provided:

188. [228]

     On 12 December 2014, Registrar Musgrave, inter alia, ordered that any notice of motion by Mr Preston relating to Mr Preston’s December 2014 Amended Limitation Issues involving sections 14 and 63 of the Limitation Act be filed and made returnable on 30 January 2015.

189. [229]

     On 26 February 2015, albeit out of time, Mr Preston served his notice of motion filed on that day (“Mr Preston’s February 2015 Motion”).

190. [230]

     Order 1 in the Mr Preston’s February 2015 Motion sought an order that:

191. [231]

     On 4 March 2015, Registrar Musgrave made orders, inter alia, that by 20 March 2015 Mr Preston serve points of claim in relation to the Preston Limitation Issue.

192. [232]

     On 23 March 2015, Mr Preston filed Points of Claim in relation to the Preston Limitation Issue (“Mr Preston’s Points of Claim”).

193. [233]

     On or about 2 June 2015, the defendants filed Points of Defence to Mr Preston’s Points of Claim (“Defendants’ Points of Defence”).

194. [234]

     On 17 June 2015, Registrar Walton fixed paragraph 1 of the Preston February 2015 Motion for hearing from Monday 26 October 2015 to Wednesday 28 October 2015, together with other pre-trial directions.

195. [235]

     The hearing of the February 2015 Motion commenced on 26 October 2015 and continued until 28 October 2015, after which a series of directions were made for further procedural steps to be taken, further investigations to be pursued, and further submissions to be made. These various matters were attended to between October 2015 and October 2016.

196. [236]

     During the hearing the Court raised with the parties that it was inapt for the Motion before the Court to claim final relief such as the declaration being sought under Supreme Court Act, s 75. Rather than give leave to amend the February 2015 Motion in the 1993 proceedings, the scope of which proceedings were in contest, the Court decided to give directions to turn the February 2015 Motion into fresh proceedings. In consequence, on 28 October 2015, the Court made the following orders:

197. [237]

     Pursuant to the 28 October 2015 orders, the plaintiffs filed on 11 November 2015 a Summons which created the proceedings number 2015/331795, the 2015 proceedings. On 3 December 2015, the Court made orders that proceedings 2015/331795 be heard together with the proceedings number 1993/23395, the 1993 proceedings, and that evidence in one be evidence in the other.

Analysis of the Legal Issues

1. [238]

   The following legal issues arise out of the agreed narrative:

   1. (1)

      Has the Firm commenced an action for its professional costs?

   2. (2)

      The character of the 1993 proceedings?

   3. (3)

      Election, Waiver and Estoppel, Abuse of process and Inherent Jurisdiction

   4. (4)

      Ancillary issues.

2. [239]

   These reasons now deal with each of these issues in turn.

3. [240]

   The applicable limitation period for commencing action for breach of contract is six years: Limitation Act, s 14(1)(a). Any applicable cause of action in contract upon the Firm’s retainer and the bills of costs accrued in or about October 1992. Expiry of the limitation period would extinguish the defendants’ title to the cause of action (Limitation Act, s 63(1)), unless the defendants had commenced action before the expiry of that period (Limitation Act, s 63(2)).

4. [241]

   The primary issue for consideration is whether, before the expiration of the applicable limitation period, “an action [was] brought on the cause of action” so that the expiration period “does not affect the right or title of the plaintiff to the debt damages or other money”: Limitation Act, s 63(2).

5. [242]

   The Firm contends such an action was brought. But the Preston interests contend that no action was brought. This section sets out the parties’ respective contentions and considers this issue.

6. [243]

   The Firm argues that no limitation issue now arises. The Firm submits that the existing proceedings sustain their claim upon the bills of costs, which were commenced within time. After the Hulme J February 1995 Judgment, and the Hulme J 1995 Orders, the Firm submits only one issue remained to be determined in the proceedings: the quantification of the account between the plaintiffs and the defendants. The Firm submits that the Young J July 1996 Orders, referring the bills of costs out for costs assessment, were made in that context: namely, the quantification of the amount that the Preston interests owed to the Firm on the final state of the account between the parties, as would ultimately be found by the Court.

7. [244]

   The Firm elaborated upon this argument. The defendants submitted that through the Young J July 1996 Orders the disputed question of the Firm’s retainer was referred to the costs assessor, Mr Hattersley, for inquiry and report under Supreme Court Rules, Pt 72, r 8, so that issue would be determined in the proceedings as part of the quantification of the state of the account between the Firm and the Preston interests.

8. [245]

   The defendants argue that the referral of these several bills of costs out to costs assessment and then the subsequent remission of the issue of the terms of the retainer back to the Court, followed by the Black J September 2011 Orders, giving effect to the Mediation Agreement about the hourly rates, were all directed to the quantification of the account between the plaintiffs and the defendants. The Firm submits that by this quantification, the Court would determine how much the Preston interests owed to the Firm.

9. [246]

   The Firm submits that the Proceeding as constituted by the Summons and the reasons for judgment, commencing with the Hulme J November 1993 Judgment and proceeding through to the Black J September 2011 Judgment (and associated orders) have all been conducted on the basis that the justiciable controversy in the proceedings has been to determine the state of the account between the Preston interests and the Firm.

10. [247]

    The Firm submits that following the Preston interests considering in the second half of 1994 the accounting report commissioned by Armstrong Wiley & Co, there was no need to determine the state of the account, or for any accounting. The Firm submits that it was agreed instead that the plaintiffs were liable to the defendants in an amount of $97,000, subject to the precise quantification of that liability by the referral to taxation or costs assessment, which it was subsequently agreed would be undertaken on the basis of the hourly rates being applied to the 16 matters agreed through the Mediation Agreement.

11. [248]

    The Firm contends that given the above matters, together with the application of the principles of res judicata or issue estoppel to the prior judgments in the proceedings, the action to state the account between solicitor and client can proceed and no limitation is now able to be raised.

12. [249]

    The Preston interests put several answers to those submissions. The Preston interests contest the Firm’s assertion that the issue which remained to be determined in the proceedings after the Hulme J 1995 Orders was the quantification of the liability of the state of the account between the plaintiffs and the defendants.

13. [250]

    The Preston interests submit that Hulme J’s December 1993 Orders indicate that the only issue which remained to be determined was a taxation of the Firm’s bills of costs. The Preston interests submit that at the conclusion of a taxation of these bills of costs under the 1987 LPA, s 203, that a taxing officer might well have concluded that the amount to be paid in respect of each bill of costs was nil. This could have been for any number of possible reasons: the Firm did not do any work; the work done was outside the retainer; the work had previously been billed and paid for; the retainer was an entire contract and the work was not completed; payment for the work was conditional upon contingencies which had not occurred; or, the work was done and claimed for more than six years previously and the right to payment had already been extinguished under Limitation Act, s 63.

14. [251]

    The Preston interests submit that Hulme J’s December 1993 Orders did not prevent them from fielding one or more of these objections to a taxing officer, in support of a submission under the 1987 LPA, s 206(1) that the amount to be paid in respect of each bill of costs was nil.

15. [252]

    The Preston interests submit that the Firm’s argument that no limitation issue now arises really amounts to a contention that Hulme J’s Orders involved: either, (a) a finding that the Preston interests were liable to the Firm for a sum of money, and that the remaining issue for determination was merely the quantification of that sum; or, (b) an admission by the Preston interests that they were liable to the Firm for a sum of money and that the only remaining issue was one of the quantification of the liability.

16. [253]

    The Preston interests submit that the Firm has misconstrued Hulme J’s orders. They submit: (1) that Hulme J made no such finding as in (a) above, and (2) that the Preston interests made no such admission, as in (b) above.

17. [254]

    The Preston interests submit that the Firm’s argument appears to turn upon the following words in the Hulme J February 1995 Judgment:

18. [255]

    The Preston interests submit that Hulme J simply inferred from the material to which he referred in his decision that their prior conduct involved the specified concession. But the Preston interests submit that Hulme J’s statement in the February 1995 judgment that they had made this concession: did not involve any finding of liability during a contested hearing on that issue and did not involve, the recording of any actual admission by the Preston interests. They contest that they made any such voluntary admission.

19. [256]

    The Preston interests further submit: that even if it were found that such an admission had been made, it would have been made in 1993 or 1994, at a time when any cause of action on the bills of costs had not been extinguished by Limitation Act, s 63; that the concession Hulme J found did not involve a promise by the Preston interests not to rely later on Limitation Act, s 63; and, that Hulme J expressly qualified the admission with the words that it was “without any taxation”, which indicate Hulme J was accepting that during the taxation the Preston interests were entitled to raise any matters they wished.

20. [257]

    The Preston interests submit that, if they had made a concession, it was insufficiently specific to found an estoppel against the Preston interests now relying on Limitation Act, s 63 and there is no evidence that the Firm relied on the concession.

21. [258]

    Moreover, the Preston interests submit that examination of the letter dated 15 November 1994 from their then solicitors and their conduct until February 1995, does not show any admission that the Preston interests were liable to the Firm for a sum of money.

22. [259]

    The Preston interests observe that the concept expressed in the Firm’s argument of “the quantification of a stated amount” comes from Barrett J’s 2010 Judgment (at [58]), in which Barrett J was considering whether the orders made by Hulme J between 1993 and 1995 disposed of the proceedings in their entirety. The Preston interests submit that it is preferable to focus on the actual orders Hulme J made rather than Barrett J’s later comments in 2010, as the former presents the issues for present determination and the latter were addressed to a different purpose. The Preston interests say that when Hulme J’s orders are examined, it is clear that the controversy that remained was merely the taxation of the Firm’s bills of costs.

23. [260]

    The Preston interests further submit that the Firm’s argument appears to assume that once Hulme J made orders between 1993 and 1995 that the Preston interests could no longer rely upon Limitation Act, ss 14 and 63 during the taxation process. But they submit that this cannot be right. They submit for example, if the Firm’s bills of costs, which were initially served in late 1993, had included claims in respect of work done more than six years earlier than when the taxation took place, then the plaintiff could in objections subsequently served still have objected to payment for that work on the basis that the liability for it was by the time of the taxation statute-barred.

24. [261]

    The Firm replies. The Firm submits: that the costs assessor will make a determination in the costs assessment in each of the 16 matters; and that that determination will then be set out in the certificate that the costs assessor issues to both the Preston interests and to the Firm: 1987 LPA, s 208J, as in force on 1 July 1994 (the new Part 11). The Firm says that it is then open to the Firm to file “a certificate in the office or the registry of the Court having jurisdiction or for the payment of the amount of money”. Once the certificate is filed it is “taken to be a judgment” of that court for the amount of unpaid costs: the 1987 LPA (amended by the 1994 Amendments), s 208J(3).

25. [262]

    The Firm submits: that the Firm’s right to an amount of money will not arise until the account is finally stated and its quantum determined, when the costs assessment is completed. The Firm submits, in the alternative, that when the 10 applications for the attached bills on 1 November 1996, and 6 applications with attached bills on 20 January 1997, were lodged for assessment, the Firm commenced the costs assessment under the 1987 LPA, applying “taxation principles” as at 30 June 1994, conformable with the Young J 1996 Orders to determine the quantum of the Preston interests’ liability to the Firm, in respect of all 16 matters. In so doing, the Firm should be taken to have commenced an “action” within the meaning of Limitation Act, s 11(1), a provision which defines “an action” as including “any proceedings in a court”. The Firm submits that for Limitation Act, ss 14 and 63 purposes, this inclusive definition of “an action” in s 11(1) shows that “an action” can encompass something other than “proceedings in a court”.

26. [263]

    The Firm submits: the filing of the 16 applications for costs assessment with attached bills with the Court registry, paying a filing fee and engaging the Court’s administrative process for the quantification of those bills qualifies as a Limitation Act, s 11 “action”. The process that follows upon the filing of the applications for costs assessment has quasi-judicial characteristics: the costs assessor is an experienced legal practitioner, appointed by the Chief Justice, performs statutory functions, gives reasons for determinations, is subject to review, and produces a certificate capable of becoming a judgment upon filing.

27. [264]

    The Firm submits: the costs assessor (and any review panel engaged later to conduct a review) carry out quasi-judicial functions, determining the legal rights which give rise to an enforceable judgment debt: Attorney-General (NSW) v Kennedy Miller Television Pty Ltd (1998) 43 NSWLR 729 at 739.

28. [265]

    The Firm submits: the innovation of a statutory costs assessment regime is “an action” within the meaning of Limitation Act, s 11: Windsurf Holdings Pty Ltd v Leonard; Carlson v Leonard; Wyvill v Leonard [2009] NSWCA 6 at [105] – [107] (per Sackville J) (“Windsurf Holdings”). The commencement of the 16 applications were an action for a cause of action in contract, as the Firm was seeking to have quantified the amount which they were entitled to be paid under their contracts of retainer, pursuant to which the legal services were provided.

29. [266]

    The Firm submits: to the extent that McCallum J in Coshott v Barry [2012] NSWSC 850 (“Coshott v Barry”) held that the lodging of applications for cost assessment does not amount to the bringing “an action” on a cause of action within the meaning of Limitation Act, s 11, the case is wrongly decided.

30. [267]

    The Firm alternatively submitted that once the costs assessments are completed, and the costs assessor issues certificates, the Firm’s right to register the certificates as judgments of a court of appropriate monetary jurisdiction gives rise, to “a cause of action to recover money recoverable by virtue of an enactment within the meaning of Limitation Act, s 14(1)(d). The commencement of that proceeding to register the judgment is “an action” within the meaning of Limitation Act, s 11(1).

31. [268]

    The Firm’s further alternative argument is that once the quantum of the account stated is ascertained through the costs assessments, having regard to the Hulme J 1993 Orders (as modified by the Young J July 1996 Orders and as further modified by the Black J September 2011 Orders), that even such “quantification of the account stated” gives rise to a “cause of action to recover money recoverable by virtue of an enactment” within Limitation Act, s 14(1)(d).

32. [269]

    The Firm argues that no Limitation Act, s 63 extinguishment has occurred. The Firm submits that Limitation Act, s 63(2) enables the defendants to proceed with the “action”, namely the existing costs assessments, so as to have their right or title to the monies established by the costs assessments and to have the quantification of the account stated, to determine the amount for which the Preston interests are liable to the Firm.

33. [270]

    Moreover, the Firm submits that one of the “purposes of the action” (see Limitation Act, s 63(2)(a)) is to enable the Firm ultimately to file a certificate as to judgment. The Firm’s right or title to the monies is established in the costs assessment “action”, which may then be given effect by the filing of a certificate as a judgment. The Firm submits that none of these steps are statute-barred.

34. [271]

    The Firm submits that even if Coshott v Barry is held to be correctly decided, the costs assessments do not lack utility and should still proceed. Their continuing purpose is to quantify the liability of the Preston interests to the Firm as part of the account sought to be stated in the proceedings to give effect to the Black J September 2011 Orders, which varied the Young J 1996 Orders, which in turn varied the Hulme J 1997 Orders.

35. [272]

    Finally, the Firm submits that the quantification of the liability of the Preston interests to the Firm through the costs assessment provides the basis for the defendants to maintain their solicitors’ lien over the original files. The Firm submits the costs assessment should proceed and is not beyond the power of the costs assessor: Coshott v Barry at [55].

36. [273]

    The defendants advance as a candidate to qualify as “an action” having been brought on their behalf, the filing of applications for bills of costs in each of the 16 matters that occurred in October and November 1996 after the Young J July 1996 referral Orders. The defendants’ primary contention turns on the characterisation of these applications, which are described in full in the factual narrative above.

37. [274]

    The applications were lodged to conform with the requirements for an assessment of costs under the 1987 LPA after the commencement of the 1994 Amendments on 1 July 1994.

38. [275]

    In my view, authority is clear that such applications are not an “action” for the purposes of the Limitation Act, s 11 but are the mere initiation of an administrative process conducted by Court-appointed officials. The filing of these applications in October/November 1996 did not constitute “an action” that was “brought on the cause of action” before the expiration of the limitation period fixed under Limitation Act, s 14: see Limitation Act, s 63(2).

39. [276]

    Whilst it is true as the defendants point out, that in Limitation Act, s 11(1) “action” is defined as follows, “action” includes any proceedings in a Court”, thereby contemplating the possibility that non Court proceedings may be an action, authority of this Court makes clear that a lodged application for costs assessment under the 1994 Amendments to the 1987 LPA does not constitute the bringing of an “action” before the expiration of a limitation period or a claim in contract, or quantum merit, for legal costs: Coshott v Barry [2012] NSWSC 850.

40. [277]

    But before considering the position when these applications were made in late 1996, it is useful first to make clear by reason of the conduct of these parties that this issue should be determined, as the parties regarded it at the time, as a referral out entirely within the regime of the 1994 Amendments. There was some discussion in submissions about the statutory taxation regime which applied under the 1997 LPA before the 1994 Amendments. But the Young J July 1996 Orders and the lodging of the relevant applications in October and November 1996 all take place after the 1994 Amendments. The unamended 1987 LPA can be ignored. This consistent with the findings of Barrett J in the March 2010 Judgment, at [66], to the following effect:

41. [278]

    The 1987 LPA after the 1994 Amendments relevantly provided for system of costs assessment which could properly be described as an administrative process. The 1994 Amendments to the 1987 LPA in Part 11, Division 6 provided an administrative regime for the assessment of costs through a new officer created within the Court, the Manager, Costs Assessment within the Court’s administrative structure, the Manager, Costs Assessment. Applications for assessment of costs in bills of costs could be made by clients (s 119), by one legal practitioner instructing another (s 200), by a barrister or solicitor giving a bill of costs (s 201), and the process also allowed for the assessment of party/party costs arising in proceedings (s 202).

42. [279]

    The legislation set out in s 203 how the application was to be made:

43. [280]

    Once received, the Manager, Costs Assessment refers each application for assessment to a costs assessor to be dealt with under Division 6 (s 206). Costs assessors are required (by s 208) to give a degree of procedural fairness by way of written submissions but are otherwise not bound by the rules of evidence and may inform themselves as they see fit (s 208).

44. [281]

    Division 6, subdivision 4 provides for the enforcement of the assessment through a process of giving certificates of determination under s 208J, which relevantly provides as follows:

45. [282]

    The Legal Profession Regulation 1994 in Regulation 80(3) relevantly provided for the application of the new Part 11 after the 1994 Amendments in respect of applications made after 1 July 1994, as follows:

46. [283]

    After Young J’s referral to costs assessment in the Young J July 1996 Orders, the assessment was clearly being conducted under Regulation 80(3) as a costs assessment but to the extent that “former taxation principles” might have borne upon the process of assessment they were to be applied.

47. [284]

    In Coshott v Barry [2012] NSWSC 850 (at [43]), McCallum J concluded that the making of an application for costs assessment under the 1987 LPA as it operated after the 1994 Amendments “does not immunise the right and title of a solicitor to bring a claim in contract for unpaid legal fees from the application of the Limitation Act”. Her Honour’s logic in reaching this conclusion, is compelling and I see no reason to disagree with it.

48. [285]

    In Coshott v Barry her Honour was considering a situation which in my view was on all fours with the present case. There the clients, the Coshotts, had retained solicitors, Messrs CKB Partners but terminated their retainer in about August 2003 as a result of which legal costs charged by CKB Partners remained unpaid. No legal proceedings were ever commenced by CKB Partners to recover those costs. But in six separate matters CKB Partners applied for an assessment of their costs under the 1994 Amendments, s 201. Each application was determined by a costs assessor and a certificate of determination was issued as contemplated by s 208J(1). But in only two of the matters the certificates had been filed to take effect as judgments as contemplated by s 208J(3) (one in the Local Court and one in the District Court). CKB Partners sought to enforce the six costs assessments but the clients contended that both the filed and unfiled certificates were statute-barred by a combination of Limitation Act, ss 14(1)(a) and 63.

49. [286]

    It was common ground that the two certificates were filed to take effect as judgments within six years of the date on which the defendants solicitors' cause of action first accrued. As to the remaining four certificates it was common ground that no legal proceedings were commenced and no judgment obtained within six years of the date on which the cause of action contract first accrued. But it is equally evident from her Honour’s judgment that it was common ground that applications for costs assessment had been made within the limitation period in respect of all six certificates.

50. [287]

    Her Honour concluded (at [58]) that the four certificates that had not been filed related to extinguished debts and should not be filed in the Registry, but the two judgments already obtained were enforceable.

51. [288]

    Her Honour reached this conclusion by a reasoning which in my view is directly applicable to the present proceedings.

52. [289]

    Under the heading “Does the Costs Assessment System Sit outside the Reach of the Limitation Act?” her Honour said the following at [30]- [43]:

53. [290]

    The Court agrees with her Honour’s conclusion at [43]. Her Honour then turned to the procedure for filing a certificate of assessment which she considered at [44] – [49] as follows:

54. [291]

    Somewhat similar issues arose in this case concerning the pleading of the taking of the limitation point but it has squarely been taken both by the Points of Claim served early in 2015 and by the filing of the February 2015 Motion and the commencement of the 2015 proceedings. Those processes satisfy the requirements of Limitation Act, s 68A to the requirement to plead the limitation point.

55. [292]

    McCallum J then considered the question “Have the defendants brought an action on the cause of action?” and at [50] – [52] her Honour said as follows:

56. [293]

    I respectfully agree with her Honour’s conclusion in [52]. This case, in my view, is indistinguishable in principle from the facts McCallum J considered in Coshott v Barry: there were no proceedings commenced by the defendants within the applicable limitation period (apart from the costs assessment applications) and the costs assessments were not complete to the point of resulting in the entry of judgment.

57. [294]

    Her Honour then drew her conclusion, at [53], that the solicitors’ right and title to the debts quantified in the four certificates that had not been filed was extinguished. But her Honour rejected the argument that the certificates issued by the costs assessors are ultra vires or that the costs assessors had no jurisdiction to issue them. Her Honour concluded that the certificates may serve broader purposes than enforcement of a debt: they may be relevant to the enforcement of a lien claimed by the client’s files. But her Honour did indicate that in respect of an incomplete assessment in respect of an extinguished debt “a costs assessor could properly decline to undertake the assessment” (at [55]).

58. [295]

    Her Honour’s observations that the costs assessment is not ultra vires may have relevance in these proceedings to questions of the further assessment of costs of the assessment and what consequential relief is appropriate in this case. These are matters for future debate after the parties have had an opportunity to consider these reasons.

59. [296]

    The Firm seeks to repel the application of Coshott v Barry in part by reference to observations of Sackville AJA in Windsurf Holdings at [105] – [107]. There the Court of Appeal was considering the definition of “action” in the Limitation Act (Qld), s 5 which is in substantially similar terms to the definition in the Limitation Act, s 11. Where his Honour said in a judgment (agreed by Beazley JA (as her Honour then was) and Bell JA (as her Honour then was)):

60. [297]

    But the Court of Appeal in Windsurf Holdings was not considering the point in issue both in this case and in Coshott v Barry. Sackville AJA’s observations seem to be predicated upon an action or a proceeding taking place “in a Court”. But the point in McCallum J’s analysis is that a costs assessment is an administrative process, not an application in the Court.

61. [298]

    This deals with the Firm’s primary argument that the defendants have commenced “an action” within time under the Limitation Act. But the defendants pursued a number of secondary arguments that in my view are not persuasive but require brief analysis and consideration.

62. [299]

    Drawing upon paragraph [58] of the Barrett J March 2010 Judgment the Firm submits that the whole context and purpose of the 1993 proceedings was “directed towards a final determination of the state of the account between the plaintiffs and the solicitors”. The submission is put in a number of different ways but in substance amounts to a contention that the 1993 proceedings themselves together with the Young J July 1996 Orders referring the bills of costs for assessment were in substance a kind of action for an account stated upon which the defendants, the Firm, could now maintain and rely upon as an action brought within the applicable limitation period. In my view there are several flaws with this argument.

63. [300]

    The 1993 proceedings were not brought by the defendants. They were brought by the plaintiffs. The 1993 proceedings are not an action “brought on the cause of action” such that the “expiration of the limitation period does not affect the right or title of the plaintiff to the debt, damages or other money” (emphasis added) within Limitation Act, s 63(2). Limitation Act, s 63(2) contemplates, as might be expected, that the person with the cause of action must bring the action in question, as a plaintiff. That is not what has happened here and the Firm cannot claim the benefit of Limitation Act, s 63(2).

64. [301]

    The Firm’s submissions somewhat blur the procedural reality of these proceedings by suggesting that really the Court is considering a kind of cause of action in account stated of the well-known type: Camillo Tank SS Co Ltd v Alexandria Engineering Works (1921) 38 TLR 134. But this is not such a case and never was. As Barrett J comprehensively analysed in the Barrett J March 2010 Judgment ([56] – [61]), all that remained of these proceedings after their general dismissal was the quantification of solicitor/client costs, the subject of paragraphs 1 and 2 of the Summons. The referral out had been cancelled. The client was no longer asserting that any of the bills of costs had been paid on mutual account. The sole issue remaining was a process of administrative quantification. But that process was incomplete when the Firm’s cause of action in contract expired without the Firm having commenced its own proceedings.

65. [302]

    This is not an unjust result. It was open to the Firm to put on a Cross-claim for legal fees in the proceedings pending the outcome of the costs assessment.

66. [303]

    The Firm’s argument that the Hulme J February 1995 Judgment involves some kind of finding that the plaintiffs owed the defendants $97,000 is in my view a misconstruction of the Hulme J February 1995 Judgment. In the controversial sentence in question “I think the only proper inference to be drawn from the plaintiffs conduct in this regard is that the plaintiffs were conceding that the defendants’ claim for sum $97,000 was, on the basis which was then advanced, correct” is merely in my view a recording of the obvious fact in context that the Preston interests were no longer seeking on an account to contend that they had partly paid some of these bills on a running account. It is not a finding that $97,000 is then owing from client to solicitor. The statement is clearly qualified by his Honour’s observation that his statement is made on the basis “this is without any taxation” which mean that all of the relevant arguments may be fielded on taxation to reduce the amount owing potentially even to nil.

67. [304]

    Nor can it be said that there is any admission on the Preston interests path that they owed $97,000 to the Firm. The only possible evidentiary basis for such an admission is the letter of 15 November 1994 which in my view contains no such admission. In any event Hulme J does not appear to be expressly referring to that letter but is simply referring to the plaintiff’s withdrawal from the reference before the Hon. D. Needham QC.

68. [305]

    It only remains for the Court to deal with a number of supplementary arguments advanced by the Firm. It is sufficient to deal with these in general terms.

69. [306]

    The Firm argues that it is an abuse of process for the Preston interests to raise the limitation issue 16 years after the limitation period expired citing Rogers v The Queen (1994) 1 CLR 251. But in my view, all that has happened in this case is that the Preston interests have been advised after the lifting of the lengthy stay in the proceedings to take this point which was not argued before either Barrett J or Black J or any of the other judges who have dealt with these proceedings after the lifting of the stay. Far from being an abuse of process, the Preston interests’ current application takes advantage of an available legal right.

70. [307]

    The same can be said for the estoppel points argued against the Preston interests. The limitation point was taken late but nothing in the Preston interests conduct in my view expressly represented that such a limitation point would not be taken at an earlier time.

71. [308]

    Finally, it was argued that a taxation of the costs might occur in the Court’s inherent jurisdiction: Attard v James Legal Pty Ltd [2010] NSWCA 41. But this argument did not really address the fundamental problem that the cause of action is extinguished, whatever the mechanism might be used for its enforcement.

72. [309]

    Two ancillary issues arise. The first is whether in the further consideration of the residue of these proceedings a costs capping order can be made. The second issue is whether these proceedings are suitable for the making of a specific gross sum costs order.

73. [310]

    Costs Capping. The parties have each expended substantial financial and personal resources in the proceedings. The parties estimated in oral submissions that the amount spent on each side over the past 24 years may even be $1.5 million. The Firm initially sought $95,749.40 from the Preston interests. The parties’ conduct in the proceedings has been far from proportionate.

74. [311]

    The Court asked the parties whether a costs capping order should be made under Uniform Civil Procedure Rules 2005 (“UCPR”), r 42.4. The Court may under UCPR, r 42.4, either on a party’s application or at its own motion, specify the maximum costs recoverable by one party from another. UCPR, r 42.4 provides:

75. [312]

    The object of that rule is to keep the legal costs that parties expend on litigation proportionate to the importance and complexity of the matters in issue. Civil Procedure Act 2005 (“CPA”), s 60 reinforces that purpose. CPA, s 60 states that 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”. The function of this provision is to “put in the Court’s hands a brake on intemperate and disproportionately expensive conduct of proceedings”: Sherborne Estate (No. 2):Vanvalen v Neaves [2005] NSWSC 1003; 65 NSWLR 268 (“Sherborne Estate”) at [29] (Palmer J). The effect of the provisions (CPA, s 60 and UCPR, r 42.4) together is to endorse proportionality as central to the just and efficient conduct of civil proceedings: Lownds v Home Office [2002] 4 All ER 775.

76. [313]

    In Sherborne Estate at [24], Palmer J concluded that UCPR, r 42.4(1) allowed an order capping the maximum costs recoverable to be made only in advance of a hearing, but not after the hearing. His Honour concluded that on the basis that subrules (2)-(4) only make sense upon that construction. But the Court of Appeal in Nudd v Mannix [2009] NSWCA 327 (“Nudd”) held that the Court did have the power to make an order capping costs at the end of a hearing. Handley AJA (with whom McColl JA and MacFarlan JA agreed) said that that power to make an order capping costs, even retrospectively, was expressly conferred by UCPR, r 42.4(1).

77. [314]

    The jurisdiction to make retrospective costs capping orders should be carefully exercised. The parties will have a general expectation that, if successful in the proceedings, they will be able to substantially recover their costs. But that expectation must be tempered by a recognition that UCPR, r 42.4 powers have long been available and may be exercised.

78. [315]

    The Court may not be precluded from making an order under UCPR, r 42.4 even at this late stage, if such an order would serve a useful purpose. Neither party sought such an order at the hearing. But now the Court has given judgment the position may have changed. The Court grant of liberty to apply encompasses one or other party seeking to put submissions on this issue.

79. [316]

    Specific Gross Sum Costs Orders. This application was carefully argued but strongly contested. As these proceedings already show, these parties have immense capability to protract arguments about costs assessment. Costs orders have not yet been made; they are a matter for further argument. It is desirable for the parties to bring these proceedings to an end. If final costs orders were to be made after this judgment, further arguments may be reduced if the Court were to make a specified gross sum costs order under CPA, s 98(4)(c).

80. [317]

    The principles for the making of specified gross sum costs orders instead of assessed costs are now well settled. CPA, s 98(4)(c) is expressed in general terms and is not limited to cases of a particular class or type: Australasian Performing Rights Assoc Ltd v Marlin [1999] FCA 1006. The power to award a CPA, s 98(4)(c) specified gross sum instead of assessed costs is exercised whenever circumstances warrant its exercise; the purpose of the rule is to avoid the expense, delay and aggravation arising out of taxation: Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119.

81. [318]

    Such orders are not uncommonly made in situations, where the party against which costs orders have been made is not of financial substance and substantial further costs would be expended in assessing the costs orders so made: Hamod v New South Wales [2011] NSWCA 375 at [816] – [818].

82. [319]

    This is not obviously such a case. But this jurisdiction is potentially apt here for other reasons. The Court has just given judgment on a costs assessment that has lasted a generation. Generating another costs assessment between these parties carries clear risks.

83. [320]

    Therefore, if and when costs orders are made, the Court would consider making a gross sum costs order under CPA, s 98(4)(c). The Court has not decided it will make such an order, or indeed what costs orders it will make. One or other party may seek a special costs order. But either side may wish to apply to take advantage of the Court’s useful CPA, s 98(4)(c) jurisdiction in due course.

Conclusions and Orders

1. [321]

   For the reasons given above, the Court has decided to make the declarations the plaintiffs seek in the 2015 proceedings. That should be enough to bring the 1993 proceedings to an end. Any further steps on the costs assessment would be futile. Even if the costs assessments were allowed to proceed, the defendants can neither bring them to completion in the form of a judgment, nor bring any further action for recovery of any final quantification of their 1992 bills of costs on assessment, as any such action would be barred by Limitation Act ss 14 and 63.

2. [322]

   The plaintiffs also seek the return of their files to them. Whether that order is still pressed and, if so, how it should be formulated are unclear. The files may have no significance any more. The Court will give the parties an opportunity to see if they can yet agree on consequential orders for the return of the plaintiffs’ files or on some other mutual resolution of this issue. If they cannot agree, the Court will consider any remaining contest on this issue.

3. [323]

   The plaintiffs have been substantially successful. Costs would normally follow the event. And the plaintiffs seek costs and interest on costs. But this case has its unique features and, as mentioned above, one or other party may seek a special costs order. So the Court will provide an opportunity to hear the parties’ submissions about costs.

4. [324]

   The Court therefore makes the following declarations, orders and directions:

   1. (1)

      Declare that the defendants’ entitlement to costs the subject of the bills of costs referred to in the orders made by the Court on 13 February 2014 in proceedings No 1993/23395 is extinguished by the operation of Limitation Act 1969, ss 14 and 63.

   2. (2)

      Direct the parties to consult and to bring in further short minutes of order to deal with any consequential relief and otherwise to give effect to these reasons;

   3. (3)

      If the parties cannot agree on a form of short minutes of order to meet the requirements of order (2), then they are ordered to provide their respective draft orders to the Court by 5.00pm on 6 December 2017;

   4. (4)

      Appoint 8 December 2017, or such other mutually convenient date as the parties arrange with my Associate, for further directions in relation to hearing argument about any consequential orders and issues of costs; and

   5. (5)

      Grant liberty to apply.