Elias v Smidt (No 3)

1. [1]

   LEEMING JA: What remains of this proceeding is the plaintiff’s application for a gross sum costs order. Although, in light of the defendants’ conduct, this is an appropriate case for such an order, the application is complicated because (a) the claimed costs are very high, considering what was involved and (b) the plaintiff, a solicitor, retained an incorporated legal practice of which he was the sole shareholder and director to act for him, the entirety of the work as solicitor was done by him, and his claim for that time is the largest component of the costs.

2. [2]

   A notice of motion filed on 13 August 2025, a supporting affidavit of the plaintiff Mr Charbel Elias, solicitor, but without its exhibit, and written submissions by counsel came before me on 1 September 2025. I addressed the substantive orders sought on the motion at that hearing: Elias v Smidt (No 2) [2025] NSWSC 1008, rejecting the application for leave to execute a default judgment against the defendants in circumstances where I was not satisfied that Mr Elias had suffered any actual loss and he did not accept that he owed any liability to the Australian Taxation Office. (Rather than reiterating the background set out in those reasons, and in my earlier reasons of 14 July 2025 (Elias v Smidt [2025] NSWSC 762), what follows presupposes familiarity with the background.) I was unable to deal with the final order sought, which was:

3. [3]

   By way of overview, that amount is calculated as follows. The total costs for work done up to and including 15 July 2025 constituted professional costs of $83,450 excluding GST plus disbursements (principally, counsel fees) of $41,581.75. Mr Elias acknowledged that $19,600 of the professional costs reflected work on his own affidavits, and said that he would only charge 30% of that time. He also said that he would not press for the costs related to a hearing on 27 June 2025. He pressed for professional costs of $67,480 excluding GST. Mr Elias asked the Court to apply a broadbrush approach and make an order specifying a gross sum of 85% of total costs of $67,480 + $41,581.75. His calculation was that 0.85 x ($67,480 + $41,581.75) = $92,702.49. There is a threshold difficulty with that calculation, because the professional costs exclude GST but the disbursements include GST, and if indeed Mr Elias as a client is to be treated as separate from the incorporated legal practice of which he is the sole director, shareholder and employed solicitor, then there was a taxable supply by the company to him, and prima facie the determination of fair and reasonable ordered costs would include GST. But as will be seen, there are other, larger difficulties attending this application.

4. [4]

   I could not exercise the discretion as to costs immediately after the hearing on 1 September, in part because it appeared that the application raised a question of law, and in part because of the tender at the hearing of some 170 pages of evidence relating to costs, to none of whose details was I taken during the hearing. However, I did conclude that (a) Mr Elias had incurred significant costs in coming to Court, particularly at the beginning of litigation where substituted service and asset preservation orders were obtained, (b) prima facie he was entitled to a costs order in his favour, and (c) he was not entitled to indemnity costs based on a Calderbank letter. Those conclusions inform the costs discretion I am now exercising, and thus my reasons at [43]-[47] are to be regarded as part of my reasons for the orders made today. I then said:

5. [5]

   After I had reserved judgment on the question of costs, my Associate sent an email to the parties in these terms:

6. [6]

   Further submissions were supplied, commendably promptly, on 4 September 2025. After traversing passages in the judgments in Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29, Burrows v Macpherson & Kelley Lawyers (Sydney) Pty Ltd [2021] NSWCA 148, Spencer v Coshott (2021) 106 NSWLR 84; [2021] NSWCA 235 and Birketu Pty Ltd v Atanaskovic [2025] HCA 2; 99 ALJR 321, the submission maintained that in Birketu the question was left open to the legislature, that the High Court was “plainly cognisant of Leeming JA’s decision in Burrows and [that of] Simpson AJA in Coshott” and that there was “no expression that either decision was wrongly decided”. It is possible that I do not fully understand aspects of the balance of the submissions, which is best reproduced verbatim (I have preserved the typeface, spelling and emphasis of the original):

Overview of the balance of these reasons

1. [7]

   Mr Elias commenced proceedings, obtaining Mareva relief and ultimately a default judgment in his favour, but one which is subject to conditions preventing its enforcement until such time as he suffers actual loss (such as his being found liable on the Directors’ Penalty Notices or where the Australian Taxation Office has enforced that liability against him). In that eventuality, he has the benefit of a determination that such liability may be passed on to Ms Smidt and Just Law Group.

2. [8]

   The premise of Mr Elias’ application was that his fellow director, Ms Smidt, had seriously defaulted in their company’s taxation obligations, and had taken those funds out of the company. A manager has now been appointed by the Law Society to Just Law Group’s practice. Seeking and obtaining Mareva relief was appropriate, as was seeking and obtaining the judgment whose effect is that he is entitled to be indemnified for any loss he suffers by reason of the Director’s Penalty Notices he has received. Ms Smidt has already, in the course of the litigation, indemnified him for an amount of $5,438.11, being a credit in an internal ATO account which was appropriated.

3. [9]

   Rule 42.34 of the Uniform Civil Procedure Rules 2005 (NSW) applies, because the judgment obtained is less than $500,000. This proceeding could at least arguably have been commenced in the District Court. That Court had power to grant the interlocutory relief obtained from this Court. It lacked power to make an order winding up Just Law Group Pty Ltd, but despite such an order being sought, no such claim was ever pressed, and in my view the inclusion of that claim does not without more disapply r 42.34. The rest of Mr Elias’ claims for final relief fell within the jurisdiction of the District Court. However, in circumstances where a former director of a law practice made serious allegations about his co-director, who continued in control of the law practice servicing clients, I am satisfied that it was appropriate to commence in the Supreme Court. In those circumstances, I see no reason to depart from the ordinary rule in r 42.1 that costs follow the event, and for those costs to include the costs of obtaining interlocutory relief as well as the default judgment. I have already rejected Mr Elias’ application for costs to be determined on an indemnity basis.

4. [10]

   I accede to Mr Elias’ application for costs to be determined as a gross sum. The costs ought to be relatively small, since the litigation was completed in three months and there was never any opposition from Ms Smidt. That said, Ms Smidt’s generally unsatisfactory conduct, including her earlier conduct leading to the company’s failure to pay tax, her failure to comply with a written undertaking to appoint a restructuring practitioner and her habit of seeking adjournments and not complying with court directions, suggests that the process of assessment may be more fraught than is usually the case. The power conferred by s 98(4) is not confined, and may be exercised whether the circumstances warrant: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [21]. One consideration informing the appropriateness of such an order is the desirability of avoiding “the expense, delay and aggravation likely to be involved in contested costs assessment”: Hamod v State of New South Wales [2011] NSWCA 375 at [817]. Another is the possibility that neither Ms Smidt nor Just Law Group will be able to pay the order: see Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd (No 2) [2025] NSWCA 185 at [31]. It is also steadily to be borne in mind that the potential liability is $225,161.29. The total costs to 15 July exceeded $133,000, and more work has been done subsequently. In Manariti Plumbing Pty Ltd at [32], it was said:

5. [11]

   All those factors favour an exercise of the discretion under s 98(4)(c) to order that the defendants may a specified gross sum instead of assessed costs.

6. [12]

   The remaining issues are more complex. They are twofold:

   1. (1)

      whether Mr Elias is entitled to the largest component of his claim, namely, for his own time, and

   2. (2)

      the quantification of costs.

7. [13]

   I address each in turn.

Can Mr Elias recover for his own time?

1. [14]

   To the extent that it is put that I am bound by what was held in Coshott v Spencer to permit Mr Elias to recover costs for work he did as a solicitor by the company of which he is the sole shareholder and director and (so it would appear) the sole lawyer, I respectfully disagree. First, I consider that that submission is inconsistent with what was said more recently by the High Court, which, after making reference to the very passage upon which Mr Elias relies, said that the question was open. Secondly, I consider that the submission is inconsistent with what had earlier been said by the High Court in Bell Lawyers. Thirdly, I consider that in point of principle, a solicitor who operates his or her practice through an incorporated legal practice, of which the solicitor is the sole director and shareholder, is not to be placed in a more advantageous position concerning costs than if the same solicitor did the same work as a sole practitioner or as a barrister. The full reasons for that conclusion are complex, but they include something quite simple, which is that if it would be an affront to justice to permit a solicitor litigant who acts as a sole practitioner to recover for his or her time, it would equally be an affront to justice to permit a solicitor litigant who retains his or her own incorporated legal practice, of which he or she is the sole shareholder and director, to recover for his or her time.

2. [15]

   There is force in Mr Elias’ submission that it is undesirable to address this in the absence of a contradictor. But I have no choice about the matter, if I am to determine the application made by him according to authorities which bind me. It would scarcely be fair to require him to appoint (and pay for) a contradictor, when all that was at stake is the costs to be allowed on a gross sum basis for obtaining Mareva relief and a default judgment. And the point is of general application, and ultimately will be determined by an appellate court, which tells against seeking to take advantage of the generosity of the Bar and inviting the appointment of an amicus at this stage in the process.

3. [16]

   Bell Lawyers establishes that barristers or solicitors who appear for themselves cannot recover costs for the value of their time spent in litigation. That has long been the general rule applied to litigants’ entitlements to costs, subject to what was termed “the Chorley exception” which placed solicitors in a different position from every other self-represented litigant. The majority judgment in Cachia v Hanes (1994) 179 CLR 403 at 411; [1994] HCA 14 cast doubt upon this exception:

4. [17]

   The exception was rejected in Bell Lawyers, with the joint judgment stating its conclusion at [3]:

5. [18]

   Bell Lawyers addressed the position of employed solicitors, confirming that the decision that the Chorley exception was not part of the common law of Australia did not disturb “the well‑established understanding in relation to in-house lawyers employed by governments and others, that where such a solicitor appears in proceedings to represent his or her employer the employer is entitled to recover costs in circumstances where an ordinary party would be so entitled by way of indemnity”: at [50].

6. [19]

   The joint judgment also recognised the special case of a solicitor who was employed by a company which operated an incorporated legal practice where the company was owned and controlled by the solicitor. The difficulty is that on the one hand, if such a solicitor were regarded as an employed solicitor, he or she might continue to fall within the “well-established understanding” mentioned above; while on the other hand, such a case is difficult to reconcile with the affront to the fundamental value of equality which caused the Chorley exception to be discarded. Their Honours raised the issue, but left it open, at [51]:

7. [20]

   Pausing there, it is clear that the joint judgment was not deciding whether the costs of work done by the sole director and shareholder of an incorporated legal practice were recoverable. It is also clear that the joint judgment, and in particular the sentences commencing with “[i]t might be queried”, were casting doubt upon the correctness of the proposition that such costs were recoverable. Those sentences emphasise that the proposition that a solicitor employed by a company of which the solicitor was the sole director and shareholder falls within the employed solicitor exception was, to say the least, contestable. Nonetheless, the High Court did not rule on that issue, which did not arise on the facts of that appeal. That accords with the ordinary processes of judicial economy, as to which, see Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 at [7].

8. [21]

   The joint judgment proceeded to say at [52]-[53]:

9. [22]

   The words in those paragraphs, including the first sentence of [53], have, to my mind, a straightforward meaning, when they are read contextually. The High Court was addressing an argument advanced by the barrister (who was seeking to recover for her own time pursuant to a costs order in her favour) that the overruling of the Chorley exception was a matter for the legislature, not the High Court. That submission was rejected. The reason for doing so was the last sentence in [53], namely, the characterisation of “the Chorley exception” as an aspect of the common law of Australia.

10. [23]

    All reasons for judgment must be read in context. As was pointed out in Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294 at [323], that is to say “nothing more and nothing less than what was said by the Judicial Committees of the Privy Council in Commonwealth of Australia v Bank of New South Wales (1949) 79 CLR 497 at 637-638; [1950] AC 235 at 308 and Mutual Life & Citizens’ Assurance Company Ltd v Evatt (1970) 122 CLR 628 at 643; [1971] AC 793 at 809, namely, that all judicial reasoning must be understood secundum subjectam materiam (according to the subject matter)”.

11. [24]

    When the first sentence of [53] is taken out of context, it may be read as supporting the proposition that it is a matter for the legislature to determine, in the future, whether the employed solicitor exception no longer applies to an incorporated legal practice owned and controlled by that solicitor. I think that is a somewhat strained reading, because the natural meaning of “whether or not” is that no view is being expressed on the correctness of the proposition that the employed solicitor exception applies. When the sentence is read in context, the position is clarified. After all, only two sentences earlier the High Court emphatically and explicitly stated that it was not expressing a conclusion on the issue. The entirety of [51] is directed to exposing the tension between the abolition of the Chorley exception and a continuing entitlement of incorporated legal practices with a solicitor who is the sole director and shareholder being able to recover for that solicitor’s time, and expressly leaving that issue open. Reading [53] as determining the answer to the issue amounts to reading that the High Court has contradicted itself. And why would the joint reasons be read as determining an issue not before it, when only two sentences earlier those same reasons had left that issue open? All this confirms that the approach taken in Mr Elias’ submissions involves, with respect, a misreading of the judgment. Instead, the point of [53] is to reject the submission that one reason the High Court should not alter the Chorley exception was that that is a matter for the legislature.

12. [25]

    True it is that Spencer v Coshott (2021) 106 NSWLR 84; [2021] NSWCA 235 proceeded on the basis that the first sentence of [53] was dispositive, as Mr Elias emphasised. With the utmost respect, I have concluded that that is a misreading of [53] when read in context. That follows from what I have said in the previous three paragraphs. I shall explain how, so far as I can see, this came about below.

13. [26]

    The solicitor, Mr Spencer, had retained an incorporated legal practice (Kejus Pty Ltd), of which he was the sole shareholder and director, to act for himself. Hence unlike Bell Lawyers or Burrows the issue arose squarely in Spencer v Coshott.

14. [27]

    The dispositive aspect of the appeal on this issue is in the reasons of Simpson AJA, with which the other members of the Court agreed, at [95]-[102]:

15. [28]

    The proposition from Coshott on which Mr Elias relies – namely that it is established by Bell Lawyers that Mr Elias can recover for his own time because he was employed by Saile Law – and what was said in Spencer v Coshott at [100]-[101], are in my respectful view inconsistent with what was held in Bell Lawyers at [51] leaving precisely that question open.

16. [29]

    It is also clear that the reasoning in Spencer v Coshott is not that of an appellate court developing the law by resolving an unresolved question. Instead, the reasoning is that the High Court, in [53] of Bell Lawyers, determined that a solicitor such as Mr Spencer who was employed by a company owned and controlled by him was, until legislation otherwise provided, entitled to costs for his professional time. I mention this because it has an effect on the precedential status of Spencer v Coshott.

17. [30]

    It is not difficult to see how this came about. The reasoning in Spencer v Coshott reflected the submissions advanced by the parties. That decision was one in the exercise of the supervisory jurisdiction of the Court of Appeal for error of law on the face of the record by the District Court hearing an appeal from a decision of a Costs Review Panel. The hearing occupied less than 2 hours and proceeded by audio-visual link during the COVID-19 pandemic. Paragraph 61 at the conclusion of the submissions filed on behalf of Mr Spencer gave prominence to the sentence from [53] of Bell Lawyers. At the conclusion of oral submissions, his counsel said:

18. [31]

    That submission in substance reflects the dispositive reasoning in Spencer v Coshott at [100]-[101].

19. [32]

    I have reviewed the written and oral submissions made by the respondent, and have not seen that it was anywhere put that that was a misreading of Bell Lawyers.

20. [33]

    Further, Spencer v Coshott did not address all the authorities on point. Meagher JA in Burrows considered the position of an incorporated legal practice which was both party to the litigation, and acting for itself, although it was unnecessary to do so and his view was therefore obiter. His Honour said at [19]:

21. [34]

    I read the concluding words of that paragraph as tantamount to holding that the extended definition of “costs” does not extend to cases where there is an incorporated legal practice and the costs claimed are for work performed by its sole director and shareholder. Although the Court of Appeal in Spencer v Coshott was taken to earlier paragraphs in Meagher JA’s reasons, their Honours were not taken to that paragraph.

22. [35]

    In Burrows I addressed the position at [134]-[136]. The passage was expressly obiter, it being unnecessary in order to resolve the appeal:

23. [36]

    Meagher JA agreed with my reasons (subject to qualifications not presently relevant): at [1]. White JA agreed “substantially”: at [140], and it is possible that that agreement did not extend to the passage reproduced above. In any event, the reasoning was obiter, and it was open to the Court in Spencer v Coshott to depart from it. It may also be noted that at least Meagher JA and I proceeded on the view that Bell Lawyers left the position of a solicitor employed by a company of which the solicitor was the sole director and shareholder unresolved.

24. [37]

    It would have been open in Spencer v Coshott to depart from the obiter dicta in Burrows and to resolve the question left open by Bell Lawyers concerning solicitors employed by companies they owned and controlled. The reasoning would probably address the rights conferred by statute when incorporated legal practices were permitted, and reconciled those rights with the cautions expressed by the joint reasons in Bell Lawyers concerning the tension between the recoverability of professional costs for such a solicitor and the recoverability of professional costs of a sole practitioner. If that had occurred, then a judge sitting at first instance would be bound to apply the more recent decision of the Court of Appeal. There are times when the rules of precedent oblige judges to apply a principle of law even if they consider it wrong. As Lord Devlin said, stare decisis does not apply only to good decisions; if it did, it would have neither value nor meaning: Jones v Director of Public Prosecutions [1962] AC 635 at 711. This is not one of those cases.

25. [38]

    But that is not how Spencer v Coshott proceeded. Instead, Spencer v Coshott offers no reasoning to that conclusion of its own, but rather proceeds on the basis that the High Court in Bell Lawyers had determined the issue. As presently advised, this difference matters. This Court is bound by what was held in Bell Lawyers, directly. It is one thing for the Court of Appeal to develop the law, such as to bind lower courts in the appellate hierarchy to that development. It is another thing for the Court of Appeal merely to construe a decision of the High Court as determining a point. Such a decision has a different precedential status; cf Hasler v Singtel Optus Pty Ltd; Curtis v Singtel Optus Pty Ltd; Singtel Optus Pty Ltd v Almad Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 at [98]-[100] and Commonwealth Bank of Australia v Kojic (2016) 249 FCR 421; [2016] FCAFC 186 at [149]. Those were decisions involving intermediate appellate courts, but the position of a judge sitting at first instance was considered by Mortimer J in Helmbright v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (No 2) (2021) 287 FCR 109; [2021] FCA 647 at [118]-[121], drawing the same distinction between an appellate court that merely followed the reasoning of the High Court, and one which had “expressed some additional qualifications”, or “made findings about, or modifications to” the earlier test within the conventional incremental approach of the common law. I think that in principle that is right. The rules of precedent turn on when a court establishes a rule or principle of law. If the Court of Appeal had held there was an additional qualification, such as the employed solicitor rule did not apply in the case of companies owned or controlled by the solicitor, then lower courts would be bound. The same would be true if the Court of Appeal had held that there was no additional qualification. But the position is different when an intermediate appellate court merely purports to apply what another court has determined – which is to say, it does not purport to make law itself. That course may still have an effect. For example, if an intermediate appellate court endorses a rule or principle of law which has been determined by a lower court, then that rule or principle will now bind all courts bound by the intermediate appellate court. If the intermediate appellate court endorses a rule or principle of law which has earlier been determined by the same court, without developing the law in some way, then the position is unaltered – lower courts remain bound by the earlier decision. If an intermediate appellate court merely follows what it regards to be a rule or principle established by the High Court, then at least as presently advised I do not see how that affects the position of a judge sitting at first instance: he or she remains bound by the High Court.

26. [39]

    It is not necessary to take the analysis in the previous paragraph to its conclusion, or indeed to rely upon it, because the High Court has returned to the issue more recently. Birketu Pty Ltd v Atanaskovic confirms that the position is open. As Mr Elias acknowledges, the High Court referred expressly to what had been said in both Burrows and Spencer v Coshott, and then stated at [26] that the “question as to the position of an incorporated legal practice of which the sole employed solicitor is also the sole director and shareholder” was left open.

27. [40]

    It is difficult to read what was said of Burrows and Spencer v Coshott as a statement that the position is in fact foreclosed until and unless new legislation is enacted. It is also difficult to read that as a statement that the position is determined, for practical purposes save for litigation in the High Court of Australia, by what was said in Spencer v Coshott. Yet that is the gravamen of Mr Elias’ submission to me.

28. [41]

    I do not think “left open” in the joint reasons in Birketu means “left open to the legislature” but authoritatively determined by judicial decision; cf paragraph 16 of Mr Elias’ supplementary submission. That is not how reasons of appellate courts are ordinarily understood. Any court decision (save for a decision on an entrenched issue of constitutional law) can be overturned by legislation. When an appellate court “leaves open” an issue, it is unnecessary to say that the point is liable to be affected by some future statute, because that is fundamental to the Australian legal system. Rather, when an appellate court “leaves open” a point, it ordinarily means that the point is not determined as a matter of precedent.

29. [42]

    The Court as presently constituted is bound by Bell Lawyers Pty Ltd v Pentelow and Birketu Pty Ltd v Atanaskovic. Both of those High Court decisions state that the issue presented by Mr Elias’ application is left open. That is impossible to reconcile with the holding in Spencer v Coshott that Bell Lawyers resolved the point. If I were to accede to Mr Elias’ submission, I would be adhering to what was said by the Court of Appeal in Spencer v Coshott. However, I would be proceeding in a fashion which is inconsistent with what the High Court held in both Bell Lawyers and Birketu. The position is awkward, but I think I am obliged to proceed on the basis that the point remains open. I reject Mr Elias’ submission to the contrary.

30. [43]

    Accordingly, I approach the question as a matter of principle.

31. [44]

    First, it is clear that whether or not the “Chorley exception” is recognised is a question as to the content of the common law of Australia: Bell Lawyers at [2]-[3], [27], [39], [63]. The change effected by Bell Lawyers operates retrospectively, like any other change to the common law: Ha v State of NSW (1997) 189 CLR 465 at 504; [1997] HCA 34. Indeed, that very point was made in Bell Lawyers at [55] (cf at [97]-[98] where Edelman J left open the possibility of exceptions to the usual rule).

32. [45]

    Secondly, it follows that prior to statute permitting incorporated legal practices, a solicitor could not as the law is now understood charge for his or her professional time. The question is whether the statutes which permitted a solicitor to incorporate have altered that position.

33. [46]

    Thirdly, there is no express language in the legislative provisions directed to the recoverability of costs of employed solicitors. That is unsurprising. At the time the statutes were enacted, the Chorley exception was understood to be part of the common law of Australia, and there was no reason to think that a sole practitioner who could recover his or her own costs would be disadvantaged if he or she took advantage of the statutory entitlement to incorporate.

34. [47]

    Fourthly, the most important legislation was that enacted in Part 2.6 of the Legal Profession Act 2004 (NSW). Those provisions no longer apply, but broadly speaking there are counterparts in Part 3.7 of the Legal Profession Uniform Law. (Some details appear to be absent in the current regime, but it would be truly bizarre if the shift from the Legal Profession Act to the Uniform Law brought about the result that a solicitor employed by an incorporated legal practice owned and controlled by that solicitor could not recover under the former regime but could under the Uniform Law, and accordingly I shall put them to one side.)

35. [48]

    Part 2.6 very much left in place the traditional regulation of solicitors, by providing that an incorporated legal practice must have at least one legal practitioner director (s 140), and extending the professional responsibilities to legal practitioner directors. For example, conduct of employed legal practitioners which was unsatisfactory professional conduct or professional misconduct, or conduct of directors who were not legal practitioners which adversely affected the provision of legal services, was capable of being unsatisfactory professional conduct or professional misconduct on the part of the legal practitioner director: s 141. More generally, s 143 provided that an Australian legal practitioner who provided legal services on behalf of an incorporated legal practice was subject to the same professional obligations, and “does not lose professional privileges of an Australian legal practitioner”. It is far from clear whether the entitlement to charge for professional time, under the Chorley exception as it was then understood, was a “professional privilege” within the meaning of s 143. But the evident intent of the provision was to place solicitors employed by incorporated legal practices in the same position as they would otherwise have been, at least when dealing with third parties. For example, when an issue of client legal privilege arose, it should make no difference whether the confidential communication was with the director of an incorporated legal practice who was a legal practitioner, or with a partner of an incorporated firm.

36. [49]

    Conversely, another aspect of the purpose was not to disadvantage those dealing with law practices and their employees. White JA in Burrows summarised the history of legislation in this area, and reproduced at [157] the second reading speech of the Attorney General, who said of s 143:

37. [50]

    This was reinforced by s 145, which provided:

38. [51]

    The foregoing provisions suggest that one aspect of the legislative purpose was to apply the same professional rules and obligations to legal practitioners who chose to operate through an incorporated legal practice.

39. [52]

    Fifthly, in the light of the underlying legislative purpose, there are powerful reasons telling against a construction which would permit a solicitor employed by a company owned and controlled by the solicitor to charge for the solicitor’s time. Three were summarised by White JA in Burrows at [151]-[153], which I repeat and elaborate below:

    1. (1)

       A solicitor cannot be independent and give himself or herself independent legal advice when he or she is both the litigant and the lawyer. In this respect, the position is precisely the same, whether the solicitor be a sole practitioner or employed by a company of which the solicitor is the sole director and shareholder. The absence of independence is unaffected by the separate corporate structure because it focusses on the fact that the client and the natural person who is in fact providing legal services are one and the same.

    2. (2)

       A solicitor could profit from the conduct of litigation, if the solicitor could recover professional costs for his or her time as an employed solicitor of a company whose sole shareholder and director was the solicitor. There is nothing artificial about regarding profits derived by the company as profits of the solicitor who owns and controls the company for the purpose of the rule against litigants profiting from litigation. True it is that a solicitor’s personal taxable income may be distinct for purposes of income tax from the income of the company of which the solicitor is the 100% shareholder. But that merely illustrates that it is one thing to consider profits in a legislative regime which applies different rates of taxation to natural persons and companies, and another thing entirely to ask whether a person is profiting from litigation in which he or she is a litigant.

    3. (3)

       A solicitor who happened to be an employee of a company whose sole shareholder and director was that self-same solicitor would be in a materially different position from any other litigant, including a professional person and including a solicitor who was a sole practitioner. Conversely, the opposing party would be in a correspondingly worse position. The entitlement to costs of the former, and the liability to pay costs of the latter, would turn on choices which seem capricious, insofar as the costs comprised the solicitor’s professional time. It seems decidedly odd that a sole practitioner representing himself or herself in litigation can recover nothing for his or her time, but if the sole practitioner operated through an incorporated legal practice of which he or she was the sole director and shareholder, he or she would be able to recover costs for his or her time. It also seems decidedly odd that a defendant sued by a solicitor (say in an action for debt) is at risk of paying for the solicitor’s time spent prosecuting the action if the solicitor/lender operates through an incorporated legal practice of which the solicitor is the sole director and shareholder, but is not exposed to the risk if the solicitor/lender operates as a sole practitioner. There is a great deal of force to this being just as much an affront to the equality of persons before the law as the Chorley exception itself was in the first place.

40. [53]

    Why then should the statutes permitting incorporation be construed so as to produce such results? Doing so would be contrary to the purpose of permitting those dealing with law practices not to be affected by whether the practice was or was not incorporated. Moreover, the three matters identified above are all questions of substance. Whether or not there is professional independence, whether or not litigation is used to make profits, and whether or not there is equality before the law are not answered by the proposition that there is a distinction between the solicitor and the corporation which the solicitor owns and controls. For that reason, the recoverability of professional costs should not depend on whether the solicitor is a sole practitioner or is employed by his or her own company.

41. [54]

    Another way of making this point turns on the reasons in Bell Lawyers emphasised above. One purpose for abolishing “the Chorley exception” was its affront to equality before the law. It is impossible to justify to the defendant faced with a costs order obtained by a solicitor that if the solicitor had been a sole practitioner, the costs would not include the solicitor’s time, but because the solicitor had incorporated a company of which he or she was the sole director and shareholder, the solicitor was entitled to recover tens of thousands of dollars of costs. If the former is an affront to equality, so too is the latter.

42. [55]

    The question of statutory construction is not straightforward, principally because the statutes permitting incorporated legal practices predate the change in the common law effected by Bell Lawyers. But three considerations tell against Mr Elias’ submission. The first is the absence of any positive expression of legislative purpose to overturn the considerations summarised above. The second is that it is contrary to the legislative purpose. The third is that those provisions all suggest that lawyers practising through an incorporated legal practice should remain under the same professional obligations as those operating as sole practitioners or partners. Some of those obligations are sourced in the common law. And indeed, the statute recognised as much, insofar as s 145 commenced “[f]or the purposes of the application of any law (including the common law) or legal profession rules relating to conflicts of interest …”. The legislative recognition of “the common law” carries with it a recognition that the common law will change from time to time. Put differently, not lightly would one construe s 145 as confined only to those rules which existed in 2004. The common law changed with the decision of Bell Lawyers Pty Ltd v Pentelow, and the statute should be read accordingly.

43. [56]

    I reject Mr Elias’ submission that he is entitled to costs for his own time acting for himself. That means that of Saile Law’s professional costs of $83,450 (exclusive of GST) which are the subject of this application, of which $67,480 are pressed, the only recoverable costs are those incurred by Ms Rita Elias, who was employed as a paralegal and the practice manager (and who, so I was told, is Mr Elias’ wife) whose time is charged at $250 per hour (excluding GST) and whose costs were $17,425, and Ms Jessie Elias, legal clerk, whose time is charged at the same rate, and who charged $1,625 for 6.5 hours work on 5 June 2025 (invoice 125). There are also $41,581.75 of disbursements, comprising counsel’s fees of Mr Isackson ($3,520), Mr Jones ($28,325) and other disbursements of ($9,736.75).

44. [57]

    The touchstone for an order of party/party costs (now defined as “ordered costs”) is what is fair and reasonable: Legal Profession Uniform Law Application Act 2014 (NSW) ss 63, 76. In order to consider whether these amounts are “fair and reasonable”, it is necessary to review what in fact occurred, and then evaluate that against the costs claimed. I address each in turn.

What occurred

1. [58]

   Proceedings were commenced by summons filed on the afternoon of Monday 14 April 2025. Mr Elias was the plaintiff; Ms Smidt was the first defendant and Just Law Group Pty Ltd was the second defendant.

2. [59]

   The Duty Judge (Richmond J) was approached on Tuesday 15 April 2025, and leave was granted to file a notice of motion and Mr Elias’ affidavit, with the matter returning at 11.30am on Wednesday 16 April 2025. On that day, Hammerschlag CJ in Eq was the Duty Judge. He granted orders for short service, for substituted service by email and by leaving a copy of the papers at Ms Smidt’s home, granted ex parte Mareva relief upon the usual undertaking, and stood the matter over until 22 April. The order was not framed in terms of being limited until the motion was returnable, but is to be understood in that sense (and was evidently so understood): Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730 at 731. The hearing commenced (according to the record of proceedings on the file) at 11.17am and concluded at 11.45am.

3. [60]

   On 22 April, the matter came before Hammerschlag CJ in Eq, again as Duty Judge, who, having been satisfied that service had been effected and with no appearance from either defendant, extended the Mareva order until further order, and directed that the matter proceed on pleadings, imposed a timetable, and stood the proceedings into the Registrar’s list on 4 June. The hearing commenced (according to the record of proceedings on the file) at 10.00am and concluded at 10.06am.

4. [61]

   On Monday 2 June, Ms Smidt and Just Law Group filed a submitting appearance.

5. [62]

   On Tuesday 3 June, Ms Smidt wrote directly to the chambers of Justice Hammerschlag, copying in Mr Elias:

6. [63]

   It seems that the hearing on 4 June was vacated, because the proceedings had been relisted before Hammerschlag CJ in Eq on 6 June, following Mr Elias filing a motion seeking default judgment. That hearing appears to have commenced before lunch, but was adjourned until the afternoon, with Ms Smidt appearing by AVL link in the afternoon. Mr Jones is recorded in the transcript as seeking either a determination of his application for default judgment, or being given an expedited hearing date. The hearing of the motion commenced, but did not proceed. The first obstacle was that the second defendant had no representation, with his Honour saying “I cannot have a defendant which is a firm carrying on business as an incorporated legal practice represented by a director in circumstances where that director hasn’t got leave and that director is not a legal practitioner”. His Honour said he would deal with the application for default judgment against Ms Smidt. But that application did not proceed either, because of deficiencies in service:

7. [64]

   At the conclusion of the hearing, Mr Jones asked that the costs thrown away on this motion be the plaintiff’s costs in the cause, to which the judge responded:

8. [65]

   On that occasion, the matter was set down for hearing on 14 July with an estimate of 2 days. The defendants were directed to file defences by 20 June. The judge noted that no motion to vary the existing submitting appearances had been filed, and said “[i]f I were you, I would quick smart put on such a motion supported by an affidavit explaining how you came to make a submitting appearance apparently mistakenly”.

9. [66]

   At no stage thereafter did Ms Smidt or Just Law Group make any application to withdraw the submitting appearance. On the evidence before me, there was no communication by either defendant of any intention to do that.

10. [67]

    The matter returned to Court on 27 June 2025. Mr Jones appeared for Mr Elias, and there was no appearance for the defendants. The entirety of the transcript of what occurred is as follows:

11. [68]

    When the matter came before me on 14 July, once again there was an email advising that Ms Smidt was unwell, had been unable to travel to Sydney or retain legal representation, and attaching a document which purported to be a “Medical Certificate” signed by a doctor. In circumstances where there was no application to withdraw the submitting appearance, I proceeded to hear the application, for reasons given at [51]-[55] of my first judgment:

12. [69]

    Mr Elias proceeded to move for default judgment in respect of the unpaid liability to the ATO. The hearing extended into the afternoon. I acceded to that application. However, the application was unusual, because Mr Elias was not in fact out of pocket, and was in substance seeking a curial determination that in the event he was liable to the ATO, he could shift that liability to the defendants. My reasons concluded:

13. [70]

    Mr Elias was not ready to proceed on 1 August. His application on 1 September was unopposed but unsuccessful (save in relation to the undetermined question of costs): Elias v Smidt (No 2) [2025] NSWSC 1008. No application was made by Ms Smidt or Just Law Group to withdraw their submitting appearances.

The costs claimed

1. [71]

   After judgment was reserved, my consideration of aspects of the costs claimed threw up concerns relating to the daily rates of counsel, the hourly rates of paralegals, items of work done by Mr Jones on 23 and 26 June, Mr Jones’ cancellation fee, a $2,500 “internal expenses fee” charged by Saile Law, and the amount of time spend on preparing a court book, which had not been addressed in the written or oral submissions. I granted leave to Mr Elias to supply supplementary submissions on those topics, leading to further submissions supplied on 16 September 2025. I will address those submissions when dealing with each of the topics.

2. [72]

   I start with counsel. The Costs Assessment Rules Committee Guidelines dated 24 October 2023 state that the daily rate allowable for junior counsel is $2,400 - $5,600, exclusive of GST, based on a 10 hour day from 8am to 6pm. They also state that “Where within the applicable range a particular matter sits should be influenced by the factors referred to in Legal Profession Uniform Law, s 172”. The first of those factors, and the only one which is directly connected to the individual practitioner, is “the level of skill, experience, specialisation and seniority of the lawyers concerned”.

3. [73]

   Mr Isackson of junior counsel charged $3,200 excluding GST. That was for an appearance before Hammerschlag CJ in Eq on 22 April when the ex parte Mareva relief was returnable (charged as a ½ day), and for 4 hours preparation. The time spent is reasonable. A litigant must, in the absence of communication from a defendant against whom ex parte Mareva relief has been obtained, be ready if necessary to proceed to justify those orders afresh. However, the hourly and daily rates (of $400 and $3,200) are on the high side, bearing in mind the former represent 8 hour days. $3,200 for an 8 hour day equates to $4,000 for a 10 hour day, which is precisely in the middle of the range, whilst counsel was only in his third year of practice at the Bar, a point to which I shall return.

4. [74]

   There should also be some discount reflecting the fact that some of the time must represent time in familiarising with the brief that would not have been necessary had the same counsel been used for the hearings on 15 and 16 April as on 22 April. I do not think it is fair and reasonable for the person against ex parte relief has been obtained to bear the additional costs occasioned by the briefing of one counsel on the application date, and another when the matter was returnable.

5. [75]

   Mr Jones of counsel has charged $4,000 per day and $500 per hour, exclusive of GST. Those rates are near the top end of the rates for junior counsel. The hourly rate is high: the Guidelines specify a range of $240 - $560. So is the daily rate. Mr Jones’ costs agreement also provides that for time outside of 9am – 5pm, he will charge an additional hourly rate, so that his daily rate for a 10 hour (so as to compare it with the range in the Guidelines), is $5,000 per day. Mr Jones was only called to the Bar in 2020.

6. [76]

   I invited submissions on whether the daily rates charged by counsel would be reduced by a costs assessor. Mr Elias said that the rates fell within the range in the Guidelines. It was noted that “Mr Jones’ daily rate equates to only 8 hours of his hourly rate and not a 10-hour daily rate”, as if to imply that the client was being offered better value. It was said that “given the nature and complexity of the matter, involving Supreme Court of NSW proceedings”, the rates were within standard commercial rates, they were reasonably disclosed and had been charged in accordance with their Costs Disclosure and Costs Agreements, and had in fact been paid.

7. [77]

   It is true that the rates fall within the range in the Guidelines. It is also true that they have been properly disclosed, and give rise to an actual liability on the part of Saile Law to pay, thereby engaging the indemnity principle. However, I do not accept that the matter was especially complex. To the contrary, but for its concerning a solicitor and an incorporated legal practice, it should have been commenced in the District Court. Most importantly, the submissions do not address the discrepancy between Mr Isackson to some extent, and Mr Jones to a greater extent, being quite junior counsel, and yet charging at the middle and towards the top of the range. There is no evidence that a costs assessor would not regard the rates as too high.

8. [78]

   Contrary to Mr Elias’ submissions, I think a costs assessor would apply a discount to Mr Jones’ rates. That is because I do not think a costs assessor would proceed on the basis that in this litigation, where as it happens there has been a series of mis-steps, it would be fair and reasonable to assess Mr Jones’ fees on the basis of a senior junior with a decade or more of experience, at the top of a relatively wide range. This is confirmed by what I have seen and heard of his submissions, which fall short of the standards I would expect of leading junior counsel with a decade or more of experience. This manifests itself in a range of ways, including the fact that there were three applications for default judgment, the fact that special costs orders were made along the way and the form and content of the written and oral submissions.

9. [79]

   Mr Jones has issued three fee notes.

10. [80]

    In the first, Mr Jones charged $6,500 plus GST for work on 14, 15 and 16 April when ex parte relief was obtained. The 6 hours of preparation and advice seems high, as does $3,000 for appearing briefly before Richmond J and Hammerschlag CJ in Eq on an ex parte application where it was known that there would be no opposition.

11. [81]

    Mr Jones’ second fee note is for $3,750 plus GST, for 1½ hours work on 30 May and 3 hrs for the directions hearing and motion on 6 June. That was the first application for default judgment. It did not proceed because Mr Elias was not in a position to proceed. Although an order was made for costs being costs in the cause, I am doubtful it is fair and reasonable for any significant amount of these costs to be recoverable.

12. [82]

    Mr Jones’ third fee note of $2,500 (plus GST) is for five hours of work on 23 June, for settling evidence in chief, an hour’s conference concerning relisting the matter, and an hour for settling an offer of compromise. Mr Jones’ fourth fee note is for $13,000 (plus GST), an amount which includes 2 hrs of drafting submissions on 26 June. There is no charge for 27 June.

13. [83]

    I drew to Mr Elias’ attention this work and its proximity to the hearing of 27 June. Mr Elias maintained the claim for all of the work. He submitted that:

14. [84]

    These submissions are problematic. The hearing on 27 June should not have occurred. It resulted in a special costs order. The application before me was advanced on the basis of Mr Elias positive statement that “I am not pressing for the costs related to that listing” (affidavit sworn 13 August 2025, para 82). It is self-evident that the work done by counsel related to the listing of 27 June. The reason Mr Elias’ second affidavit was being settled on 23 June was so that it could be read on the application of 27 June. The same was true of the written submissions.

15. [85]

    I shall proceed on the assumption, which I regard as highly favourable to Mr Elias, that by his more recent submission, Mr Elias now seeks to qualify his affidavit, and contend that he did press for costs which were related to the abortive 27 June hearing, insofar as those costs were not wholly wasted, and served some useful purpose at the hearing on 14 July. (Incidentally, this illustrates the various capacities in which Mr Elias is involved in this litigation. He is simultaneously litigant, witness of fact as to the work done earlier this year, and advocate as author of the written submissions.)

16. [86]

    I would include the 3 hours spent settling the affidavit which ended up being read, but not the 1 hour which obviously and concededly concerned the motion. In light of the fact that a further 3 hours was changed on 9 July 2025 for “Amend outline of written submissions”, and the absence of any evidence concerning the submissions in the form they took on 26 June and the form supplied to me on 14 July, I would not allow any contribution for the 2 hours work the day before the abortive hearing on 27 June.

17. [87]

    Mr Jones’ third fee note also includes $4,000 for preparation of submissions and notes for the hearing on 14 July, $4,000 for that hearing, and a cancellation fee of $4,000 for 15 July.

18. [88]

    One day’s fees for preparation and one day’s fees for the hearing on 14 July is reasonable. However, nothing should be allowed for the cancellation fee. Mr Jones’ costs agreement does provide that for a hearing set down for more than 1 day, the fees payable for the entire hearing are payable by way of cancellation fee if the matter is settled, vacated, adjourned or otherwise does not proceed within 1 month of the listing date (cl 2.7). However, permitting the recovery of the fee would be contrary to the Guidelines, which state (in footnote 8) “[c]ancellation fees, over and above the first day of a brief on hearing, should not be allowed.”

19. [89]

    This aspect of the Guidelines was raised in terms with Mr Elias. The question sent by email from my Associate, and the response, were as follows:

20. [90]

    The response does not attend to the question. The claim is palpably contrary to the Guidelines. That fact was squarely raised with Mr Elias. The response does not mention the Guidelines, still less does it say why they are inapplicable to the present case. Instead, the response merely reiterates the factual preconditions (namely, incorporation within the costs agreement, and the fact that the hearing did not extend into the second day) to the cancellation fee being payable. That is to say, only if the matters identified in Mr Elias’ submission were established could there be any liability on the part of anyone to pay the cancellation fee. But the issue is whether assuming there is such a liability, why should there be a departure from the Guidelines?

21. [91]

    I reject these submissions. I do so on two bases.

22. [92]

    First, the Guidelines are not binding, but there is merit in treating them as a general rule, departure from which requires identifying some good reason. No good reason has been identified. Further, bearing in mind that on the evidence before me there was no indication after 6 June that any application to withdraw the submitting appearances might be made, it should have been clear to Mr Elias that the hearing if it proceeded ex parte would never go into a second day.

23. [93]

    Secondly, even if that were not so, I respectfully agree with what was said by Rees J on this issue in Hoho Property Pty Ltd v Bass Finance No 37 Pty Ltd [2022] NSWSC 1062 at [22]-[23]:

24. [94]

    I also respectfully share the views expressed by Wilcox J in Commissioner of the Australian Federal Police v Razzi (No 2) (1991) 30 FCR 64 at 67:

25. [95]

    That passage was written 34 years ago, but legal fees have not become less onerous in the meantime. That said, there may be exceptional cases (for example, a modest cancellation fee when counsel is retained for a four week trial at the commencement of law term, when it is unlikely that other work will become available). The cancellation fee sought to be recovered by Mr Elias is well removed from that example.

26. [96]

    Ordinarily a relatively high proportion of costs in the form of counsel’s fees is recoverable under a gross sum process. But this is not an ordinary case. Bearing in mind that a discount is appropriate so as to ensure that the process does not penalise the person liable to pay the costs, and the further discount lest the defendants be penalised for the fact that Mr Elias briefed one counsel to obtain ex parte relief and another counsel on the return date, I would allow some $2,400 for Mr Isackson (reflecting a discount to around $2,800 for additional time which would not have been needed had the same counsel been briefed, to which has been applied the 85% discount which Mr Elias has proposed).

27. [97]

    I would allow $11,000 for Mr Jones. The latter reflects my view that a fair and reasonable amount would be some 4 days (roughly, 1½ days for the ex parte application, ½ a day for subsequent work, and two days’ fees for preparation and the hearing on 14 July). I would apply a daily rate of around $3,200 and then make the deduction of around 15% which Mr Elias accepts is appropriate.

28. [98]

    Those amounts exclude GST.

29. [99]

    The disbursements exclusive of counsel’s fees include amounts of $224 for transcripts of 27 June and 1 August. I do not see how either is an expense which the defendants should pay – both were for hearings which produced no tangible result by reason of deficiencies in Mr Elias’ preparation.

30. [100]

    They also include an amount on 1 April 2025 the day after the matter was opened, for $2,500 (exclusive of GST) for “Internal expenses: Fixed internal expenses per Costs Agreement, including but not limited to in office printing, photocopying, scanning, filing, archiving and stationary [sic]”. To be fair, no separate charge is made for photocopying. On the other hand, it is difficult to see how this is a cost or expense which it is fair and reasonable for the defendants to pay. It is a notional amount, which Mr Elias has agreed to be paid to his company in lieu of any actual costing of photocopying and other ordinary office expenses, and seems to bear no resemblance to any pre-estimate of actual disbursements.

31. [101]

    Mr Elias availed himself of the opportunity to address this claim as follows:

32. [102]

    I do not accept this. The Court book that matters is the one which was tendered at the (third) application for default judgment. It contained 561 pages. It extended into a second volume only because it was printed single-sided. As will become apparent, no fewer than five copies were printed. But the real point is that the recovery of internal expenses is not measured by the proposition that another law practice (perhaps one in which a separate company provides photocopying services) might charge a rate of $0.50 or $1 per page for photocopying. The question is what was the cost to Saile Law of running off copies of a relatively short court book. Bearing in mind that Saile Law did charge a high rate for paralegals involved in that exercise, the cost would be minimal.

33. [103]

    I do not accept that it is fair and reasonable for this upfront and relatively arbitrary cost to be borne by the defendants.

34. [104]

    Otherwise the disbursements are reasonable. They amount to $7,012.75, and include GST. Applying the 85% rate proposed by Mr Elias, that yields an amount which I shall round to $6,000.

35. [105]

    I turn to professional costs. I have already mentioned that Ms Rita Elias and Ms Jessie Elias each charged $1,625 for 6.5 hours work on 5 June 2025. The description in the costing for Mr Rita Elias is:

36. [106]

    The entry for Ms Jessie Elias is identical save that it concludes “with the assistance of RE”.

37. [107]

    This is the Court book for the first application for default judgment that did not proceed. According to Mr Elias’ submission on this point, it had 20 tabs and 461 pages. Of course, that time may not have been wholly wasted, in light of the need for a court book later in the litigation. However, Ms Rita Elias also charged 8 hours on Thursday 10 July for “Organising Court book, printing, collating, scanning and hole punching pages. Organised 4 x 2 volumes of Court books. Organising electronic version of Court book”, followed by a further 5 hours on Friday 11 July “Continued to organise, compile and settle Court books (5 copies). Attended to Leeming J’s chambers and Counsel chambers to provide copies of Court books”, and then a further 3 hours on Saturday 12 July “Organised one more copy of Volumes 1 and 2 of Court book”.

38. [108]

    When asked to elaborate on the time spent by Ms Rita Elias and Ms Jessie Elias, it was said that:

39. [109]

    Mr Elias maintained that “[t]he above time spent and charged was reasonably incurred and necessary in advancing and preparing the matter”.

40. [110]

    A copy of this court book was tendered. It is not especially complex. Volume 1 contains 7 documents: the summons, the statement of claim, the submitting appearance, and two affidavits of Mr Elias with their exhibits. Volume 2 contains 11 documents: 6 emails, some court orders, some transcript, a copy of Mr Elias’ ATO statement, and Mr Elias’ written submissions. Both contain helpful indexes, and are paginated and tabbed. But the indexes are brief, and the pagination has been applied automatically when (I infer) a large PDF scan of the appeal book has been assembled before printing.

41. [111]

    The proposition that it would take a paralegal who charges $250 per hour (which is towards the top of the range in the Guidelines ($135 - $300) for paralegals) 3 whole hours to run off another copy of a court book on the Saturday before a hearing is improbable. Mr Elias made no comment on that despite my Associate’s email referring in terms to the time charged on 12 July.

42. [112]

    The proposition that it is fair and reasonable for the defendants to pay $750 or anything like that amount for that extra copy is absurd. It is not even established that a 5th copy on an application against a submitting defendant was justifiable.

43. [113]

    Aside from the 3 hours on the Saturday, the claim for costs includes 13 hours of Ms Elias’ time for preparing four copies of a straightforward court book. Nothing like that amount of time is fair and reasonable. The list of activities identified by Mr Elias is long, but they do not, with respect, withstand scrutiny.

    1. (1)

       “Assisting Mr Elias with reviewing the material” suggests that there was not a clear delineation of work. I bear in mind that Mr Elias settled the court book, and on 10 July he charged 3 hours for “Prepare Court Book for Final Hearing” and on 11 July a further 2 hours for “Settle Court Book for final hearing”. Ms Elias’ role was, it is to be inferred, entirely administrative.

    2. (2)

       “Collecting, organising, arranging documents, compiling documents” is not challenging for a court book with 18 documents. Each of the 18 documents must have been readily to hand (and indeed an efficient approach would have been to collect them electronically).

    3. (3)

       “Indexing” amounts to listing the 18 documents; it is the work of a few minutes.

    4. (4)

       “Paginating” was done automatically, as is plain from the format of the court book.

    5. (5)

       “Formatting when required” is unexplained, and has the appearance of a make-weight.

    6. (6)

       “Printing, copying, scanning and compiling multiple hard copy volumes” should have been a largely automated process. If for some reason Saile Law did not have a printer/photocopier that had an automatic paper feeder, that does not mean that Ms Elias’ time manually feeding in the pages is fair and reasonable.

44. [114]

    The bottom line is that of the $19,100 of paralegal time, $7,250 (29 hours) has been attributed to preparing a simple court book of two volumes containing 18 items. Both the hourly rate for work which could be done by a law student or a secretary and the number of hours are excessive.

45. [115]

    I have dwelt on the production of the court book because it is a large item, and I am better placed to assess what was involved than some other aspects of the claim. It is not possible for me to express a conclusion on each and every item claimed, and it would be wrong to attempt to do so. The application for a gross sum costs order is not to be converted to a de facto assessment of costs, and it is to be borne in mind that there has been no process of challenging and justifying the various items. However, it is necessary to have sufficient confidence that the amount represents a fair and reasonable amount that the other party should have to pay.

46. [116]

    I am unpersuaded that 85% x $19,050 or anything like that amount is a fair and reasonable amount for the defendants to pay for the professional services provided by paralegals charging at $250 per hour plus GST.

47. [117]

    In response to the invitation to comment on the hourly rates, Mr Elias said that a costs assessor would more than likely not reduce the rate, because:

48. [118]

    Nothing was said to suggest that either paralegal was especially highly skilled so as to warrant a rate towards the top of the range. I have already expressed views about the absence of complexity of this matter. The ability to assemble a court book is not complex. The particular court book that was supplied at the hearing of 14 July 2025 was the opposite of complex.

49. [119]

    Those considerations lead me to conclude that a significantly greater discount must be applied in order to convert the amounts charged by Saile Law into amounts which are fair and reasonable. For the largest item, preparation of straightforward court books after they have been settled by a solicitor, the costs are way too high. I would reduce the 29 hours to something like 8-10 hours (or one third of the amount claimed). Accepting that the balance of items may not have been so wasteful, I would reduce the professional costs to $8,000, and applying a 15% discount yields $6,800.

50. [120]

    That produces a gross sum assessment of $6,800 for professional costs, $13,400 for counsel and $6,000 for other disbursements. The first two components have been calculated on the basis that they do not include GST, but the third already includes GST. Against the possibility of execution of the order, it is better to provide an amount which includes GST (cf Litigation Fund WCX Pty Ltd v Mitchell (No 5) [2025] NSWCA 149). 1.1 x $20,200 + $6,000 = $28,220.

51. [121]

    By way of cross-check, the contribution of counsel’s fees of around half is high, but that reflects the fact that the litigation was short in duration, with a series of interlocutory applications, coupled with the fact that the amounts exclude the entirety of time for any solicitor, because Mr Elias chose to use no solicitor other than himself.

52. [122]

    By way of further cross-check, it is steadily to be borne in mind that (a) the claim was one which was small by the standard of claims in this Court, which aside from the fact that it involved a solicitor should have been brought in an inferior court, and (b) at all times after early June 2025, Mr Elias was prosecuting litigation in which all defendants had submitted. Mr Elias was entitled to seek interlocutory relief, which materially increased the costs at the commencement of the litigation. But even so, it would not be fair and reasonable for anything like the $92,702.49 to be recoverable, even if contrary to my view, Mr Elias’ own time is recoverable.

53. [123]

    It is also to be borne steadily in mind that Ms Smidt has never opposed any of the relief sought, and filed a submitting appearance, and all that has been obtained is ex parte relief for short service and Mareva orders, together with default judgment. I do not neglect the fact that Ms Smidt was, potentially, a difficult litigant. On Mr Elias’ case, she committed serious fraud on the Australian Taxation Office. Her conduct in this litigation has been problematic. Those considerations tend both to favour the making of a gross sum costs order, and to increase its amount. But those considerations do not justify the amount claimed or anything like that amount.

54. [124]

    I shall order that the first and second defendants pay the plaintiff’s costs in the gross sum of $28,220 (inclusive of GST).

Ms Smidt’s further submissions

1. [125]

   After this matter was listed for judgment, Ms Smidt supplied a document of 11 pages and 34 paragraphs to my Associate. She did so by email sent at 10:32am on 17 September, the matter being listed for judgment at 2pm. There was no explanation for her non-compliance with the directions, or for why she had not participated in the application for costs previously.

2. [126]

   The submissions are prepared by Ms Smidt personally, purportedly on behalf of both herself and Just Law Group Pty Ltd. Ms Smidt is not a legal practitioner. There is no application for leave to appear for the company. I would not grant leave. The position is no different from what occurred on 6 June 2025; in fact, it is worse. Both Ms Smidt and Mr Elias make serious allegations against the other, accusing each of dishonesty. Ms Smidt cannot in those circumstances represent the law practice of which she was, at relevant times, a director.

3. [127]

   Ms Smidt is entitled to make submissions on her own behalf against the costs order sought by Mr Elias. She may do so notwithstanding her submitting appearance (which was expressed to be “save as to costs”). However, that entitlement is not to be converted into a free-standing right to make submissions on the merits of litigation in which she has declined to participate to date, at least in circumstances where there is no application seeking leave to withdraw her submitting appearance.

4. [128]

   Much of the submission is directed to the “improper procedural conduct” by Mr Elias in the litigation. She says the litigation was improperly commenced, and that he has not used fair and reasonable tactics. She says that he has misled the Court, the Law Society, that she has been defamed, and has suffered significant harm. She goes so far as to say that “dishonest and misleading affidavits” were made by Mr and Mrs Elias in relation to service. It was open to Ms Smidt earlier in the litigation to apply to withdraw her submitting appearance and contest those issues. I am not prepared to let her advance such submissions – which on any view are amply outside the leave granted last week for further submissions on particular issues of Mr Elias’ claim for costs – now, at the end of the litigation, in opposition to a gross sum costs order. Lest there be any doubt about it, I am not determining one way or the other the correctness of those submissions, which were made without leave and unsupported by evidence, and in response to which Mr Elias has not been heard.

5. [129]

   I now turn to Ms Smidt’s submissions which are more closely connected with the costs order sought by Mr Elias.

6. [130]

   Ms Smidt says, repeatedly, that she will be unable to meet any substantial costs order. That is a reason favouring the making of a gross sum costs order, as noted above.

7. [131]

   Ms Smidt says that there should be no order of any costs following her payment of $5,438.11 on 26 June 2025. I do not accept the submission. Mr Elias was entitled to seek a court decision addressing not just any actual loss he has suffered, but also any potential loss he may suffer.

8. [132]

   Ms Smidt says that the rates of counsel, Ms Rita Elias, and Ms Jessie Elias are too high. As will be apparent from the above, I agree.

9. [133]

   Ms Smidt also says the fees claimed by Mr Jones on 23 and 26 June should not be allowed. As will be apparent from the above, I agree in large measure.

10. [134]

    Ms Smidt also objects to Mr Jones’ cancellation fee, saying that the final hearing should have been vacated. I do not agree with her submission, but the cancellation fee has not contributed to the gross sum I would order.

11. [135]

    Ms Smidt says she “request[s] further particulars” of the $2,500 internal expenses fee, which on its face is too high, and she seeks clarification of the time spent on preparing a Court Book. There must be an end to disputes concerning a relatively small amount of costs, lest the process of seeking and providing explanations consumes more time and expense than the costs at stake. As explained above, I am unpersuaded that any of the $2,500 disbursement has been shown to be fair and reasonable, and I have very significantly reduced the disbursement recoverable for preparing the Court Book.

12. [136]

    Finally, Ms Smidt says that the matter should proceed to itemised assessment by a costs assessor. I disagree. Everything about this litigation, including the most recent submissions from Ms Smidt, strengthen my conclusion that there should be a gross sum order.

Should I determine the position if Mr Elias is entitled to his time?

1. [137]

   Finally, I have considered whether I should express a view concerning the recoverability of Mr Elias’ time, against the possibility that I am wrong to regard this as not recoverable. I have determined that I should not take that course, for the following reasons.

2. [138]

   First, the reason for a judge at first instance to assess notional damages and make other findings in the alternative is to avoid the need for a retrial; see the authorities collected in Kronenberg v Macaulay [2025] NSWCA 195 at [20]-[22]. But I am in no specially advantaged position over and above an appellate court. Most of Mr Elias’ costs were incurred in relation to the early steps in the litigation which were before other judicial officers.

3. [139]

   Secondly, making findings in the alternative would require me to confront what I regard to be a large issue. The largest component of the claim for costs is Mr Elias’ own hourly time in proceedings he has brought against the defendants. He concedes, in my view properly, that there should be a 70% discount for time spent on his own affidavits. As it happens, there have been a series of mis-steps in the litigation, leading to the three applications for default judgment, and special costs orders along the way, all in circumstances where after early June the defendants had submitted. In Bell Lawyers, it was “queried whether such a solicitor has sufficient professional detachment to be characterised as acting in a professional legal capacity when doing work for the incorporated legal practice”: at [51]. It is far from clear to me that even if contrary to my view Mr Elias is entitled to some of his time at his professional rate of $500 per hour plus GST, he was actually acting in a professional capacity for most of the proceedings, as opposed to his personal capacities as witness of fact and plaintiff seeking relief from the Court. That is to say, there are other aspects of the services provided by him in relation to which it may be doubted that Mr Elias was capable of acting with appropriate professional detachment. This includes the time charged by Mr Elias taking instructions from and drafting affidavits of other witnesses of fact, bearing in mind that when doing so he was acting as both litigant and witness of fact and solicitor (for example, between 3 and 9 April, Mr Elias charged $3,900 for work relating to affidavits of Mr Abbotts, Mr Lowry and Ms Houchen and it would be difficult for him to disregard his own recollections of events when taking evidence from other witnesses of fact). I would want Mr Elias to have an opportunity to be heard as to this, which was not squarely raised on 1 September, when the main topic was the substantive orders rather than costs. But in litigation where costs have already been excessive, no useful purpose would be served in causing Mr Elias to incur yet further costs so that I could make notional findings in a way that was procedurally fair to him.

4. [140]

   Thirdly, these costs are relatively small. Of the $67,480 of professional costs which are pressed, $48,430 relate to Mr Elias, and he seeks to recover 85% of those costs, which is $41,165.50. On the view of the law I take he is not entitled to any, and there must come a time when I shall cease to determine, even notionally, the remaining outstanding issues against the possibility that the law is contrary to what I have determined.

Orders

1. [141]

   The Court’s orders are: