FEDERAL COURT OF AUSTRALIA

Hudson v Sigalla (No 2) [2017] FCA 339

ORDERS

THE COURT ORDERS THAT:

1.    Order 3 made on 28 November 2016 be varied by the addition of the following:

“in the sum of $28,300, made up as follows:

(a)    $10,450 in respect of Mr Katekar’s fees;

(b)    $11,950 in respect of Mr Botsman’s fees; and

(c)    $5,900 in respect of Mr Jolly’s costs and other disbursements”.

2.    Each party pay his own costs of the present application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    This is a dispute about costs arising out of an incompetent appeal concerning another dispute about costs. It is a melancholy tale.

Background

2    Frank Hudson purported to appeal from orders made in the Federal Circuit Court that the costs he was adjudged liable to pay be fixed in a lump sum of $317,106, in circumstances in which the primary judge had earlier ordered that the costs be taxed. The lump sum costs order was made following an interlocutory application by the lawyers for the successful party (Andrew Sigalla) in which they sought a variation of the earlier order to enable the costs to be paid directly to them: Hudson v Sigalla (No.3) [2016] FCCA 2140. The lawyers in question included a firm of solicitors, Kemp Strang Lawyers, and the barristers they had briefed to represent Mr Sigalla: Guy Reynolds SC and Christopher Botsman.

3    Three preliminary questions were raised by the notice of appeal and it is from the determination of two of those questions that the present application arises. The first two questions were whether Mr Hudson needed leave to appeal and, if so, whether leave to appeal should be granted. The third question was whether a partial stay of the primary judge’s orders should be granted.

4    On 17 October 2016 I listed the three preliminary questions for hearing. The hearing took place on 25 November 2016. During the course of it the third issue fell away when Mr Hudson abandoned his application for a partial stay.

5    Three days later I delivered judgment, making orders dismissing the notice of appeal as incompetent, refusing Mr Hudson leave to appeal, and requiring him to pay the respondents’ costs: Hudson v Sigalla [2016] FCA 1204. When these orders were pronounced, Mr Katekar, counsel for Mr Reynolds and Mr Botsman, applied for an order that costs be paid in a specified sum. That sum was “at least” $49,709.78, being 85% of what they asserted were their total costs of $58,481.50. The latter figure comprised $11,687.50 (the subject of an invoice issued by Sean Jolly, the principal solicitor of the firm IHS Law, who had only been instructed on 28 October 2016); $12,650 (the subject of an invoice from Mr Katekar, who had come into the matter only two days before the hearing); and the somewhat astonishing sum of $34,144 (the subject of an invoice apparently issued by Mr Botsman to Mr Reynolds).

6    Mr Hudson did not oppose the making of a fixed costs order but balked at paying the amount sought.

The competing arguments and evidence

7    On the face of things, as Mr Hudson submitted, the amount of costs claimed is manifestly unreasonable. Still, the respondents maintained that it was “appropriate” for the following reasons.

8    First, they contended, the “mix of costs” was “lean” because the person who had done most of the work (Mr Botsman) had charged the lowest hourly rate; there was no duplication; none of the counsel who was involved in the matter before Mr Katekar had charged for his work and neither had Mr Reynolds.

9    Secondly, they contended that the Court was not obliged to discount fees when fixing a lump sum and, where counsel’s fees are reasonable, they need only be reduced by 5%.

10    Thirdly, they contended that Mr Hudson’s failure to accept the respondents’ offers of settlement was imprudent and unreasonable, the stay was hopeless, and the appeal was without merit.

11    The application was supported by an affidavit from Mr Jolly sworn the same day. Annexed to that affidavit were three tax invoices, and a one-page outline of submissions attaching the same three tax invoices and two letters. The first letter, apparently sent on 7 October 2016, urged Mr Hudson to abandon his start application. The second, dated 19 October 2016, urged the abandonment of the appeal. In the second letter, upon which the respondents relied, they asserted that the appeal had “no or negligible prospects of success”. They added:

It is also clear that, by pressing the appeal your client will be exposed to the costs of briefing at least two and possibly three sets of lawyers to represent the practitioners. These costs could add between $50,000 and $100,000 to your client’s costs, if, as we expect, the appeal is dismissed.

(Emphasis added.)

12    Both letters made offers of settlement and foreshadowed applications for indemnity costs in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333 in the event that the offers were not accepted within the times specified in the letters — 10 am on 11 October 2016 with respect to the stay application and 5 pm on 21 October 2016 with respect to the appeal. The offers were not accepted within the specified times and, accordingly, lapsed.

13    As Mr Hudson had only received notice of the respondents’ application earlier in the afternoon, I made orders enabling him to consider and respond to the material proffered on behalf of the respondents and for the respondents to file any submissions and evidence in reply.

14    On 5 December 2015 Mr Hudson’s lawyers, Marque Lawyers, filed a 20-page affidavit affirmed the same day by Damian Bruce Sturzaker, a partner of the firm and the solicitor on the record for Mr Hudson, and a five-page submission from Christopher Wood, Mr Hudson’s barrister. In his affidavit Mr Sturzaker took issue with the costs purportedly incurred by Mr Botsman in representing Mr Reynolds and the reasonableness of the total amount claimed.

15    Mr Hudson submitted that no amount should be allowed for Mr Botsman’s fees because generally parties cannot recover for their time and effort in preparing and presenting their own cases. He submitted that, while there is an exception for clients who are solicitors (known as the Chorley exception after London Scottish Benefit Society v Chorley, Crawford, and Chester (1884) 13 QBD 872), that exception has been widely criticised, it only applies where the solicitors do not retain lawyers of their own (citing Bechara t/as Bechara and Co v Bates [2016] NSWCA 294 at [24]), and it is doubtful whether it applies to barristers who act for themselves (citing Bechara at [30]). In the alternative, Mr Hudson submitted that a discount of “more than 60%” should be applied to the costs of both Mr Botsman and Mr Katekar. Mr Hudson also submitted that the invoice Mr Botsman sent to Mr Reynolds on 28 November 2016 included entries for work performed by Mr Botsman on his own behalf or which would have been necessary regardless of whether he was briefed for Mr Reynolds. He contended that, on the face of the invoice, the amount which was solely attributable to acting for Mr Reynolds was approximately $3,000. He was also critical of several of the claims made by Mr Jolly, describing them as “plainly unreasonable” and argued that the amount sought for Mr Katekar was excessive because his fees were higher than the range published by the National Guide to Counsel Fees.

16    On 13 December 2016 the respondents filed a 10-page submission in reply. Like Mr Hudson, they paid no heed to the Costs Practice Note (GPN-COSTS), which stipulates (at [4.15]) that, unless leave is given by the Court in advance, no costs submissions may exceed three pages. In their reply submission, the respondents moved away from the original sum they proposed to a total figure of $74,499.70, an effective increase of about 50%. That sum was made up as follows:

(a)    $6,424 inclusive of GST “subject to such discount as the Court considers appropriate” for the period from 30 September 2016 to 21 October 2016, when the second Calderbank offer lapsed;

(b)    $55,687.50 inclusive of GST for the period from 22 October 2016 until 28 November 2016 on an indemnity basis; and

(c)    $12,388.20 inclusive of GST “subject to such discount as the Court thinks appropriate” for the costs incurred in relation to the application for the costs to be paid in a specified sum.

17    On 13 December 2016 Mr Reynolds’ and Mr Botsman’s solicitors, IHS Law, filed a 50 page affidavit sworn the previous day by Mr Jolly. Objection was later taken, with good reason, to three annexures to the affidavit (SEJ15, SEJ16, and SEJ17) and a number of paragraphs in the affidavit itself on the basis that it was not evidence in reply and was filed without the leave of the Court. The three annexures consisted of invoices totalling $12,938.20 issued after Mr Hudson’s evidence and submissions had been filed. In the absence of any application for leave to adduce additional evidence in chief, I propose to disregard all material in Mr Jolly’s affidavit (including the annexures) which is not strictly in reply. A good deal of the material in Mr Jolly’s affidavit is not evidence but argument and it will be treated as such.

The Court’s powers and duties

18    Section 43(2) of the Federal Court of Australia Act 1976 (Cth) (the Act) relevantly provides that “except as provided by any other Act, the award of costs is in the discretion of the Court or Judge”. “Costs” are not defined in the Act but plainly include disbursements, including counsel’s fees: see, for example, Visscher v Teekay Shipping (Australia) Pty Ltd (No 3) [2012] FCA 212 at [9].

19    The discretion conferred by s 43(2) is extremely wide. Still, it must be exercised judicially and in the way that best promotes the overarching purpose of the civil procedure provisions of the Act and the Federal Court Rules 2011 (FCR or Rules): s 37M. That purpose is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: s 37M(1). Subsection (2) states:

Without limiting the generality of subsection (1), the overarching purpose includes the following objectives:

(a)    the just determination of all proceedings before the Court;

(b)    the efficient use of the judicial and administrative resources available for the purposes of the Court;

(c)    the efficient disposal of the Court’s overall caseload;

(d)    the disposal of all proceedings in a timely manner;

(e)    the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.

20    Parties also have a duty to conduct proceedings, including settlement negotiations, in a way that is consistent with that purpose (s 37N(1)) and their lawyers are obliged to take that duty into account and assist their clients to comply with it (s 37N(2)). Any failure by a party or the party’s lawyer to comply with those duties must be taken into account in the exercise of the costs discretion: s 37N(4).

21    The Court’s power to make a costs order in a specified sum is provided for expressly in s 43(3)(d) of the Act and r 40.02(b) of the Rules. The purpose of such a rule is “to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120 citing Leary v Leary [1987] 1 WLR 72; [1987] 1 All ER 261.

22    Some of the relevant principles informing the exercise of the discretion were helpfully summarised by Sackville J in Seven Network Ltd v News Ltd [2007] FCA 2059 at [25]-[30], a case decided under the former Rules of Court. In substance they are as follows:

(1)    The sum is to be “fixed broadly having regard to the information before the Court” (Beach Petroleum at 124) and “a much broader brush [is to be applied] than would be applied on taxation” (Hadid v Lenfest Communications Inc [2000] FCA 628 at [35]; Harrison v Schipp (2002) 54 NSWLR 738 at [22] per Giles JA).

(2)    The principles applicable on taxation and the costs allowable on taxation may nonetheless assist the Court in fixing an appropriate sum, but “care should be taken … to ensure that the process does not take on too many of the characteristics of a taxation”: Seven Network at [30].

(3)    The approach to be taken must be “logical, fair and reasonable”: Beach Petroleum at 123, cited in Hadid at [27]; Harrison at [22].

(4)    The Court should be astute to avoid overestimating the recoverable costs and underestimating the appropriate amount such as by applying an arbitrary discount: Beach Petroleum at 123.

23    I note that on taxation a taxing officer is obliged to disallow costs that, in his or her opinion, have been incurred or increased, relevantly, unreasonably or through overcaution or by other unnecessary expense: FCR r 40.30(b).

An order should be made but in what sum?

24    I am satisfied that this is an appropriate case in which to make an order for the payment of costs in a specified sum. The more difficult question is: in what sum?

25    At first blush, the submission made by the respondents that from 22 October 2016 costs should be assessed on an indemnity basis is not without merit. An offer to compromise only on costs is still an offer of compromise which would entitle a judge in the exercise of her discretion to award indemnity costs: see Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53 at [125]–[146] and the authorities referred to there. Not only did Mr Hudson not accept the offer; he did not respond to it, and, while he may have thought that there was no point in doing so, he offered no explanation for his silence. Still, this does not mean that indemnity costs must be awarded; ultimately “the question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rules as to costs”: SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]; (Giles JA) and Jones v Bradley (No 2) [2003] NSWCA 258 at [8]-[9]. As Lloyd LJ observed in Taylor v Pace Developments Ltd [1991] BCC 406 at 408, “there is only one immutable rule in relation to costs, and that is that there are no immutable rules”.

26    In the peculiar circumstances of the present case, I am not disposed to award indemnity costs. While Mr Hudson’s prospects of success were slim and his insistence that he did not need leave to appeal was misguided, the challenge to the primary judge’s decision was made in good faith. The respondents’ offer involved no compromise of the very substantial amount he had been ordered to pay; he was simply invited to capitulate. The costs incurred to that point were relatively inconsequential. Moreover, there was no justification for the thinly-veiled threat made in the letter of offer that the respondents would retain “two and possibly three sets of lawyers” to represent them. Certainly, no justification for this prediction was given in the letter. In the interlocutory application in the court below, the respondents were, in effect, self-represented, although Mr Botsman appeared as counsel for Mr Reynolds. Furthermore, the notion that the fair and reasonable costs that would be generated in opposing an appeal against a lump sum costs order would approach $50,000 to $100,000 was barely credible. I make no adverse finding as to the actual motivations of the offerors, but the offer has the appearance of a procedural move to support a claim for indemnity costs, rather than a genuine attempt to reach a negotiated settlement: The Uniting Church v Takacs (No 2) [2008] NSWCA 172 at [14] (Hodgson JA). In all the circumstances, I am not satisfied that it was unreasonable of Mr Hudson not to accept it.

27    I now turn to consider the costs themselves.

28    It is convenient to deal first with the least controversial components: the fees charged by Mr Jolly and Mr Katekar.

29    Mr Jolly has been in practice since July 2005, first as a solicitor in a firm, then as a sole practitioner as the principal of IHS Law, a small law firm in Beecroft on Sydney’s North Shore. He was admitted as a notary public in October 2015. He charged at an hourly rate of $500, which, he said, was based on the published rates for a notary public of $55 including GST for each 6 minute time unit or part thereof and the scale fees set out in Schedule 3 to the Rules of no more than $58 per each 6 minute unit, his post-admission experience of over 11 years in civil litigation including matters in this Court and the Supreme Court, and over eight years as a principal of a law practice.

30    A number of his charges I consider unreasonable and/or unnecessary, such as $2,160 for preparing for the interlocutory hearing (including allowing 42 minutes to prepare a notice of acting for Mr Botsman) and $425 for “receiving and forwarding” a list of authorities, authorities and a chronology.

31    Furthermore, many of the tasks described in Mr Jolly’s invoice did not require the services of an experienced solicitor. For instance, Mr Jolly charged at the rate of $500 per hour for preparing a notice of acting and for scanning, assembling, paginating and printing documents, even when some of those tasks are expressly singled out in cl 8.1 of Schedule 3 as tasks capable of being performed by a clerk or paralegal at the rate of $11 per 6 minute unit ($110 per hour or approximately one-fifth what Mr Jolly charged). He sought to justify these charges by saying that things needed to be done quickly and it was more efficient for him to carry out these tasks personally. That may well be so, but it does not mean that it is fair and reasonable to charge for them at close to the maximum rate that a solicitor is entitled to charge. In Council of the Queensland Law Society Inc v Roche [2004] 2 Qd R 574 at [32] de Jersey CJ (with whom McMurdo P and Williams JA agreed) observed that “[i]t would be unprofessional … to set a high, across-the-board rate … which resulted in a windfall because of the high proportion of non-qualified work to be accomplished”. Regulatory Guide 8, Billing Practices — Some Key Principles (Version 2), published by the Queensland Legal Services Commission in November 2013, states that:

a lawyer’s legal costs should be confined to the work they perform in their capacity as qualified legal practitioners (and, as we describe below, ‘paralegal’ work performed by non‐legally qualified law practice employees under the lawyer’s supervision). Lawyers who perform work which does not require legal professional knowledge and which they perform in some other capacity are entitled to be paid for that work in the same way as any other person who performs that same kind of work.

32    These principles are reflected in Schedule 3 to the Rules. Despite what Mr Jolly seems to have thought, the maximum hourly rate prescribed by the Rules does not turn solely on the lawyer’s skill and experience. It also depends on the complexity of the matter, the difficulty or novelty of the issues, and whether the task is capable of being performed by non-lawyers. Clause 1, for example is in these terms:

1 Attendances

1.1    Attendances by a lawyer requiring the skill of a lawyer (including attendances in conference, by telephone, on counsel, appearing in court, instructing in court and travelling), for each unit of 6 minutes a sum in all circumstances not exceeding $58:

(a)    having regard to the lawyer’s skill and experience; and

(b)    having regard to the complexity of the matter or the difficulty or novelty of the questions involved.

1.2    Where any attendance referred to in item 1.1 is capable of performance by a law graduate or articled clerk for each unit of 6 minutes: $22.

1.3    Attendances capable of performance by a clerk or paralegal—for each unit of 6 minutes: $11.

33    The rates at which Mr Jolly charged paid no regard to the kind of activity in which he was engaged. Not only did he charge principal’s rates for para-legal and clerical tasks, he charged the same rates for travelling to and from the city and for receiving and forwarding documents. In New South Wales Crime Commission v Fleming and Heal (1991) 24 NSWLR 116 at 126 Gleeson CJ observed that “to allow a simple, flat, hourly rate as the basis for charging for anything, of whatever character, done by any solicitor of whatever seniority and experience … is difficult to justify.”

34    For these reasons, applying a broad brush, I would reduce the amount sought for Mr Jolly’s costs by approximately 50%.

35    Mr Katekar is an experienced junior counsel who came into the matter at short notice. I take these matters into account but I would make a modest reduction in the fees claimed. For an interlocutory application, the rate for junior counsel for which the National Guide to Counsel Fees provides is between $690 and $4,140. The rate for a final hearing is between $900 and $4,200. In lieu of the $12,650 claimed, I would allow $10,450 including GST.

36    I now turn to consider the largest single component of the claim: Mr Botsman’s fees. The respondents submitted that the costs were high “because of the complexity of the issues, the need to carefully and comprehensively answer Mr Hudson’s submissions, the opportunity to dispose of the appeal and the stay at the preliminary stage, and Mr Botsman’s tireless efforts to settle the matter”. They also submitted that, because Mr Botsman represented both himself and Mr Reynolds and the issues were the same, the question of whether Mr Botsman is entitled to recover his costs as a self-represented litigant does not arise. Alternatively, they contended that the Chorley exception would apply and he is therefore entitled to those costs.

37    Putting to one side the question of the representation of Mr Reynolds, which I will address first, none of these submissions is persuasive.

38    Mr Sturzaker’s evidence is that, before 28 November 2016, when he was served with a letter from Mr Botsman to Mr Reynolds to which a signed costs agreement was annexed, he had not been told and was unaware that Mr Botsman acted for Mr Reynolds. That evidence is difficult to accept when the submissions filed on 14 November 2016 were signed by Mr Botsman (as well as Jonathan Redwood) each as “Counsel for the Second and Third Respondents”. On the other hand, there is no evidence that before those submissions were served, Mr Hudson was on notice that Mr Botsman was acting, not merely on his own account, but also as counsel for Mr Reynolds.

39    The costs agreement is dated 20 September 2016 and appears to have been sent to Mr Reynolds on that date. While there is no evidence as to when the agreement was executed the last clause states:

Offer & Acceptance. This agreement takes effect by the Client: (a) signing in the space provided below and providing the Barrister with the signed version; or (b) by instructing or continuing to instruct the Barrister after receiving this document. Such acceptance signifies that the Client understands and give[s] consent to the proposed costs.

40    Despite the costs agreement, when the matter first came before me for case management on 17 October 2016 Mr Botsman did not appear for Mr Reynolds.

41    At first, only Mr Wood appeared. I adjourned for a short time to enable Mr Wood to contact the other parties and when the hearing resumed Mr Botsman appeared. At this point, Mr Botsman announced that he was the second respondent. Mr Reynolds did not appear, but Mr Botsman did not say that he appeared for him. To the contrary he said: “I mention the appearance for Mr Reynolds”. At the conclusion of the hearing, when I was exploring suitable hearing dates, Mr Botsman said:

The 24th and 25th are convenient for me, but I will have to – I can envisage myself and Mr Reynolds will be represented. The question is whether we’re represented together or separately. The counsel that I have in mind is available for those – the 24th and 25th, your Honour.

42    Those remarks are odd, to say the least, if, the costs agreement was in force at that time, as the costs agreement extended, not only to preparation and paperwork and the conduct of settlement negotiations, but also to representation of Mr Reynolds at the hearing and other court appearances.

43    Furthermore, an affidavit sworn by Mr Botsman on 31 October 2016 was read in Court on 25 November 2016. Nowhere in that affidavit did Mr Botsman indicate that he had been briefed to represent Mr Reynolds. He merely described himself as a respondent to Mr Hudson’s appeal and a respondent to Mr Hudson’s application for a partial stay of the Federal Circuit Court’s orders. While he did say that he sent an email on behalf of himself and Mr Reynolds on 21 September 2016, he did not say that he did so as Mr Reynolds’ legal representative.

44    In these circumstances, before he was served with the written submissions there was no reason for Mr Hudson to believe that Mr Botsman’s activities in and out of court in connection with the proceeding were conducted as counsel for Mr Reynolds.

45    Some allowance should be made for the fees Mr Botsman incurred in representing Mr Reynolds. For the following reasons, however, there should be a substantial discount.

46    First, contrary to the respondents’ submissions, the issues were not complex. Nor was there any need to “comprehensively answer” Mr Hudson’s submissions. After all, I was not hearing an appeal but determining an interlocutory application in circumstances where the respondents maintained (both in correspondence with Mr Hudson’s lawyers and in Court) that Mr Hudson’s arguments had little or no prospects of success.

47    Secondly, Mr Botsman had been intimately involved in the matter in the court below, both as counsel and party. For this reason he was very familiar with the points Mr Hudson wanted to agitate on the appeal and had ready answers to them.

48    Thirdly, it is inconceivable that the level of work reflected in Mr Botsman’s invoice was necessary. To give but one example, more than $10,000 was charged for the drafting of submissions, which, it will be recalled, were signed by both Mr Botsman and Mr Redwood, each on behalf of both respondents. In fact, for the most part, Mr Botsman’s work was undertaken at a time when at least one other barrister was also briefed although the interests of Mr Botsman and Mr Reynolds were indistinguishable and the matter did not warrant two counsel. It is beside the point that in this application the respondents did not seek to recover for the labour expended by two of those barristers.

49    I expect that some of the excessive work was due to the “over-anxiety” of a litigant in person (see Chorley at 875). I very much doubt that this amount of work would have been carried out by a disinterested advocate. If it had, (s)he would not or should not have charged for all of it. At all events, the general rule is that, “as between party and party, the luxuries of litigation must be paid for by those who indulge in them, the necessaries only are to be paid for by the losing side”: Donohoe v Britz (No 2) (1904) 1 CLR 662 at 666 (Barton J). Even when indemnity costs are awarded, where there is excessive use of legal services, the excessive services should be excluded: EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59 at 72 (Megarry V-C), cited with approval by von Doussa J in Beach Petroleum at 124D.

50    Fourthly, to the extent that costs were generated in representing himself, as the submissions in reply appear to accept, including, for example, his appearance in Court on 17 October 2016 and conferences with other counsel he would have attended as a party in any event, Mr Botsman should not recover them.

51    In Cachia v Hanes (1994) 179 CLR 403 at 411 the plurality described the justification for the “privileged position” afforded to solicitors acting for themselves as “somewhat dubious”. Mr Hudson is right in saying that the exception has been widely criticised. More importantly, there is real doubt about whether the exception extends to barristers.

52    In Winn v Garland Hawthorn Brahe (No 1) [2007] VSC 360 at [10] Kaye J considered that the Chorley exception did not apply to barristers appearing for themselves. In Murphy v Legal Services Commissioner (No 2) [2013] QSC 253 at [16] Daubney J declined to extend the ambit of the Chorley exception to barristers in the absence of any authority that “the ‘anomalous’ and ‘somewhat dubious’ exception in favour of a self-represented solicitor extends to a self-represented barrister”.

53    It is true that in Ada Evans Chambers P/L v Santisi [2014] NSWSC 538 at [29], upon which the respondents rely, Adamson J refused to grant leave to appeal from a decision of a magistrate to allow costs associated with the work of a barrister litigant, saying it was open to him to do so in the exercise of his discretion. But her Honour gave no real consideration to the matter, observing that, notwithstanding the importance of the point, it would not be desirable for it to be determined in that case “where the costs of so doing are already grossly disproportionate to the amount originally in issue in the proceedings”. In the first instance decision in Bechara (Bechara v Bates (No 4) [2015] NSWSC 1722), Adamson J awarded costs to the barrister litigant (Mr Bates) without adverting to Chorley and, in the absence of submissions from Ms Bechara on this issue, the Court of Appeal avoided resolving the question of principle. There is still no authority of the High Court or any intermediate Court of Appeal that applies the Chorley exception to a barrister litigant. Nor was I referred to any judgment of this Court in which it was applied to barristers.

54    Fifthly, Mr Botsman (like Mr Jolly) costed his work on the basis of the time it took to undertake the various tasks, regardless of whether the time was justified. His bill took no account of his role as a party and (like Mr Jolly) he does not appear to have exercised any judgment in the rendering of his account. Time-costing may be a convenient method for calculating fees, but, as Kirby P observed in Law Society of New South Wales v Foreman (No 2) (1994) 34 NSWLR 408 at 422, “[t]ime charges have a distinct potential to result in overcharging”. Determining the amount to be charged is not a mere arithmetical calculation. Nor is it sufficient for the lawyer to check that the charges accord with the terms of the costs agreement. It is invariably necessary to consider whether the amounts charged may be excessive. The ultimate question should always be whether the charges are fair and reasonable. The objective indications are that neither Mr Jolly nor Mr Botsman asked himself that question.

55    Finally, little attention appears to have been paid to the obligations of the parties and their legal advisors imposed by s 37N of the Act. It is true that the respondents made more than one attempt to settle the matter, but each of their offers demanded a complete capitulation. Apart from these attempts, the respondents did little, if anything, to contain costs. To the contrary, they appear to have approached the matter as though it were a money-making exercise. It is also true, as I have already observed, that no fees were sought for the work of other counsel whose services were engaged, but there is no evidence that either of them rendered a bill.

56    In Roche at [32] De Jersey CJ observed:

Major criteria which ultimately inform the professionalism of the law are integrity, and as concomitants, honesty and reasonableness … The legal profession must realize that to maintain its perceived professionalism, its practices must be seen as those appropriate to a profession, and not those of a run-of-the-mill commercial enterprise. There is, in short, a large role for discretion and conservative moderation [.]

57    The claim made for the fees charged by both Mr Jolly and Mr Botsman discloses a lack of “discretion and conservative moderation”.

Conclusion

58    The application for indemnity costs is refused. Mr Hudson should pay the respondents’ costs in the sum of $28,300, made up as follows:

(1)    $10,450 including GST in respect of Mr Katekar’s fees;

(2)    $11,950 including GST in respect of Mr Botsman’s fees; and

(3)    $5,900 inclusive of GST in respect of Mr Jolly’s costs and other disbursements.

59    As the respondents have recovered about half of what they originally sought, each party should pay his own costs of this application.

Associate:

Dated:    3 April 2017

SCHEDULE OF PARTIES