Kieran Leslie Welzel & Anor v Stephen Paul Francis [2010] NSWSC 75 (12 February 2010)

Last Updated: 19 March 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
Kieran Leslie Welzel & Anor v Stephen Paul Francis [2010] NSWSC 75


JURISDICTION:
Equity Division
Commercial List

FILE NUMBER(S):
2008/00290489

HEARING DATE(S):
12/02/2010


EX TEMPORE DATE:
12 February 2010

PARTIES:
Kieran Leslie Welzel (First Plaintiff)
Openin Pty Limited (Second Plaintiff)
Openin Holdings Pty Limited (Third Plaintiff)
Openin Assets Pty Limited (Fourth Plaintiff)
Stephen Paul Francis (Defendant)

JUDGMENT OF:
Einstein J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
Mr M Zammit (Plaintiffs)
Mr A Spencer (Defendant)

SOLICITORS:
Leigh Adams Lawyers(Plaintiffs)
Holding Redlich (Defendant)



CATCHWORDS:
Practice and Procedure
Status of Practice Notes

LEGISLATION CITED:
Interpretation Act 1987
Uniform Civil Procedure Rules 2005 (NSW)

CATEGORY:
Procedural and other rulings

CASES CITED:
Atkins v Abbey Group [1998] 43 NSWLR 539
Baulderstone Hornibrook v HBO & DC and Ors [2001] NSWSC 821
His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand & Anor v The Macedonian Orthodox Community Church St Petka Incorporated & Anor [2007] NSWCA 142

TEXTS CITED:


DECISION:
The orders of the Court are as follows:
1. The Court orders that the defendant take no step to enforce any assessment of the costs made by consent on 28 August 2009 unless and until otherwise ordered.
2. The Court further orders that the defendant pay the first plaintiffs’ costs of the application.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST


Einstein J

Friday 12 February 2010 ex tempore
Revised 15 March 2010


2008/290489 Kieran Leslie Welzel & Ors v Stephen Paul Francis

JUDGMENT

1 There is before the Court an amended notice of motion filed by the plaintiff seeking the following orders.

1. That the defendant not proceed to an assessment of costs ordered by the Court on 28 August 2009 until the conclusion of these proceedings.

2. In the alternative to order 1, that the defendant pursuant to Pt 42 r 7(2) of the Uniform Civil Procedure Rules 2005 (NSW) take no step to enforce any assessment of the orders by the Court on 28 August 2009 until the conclusion of the proceedings or until the Court otherwise orders.

2 The background to the notice of motion concerns orders made on 28 August 2009 by consent pursuant to a notice of motion filed by the plaintiffs in these proceedings. Those consent orders included the following:

(a) the first plaintiff be granted leave to join to the proceedings the companies of which the first plaintiff and the defendant are directors and equal shareholders (the Openin companies), and that the first plaintiff have leave to bring the proceedings on behalf of the Openin companies, and

(b) the plaintiffs be granted leave to file an amended summons and amended commercial list statement.

3 Consent orders as to costs were also made on 28 August 2009, namely that the first plaintiff pay the following costs of the defendant:

(a) costs of the first plaintiff’s notice of motion filed on 18 May 2009;

(b) costs thrown away by reason of the amendments to the plaintiffs’ summons and commercial list statement;

(c) costs of and occasioned with the directions hearing on 13 February 2009, 3 April 2009 and 24 April 2009;

(d) costs associated with the orders made in chambers on 11 June 2009 and the extension of those orders.

4 At the time of the making of the August orders, the defendant’s solicitors, Holding Redlich, did not inform the plaintiffs’ solicitors, Leigh Adams and Associates, that Holding Redlich had instructions to proceed to assess the August costs orders and to immediately enforce the assessment of the August costs orders against the first defendant. After correspondence had passed between the respective solicitors, the amended notice of motion has now come before the Court.

5 The argument which has come forward from the bar table has, in general terms, raised some nice questions as to ‘the nature’ of a practice note, whether or not practice notes in effect trump or may trump rules promulgated under the Uniform Civil Procedure Rules 2005. Further, there appears to be somewhat inconsistent approaches taken by judges at first instance and in the Court of Appeal in relation to these matters.

6 Rule 42.7 of the UCPR provides as follows

1. Unless the Court orders otherwise, the costs of any application or other step in any proceedings, including:

(a) costs that are reserved and,

(b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.

are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.

7 Rule 42.7(2) provides:

“Unless the Court otherwise orders, costs referred to in sub rule (1) do not become payable until the conclusion of the proceedings.”

8 Practice note SCEQ3 promulgated on 10/12/2008 includes the following provision:

“Costs.

57. Unless otherwise ordered, a party in whose favour an order for costs is made may proceed to assessment of such costs forthwith.”

Returning then to the question of ‘what is a practice note’ and ‘how practice notes are to be interpreted.

9 Section 15 of the UCPR provides as follows:

“15. Practice notes.

(1) Subject to the rules of Court, the senior judicial officer of the Court may issue practice notes for that Court in relation to civil proceedings to which this Act applies.

(2) A practice note must be published in the gazette.

(3) Sections 40 and 41 of the Interpretation Act 1987 apply to a practice note in the same way as they apply to a statutory rule.”

10 In Baulderstone Hornibrook v HBO & DC and Ors [2001] NSWSC 821, Bergin J, as her Honour then was, made the following observation [immediately after her Honour had dealt with practice note 100 in paragraph 13 of that judgment]. Her Honour went on in paragraph 14 to observe as follows:

“Mason P in Atkins v Abbey Group [1998] 43 NSWLR 539 said at 543 that Practice Note 39 ‘governed’ proceedings in the Commercial Division. Practice Notes need to be read in conjunction with the rules and one must be careful not to elevate a Practice Note to a status that it does not have. A Practice Note governs or guides the way in which the proceedings are expected to be administered. Practitioners, and thus the parties, should be aware of the requirements of the Practice Note, and it is to be expected that orders and/or directions will be made consistently with the Practice Note which governs a particular list.”

11 The Court has also been furnished with the decision of the New South Wales Court of Appeal in His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand & Anor v The Macedonian Orthodox Community Church St Petka Incorporated & Anor [2007] NSWCA 142 where the Court [at 49] observed that:

“The provisions of r 42.7 of the UCPR apply to the costs of an appeal. An order as sought by the Association is not necessary. Contrary to Metropolitan Petar’s understanding, an order for costs in respect of interlocutory proceedings is not immediately enforceable. The parties may of course take steps to quantify any such order, but that is a different matter to the question of enforceability. A specific order that costs be immediately enforceable would need to be made to displace the operation of r 42.7.”

12 In my view, a contest as between practice note 57 and Pt 42 r 42.7, unless able to be made consistent, result in the primacy of r 42.7.

13 As is submitted by the first plaintiff, an assessment of the August costs orders will no doubt be costly. The plaintiff, as I indicated at the commencement of these reasons, has a bifurcated set of applications. The first is that the defendant not proceed to an assessment of the costs order made by the consent order on 28 August 2009. The second and alternative application, is for an order that the defendant pursuant to r 42.7(2) of the UCPR take no step to enforce any assessment of the costs made by consent on 28 August 2009. To my mind, the plaintiff has made good its entitlement to the second of those orders.

14 The orders of the Court are as follows.

1. The Court orders that the defendant take no step to enforce any assessment of the costs made by consent on 28 August 2009 unless and until otherwise ordered.

2. The Court further orders that the defendant pay the first plaintiffs’ costs of the application.

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LAST UPDATED:
18 March 2010