Holman v Campbell [No 2][2024] QCA 259

SUPREME COURT OF QUEENSLAND

1. [1]
   THE COURT:  This Court refused Ms Holman’s application for leave to appeal, observing costs should follow the event.  However, at the urging of the representative of the successful party, Mr Campbell, the Court allowed the filing of further evidence and submissions as to costs.^[1]  Both sides filed further submissions and the firm acting for Mr Campbell filed an affidavit by one of its solicitors, Ms Radik.
2. [2]
   Mr Campbell submits that he should have his costs on the indemnity basis.  More controversially, he submits Ms Holman’s solicitor, Mr Abaza, should be ordered, per r 690 Uniform Civil Procedure Rules 1999 (Qld), to repay Ms Holman the costs she is ordered to pay.

Should Mr Campbell have his costs on the indemnity basis?

3. [3]
   Submissions on whether Mr Campbell should have his costs on the indemnity rather than standard basis were diverted by reliance in Mr Campbell’s submissions on the terms of an offer by Mr Campbell to settle the substantive proceeding in the Magistrates Court.  That reliance was misconceived.  The refusal of leave in this Court and, for that matter, in the District Court, says nothing as to how the proceeding in the Magistrates Court may resolve.  Reliance on the content of an offer to settle the proceeding in the Magistrates Court misses the point of the finding here and in the District Court that there is yet to be a substantive determination of rights in the proceeding in the Magistrates Court.
4. [4]
   It remains, despite that diversion, that the unreasonableness of Ms Holman’s pursuit of her application for leave to appeal is also relied upon by Mr Campbell to justify an order for costs on the indemnity basis.
5. [5]
   Ms Holman’s submissions argued her application to this court was reasonably arguable, to an extent re-arguing its legal merits.  Those submissions did not confront how obvious it was that the application was doomed to fail.
6. [6]
   The oft-cited reasons of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd,^[2] explained that the circumstances in which the discretion to depart from the general rule favouring costs on the standard basis are not closed.  However, they must have some special or unusual quality sufficient to justify the departure.  The examples of such circumstances cited by Sheppard J, in summary involved significant unreasonableness in the fact or manner of continued pursuit of the proceeding.^[3]  It is well established that the Court may order indemnity costs where a party has pursued a proceeding which is so clearly doomed to fail that it was unreasonable to have pursued it.^[4]  However, care must be taken not to conflate that extreme category of case with one merely involving the pursuit of arguments found to be unpersuasive.^[5]
7. [7]
   The present circumstances are more egregious than a mere pursuit of arguments found to be unpersuasive.  This court’s reasons explained it was an ‘insurmountable challenge’ in the District Court for Ms Holman to meet the requirement that some important principle of law or justice was involved.  The reasons of the learned District Court judge had explained that reality.  Having already consumed the District Court’s finite resources with her ill-founded application for leave to appeal, Ms Holman repeated the exercise before this court.
8. [8]
   The pursuit of her application for leave continued to stubbornly ignore that the decision in the Magistrates Court was procedural, involved no determination of substantive rights and did not preclude Ms Holman from seeking leave to amend her claim as she should have done in the first place.  Ms Holman could simply have returned to the Magistrates Court, safe in the knowledge she remained free to seek leave to amend her claim and remained protected by her rights of appeal in respect of substantive determinations of her case by the Magistrates Court.  Instead, she inflicted further unnecessary expense upon her opponent with her pursuit in this court of an application which was clearly doomed to fail.
9. [9]
   Ms Holman pressed on even after Mr Campbell’s lawyers wrote to her lawyer Mr Abaza, explaining why the application to this court was misguided and exposed Ms Holman to significant adverse costs orders.  The letter even offered that each party bear their own costs of the application if it was discontinued.
10. [10]
    It was unreasonable for Ms Holman to have pursued her application.  The circumstances justify a departure from the general rule.  Mr Campbell should have his costs on the indemnity basis.

Should Mr Abaza be ordered to repay Ms Holman the costs she is ordered to pay?

11. [11]
    Rule 690 provides:

“690 Lawyer’s delay or neglect

The court may order a lawyer to repay to the lawyer’s client all or part of any costs ordered to be paid by the client to another party if the party incurred the costs because of the lawyer’s delay, misconduct or negligence.”  (emphasis added)

12. [12]
    Mr Campbell submits, based mainly on the content of Ms Radik’s affidavit outlining her firm’s dealings with Mr Abaza, that it is open for this court to conclude the manner in which the application for leave to appeal was conducted was at the initiative of Mr Abaza and that his conduct of the application for leave to appeal was negligent.
13. [13]
    Ms Radik deposes that between 2 May 2024 (two days after her firm became aware of the leave application) and 12 September 2024 (when she affirmed her affidavit), she received over 80 emails from Mr Abaza, the vast majority of which are said by her to contain ‘irrelevant and unnecessary material or otherwise failed to advance the matter’.  At the time of affirming her affidavit, Ms Radik had received 20 emails from Mr Abaza in the course of the Court of Appeal proceedings which were sent between the hours of 7 pm and midnight.
14. [14]
    That emails were sent at night is of no inherent significance.  Some lawyers may choose to catch up on their correspondence outside business hours.
15. [15]
    Ms Radik’s affidavit exhibited examples of the correspondence.  Some of the examples demonstrated strongly held misperceptions on Mr Abaza’s part as to the division of responsibility between applicant and respondent for preparation of the record book.  Other examples were replete with lecturing references to cases and legal principles of doubtful relevance.  Some content of the examples was variously sarcastic, belittling and disturbing, suggesting a loss of objectivity.  However, the dubious necessity of and sometimes unattractive content of Mr Abaza’s correspondence does not materially inform the argument that Mr Campbell’s costs of the application were incurred because of Mr Abaza’s negligence.
16. [16]
    The relevance of the high volume of written communications generated by Mr Abaza to the order sought is, presumably, that generating such a volume was unnecessary and thus negligent and that it put Mr Campbell’s solicitors to the incurring of unnecessary cost in perusing and responding to it.  The exhibited examples of correspondence are not sufficiently comprehensive for this court to draw the inference that there was such a high proportion of unnecessary correspondence generated as to justify the serious finding of negligence.  Nor are they sufficient to demonstrate what proportion of the unnecessary correspondence required incurring the cost of substantial perusal or a response.
17. [17]
    That conclusion should not be regarded as suggesting approval of the conduct complained of.  Further and to remove doubt, the potentially costly demands of the many communications with Mr Campbell’s solicitors by Mr Abaza about the application are not made irrelevant by this conclusion.  For the reasons explained by Jackson J in Mio Art Pty Ltd v Macequest Pty Ltd (No 2)^[6], an order that Mr Campbell be paid his ‘costs of the application’ embraces any costs necessarily incurred in relation to the application, including in preparation for it.
18. [18]
    The other component of the submissions in support of a r 690 order was that the manner in which the application for leave to appeal was conducted was at the initiative of Mr Abaza.  Presumably this is relied upon as constituting misconduct or negligence per r 690.
19. [19]
    To the extent the argument is founded on Mr Abaza’s manner and frequency of communications with Mr Campbell’s lawyers it carries no weight.  The exercise of professional judgment as to the manner and frequency of such communication is inherent in the discharge of the professional role for which a solicitor is retained.  Because the making of choices in that context falls to the lawyer there is no basis to infer from the making of such choices, without more, that the lawyer is acting without or beyond client instructions.
20. [20]
    The other foundation for the argument the application for leave to appeal was conducted at the initiative of Mr Abaza, is that Mr Abaza should have known the application was doomed to fail.  The inference sought, in effect, is that Mr Abaza did know the application could not succeed and should have so advised his client, who in the face of such advice would not have instructed him to continue and, therefore, Mr Abaza must have pursued the application of his own initiative.  That inference should not be drawn because a less problematic inference is open.  It is possible Mr Abaza genuinely believed the objectively misconceived application to this court had some prospect of success and, so advised, his client instructed him to pursue it.  In that equation such a belief was legally erroneous but legal error does not of itself bespeak misconduct or support the serious finding of negligence.
21. [21]
    The court should not make an order pursuant to r 690.

Order

22. [22]
    The court’s order should be:

The applicant will pay the respondent’s costs of the application for leave to appeal, to be assessed on the indemnity basis.