The recent decision of Justice Rees in the matter of Foundas v Arambatzis (No 4) [2023] NSWSC 1648 confirmed the Supreme Court’s view that it is not necessary that a party has paid the claimed costs to its own solicitor – or even that an invoice has been rendered.
At [15], Rees J states:
 Whether an indemnity costs order may be made where the applicant has not paid its legal costs was considered in In the matter of Ryals Hotel Pty Ltd [2021] NSWSC 42. As Black J summarised the position, the indemnity principle permits recovery of costs by a successful party which is liable to pay them, but it is not necessary that the costs have already been paid, or even that an invoice has been rendered. ... The indemnity principle does not prevent recovery of costs although the relevant bills are unpaid. ... The obligation to pay is sufficient.
Further, in that matter, the solicitor’s costs agreement was undated and unsigned. It was inferred that the solicitor did not comply with the Uniform Law in respect of costs disclosure. Nonetheless, his Honour Rees J stated that the failure to comply “does not affect ... the brother’s liability to pay Mr Cutri’s costs. As James J explained in Salvatore Blanda v Kemp Strang Lawyers Pty Ltd [2006] NSWSC 48, the consequences of failure to comply with costs disclosure are limited to the consequences expressly stated in the legislation. At [56]:
 It is noteworthy that [the legislation] did not, according to its terms, destroy a solicitor’s entitlement to costs ... The section merely provided that, if there had been a non-compliance with [costs disclosure requirements’, a client did not have to pay the costs unless they had been assessed and a solicitor could not avail himself of the particular remedy of maintaining proceedings, that is court proceedings, for the recovery of the costs, unless the costs had been assessed.
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