68 Bathurst Street Pty Ltd v NV Legal Pty Ltd trading as NV Lawyers

[2009] NSWSC 1145

CITATION:	68 Bathurst Street Pty Ltd v NV Legal Pty Ltd trading as NV Lawyers [2009] NSWSC 1145
HEARING DATE(S):	26/10/09
JUDGMENT DATE :	27 October 2009
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
DECISION:	Interlocutory order staying costs assessment until further order.
CATCHWORDS:	PROCEDURE - costs - assessment of costs - application by law practice for assessment against companies - serious question to be tried as to whether costs agreement with companies or with their provisional liquidator - consideration of balance of convenience
LEGISLATION CITED:	Legal Profession Act 2004, ss 352, 356, 358, 359, 368(5) Uniform Civil Procedure Rules 2005, rule 35.9(c) Practice Note SC Gen 4, paragraph 8, dot point 4
CATEGORY:	Principal judgment
PARTIES:	68 Bathurst Street Pty Ltd - First Plaintiff 70 Bathurst Street Pty Ltd - Second Plaintiff 72-74 Bathurst Street Pty Ltd - Third Plaintiff Blue Mountains Helicopters Pty Ltd - Fourth Plaintiff Chobe Pty Ltd, ACN 080 731 219 - Fifth Plaintiff McInnes Perpetual Pty Ltd - Sixth Plaintiff Australian Barter Currency Exchange Pty Ltd - Eighth Plaintiff NV Legal Pty Ltd trading as NV Lawyers - First Defendant Robert Boyce Moodie - Second Defendant Rodgers Reidy (NSW) Pty Ltd trading as Rodgers Reidy - Third Defendant Gino Robert Cassaniti - Fourth Defendant
FILE NUMBER(S):	SC 4918/09
COUNSEL:	Mr D A Allen - Plaintiffs - Mentions Second and Third Defendants Mr J T Johnson - First Defendant Fourth Defendant in person
SOLICITORS:	Proctor & Associates - Plaintiffs NV Legal Pty Ltd trading as NV Lawyers - First Defendant Fourth Defendant in person

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

BARRETT J

TUESDAY 27 OCTOBER 2009

4918/09 68 BATHURST STREET PTY LTD & 7 ORS v NV LEGAL PTY LTD trading as NV LAWYERS & 3 ORS

JUDGMENT

1 The plaintiffs are seven companies of which Mr Moodie was formerly the provisional liquidator. He ceased to hold that office by virtue of an order made on 2 March 2009, at which point the companies ceased to be under external administration and a number of other orders were made.

2 Mr Moodie’s appointment as provisional liquidator was ordered by the court on 8 July 2008. On that day, a costs agreement was entered into by the first defendant, NV Legal Pty Ltd, which is an incorporated law practice.

3 By summons filed on 14 October 2009, the plaintiffs seek declaratory relief to the effect that they never retained NV Legal Pty Ltd and are not liable to pay costs to NV Legal Pty Ltd for work done in relation to certain matters. Also sought is an order that certain costs assessment proceedings be permanently stayed.

4 On 26 October 2009, I heard a notice of motion filed with the summons. By that notice of motion, the plaintiffs seek an interlocutory order staying the costs assessment until further order.

5 The costs assessment was initiated on 24 July 2009 by means of an application made by NV Legal Pty Ltd under s 352 of the Legal Profession Act 2004. That section allows a law practice that has given a bill to apply to the Manager, Costs Assessment for an assessment of the whole or any part of the legal costs to which the bill relates. By section 356, the Manager, Costs Assessment must cause a copy of the application to be given to any “client” and “any other person whom the Manager thinks it appropriate to notify”. There is no evidence of any delivery of a copy by the Manager, Costs Assessment, but given the form of the application, it seems likely that a copy was given to each of the seven plaintiffs and to no one else.

6 The Legal Profession Act defines “client” as follows:

“’client’ includes a person to whom or for whom legal services are provided.”

7 In most cases, no doubt, the “client” will be the person who retains a law practice to perform legal services for the person.

8 It is the identity of the “client” in relation to the services the subject of the costs agreement of 8 July 2008 that will be the central issue in these proceedings. An important question will be whether the agreement was made by NV Legal Pty Ltd with the seven plaintiff companies or with Mr Moodie (or perhaps with both).

9 The agreement is evidenced by a letter addressed by NV Legal Pty Ltd to Mr Moodie which begins:

“Further to your discussion with the writer we confirm that we are willing to act on behalf of the companies and the provisional liquidator in respect of these companies .” [emphasis added]

10 The “companies” are the seven plaintiff companies.

11 The copy of this letter in evidence contains a space for signature, by way of acceptance, by “Robert Boyce Moodie as Liquidator for the companies”. I was not taken to any copy in which there is a signature in that space.

12 The plaintiffs say that there is a serious question to be tried as to whether liabilities under the costs agreement are liabilities of the plaintiffs or of Mr Moodie (or, perhaps, partly one and partly the other); also, whether, if they are Mr Moodie’s liabilities, he had the benefit of a right of indemnity out of the assets of the companies and whether the quantum of any such indemnity was compromised by the court orders of 2 March 2009.

13 Given the form of the letter to which I have referred, I accept this submission. It is therefore necessary to address the balance of convenience.

14 It was submitted on behalf of NV Legal Pty Ltd that the costs assessment should be allowed to run its course since, whatever may be the correct answers to the questions just outlined, there is still a need for the costs liability to be quantified.

15 The alternative view, which I accept, is that there should first be a determination of the person (or persons) subject to the liability. Section 358 says that a costs assessor may require documents and particulars relevant to an assessment. Under s 359, the assessor is required to afford to certain persons an opportunity to be heard. If the true position is that the seven companies alone are liable for the costs or that Mr Moodie is solely liable (or that each is liable as to part), the assessor would no doubt be assisted by that knowledge in deciding how to proceed under these sections.

16 Fundamentally, of course, it is important that an assessment be against or in respect of the correct person, given the process under s 368(5) of the Legal Profession Act that permits it to be converted into a court judgment.

17 NV Legal Pty Ltd may have to wait somewhat longer to obtain its assessment if the stay sought is granted. But that is a less burdensome consequence than the possibility that the wrong person might become subject to a judgment resulting from filing of a certificate of costs assessment.

18 The plaintiffs, by their counsel, have proffered to the court the usual undertaking as to damages.

19 I make the following orders and directions:

1. Upon the plaintiffs by their counsel giving to the court the usual undertaking as to damages, order that costs assessment proceedings 2009/00197353 be stayed until further order.
2. Direct that the plaintiffs file and serve any further evidence by 2 November 2009.
3. Direct that the defendants file and serve any further evidence by 27 November 2009.
4. Direct that the matter be listed before the Registrar on 30 November 2009 for directions.

20 The requirement that further affidavits be not only served but also filed is a consequence of the proceedings having been placed in the Corporations List: see Uniform Civil Procedure Rules, rule 35.9(c) and Practice Note SC Gen 4, paragraph 8, dot point 4.

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