A&B Property Developments Pty Ltd v Legalese Pty Ltd - [2011] SADC 101

District Court of South Australia
(Civil: Appeal Against a Master's Decision)
A&B PROPERTY DEVELOPMENTS PTY LTD v LEGALESE PTY LTD
[2011] SADC 101
Judgment of His Honour Judge Stretton (ex tempore)
29 June 2011
PROCEDURE - JUDGMENTS AND ORDERS - IN GENERAL
PROFESSIONS AND TRADES - LAWYERS - REMUNERATION - TAXATION AND ASSESSMENT OF COSTS
The plaintiff secured judgment in default of appearance on its liquidated claim for legal fees. A Master set aside the default judgment to allow the defendant to pursue a taxation of the legal fees in the Supreme Court. A year later the defendant had not pursued taxation beyond its initial application. The Master therefore reinstated the default judgment. The defendant appealed against that decision, arguing inter alia that the District Court should order the Supreme Court to proceed with taxation pursuant to section 42 of the Legal Practitioners Act.
Held: The District Court has no power to direct the Supreme Court to proceed with a section 42 taxation. Section 42 is unlikely to have application where judgment has been entered in the District Court for a liquidated quantum of legal fees. The Master was correct in ruling that the defendant had every opportunity to pursue taxation in the Supreme Court and failed to do so, and that the default judgment should be reinstated.
Legal Practitioners Act 1981 (SA) s 42, referred to.
Aon Risk Services Australia v Australian National University [2009] HCA 27; Manock v Channel 7 Adelaide Pty Ltd [2010] SASC 198, considered.

A&B PROPERTY DEVELOPMENTS PTY LTD v LEGALESE PTY LTD
[2011] SADC 101
The Appeal

The defendant in the matter of Legalese Pty Ltd v A&B Property Developments has appealed from a decision of a master of this Court made on 2 May 2011. At that time the master made an order that a default judgment in the sum of $143,705.40 plus interest and costs to be taxed or agreed, that had been entered by the plaintiff on 5 February 2010, be reinstated.
The master also fixed interest on the judgment sum at $17,756.48 and further ordered that the plaintiff be paid those sums from monies that had been paid into court on a previous occasion. Finally, the master ordered that the plaintiffs have the costs of and incidental to the application.
Background
By way of background, I mention that no dispute has been taken by any party to the history of the matter as recounted in the master’s judgment and primarily from that judgment I set out a brief summary of that history.
The action itself was instituted in December 2009 by the plaintiff for legal fees that the plaintiff claimed were owing to it for work done for the defendant over a period of time. The defendant did not respond to those proceedings. It did not file a notice of address for service or a defence and in February 2010 default judgment for the plaintiff was entered. It seems that an application made on 25 March 2010 by the plaintiff for a charging order to assist in the enforcement of that judgment prompted the defendant to apply to set aside the default judgment and file a defence.
The defendant filed an affidavit in support of its application claiming that the fees charged by the plaintiff for legal work were excessive and recording various other complaints concerning that work. That affidavit also stated that an application was being made to the Supreme Court initiated by letter on 1 April 2010, seeking the Supreme Court’s assessment of appropriate costs pursuant to Rule 272, and s42(1) of the Legal Practitioners Act 1981. After argument on 6 April 2010, on 8 April 2010 a charging order was made on the property of the defendant to secure the judgment.
On 28 April 2010 the master granted the defendant temporary relief. He set aside the default judgment on the basis that an application had been made to the Supreme Court to assess the quantum of the disputed monies. The defendant also wanted to sell the property over which the charging order had been made. Accordingly in November 2010 the sum of $175,000 was paid into court and the charging order, I assume by consent, was set aside.
On 11 February 2011 the plaintiff wrote to the registrar of the Supreme Court seeking a listing of the defendant’s request for an adjudication of costs. On 17 February 2011 the court responded that the defendant’s solicitor had not supplied accounts nor had the registry heard from the defendant’s solicitor since April 2010. Accordingly the Supreme Court had been unable to proceed with the assessment of costs. No further action has been taken to pursue the assessment of costs in the Supreme Court.
The application to reinstate the judgment
In light of the defendant’s inaction the plaintiff applied to the master seeking an order that the February 2010 default judgment be reinstated and monies be paid out of court to it. That application was made pursuant to District Court Rules 116 and 190, and was argued before the master on 18 April 2011. It was supported by an affidavit of the director of the plaintiff company. The defendant filed an affidavit from his solicitor Mr Campbell which was also taken into account.
The master then considered the matter in some detail. He noted the jurisdiction available to the defendant, per s42(1) of the Legal Practitioners Act to have the Supreme Court tax and settle any disputed legal costs. That section allows the court to take such action whether or not monies have been paid, and whether or not proceedings have already been instituted seeking recovery of those costs. The section is silent on the topic of whether a taxation may proceed in the Supreme Court, where a final judgment has already been given by this Court quantifying the subject legal costs.
Ordinarily a taxation contemplated by s42 would relate to the costs of an action or other legal work, rather than be used to quantify an originating claim for legal fees which has already proceeded to judgment. The defendant is concerned that its ability to pursue a taxation pursuant to s42 will be extinguished by a judgment in this Court.
That remains a live issue between the parties, and whilst I don’t finally determine it today, there is a strong argument that a final judgment of this Court is not a matter that s42 properly interpreted, contemplates overturning.
Rather, it is likely that s42 contemplates the determination of costs only where there is no judgment to that effect. In other words where there is a judgment to that effect, s42 properly interpreted, has no work to do and therefore likely has no application. As I say, I make no final decision about that. Before me Mr Scragg for the plaintiff maintains that res judicata would be available to him subsequent to a final judgment in this court, should the defendant then seek to reactivate its application under s42. Mr Campbell for the defendant, whilst not formally conceding the matter, indicated that he was concerned that a final judgment in this Court would potentially extinguish his client’s rights pursuant to s42.
The master considered the defendant had had long enough to pursue its taxation, and reinstated the default judgment.
Grounds of Appeal
The essence of this appeal is that the decision of the master on 2 May 2011 to reinstate the default judgment, made in the absence of the defendant having pursued its application for taxation pursuant to s42, is wrong.
Whilst the grounds of appeal plead that the master erred in refusing to stay the District Court proceedings, the master did stay those proceedings for over a year. The real issue is whether still more time should have been allowed for the defendant to pursue its costs application or file some other counterclaim or set off.
The grounds also plead that the master erred in denying the defendant an opportunity to challenge the legal costs of the plaintiff. It is clear that the master allowed the defendant a year to pursue such a challenge. The real issue is whether he should have allowed still more time.
Other grounds of appeal essentially attack the exercise of the master’s discretion in balancing the right of the defendant to fully ventilate and contest the quantum of the legal costs against case flow management principles and the important common law principle of finality in litigation.
The final ground of appeal pleads that it was open to the master to order the Supreme Court to conduct the taxation as soon as possible. This ground can be dismissed immediately. I do not think it is open to the District Court to order the Supreme Court to do anything. The most it can do is order a plaintiff to apply to the Supreme Court for a taxation[1]. Further as has been pointed out, the proceedings under s42(1) of the Legal Practitioners Act to tax costs require a number of detailed procedural steps to be undertaken, some of which must be performed by the defendant. These have not been performed. Even were it legally open to do so, it is not simply a matter of ordering the Supreme Court to proceed with a taxation. The defendant has failed to perform the steps which would enable it to proceed.
[1] See section 42(5).
Discussion
The master carefully considered the rights of each party. He considered the values and principles behind s42 of the Legal Practitioners Act. He reviewed a series of judgments interpreting that section. The master clearly considered the applicable case flow management principles. He considered rules 116 and 190. He applied the High Court’s decision in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27. That case emphasises the importance of balancing costs against time, and in doing so the respective rights of parties to on the one hand have a full opportunity to ventilate their legal rights and all issues relevant to those rights, but on the other hand the importance of finality in litigation in the interests of all concerned. I agree with the master’s analysis of that case and the consideration of it in Manock v Channel 7 Adelaide Pty Ltd (2010) SASC 198 by Sulan J.
The master noted that the plaintiff’s claim was a liquidated amount that had been particularised in a series of accounts. There was some dispute about when those accounts were rendered. It was said by the plaintiff that the accounts had been issued over time, but in any event they were also provided by way of bundles on at least two occasions, the latest in the early part of 2010.
The master noted that as at 6 April 2010, the defendant had the plaintiff’s itemised accounts particularising the sum the subject of the claim. He notes therefore that the defendant was equipped at that time to pursue its application to the Supreme Court. That was over a year before the master’s decision to reinstate the judgment.
The master correctly noted that the Supreme Court has power under 42(2)(b) to stay any proceedings for the recovery of legal costs the subject of an application under s42(1) but that nothing had occurred in that respect. The master noted that over a year had been granted to the defendant to pursue the taxation of its costs in the Supreme Court, and the defendant had simply failed to do anything whatsoever to pursue it.
The master further noted that even during argument before him the defendant was unable to give any assurance that the matter would be proceeding before the Supreme Court. The master noted submissions and material put to him including the suggestion of a counterclaim relating to the performance of the services the subject of the liquidated judgment. The master noted that no steps had been taken to file such counterclaim or action and that the defendant was seeking in effect yet more open-ended time to pursue such an action.
The master correctly noted that the plaintiff had had to wait more than a year for the finalisation of the matter when the plaintiff already had a default judgment. That time had been granted to the defendant to pursue at least two avenues, that is, its taxation of costs pursuant to s42 or the institution of some counterclaim or other action against the plaintiff.
The master concluded that it would be unreasonable and unjust to further delay the matter or permit further indulgences to the defendant. The master noted that it was conceded at all stages that some costs would be owing to the plaintiff. The defendant simply disputed the quantum of those costs. The master noted that the defendant had had every opportunity to do so.
Conclusion
In the final analysis I find that the master was correct in not further staying the District Court proceedings. I find that the master did not err in denying the defendant a still further open-ended opportunity to challenge the plaintiff’s claim for legal fees. The master allowed an extensive period for that to occur, which in my view was in all the circumstances generous.
In relation to the other grounds of appeal I find that the master was correct in the exercise of his discretion to hold that the defendant had had every reasonable opportunity to ventilate its various rights of review in relation to the quantum of costs. I refer to, without repeating the further matters ventilated in Mr Campbell’s argument. I have taken all of those into account in my assessment of the correctness of the master’s decision.
Finally, I have earlier mentioned in the course of these reasons why I do not regard it as open to this Court to order the Supreme Court to proceed with a taxation pursuant to s42. Accordingly ground 6 is also not made out.
Accordingly the appeal is dismissed.
I order that the defendant/appellant pay the plaintiff’s costs, fixed in the agreed sum of $2000. I also order that the appellant pay the original filing fee of $870. Therefore, I order the sum of $2870 be paid out of court to the plaintiff forthwith.