Ada Evans Chambers Pty Ltd v Santisi
[2014] NSWSC 538
•06 May 2014
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Ada Evans Chambers P/L v Santisi [2014] NSWSC 538 Hearing dates: 2 May 2014 Decision date: 06 May 2014 Jurisdiction: Common Law Before: Adamson J Decision: (1) Dismiss the summons.
(2) Unless any party seeks a different order in writing to my Associate within seven days, order the plaintiff to pay the defendant's costs of the proceedings.
Catchwords: APPLICATION - application to strike out summons for appeal from Local Court costs order - effect of Practice Note - whether a legal practitioner who is a barrister is entitled to costs when also a litigant - no basis to suggest that the Magistrate's discretion to exclude the evidence miscarried - relevance of lack of fee agreement - no arguable ground - summary dismissal appropriate Legislation Cited: Civil Procedure Act 2005 (NSW), s 56, s 57, s 58, s 59, s 101
Criminal Procedure Act 1986 (NSW), s 215
Legal Profession Act 2004 (NSW), s 317
Local Court Act 2007 (NSW), s 39, s 40
Uniform Civil Procedure Rules 2005 (NSW), r 13.4Cases Cited: Ciszek v Enterprise Financial Solutions Pty Limited [2010] NSWSC 1265
Farkas v Northcity Financial Services Pty Limited [2006] NSWSC 1036
Murphy v Legal Services Commissioner (No. 2) [2013] QSC 253
Phillips v Tobias Partners Pty Limited [2013] NSWSC 496
Sayed v Deng [2012] NSWSC 851
Soia v Bennett [2014] WASCA 27
Wang v Farkas [2014] NSWCA 29
Winn v Garland Hawthorn Brahe [2007] VSC 360Texts Cited: Local Court of New South Wales Practice Note Civ 1 Category: Principal judgment Parties: Ada Evans Chambers Pty Ltd (Plaintiff/Respondent)
Frank Santisi (Defendant/Applicant)Representation: Counsel:
R Freeman (Plaintiff/Respondent)
SJ Burchett (Defendant/Applicant)
Solicitors:
Adams & Co Lawyers (Plaintiff/Respondent)
Denison Toyer (Defendant/Applicant)
File Number(s): 2014/13789 Publication restriction: Nil
Judgment
Introduction
Frank Santisi applies to strike out a summons for appeal filed by Ada Evans Chambers Pty Limited (the Chambers) in respect of an order as to costs made by the Local Court.
The dispute between Mr Santisi and the Chambers arose when Mr Santisi, a practising barrister, was a licensee of the Chambers. The Chambers commenced proceedings in the Local Court for licence fees alleged to be outstanding. Mr Santisi filed a cross-claim alleging that certain services were not provided to him. The hearing of the matter commenced before Schurr LCM on 1 June 2012. There were then directions on 15 June 2012 before Schurr LCM. The matter then continued before Pierce LCM on 9 August 2012, 26-27 November 2012 and 4 October 2013. Judgment was delivered on 18 December 2013 in favour of Mr Santisi for the sum of $8,000 plus interest and costs.
The summons in this Court was filed on 15 January 2014 and purports to appeal against the costs order. No leave to appeal is sought. An amended summons was filed on 14 March 2014 but it, too, failed to include an application for leave.
Mr Burchett, who appeared on behalf of Mr Santisi, contended that the appeal was incompetent because no leave had been sought and no attempt had been made to amend the summons to seek leave, notwithstanding that the issue had been raised at a previous directions hearing. Further, he submitted that, even if leave were sought, it would not be granted and that the summons, accordingly, ought be struck out.
Mr Freeman, who appeared for the Chambers, initially contended that no leave was required, but at the conclusion of the hearing he sought leave to amend to add a prayer for leave, on the basis that he conceded that it was possible that the matters raised were mixed questions of fact and law.
Whether leave is required
Section 39 and s 40 of the Local Court Act 2007 (NSW) relevantly provide as follows:
39 Appeals as of right
(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.
40 Appeals requiring leave
(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.
(2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court:
(a) an interlocutory judgment or order,
(b) a judgment or order made with the consent of the parties,
(c) an order as to costs.
Because the Chambers seeks to appeal a costs order, leave is required. Leave is also required because, at best, it involves a mixed question of fact and law, rather than a pure question of law. To the extent to which it could be argued that appeals that concern pure questions of law lie as of right even where they concern costs orders, that argument is foreclosed by numerous decisions of this Court: Ciszek v Enterprise Financial Solutions Pty Limited [2010] NSWSC 1265 at [10] per Schmidt J; Phillips v Tobias Partners Pty Limited [2013] NSWSC 496 at [15] per Beech-Jones J. In the present case, two grants of leave are required: one because the order sought to be appealed is a costs order; and, the second, because the question is, as Mr Freeman conceded, is at least one of mixed fact and law: Sayed v Deng [2012] NSWSC 851 at [27]-[34] per Beech-Jones J.
There has been a marked intransigence on the part of the Chambers to concede that leave is required. Mr Santisi first raised the requirement for leave in correspondence on 3 March 2014. It was raised before the Court at the return of the summons on 4 March 2014 and leave was granted to amend the summons to add a prayer for leave. An amended summons was filed on 14 March 2014 but it did not seek leave. Mr Santisi alerted the Chambers to the incompetence of their appeal by correspondence through his solicitors on 14 March 2014, which also foreshadowed a notice of motion to dismiss the proceedings. The motion was eventually filed on 24 April 2014. It was only shortly before I reserved my decision on the motion that Mr Freeman eventually conceded that leave might be required.
As Beech-Jones J said in Sayed v Deng at [31] and [33], the requirements for leave in s 39 and s 40 show a concern for protecting parties from the costs of appeals from a Court of limited monetary jurisdiction where there is a significant risk that the overall costs of the proceedings will be wholly disproportionate to the matter in dispute.
The nature of the application
Mr Santisi relied on r 13.4 of the Uniform Civil Procedure Rules2005 (NSW) which provides that the Court may dismiss proceedings if they are, relevantly, frivolous or vexatious or an abuse of the process of the Court. Mr Burchett submitted that, although leave to appeal was not sought, even if it had been, it would not have been granted because of the grounds of appeal. He submitted that this matter ought not be allowed to go further because the grounds were either unarguable, or not of sufficient importance to warrant a grant of leave having regard to the amount of the principal claim and the desirability of there being an end to litigation, particularly civil litigation over small amounts of money where the costs readily exceed the amount in issue.
Accordingly, in order to determine whether the proceedings ought be dismissed under UCPR r 13.4, it is necessary to examine the grounds of appeal. In deciding whether to order the dismissal of the proceedings, I am obliged to consider the Civil Procedure Act 2005 (NSW), including the overriding purpose in s 56, the objects of case management in s 57, the dictates of justice in s 58 and the elimination of delay in s 59.
The evidence on the application
Mr Santisi relied on the following evidence:
(1) Correspondence between the solicitors dated 29 April 2014 and 1 May 2014.
(2) An affidavit of Ms Crosby, the Chambers' clerk sworn 29 April 2014, which exhibits the transcripts of the Local Court on 1 June 2012 and 18 December 2013, together with documents associated with the obtaining of such transcripts.
(3) Mr Santisi's costs submission in the Local Court dated 14 October 2013.
(4) The note of the reasons given by the Magistrate on 18 December 2013 concerning the question whether Mr Santisi's own professional time could form part of the order for costs.
The Chambers relied on an affidavit of Sidney Adams sworn 2 May 2014, to which is exhibited documents from the Local Court proceedings, including transcripts and written submissions relied on by the parties. These documents include affidavits of Mr Santisi and his solicitor, Mr Doukas, in support of his application for indemnity costs in the Local Court. The documents annexed to these affidavits include a tax invoice from Denison Toyer, Mr Doukas's firm, in respect of fees in the Local Court matter that total $47,025 and also a tax invoice prepared by Mr Santisi for the matter, which was prepared as if he had been briefed for any other litigant, which comes to a total amount of $63,030. In his affidavit Mr Santisi deposed to several offers he made to Mr Freeman in the course of the proceedings in which he offered to walk away and bear his own costs on the basis that all claims and cross-claims would be dismissed.
The grounds of appeal
Aside from ancillary costs orders, the Chambers seek the following relief in the amended summons:
1 Appeal allowed.
2 Order of the court below as to costs be set aside.
3 Costs with respect to the proceedings in the court below to be capped in accordance with Part G of the Local Court of New South Wales Practice Note Civ 1.
4 Defendant to pay the plaintiff's costs thrown away in respect to the first hearing date, namely 01 June 2012.
The grounds of appeal set out in the summons are:
1 The Magistrate in the court below erred in making an order contrary to cl.36.2 of the Local Court of New South Wales Practice Note Civ 1 (hereafter "the Practice Note") in circumstances where both parties had conceded, on the first day of hearing (01 June 2012), that Part G of the Practice Note applied.
2 The Magistrate in the court below erred in making a costs order contrary to cl.36.2 of the Local Court of New South Wales Practice Note Civ 1 in circumstances where the defendant had not complied with cll.36.3, 36.4 and 36.5 of the Practice Note.
3 The Magistrate in the court below erred in awarding the defendant "advocacy and other work of counsel" costs in circumstances where the defendant was a self-represented litigant/barrister.
4 The Magistrate in the court below erred in rejecting and not allowing into evidence the affidavit of Camilla Thompson (dated 16 December 2013) annexing the transcript and sound recording CD of the proceedings before the Local Court on 01 June and 16 June 2012, such evidence being critical and relevant to the issues of the defendant:-
(a) being a self-represented litigant/barrister;
(b) having not been briefed by a solicitor to appear in the matter;
(c) having not been retained by a solicitor to appear in the matter;
(d) having not retained a solicitor to act in his interests in the matter.
5 The Magistrate in the court below erred in not limiting the costs order to exclude costs incurred with respect to claims rejected by the Local Court, and by not offsetting such costs incurred by the plaintiff in defending those claims.
6. The Magistrate in the court erred in not limiting costs so as to compensate the defendant for costs actually incurred in the matter, in circumstances where no fee disclosure had been provided by the alleged instructing solicitor, no written fee agreement had been entered into between the defendant and the alleged instructing solicitor, and where the defendant had already disclosed the matters set out in paragraph 4 above to the court and to the plaintiff.
The merits of the grounds of appeal are relevant to whether leave, if sought, would be granted, and also to whether the ground is arguable in any event.
Grounds 1 and 2: the relevance of the Practice Note
Part G of the Local Court of New South Wales Practice Note Civ 1 provides for Maximum Costs Orders in the General Division of the Local Court and applies to all proceedings, regardless of where they commenced, where the amount of the claim is $20,000 or less and also includes proceedings (such as the present) that are transferred from the Small Claims Division to the General Division. Clause 36.2 of the Practice Note provides:
36.2 Unless the court otherwise orders, the following orders are taken to have been made when the defence is filed in the proceedings:
o If the plaintiff is successful and the claim is for an amount between $10,000 and $20,000, then the maximum costs that can be awarded to the plaintiff is 25% of the amount awarded by the court plus any amount that might be allowed in relation to costs incurred up to the filing of the first defence in the proceedings.
o If the defendant is successful and the claim is for an amount between $10,000 and $20,000, then the maximum costs that can be awarded to the defendant is 25% of the amount claimed by the plaintiff
o Where the proceedings were transferred from the Small Claims Division to the General Division, then the maximum costs that can be awarded to the successful party is $2,500.
The balance of the Practice Note makes provision for the filing of a notice of motion seeking to vary the maximum costs order at any time until two weeks prior to the first review date, which, in this case, was a date six months prior to the hearing date.
The first two grounds of appeal rest, in my view, on a false premise. A Practice Note applies, but only subject to the orders of the Court. It does not have a higher status than the Civil Procedure Act or the Uniform Civil Procedure Rules. It provides for a procedure to be followed in circumstances where a party wants to obtain protection in advance from maximum costs orders. It is not, however, capable of fettering the Magistrate's discretion on costs, which is required to be exercised following judgment on the principal claim and derives from s 98 of the Civil Procedure Act. That Mr Santisi did not follow the procedure in the Practice Note to obtain an exception from the maximum costs order was a matter that could be taken into account by the Magistrate, but not one that could bind him.
Mr Freeman relied on passages from the transcript where the Magistrate referred to the Practice Note and both parties conceded that it applied. I do not regard the concession that the Practice Note applied as amounting to any more than that Mr Santisi accepted that it was applicable and could govern the costs of the parties unless the court otherwise ordered. Indeed the Practice Note itself expressly preserved the right of the Magistrate to order "otherwise".
The Magistrate was aware of the Practice Note and decided, as his Honour was entitled to do, to order "otherwise", as the following reasons for his Honour's costs order demonstrate:
HIS HONOUR: Okay. Well, look, as to costs we've still got to quantify the actual amount of the cross-claim exactly but as to costs, I order that the court does otherwise order in terms of para 36 of the practice note and order that the plaintiff cross-defendant pay, as to both the claim as the cross-claim, the defendant cross-claimant's costs as agreed or assessed. Note and order that Mr Santisi, identifying him that way, recover as to advocacy work and other work of counsel 75% of such fees.
I disagree with Mr Freeman's characterisation of the way in which Mr Santisi appeared. There were solicitors on the record, Mr Santisi made it abundantly plain that they were on the record and they were briefing him but his appearance was for himself in the sense that he did the advocacy work. If you read everything he said as a whole, that's plainly what he was trying to convey and that's what he in fact did. That's what occurred.
The Magistrate's order was adverse to the interests of the Chambers and may well have exposed them to a result that they had not necessarily envisaged. I note that, on more than one occasion, Mr Santisi offered to walk away from the proceedings with each party bearing his, or their, own costs. It was open to his Honour to make the order. I do not consider the Chambers to have identified an arguable basis on which his Honour's discretion could be said to have miscarried.
Ground 3: costs allowed for Mr Santisi
The Magistrate's finding as to Mr Santisi's role is set out in the reasons above. His Honour's consideration of the law that applied was set out in a separate note of reasons that was provided to the parties on 18 December 2013. His Honour set out in the note (which I admitted and marked Exhibit C) his reasons for considering that there was no basis to exclude barristers from the exception that applies to solicitors who act for themselves. The note of reasons concluded as follows:
My view is that the authorities are very clear that there is an exception to the rule against self-represented litigants recovering fees for acting for themselves. It is an exception which relies on the fact that (in times gone by only solicitors, but now counsel as well) their fees can be quantified, and that if they were not permitted to recover such fees they would simply retain another lawyer and recover them that way. To read the rule as applying to counsel is not so much to "extend it", as Mr. Freeman argues, but to recognize its underlying rationale as applying to any variety of lawyer, whether counsel and solicitor. With respect, I disagree with the inter-State decisions cited by Mr. Freeman. Those cases seem to me to be more in the nature of passing remarks cautioning against extending the rule to counsel, and with great respect, not to be at all well-based.
It was on this basis that the costs order was made. The Chambers argued before me that this was erroneous in law, or that it involved a mixed question of fact and law. Mr Freeman submitted that it was erroneous for costs to be allowed for barristers appearing in their own causes, although he accepted that there was an exception for solicitors.
Mr Burchett relied on the decision of Bergin J in Farkas v Northcity Financial Services Pty Limited [2006] NSWSC 1036, in which the question arose whether a litigant was entitled to interest on costs that related to work he performed as junior counsel in the case. The Costs Assessor had already determined that the litigant was entitled to such fees, as appears from the following reasons given by the Costs Assessor which are extracted in the judgment:
"The litigant in this matter is a barrister and it is submitted that much of the work undertaken by the litigant was work undertaken by a solicitor and therefore offends some of the New South Wales Barrister's Rules. It is fair to say that the distinction between barristers and solicitors in this day is considerably less than before, and indeed it is acceptable, although unusual, for barristers to accept a brief direct from the public without the intervention of a solicitor. Both barristers and solicitors are legal practitioners under the Act. It is the style under which they seek to practice under different practice rules which sets them apart.
I have carefully considered the submissions from the Costs Applicant and the Costs Respondent on this aspect of the assessment. I have determined that the Costs Applicant is entitled to costs for the work undertaken by him as a junior counsel."
Although Bergin J was only required to decide whether interest under s 101 of the Civil Procedure Act ought be awarded, and not whether it was appropriate that such costs be allowed at all, it appears from her Honour's judgment that her Honour accepted the appropriateness of the Costs Assessor's decision to allow the costs of a barrister who appeared in his own cause. The relevant cases on recoverability of costs by a legal practitioner were summarised by Basten JA in Wang v Farkas [2014] NSWCA 29. However, that case turned on the construction of the Criminal Procedure Act 1986 (NSW) which, by s 215 conferred power to order "professional costs", which was defined to mean "costs . . . relating to professional expenses and disbursements", and was held to exclude the valuation of time devoted by a litigant, even if a legal practitioner, to his or her own legal proceedings.
Mr Burchett relied on the cases referred to above, as well as Soia v Bennett [2014] WASCA 27, which summarised the law in various jurisdictions in Australia.
Mr Freeman relied on Winn v Garland Hawthorn Brahe [2007] VSC 360 in which Kaye J was not prepared to extend the Chorley exception to barrister's fees. Mr Freeman also relied on Murphy v Legal Services Commissioner (No. 2) [2013] QSC 253, in which Daubney J was not prepared to extend the ambit of the Chorley exception (named after London Scottish Benefit Society v Chorley, Crawford & Chester (1984) 13 QBD 872) to barristers in the absence of clear authority.
In the instant case, the Magistrate was referred to relevant authority having heard full argument on the question. His Honour considered it to be material that there were solicitors on the record, as his reasons disclose. I consider that, at best, the question that arises is one of mixed law and fact. It also concerns costs and therefore leave is required on two bases. In my view, leave, if sought, ought not be granted in the instant case to argue this ground. This is not to say that the question whether a legal practitioner who is a barrister is entitled to costs when also a litigant is not an important one. However, I consider that it was open to the Magistrate to exercise his discretion to allow the costs associated with the work Mr Santisi did. The distinction between solicitors and barristers has become less important in circumstances where all legal practitioners are admitted as such. Furthermore I do not consider that, even given the importance of the point, it would be desirable for it to be determined by this Court in the instant case where the costs of so doing are already grossly disproportionate to the amount originally in issue in the proceedings.
Ground 4: the affidavit of Camilla Thompson
Ground 4 concerns the Magistrate's decision not to allow the affidavit of Camilla Thompson of 16 December 2013 to be read. Ms Thompson is a secretary who also acts as the clerk of the Chambers. She deposed that she had listened to the CD recordings of the proceedings on 1 June 2012 and 15 June 2012 and had transcribed them and annexed the transcripts to her affidavit. When the matter came before the Magistrate on 18 December 2013, Mr Freeman sought to read the affidavit, although it had only been served on 16 December 2013. Mr Santisi objected on the basis that it was not an official transcript and he had not had an opportunity to check its accuracy. The Magistrate ruled that it would not be allowed as evidence but that he would use it as an aide memoire. Mr Freeman then cross-examined Mr Santisi by reference to it.
I do not consider this ground to be arguable. Mr Freeman has not identified any basis on which it could be said that the Magistrate's discretion to exclude the evidence miscarried.
Ground 5: not excluding from the costs order the costs of claims that had failed
This ground seeks to impugn a purely discretionary decision. No error has been identified. Furthermore there is, in my view, no real prospect of leave being granted to argue such a ground.
Ground 6: no limiting costs by reason of lack of fee agreement between solicitor and client
I understand this ground to be that the Magistrate ought not to have allowed costs because there was no fee agreement. The lack of fee agreement does not mean that there was no retainer. It has consequences under the Legal Profession Act 2004 (NSW) in that such fees are required to be assessed under Division 11, by reason of s 317 of the Legal Profession Act, which provides in part:
317 Effect of failure to disclose
(1) Postponement of payment of legal costs until assessed
If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, the client or associated third party payer (as the case may be) need not pay the legal costs unless they have been assessed under Division 11.
Accordingly, the quantum of the costs is a matter for the assessor. The recoverability of such costs is not foreclosed by the lack of fee agreement. I do not consider that leave to argue this ground ought be given.
Conclusion
In my view Mr Santisi is entitled to have the summons dismissed under UCPR 13.4. Although his was an application for summary dismissal, the matter was argued fully and sufficient opportunity was given to the Chambers to identify any arguable points that could conceivably or properly found a grant of leave to appeal under s 40 of the Local Court Act. Mr Freeman failed to identify any such ground. Had this application been conducted as the Chambers' application for leave rather than Mr Santisi's application for summary dismissal, I would have refused leave for every ground of appeal.
The lack of proportionality between the costs and the amount of the judgment entered against the Chambers is gross. It is high time that these proceedings were concluded.
Orders
I make the following orders:
(1) Dismiss the summons.
(2) Unless any party seeks a different order in writing to my Associate within seven days, order the plaintiff to pay the defendant's costs of the proceedings.
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Amendments
08 May 2014 - typographical change agree to disagree
Amended paragraphs: paragraph 21
Decision last updated: 08 May 2014
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