Alfred Attard v James Legal Pty Limited and Peter James T/As James Solicitors

[2004] NSWSC 478

CITATION:	Alfred ATTARD & Ors v JAMES LEGAL PTY LIMITED & PETER JAMES T/AS JAMES SOLICITORS [2004] NSWSC 478
HEARING DATE(S):	7/5/04
JUDGMENT DATE:	11 June 2004
JUDGMENT OF:	Bell J at 1
DECISION:	Grant a stay of Applications No. 90043 of 2004, 90044 of 2004 and 90178 of 2004 pending the determination of the Common Law proceedings No. 1555 of 2004 and the Equity proceedings 20444 of 2004 upon the plaintiffs giving the undertaking that is set out in paragraph [21] above; Stand the proceedings over to Thursday 17 June at 9.15 in order to give the plaintiffs an opportunity give the undertaking; The stay granted on 2 April 2004 is continued until further order.
LEGISLATION CITED:	Legal Profession Act 1987 Trade Practices Act 1974
PARTIES :	Alfred Attard (1st Plaintiff) Michael Henry (2nd Plaintiff) Glowmint Pty Limited (3rd Plaintiff) Elzac Properties Pty Limited (4th Plaintiff) Construction Management Group Pty Limited (Under Deed of Company Arrangement) (5th Plaintiff) James Legal Pty Limited & Peter James T/AS James Solicitors (Defendant)
FILE NUMBER(S):	SC 20044/04
COUNSEL:	R. Kaye SC (Plaintiffs) N. Perram (Defendants)
SOLICITORS:	Lazarus Smith Lawyers (Plaintiffs) Acuiti Legal (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

BELL J

Friday 11 June 2004

20044/04 Alfred Attard & Ors v James Legal Pty Limited & Peter James t/as James Solicitors

JUDGMENT

1 BELL J: By notice of motion filed on 4 March 2004 the applicants, the first to fourth plaintiffs in the proceedings, apply for orders including:

1. That the Applications No. 90043 of 2004, 90044 of 2004 and 90178 of 2004 by a Practitioner of Assessment of Costs be stayed pending determination of proceedings No. 1555 of 2004 and these proceedings.
2. Further or in the alternative to paragraph 1 hereof, an order that the Applications No. 90043 of 2004, 90044 of 2004 and 90178 of 2004 by a Practitioner for Assessment of Costs by consolidated with Proceeding No. 1554 of 2004 (“Equity Proceedings”) and these proceedings pursuant to Supreme Court Rules Pt 31 rule 7 and/or that the respective actions be heard together.

2 Argument focussed wholly on the relief claimed in prayer one.

3 It is convenient to refer to the applicants on the motion as the plaintiffs and to the respondents as the defendants.

4 In support of the motion the plaintiffs relied upon the affidavit of their solicitor, Barry Neil Lazarus sworn on 3 March 2004. The defendants read the affidavit of Peter Richard James sworn on 4 May 2004.

5 It appears that the first and second plaintiffs, together with their respective family companies, were involved with the fifth plaintiff, Construction Management Group, in lengthy litigation involving a firm of developers, Franks Centre Lofts Pty Limited (FCL). The litigation was commenced at a time when Blessington Judd, solicitors, were acting on the plaintiffs’ behalf.

6 In or about July 2000 the plaintiffs retained the defendants, James Legal Solicitors, to act on their behalf in relation to the various proceedings. The proceedings are summarised in a schedule, that is annexure “A” to the affidavit of Mr Lazarus:

1. Franks Centre Lofts Pty Limited v Construction Management Group & Michael Henry & Alfred Attard, Supreme Court Proceedings No. 55017 of 1999,
2. Construction Management Group v Allatech Pty Limited, Supreme Court Proceedings No. 55021 of 2000,
3. Orlando Pty Limited v Frank Centre Lofts, District Court Proceedings No. 1802 of 2000 (NB Frank Centre Lofts cross claimed against Construction Management Group),
4. Construction Management Group v Supreme Linings, District Court Proceedings No. 2024 of 2000.

7 I was informed that the defendants ceased to act on the plaintiffs’ behalf around April/May 2003.

8 By letter dated 25 August 2003 Lazarus Smith Lawyers, who by this time were acting on the plaintiffs’ behalf, wrote to the defendants requesting that they be provided with itemised bills of costs in respect of all fees and disbursements for which the defendants had already been paid together with any fees and disbursements that were alleged to be still owing to them. Following further correspondence by letter dated 17 November 2003 Lazarus Smith put the defendants on notice that the plaintiffs alleged the conduct by them of the FCL litigation on their behalf had been negligent.

9 On 14 January 2004 the defendants made application pursuant to Pt 11 Div 6 of the Legal Profession Act 1987 (NSW) (the LPA) for an assessment of their costs, Application No. 90043 of 2004 (the Allatech costs). The bills of costs the subject of this application were dated 28 May 2003 and 14 April 2003. On the same date the defendants made application for an assessment of their costs, Application No. 90044 of 2004 (master file 00530). The bills of costs the subject of this application were dated 26 July 2001, 28 February 2003, 31 March 2003, 14 April 2003 and 21 May 2003. On 5 February 2004 the defendants made application for the assessment of their costs, Application No. 90178 of 2004 (Blessington Judd 01369). The bills of costs the subject of this application were dated 30 November 2001, 14 April 2003 and 28 May 2003. I shall refer to the three applications for assessments of costs as “the applications for assessment”.

10 The first to fourth plaintiffs commenced proceedings against the defendants in the Equity Division, No. 1555 of 2004 (the Equity proceedings) by summons filed on 19 February 2004. By these proceedings the plaintiffs seek a declaration that a deed executed between them and the defendants in January 2003 was repudiated by the defendants. The conduct said to have constituted repudiation of the deed was the defendants’ decision to cease acting on behalf of the first to fourth plaintiffs. The deed is said to have made provision for the payment of the defendants’ costs. A copy of it is annexure “B” to the affidavit of Mr Lazarus.

11 By statement of claim filed on 2 March 2004 the plaintiffs also commenced proceedings against the defendants in the Common Law Division, No. 20044 of 2004 (the Common Law proceedings). By these proceedings the plaintiffs claim that the defendants acted negligently and in breach of their retainer in proceedings No. 55017 of 1999 (the FCL proceedings), proceedings No. 55021 of 2000 (the Allatech proceedings), District Court proceedings No. 1802 of 2000 (the Orlando proceedings) and District Court proceedings No. 2024 of 2000 (the Supreme Linings proceedings). In addition to the claims in contract and negligence the plaintiffs propound a claim under the Trade Practices Act 1974 (Cth) (the TPA) and seek relief under ss 82 and 87 of the TPA including a declaration that the costs the subject of applications No. 90043 of 2004, 90044 of 2004 and 90178 of 2004 are not recoverable by the defendants.

12 The plaintiffs plead that as at 2 October 2001 they had paid to the defendants the sum of $1,186,206.33 by way of costs and disbursements and that the defendants agreed to their costs of the various actions being paid in accordance with scheduled payments as set out in a document described as a cash flow chart provided to them on that date (paragraph 31). The plaintiffs claim that the defendants breached the agreement by the request of further sums (paragraph 33). Alternatively, the plaintiffs plead that the defendants are estopped from claiming costs and disbursements that exceed the agreed payments.

13 On 2 April 2004 an order was made staying the assessment of the applications for assessment. No point was taken on behalf of the defendants that a stay was not an appropriate form of relief should the plaintiffs make good their primary contention. I deal with the motion upon that basis.

14 It is the plaintiffs’ contention that it is futile and impractical for the applications for assessment to proceed prior to the determination of both the Common Law and Equity proceedings. They note that the Costs Assessor is not in a position to determine whether the costs were incurred as the result of negligent advice. The defendants accept so much. This does not mean that the defendants should be deprived of their entitlement to have their costs assessed in accordance with the scheme provided by the LPA. Mr Perram, who appeared on the defendant’s behalf, submitted that the Costs Assessor is particularly well qualified with respect to the quantification of costs and to the extent that the Common Law proceedings raise allegations of over-charging the Court is likely to be assisted by the Costs Assessor’s certificate of determination.

15 Mr Perram acknowledged that to the extent that the costs the subject of the applications for assessment relate directly to the plaintiffs’ claims in the Common Law and Equity proceedings it would be proper for the Court to make orders having the effect of preventing the defendants from enforcing any judgment obtained upon registration of the Costs Assessor’s certificate of determination. In his submission this might be achieved by staying any judgment under s 208J(3) of the LPA. Allowing the process of assessment to continue was said not to undermine either the Common Law or the Equity proceedings.

16 Section 208J(1) of the LPA provides that upon making a determination the Costs Assessor is to issue to each party a certificate that sets out the determination. The Costs Assessor is required to ensure the a certificate issued under s 208J is accompanied by a statement of the reasons for the determination (s 208JAA(1)(a)). Section 208J(3) provides:

“In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of the unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed.”

17 In Mr Perram’s submission the filing of the certificate of determination in the registry of the court, although taking effect as a judgment of the court pursuant to s 208J(3), would not give rise to an estoppel by record or otherwise. In the course of submissions he acknowledged the contrary proposition to be arguable. He submitted that a stay of the assessment process remained premature and that the plaintiffs might obtain injunctive relief preventing the filing of the certificate of determination or it may be, an undertaking from the defendants not to register the same.

18 In the plaintiffs’ submission the interests of justice favoured a stay of the applications for assessment. They submitted that the total sum the subject of the applications for assessment was of the order of $147,743 and that this represented a relatively small proportion of the total sum paid by them to the defendants on account of professional costs. In both Application No. 90044 of 2004 (relating to the defendants’ master file 00530) and Application No. 9043 of 2004 (the Allatech matter) the state of the plaintiffs’ account with the defendants as at December 2002 shows that little billed work remained outstanding. The bulk of the costs that are the subject of these two applications for assessment relate to amounts billed in 2003 that post-date the execution of the deed. Substantial costs appear to have been billed at or about the time that the defendants ceased to act for the plaintiffs. This circumstance was relied upon as lending colour to the submission that the subject matter of at least these two applications for assessment is bound up with the Common Law and the Equity proceedings.

19 The Costs Assessor has not to-date undertaken work with respect to the applications for assessment. Should the assessment process be allowed to run its course the plaintiffs will be put to considerable expense in the preparation and lodgement of their notice of objections. Necessarily their objections will raise the question of whether the legal work undertaken was necessary in light of what is alleged to have been the defendants’ negligent advice.

20 The only prejudice that might be occasioned to the defendants in the event that the Court granted the stay, at least with respect to the Allatech and master file assessments, was the question of interest. Mr Kaye SC, who appeared on the plaintiffs’ behalf, indicated that they would be willing to give an undertaking to the Court in the following terms:

“In the event that the Professional Negligence proceedings and Equity proceedings are determined, or otherwise resolved, and such determination gives rise to a liability on the part of the Applicants to pay costs or disbursement to the Respondents, the Applicants will pay interest upon such terms as may be assessed at Supreme Court rates as and from the dates of filing of the respective applications for assessment of costs.”

21 Mr Perram drew my attention to the somewhat different considerations that apply to Application No. 90178 of 2004 (the Blessington Judd matter). No allegation of negligence is pleaded with respect to the conduct of the legal work concerning Blessington Judd matter. It is work that on its face was undertaken before the date of the execution of the deed, albeit the bulk of the sums claimed are itemised in bills that were prepared in April and May 2003. There was submitted to be no reason why the defendants should be precluded from proceeding to have their costs assessed with respect to this work and to have any certificate of determination registered and the judgment enforced.

22 Mr Kaye acknowledged that there was no pleading of negligence in the Common Law proceedings with respect to the conduct of the Blessington Judd matter. He relied on paragraph 38 (d) of the statement of claim that pleads over-servicing “in relation to the FCL proceedings and otherwise”. He also relied on the claim for reimbursement of costs pleaded in paragraph 40(vii) of the statement of claim. Mr Kaye took me to the correspondence annexed to Mr Lazarus’ affidavit in support of the submission that the plaintiffs are confronted with the difficulty that they do not know how the $1,186,206 that they have paid to the defendants has been applied. The costs the subject of the Blessington Judd application in this sense are contended to be inseparably connected to the other proceedings being conducted on the plaintiffs’ behalf by the defendants.

23 I have concluded that the interests of justice favour granting the plaintiffs the relief that they seek. The subject matter of Application no 90044 of 2004 (relating to the defendant’s master file 00530) and Application No. 9043 of 2004 (the Allatech matter) is directly raised by the Common Law proceedings and, it may be, the Equity proceedings. If the assessments proceed the plaintiffs will be required to undertake the expense of preparing Notices of Objections. While ultimately these may be recoverable should they be successful, it places a burden on them requiring that they address the assessment process while engaged upon the preparation of their claims in this Court.

24 Each of the applications for assessment was lodged with the Manager, Costs Assessment, in accordance with the provisions of Div 6 of Pt 11 of the LPA after the plaintiffs notified the defendant of their assertion that they had been negligently advised by the defendant and that they reserved the right to resist payment of further amounts and to seek recovery of amounts paid, together with damages, interest and costs (letter Lazarus Smith Lawyers to the defendants, dated 17 November 2003, Annexure “E” to the affidavit of Barry Neil Lazarus). The plaintiffs did not delay thereafter in bringing the Common Law proceedings and the Equity proceedings.

25 The costs assessor has not to-date undertaken work on the applications. Any prejudice to the defendants seems to me to be adequately addressed by the undertaking to which I have referred.

26 The defendant’s acknowledge with respect to the bulk of the costs the subject of the applications for assessment that it is appropriate that they not be permitted to file any certificate of determination pending the finalisation of the litigation.

27 While the plaintiffs do not make any claim in negligence and/or breach of retainer with respect to the conduct of the legal work connected with the Blessington Judd matter I am persuaded that the interests of justice favour a stay of that application for assessment also. The Common Law proceedings include a claim of over-servicing otherwise than in relation to the FCL litigation and for the reimbursement of sums paid on account of costs. The proceedings arise out of the conduct by the defendant’s of a legal work for the plaintiffs in respect of a number of matters. There may be issues concerning the allocation as between the matters conducted on the plaintiffs’ behalf of the sums received by the defendant’s on account of costs.

28 I propose to grant a stay of Applications No. 90043 of 2004, 90044 of 2004 and 90178 of 2004 pending the determination of the Common Law proceedings No. 1555 of 2004 and the Equity proceedings 20444 of 2004 upon the plaintiffs giving the undertaking that is set out in paragraph [21] above. I will stand the proceedings over to Thursday 17 June at 9.15 am in order to give the plaintiffs an opportunity give the undertaking.

29 The stay granted on 2 April 2004 is continued until further order.

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Last Modified: 06/15/2004