ATTORNEY-GENERAL (SA) v Kowalski (No 8) - [2020] SASC 208

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
ATTORNEY-GENERAL (SA) v KOWALSKI (No 8)
[2020] SASC 208
Judgment of The Honourable Justice Blue
28 October 2020
PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS - VEXATIOUS LITIGANTS AND PROCEEDINGS
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - RIGHT OF APPEAL
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - FROM LOCAL COURT
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - JUDGMENTS AND ORDERS - GENERALLY - CONSENT JUDGMENTS AND ORDERS
PROFESSIONS AND TRADES - LAWYERS - REMUNERATION - TAXATION OF COSTS AND FEES - GENERAL PRINCIPLES
Application for permission pursuant to section 39 of the Supreme Court Act 1935 to appeal against a judgment of a Magistrate dismissing an application to set aside a consent judgment.
Held:
1. It is reasonably arguable that the Magistrate erred in failing to have regard to the affidavit filed in support of the set aside application (at [55]).
2. The appeal would not be instituted for an ulterior purpose (at [107]).
3. Permission pursuant to section 39 to institute the appeal granted (at [108]).
Supreme Court Act 1935 (SA) s 39; Legal Practitioners Act 1981 (SA) s 42; Workmen’s Compensation Act 1971 (SA) s 41; Magistrates Court Act 1991 (SA) s 38, referred to.

ATTORNEY-GENERAL (SA) v KOWALSKI (No 8)
[2020] SASC 208
Civil
BLUE J:

Mr Kowalski seeks permission, pursuant to section 39 of the Supreme Court Act 1935 (SA) to institute an appeal against a judgment of a Magistrate dismissing his application to set aside a consent judgment in favour of Stanley & Partners.
Timothy Bourne was invited to make submissions on the application and appeared to oppose the grant of permission. The partnership of Stanley & Partners has been dissolved but Mr Bourne was a partner at all material times and was the partner responsible in relation to acting for Mr Kowalski and subsequent litigation by and dealings with Mr Kowalski.
Background
In January 1988 Mr Kowalski instructed Mr Bourne of Stanley & Partners in relation to an eye injury suffered in the course of his employment at Mitsubishi Motors Australia Limited (Mitsubishi). There was no written costs agreement under subsection 42(6) of the Legal Practitioners Act 1981 (SA) (the Legal Practitioners Act) (as it was in 1988) providing for Stanley & Partners to charge at rates other than those prescribed by the relevant court scale.
In August 1989 Mr Bourne on behalf of Mr Kowalski instituted an action in the District Court against Mitsubishi (the District Court action). The claim was for damages for breach of duty and in the alternative an assessment of workers compensation under the Workmen’s Compensation Act 1971 (SA) (the Workmen’s Compensation Act).
In January 1991 Mr Bourne prepared a draft application in the Industrial Court seeking finalisation of Mr Kowalski’s workers compensation claims with respect to the eye injury and a draft letter to Mitsubishi’s solicitors serving the application.
In February 1991 Mr Kowalski terminated his instructions to Stanley & Partners.
On 25 February 1991 Stanley & Partners rendered a bill to Mr Kowalski totalling $2,152[1] for the work undertaken in relation to his eye injury. The bill was in the following terms:
[1]    All dollar figures are rounded to the nearest whole dollar unless otherwise shown.
RE     DAMAGES AND COMPENSATION – MITSUBISHI MOTORS
ToOur professional charges herein and including all office
and telephone attendances and correspondence incidental
to claim, preparing, filing and serving district court
proceedings, obtaining medical and other evidence
in support of claim, negotiating with solicitors for
Mitsubishi, drafting Industrial Court proceedings,
and all other work incidental thereto, exceeding but say,
$2,000.00
To: Our disbursements
Photocopies  $148.60
STD Call    $3.42
$2,152.02
Stanley & Partners’ time cost ledger shows that the bill was prepared based on time costing and the total time-based charges recorded in the time cost ledger were $2,102.
On 25 February 1991 Stanley & Partners rendered a bill for $150 for work in relation to a defamation claim.
In August 1991 Mr Kowalski suffered a severe mental breakdown and was unable to continue work at Mitsubishi. In due course, he was referred to a psychiatrist, Dr Karl Jagermann, for treatment. He did not ever return to work. In March 1994 Mitsubishi informed him that his employment was terminated because his contract of employment had been frustrated as a result of his psychiatric illness.
In September 1991 Mr Kowalski, by his new solicitors R J Cole & Partners, required Stanley & Partners to tax their costs and they agreed to do so. Stanley & Partners engaged legal costs consultants, HJ & SW Briggs, to prepare a draft bill of costs in taxable form. The consultants prepared a draft bill totalling $6,331, which included preparation of the bill itself for $2,487.
On 8 November 1991 Stanley & Partners rendered a bill to Mr Kowalski for $4,009. This comprised $2,487 for preparation of the draft bill of costs and the balance ($1,522) was described as professional charges further to those contained in the bills rendered in February 1991.
On 8 November 1991 Mr Bourne wrote to R J Cole & Partners attaching the last (summary) page only of the draft bill of costs showing subtotals and totals. He said that Stanley & Partners proposed to file and serve a bill of costs in seven days.
It appears from the summary page that the draft bill of costs was prepared on the basis of the Supreme Court scale.
On 13 November 1991 R J Cole & Partners wrote to Stanley & Partners stating that the summary page of the bill of costs was meaningless to them. They contended that the bill should have been prepared on the Magistrates Court scale and that nothing could be charged for preparation of the draft bill of costs.
On 4 January 1993 Dr Jagermann provided a progress report to Mr Kowalski’s general practitioner (4 January report). He referred to pressure being exerted on Mr Kowalski by his current firm of solicitors [RJ Cole & Partners] to settle his claims against Mitsubishi. He referred to his clinical diagnosis that Mr Kowalski was suffering a “pathologically intense state of anxiety” and to his having issued a certificate of work incapacitation up to 28 February 1993. He said amongst other things:
Mr Kowalski’s mind remains torn in different directions wherein he cannot clearly decide on what next to do … Mr Kowalski continues to register surges of tension and tears, poor appetite, insomnia, loss of energy and fatigue, low self-esteem and cognitive impairment… As he is at present Mr Kowalski cannot apply, enthuse or entrust himself to anything.
On 14 January 1993 Stanley & Partners issued a minor civil action in the Magistrates Court (the action) against Mr Kowalski for $6,311 being the total of the accounts rendered in February and November 1991, plus costs, resulting in a total claim of $6,684.
On 26 January 1993 Dr Jagermann provided a further progress report to Mr Kowalski’s general practitioner (26 January report). He again referred to pressure being exerted on Mr Kowalski by RJ Cole & Partners to settle his claims against Mitsubishi. He said amongst other things:
With Mr Kowalski being at the end of tether and having proceeded to put his rural property on the market as he is already being taken to court by another firm of solicitors for non-payment of their charges, he has become more bewildered, confused, disturbed and lost. In this perilous state of mind and emotional vulnerability Mr Kowalski is likely to put his signature to anything simply to be freed of the unremitting barrage of pressure that has become more intensive of late.
Mr Kowalski’s mind is also rendered anxious about the prospect of facing up to his former factory work on account of projected forebodings of yet more pressure and the showing of at least a veiled hostility toward him by members of the workforce cum higher up staff …
On 29 January 1993 Mr Kowalski signed a consent to judgment in the action for $6,684. Judgment was entered in favour of Stanley & Partners for that amount.
In March 1995 Mr Kowalski filed an application in the action to set aside the consent judgment but it was dismissed when he did not appear at the hearing. In October 1995 he filed another application to set aside the consent judgment on the ground that it was procured by duress and Stanley & Partners failed to comply with the requirements of the Legal Practitioners Act. In November 1995 this application was dismissed by a Magistrate.
In November 1995 Mr Kowalski filed an application in the Magistrates Court that Stanley & Partners’ legal costs be rescinded or taxed. The application was made on the same grounds as the October 1995 application. It was dismissed by another Magistrate as being misconceived.
In December 1995 Mr Kowalski applied for leave to appeal against the dismissal of his applications by the Magistrates. In November 1996 a Judge of this Court dismissed the application for leave.
In April 2010 Mr Kowalski instituted a proceeding against Mr Bourne in the Federal Magistrates Court for misleading conduct in April 2010 contained in a letter from Mr Bourne denying an allegation by Mr Kowalski that he had obtained the judgment by fraud. In August 2010 the proceeding was dismissed by Mr Lindsay FM as misconceived and Mr Kowalski was ordered to pay Mr Bourne’s costs fixed at $9,675. An appeal by Mr Kowalski to the Federal Court was dismissed in March 2011.
In March 2011 Mr Kowalski instituted a proceeding against Mr Bourne in the Industrial Relations Court seeking recovery of costs paid to Stanley & Partners pursuant to section 41 of the Workmen’s Compensation Act. In August 2011 the proceeding was dismissed by a Judge. In May 2015 Mr Kowalski’s appeal against that dismissal was dismissed by the Full Court of the Industrial Relations Court. In March 2017 Mr Kowalski’s appeal to the Full Court of this Court was effectively dismissed.[2]
[2] The appeal was allowed for the purpose only of substituting an order dismissing the appeal to the Full Bench of the Industrial Relations Court for its order permanently staying Mr Kowalski’s application.
In November 2013 Mr Kowalski filed an application in this Court for taxation of Stanley & Partners’ costs. In December 2014 a Master permanently stayed the application. Appeals by Mr Kowalski to a single Judge and the Full Court were dismissed.
In January 2014 I made an order pursuant to section 39 of the Supreme Court Act 1935 (SA) prohibiting Mr Kowalski from instituting further proceedings without permission of the Court.
Mr Kowalski subsequently sought permission pursuant to section 39 to apply to the Magistrates Court to set aside the consent judgment on the ground that, when he gave his consent, he was suffering a psychiatric condition rendering him incapable of consenting. On 30 April 2019 I granted permission.
On 1 May 2019 Mr Kowalski filed at the Magistrates Court an interlocutory application seeking the setting aside of the consent judgment. This was supported by an affidavit sworn by Mr Kowalski on 1 May 2019 filed at the same time (the 1 May affidavit). The affidavit contained 29 paragraphs, followed by paragraph 30 which exhibited the defence that Mr Kowalski proposed to file to the claim if the consent judgment were set aside and paragraph 31 in which he said that he knew the facts deposed to of his own knowledge except where it otherwise appeared.
The 1 May affidavit included the following paragraphs:
7.On 16-8-1991, I suffered a severe mental break down/psychiatric illness at work, therefore, I have been treated for my psychiatric illness since that time. I have not been able to work since that time and I couldn’t manage my affairs, therefore, on 16-3-1994, MMAL informed me that as a result of my psychiatric illness, and the fact that I shall never be able to work again, my contract of employment with MMAL was FRUSTRATED by operation of law. NOTE: I have to take 4 Luvox per day for my psychiatric illness.
…
13.ON 10-7-1992, MY TREATING PSYCHIATRICT (sic), DR K JAGERMANN, ADMITTED ME INTO THE FULLARTON PRIVATE HOSPITAL IN ORDER TO PROTECT ME FROM MYSLEF (sic).
…
15.On 4-1-1993, my treating psychiatrist, Dr K Jagermann, said in a medial (sic) report that “… MR KOWALSKI’S MIND REMAINS TORN IN DIFFERENT DIRECTIONS WHEREIN HE CANNOT CLEARLY DECIDE ON WHAT NEXT TO DO. SIMMILARLY (sic) MR KOWALSKI CANNOT ESCAPE FROM THE RAVAGES OF RECURRING ANGER AND DEPRESSION LASHING OUT AT MR KOWALSKI MAKING HIM BELIEVE THAT IT IS ALL HIS FAULT. IT IS NO WONDER THAT MR KOWALSKI CONTINUES TO REGISTER SURGES OF TENSION AND TEARS, POOR APPETITE, INSOMNIA, LOSS OF ENERGY AND FATIGUE, LOW SELF-ESTEEM AND CONGNITIVE (sic) IMPAIRMENT, HIS DRIVING, PARDON MY ENGLISH, IS CURRENTLY UP THE CREEK …”.
…
17.On 26-1-1993, my psychiatrist, Dr K Jagermann, said in a medial (sic) report that “… WITH MR KOWALSKI BEING AT THE END OF TETHER AND HAVING PROCEEDED TO PUT HIS RURAL PROPERTY ON THE MARKET AS HE IS ALREADY BEING TAKEN TO COURT BY ANOTHER FIRM OF SOLICITORS FOR NON-PAYMENT OF THEIR CHARGES, HE HAS BECOME MORE BEWILDERED, CONFUSED, DISTURBED AND LOST. IN THIS PERILOUS STATE OF MIND AND EMOTIONAL VUNERASBILITY (sic) MMR (sic) KOWALSKI IS LIKELY TO PUT HIS SIGNASTURE TO ANYTHING SIMPLY TO BE FREED OF THE UNREMITTING BARRAGE OF PRESSURE THJAT (sic) HAS BECOME MORE INTENSIVE OF LATE …”
18.On 29-1-1993, as a result of the unwarranted stress and anxiety which I was being placed under, to pay the Plaintiff’s legal costs and to illegally settle my workers compensation claims with MMAL, I was at the end of my tether, bewildered, confused, disturbed, lost, in a perilous state and emotionally unstable, therefore, I signed the consent judgment in action No 788 of 1993, in order to be freed of the unremitting barrage of pressure which had become more intensive at the time, however, when I did so I was not mentally competent to do so on the ground that I was not able to think rationally, or in a fit or a competent mental state to fully understand what the ramifications of me signing it would be.
…
21.On 29-1-1993, was not mentally competent to sign the consent judgment, therefore equity demands that it is set aside or revoked.
…
28.The reason why I have not brought this application in the Adelaide Magistrates Court, un-till (sic) now, is because I thought that my only avenue to set aside my consent judgment dated 29-1-1993, was to commence legal proceedings in the Supreme Court for an extension of time to set my consent judgment aside …
In the proposed defence exhibited to the affidavit, Mr Kowalski pleaded amongst other things that Stanley & Partners illegally sued him for more than their original bill in the sum of $2,152; Stanley & Partners illegally charged him the costs of preparing their bill of costs in taxable form in the sum of $2,487 and Stanley & Partners had been requested in September 1992 to tax their costs but failed to do so.
On 7 May 2019 Mr Kowalski served the interlocutory application and supporting affidavit on Mr Bourne by facsimile. On 10 May 2019 Mr Kowalski filed an affidavit of proof of service.
On 15 May 2019 Mr Kowalski filed written submissions on his set aside application, which annexed various documents,
On 21 June 2019 Mr Kowalski and Mr Bourne appeared at a directions hearing before a Magistrate in relation to the set aside application. The Magistrate directed Mr Kowalski to file points of claim by 5 July 2019 and Mr Bourne to file points of defence by 19 July 2019. The directions hearing was adjourned to 9 September 2019.
On 4 July 2019 Mr Kowalski filed points of claim. They reproduced word for word paragraphs 1 to 29 of the 1 May affidavit, together with two additional paragraphs.
On 9 September 2019 Mr Bourne filed an affidavit sworn on that date which he submitted by way of points of defence and evidence in response to Mr Kowalski’s application. He referred to Mr Kowalski’s 1 May affidavit and responded to some paragraphs in it.
On 9 September 2019 Mr Kowalski filed an affidavit sworn on that date exhibiting documents amongst other things in support of a contention that Mr Bourne had breached section 41 of the Workmen’s Compensation Act in relation to the Stanley & Partners bills.
On 9 September 2019 Mr Kowalski and Mr Bourne appeared at the adjourned directions hearing before the Magistrate (the 9 September hearing). The Magistrate made the following orders:
1.The matter will proceed at the hearing on the material before the court.
2.Mr Kowalski specifically advises the court that all material in relation to his mental incompetence to consent to judgment in favour of Stanley & Partners in 1993 is before the court.
3.Allow 1 hour for submissions to each party.
4.The matter is listed for hearing on Monday 28 October at 10 am.
Mr Kowalski and Mr Bourne must have understood that Mr Kowalski was relying on his affidavits sworn on 1 May and 9 September 2019.
On 17 September 2019 Mr Kowalski filed an affidavit that he had sworn on 11 April 2019 (the 11 April affidavit). This affidavit contained paragraphs 1 to 29 which were identical word for word to paragraphs 1 to 29 of the 1 May affidavit. However, this affidavit exhibited the documents referred to in the body of the affidavit as pages 1 to 80. Pages 49 to 51 comprised the report from Dr Jagermann dated 26 January 1993, from which Mr Kowalski had quoted at paragraph 17 of both affidavits and of his points of claim. Pages 31 to 33 comprised the report from Dr Jagermann dated 4 January 1993, from which Mr Kowalski had quoted at paragraph 15 of both affidavits and his points of claim
On 27 September 2019 Mr Kowalski filed an affidavit sworn on 23 September 2019 which responded, paragraph by paragraph, to Mr Bourne’s affidavit sworn on 9 September 2019. It also exhibited various documents.
On 28 October 2019 Mr Kowalski and Mr Bourne appeared at the hearing of the set aside application before the Magistrate (the 28 October hearing). During the course of submissions, Mr Kowalski referred to his 11 April affidavit. He told the Magistrate that at the 9 September hearing he believed that it had been filed but he went home, looked at his documents, found that it had not been filed and then filed it (on 17 September).
Mr Kowalski commenced to refer to passages in his affidavit referring to Dr Jagermann and referred to paragraph 13 in which he stated that in July 1992 Dr Jagermann admitted him into Fullarton Private Hospital in order to protect him from himself. At that point, the Magistrate ruled that Mr Kowalski could not rely on the 11 April affidavit because he had told the Magistrate at the 9 September hearing that all the material that he wanted to rely on in relation to his mental incompetence was before the Court and that he did not serve the affidavit on Mr Bourne.
At the conclusion of Mr Kowalski’s submissions, the Magistrate told Mr Bourne that he did not need to hear from him. The Magistrate delivered ex tempore reasons for dismissing the set aside application. The reasons included the following passages addressing Mr Kowalski’s reliance on having been mentally incompetent to consent to judgment:
6.Mr Kowalski’s third basis for applying setting aside the judgment was that he was mentally incompetent to consent to judgment. At the time this matter was listed for hearing, Mr Kowalski specifically advised me that all material in relation to his mental incompetence to consent to judgment in favour of Stanley & Partners in 1993 was before the court. Notwithstanding that advice, Mr Kowalski attempted to rely on further affidavit material filed by him on 17 September 2019 and not served on Mr Bourne because, as Mr Kowalski claimed, ‘he is not a party’.
7.I will not allow reference to the affidavit but for the sake of completeness, I note Mr Kowalski attempted to refer to paragraph 13 of his affidavit. That paragraph reads as follows:
On 10-7-1992, my treating psychiatrist Dr K Jagermann admitted me into the Fullarton Private Hospital in order to protect me from myself.
8.The details of Mr Kowalski’s mental incompetence are not dealt with in that paragraph. The date of the admission to Fullarton Private Hospital pre-dated the date of the signing of judgment by number of months. Furthermore, as Mr Millard noted in his reasons in 1995, Mr Kowalski was represented by lawyers at the time.
9.Mr Kowalski has failed to satisfy me that he was mentally incompetent to consent to judgment. There is nothing before me to indicate that is the case.
10.For those reasons Mr Kowalski’s application on this occasion must be dismissed. Mr Bourne makes no application for costs.
Criteria for grant of permission under section 39

Subsection 39(1) of the Supreme Court Act 1935 (SA) empowers the Court to make an order prohibiting a person by whom vexatious proceedings have persistently been instituted from instituting a further proceeding without permission of the Court.
A “vexatious proceeding” is defined by subsection 39(5) to be a proceeding:
(a) instituted to harass or annoy, to cause delay, or for any other ulterior purpose; or
(b) instituted without reasonable ground.
Before granting permission to a person subject to an order under subsection 39(1) to institute a proceeding, the Court must be satisfied that the proceeding is not vexatious. This means, firstly, that the proceeding is not instituted without reasonable ground within the meaning of section 39(5)(b), that is, it appears that there is a tenable legal and factual basis for the proceeding. When the proceeding is an appeal, this means that the appeal is reasonably arguable. The test means, secondly, that the proceeding is not instituted for an ulterior purpose within the meaning of section 39(5)(a).
Would the appeal be reasonably arguable?
Failure to have regard to supporting affidavit
Mr Kowalski contends that the Magistrate erred by failing to have regard to the 1 May affidavit filed in support of his set aside application on 1 May 2019 in which he reproduced Dr Jagermann’s opinion expressed on 26 January 1993, being three days before Mr Kowalski consented to judgment, that he was not mentally capable of entering into an agreement (paragraph 17) and himself deposed that on 29 January 1993 that he was not mentally competent to consent to judgment because he was not able to think rationally or in a fit or competent mental state (paragraph 18). Mr Kowalski also contends that the Magistrate erred by failing to have regard to the 11 April affidavit.
It is reasonably arguable on the basis of the transcript of the hearing on 28 October 2019 and the Magistrate’s ex tempore reasons for judgment that the Magistrate did not have regard to the 1 May affidavit. The Magistrate only referred to the 11 April affidavit and declined to receive that affidavit for the reasons given by the Magistrate.
It is reasonably arguable on the basis of the transcript and the orders made by the Magistrate on 9 September 2019 that Mr Kowalski was relying on the affidavits that he had filed in the action up to 9 September 2019 and that Mr Bourne was relying on the affidavit he filed on 9 September 2019. It is reasonably arguable that it was clear in any event that Mr Kowalski was relying on the affidavit he filed at the same time as, and in support of, his set aside application on 1 May 2019. That was the main affidavit relied on by Mr Kowalski. His second affidavit filed on 9 September 2019 was only supplementary to the primary affidavit. It is reasonably arguable that this was clear in any event from Mr Bourne’s 9 September affidavit in which he responded to the 1 May affidavit.
In addition, the Magistrate referred only to paragraph 13 of the 11 April affidavit in concluding that the details of Mr Kowalski’s mental incompetence in January 1993 were not dealt with in that affidavit. It is reasonably arguable that this was erroneous because paragraphs 17 and 18 explicitly dealt with Mr Kowalski’s mental incompetence in January 1993.
Mr Bourne contends that paragraph 17 of Mr Kowalski’s affidavit was not admissible because it only reproduced an extract from Dr Jagermann’s report and did not exhibit the report itself.
It is common for affidavits received on interlocutory applications to reproduce extracts from an admissible document as opposed to exhibiting the document itself. If the opponent objects to receipt of the extracts, the court may require the party adducing the evidence to tender the document in question, although the court has a discretion to receive the extract. The action in the Magistrates Court was a minor civil action governed by section 38 of the Magistrates Court Act 1991 (SA), which provides amongst other things that even at the trial of the action the Court is not bound by rules of evidence, the procedure is inquisitorial rather than adversarial, and the Court must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.
Mr Bourne did not at the hearing on 28 October 2019 object to the 1 May affidavit. For the reasons given above, Mr Bourne must have known that Mr Kowalski was relying on that affidavit and it is reasonably arguable that the onus lay on him to object to it if he wished to do so.
It is true, as Mr Bourne points out, that at the 9 September hearing he foreshadowed that, to the extent that Mr Kowalski’s affidavits contained hearsay evidence, he would object. However, Mr Bourne did not make any objection at the 28 October hearing of the set aside application.
It is reasonably arguable that the Magistrate erred by failing to have regard to the 1 May affidavit filed in support of his set aside application.
Having reached this conclusion, I observe that it is best practice for a judicial officer at the outset of a contested interlocutory hearing to invite the parties to identify and tender the affidavits upon which they rely and formally receive them as evidence. This ensures that affidavits are not (as may be the case in the present case) overlooked by the judicial officer and also ensures that the parties identify and address any objections and any application to cross-examine the deponent. An alternative to receiving affidavits as evidence is to invite the parties to notionally “read” the affidavits upon which they rely, which is tantamount to formal reception of the affidavits but is becoming less common practice. Even if the judicial officer merely invites the parties to identify the affidavits upon which they rely, this should avoid an affidavit being overlooked and prompt any objections or applications to cross-examine.
In the present case, the Magistrate did not at the outset, or at any other time during the hearing, identify or invite the parties to identify the affidavits upon which they relied. The Magistrate proceeded directly to submissions and commenced by identifying the issues. The Magistrate did not ultimately invite Mr Bourne to make submissions.
It is reasonably arguable that the course adopted by the Magistrate resulted in the hearing miscarrying from the perspective of both parties. From the perspective of Mr Kowalski, the Magistrate did not have regard to the 1 May affidavit filed in support of his set aside application. From the perspective of Mr Bourne, any question as to whether Dr Jagermann’s report should have been tendered was not prompted by the manner in which the Magistrate dealt with, or did not deal with, the affidavits.
Capacity of evidence to prove mental incompetence
Mr Bourne contends that, if Dr Jagermann’s 26 January report had been tendered at the hearing on 28 October 2019, it was not capable of proving that Mr Kowalski was mentally incompetent to consent to judgment on 29 January 1993.
The Magistrate did not address this issue because he did not refer to the 1 May affidavit and did not refer to paragraphs 17 or 18 of the 11 April affidavit.
First, Mr Bourne contends that, if matters had proceeded differently, he would have objected to receipt of paragraph 17 of the 1 May affidavit on the ground that the full report should be tendered and not an extract reproduced in Mr Kowalski’s affidavit. This is hypothetical because the hearing on 28 October 2019 arguably miscarried for the reasons identified above. However, hypothetically, if the Magistrate had not made the arguable errors identified in the previous section and Mr Bourne had objected to receipt of paragraph 17 on this ground, it is reasonably arguable that Dr Jagermann’s report should have been received if it had been tendered. The report was available because it was already exhibited to the 11 April affidavit which had been filed.
Secondly, Mr Bourne contends that Dr Jagermann’s report should not have been received because Dr Jagermann could not be cross-examined because he is now deceased. This is a factor relevant to delay (addressed below) but does not render Dr Jagermann’s report inadmissible. It is reasonably arguable that Dr Jagermann’s report should have been admitted notwithstanding that he is now deceased.
Thirdly, Mr Bourne contends that on its face Dr Jagermann’s report is not capable of proving that Mr Kowalski was mentally incompetent to consent to judgment on 29 January 1993. He contends that it merely demonstrates that Mr Kowalski was under financial pressure to make decisions about his claim for compensation and/or damages but falls short of suggesting that he did not have the competence to conduct the litigation.
Dr Jagermann’s report was provided to Mr Kowalski’s general practitioner to report on his condition and mental capacity. The fact that it was not a medico-legal report provided for the purpose of litigation does not detract from its weight. It was directed principally to Mr Kowalski’s mental capacity to enter into a settlement agreement with Mitsubishi but nevertheless expressed an opinion upon Mr Kowalski’s mental capacity to enter into any form of legal agreement. Moreover, in the passage extracted at [18] above, Dr Jagermann specifically referred to Mr Kowalski “being taken to court by another firm of solicitors for non-payment of their charges”, which was clearly a reference to the action instituted by Stanley & Partners against Mr Kowalski.
Dr Jagermann’s 4 January report needs to be considered in the context that Mr Kowalski had been incapacitated from working since suffering a mental breakdown in August 1991. He was treated by Dr Jagermann over much of the period since then. He had been diagnosed by Dr Jagermann as suffering from a pathologically intense state of anxiety. He was in January 1993 totally incapacitated from working. He was under concurrent stress as a result of pressure to settle his claims against Mitsubishi. Dr Jagermann’s 26 January report also needs to be considered in the context of his 4 January report.
In the circumstances, it is reasonably arguable that the expression of the opinions by Dr Jagermann was capable of forming a basis for a Magistrate hearing Mr Kowalski’s set aside application to find that Mr Kowalski was not mentally competent to make a decision to consent to judgment for the full amount of Stanley & Partners’ claim (including costs) on 29 January 1993. I do not myself make such a finding because it is not my function on an application for permission under section 39.
I observe that, in addition to relying upon mental incompetence, Mr Kowalski relied before the Magistrate on two other grounds to set aside the consent judgment. Those grounds were that Stanley & Partners should not have entered judgment because their costs had not been taxed as required by section 41 of the Legal Practitioners Act and that Stanley & Partners were precluded by section 41 of the Workmen’s Compensation Act from recovering any costs from Mr Kowalski because they had not been ordered by the Industrial Relations Court. Neither of these were capable of comprising grounds to set aside a consent judgment. Even if either matter were established by Mr Kowalski, they would only be defences to the action if the consent judgment were first set aside: the mere fact that Stanley & Partners might, or even would, have failed in the action if it had proceeded to trial is incapable of comprising a ground on which a consent judgment should be set aside. When I granted permission to Mr Kowalski to apply to set aside the consent judgment, it was limited to the ground of mental incompetence and did not extend to the two additional grounds argued by Mr Kowalski before the Magistrate.
Futility of appeal: reasonable basis for defending claim on the merits
Assuming that Mr Kowalski established that his consent to the consent judgment was vitiated because he was not mentally competent, the court might exercise its discretion not to set aside the judgment unless Mr Kowalski has a reasonable basis for defending the claim on its merits. Otherwise, the setting aside might be regarded as futile.
The Magistrate did not address this issue because of his finding that there was no evidence of Mr Kowalski’s mental incompetence as at January 1993.
Mr Kowalski contended before the Magistrate that he had several defences to the claim on the merits.
Charge for $2,487
Stanley & Partners on 8 November 1991 charged Mr Kowalski $2,487 for preparation of a draft of bill of costs, which they did not provide to him. Mr Kowalski contended that Stanley & Partners was not entitled to charge him any of this amount.
In Dal Pont, Law of Costs, it is stated that:
at general law, it is established that the preparation of a bill at his or her own expense is part of a lawyer’s duty.[3]
[3] Dal Pont, Law of Costs, 4th edition (2018) at [4.27].
Similarly, in Lunn & Simpson’s, Legal Costs, South Australia, it is stated that:
A solicitor is not entitled to charge his client for preparing a bill of costs in proper form.[4]
[4] Butterworths, Legal Costs, South Australia, vol 1 (at Service 36) p. SA-361.
There are various authorities that support this proposition.[5]
[5] Re McCook (1887) 3 WN (NSW) 86; National Bank of Wales [1902] 2 Ch 412 at 414 per Buckley J; Re J F Fitzgerald & Seymour's Bill of Costs [1960] Qd R 430 at 432 per Wanstall J; Parramatta River Lodge Pty Ltd v Sunman (1991) 5 BPR 12,038 at 12,046–8; BC9101975 per Young J; Re National Safety Council of Australia Victorian Division (in liq) (1991) 9 ACLC 675 at 677 per Vincent J (SC(Vic)); Re Carter Newell's Bill of Costs [1996] 2 Qd R 13 at 19; BC9404358 per Dowsett J; Re Moore (SC(Qld), Thomas J, 1 November 1996, unreported) BC9605364 at 7–8.
It is reasonably arguable that Mr Kowalski had, and if the consent judgment were set aside would have, a good defence to the action to the extent of $2,487.
Charge for $1,522
Stanley & Partners on 8 November 1991 charged Mr Kowalski $1,522 described as professional charges further to those contained in the bills rendered on 25 February 1991. Mr Kowalski contended that Stanley & Partners were not entitled to charged him any of this amount because the February 1991 accounts were final accounts.
In Dal Pont, Law of Costs, it is stated that:
At general law, it has repeatedly been held that a lawyer who delivers a bill of costs without reserving the right to withdraw or alter it upon a valid condition is, for the purposes of the taxation, bound by it… [T]he lawyer cannot alter it except with leave of the court. Two reasons are commonly cited for this prohibition… Second, if a lawyer can withdraw a bill a client wishes to have taxed and submit another bill for a higher amount for taxation, the client may be reticent to request taxation for fear of having to pay more than he or she was charged in the first instance. More generally, the lawyer is treated strictly because the matter is one in which he or she is an expert and the client is not.[6]
[6] Dal Pont, Law of Costs, 4th edition (2018) at [5.56].
There are various authorities that support this proposition.[7]
[7] Loveridge v Botham (1797) 1 Bos 49; 126 ER 772; Re Carven (1845) 8 Beav 436 at 438; 50 ER 171 at 172 per Lord Langdale MR; Re Holroyde and Smith (1881) 43 LT 722 at 723 per Jessel MR; Parker v Blenkhorn (1888) 59 LT 906 at 907 per Lord Halsbury LC (HL); Re Hopkins (1891) 17 VLR 85 at 87 per A'Beckett J; Re A D Michie (1898) 24 VLR 440 at 441 per Hood J; Grant, Bulcraig & Co [1906] 1 Ch 124 at 127 per Farwell J; Sadd v Griffin [1908] 2 KB 510 at 512 per Farwell LJ; Re Sullivan Brothers (1915) 32 WN (NSW) 127; Fairway Construction Ltd v McGuire (1969) 71 WWR 396 at 397–8 per Davey CJBC (CA(BC)); Re Edwin Sutherland & Co's Bill of Costs [1971] Qd R 318 at 324 per Hoare J (affd [1971] Qd R 318 at 330 per Hanger CJ (FC)); Chappell v Mehta [1981] 1 All ER 349 at 351 per Lawton LJ; Re Legal Aid Commission of Victoria (1983) FLC 91-363 at 78,435 per Treyvaud J; Re Carter Newell's Bill of Costs [1993] 2 Qd R 593 at 598 per Ryan J.
The bills rendered in February 1991 were ostensibly final accounts because Stanley & Partners’ instructions had been terminated. They contained no reservation of a right to alteration.
It is reasonably arguable that Mr Kowalski had, and if the consent judgment were set aside would have, a good defence to the action to the extent of $1,522.
Charge for $2,302
Mr Kowalski had requested in September 1991 that Stanley & Partners tax their costs. They did not lodge a bill of costs for taxation. Mr Kowalski contended that Stanley & Partners was not entitled to obtain judgment against him for any amount unless and until their costs were taxed.
When a solicitor sues a client for legal costs in the Magistrates Court, the Magistrates Court has jurisdiction to determine liability, including the existence and terms of a retainer if there is a dispute about them.[8] The Supreme Court has statutory[9] and inherent[10] jurisdiction to determine the quantum of legal costs and the Magistrates Court has no jurisdiction to tax costs.[11] If a solicitor sues a client for legal costs in a lower court and the only issue is the quantum of costs, the action will be stayed or adjourned pending taxation of the costs in the Supreme Court.[12] If a solicitor sues a client for legal costs in a lower court and there are liability as well as quantum issues, the lower court will determine the liability issues at trial and the matter will then be adjourned pending taxation of the costs in the Supreme Court to fix quantum.[13]
[8] King William Law Chambers v Mobitel (International) Pty Ltd (1981) 29 SASR 316 at 317-318 per King CJ (with whom Mohr and Matheson JJ agreed); von Doussas Legal Pty Ltd v Nasr [2008] SASC 206 at [18]-[22] per White J; von Doussas Legal Pty Ltd v Nasr [2009] SASC 246 at [71] per Bleby J (with whom Gray and Layton JJ agreed); Kedem v Johnson Lawyers Legal Practice Pty Ltd [2014] SASC 168 at [33]-[36] per Kourakis CJ.
[9] Legal Practitioners Act 1981 (SA) section 42 in force in 1991. See now Legal Practitioners Act 1981 (SA) Schedule 3 clauses 37 to 41.
[10] Dal Pont, Law of Costs, 4th edition (2018) at [5.53]-[5.55].
[11] King William Law Chambers v Mobitel (International) Pty Ltd (1981) 29 SASR 316 at 317-318 per King CJ (with whom Mohr and Matheson JJ agreed); von Doussas Legal Pty Ltd v Nasr [2008] SASC 206 at [18]-[22] per White J; von Doussas Legal Pty Ltd v Nasr [2009] SASC 246 at [71] per Bleby J (with whom Gray and Layton JJ agreed); Kedem v Johnson Lawyers Legal Practice Pty Ltd [2014] SASC 168 at [33]-[36] per Kourakis CJ.
[12] See powers conferred by Legal Practitioners Act 1981 (SA) subsections 42(2) and (5) in force in 1993. See now Legal Practitioners Act 1981 (SA) Schedule 3 clauses 41(3) and 43.
[13] King William Law Chambers v Mobitel (International) Pty Ltd (1981) 29 SASR 316 at 317-318 per King CJ (with whom Mohr and Matheson JJ agreed); von Doussas Legal Pty Ltd v Nasr [2008] SASC 206 at [18]-[22] per White J; von Doussas Legal Pty Ltd v Nasr [2009] SASC 246 at [71] per Bleby J (with whom Gray and Layton JJ agreed).
It is not clear why Stanley & Partners issued an action in the Magistrates Court when there had been no dispute as to Mr Kowalski’s liability to pay costs, they had been requested to tax their costs and they had prepared a bill of costs in taxable form but had not lodged it for taxation. If Mr Kowalski had not consented to judgment, it is reasonably arguable that the action would have been stayed if Mr Kowalski did not raise any liability issues.
If the consent judgment were now set aside, it is reasonably arguable that Mr Kowalski would be entitled to a stay or adjournment of the action until the costs have been taxed. The trial of the action could proceed on any liability issues.
Other bases raised by Mr Kowalski
Mr Kowalski raised other bases for defending the claim on its merits.
Service of bill under section 41

Mr Kowalski contended that Stanley & Partners were precluded by section 41 of the Legal Practitioners Act from instituting the action because they had not served a bill of costs in taxable form on him.
In 1993 section 41 of the Legal Practitioners Act provided:
41 Bill of costs to be delivered
(1)A person cannot bring an action for the recovery of legal costs or appropriate money in or towards satisfaction of a claim for legal costs unless a bill specifying the total amount of those costs, and describing the legal work to which the costs relate, has been delivered to the person liable to the costs either personally, or by post addressed to the person at the person's last known place of business or residence.
(2)The person liable to legal costs may at any time within six months after delivery of a bill of costs under subsection (1) request the person claiming to be entitled to the costs to provide a statement showing in detail how the amount of the costs to which the bill relates is made up.
(3)A person of whom a request is made under subsection (2) must comply with the request.
(4)Where the defendant to an action for the recovery of legal costs has made a request of the plaintiff under subsection (2), and the plaintiff has not complied with the request, the court must, at the request of the defendant, stay the action until the plaintiff has complied with the request.
Stanley & Partners’ bill dated 25 February 1991 was sparse but it contained the two matters required by subsection (1). Stanley & Partners did not receive a request for a detailed bill under subsection (2) until just outside the six month period referred to in that subsection. Section 41 therefore did not require the Magistrates Court to stay the action.
The Court has inherent jurisdiction to order provision of a detailed bill of costs.[14] That jurisdiction is not subject to the time limit contained in subsection 41(2). However, this was superseded in practice by the request on behalf of Mr Kowalski that Stanley & Partners tax their costs.
[14] Dal Pont, Law of Costs, 1st edition (2003) at [3.25].
Costs of proceedings under Workmen’s Compensation Act
Mr Kowalski contended that Stanley & Partners were precluded by subsection 41(2) of the Workmen’s Compensation Act from recovering any costs because they had not been ordered by the Industrial Relations Court.
Subsections 41(2) and (3) provided:
41. Costs
…
(2)No legal practitioner acting for a workman shall be entitled to recover from that workman any costs in respect of any proceedings under this Act or to claim a lien in respect of such costs on, or to deduct such costs from any sum awarded as compensation, unless those costs have been awarded by the Court.
(3)No agreement by a person claiming compensation to pay any amount by way of costs greater than the amount awarded by the Court shall be binding on that person, and any amount paid by that person by way of costs in excess of the amount so awarded shall be recoverable by that person as a debt due to him.
It is reasonably arguable that the costs charged by Stanley & Partners within the 25 February bill relating to the draft application in the Industrial Court seeking finalisation of Mr Kowalski’s workers compensation claims and the draft letter to Mitsubishi’s solicitors serving the application comprised “costs in respect of any proceedings under this Act”. To the extent that the District Court action sought an assessment of workers compensation under the Workmen’s Compensation Act, it is reasonably arguable that any costs in relation to that claim comprised “costs in respect of any proceedings under this Act”. However, such costs would be a small minority of the costs charged for work in relation to the District Court action.
This is a matter that could be raised by way of partial defence by Mr Kowalski if the consent judgment were set aside and would be an issue for the Magistrates Court to determine.
Applicable court scale
Mr Kowalski contended that Stanley & Partners should have charged on the Local Court scale because the action should have been brought in the Local Court.
The action was instituted in the District Court on the instructions of Mr Kowalski. Mr Kowalski has demonstrated no basis on which the costs should have been charged on the Local Court scale.
Delay
There was a delay of many years between entry of the consent judgment and Mr Kowalski’s application to set it aside on the ground of mental incompetence.
The Magistrate did not address this issue because of his finding that there was no evidence of Mr Kowalski’s mental incompetence as at January 1993.
If permission to file an appeal is granted and error by the Magistrate is demonstrated on appeal, a discretionary factor in deciding whether the consent judgment should be set aside (whether that discretion is exercised by the Judge on appeal or on remission of the set aside application to another Magistrate) will be that delay. The delay will need to be weighed with all other relevant factors, including Mr Kowalski’s explanation in his 1 May affidavit for the delay and the prospects and strength of defences to the action by Mr Kowalski on the merits. On an application for permission under section 39, I am not in a position to determine how the discretion should be exercised. In particular, I cannot say that the delay will be fatal to the appeal being allowed.
Utility
Mr Bourne contends that there is no utility in granting permission to Mr Kowalski to file an appeal because, even if the consent judgment were set aside and Mr Kowalski successfully defended the action and the judgment sum of $6,684 became repayable to him, Mr Bourne would be entitled to set off against that amount the sum of $9,675 owed to him by Mr Kowalski pursuant to the order made by Mr Lindsay FM in August 2010.
The Magistrate did not address this issue because of his finding that there was no evidence of Mr Kowalski’s mental incompetence as at January 1993.
Assuming that there would be a right of set off between the two amounts notwithstanding the difference in the identity of the parties, at present Mr Kowalski is indebted to Mr Bourne in the amount of $9,675. If the consent judgment were set aside and Mr Bourne became indebted to Mr Kowalski for $6,684, the set off would reduce Mr Kowalski’s indebtedness to Mr Bourne. It is reasonably arguable that there would still be utility in the consent judgment being set aside.
Conclusion
I am satisfied that Mr Kowalski would have a reasonably arguable case on appeal against the Magistrate’s dismissal of his set aside application and such an appeal would not fall within the “without reasonable ground” limb of the definition of a vexatious proceeding.
Would the appeal be instituted for an ulterior purpose?
Before granting permission pursuant to section 39, I am required to be satisfied that the appeal would not be instituted to harass or annoy, to cause delay or for any other ulterior purpose.
Mr Kowalski has demonstrated that he feels aggrieved by the Magistrate’s decision, and in turn by the consent judgment and, for the reasons given above, it is reasonably arguable that the Magistrate erred, that Mr Kowalski’s consent was vitiated by mental incompetence and that Stanley & Partners was not entitled to judgment on the merits for the amount claimed. I am satisfied that Mr Kowalski’s sole purpose in seeking to appeal is to seek to set aside the consent judgment and have the claim by Stanley & Partners determined on its merits. I am satisfied that Mr Kowalski’s purpose is not to harass or annoy Mr Bourne, no question of Mr Kowalski causing delay arises, and Mr Kowalski is not motivated by any other ulterior purpose.
Mr Kowalski is not seeking to relitigate a matter previously decided against him. His set aside applications in 1995 were not made on the ground that he had not been mentally competent to consent to judgment. Mr Kowalski is not seeking to relitigate a matter decided against him in the proceedings he has brought since then.
In Kowalski v Stanley & Partners,[15] Mr Kowalski had applied for taxation of Stanley & Partners’ costs. The Full Court (Kelly and Peek JJ) held that a Master correctly concluded that this was an abuse of process because “it is being used as a vehicle by the applicant to contest liability issues, rather than simply for an actual taxation of the costs”.[16]
[15] [2016] SASCFC 74.
[16] At [34]-[38].
I am satisfied that an appeal by Mr Kowalski against the Magistrate’s decision would not be an abuse of process.
Conclusion
I grant permission pursuant to section 39 of the Supreme Court Act to Mr Kowalski to institute an appeal against the decision of the Magistrate. The permission is limited to a single ground of appeal, namely that the Magistrate erred in failing to have regard to the 1 May affidavit or the exhibits to the 11 April affidavit. Although Mr Kowalski can raise on appeal defences to the action on the merits to address any contention by Mr Bourne that setting aside the consent judgment would be futile, such defences are not capable in themselves of forming grounds of appeal.
I stress that the question I am required to decide is not whether an appeal against the Magistrate’s decision should be allowed or the orders that should be made on appeal. These will be questions to be decided by the Judge who hears the appeal and nothing in these reasons for judgment is intended to bind that Judge. My decision is confined to deciding that the appeal would not comprise a vexatious proceeding within the meaning of section 39 and permission under section 39 should be granted to institute the appeal.