Batterham v Goldberg

Case [2014] FCAFC 136

FEDERAL COURT OF AUSTRALIA

Batterham v Goldberg [2014] FCAFC 136

Citation: Batterham v Goldberg [2014] FCAFC 136
Appeal from: Batterham v Goldberg & Ors [2014] FCCA 302
Parties: PETER JAMES BATTERHAM v TERENCE LOUIS GOLDBERG, ARMANDO GARDMAN and THADY BLUNDELL
File number: NSD 239 of 2014
Judges: JACOBSON, WHITE AND GLEESON JJ
Date of judgment: 15 October 2014
Catchwords: BANKRUPTCY – appeal from decision of Federal Circuit Court to dismiss application to set aside bankruptcy notice – where debt claimed is judgment debt obtained in reliance on a costs assessment for counsel fees under Legal Profession Act 2004 (NSW) – where counsel fees incurred in relation to High Court proceedings – whether costs assessment was made pursuant to laws inconsistent with High Court Rules 2004 (Cth) – appeal dismissed
Legislation: Bankruptcy Act 1966 (Cth) s 40(3), 41
Constitution s 71, 73, 77, 109
High Court of Australia Act 1979 (Cth) s 17, 30, 48
High Court Rules 1928 (Cth) Or LIV r 10
High Court Rules 2004 (Cth) rr 6.01, 50.01, 50.02, 50.03, 51.02.2, 52, 53.02, 53.05, 54.01, 54.02.4, 56.09.3, 56.09.6, 57.01, 57.03
Judiciary Act 1903 (Cth) ss 26, 78B, 86
Legal Profession Act 2004 (NSW) s 4, 83, 345, 367, 368, 373, 384, 385
Supreme Court Act 1928 (Vic)
Cases cited: Abigroup Ltd v Abignano (1992) 39 FCR 74
Australian Securities and Investments Commission v Forge (2003) 133 FCR 487; 48 ACSR 474
Batterham v QSR Ltd (2006) 225 CLR 237
Corney v Brien (1951) 84 CLR 343
Franks v Equititrust Ltd [2012] FMCA 1180
Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110
Keith Hercules & Sons v Steedman (1987) 17 FCR 290
O’Sullivan v Noarlunga Meat Ltd (1954) 92 CLR 565
Re Athans; Ex Parte Athans (1991) 29 FCR 302
Re Briggs; Ex Parte Briggs v Deputy Commissioner of Taxation (WA) (1986) 12 FCR 310
Victoria v The Commonwealth (1937) 58 CLR 618
Woolf v Snipe (1933) 48 CLR 677
Wren v Mahony (1972) 126 CLR 212
Date of hearing: 12 August 2014
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 141
Counsel for the Appellant: Mr P King
Solicitor for the Appellant: Robert Balzola and Associates
Counsel for the Respondents: Mr S Golledge
Solicitor for the Respondents: Sally Nash & Co Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 239 of 2014
ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA
BETWEEN:

PETER JAMES BATTERHAM
Appellant
AND:

TERENCE LOUIS GOLDBERG
First Respondent

ARMANDO GARDMAN
Second Respondent

THADY BLUNDELL
Third Respondent

JUDGES:

JACOBSON, WHITE AND GLEESON JJ

DATE OF ORDER:

15 OCTOBER 2014

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The appellant pay the respondents’ costs.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 239 of 2014
ON APPEAL FROM THE FEDERAL CIRCUIT…

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Batterham v Goldberg [2014] FCAFC 136
Case
[2014] FCAFC 136
Decision Date

CaseChat Overview and Summary

The appellant in this case, Batterham, has brought an appeal against the Federal Circuit Court’s decision to dismiss his application to set aside a bankruptcy notice issued by the respondents. The bankruptcy notice seeks to recover a judgment debt for unpaid counsel fees incurred during High Court proceedings. The case hinges on whether the costs assessment was conducted in accordance with the laws of New South Wales, specifically under the Legal Profession Act 2004, and if this assessment conflicts with the High Court Rules 2004. The appellant argues that the costs assessment, which resulted in a judgment for unpaid fees, was made under laws inconsistent with the High Court Rules, thus contravening section 109 of the Constitution. Additionally, the appellant contends that the respondents are not his proper creditors and hence were not entitled to issue the bankruptcy notice.

The primary legal issues before the court were whether the respondents could validly invoke the provisions of the Legal Profession Act 2004 concerning the assessment of costs for counsel fees in the High Court, whether the respondents were rightly considered creditors of the appellant, and whether the Federal Circuit Court judge made any erroneous findings. The court examined the statutory jurisdiction of the High Court concerning the taxation of costs and the nature of the relationship between a solicitor and client in such matters. The appellant's contention was that the assessment of costs for unpaid counsel fees was unlawful under the High Court Rules, which do not permit the allowance of unpaid disbursements unless the solicitor provides an undertaking to pay.

The court found that the respondents could lawfully apply for the assessment of counsel fees under the Legal Profession Act 2004 and that this act did not conflict with the High Court Rules. The court also held that the respondents were the appellant’s proper creditors and thus entitled to issue the bankruptcy notice. The Federal Circuit Court judge’s findings were reviewed, but no errors were found. Consequently, the appeal was dismissed, and the appellant was ordered to pay the respondents' costs.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellant pay the respondents’ costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The Notice of Appeal raises three principal issues: first, whether it had been open to the respondents to invoke the provisions in the Legal Profession Act 2004 (NSW) (the LPA) concerning the assessment of costs as between solicitor and client in respect of counsel fees in the High Court of Australia; secondly, whether the respondents are properly the appellant’s creditors with respect to the unpaid counsel fees; and, thirdly, whether the FCC Judge erred in certain of his findings. Background In 2006, the appellant was an unsuccessful appellant in the High Court: Batterham v QSR Ltd [2006] HCA 23; (2006) 225 CLR 237. His solicitors when the appeal was heard on 8 and 9 November 2005 were the respondents, who trade as Turner Freeman, and his counsel were Mr Kenzie QC and Mr Kimber SC. Originally, Clayton Utz had been the appellant’s solicitors in the appeal. However, the appellant withdrew his instructions to that firm on 2 November 2005, only six days before the hearing, and instructed Turner Freeman instead. Clayton Utz had retained Mr Rothman QC as Counsel, but he had returned the brief on his appointment to the Supreme Court of New South Wales on 3 May 2005. Clayton Utz then retained Mr Kenzie QC and he retained the brief following the appellant’s instruction of Turner Freeman. On 6 May 2009, Mr Kenzie QC provided a memorandum of fees to Turner Freeman in respect of his representation of the appellant. The papers did not disclose the reason for the time which had elapsed before this account was provided but it is apparent that it replaced an earlier memorandum. In the revised memorandum, which related to his services in the period from 2 November 2005 to 24 May 2006, Mr Kenzie claimed $42,625.00. Turner Freeman incorporated those fees into an account dated 27 May 2009 which they then rendered to the appellant. The appellant has refused to pay this account and it was common ground that Mr Kenzie’s fees remain unpaid. On 11 February 2011, Turner Freeman and Mr Kenzie applied under Part 3.2 of the LPA for an assessment of costs in respect of Mr Kenzie’s fees. However, that application was rejected and, subsequently, an amended application was lodged by Turner Freeman only. A Costs Assessor, Ms Hutley, carried out a costs assessment pursuant to s 367 of the LPA and, on 23 November 2011, assessed Turner Freeman’s costs at $42,625.00. The appellant participated in the costs assessment, and did not dispute the reasonableness of the amount claimed by Turner Freeman. Instead he raised, unsuccessfully, other objections. Ms Hutley issued a certificate, in accordance with s 368 of the LPA, for costs in the sum of $42,625.00. The appellant did not seek any review of Ms Hutley’s assessment under s 373 of the LPA, and nor did he appeal against it under ss 384 and 385 of the LPA. Section 368(5) of the LPA provides:(5)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 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.The effect of this provision is that a certificate of a costs assessor is, on being filed in an appropriate court, to be taken to be a judgment of that court for the amount of the unpaid costs.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

A finding as to the third matter is implicit in the FCC Judge’s reasons but the appellant did not establish any basis upon which this Court could find that Judge’s conclusion was made in error. Conclusion For the reasons given above, I would dismiss the appeal. The appellant appeals from the decision of a single judge of the Federal Circuit Court (“FCC”) on 13 February 2014 dismissing his application to set aside bankruptcy notice BN166203 issued on 18 October 2013 (“the bankruptcy notice”): Batterham v Goldberg & Ors [2014] FCCA 302. The debt claimed in the bankruptcy notice is a judgment debt obtained in the Local Court of New South Wales (“Local Court”) in March 2012. The appellant contends that the FCC judge erred in failing to find that the bankruptcy notice is founded on a judgment obtained in reliance on a costs assessment under Part 3.2 of the Legal Profession Act 2004 (NSW) (“Legal Profession Act”), which assessment was made pursuant to laws that are inconsistent with provisions of the High Court Rules 2004 (Cth) (“Rules”) contrary to s 109 of the Constitution. The relevant inconsistency is said to arise from powers under the Legal Profession Act to assess disbursements for barristers’ fees even though the fees are unpaid, and to obtain a judgment for those fees following a costs assessment. In contrast, under the Rules, no allowance may be made for unpaid disbursements on a taxation of costs, except where the solicitor gives an undertaking to pay the disbursements. The appellant also contends that the respondents, on whose application the bankruptcy notice was issued, are not the creditor of the appellant and were therefore not entitled to obtain the bankruptcy notice pursuant to s 41 of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”).Background facts Except by ground 5 in the notice of appeal, the appellant did not dispute the facts as found by the primary judge. In summary, the appellant was involved in litigation against QSR Limited. In that litigation, he had been represented by Clayton Utz but he withdrew their instructions and then retained Turner Freeman Lawyers (“Turner Freeman”) to represent him in the High Court: Batterham v QSR Ltd (2006) 225 CLR 237 (“QSR”). Mr Kenzie QC appeared in the High Court as senior counsel for the appellant on 8 and 9 November 2005. In 2009, Turner Freeman submitted a tax invoice to the appellant for payment of Mr Kenzie QC’s fees. The invoice covered work done by Mr Kenzie QC from 2 November 2005 (when instructions were withdrawn from Clayton Utz) until 24 May 2006. The circumstances of the delay in the submission of Turner Freeman’s invoice were not explained. Mr Kenzie QC’s fees were not paid by either the appellant or Turner Freeman and have still not been paid. Turner Freeman sought an assessment of Mr Kenzie QC’s fees under the Legal Profession Act. The assessment was carried out by Ms Hutley. She issued a determination dated 23 November 2011 (“costs determination”). In her accompanying statement of reasons, Ms Hutley said:1.5 The [appellant] does not dispute the amount of fees claimed… The [appellant] argues that he has no responsibility of arrangements between senior counsel and Clayton Utz and that any such arrangement should have included senior counsel’s fees while appearing for him after he had withdrawn instructions from that firm. He states that he has no liability for fees as he did not retain him and did not instruct [Turner Freeman] to retain him.

Ratio Decidendi

Legal Principle Established

Orally, Mr King submitted:a.The appellant could have made an application under s 26 of the Judiciary Act 1903 (Cth) and rule 50.01 of the Rules for an assessment of solicitor client costs, both invoking the inherent jurisdiction of the court over its own processes and under its rules;b.The High Court’s jurisdiction was engaged by a matter in the High Court, namely, QSR;c.Rules 53.02, 53.05, 54 and 57.03 of the Rules provide additional support for the High Court’s statutory jurisdiction to assess solicitor client costs.Consideration The Local Court judgment concerns the appellant’s costs of conducting the proceedings in the High Court. Such costs are commonly referred to as “solicitor client” costs, to differentiate them from the legal costs of another party to litigation, payable pursuant to a court order. The latter are commonly referred to as “party party” costs. In Woolf, a solicitor applied for an order directing the Principal Registrar to take his bill of costs against his clients in respect of business transacted in the High Court in proceedings in that Court. Dixon J dismissed the application. He identified three sources of the jurisdiction of superior Courts of law and equity to “ascertain, by taxation, moderation, or fixation, the costs, charges, and disbursements claimed by an attorney or solicitor from his client”. They are:a.A jurisdiction founded upon the relation to the Court of attorneys and solicitors considered as its officers “commonly called the general jurisdiction of the Court” (at 678);b.When a contested claim for costs comes before the Court, jurisdiction to determine by taxation or analogous proceeding the amount of costs (at 679); andc.A statutory jurisdiction derived at first from 2 Geo. II. C. 23, and afterwards from 6 & & 7 Vict. C. 73, ss 37-43, the provisions of which were said by Dixon J to form the foundation of Part V of the Legal Practitioners Act 1898 (NSW) and certain provisions of the Supreme Court Act 1928 (Vic). Dixon J concluded that the High Court had no relevant statutory jurisdiction. He said (at 681):…if, in the exercise of its general jurisdiction, the Court referred a solicitor’s costs for taxation, [rule 10 of Order LIV of the High Court Rules 1928 (Cth)] would enable it to order him to deliver a bill. But it is not expressed in such a way as to confer upon the High Court the independent statutory jurisdiction of the Supreme Court to order the delivery of a bill, much less the powers of that Court relating to the taxation of bills already delivered. Rules of Court ought not to be construed as enlarging or conferring jurisdiction or affecting substantive rights. Many difficulties would ensue if this general principle were neglected and the rule were read, not as operating only within the existing jurisdiction of the Court, but as conferring upon both solicitor and client a new right to taxation in this Court. Under State law a client may tax his solicitor's bill as of course within a month of its delivery. Thereafter within twelve months an order may be made for taxation upon the application of solicitor or client. After twelve months, or after payment, or the entry of judgment, an order for taxation may be made only if special circumstances appear. Terms may be imposed. Payment into Court may be directed. In every case the solicitor may be restrained from taking proceedings to recover the costs. Further, where the retainer is not disputed, judgment may be directed for the amount shown by the certificate or allocatur. The relations of the solicitor and his client are, apart from rule 10, governed by these provisions of State law whether the services for which remuneration is claimed include work in the High Court or not….the general jurisdiction of this Court is adequate to protect the client.