Beaton v Firmin Arnold and Associates Pty Ltd

[2019] NSWSC 432

Supreme Court

New South Wales

Medium Neutral Citation:

Beaton v Firmin Arnold & Associates Pty Ltd [2019] NSWSC 432

Hearing dates:

7 December 2018

Date of orders:

18 April 2019

Decision date:

18 April 2019

Jurisdiction:

Equity

Before:

Robb J

Decision:

(1) Order the defendant to pay to the plaintiff the sum of $2,697.71, as the net amount of interest payable under s 100 of the Civil Procedure Act 2005 (NSW).

(2)   Order the defendant to pay to the plaintiff her costs limited to her reasonable costs of filing the statement of claim and obtaining in her favour the judgment made in order 1.

(3)   Otherwise dismiss the plaintiff's notice of motion filed on 3 July 2018.

(4)   Order the plaintiff to pay the defendant's costs of the notice of motion filed on 3 July 2018, save for any amount that the defendant may be ordered to pay for the costs of the plaintiff as a result of order 2 hereof.

Catchwords:

COSTS — Party/Party — General rule that costs follow the event — Application of the rule and discretion

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 100

Category:

Costs

Parties:

Anne Beaton (plaintiff)
Firmin Arnold & Associates Pty Ltd (defendant)

Representation:

Counsel:
A J McQuillen (plaintiff)

  Solicitors:
Jenman Lawyers (plaintiff)
Self-represented (defendant)

File Number(s):

2018/85067

Judgment

1. The plaintiff, Anne Beaton, commenced these proceedings by statement of claim filed on 16 March 2018 against the defendant, Firmin Arnold & Associates Pty Ltd, which is a firm that deals in collecting unclaimed funds. The statement of claim sought an order that the defendant pay the plaintiff the sum of $62,071.77 for a debt owing to her, as well as interest, costs and an account.

2. The defendant had previously paid the plaintiff $15,000 on 2 March 2018. On 12 April 2018, after the statement of claim was filed, the defendant paid a further $47,171.77 to the plaintiff. The total amount paid was therefore $62,171.77.

3. The plaintiff brings a notice of motion filed on 3 July 2018 that seeks the following orders:

1.   Leave be given to the Plaintiff to enter judgment for the amount of $62,171.71 or such other sum as may be found due to the Plaintiff after an account.

2. An account of administration in common form pursuant to UCPR 46.

3. Alternatively, an account of administration on the basis of wilful default pursuant to UCPR 46.4.

4. Directions for the taking of an account pursuant to UCPR 46.4.

5.   Such further or other order as to the Court seems fit.

6.   Costs.

4. The plaintiff's notice of motion came before the Court in the Applications List for hearing on 7 December 2018. The plaintiff was represented by counsel. For reasons that do not need to be related, it was necessary for the Court to hear submissions from the defendant by its director, Ms Penelope Elizabeth Arnold O'Connell, by telephone.

5. Because of the difficulty in conducting the hearing, as the defendant was not represented by somebody present in the courtroom, it was necessary to give the defendant an opportunity to deliver some additional submissions in writing in order to respond to written submissions provided to the Court by the plaintiff.

6. After the defendant provided the additional submissions, further submissions were provided in response by the plaintiff, although the Court had not given the plaintiff leave to deliver any further submissions.

7. The plaintiff’s notice of motion, in par 6, seeks “Costs” against the defendant. The plaintiff’s submissions show that the plaintiff seeks indemnity costs and a fixed sum costs order. The claim for indemnity costs is made largely on the basis of supposed Calderbank offers that the plaintiff served on the defendant in order to achieve a compromise on the amount of costs payable by the defendant to the plaintiff.

Background

8. On 18 November 2016, the defendant wrote to the plaintiff stating that there was $62,071.77 owed to her in unclaimed funds. The evidence does not disclose why, but apparently the plaintiff was entitled to a sum of money held by ASIC in an account at the Commonwealth Bank of Australia (the Bank). The evidence also does not disclose the circumstances in which the defendant discovered that the plaintiff had the entitlement. One week later, on 25 November 2016, the plaintiff signed a document authorising the defendant to recover the sum of $62,071.77 in return for a fee of 8% of the monies recovered.

9. From 10 February 2017 to 7 April 2017 the plaintiff provided and certified documents as requested by the defendant. On 14 April 2017 the Bank posted a letter to the defendant together with a cheque for $62,071.77, which amount was described in the letter as “the balance of the account”. On 24 April 2017, the defendant deposited the cheque into its trust account. On 23 May 2017, the defendant received a further letter from the Bank together with a cheque for $5,039.55, which was described in the letter as “the ASIC interest adjustment on the balance of the account”. The total amount received by the defendant was $67,111.32. The 8% fee equalled $5,368.91.

10. As the money to which the plaintiff was entitled was apparently held on her behalf by ASIC, the plaintiff should have been able to confirm the amount that she was owed by making an enquiry directly to ASIC. Further, the circumstances in which the Bank paid the two amounts to the defendant suggest that the Bank paid all of the money to which the plaintiff was entitled, and that was held by the Bank, to the defendant. This is relevant to the plaintiff's claim for an accounting. It may be that the defendant was made the plaintiff's agent for the purpose of collecting the unclaimed monies. However, all that the defendant could do was to use the documents signed by the plaintiff to recover whatever amount was held on behalf of ASIC by the Bank. There is no reason to believe that the Bank held any more money than it paid to the defendant, or that the defendant received any more than the $67,111.32.

11. On 13 September 2017, the defendant wrote to the plaintiff asking her to certify her information again, and the plaintiff advised that she had already done so in April 2017. By this stage, the plaintiff was unaware that the defendant had successfully recovered the funds. On 14 September 2017, the plaintiff contacted the Bank and was advised that the cheques had been cashed by the defendant.

12. In early October 2017, the defendant told the plaintiff that the money collected had been sent by the defendant to another client with a similar name by accident, and that the defendant was going to see if it could get the money back from the other client and lodge a claim with its insurance company.

13. On 27 October 2017, the defendant emailed the plaintiff and explained that the total amount of the unclaimed funds application was $67,111.32, rather than the $62,071.77 previously advised, reflecting the interest on the account. With the 8% fee owing to the defendant deducted, the amount owing to the plaintiff was stated to be $60,467.30, which is less than 92% of the total amount. In the same email, the defendant apologised for the “grave and terrible mistake” regarding the payment of the plaintiff’s money to another client, and stated that it was pursuing the matter with its insurance company and considering its legal options, and that it may need to start paying instalments to the plaintiff.

14. On 3 November 2017, the defendant wrote to the plaintiff by email and said that its plan was to pay the plaintiff an unspecified amount from its trust account that was meant to be paid to the client who had received the plaintiff’s funds. On 13 November 2017, the defendant wrote to the plaintiff to say that it was still waiting to provide the roughly $10,000 set aside for the other client, that it planned to pay the remaining money by instalments, and that the amount that would be covered by its insurance company was not yet confirmed. On 27 November 2017, the defendant sent a schedule of the following proposed minimum payments to the plaintiff: $10,000 in December 2017, $15,000 in January 2018, $17,500 in February 2018, and $18,000 in March 2018.

15. On 6 December 2017, the plaintiff was doubtful that she would receive the unclaimed monies owing to her, and was not happy with the proposed payment by instalments, and so instructed her solicitor to correspond with the defendant. The plaintiff’s solicitor advised the defendant by letter dated 6 December 2017 that, given the negligence of the defendant, the plaintiff had incurred legal expenses in consulting a solicitor, and asked that in this instance the defendant waive the 8% fee.

16. On 15 December 2017, the defendant replied to the plaintiff’s solicitor stating that it would take the waiver request “under advisement”, and emphasised that the defendant was motivated to have the matter settled urgently.

17. On 20 December 2017, the plaintiff’s solicitor undertook an ASIC search of the defendant company which revealed that the defendant had received a notice of proposed deregistration initiated by ASIC on 5 September 2017. On the same date, the plaintiff’s solicitor wrote to the defendant demanding payment within 7 days or the plaintiff would be issuing the defendant with a statutory demand, and also asked how the defendant could pay its proposed instalments to the plaintiff when the defendant was facing deregistration. The defendant responded on 4 January 2018 accepting that it still owed the plaintiff $60,467.30 and that it “will be paying directly to [the plaintiff] her unclaimed funds”.

18. On 23 January 2018, the plaintiff’s solicitor wrote to the defendant asking when and by which method the defendant would pay the unclaimed funds to the plaintiff. The defendant did not respond and, on 31 January 2018, the plaintiff’s solicitor wrote again to the defendant and put it on notice that unless payment was made within seven days, the plaintiff would file a statement of claim in relation to the matter.

19. On 6 February 2018, the defendant wrote to the plaintiff’s solicitor advising that “arrangements are being made for a bank cheque for [the plaintiff]” and that “[a]s this matter will be settled in the near future, we view your proposed action to be a redundant and costly exercise for not only your client but also your office”.

20. On 7 February 2018, the plaintiff’s solicitor wrote to the defendant asking when the plaintiff would receive her unclaimed monies. The defendant did not provide a response. On 28 February 2018, the plaintiff’s solicitor sent an email to the defendant attaching a draft statement of claim and stating that it intended to file the statement of claim on the 5 March 2018 unless payment was made to the plaintiff by 2 March 2018.

21. On or around 2 March 2018, the defendant sent to the plaintiff a bank cheque for the sum of $15,000.

22. Notwithstanding the receipt of this money, the plaintiff instructed her solicitor to file the draft statement of claim on 16 March 2018.

23. On 9 April 2018, after the plaintiff’s statement of claim was filed, the defendant wrote to the plaintiff, attaching an undated cheque for the sum of $45,467.30, together with an undertaking to be signed by the plaintiff that the statement of claim would be withdrawn.

24. On 10 April 2018, the plaintiff’s solicitor wrote to the defendant demanding the plaintiff’s fees of $12,000 and advising that the statement of claim would not be withdrawn unless her costs were paid forthwith.

25. On 12 April 2018, the plaintiff received a bank cheque from the defendant for the sum of $47,171.77.

Legal position as at 12 April 2018

26. By 12 April 2018, the plaintiff had received from the defendant all of the money to which she was entitled, although the payments were substantially late. It would be reasonable to allow the defendant, say, two weeks to have processed the receipts from the Bank. As the defendant received $62,071.77 from the Bank on 14 April 2017, after deducting the 8% fee, it should have paid the plaintiff $57,106.03 by 28 April 2017. The further $5,039.55 was received by the defendant on 23 May 2017, so after the deduction of 8% it should have paid the plaintiff $4,636.39 by 6 June 2017.

27. As the plaintiff had received the whole of the debt due to her before she filed her notice of motion on 3 July 2018, the plaintiff clearly is not entitled to the order sought in par 1 of her notice of motion that leave be given to the plaintiff to enter judgment for the amount of $62,171.71.

28. I also find on the evidence before the Court that the plaintiff is not entitled to an accounting from the defendant. An accounting is not ordered by the Court unless there is evidence that demonstrates that there is some amount owing by the defendant to the plaintiff, that the precise amount is unknown, and that there is accordingly good reason for the Court to put the parties to the expense of an accounting. In the present case, there is no reason on the evidence for the Court to conclude that the unclaimed monies were any more than the amount held by the Bank on behalf of ASIC and paid to the defendant. It was within the power of the plaintiff to make an enquiry of ASIC as to what amount was held on her behalf as unclaimed funds. As the plaintiff has not tendered any evidence that she was entitled to any additional monies, the Court will not make an order for an accounting. Consequently, the Court will not make the orders in pars 1 to 4 of the notice of motion insofar as they relate to an accounting between the parties.

29. Because the plaintiff was paid late, the plaintiff was entitled to an order for the payment of interest under s 100 of the Civil Procedure Act 2005 (NSW). Over the relevant period, the Supreme Court pre-judgment interest rate has been 5.5% per annum. On my calculation, the plaintiff was entitled to interest on $57,106.03 for 39 days between 24 April 2017 and 6 June 2017, interest on $61,742.42 for 269 days between 6 June 2017 and 2 March 2018, and interest on $46,742.42 for 41 days between 2 March 2018 and 12 April 2018. The total amount of interest is $3,127.06.

30. The total amount that the defendant paid the plaintiff of $62,171.77 was $429.35 more than the amount of $61,742.42 that the defendant owed to the plaintiff, after deducting the 8% fee. The defendant is therefore entitled to $429.35 credit against the interest payable. The consequence is that the amount of interest that was payable as at 12 April 2018 was $2,697.71.

31. Consequently, on 12 April 2018, all that the plaintiff was entitled to was judgment for $2,697.71, plus her reasonable costs on the ordinary basis for commencing the proceedings by filing the statement of claim. The plaintiff ought to have been advised to seek this relief, if the defendant did not agree to it, and, if that had been done, the plaintiff would have been entitled to the additional costs of obtaining that relief.

32. On a number of occasions, the defendant agreed to waive its entitlement to the 8% fee, but that was only in the context of the plaintiff ceasing to pursue the balance of her claim against the defendant. Nothing on the evidence binds the defendant to waive its fee in the absence of consideration provided by the plaintiff. Accordingly, the plaintiff is not entitled to an order that the defendant pay to her the balance of the 8% fee retained by the defendant.

33. That should have been the end of the matter, but for the entry of judgment for the amount of the interest and the assessment of the costs to which the plaintiff was entitled, but that is not what has happened.

34. Although the plaintiff is entitled to judgment for a small amount of interest, she is not entitled to the relief that she sought in her notice of motion filed on 3 July 2018. The Court will dismiss the notice of motion and order the plaintiff to pay the defendant's costs of the notice of motion on the ordinary basis.

35. The plaintiff continued the proceedings, by seeking the relief in the notice of motion filed on 3 July 2018, and continued to run up ever increasing legal fees, which she demanded from the defendant. The parties exchanged what they described as Calderbank offers that concerned only the costs that the defendant should pay to the plaintiff.

Offers of settlement

36. On 26 April 2018, the plaintiff’s solicitor wrote to the defendant, on a “Without Prejudice save as to Costs” basis, to advise that the plaintiff’s costs were $12,000 as at 10 April 2018. This letter contained an offer, open for one week, that the plaintiff was willing to accept payment of $7,000 for costs.

37. The defendant did not accept the offer.

38. On 19 September 2018, the plaintiff’s solicitor wrote to the defendant, on a “Without prejudice save as to costs” basis, to advise that the plaintiff’s costs and disbursements, inclusive of counsel’s fees, were $44,985.37. This letter contained an offer, open for 14 days, stated to be under the Calderbank principles, to accept $31,489.76 as full and final payment.

39. The defendant also did not accept this offer. The defendant made a number of counter offers, also described as Calderbank offers. It is not necessary to set these offers out, as the defendant has not sought any orders in respect of them.

40. By an affidavit dated 5 December 2008, filed shortly before the hearing, the plaintiff’s solicitor annexed a final tax invoice that claimed $38,267.62 inclusive of GST as being the solicitor’s costs. The total amount claimed, including counsel’s fees of $14,044.50 and other disbursements, was $54,436.12.

Consideration

41. It is astonishing that, after the plaintiff had received payment of slightly more than the whole of the debt owing to her, she did not limit the steps that she took in these proceedings to those aimed at obtaining an order for the payment of the small amount of interest due to her, and an order for payment of her costs to achieve that outcome. Instead, she pursued the misguided course of filing the 3 July 2018 notice of motion and seeking to recover the entirety of her burgeoning legal costs from the defendant. The Court has looked at the tax invoices prepared by the plaintiff's solicitor, and is at a loss as to how the plaintiff's solicitor could in good conscience have believed that the legal fees incurred were proportionate to the amount at issue.

42. It is not necessary for the Court to consider the issue of whether, and in what circumstances, Calderbank offers may be effective, when the only matter that is really at issue is the amount of costs payable by one party to the other.

43. The reason is that, until the amount of the costs that the defendant is liable to pay the plaintiff has been assessed, it cannot be known whether the amounts that the plaintiff offered to accept in either of her alleged Calderbank offers were less than the amount of costs to which she was then entitled. Furthermore, Calderbank offers are essentially concerned with the costs of the proceedings that one party should be ordered to pay to the other following the non-acceptance of a Calderbank offer. They could not be concerned with the compromise of a claim for costs until after the Court has made costs orders in the proceedings.

44. In my view, the manner in which the plaintiff purported to deploy Calderbank offers in these proceedings was misguided.

45. The Court cannot make a gross sum costs order in these proceedings as sought by the plaintiff. The application for the order was made on the assumption that the plaintiff had a reasonable claim to recover an amount of $54,436.12 including fees and disbursements. That assumption was based upon the proposition that the plaintiff was entitled to the orders sought in her notice of motion. As the assumption upon which the application was made is erroneous, there is no occasion for the Court to consider further what lump sum costs order should be made.

46. It may be unfortunate, but this is a case where the only available course is for the costs orders to be made in favour of each party to be assessed in the ordinary way, if the parties are unable to come to an agreement.

Orders

47. For the reasons given above I make the following orders:

1. Order the defendant to pay to the plaintiff the sum of $2,697.71, as the net amount of interest payable under s 100 of the Civil Procedure Act 2005 (NSW).

2. Order the defendant to pay to the plaintiff her costs limited to her reasonable costs of filing the statement of claim and obtaining in her favour the judgment made in order 1.

3. Otherwise dismiss the plaintiff's notice of motion filed on 3 July 2018.

4. Order the plaintiff to pay the defendant's costs of the notice of motion filed on 3 July 2018, save for any amount that the defendant may be ordered to pay for the costs of the plaintiff as a result of order 2 hereof.

48. I direct the plaintiff's solicitor to provide a copy of these reasons for judgment to the plaintiff as soon as reasonably possible after they are delivered. I do not know whether the plaintiff has yet paid to her solicitor any of the amounts claimed in the solicitor's tax invoices. It appears to me that the amounts claimed are not justified having regard to the issues in the proceedings from time to time. It will be a matter for the plaintiff as to whether it is appropriate for the plaintiff to apply for an assessment in respect of the fees charged by her solicitor.

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Decision last updated: 18 April 2019