Boensch v Bingham

[2024] NSWCA 116

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Boensch v Bingham [2024] NSWCA 116

Hearing dates:

22 April 2024

Date of orders:

20 May 2024

Decision date:

20 May 2024

Before:

Gleeson JA at [1]
White JA at [70]
Griffiths AJA at [71]

Decision:

Appeal dismissed with costs.

Catchwords:

MORTGAGES AND SECURITIES — Unregistered mortgage — Where mortgage granted as security for legal fees — Whether caveat claiming an interest pursuant to mortgage valid — Whether mortgage void or otherwise terminated for breach — Whether mortgage secures forensic and speculative amount — Whether mortgage executed as a deed in accordance with requirements of Conveyancing Act 1919 (NSW), s 38

COSTS — Solicitor/client — Costs agreement — Where costs estimate given and costs agreement capped legal costs — Whether mortgage constituting costs agreement void by reason of asserted non-compliance with disclosure obligations to provide an updated costs estimate

COSTS — Solicitor/client — Costs assessment — Where Costs Review Panel found costs payable pursuant to mortgage constituting costs agreement — Where mortgage terms cap amount payable and defer date for payment of costs — Where Costs Review Panel determined it lacked jurisdiction to determine costs assessment application before costs became payable under agreement — Whether attempt to enforce costs agreement before costs fell due constitutes breach of agreement

APPEALS — Appeal by mortgagor against declarations that mortgage secures legal costs and is enforceable subject to final quantification by assessment process after a future date — Whether trial judge misinterpreted findings of other courts on related issues between same parties

CIVIL PROCEDURE — Pleadings — Departure from pleadings — Whether respondent acquiesced in appellant’s departure from pleadings — Whether trial judge should have made findings on matters not pleaded below

EQUITY — Defences — Set-off — Whether client’s claim against solicitor in negligence in separate proceedings capable of offsetting amount owing under costs agreement — Where negligence claim still on foot and neither party presently has a monetary judgment against the other

Legislation Cited:

Contracts Review Act 1980 (NSW)

Conveyancing Act 1919 (NSW), ss 23B, 38

Legal Profession Uniform Law 2014 (NSW), ss 172, 174, 178, 180, 184, 185

Real Property Act 1900 (NSW), s 74I

Uniform Civil Procedure Rules 2005 (NSW), rr 42.1, 51.18(1)(e)

Cases Cited:

Australian Beverage Distributors Pty Ltd v Evans and Tate Premium Wines Pty Ltd [2006] NSWSC 560; (2006) 58 ACSR 22

Bailey v Boensch [2020] NSWSC 1391

Banque Commerciale S.A., En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279

Bingham v Bevan (2023) 111 NSWLR 287; [2023] NSWCA 86

Bingham v Boensch [2023] FCA 117

Boensch v Bingham (No 2) [2022] FedCFamC2G 47

Boensch v Bingham [2022] NSWSC 1432

Boensch v Bingham [2023] NSWSC 1152

Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49

Graham v Hall (2006) 67 NSWLR 135; [2006] NSWCA 208

Lord v Direct Acceptance Ltd (1993) 32 NSWLR 362

Mostyn v Mostyn (1989) 16 NSWLR 635

Rawson v Samuel (1841) 1 Cr & Ph 161; 41 ER 451

Re Fewin Pty Ltd [2017] NSWSC 1093

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52

Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2019) 100 NSWLR 432; [2019] NSWCA 135

Texts Cited:

Derham, On the Law of Set-off (Oxford University Press, 4th Ed, 2010)

Category:

Principal judgment

Parties:

Franz Boensch (Appellant)
John David Bingham (Respondent)

Representation:

Counsel:
D P Robinson SC / M A Hazan (Respondent)

Solicitors:
Franz Boensch (Appellant – self-represented)
Bicknell & Monteith Lawyers (Respondent)

File Number(s):

2023/335818

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity Division

Citation:

[2023] NSWSC 1187

Date of Decision:

6 October 2023

Before:

Peden J

File Number(s):

2021/317581

HEADNOTE

[This headnote is not to be read as part of the judgment]

Mr Bingham, a solicitor, represented Mr Boensch and briefed a barrister in High Court proceedings in 2019 in relation to a dispute between Mr Boensch and his trustee in bankruptcy. Costs disclosures were provided to Mr Boensch by the solicitor and the barrister in February 2019. On 12 March 2019 Mr Boensch granted Mr Bingham an unregistered mortgage over land owned by Mr Boensch as security for payment of fees for ongoing legal services. The annexure to the mortgage set out the terms of the parties’ agreement, and included that Mr Bingham could not enforce the mortgage until 1 March 2024, and that the principal sum for legal costs secured by the mortgage was capped at $100,000. On 21 June 2019, Mr Bingham lodged a caveat over the property, claiming an equitable interest in the property pursuant to the mortgage. In October 2019, the solicitor provided an updated costs estimate.

In October 2020, Mr Bingham applied for an assessment of solicitor/client costs. A costs assessor issued a certificate on 9 December 2020 in the sum of $358,234.71. Judgment was entered in the District Court and a bankruptcy notice was served on Mr Boensch. Mr Boensch applied to set aside the bankruptcy notice on the grounds that the costs agreement between the parties was constituted by the mortgage, the terms of which prevented Mr Bingham from enforcing any liability until 1 March 2024. The Federal Circuit and Family Court of Australia accepted this contention and set aside the bankruptcy notice. Mr Bingham unsuccessfully appealed to the Federal Court of Australia. Later, the costs determination certificate was referred to a Costs Review Panel, which issued a new certificate in a $nil amount, finding that Mr Boensch’s liability to Mr Bingham for costs is dictated by the terms of the mortgage, consistent with the Federal Circuit and Family Court and the Federal Court findings.

After receiving a lapsing notice in relation to the caveat in October 2021, Mr Bingham commenced proceedings in the Supreme Court, seeking declarations that the caveat is valid and ought remain on title and that the mortgage binds the parties. Mr Boensch filed a cross-claim, seeking declarations that the mortgage was void as the costs agreement was breached by Mr Bingham.

In October 2023, the primary judge delivered judgment in favour of Mr Bingham and dismissed Mr Boensch’s cross-claim. Her Honour made declarations that the mortgage secures legal costs, the quantum of which is currently unknown, and that Mr Bingham is entitled to enforce the mortgage after 1 March 2024, pursuant to its terms.

Mr Boensch appeals from that judgment. His primary argument on appeal is (1) that the mortgage and caveat are void because (a) Mr Bingham failed to provide an updated costs disclosure pursuant to the Legal Profession Uniform Law (which it is said the primary judge did not address), and (b) Mr Bingham breached the costs agreement contained in the mortgage by applying for costs assessment in 2020, and obtaining and enforcing a judgment for costs, before costs became payable under the agreement. Mr Boensch also says that (2) the Costs Review Panel’s finding of a $Nil amount owing prevents Mr Bingham from recovering any costs from Mr Boensch in the future, (3) a separate claim currently on foot by Mr Boensch against Mr Bingham in negligence, if successful, should be set-off against any liability arising under the mortgage, and (4) the mortgage was not properly witnessed and is therefore invalid due to non-compliance with the requirements of the Conveyancing Act 1919 (NSW).

Gleeson JA (White JA and Griffiths AJA agreeing) held, dismissing the appeal:

(1a)   The primary judge did not misinterpret the findings of the FCFCOA and the FCA that costs disclosures issued by Mr Bingham to Mr Boensch in February and October 2019 were not costs agreements under the Uniform Law, as they were not accepted by Mr Boensch, and that the only costs agreement which binds the parties is the agreement constituted by the mortgage.

Bingham v Bevan (2023) 111 NSWLR 287; [2023] NSWCA 86; Boensch v Bingham (No 2) [2022] FedCFamC2G 47; Bingham v Boensch [2023] FCA 117, considered.

Additionally, the issue of alleged contravention of the disclosure obligations under s 174(1) of the Legal Profession Uniform Law was not pleaded by Mr Boensch in the court below, and the parties did not depart from the pleadings in the way the case was run. Nor can it be inferred that Mr Bingham acquiesced in such a course if adopted by Mr Boensch at trial. It was therefore not necessary for the primary judge to make findings concerning alleged non-compliance with disclosure obligations under the Uniform Law.

Banque Commerciale S.A., En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279, applied.

(1b)   The primary judge did not err in finding that the mortgage was not terminated. Even if Mr Bingham did repudiate the mortgage by taking steps to enforce it prior to March 2024, Mr Boensch never communicated an acceptance of that repudiation.

1. The primary judge did not err in finding that Mr Bingham is not prevented from applying for a subsequent costs assessment after 1 March 2024. This was also found by the Costs Review Panel.

2. Neither party has a judgment for a sum of money against the other, so no judgments are presently capable of set-off. The primary judge did not err in finding that Mr Bingham is prima facie entitled to some payment under the mortgage, notwithstanding separate ongoing proceedings between the parties that may result in an award of damages to Mr Boensch.

   Bailey v Boensch [2020] NSWSC 1391; Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49; Australian Beverage Distributors Pty Ltd v Evans and Tate Premium Wines Pty Ltd [2006] NSWSC 560; (2006) 58 ACSR 22; Re Fewin Pty Ltd [2017] NSWSC 1093, considered.

3. The discrepancy between the Justice of the Peace’s JP number written on the mortgage when it was witnessed to that appearing in his affidavit does not invalidate the mortgage. There is no suggestion that the Justice of the Peace was not sufficiently qualified, and Mr Boensch could not demonstrate anything more than a typographical error.

   Additionally, the Conveyancing Act, s 38(1) does not require a Justice of the Peace to witness the execution of a deed of mortgage; only an independent witness who is not party to the deed.

   Mostyn v Mostyn (1989) 16 NSWLR 635; Graham v Hall (2006) 67 NSWLR 135; [2006] NSWCA 208, considered.

Judgment

1. GLEESON JA: In the underlying proceedings, Mr Franz Boensch, the registered proprietor of land at Rydalmere in New South Wales, challenged the validity of a caveat lodged by Mr John Bingham claiming an interest in the Rydalmere land pursuant to a mortgage given by Mr Boensch to Mr Bingham dated 12 March 2019. The mortgage was unregistered. The primary judge (Peden J) found that the caveat was valid and made declarations concerning the validity of the mortgage and its enforceability: Bingham v Boensch [2023] NSWSC 1187 (the primary judgment).

2. Mr Boensch appeals from that judgment. For the reasons that follow the appeal should be dismissed.

Background

3. In 2019 Mr Bingham represented Mr Boensch and briefed a barrister, Mr Christopher Bevan, to appear for his client on an application for special leave to appeal to the High Court in a dispute between Mr Boensch and his trustee in bankruptcy, Mr Scott Pascoe. The High Court granted special leave to appeal on 21 June 2019, the appeal was heard on 11 October 2019 and was dismissed on 13 December 2019: Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49.

4. Mr Boensch and Mr Bingham have since fallen out in relation to Mr Bingham’s claim for legal costs including counsel’s fees, and whether the advice provided in connection with the High Court appeal was negligent. The background to the dispute concerning legal costs is as follows.

5. In February 2019 Mr Bingham provided Mr Boensch with a “Costs Disclosure & Costs Agreement” which included a costs estimate totalling $32,500 in respect of three stages of work: (i) special leave application - $7,700, (ii) any application for security for costs - $5,500, and (iii) appeal - $20,000. The barrister also provided Mr Bingham with two separate costs agreements; the first dated 2 February 2019, with an estimate of total fees of between $63,000-$75,000 plus GST in respect of the three stages of work, and the second dated 6 February 2019, with an estimate of total fees at $60,000 plus GST plus travelling and out-of-pocket expenses.

6. On 12 March 2019 Mr Boensch gave a mortgage over the Rydalmere property to Mr Bingham as security for the continuing provision of legal services (the mortgage). The terms and conditions of the mortgage were contained in Annexure A to the mortgage and included:

• the principal sum for legal costs incurred by Mr Boensch, as the client of Mr Bingham, secured by the mortgage shall be limited to $100,000 (cl 6);

• Mr Bingham could enforce such liability only to the extent that it could be satisfied out of the Rydalmere property (cl 4);

• Mr Bingham could not enforce the mortgage by exercise of the power of sale over the Rydalmere property until 1 March 2024 (cl 2); and

• Mr Bingham agreed not to register a caveat against the title to the Rydalmere property before 30 March 2019 (cl 8).

7. On 21 June 2019 Mr Bingham lodged caveat AP338562 over the Rydalmere property claiming an interest in the property pursuant to the unregistered mortgage.

8. On 4 October 2019 Mr Bingham provided Mr Boensch with an updated “Costs Disclosure & Costs Agreement” which included a costs estimate excluding GST totalling $358,700 comprising (i) solicitors’ fees - $35,000, (ii) barrister’s fees - Mr Bevan - $295,000 and Mr Michael Wells - $20,000, and (iii) disbursements (third party expenses) - $8,500 and internal expenses - $200. Mr Boensch rejected that costs agreement immediately on receipt on 4 October 2019.

9. Notwithstanding the terms of the mortgage, Mr Bingham applied in October 2020 for an assessment of his costs of legal services provided to Mr Boensch, including counsel’s fees. A costs assessor issued a certificate of determination on 9 December 2020 in the sum of $358,234.71 and on 7 May 2021 the determination was forwarded to the parties by the Manager, Costs Assessment. Mr Bingham registered this certificate as a judgment of the District Court on 4 June 2021 in the sum of $372,674.84, including interest and costs. A bankruptcy notice was served on Mr Boensch on 6 September 2021. Mr Boensch made application to the Federal Circuit and Family Court of Australia (Division 2) (FCFCOA) to set aside the bankruptcy notice.

10. In October 2021 Mr Boensch served on Mr Bingham a lapsing notice issued by the Registrar General under s 74I of the Real Property Act 1900 (NSW). Mr Bingham then commenced proceedings in the Equity Division seeking declarations that the caveat was valid and ought to remain on title and that the mortgage binds the parties. The caveat was initially extended by the Court for an interim period and was extended on 7 December 2021 until further order. Mr Boensch filed a cross-claim in the underlying proceedings seeking declarations that the caveat and mortgage were invalid and void.

11. On 4 February 2022 Judge Manousaridis set aside the bankruptcy notice on the ground that the District Court judgment did not represent any debt payable by Mr Boensch to Mr Bingham. His Honour found that (i) the February and October 2019 costs agreements were not binding on Mr Boensch, (ii) the only binding costs agreement was that contained in the mortgage, (iii) given the terms of Annexure A to the mortgage, no legal costs were payable to Mr Bingham at the time he applied for the assessment of his costs, and (iv) it followed that the costs assessor purported to embark on an assessment of legal costs he had no authority to make, and therefore purported to make a costs determination in relation to the High Court proceedings he had no jurisdiction to make: Boensch v Bingham (No 2) [2022] FedCFamC2G 47 (Boensch (FCFCOA)) at [85]. An appeal by Mr Bingham from that decision was dismissed by Abraham J: Bingham v Boensch [2023] FCA 117 (Boensch (FCA)).

12. On 21 October 2022 the certificate of determination was referred to a Costs Review Panel, after Mr Boensch obtained an extension of time for review: Boensch v Bingham [2022] NSWSC 1432. The Panel issued two new certificates, together with reasons on 29 March 2023. The certificate of costs was issued in a $Nil amount with reasons, which included the following:

5.15 … the Panel accepts that s 198(1) [of the Uniform Law] requires that when an application for assessment is made the costs have to be payable at that time. … accordingly the Panel determines that at the time the application was filed by Mr Bingham, Mr Boensch had no liability to pay any costs and hence the Costs Assessor had no jurisdiction to determine the application.

5.16 When the liability under the Mortgage crystallises, Mr Bingham can make another application.

13. Mr Boensch was self-represented in the underlying proceedings. His cross-claim relevantly asserted that:

in about March 2019 a “capped costs agreement” was reached between Mr Bingham and Mr Boensch (par [3]),

Annexure A to the mortgage limited the payment of legal costs capped at “$100,000” (par [5]) with deferred payment for five years (par [6]), and

Mr Bingham had broken the agreed costs agreement reflected in Annexure A and therefore was not entitled to security under the agreement (par [11]).

14. At the hearing below Mr Boensch advanced eight reasons (one of which was not pressed) why the caveat ought to be removed from the title of the Rydalmere property and why the mortgage had no work to do. Relevantly for this appeal, the first reason was that “[t]his Contract/costs-agreement is now void and declared by courts as void” and “therefore the Mortgage securing Annexure ‘A’ … void as well”.

15. On 6 October 2023 the primary judge delivered judgment, rejecting each of the reasons advanced by Mr Boensch, dismissed the cross-claim and ordered Mr Boensch pay Mr Bingham’s costs of the proceedings on the ordinary basis as agreed or assessed. Her Honour made the following declarations concerning the mortgage:

(1)   Declaration that the unregistered mortgage dated 12 March 2019 between John David Bingham and Franz Boensch secures costs incurred for the provision of legal services provided to Franz Boensch between February and December 2019, the quantum of which is currently unknown.

(2) Declaration that John Bingham is entitled to enforce the terms of the mortgage in relation to payment of fees, if they have been finally quantified by the assessment process pursuant to the Legal Profession Uniform Law, after 1 March 2024, and only from the proceeds of sale of the property in folio identifier Lots 37-38 in DP14244, having Land Title Reference Auto Consol 7366-5.

The appeal

16. Mr Boensch appeals from the whole of the judgment below. He was self-represented in this Court and unfortunately the notice of appeal is prolix; it contains 28 grounds which are mostly in general or conclusionary terms, and fails to state briefly, but specifically, the grounds relied upon in support of the appeal, as required by the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 51.18(1)(e).

17. In his written submissions Mr Boensch contends that the mortgage is void for five broad, somewhat overlapping reasons, and the caveat ought therefore to be removed from the title to the Rydalmere property. It is convenient to reproduce Mr Boensch’s summary of his argument in par [17] of his written argument:

While the caveat has secured a defined sum of $100,000 at the outset, but thereafter the Solicitor:

(a)   failed to disclose and making the costs agreement (Contract) and Mortgage as part of this costs agreement (Contract) void under statutory law,

(b)   breached the costs agreement (Contract) in other major and essential points as referred to in paragraph 4 above, making it void,

(c)   failed the proper Mortgage execution requirements in NSW,

(d)    produced a NIL costs certificate C7-1 No 2020/00295614 awarding the client $275.00 application fee,

(e)    having to take damages and compensation payment to the client into consideration from the outcome of proceedings Boensch v Bingham [2023] NSWSC 1152,

this caveat can at best secure a forensic and speculative amount, if any amount at all.

18. The reasons in (a), (b), (d) and (e) above are relied upon for the central proposition that Mr Boensch’s liability under the mortgage for the legal costs is “undefined” and “a forensic or speculative amount”, with the consequence that the caveat should not be extended. The reason in (c) above is relied upon for the alternative proposition that the mortgage is not binding on Mr Boensch as the signature of Mr Bingham was not properly witnessed.

19. In oral argument, Mr Boensch identified his primary argument as that referred to in (a) above. This reason directs attention to several provisions in the Legal Profession Uniform Law 2014 (NSW) (Uniform Law) dealing with legal costs.

The principal statutory provisions – Uniform Law

20. Pt 4.3 (Legal Costs), Div 2 (Legal costs generally), includes s 172 which deals with the requirement that legal costs must be fair and reasonable. It provides:

172 Legal costs must be fair and reasonable

(1)   A law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are—

(a)   proportionately and reasonably incurred; and

(b)   proportionate and reasonable in amount.

(2)   In considering whether legal costs satisfy subsection (1), regard must be had to whether the legal costs reasonably reflect—

(a)   the level of skill, experience, specialisation and seniority of the lawyers concerned; and

(b)   the level of complexity, novelty or difficulty of the issues involved, and the extent to which the matter involved a matter of public interest; and

(c)   the labour and responsibility involved; and

(d)   the circumstances in acting on the matter, including (for example) any or all of the following—

(i) the urgency of the matter;

(ii) the time spent on the matter;

(iii) the time when business was transacted in the matter;

(iv) the place where business was transacted in the matter;

(v) the number and importance of any documents involved; and

(e)   the quality of the work done; and

(f)   the retainer and the instructions (express or implied) given in the matter.

(3)   In considering whether legal costs are fair and reasonable, regard must also be had to whether the legal costs conform to any applicable requirements of this Part, the Uniform Rules and any fixed costs legislative provisions.

(4)   A costs agreement is prima facie evidence that legal costs disclosed in the agreement are fair and reasonable if—

(a)   the provisions of Division 3 relating to costs disclosure have been complied with; and

(b)   the costs agreement does not contravene, and was not entered into in contravention of, any provision of Division 4.

21. Div 3 (Costs disclosure) includes s 174 which deals with the disclosure obligations of a “law practice”; that expression is defined in s 6 to include a legal practitioner or a law firm. It relevantly provides:

174 Disclosure obligations of law practice regarding clients

Main disclosure requirement

(1)   A law practice—

(a)   must, when or as soon as practicable after instructions are initially given in a matter, provide the client with information disclosing the basis on which legal costs will be calculated in the matter and an estimate of the total legal costs; and

(b)   must, when or as soon as practicable after there is any significant change to anything previously disclosed under this subsection, provide the client with information disclosing the change, including information about any significant change to the legal costs that will be payable by the client—

together with the information referred to in subsection (2).

(2)   Additional information to be provided

Information provided under—

(a)    subsection (1)(a) must include information about the client’s rights—

(i)   to negotiate a costs agreement with the law practice; and

(ii)   to negotiate the billing method (for example, by reference to timing or task); and

(iii)   to receive a bill from the law practice and to request an itemised bill after receiving a bill that is not itemised or is only partially itemised; and

(iv)   to seek the assistance of the designated local regulatory authority in the event of a dispute about legal costs; or

(b)   subsection (1)(b) must include a sufficient and reasonable amount of information about the impact of the change on the legal costs that will be payable to allow the client to make informed decisions about the future conduct of the matter.

(3)   Client’s consent and understanding

If a disclosure is made under subsection (1), the law practice must take all reasonable steps to satisfy itself that the client has understood and given consent to the proposed course of action for the conduct of the matter and the proposed costs.

…

(6)   Disclosure to be written

A disclosure under this section must be made in writing, but the requirement for writing does not affect the law practice’s obligations under subsection (3).

…

22. Section 178 deals with the consequences of non-compliance with disclosure obligations for a costs agreement. It relevantly provides:

178 Non-compliance with disclosure obligations

(1)   If a law practice contravenes the disclosure obligations of this Part—

(a)    the costs agreement concerned (if any) is void; and

(b)   the client or an associated third party payer is not required to pay the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority; and

(c)   the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority or under jurisdictional legislation; and

(d)   the contravention is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention.

…

23. Div 4 (Costs Agreements) contains other material provisions, including: ss 180, 184 and 185. They relevantly provide:

180 Making costs agreements

(1)   A costs agreement may be made—

(a)   between a client and a law practice retained by the client; or

(b)   between a client and a law practice retained on behalf of the client by another law practice; or

(c)   between a law practice and another law practice that retained that law practice on behalf of a client; or

(d)    between a law practice and an associated third party payer.

(2)   A costs agreement must be written or evidenced in writing.

(3)   A costs agreement may consist of a written offer that is accepted in writing or (except in the case of a conditional costs agreement) by other conduct.

(4)   A costs agreement cannot provide that the legal costs to which it relates are not subject to a costs assessment.

…

184 Effect of costs agreement

Subject to this Law, a costs agreement may be enforced in the same way as any other contract.

185 Certain costs agreements are void

(1)   A costs agreement that contravenes, or is entered into in contravention of, any provision of this Division is void.

Note

If a costs agreement is void due to a failure to comply with the disclosure obligations of this Part, the costs must be assessed before the law practice can seek to recover them (see section 178(1)).

(2)   A law practice is not entitled to recover any amount in excess of the amount that the law practice would have been entitled to recover if the costs agreement had not been void and must repay any excess amount received.

…

(5)   If a law practice does not repay an amount required by subsection (2), (3) or (4) to be repaid, the person entitled to be repaid may recover the amount from the law practice as a debt in a court of competent jurisdiction.

Non-compliance with disclosure obligations

24. The primary judge recorded at [27], consistently with Mr Boensch’s written submission referred to at [14] above, that Mr Boensch submitted that the mortgage only secured the costs agreement, which Judge Manousaridis and Abraham J had determined to be void. The primary judge rejected this submission at [28]-[31] of her judgment. After noting that Mr Boensch was correct in submitting that Mr Bingham’s alleged costs agreements (that is, the February and October 2019 costs disclosures) had not been accepted in the Federal Court as an agreement that binds the parties, and referring to the reasons of Judge Manousaridis at first instance and Abraham J on appeal, the primary judge said at [30]-[31]:

Mr Boensch accepted that those judgments bind him and that he has always asserted that the mortgage was the binding agreement between him and Mr Bingham. Further, after having had the opportunity over the luncheon adjournment to revisit those paragraphs of the judgments, Mr Boensch orally accepted that he no longer agitated for a finding that the mortgage was not the binding agreement between the parties.

For completeness, I also consider that in circumstances where the costs agreement were determined to be void, Mr Bingham would not be barred from the opportunity to claim his fees on a quantum meruit basis: see e.g. Wentworth v Rogers; Wentworth and Rogers (2006) 66 NSWLR 474 at [55]-[56] (Santow JA).

25. Mr Boensch contends by grounds 3, 4, 5 and 6 that the primary judge (i) misinterpreted the decisions of Judge Manousaridis and Abraham J , (ii) erred in failing to find that there was non-compliance with disclosure obligations given the amount enforced was about $376,000, exceeding the capped amount of $100,000 under the mortgage, and (iii) erred in finding “that the mortgage as an essential part of the costs agreement was not void as regulated under s 178(1)(a) of the Uniform Law”.

26. In oral argument, Mr Boensch said that the mortgage which secures legal costs, is part of the costs agreement and is void due to the costs agreement being void. Thus, it is said that there is no amount for the caveat to secure.

First argument: the decisions of Judge Manousaridis and Abraham J

27. The first argument ignores the findings of Judge Manousaridis, which were upheld by Abraham J. Contrary to the submission, Judge Manousaridis did not find that the February and October costs disclosures were void under s 178 of the Uniform Law for non-compliance with the solicitor’s disclosure obligations under s 174(1). That was not in issue before Judge Manousaridis. As his Honour recorded, Mr Boensch’s argument was that the February and October 2019 costs disclosures were not binding costs agreements because they were never accepted by Mr Boensch, whilst the mortgage was a costs agreement, and the liability, if any, to pay legal costs to Mr Bingham was regulated entirely by the mortgage: Boensch (FCFCOA) at [3], [59], [60(b)(i) and (ii)], [61] and [62(b)]. Mr Boensch adhered to that position on the appeal before Abraham J: see Boensch (FCA) at [7].

28. Although lengthy, it is appropriate to reproduce the findings of Judge Manousaridis in Boensch (FCFCOA) at [83]-[85]:

[83]   The Costs Determination on the basis of which the Costs Certificate was issued was premised on the Cost Assessor’s finding that Mr Boensch and Mr Bingham entered into costs agreements on the terms contained in the Solicitor’s February and October costs disclosures. The evidence before me, however, not only gives rise to a substantial reason for questioning that finding; it leads me to conclude that Mr Boensch and Mr Bingham did not enter into any such costs agreements, and that the only costs agreement they entered into in relation to the payment of the HC Costs is the agreement constituted by the Mortgage.

[84]   I rely on the following findings and conclusions:

(a)   In February 2019 Mr Bingham provided to Mr Boensch the Solicitor’s February and the Barrister’s February costs disclosures; and Mr [Bingham] and Mr Bevan informed Mr Boensch they would require a mortgage over the Property as security for the payment of their costs.

(b)   The Solicitor’s February costs disclosure cannot by itself evidence the terms of a costs agreement. At most it evidences an offer by Mr Bingham to provide legal services to Mr Boensch on the terms set out in the Solicitor’s February costs disclosure. Before such offer can be found to have been converted into a costs agreement, however, there must be evidence that Mr Boensch engaged in conduct that could be taken to constitute an unqualified acceptance by him of the terms contained in the Solicitor’s February costs disclosure.

(c)   There is no evidence Mr Boensch engaged in any conduct that could be characterised as the unqualified acceptance by him of the offer constituted by the Solicitor’s February costs disclosure. On the contrary, the evidence shows Mr Boensch, on the one hand, and Mr Bingham and Mr Bevan, on the other, held discussions and exchanged emails that led to Mr Boensch and Mr Bingham executing the Mortgage.

(d)   The effect of the Mortgage is as follows:

(i)   Mr Boensch granted a mortgage over the Property as security for the “debt or liability described in the terms and conditions set out or referred to in this mortgage”, the terms and conditions being those identified in Annexure ‘A’ to the Mortgage.

(ii)   The only clause in Annexure ‘A’ to the Mortgage that is capable of being construed as describing a debt or liability is cl 6, which refers to the “legal costs incurred by the Mortgagor (that is, Mr Boensch) as the client of the Mortgagee and as trustee of the Boensch Trust”. The Mortgage itself does not further identify the “legal costs incurred by the Mortgagor”. Given that this constitutes one of the subject matters of the Mortgage, extrinsic evidence is admissible to identify the incurring of legal costs to which cl 6 refers. That evidence would at the very least include the Solicitor’s February costs disclosure, and in particular that part which identifies the legal work Mr Bingham would perform, and the rates at which he would perform the work.

(iii)   In addition to describing the debt or liability, Annexure ‘A’ to the Mortgage identifies the capacity in which Mr Boensch is to assume the debt or liability, namely as “trustee of the Boensch Trust” (cl 4); it limits the extent of the debt or liability “to the sum of one hundred thousand dollars ($100,000)” (cl 6); it limits the means by which Mr Bingham can enforce such debt or liability, namely, “only to the extent which it [that is, Mr Boensch’s debt or liability under the Mortgage] can be satisfied out of the secured property” (cl 4); and it defers the time the liability or debt may be so enforced “until 1 March 2024” (cl 2).

(e) Given the terms of Annexure ‘A’ to the Mortgage I identify in (d), the Mortgage constitutes “an agreement about the payment of legal costs”. It is therefore a “costs agreement” for the purposes of the LPU Law; and, being a “costs agreement”, s 184 of the LPU Law provides that, subject to “this Law,” the Mortgage “may be enforced in the same way as any other contract”. That includes the right Mr Boensch has to set up the terms of the Mortgage as a defence to a claim for the payment of the HC Costs that purports to be based on an asserted costs agreement other than the agreement that is constituted by the Mortgage.

(f)   The Solicitor’s October costs disclosure is incapable of constituting the terms of any costs agreement or updated costs agreement. Mr Boensch communicated his rejection of those terms as being contrary to what had been agreed in March 2019; and Mr Boensch did so on the same day he received the Solicitor’s October costs disclosure.

(g)   The Costs Assessor did not purport to set aside or vary the Mortgage, or otherwise find the Mortgage to be unfair or contrary to the LPU Law. That means that, on the evidence, the Mortgage is the only agreement between Mr Boensch and Mr Bingham about the payment of legal costs; and Mr Boensch’s liability to pay the HC Costs is to be determined by reference to the terms of the Mortgage.

(h)   The right the Mortgage gives to Mr Bingham to recover “out of the secured property” no more than $100,000 has not accrued, because 1 March 2024 has not arrived. For this reason alone, and assuming such right can properly be characterised as a liability by Mr Boensch to pay anything to Mr Bingham, Mr Boensch is not, and, when Mr Bingham issued his invoice dated 6 December 2019 Mr Boensch was not, liable to pay Mr Bingham any amount on account of the HC Costs. Thus, at the time Mr Bingham lodged his application for assessment of his costs, no legal costs were payable to him, and the Costs Assessor had no authority to undertake any costs assessment of Mr Bingham’s or Mr Bevan’s costs.

(i)   Given the terms I identify in (d), it cannot be said Mr Boensch assumed any personal liability to pay any amount to Mr Bingham in relation to the HC Costs. Mr Bingham’s rights are restricted to seeking satisfaction “out of the secured property”, not by a personal action for judgment against Mr Boensch.

[85]   ... Further, given the Mortgage is a “costs agreement” which Mr Boensch has the right to enforce, and Mr Boensch enforced his rights under the Mortgage by relying on its terms before the Costs Assessor as an answer to Mr Bingham’s application for the assessment of legal costs, it was not open to the Costs Assessor to ignore, as he did, the terms of the Mortgage; and his having ignored the terms of the Mortgage is incapable of altering the rights and obligations Mr Boensch and Mr Bingham have in relation to the HC Costs as provided for by the terms of the Mortgage.

29. Dismissing the appeal, Abraham J stated at [85]-[86]:

[85] … the terms of the mortgage, which are recited at [18] above, properly read, cap the costs at $100,000. The effect of the mortgage is accurately described by the primary judge at PJ [84(d)] recited above at [38]. There is nothing in that document (or elsewhere) which suggests that the respondent accepted that he would pay anything other than that amount, or that he would be personally responsible for any additional amount. To the contrary, the inference from the terms of the mortgage is that $100,000 is the maximum, noting also that it is approximately the figure that was estimated as the costs of the appeal process by Mr Bingham and Mr Bevan (including special leave and a full hearing) at the time the mortgage was executed.

[86]   Mr Bingham’s submission to the Costs Assessor, which appears to have been accepted, that the mortgage secured all legal costs claimed is, as the primary judge correctly observed at PJ [51], not supported by the terms of the mortgage. The mortgage only secured Mr Bingham’s costs in so far as those costs were capped at $100,000. As the primary judge concluded at PJ [51(c)]:

The only liability in Annexure ‘A’ to the Mortgage can reasonably be construed to describe is the liability described in cl 6, namely the “principle (sic) sum for legal costs incurred by” Mr Boensch as a client of Mr Bingham, and his capacity as trustee of the Property, which would have to be read with cl 6, which provides that the liability so incurred “shall be limited to” $100,000.

30. The primary judge did not misinterpret the findings made by Judge Manousaridis and Abraham J.

Second and third arguments: whether erroneous finding by primary judge concerning compliance with disclosure obligations

31. Compliance with the disclosure obligations under s 174(1) of the Uniform Law and the consequences of non-compliance for the costs agreement concerned (if any) under s 178(1)(a) were not issues that were pleaded by Mr Boensch in his defence or cross-claim. The pleaded issue raised by the cross-claim (pars 8-12) was that Mr Bingham had “broken” the agreement in Annexure A to the mortgage by enforcing his claim for legal costs in an amount more than the capped amount of $100,000 and prior to 1 March 2024. Accordingly, it is unsurprising that the primary judge made no findings concerning Mr Bingham’s disclosure obligations under s 174(1) of the Uniform Law, or whether the mortgage was void under s 178(1)(a) of the Uniform Law.

31. It is said that the primary judge found that “the mortgage … was not void as regulated under s 178(1)(a) of the Uniform Law”. That is not an accurate statement of her Honour’s findings: cf [30]-[31] of the primary judgment. Insofar as it said that the primary judge erred in not finding that “there was non-compliance with disclosure obligations given the amount enforced was about $376,000, exceeding the capped amount of $100,000 under the mortgage”, this assumes that compliance with the disclosure obligations under s 174(1) was a matter in issue below. As indicated, this issue was not pleaded.

32. Nevertheless, complaint is made that the primary judge misunderstood Mr Boensch’s position concerning the costs agreement contained in the mortgage, as recorded in her Honour’s reasons at [30] (which are set out at [24] above). This submission directs attention to the way the case was run at trial. The transcript records that the primary judge sought clarification of Mr Boensch’s position, given the findings of Judge Manousaridis, which were upheld by Abraham J. Mr Boensch responded that the mortgage was an agreement which bound the parties; his said that the mortgage “no longer binds the parties because Mr Bingham breached the covenants”. As indicated, that was a different reason why Mr Boensch said the mortgage was no longer binding, which the primary judge separately addressed: see [45]f below.

33. Mr Boensch also accepted that: (i) he had sought a declaration in the negligence proceeding that the mortgage is a contract and therefore a legally binding agreement; (ii) the primary judge did not need to decide whether the mortgage contained a costs agreement, as that had been decided in the FCFCOA and FCA; and (iii) his primary argument was that the mortgage was void because Mr Bingham had breached the contract and therefore the contract (being the costs agreement in the mortgage) could not be enforced. However, Mr Boensch also made passing references below to the Uniform Law and non-disclosure, relevantly, he said:

“•   I intend to have it set aside because of it being made void” referring to the “LPUL”,

•   the mortgage had become void in two ways, “one is under the LPUL because of non-disclosure”, and

•   the costs agreement was “not updated properly”.

35. It is evident that there was a degree of confusion, and some tension, in Mr Boensch’s responses to the primary judge’s questions. It is not clear whether Mr Boensch’s reference to the costs agreement being “not updated properly”, was a reference to the October costs disclosure not being a binding agreement, as Judge Manousaridis found, or an assertion of non-disclosure by Mr Bingham of an updated estimate of legal costs under s 174(1)(b).

36. The primary judge sought clarification of Mr Boensch’s position concerning the mortgage after the luncheon adjournment below. Mr Boensch accepted that the Federal Court had made a finding about the mortgage, and went on to say that that the “agreement, including mortgage, … falls away because being void, not being updated it falls away”. It is appropriate to reproduce this exchange in full:

HER HONOUR: In 26 you say that the Federal Court has not made a finding about the mortgage, but do you still say that?

DEFENDANT: I don’t say that, your Honour. As I said, at first for me it was separate, and I see what Judge Manousaridis said and I understand it, and one cannot exist without the other, and it all becomes part of the cost agreement. I have just wanted to make some verbal submission today; if the mortgage was separate from the agreement, the attachment is definitely the agreement because that deals with things negotiated, costs of the agreement, and, as I saw it back then, the mortgage came on top of that as security. Even then the mortgage has no work to do. If the mortgage only attaches something, it does not say something. It only attaches a cost agreement in my first understanding, and if that is true then the attachments falls away and there is nothing left for the mortgage to secure.

HER HONOUR: I think I understand all of the rest of it. Were there other things you wanted to take me to?

DEFENDANT: No, the agreement, including mortgage, it falls away because being void, not being up-dated it falls away under a normal contract of trust and agreement. I would not have otherwise agreed to the mortgage. The caveat itself, as I said, under the caveat law and the rulings we have now on caveats, but it cannot be extended because it does not secure any substantial debt. It is just an argument what it secures.

37. Thus, there remained a degree of confusion in Mr Boensch’s responses to the primary judge’s questions, even after her Honour sought clarification from Mr Boensch. Nevertheless, it does not follow that the primary judge was in error in not deciding a matter which had not been pleaded, relevantly, whether Mr Bingham had contravened the disclosure obligations under s 174(1)(b), and if so, what was the effect of non-compliance on the mortgage, given s 178(1)(a).

38. Plainly, an assertion that Mr Bingham had contravened the disclosure obligations under s 174(1)(b) was likely to be contentious. It should have been pleaded. It was not suggested by Mr Boensch that the parties had departed from the pleadings in the conduct of the trial. Nor was it suggested that it should be inferred that Mr Bingham acquiesced in such a course, assuming that course had been adopted by Mr Boensch at trial: Banque Commerciale S.A., En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279 at 287.

39. Two further matters serve to reinforce the conclusion just mentioned as to the way the case was run at trial. The first is that it is not immediately obvious that Mr Bingham was required to provide an updated estimate under s 174(1)(b) in circumstances where Mr Bingham and the barrister had provided a total estimate of legal costs in February 2019 of $92,500 and the parties had negotiated and signed the mortgage containing a costs agreement which capped costs at $100,000.

40. The second is that Mr Boensch’s submissions below did not address the meaning of the word “void” in s 178(1)(a) of the Uniform Law, which was considered in Bingham v Bevan (2023) 111 NSWLR 287; [2023] NSWCA 86 at [40]-[49]. Contrary to the premise of Mr Boensch’s submission in this Court, “the word “void” is not used to the Uniform Law to indicate some absolute absence of legal effect”: Bingham v Bevan at [41] (Basten AJA, Meagher and White JJA agreeing). Further, as Basten AJA also observed at [41], s 178(1) of the Uniform Law identifies specific consequences of contravention of the disclosure obligations, which may arise where there is a void costs agreement: namely, the client is not required to pay the legal costs until the costs have been assessed and the law practice must not commence or maintain proceedings for recovery of any or all of the legal costs until they have been assessed: s 178(1)(b) and (c). The primary judge ought not be criticised for not dealing with a matter which was not pleaded, nor the subject of a clearly articulated argument.

Summary of conclusions

41. In summary, given the pleadings and the way the case was run at trial, it was not necessary for the primary judge to make findings concerning non-compliance with the disclosure obligations under s 174(1) of the Uniform Law, or the consequences under s 178(1)(a) for the costs agreement concerned (if any), assuming a contravention of the disclosure obligations.

Whether liability for legal costs limited to $27,000

42. Alternatively, it is said that if the mortgage is binding it secured, at most, the amount of $27,000. This submission assumes that (a) the estimate in the February costs disclosure should be reduced by $7,000 in respect of any application for security for costs of the appeal, as no such application was in fact made, and (b) Mr Bingham has no liability in respect of counsel’s fees given the decision of the Court in Bingham v Bevan.

43. As to (a), the argument confuses Mr Boensch’s liability to pay legal costs which was capped at $100,000, with the integers of the estimate contained in the February costs disclosure. Whether the legal costs charged by Mr Bingham for the work actually performed are fair and reasonable (Uniform Law, s 172(1)) is a matter to be determined on a costs assessment occurring after 1 March 2024.

44. As to (b), the argument involves a misreading of the Court’s reasons in Bingham v Bevan. The Court did not find that Mr Bingham did not have any liability whatsoever to the barrister for counsel’s fees. The Court held that the barrister could not recover any amount from the solicitor that would not have been payable if the payment condition in the costs agreement (by which the solicitor’s liability for the payment of counsel’s fees was conditional upon the solicitor recovering the barrister’s fees from either the client (Mr Boensch) or the respondent to the appeal) were still operative: at [50]-[58].

Alleged breach of the mortgage

45. The second reason relied upon by Mr Boensch relates to the conditions of the mortgage in Annexure A. It is said that Mr Bingham breached the mortgage by taking the following steps before 1 March 2024: seeking an assessment of costs, registering the certificate of determination as a judgment, and issuing a bankruptcy notice.

46. The primary judge rejected this argument at [32]-[37] of her judgment. It is sufficient to reproduce the dispositive reasons at [35]-[37]:

I do not accept that the mortgage agreement has been validly avoided or terminated. I do not accept that when a contractual party asserts a right wrongly, such as suing for more than a sum identified in a contract, the party has necessarily repudiated the contract. Even if Mr Bingham did repudiate the mortgage, Mr Boensch never notified Mr Bingham that he was accepting that repudiation and terminating the mortgage agreement. Further, even if he had, when a contract is terminated for breach, including repudiation, all unconditionally accrued rights, including as to payment, remain on foot: McDonald v Denny Lascelles Ltd (1993) 48 CLR 457 (at 477 per Dixon J). Mr Boensch has not demonstrated why Mr Bingham’s entitlement to payment for legal services performed at the request of Mr Boensch would cease to be enforceable by reason of any breach or termination.

As already noted, Mr Boensch has repeatedly informed various courts that he considers the mortgage agreement binding, as has been found in the Federal Court, and has never asserted that he has terminated it.

I note that Mr Boensch’s submissions also referred to relief pursuant to the Contracts Review Act 1980 (NSW). However, no relief pursuant to that legislation was pleaded. Mr Boensch clarified orally that the conduct, upon which he relied to avoid the operation of the mortgage agreement, was only the breaches he had identified. He did not submit that there was any conduct at the time of formation that would give rise to any remedy under that legislation. Therefore, the same reasoning as above applies.

47. In writing, Mr Boensch did not identify any error in this reasoning.

48. In oral argument, Mr Boensch said that “if the major agreements of a contact (sic) are broken, then the contract is made void by the Contracts Review Act” and that the primary judge erred in stating at [37] that no relief pursuant to the Contracts Review Act 1980 (NSW) was pleaded. After the Court drew Mr Boensch’s attention to the terms of his cross-claim, he acknowledged that there was no pleaded claim for relief pursuant to the Contracts Review Act.

49. Mr Boensch also said that Mr Bingham (and Mr Bevan) did not have an honest intention to comply with the “original negotiated cost agreement”. This seems to be a reference to the terms agreed in Annexure A to the mortgage, relevantly, (i) the quantum of legal fees capped at $100,000, (ii) Mr Boensch was not liable personally, (iii) payment could only be obtained from the Rydalmere property mortgaged to Mr Bingham, and (iv) payment was deferred until after 1 March 2024. Complaint is made that Mr Bingham and Mr Bevan made submissions to the costs assessor in 2021 that were inconsistent with the terms of the costs agreement. Assuming that this conduct is relied upon as a repudiation by Mr Bingham of the costs agreement, it is answered by her Honour’s findings at [35]-[36] that even if there was repudiatory conduct by Mr Bingham in having his costs assessed prior to the temporal limitation in cl 2 of Annexure A to the mortgage, there was no evidence that Mr Boensch accepted any repudiation so as to bring the contract contained in the mortgage to an end. That finding is not challenged.

Certificate of costs issued by Review Panel for a $Nil amount.

50. The third reason relied upon by Mr Boensch relates to the certificate of costs issued by the Costs Review Panel for a $Nil amount. It is said that it is no longer possible for there to be another costs assessment because Mr Bingham cannot make another application for an assessment.

51. The primary judge rejected this argument at [40]-[41] of her judgment:

First, as set out above, the costs assessment process was determined to be invalid because there were no costs “payable” at the time of the assessment; there was a jurisdictional error. However, Mr Boensch did not provide any clear reason why another application for assessment would not be available to Mr Bingham after 1 March 2024 as noted by the Costs Review Panel. There is nothing to suggest the entitlement to have costs assessed and enforced has been lost forever.

Secondly, Mr Boensch now accepts that the mortgage agreement has been found to be the binding costs agreement between the parties, without the costs agreement, upon which Mr Bingham previously relied.

52. Mr Boensch did not identify any reason why another application for costs assessment would not be available to Mr Bingham after 1 March 2024, which as her Honour observed at [40] was noted by the Costs Review Panel in its reasons at [5.16]. No error has been demonstrated in her Honour’s reasons.

Defence by way of set-off

53. The fourth reason relied upon by Mr Boensch is that he has an offsetting claim against Mr Bingham arising from the negligence proceeding which he commenced in the Equity Division in 2021. (An application by Mr Bingham for summary dismissal of the negligence proceeding was refused by Richmond J on 22 September 2023: Boensch v Bingham [2023] NSWSC 1152.)

54. The primary judge dealt with the set-off argument at [51]-[55] of her judgment. After noting Mr Boensch’s reference to the High Court’s reasons in Boensch v Pascoe at [90]-[91] concerning the caveat lodged by Mr Pascoe against the title to the Rydalmere land, and the observations of Parker J in Bailey v Boensch [2020] NSWSC 1391 at [39]-[46], the primary judge rejected this argument at [54]-[55]:

I do not accept that a trustee in bankruptcy’s entitlement to lodge a caveat over trust property is equivalent to Mr Bingham’s situation. Neither do I accept that Mr Bingham’s interest is merely contingent or a “forensic possibility”.

Here, Mr Boensch accepted that when the mortgage was executed it was open to Mr Bingham to lodge a caveat, even though the amount of legal fees secured was not known. Merely because the quantum of legal fees has not been finally determined does not mean the mortgage agreement does not secure fees yet to become payable. It is a common situation that lawyers and others obtain a mortgage or other security from clients before commencing to provide legal services. The purpose is to ensure security for the payment of fees once the quantum is known and demanded, if not paid. Here, there is no dispute that Mr Bingham provided legal services to Mr Boensch and therefore it cannot be said that no fees at all would be payable. Even if there is an offsetting claim, that does not avoid Mr Bingham’s prima facie entitlement to some payment.

55. Again, Mr Boensch did not identify any error in her Honour’s reasons. Nevertheless, he asserted in his written submissions that “if the compensation and damages claim is successful, then [Mr Bingham] is (a) not entitled to remuneration due to wrongful advice, [and] (b) is liable of (sic) payment to [Mr Boensch] for professional misconduct of (sic) for a greater sum greater than $100,000” (emphasis added).

56. As neither party has a judgment for a sum of money against the other, no judgments presently exist between the parties which are capable of set-off on the basis that a superior court in its inherent jurisdiction may set-off one judgment or order for payment of money against another: Australian Beverage Distributors Pty Ltd v Evans and Tate Premium Wines Pty Ltd [2006] NSWSC 560; (2006) 58 ACSR 22 at [68]-[70] (White J); Re Fewin Pty Ltd [2017] NSWSC 1093 at [9]-[16] (Brereton J). See also Derham, On the Law of Set-off (Oxford University Press, 4^th Ed, 2010) at [2.103-2.104].

57. Nor did Mr Boensch submit below that he was entitled to an equitable set-off to Mr Bingham’s claim for legal costs: see, for example, Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2019) 100 NSWLR 432; [2019] NSWCA 135 at [109]-[110], [119]. The “impeachment test” for an equitable set-off, as formulated by Lord Cottenham LC in Rawson v Samuel (1841) Cr & Ph 161; 41 ER 451 at 178 (and accepted in Lord v Direct Acceptance Ltd (1993) 32 NSWLR 362 at 367), requires that the party seeking the benefit of the equitable set-off must demonstrate:

… some equitable ground for being protected against his adversary’s demand. The mere existence of cross-demands is not sufficient. …

58. In the absence of argument below, it was not necessary for the primary judge to consider whether the impeachment test was satisfied, and if so, what would be the consequence for the caveat and the mortgage.

59. The primary judge found that Mr Bingham had a prima facie entitlement to some payment, given that the underlying proceedings concerned the validity of the caveat claiming an equitable interest in the Rydalmere land pursuant to the mortgage; it was not necessary for her Honour to go further and quantify any likely set-off claimed by Mr Boensch by way of defence arising from the negligence proceeding. Moreover, there was no admissible evidence of the likely value of Mr Boensch’s asserted claim against Mr Bingham in the negligence proceeding.

Other matters

60. In writing, Mr Boensch said that there was “[n]o agreement implied or otherwise, that a Caveat was permitted to be lodged on the Trust Property”, being a reference to the Rydalmere property, which Mr Boensch held on trust for his children. This submission was repeated in oral argument. Mr Boensch said that there was never any discussion about a caveat and that he did not agree to a caveat. There are two answers to this submission.

61. One is that the submission ignored Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [57], where the High Court confirmed:

… The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document.

62. In his defence and cross-claim below, Mr Boensch did not contend that there was any vitiating element or that he had a claim for equitable or statutory relief. Mr Boensch is bound by his signature on the mortgage and Annexure A.

63. The other matter is that Mr Boensch frankly acknowledged in oral argument that cl 8 was included to permit him to refinance the Rydalmere property by the end of March 2019. Accepting that cl 8 operated as a temporal limitation on Mr Bingham lodging a caveat before the end of March 2019, there was no contractual limitation or prohibition on him lodging a caveat against the Rydalmere property after 30 March 2019, as he did on 21 June 2019.

Validity of Mr Bingham’s execution of the mortgage

64. The fifth and alternative reason relied upon by Mr Boensch relates to the signature of Mr Bingham on the mortgage. It is said that this signature was not properly witnessed by Mr Michael Birrell, a Justice of the Peace, because Mr Birrell wrote a different JP number (191119) on the mortgage to that given in the text of his 3 December 2021 affidavit at par [2] referring to his JP number as 10119, when deposing to witnessing Mr Bingham’s signature.

65. The primary judge dealt with this argument at [56]-[60] of her judgment. Her Honour accepted the unchallenged affidavit evidence of Mr Birrell, who described himself as a chartered accountant and registered Justice of the Peace, that he witnessed Mr Bingham’s signature and wrote his JP number next to the signature. His evidence was that he signed the mortgage at each of the places where his signature appears: at [57]. Her Honour was not prepared to make a finding that Mr Birrell’s evidence was either false or incorrect, noting that he was not cross-examined, and that Mr Boensch did not point to any evidence to suggest that Mr Birrell did not hold the qualifications, to which he deposed: at [58]. Her Honour also observed at [59] that Mr Boensch had previously positively asserted that the mortgage was binding between the parties, as Judge Manousaridis had found in the FCFCOA.

66. The contention that Mr Bingham’s signature was not properly witnessed directs attention to the Conveyancing Act 1919 (NSW), s 38(1) which requires with respect to each person who executes a deed, that his or her signature be witnessed by an independent witness (that is, a person not a party to the deed) and that such witness attest overseeing the execution by that party of the deed by signing his or her name in the appropriate place: Mostyn v Mostyn (1989) 16 NSWLR 635 at 638-639 (Young J). Although the effect of s 38(3) is that this requirement does not apply to land under the Real Property Act, this exception was not engaged as the mortgage given by Mr Boensch was unregistered.

67. Accordingly, the mortgage was required to be made by deed by s 23B of the Conveyancing Act, but there was no statutory or other need for Mr Birrell to sign the mortgage as a Justice of the Peace and the act of Mr Birrell as witness in describing himself as a Justice of the Peace was gratuitous and unnecessary: Grahamv Hall (2006) 67 NSWLR 135; [2006] NSWCA 208 at [84]; cf subsec (1A) and (1B) of s 38 of the Conveyancing Act which extend the facilities for executing deeds in the cases of persons who, by reasons of illiteracy or physical incapacity, are unable to sign documents where the direction is given in the presence of that person that the deed is signed in the name of that person by another person and a “prescribed witness” (which includes a Justice of the Peace) attests that the signature was affixed in those circumstances. These provisions had no application in the present case.

68. Whether the JP number next to Mr Birrell’s signature on the mortgage was correct or not, does not cast doubt on Mr Birrell’s unchallenged evidence that he witnessed Mr Bingham sign the mortgage. It was well-open to the primary judge to accept that evidence.

Conclusion and Orders

69. The appeal has failed. There is no reason why costs should not follow the event: UCPR, r 42.1. I propose that the appeal be dismissed with costs.

70. WHITE JA: I agree with Gleeson JA.

71. GRIFFITHS AJA: I agree with Gleeson JA.

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Amendments

22 May 2024 - Amended formatting issues

Decision last updated: 22 May 2024