FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Boensch v Bingham (No 2) [2022] FedCFamC2G 47
File number(s): SYG 1781 of 2021 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 4 February 2022 Catchwords: BANKRUPTCY – Application to set aside a bankruptcy notice based on a judgment entered on the filing of a costs certificate – whether it is open to set aside the bankruptcy notice on the ground that the costs assessor did not determine costs on the basis of what the applicant claimed is the true costs agreement – open to do so on two alternate grounds depending on whether the question whether there exists a costs agreement is a jurisdictional fact – on the assumption that the question whether a costs agreement exists is a jurisdictional fact the bankruptcy notice could be set aside if there are substantial reasons for questioning that what the costs assessor found is the costs agreement is in fact the true costs agreement – substantial reasons exist and moreover the evidence establishes that the true costs agreement is that for which the applicant contends – given the terms of the true costs agreement the applicant is not indebted to the respondent and for that reason the judgment on the basis of which the bankruptcy notice was issued does not in truth represent any debt the applicant owes the respondent – on the assumption that the question whether a costs agreement exists is not a jurisdictional fact the bankruptcy notice could be set aside if there are substantial reasons for questioning whether the costs determination was made without any jurisdictional error – substantial reason found for questioning that the costs determination was made without jurisdictional error – no basis for finding that the costs determination was made without jurisdictional error and for that reason there is no basis for being satisfied that the judgment on the basis of which the bankruptcy notice was issued in truth represents any debt the applicant owes the respondent – bankruptcy notice set aside. Legislation: Bankruptcy Act 1966 (Cth), ss.40(1)(g), 40(3)(b), 58(3)
Legal Profession Uniform Law Application Act 2014 (NSW), ss.70, 71(3), 73, 83(1), 83(1A)
Legal Profession Uniform Law (NSW), ss.6, 172(4), 174(1), 174(2), 180, 184, 195, 198(1), 199, 200(2)
Legal Profession Act 2004 (NSW), s.302Cases cited: Amirbeaggi v Business in Focus (Aust) Pty Ltd [2008] NSWSC 421
Anderson v Hill [2017] NSWSC 1149
Boensch v Pascoe [2019] HCA 49
Boensch v Somerville Legal Pty Ltd [2019] FCCA 868
Boensch v Somerville Legal [2021] FCAFC 79
BTX17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (No 2) [2020] FCCA 2270
Cheung v Burness (Trustee) [2016] FCA 1381
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Corney v Brien (1951) 84 CLR 343
Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5
Doyle v Hall Chadwick [2007] NSWCA 159
D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12
Ex parte Chinery; In re Chinery (1884) 12 Q.B.D 342
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- AGLC
- Boensch v Bingham (No 2) [2022] FedCFamC2G 47
- Case
- [2022] FedCFamC2G 47
- Decision Date
CaseChat Overview and Summary
Mr Boensch applied to set aside a bankruptcy notice issued to him by Mr Bingham, which demands that Mr Boensch pay the Judgment Amount to Mr Bingham. The bankruptcy notice was issued on the basis of a judgment entered on the filing of a Costs Certificate. Mr Boensch argues that the bankruptcy notice should be set aside because the Costs Determination is invalid, and therefore the Costs Certificate and the judgment on the basis of which the bankruptcy notice was issued are not valid. The court was required to decide whether the bankruptcy notice could be set aside on the ground that the Costs Assessor did not determine costs on the basis of what Mr Boensch claims is the true costs agreement. The court had to consider whether it was open to set aside the bankruptcy notice on the assumption that the question whether there exists a costs agreement is a jurisdictional fact, and on the assumption that it is not a jurisdictional fact.
The court found that the question whether there exists a costs agreement is a jurisdictional fact, and that it was open to set aside the bankruptcy notice if there are substantial reasons for questioning that what the Costs Assessor found is the costs agreement is in fact the true costs agreement. The court found that substantial reasons exist for questioning that the costs determination was made without jurisdictional error, and that the evidence establishes that the true costs agreement is that for which Mr Boensch contends. Given the terms of the true costs agreement, the court found that Mr Boensch is not indebted to Mr Bingham for the HC Costs, and that the judgment on the basis of which the bankruptcy notice was issued does not in truth represent any debt Mr Boensch owes Mr Bingham. The court set aside the bankruptcy notice.
The court made an order setting aside the bankruptcy notice issued to Mr Boensch by Mr Bingham.
The court found that the question whether there exists a costs agreement is a jurisdictional fact, and that it was open to set aside the bankruptcy notice if there are substantial reasons for questioning that what the Costs Assessor found is the costs agreement is in fact the true costs agreement. The court found that substantial reasons exist for questioning that the costs determination was made without jurisdictional error, and that the evidence establishes that the true costs agreement is that for which Mr Boensch contends. Given the terms of the true costs agreement, the court found that Mr Boensch is not indebted to Mr Bingham for the HC Costs, and that the judgment on the basis of which the bankruptcy notice was issued does not in truth represent any debt Mr Boensch owes Mr Bingham. The court set aside the bankruptcy notice.
The court made an order setting aside the bankruptcy notice issued to Mr Boensch by Mr Bingham.
Orders
Orders of the court
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Background
Background to the litigation
Mr Bingham does not dispute he and Mr Boensch entered into a mortgage; but Mr Bingham makes no submissions about the effect of its terms. Mr Bingham’s principal submission is that the Costs Determination is determinative of the parties’ rights in relation to the HC Costs, and remains so until it is set aside.BACKGROUNDJanuary 2019 – discussions begin in relation to applying to High Court In around January 2019 Mr Boensch held discussions with Mr Bingham about Mr Bingham acting, and his retaining counsel, Mr Bevan, to act, for Mr Boensch in an application for special leave to appeal to the High Court from orders the Full Federal Court made on 20 December 2018 dismissing an appeal Mr Boensch had brought to that Court.[1] [1] Boensch as trustee of the Boensch Trust v Pascoe [2018] FCAFC 234February - March 2019 - discussions about fee arrangements By 31 January 2019 Mr Bingham had provided to Mr Bevan proposed terms on which Mr Bevan would be retained to act in the application for special leave. By email sent on 31 January 2019 Mr Bevan confirmed to Mr Bingham that the terms of the retainer were acceptable, subject to a number of matters. These included the following: [2]The fees - yours and mine including my arrears of fees to date - will be secured by a second mortgage to be granted over the trust property by Franz [Boensch] as trustee (as he is suing as trustee) to you and me jointly as mortgagees as they will be accruing at a faster rate than they are being paid, we suspect.[2] Exhibit FBBN, page 34 The “property” to which Mr Bevan referred is a property in Rydalmere (Property) of which Mr Boensch was, and, it appears, continues to be the trustee. On 4 February 2019 Mr Bevan sent the following email to Mr Bingham (emphasis in original):[3]I confirm that Franz [Boensch] and you are meeting me here at 2.00 pm tomorrow for 2 hours to finalise the fee arrangements with Franz [Boensch], sign off on the High Court documents (I’ll provide sufficient copies for filing and service at the High Court Registry on Level 23 of the Law Courts Building) and agree on who is filing and serving them this week (Franz [Boensch] will probably assist in that area). Maybe you can attend to it together?[3] Exhibit JDB-1, page 68 On 5 February 2019 Mr Boensch met with Mr Bingham and Mr Bevan. They discussed a proposed mortgage over the Property. That is apparent from an email Mr Bingham sent to Mr Boensch on 8 February 2019 to which Mr Bingham attached what he described as “documentation relating to a mortgage as discussed in meetings with Chris Bevan”.[4] [4] Exhibit FBBN, page 35 On or shortly after 7 February 2019 Mr Bingham provided to Mr Boensch a document dated 7 February 2019, and titled “Costs Disclosure & Costs Agreement” (Solicitor’s February costs disclosure). Mr Bingham provided this document to Mr Boensch in fulfilment of the obligations imposed by s 174(1) of the Legal Profession Uniform Law (NSW) (LPU Law), which provides:Main disclosure requirement 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).
Evidence
Evidence Before The Court
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Decision
Reasons for decision
The bankruptcy notice demands that Mr Boensch pay $372,674.84 to Mr Bingham. That is the amount of a judgment (Judgment Amount) entered in the District Court of New South Wales (Judgment). The Judgment Amount, in turn, is the sum of three amounts recorded in a Certificate of Determination of Costs (Costs Certificate) issued pursuant to s 70 of the Legal Profession Uniform Law Application Act 2014 (NSW) (LPUL Application Act), and filed with the District Court pursuant to s 71(3) of that Act. The largest of the three amounts - $358,234.71 - represents the amount for which the costs assessor (Costs Assessor) who issued the Costs Certificate determined the costs of legal services Mr Bingham and counsel provided to Mr Boensch in connection with an appeal to the High Court (Costs Determination). The other two amounts represent interest on the amount of the Costs Determination, and the filing fee Mr Bingham paid when he lodged his application for the assessment of costs. Mr Boensch relies on a number of grounds for setting aside the bankruptcy notice; but the central grounds on which Mr Boensch relies are based on the terms of a mortgage he and Mr Bingham executed in March 2019. Mr Boensch claims that his liability, if any, to pay Mr Bingham’s costs and disbursements in relation to the High Court appeal (HC Costs) are regulated, and entirely regulated, by the terms of the mortgage. Mr Boensch submits that, under the terms of the mortgage, any liability to pay the HC Costs would be limited to $100,000; Mr Bingham could enforce such liability only to the extent it can be satisfied out of a property of which Mr Boensch is the trustee; and Mr Bingham cannot enforce the liability until 1 March 2024. In those circumstances, Mr Boensch submits he is not indebted to Mr Bingham for the HC Costs, and, therefore, it was not open to Mr Bingham to apply to have the HC Costs assessed and, on the issue of the Costs Certificate, register the Costs Certificate as a judgment of the District Court. Mr Boensch also submits that the Costs Determination is invalid for a number of reasons, one of which is that the Costs Assessor failed to find that the terms of the mortgage constituted a costs agreement and, for that reason, failed to give effect to its terms. Mr Boensch also claims that it was not competent for Mr Bingham to apply for the assessment of his costs when he did because at that time Mr Boensch was a bankrupt, and s 58(3) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) prevented him from doing so. Finally, Mr Boensch submits he has a counter-claim, set-off, or cross demand against Mr Bingham equal to or exceeding the Judgment Amount based on what Mr Boensch claims is negligence by Mr Bingham and counsel in connection with the litigation that ended in the High Court. Mr Bingham does not dispute he and Mr Boensch entered into a mortgage; but Mr Bingham makes no submissions about the effect of its terms. Mr Bingham’s principal submission is that the Costs Determination is determinative of the parties’ rights in relation to the HC Costs, and remains so until it is set aside.BACKGROUNDJanuary 2019 – discussions begin in relation to applying to High Court
Ratio Decidendi
Legal Principle Established
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