Brezniak v Habib
[2014] NSWSC 1730
•05 December 2014
Supreme Court
New South Wales
Medium Neutral Citation: Brezniak v Habib [2014] NSWSC 1730 Hearing dates: 5 November 2014 Decision date: 05 December 2014 Jurisdiction: Common Law Before: Schmidt J Decision: The parties should have an opportunity to consider the form of orders which should be made to reflect these conclusions and to consider the appropriate costs order.
They are directed to confer and to file proposed orders, hopefully in agreed terms, within 14 days. The matter is listed for mention at 9:30am on 19 December 2014.
Catchwords: PROCEDURE - costs - notice of motion - orders seeking judgments to be set aside - whether judgments entered irregularly - costs assessor certificate - review panel certificate - whether court had jurisdiction to enter judgment in favour of plaintiff -
PROCEDURE - notice to produce - notice to produce set aside
whether costs assessor had power to consider and resolve the question of whether the disputed memoranda had been paid - defendant bound by certificates - certificates have not been suspended and may be enforced - Court has jurisdiction to enter judgment in favour of plaintiff - filing of costs assessor's certificate may not be aside under Rule 36.15Legislation Cited: Legal Profession Act 2004 (NSW)
Legal Profession Regulation 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)Cases Cited: SAS Trustee Corporation v Woollard [2014] NSWCA 75
Weber v Aquaqueen International Pty Ltd; Aquaqueen International Pty Ltd v Weber [2013] NSWSC 1181Category: Procedural and other rulings Parties: Daniel Brezniak (Plaintiff)
Mamdouh Habib (Defendant)Representation: Counsel:
Mr R K Newton (Plaintiff)
Solicitors:
Zali Burrows Lawyers (Plaintiff)
Ms D Searle
Searle & Associates Lawyers (Defendant)
File Number(s): 2013/314464 2014/316920 Publication restriction: No
Judgment
The defendant Mr Habib filed a motion in each of these proceedings, seeking orders under Rule 36.15 of the Uniform Civil Procedure Rules2005 (NSW) that judgments obtained by the plaintiff, Mr Brezniak of counsel, under Rule 36.10 in each case be set aside as having been entered irregularly. The first judgment was entered on 18 October 2013, upon Mr Brezniak filing a certificate issued by a costs assessor under the Legal Profession Act 2004 (NSW). The second judgment was entered on 28 October 2014, upon the filing of a certificate issued by a review panel under the Legal Profession Act.
There was no issue between the parties as to the underlying facts.
The notice to produce
At the commencement of the hearing a notice to produce various documents which had been served on Mr Brezniak was called on. No documents were produced. Their relevance was disputed and Mr Brezniak asked that the notice be set aside as an abuse of process.
Having heard the parties, I set the notice aside, indicating that I would later give reasons. Thereupon it was indicated for Mr Habib that a subpoena also served on Mr Brezniak in identical terms, returnable the following day, would not be pressed. That concession was properly made. That service of a subpoena in such terms, returnable the day after the hearing of the motions, accorded with the obligations imposed upon litigants by s 56 of the Civil Procedure Act2005 (NSW) is difficult to see, given the service of the notice to produce. Unnecessary costs were plainly thereby incurred.
My reasons for setting aside the notice to produce appear below.
The Court had jurisdiction to enter judgment in favour of Mr Brezniak
While not raised in the motion, at the hearing the Court's jurisdiction to enter the two judgments in favour of Mr Brezniak was put in issue by Mr Habib.
I am satisfied that the Court had jurisdiction to enter judgment on the assessor's certificate in 2013. The position is different in relation to the review panel's certificate.
It is important to understand how the judgments came to be entered.
Mr Brezniak was engaged by Mr Habib in 2012 to advise him in relation to pleadings filed in this Court, in proceedings which Mr Habib had brought against the State of NSW. Mr Brezniak provided him with a costs disclosure and costs agreement document and undertook various work, for which Mr Habib later paid him. A dispute then arose in relation to four memoranda of fees which Mr Brezniak provided, but Mr Habib did not pay. In April 2013, Mr Brezniak made an application under the Legal Profession Act to have those costs assessed.
The costs assessor gave reasons for his assessment on 4 September 2013. They disclosed that Mr Brezniak's case was that in addition to being retained to advise in relation to the Supreme Court proceedings, Mr Habib had engaged him to give advice in relation to certain other matters, including in relation to a dispute about the return of Mr Habib's passport, about which there had been litigation in the Administrative Appeals Tribunal and the Federal Court; that Mr Habib had also introduced him to a Mr Rahemi, for whom Mr Brezniak had agreed to act on the basis that Mr Habib would pay his costs; and that Mr Brezniak had later rendered fees for work he had performed, which Mr Habib paid.
Mr Brezniak rendered the four memoranda of fees which were in dispute in October, November and December 2012. They totalled $22,010.75. Mr Habib claimed that some of the $31,775.82 he had earlier paid Mr Brezniak related to these memoranda. Mr Brezniak disagreed.
Mr Habib's position before the costs assessor was that Mr Brezniak had already been overpaid. He provided the costs assessor with comprehensive objections, which the assessor described to have included, amongst other things, that he had engaged Mr Brezniak only to advise him in relation to the Supreme Court proceedings; that he had not engaged Mr Brezniak in relation to the matters the subject of the disputed fee memoranda; that he had settled his case with the Australian Government in 2010, but it had refused to return his passport, but by the time he met Mr Brezniak in January 2012 it had already been returned; that he had never agreed to pay Mr Brezniak for work performed for Mr Rahemi; that he was having financial difficulties paying his solicitors in the Commonwealth matter; that he had paid Mr Brezniak a total of $31,775.82; that he had always paid Mr Brezniak in advance; and that his dispute with Mr Brezniak concerned advice he had given in the Supreme Court proceedings.
The assessor found that Mr Brezniak had complied with his obligations of disclosure; that Mr Habib had retained Mr Brezniak to perform the disputed work; that he had given the instructions Mr Brezniak claimed; that he had agreed to pay Mr Brezniak for the work performed for Mr Rahemi, being a third party payer (see s 302A of the Legal Profession Act); that Mr Brezniak had performed the claimed work; that none of the $31,775.82 Mr Habib had paid related to the four memoranda in issue; and that on only one occasion had Mr Brezniak sought payment in advance, in accordance with the costs agreement, in respect of a claim Mr Habib had made against the NSW Police. The assessor concluded that none of the payments made by Mr Habib related to the memoranda of fees in dispute.
The assessor also found that the hourly rates Mr Brezniak had charged were fair and reasonable for the work he had performed. That work was also found to have been fair and reasonable. In the result the assessor found that the amount of $22,010.75 was payable to Mr Brezniak and issued a certificate to that effect.
That certificate was registered in this Court on 18 October 2013. Thereupon judgment was given in favour of Mr Brezniak against Mr Habib, in the amount of $22,010.75. Mr Habib did not pay Mr Brezniak, who then took steps to enforce the judgment. A bankruptcy notice was served in 2014 and a creditor's petition was filed in the Federal Circuit Court in September 2014. Mr Habib did not file his motion to set aside the 18 October 2013 judgment until 13 October 2014.
In the meantime, Mr Habib pursued his right to have the costs assessment reviewed. The review panel agreed with the costs assessor and in August 2014 issued a certificate affirming that given by the costs assessor. That certificate was also in the amount of $22,010.75.
The review panel's reasons disclosed that the four fee memoranda in dispute related to work performed by Mr Brezniak in relation to the claim against the State; to Mr Rahemi's matter; to the refusal to issue a passport matter; and to general matters, including letters sent to the Prime Minister.
The review panel noted that the grounds of review pursued by Mr Habib included the costs assessor's failure to reduce Mr Brezniak's bills; a denial of natural justice in not considering his submissions or giving him an opportunity to respond to Mr Brezniak's response to his submissions; the assessor failing to consider duplicity of items which Mr Brezniak had claimed; the assessor wrongly concluding that Mr Rahemi was a third party payer, when he had only been a referral; that he had only retained Mr Brezniak in the proceedings brought against the State; and that Mr Brezniak had volunteered to undertake other work performed, in order to promote his name and so that he could charge Mr Habib, who had not instructed him to perform that work; that the assessor had failed to take account of his confusion and trust in Mr Brezniak asking for lump sums in advance; that he had paid a total of $31,755.82, when Mr Brezniak did not issue invoices for the amounts he sought to have paid and only provided invoices after receiving payment, including for work already paid for; that he had made payments in advance, with the result that Mr Brezniak had been overpaid; that the assessor had erred in believing that Mr Brezniak had provided invoices for the $31,755.82 he had paid; that the disputed memoranda sought payment for work he had already paid for Mr Brezniak; that the assessor had failed to consider his submissions that he had previously paid for such work; and that his responses to Mr Brezniak's response had not been considered, thereby denying him procedural fairness.
The review was conducted on the evidence advanced before the assessor. The panel noted that the contest related to whether instructions had extended to various matters and charges; whether invoices had been paid; and whether Mr Habib was responsible for the costs for the work done for Mr Rahemi.
The panel noted that the material before the assessor included responses from Mr Habib to questions asked of him by the assessor on 7 June 2013, which he provided on 5 July. On 10 July, Mr Brezniak's solicitor provided a response to the assessor's request for particulars; that on the same day Mr Habib had responded with detailed submissions. Mr Brezniak was invited to respond to those submissions and did so.
The review panel said that it had closely scrutinised that material and had also concluded that the bills were fair and reasonable. It considered that Mr Habib had been given every opportunity to make submissions and provide material to the assessor. It concluded that the bills should be affirmed; that there had been no duplicity; that Mr Habib had accepted responsibility for Mr Rahemi's costs and the referral claim was not made out; that Mr Brezniak had acted on that agreement; that there was no costs agreement entered for the wider matters, but that Mr Brezniak's costs were reasonable and had been reasonably incurred; that prior work had been performed, but Mr Habib had not established that the prior payments related to the work the subject of the four memoranda which Mr Brezniak pursued; that Mr Brezniak had satisfied the panel that the earlier payments were not related to those memoranda; that Mr Habib had not established that the assessor had failed to consider his submissions; and rejected the claim that he ought to have had an opportunity to respond to Mr Brezniak's response to his submissions.
The review panel's certificate was filed in this Court with the result that another judgment was given in Mr Brezniak's favour on 28 October 2014. Mr Habib filed his motion in relation to that judgement on 29 October.
On 5 November 2014, Mr Habib brought an appeal from the review panel's decision to the District Court on a question of law, on the basis of the inadequacy of the review panel's reasons. He has not sought a stay of either the costs assessor's determination, or that of the review panel.
The costs assessor had power to consider and resolve the question of whether the disputed memoranda had been paid
While also not raised on those motions, the assessor's power to resolve the question of whether any part of the sums paid by Mr Habib related to the four memoranda the subject of the assessment application, was disputed at the hearing.
It was submitted for Mr Habib that an assessor's powers were only those granted by s 363 of the Legal Profession Act, which it was submitted, could not encompass such a dispute. If there were such a dispute, it was claimed, it had to be resolved by a court of competent jurisdiction.
No authority could be pointed to which supported such a construction of this statutory scheme. That may reflect that it is an argument which has not previously been advanced, inconsistent as it is with not only the purpose of s 363, but with the purpose of the cost assessment process established by the Legal Profession Act itself.
The relevant rules of statutory construction were conveniently stated by Bathurst CJ in in SAS Trustee Corporation v Woollard [2014] NSWCA 75 at [58]:
"...As was said by the plurality in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27 at [47], the task of statutory construction must begin with the words of the statute itself considered in context, which includes the general purposes and policy of the provisions. Ascertainment of the statutory purpose may be based on an express statement of purpose in the statute, inference from the text and, where appropriate, reference to extrinsic material: Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 at [23]-[25], [68] and [88]. As was pointed out by Kiefel J in that case, the starting point is the words in question, read in the context of the statute."
The purposes of the Act itself appear in s 3, which provides:
"3 Purposes
The purposes of this Act are as follows:
(a) to provide for the regulation of legal practice in this jurisdiction in the interests of the administration of justice and for the protection of clients of law practices and the public generally,
(b) to facilitate the regulation of legal practice on a national basis across State and Territory borders."
Costs disclosure and assessment are dealt with in Part 3.2 "Costs disclosure and assessment". Section 301 provides as to its purpose:
"301 Purposes
The purposes of this Part are as follows:
(a) to provide for law practices to make disclosures to clients regarding legal costs,
(b) to regulate the making of costs agreements in respect of legal services, including conditional costs agreements,
(c) to regulate the billing of costs for legal services,
(d) to provide a mechanism for the assessment of legal costs and the setting aside of certain costs agreements."
This statutory costs assessment mechanism is designed to provide a basis upon which disputes between legal practitioners and their clients about legal costs can be resolved without resort to the courts, although that is not precluded. That process can result in a certificate being issued by a costs assessor, which can be enforced as a judgment of this Court, if payment is not made by the client.
Section 319 provides that legal costs are recoverable either under a costs agreement made in accordance with the Act, or according to the fair and reasonable value of the legal services provided. In this case there was a costs agreement, but no question that it did not apply to some of the claimed work. Mr Brezniak sought payment for the work which fell outside the agreement on the basis of its fair and reasonable value. Mr Brezniak was not entitled to seek to recover his costs in legal proceedings until he provided a bill, which he did (see s 331).
Section 351 permitted Mr Brezniak to apply for a costs assessment, Mr Habib having refused to pay the four memoranda he provided for the work he claimed he had performed. That section expressly contemplates that payment might have been made without provision of a bill, or that the legal costs in question may have been partly paid. Once the application was made, Mr Brezniak was precluded from commencing proceedings to recover those costs, until the assessment was complete (s 355).
Mr Brezniak's application was referred to an assessor under s 357, to be dealt with in accordance with the provisions made in Division 11 "Costs assessment". Section 358 empowered the assessor to require the parties, by notice in writing, to produce documents and information to him. The assessor exercised that power.
Section 359 required the assessor to give both parties a reasonable opportunity to make written submissions and to consider them. Having done so the assessor could confirm the bill or, if the disputed costs were found to be unfair or unreasonable, could substitute an amount that, in the assessor's opinion, was a fair and reasonable amount (s 367). The criteria which the assessor was bound to apply in the assessment are specified in s 363 to be:
"363 Criteria for costs assessment
(1) In conducting an assessment of legal costs, the costs assessor must consider:
(a) whether or not it was reasonable to carry out the work to which the legal costs relate, and
(b) whether or not the work was carried out in a reasonable manner, and
(c) the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 361 or 362 applies to any disputed costs.
(2) In considering what is a fair and reasonable amount of legal costs, the costs assessor may have regard to any or all of the following matters:
(a) whether the law practice and any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf complied with any relevant legislation or legal profession rules,
(b) any disclosures made by the law practice under Division 3 (Costs disclosure),
(c) any relevant advertisement as to:
(i) the law practice's costs, or
(ii) the skills of the law practice or of any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf,
(d) (Repealed)
(e) the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter,
(f) the retainer and whether the work done was within the scope of the retainer,
(g) the complexity, novelty or difficulty of the matter,
(h) the quality of the work done,
(i) the place where, and circumstances in which, the legal services were provided,
(j) the time within which the work was required to be done,
(k) any other relevant matter."
The assessor was not empowered to determine that any other costs which were not the subject of Mr Brezniak's application were unfair or unreasonable (see s 367(3)). Consideration of the fairness of those costs depended on Mr Habib making an application for assessment of those costs. Such an application can be made a by a client, even if the costs have been paid (s 350(3)). Mr Habib made no such application.
It is apparent from this legislative scheme that what the Parliament intended was to establish an assessment process which could be utilised by either legal practitioners or their clients to resolve disputes over costs. If accessed, the result of the assessment process binds the parties, subject to them exercising their statutory rights of review and appeal.
That scheme contemplates that once referred to an assessor, the parties can raise anything relevant to the question of the assessment of the amount of costs, if any, that the client owes the practitioner for the work in question. That includes not only whether the client retained the legal practitioner to undertake the work and what work was performed, but also whether the charge made for the performance of the work was fair and reasonable, if there was no applicable costs agreement and whether any payment, in whole or in part, had already been made for that work.
While the question of payment is not expressly identified as one of the criteria specified in s 363(2) to which an assessor must have regard, that is certainly relevant to a determination of the "fairness and reasonableness of the amount of legal costs in relation to the work" which is in dispute (s 363)(1)(c)). The question of whether any such payment has been made, also falls within s 363(2)(k), where express provision is made for the assessor to consider "any other relevant matter".
A claim for what a client contends is double payment for work performed by the legal practitioner is unquestionably a matter relevant to an assessor's determination of whether the costs pursued by the legal practitioner are fair and reasonable. It would be an absurd construction of s 363, entirely inconsistent with the purposes both of the Part and the Act itself, for a client not to be entitled to rely on such a claim and for an assessor not to be obliged to consider it, in resolving a dispute over claimed costs.
On the proper construction of s 363, once raised by a client, the assessor must resolve a dispute over whether payment has already been made for the work in question, in determining the fair and reasonable costs, if any, which the client is obliged to pay the legal practitioner.
Mr Habib is bound by the certificates
By the case which Mr Habib pursued, he sought to challenge the assessor's determination, upheld by the review panel, that he had not paid any part of the costs which Mr Brezniak had sought to have assessed.
Mr Habib's evidence on the motion
Mr Habib's motion was supported by an affidavit in which he described having undertaken a reconciliation of monies he had earlier paid to Mr Brezniak against amounts claimed in the four invoices the subject of the assessment, with the assistance of his solicitors. Mr Habib said that, as a result, he believed that he owed Mr Brezniak nothing, or if certain items were allowed, a small amount. Annexed to his affidavit were various invoices.
Mr Habib explained how the payments he had made had been reconciled against invoices and the opinion he had arrived at, as to how Mr Brezniak had allocated his payments to identified invoices. In some cases he said payments had not been appropriated to any invoice. Those amounts totalled $10,398.67. He said that if that amount was deducted from the $22,010.75, the subject of the certificates, the most he could owe Mr Brezniak was $11,612.08. He said that judgment should not have been entered against him for more than that amount.
Mr Habib did not explain how, if at all, this reconciliation departed from that advanced before the assessor. His affidavit did not reveal the case which he there advanced, which the assessor and the review panel rejected, or what he relied on to advance his case. He still denied, however, that work the subject of three of the invoices the subject of the assessment had been performed for him by Mr Brezniak. That amounted to $11,956.75. He claimed that, in the result, Mr Brezniak in fact owed him $344.67.
These are all claims which Mr Habib is not entitled to pursue in these proceedings, bound as he is by the two certificates.
The certificates have not been suspended and may be enforced
Mr Habib said that on the strength of this Court's October 2013 judgment, Mr Brezniak had on 5 November 2013 procured the issue of a bankruptcy notice, allegedly served upon him by way of substituted service, while he was overseas. Later a bankruptcy notice had been issued for his alleged failure to comply with that notice, supported by an affidavit in which Mr Brezniak's solicitor had falsely stated that Mr Habib was indebted to Mr Brezniak for $22,010.75.
An assessment process results in a determination which is reflected in a certificate issued under s 368. A statement of the reasons for that determination must also be provided by the assessor (s 370). That statement must accord with the requirements of Regulation 128 of the Legal Profession Regulation2005 (NSW), which requires that the total amount of costs for providing legal services and disbursements determined to be fair and reasonable be stated; that the basis on which disputed costs were assessed be disclosed and how the submissions which the parties were dealt with be revealed. Such a certificate binds the parties, s 372 providing:
"372 Determination to be final
A costs assessor's determination of an application is binding on all parties to the application and no appeal or other assessment lies in respect of the determination, except as provided by this Division."
A party dissatisfied with the assessor's determination can seek a merits review under s 373. The Manager, Costs Assessment must thereupon prepare an application for a review, which is referred to a review panel. That referral suspends the operation of the assessor's determination (s 377(1)). The suspension may be ended by the review panel if it affirms the determination, or if it otherwise considers it appropriate to end the suspension (s 377(2)).
That means in this case, when Mr Habib's review application was referred to the review panel, the assessor's determination, which binds Mr Habib and Mr Brezniak was thereby suspended. When, on 12 August 2014, the review panel affirmed the assessor's determination, it also ended that suspension, with the result that Mr Brezniak was entitled to pursue enforcement of the assessor's certificate. That determination was not, it seems however, communicated to the parties until after the panel's certificate of determination was sent to them on 22 October.
In the review process, the panel had all of the costs assessor's functions in relation to an application for assessment. Such a review is to be conducted on the evidence before the assessor, but the panel can receive submissions and fresh evidence (s 384(3)). It can also require the parties or other persons to produce documents to it, relating to the assessment (s 376).
The panel may either affirm or set aside the assessor's determination, in which event it can substitute its own determination (s 375). It must also issue a certificate setting out its determination (s 378). If the panel cannot agree, it must affirm the assessor's determination (s 375(4)). The panel must also issue a statement of its reasons (s 380).
A party can also appeal a costs assessor's decision to the District Court on a question of law under s 384, which provides:
"384 Appeal against decision of costs assessor as to matter of law
(1) A party to an application for a costs assessment who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the District Court, appeal to the Court against the decision.
(2) After deciding the question the subject of the appeal, the District Court may, unless it affirms the costs assessor's decision:
(a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or
(b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application.
(3) On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given."
An appeal on the merits can be pursued against a costs assessor's determination under s 385, with leave of the District Court. Such an appeal proceeds by way of a new hearing at which fresh or additional evidence may be led. On such an application the District Court may refer the appeal to the Manager, Costs Assessment for a review by an appeal panel, if there has been no review (s 389). If it does not affirm the costs assessor's determination, the District Court may itself make a determination which the costs assessor should have made (s 385(5)).
On such an appeal the operation of the costs assessor's determination may also be suspended by either the costs assessor, or by the Court or the NSW Civil and Administrative Tribunal, until the appeal is determined (s 386).
Similar rights of appeal may be exercised in relation to the panel's determination under s 382. Subject to such an appeal, the panel's determination is also binding on the parties and "no appeal or other review lies in respect of the determination" (s 382(2)).
Mr Habib's appeal to the District Court is on a question of law, namely the panel's alleged failure to give adequate reasons for its decision. He has not appealed the assessor's determination, nor has he sought an order under s 386, suspending the panel's determination. Accordingly, Mr Brezniak is presently entitled to enforce the assessor's determination.
The Court had jurisdiction to enter judgment in Mr Brezniak's favour
Once a certificate has been issued by a costs assessor under s 368, it may be enforced in accordance with the provisions there made. It was pursuant to this provision that Mr Brezniak filed the assessor's certificate in this Court in October 2013.
Where the costs assessed have not been paid in whole or in part, the certificate may be filed in the office or registry of a court having jurisdiction to order the payment of that amount of money. With no further action, the certificate "is taken to be a judgment of that court for the amount of unpaid costs" (s 368(5)).
If the client has paid more than the amount specified in the certificate, the client may recover that amount "as a debt in a court of competent jurisdiction" (s 368(4)).
It follows that if the assessor had concluded that the costs Mr Habib had already paid exceeded the fair and reasonable amount of costs to be paid by him to Mr Brezniak, as he had claimed, that amount would have been specified in the certificate and Mr Habib could then have recovered that amount from Mr Brezniak in accordance with s 368(4).
Mr Habib did not, however, establish his case. The assessor found that he had to pay Mr Brezniak the sum which he claimed, which was specified in the assessor's certificate. Mr Habib is bound by that result, unless he successfully challenges the assessor's certificate, exercising the rights given to him by the Act.
Mr Brezniak thus was entitled to file the assessor's certificate in this Court, as he did in October 2013. Rule 36.10 of the Uniform Civil Procedure Rules applied to the application. It provides:
"36.10 Filing of cost assessors' certificates
(cf SCR Part 40, rule 12)
(1) A cost assessor's certificate:
(a) may be filed in the proceedings to which it relates, or
(b) may be filed in fresh proceedings, whether in the same court or another court.
(2) A number of certificates may be filed together under subrule (1) if each of the certificates:
(a) relates to the same costs assessment, and
(b) requires the same person or persons to pay costs.
(3) If some of the costs specified in the certificate or certificates have been paid, the certificate or certificates must be accompanied by an affidavit, sworn not earlier than 14 days before the certificate or certificates are filed, stating the amount of the costs that have been paid."
The cost assessor's certificate specified that the fair and reasonable amount of costs to be paid by Mr Habib to Mr Brezniak was $22,010.25. Mr Habib did not pay any part of that sum after the certificate was issued. Accordingly, contrary to the case advanced for Mr Habib on the motion, Mr Brezniak was not obliged to file an affidavit stating the amount of those costs which had been paid. Even if he had done so, the affidavit would have reflected that none of the costs specified in the certificate had been paid.
The provisions made in Rule 36.10 reflect that the scheme of the Act is to create a statutory process for the resolution of disputes between legal practitioners and their clients, under an assessment process, the result of which binds the parties and can be enforced by and against them by filing the certificate in court, whereupon it can be enforced as a judgment of the court.
Once a dispute is so resolved, as it here was by the costs assessor's determination, by issue of a certificate which specifies the amount payable by the client to the legal practitioner, that amount, if not paid, can be recovered through the enforcement mechanism which the Act establishes. Once the review panel brought the suspension of the assessor's certificate to an end in August 2014, Mr Brezniak was entitled to pursue that mechanism and this Court was obliged to receive the certificate which he filed. He was also entitled to enforce that judgment.
The filing of the costs assessor's certificate in October 2013 may not be set aside under Rule 36.15
Rule 36.15 permits the Court to set aside a judgment which has been entered irregularly, illegally or against good faith. For the reasons I have explained, there was no irregularity or illegality in the entry of the judgment on 18 October 2013. Nor was it entered against good faith. Further, it does not appear to me that Rule 36.15 is intended to provide a mechanism whereby certificates which have been filed in accordance with s 368 can, in any event, be set aside. That is because they are not judgments of the Court, but are rather "taken to" be a judgment of the Court. If a certificate is to be challenged, it must be challenged in accordance with the mechanisms established by the Act. The certificate binds the parties and may not otherwise be appealed or reviewed.
Mr Habib did not exercise his statutory right to challenge the assessor's October 2013 certificate until he filed his application for review on 25 June 2014. That suspended the operation of the assessor's certificate, until the review panel determined to affirm the certificate in August 2014. The review panel then brought that suspension to an end. He is now pursuing an appeal to the District Court in relation to the review panel's determination, but the assessor's certificate has not been suspended.
Mr Habib has not, in those circumstances, established any basis upon which the order sought in relation to the judgment entered in Mr Brezniak's favour in October 2013, could be exercised, even if Rule 36.15 did provide a basis upon which a discretion to set aside the consequences of the filing of the certificate could be exercised.
In Weber v Aquaqueen International Pty Ltd; Aquaqueen International Pty Ltd v Weber [2013] NSWSC 1181, Garling J considered another application brought under Rule 36.15, to set aside a costs assessor's certificate which had been filed in the Court. There his Honour considered the importance of the principle of finality in litigation at [115] - [130], observing at [121] that in resolving such an application, regard should be had to:
"... the principles discussed by the Court of Appeal in Perpetual Trustees Australia Ltd v Heperu Pty Ltd (No.2) [2009] NSWCA 387; (2009) 78 NSWLR 190, namely:
● that controversies once resolved are not be re-opened except in a few narrowly defined circumstances: [32];
● a power to re-open proceedings such as that conferred by UCPR r 36.15, is to be narrowly confined and sparingly exercised: [33], [45];
● the power provided for in r 36.15 is based upon an irregularity in the steps which resulted in the entry of the judgment itself, and not on the merits of the judgment or irregularities in the anterior conduct of the proceedings: [16]; and
● rule 31.15 of the UPCR can only have limited application to judgments and orders made or entered after a hearing on the merits, or else where the parties had the opportunity to be heard on the merits: [17]."
Garling J refused that application, concluding that the matter relied on to establish irregularity, if otherwise legally correct, raised only a technicality, and not a point of any substantial merit, reflecting the substantive rights of the parties. This is a similar case. The irregularity relied on was a failure to file an affidavit, which Mr Brezniak was not obliged to file under Rule 36.10 and even if he was, would not have led to any different result.
The filing of the review panel's certificate in October 2014
After the review panel issued its certificate in August 2014, affirming the assessor's determination, the suspension of that determination came to an end. The parties only became aware of the review panel's conclusion after the certificate and reasons were sent to them in October.
On 13 October 2014, Mr Habib applied by motion to have the 2013 judgment set aside. In response, it was explained, on 28 October Mr Brezniak filed the review panel's certificate in this Court and judgment was entered in his favour on that certificate. On 29 October, Mr Habib filed his motion to have that judgment set aside. Alternatively an order staying that judgment was sought.
Section 368 applies to "a determination of costs referred to in Subdivision 2 or 3 of this Division" made by a costs assessor. It does not apply to certificates issued by review panels. Section 378 deals with certificates issued by review panels. It is only if the review panel sets aside the costs assessor's determination, that provision is made in s 378(3) for the filing of the panel's certificate in court, for enforcement. It follows that the statutory scheme envisages that if the costs assessor's determination is affirmed, as it here was, the suspension of the assessor's certificate will come to an end, as it here did, and its enforcement can then be pursued, as Mr Brezniak did.
Mr Habib relied on the same irregularity advanced in relation to the 2013 judgment, namely Mr Brezniak's failure to file an affidavit, as he submitted Rule 36.10 required. As I have explained, that involved no irregularity. Mr Habib has not paid any of the costs which both the costs assessor and the review panel found he had to pay Mr Brezniak.
Despite this, however, it is apparent that Mr Brezniak had no right to file the panel's certificate, and the Court no power to accept its filing, s 378(3) not applying to the certificate.
Mr Habib has appealed the review panel's determination to the District Court, but has not sought a suspension of that determination. In Wende v Horwath (NSW) Pty Limited [2014] NSWCA 170, Basten JA discussed at [25]:
"If an appeal were taken to the District Court, it would be an abuse of process to invoke a similar but less extensive jurisdiction under s 69 of the Supreme Court Act, whilst the appeal remained on foot. If no appeal were taken to the District Court, but a challenge to the decision of the panel was brought to the Supreme Court, relief might well be refused on the basis that the statutory appeal right should properly be invoked, where available, rather than the supervisory jurisdiction under s 69."
Here, Mr Habib has taken proceedings in the District Court, in relation to the panel's certificate, where he complains about inadequacy of reasons. The matters raised in this Court, however, go to different questions.
Basten JA also considered at [24] that:
"....there cannot be two certificates of assessed costs in relation to one matter: where there has been a determination by a review panel, which "sets out the determination", pursuant to s 378(1), that determination must, by implication, supersede the determination under review. Accordingly, it was not open to the applicants in this Court to seek to challenge the validity of the determination of Ms Dulhunty: the validity of that determination was assumed for the purposes of the review and it would be inconsistent with the fact of the review to allow the applicants to challenge the validity of the original certificate. Rather, unless and until the decision of the review panel be set aside, the original certificate has no legal consequence."
Barrett JA in Wende v Horwath also considered at [110] that:
"The consequences of the setting aside of Ms Dulhunty's determination and the substitution of a determination of the review panel, if valid, were those prescribed by s 378. In substance, the panel's determination superseded that of the costs assessor and a certificate of the panel's determination could be filed and would take effect as a judgment."
That is not what occurred in this case.
Under s 377(1) referral of an application for review of an assessment to a review panel suspends the assessor's certificate. If the review panel affirms the assessor's determination, it can bring the suspension to an end under s 377(2). That is what occurred in this case. It is only if the assessor's determination is set aside, that a panel's certificate can be enforced under s 378. It follows that in a case such as this, there is only one certificate, the assessor's certificate, which can be enforced as Mr Brezniak did by filing that certificate in this Court.
This aspect of the statutory scheme plainly reflects that before the review application, steps may have lawfully been taken to enforce the assessor's certificate by filing the certificate, whereupon it then becomes a judgment of this Court. While an assessor's determination is suspended, while a review is pursued, if the panel affirms the assessor's determination, the suspension can be brought to an end and enforcement of the assessor's certificate can then be pursued further.
In this case, after the assessor's certificate was given to Mr Brezniak and Mr Habib, Mr Habib failed to pay the costs there stipulated. A bankruptcy notice was later issued and Mr Habib then pursued proceedings in the Federal Circuit Court, where his application to set aside the bankruptcy notice was dismissed in April 2014. It was not until July 2014 that he made an application to have the assessor's determination referred to a review panel. That review also failed and he has brought proceedings in the District Court in relation to the review panel's decision, as he is entitled to do.
Both Mr Habib and Mr Brezniak are bound by the cost assessor's certificate and that of the review panel. Mr Habib thus cannot challenge the findings on which these certificates rest, as he has sought to do in these proceedings. As Basten JA discussed in Wende v Horwath that involves an abuse of process. As for Mr Brezniak, while is presently entitled to pursue his enforcement of the assessor's certificate, he is not entitled to pursue enforcement of the review panel's certificate, as he sought to do.
Orders
The parties should have an opportunity to consider the form of orders which should be made to reflect these conclusions and to consider the appropriate costs order.
They are directed to confer and to file proposed orders, hopefully in agreed terms, within 14 days. I will list the matter for mention at 9:30am on 19 December 2014.
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Decision last updated: 08 December 2014
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