Burrows v Macpherson Kelley Lawyers (Sydney) Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Burrows v Macpherson Kelley Lawyers (Sydney) Pty Ltd [2023] FCA 875  

File number: NSD 461 of 2022
Judgment of: MARKOVIC J
Date of judgment: 31 July 2023
Catchwords: PRACTICE AND PROCEDURE – application for security for costs – where applicant has commenced multiple proceedings against the respondents in various courts – where applicant has failed to satisfy an outstanding costs order in related proceeding – whether professional fees are payable where respondent is a self-represented legal practice – where applicant has not led any evidence demonstrating ability to meet a costs order – where applicant has failed to comply with a bankruptcy notice – whether there are factors additional to impecuniosity which favour an order for security for costs – whether application for security is oppressive – whether an order for security would stultify the proceeding – where the amount of security is relatively low – whether applicant’s conduct is vexatious – application granted  
Legislation:

Bankruptcy Act 1966 (Cth) s 43

Competition and Consumer Act 2010 (Cth), Sch 2 (‘Australian Consumer Law’) ss 18, 21 and 236 

Federal Court of Australia Act 1976 (Cth) s 56

Federal Court Rules 2011 (Cth) r 19.01(1)

Cases cited:

All Class Insurance Brokers Pty Ltd (in liquidation) v Chubb Insurance Australia Limited [2020] FCA 840
Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333
Birketu v Castagnet [2022] NSWSC 1435
Burrows v Macpherson and Kelley Lawyer (Sydney) NSW [2022] FedCFamC2G 1048
Burrows v Macpherson and Kelley Lawyers (Sydney) Pty Ltd [2023] FCA 622
Cachia v Hanes (1994) 179 CLR 403
Clone Pty Ltd v Players Pty Ltd (in liq) (2018) 264 CLR 165
Knight v Beyond Properties Pty Ltd [2005] FCA 764
Mbuzi v Hall [2010] QSC 359
Potier v Attorney-General (NSW) (2015) 89 NSWLR 284
Shaw v Yarranova Pty Ltd [2011] VSCA 55
Sywak v Visnic (No 2) [2010] NSWSC 374

United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15

Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Number of paragraphs: 82
Date of last submissions: 29 March 2023 (Applicant)
28 March 2023 (Respondents)
Date of hearing: 21 March 2023
Counsel for the Applicant: Mr D A Ward
Counsel for the Respondents: Mr D Neggo
Solicitor for the Respondents: Macpherson Kelley Pty Ltd

ORDERS

NSD 461 of 2022
BETWEEN:

MS ZALI BURROWS

Applicant
AND:

MACPHERSON & KELLEY LAWYERS (SYDNEY) PTY LTD ACN 127 962 298

First Respondent

MACPHERSON KELLEY LAWYERS PTY LTD ACN 122 450 337

Second Respondent

MR CHRISTOPHER STEPHEN FRAWLEY

Third Respondent

ORDER MADE BY:

MARKOVIC J

DATE OF ORDER:

31 JULY 2023

THE COURT ORDERS THAT:

1.The applicant is to provide security for the respondents’ costs by payment into Court or by way of an unconditional bank guarantee in a form acceptable to the respondents as follows:

(a)$65,000 within 28 days of the date of these Orders; and

(b)$65,000 42 days before the date of the commencement of any final…

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Details
Case
[2023] FCA 875
Decision Date

CaseChat Overview and Summary

The case of Burrows v Macpherson Kelley Lawyers (Sydney) Pty Ltd involves the applicant, Ms Burrows, who has engaged in multiple legal proceedings against the respondents in various courts. The dispute centres on whether Ms Burrows should be required to provide security for costs, given her failure to satisfy a previous costs order and her lack of assets. The court had to decide whether professional fees are payable when the respondent is a self-represented legal practice, and if there were additional factors to impecuniosity that favoured an order for security for costs. The court also considered whether the application for security was oppressive and if it would stultify the proceeding.

The court's reasoning was grounded in the principle that natural persons, even those who are impecunious, should be allowed free access to the courts unless additional factors are present. Factors considered included Ms Burrows' failure to comply with a bankruptcy notice, her lack of assets, and her status as a single mother with dependent children. The court noted that Ms Burrows had not provided any evidence demonstrating her ability to meet a costs order. Furthermore, the court highlighted that the amount of security requested was relatively low, and there was no evidence that the application for security was oppressive or would stultify the proceeding.

The court concluded that the application for security for costs should be granted, given the factors present in this case. The orders required Ms Burrows to provide security for the respondents' costs in two instalments, with a stay of the proceeding if the security was not provided within the specified timeframes. Additionally, Ms Burrows was ordered to pay the respondents' costs of the amended interlocutory application.

The final orders mandated that Ms Burrows provide security for the respondents' costs by a specified date, with a further requirement to provide security before the commencement of any final hearing. If the security was not provided, the proceeding would be stayed. Ms Burrows was also ordered to pay the respondents' costs associated with certain proceedings. The orders were made with liberty to restore on three days' notice.

Orders

Orders of the court

1. The applicant is to provide security for the respondents’ costs by payment into Court or by way of an unconditional bank guarantee in a form acceptable to the respondents as follows:

(a) $65,000 within 28 days of the date of these Orders; and

(b) $65,000 42 days before the date of the commencement of any final hearing of the proceeding.

2. In the event that the security in Order 1(a) and/or (b) above is not provided within the time specified, the proceeding be stayed until further order.

3. The applicant is to pay the respondents’ costs of paragraphs 4 and 5 of their amended interlocutory application filed on 8 September 2022.

4. Liberty to restore on three days’ notice.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

On 2 April 2015 the Determination was registered as a judgment in the Local Court of New South Wales (Local Court Judgment). Ms Burrows has not paid the Local Court Judgment. On 3 November 2015 Ms Burrows commenced the District Court Proceeding against 298 PL and a solicitor in the employ of 298 PL during the Family Court Proceeding (District Court Defendants). On 20 December 2019 judgment was delivered in the District Court Proceeding in favour of the District Court Defendants (District Court Judgment). On 24 January 2020 298 PL made an application in the District Court Proceeding for a gross sum costs order. On 28 February 2020 the District Court delivered judgment on that application and Ms Burrows was ordered to pay 298 PL’s costs in the sum of $130,000 (Costs Judgment). Ms Burrows has not made any payment in reduction of the Costs Judgment and it remains outstanding. On 20 March 2020 Ms Burrows commenced a proceeding in the New South Wales Court of Appeal seeking to appeal the District Court Judgment, the Costs Judgment and the District Court’s refusal on 26 February 2020 to further adjourn the application for a gross sum costs order. On 16 July 2020 the Court of Appeal dismissed the appeal as incompetent with costs (Court of Appeal Judgment). Upon determining that she was required to do so, on 27 July 2020 Ms Burrows filed a summons for leave to appeal in the Court of Appeal. On 20 April 2022 bankruptcy notice BN 256021 (Bankruptcy Notice) seeking payment of the Costs Judgment (i.e. the sum of $130,000) was issued to Ms Burrows. At the time of the hearing before me, the question of service of the Bankruptcy Notice remained in issue given an appeal from Orders made by the Federal Circuit and Family Court of Australia (Div 2) (Federal Circuit Court) which has since been determined (see [20] and [21] below). However, it was not in dispute that Ms Burrows has not complied with the Bankruptcy Notice. On 21 June 2022 Ms Burrows filed an application in the Federal Circuit Court seeking to set aside the Bankruptcy Notice (Bankruptcy Notice Proceeding). On 25 July 2022 298 PL filed a notice stating grounds of opposition in that proceeding. On 20 June 2022 Ms Burrows made an application in the District Court Proceeding for a stay of the Costs Judgment (Stay Application). On 19 July 2022 Ms Burrows amended the Stay Application to include a claim that 298 PL was not an incorporated legal practice at all material times (Amended Stay Application). The Amended Stay Application was heard on 2 September 2022 and the following orders were made by Principal Registrar Romeo: In relation to the Notice of Motion filed on 27 July 2022:1.The Notice of Motion is dismissed.2.Each party is to pay their own costs of the Notice of Motion.In relation to the Amended Notice of Motion filed on 31 August 2022: 3.Leave is granted to the plaintiff to file a further Amended Notice of Motion nunc pro tunc. 4.The Application is dismissed.5.The plaintiff is to pay the first defendant’s costs of the Further Amended Notice of Motion as agreed or assessed (such costs to include costs incurred in relation to the earlier Notice of Motion and the Amended Notice of Motion). 6.Exhibits are to be retained on the file. Note: (a)The undertaking of the first defendant through its counsel not to take any further steps to enforce the costs judgment against the plaintiff for 14 days other than to comply with any procedural directions of the Federal Circuit and Family Court of Australia is noted. (b)The first defendant also gave an undertaking to the court through its counsel that in relation to any money paid to it by the plaintiff to satisfy the judgment sum, it would not disburse that amount pending the plaintiff’s application for special leave to the High Court, and in the event special leave was granted and the appeal was successful, would return the judgment sum amount to the plaintiff.

Ratio Decidendi

Legal Principle Established

In Knight v Beyond Properties Pty Ltd [2005] FCA 764 at [32]-[33] Lindgren J said:32Many cases can be cited for the proposition that there is a disinclination to order an applicant who is a natural person to provide security, at least, in the absence of some factor in addition to impecuniosity. Cases which can be cited against the ordering of security and in favour of allowing natural persons, even impecunious ones, free access to the courts, include …33In the cases in which natural persons have been ordered to provide security, some factor in addition to impecuniosity has been present; cf Barton v Ministerfor Foreign Affairs (1984) 2 FCR 463 (Morling J) at 594 (impecuniosity and residence outside Australia); Cunningham v Olliver (unreported, Burchett J, 21 November 1994) (but for delay, security would have been ordered on ground of impecuniosity and bringing of claim to a significant extent for benefit of others); Chang v Comcare Australia [1999] FCA 1677 (Moore J) at [32] (impecuniosity and lack of prospects of success); Loque v Hansen Technologies Ltd [2003] FCA 81 (Weinberg J) (impecuniosity and residence outside Australia); Morris v Hanley [2000] NSWSC 957 (Young J) at [21], [38] and [39] (but for delay, Young J would have ordered security on grounds of impecuniosity and lack of prospects of success and large costs involved to defendants. Young J’s decision was reversed on appeal on the ground that defendants had not adequately explained their delay in moving for security, but the Court of Appeal did not consider other aspects of his Honour’s reasons: see Morris v Hanley & Ors [2001] NSWCA 374 at [30]-[31]); Melville v CraigNowlan & Associates Pty Ltd (2002) 54 NSWLR 82 (CA) at [132] (per Heydon JA) (impecuniosity and applicant’s failure to show that order would stultify proceeding and sum ordered by primary Judge not oppressive). CONSIDERATION I turn to consider whether an order for security for payment of the respondents’ costs should be made. As a preliminary matter the respondents contended that Ms Burrows would be unable to satisfy a costs order if they are successful in defending the litigation. The evidence relied on by the respondents to support that contention comprises the following:(1)according to a national property ownership search undertaken in Ms Burrows’ name on 25 July 2022, Ms Burrows does not own any real property in Australia;(2)Ms Burrows has failed to comply with the Bankruptcy Notice;(3)Ms Burrows has not satisfied or made any payment in reduction of the Local Court Judgment or the Costs Judgment; (4)in an email dated 6 February 2020 to Michelle Dawe (6 February 2020 Email), who I infer is the Associate to Acting Judge Craig QC of the District Court, Ms Burrows asked that the District Court Proceeding, which was listed at 9.00 am that morning, be stood down until her counsel arrived, in the event he was late. Her email included (as written):I am seeking 8 weeks to put on submissions and any evidence in reply to the defendant’s motion on costs approximately $130,000, because I do not have the capacity to respond earlier and given the quantum of costs they are seeking, it is a very serious matter. Further, it requires consideration to the High Court authority on legal practitioners claiming their own costs, I require the time to properly respond given such a large cost order will have dire consequences on my practicing certificate and livlihood. I am a single mother with 3 dependents under the age of 14, no assets and I am a sole practitioner predominately legal aid matters. I require the time to properly respond to the motion. I was served an affidavit last night by the defendant. (5)a transcript of the District Court Proceeding on 6 February 2020 recording that court’s consideration of Ms Burrow’s application for an adjournment where Acting Judge Craig stated, by reference to the 6 February 2020 Email, that:The only other basis upon which the plaintiff seems to indicate that she required an eight week period, was that she had matters to which she had to attend, including that same criminal matter. She also identified the seriousness of the defendants' motion in this matter for her because of difficulty she would have in meeting the costs sum sought by the defendants, particularly in light of her personal circumstances as a single mother with three dependent children under the age of 14.