Cohen v David

[2018] NSWDC 214

District Court

New South Wales

Medium Neutral Citation:

Cohen v David [2018] NSWDC 214

Hearing dates:

13 July 2018

Date of orders:

09 August 2018

Decision date:

09 August 2018

Jurisdiction:

Civil

Before:

Strathdee DCJ

Decision:

(1)   The plaintiff’s motion for a stay of enforcement is dismissed.

 

(2)   I order the plaintiff pay into court the sum of $50,000.00 as security for costs within 28 days of this date.

 

(3)   The proceedings are stayed until the monies referred to in order 2 are paid into court.

 

(4)   I order the plaintiff to pay the defendant’s costs of and associated with the two motions.

 (5)   I grant the parties liberty to apply.

Catchwords:

SECURITY FOR COSTS – special circumstances
STAY OF ENFORCEMENT – discretion to order – what would be fair

Legislation Cited:

Civil Procedure Act 2005 (NSW)
Legal Profession Act 2002
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Alexander v Cambridge Credit Corporation Limited (Receivers Appointed) (1985) 2 NSWLR 685
Batterham v Makeig (No 2) [2009] NSWCA 314
Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737

Category:

Principal judgment

Parties:

Robin Cohen (Plaintiff)
Suzy David and Fred David t/as David Legal (Defendant)

Representation:

Counsel:
A.E. Maroya (Plaintiff)
R. Notley (Defendants)

  Solicitors:
Paramonte Legal (Plaintiff)
David Legal (Defendants)

File Number(s):

2018/00120107

Judgment

Introduction

1. By way of Notice of Motion filed 25 May 2018 the defendants (Suzy David & Fred David trading as David Legal) seeks security for costs pursuant to Rule 42.21(1) of the Uniform Civil Procedure Rules 2005 NSW and an order staying the proceedings until such security for costs order has been provided.

2. By Notice of Motion filed 31 May 2018 the plaintiff (Robin Cohen) seeks a stay of the determinations of the costs assessor, determination by the costs assessment review panel, and the judgment entered this court obtained by the defendants on 22 August 2017.

Background

3. The defendants acted for the plaintiff in a dispute concerning the sale of shares in a company Office Deals Pty Limited to a third party Jizhu Diao. Those proceedings were commenced in the Supreme Court of New South Wales and a judgment was published by Lindsay J on 22 February 2016. The court ordered, amongst other things, that the plaintiff pay to the defendants the sum of $281,995.00 plus interest and costs.

4. On 7 April 2017 the defendants made an application for assessment of their costs and in the application the defendants claimed legal costs and disbursements totalling $216,085.89 inclusive of GST.

5. On 5 July 2017 a Certificate of Determination of Costs was issued together with Reasons for the Determination. The Certificate of Determination of Costs required the plaintiff to pay the defendants $211,085.89.

6. On 11 August 2017 solicitors then acting for the plaintiff informed the defendants that the plaintiff intended to file an Application for Review of the Costs Assessment Determination.

7. On 16 August 2017 the solicitors for the plaintiff served on the defendants an unfiled Application for Review of Determination of a Costs Assessor and informed the defendant that a sealed copy would be served in due course.

8. On 18 August 2017 the plaintiff filed in the Supreme Court of New South Wales an Application for a Review of Determination of a Costs Assessor.

9. Subsequently the Review Panel affirmed the costs assessor’s decision and issued a Statement of Reasons for Review Determination dated 28 November 2017, and a Certificate of Determination of Review dated 28 November 2017, was forwarded to the parties on 21 March 2018 by the manager of costs assessment in the Supreme Court.

10. On 22 August 2017 this court made an order that the plaintiff was to pay the defendants the sum of $211,085.89.

11. On 16 April 2018 the plaintiff commenced these proceedings by filing a summons seeking to appeal the decisions of both the original assessor and review panel, pursuant to subsection 384(1) of the Legal Profession Act 2004 (NSW) (now repealed) (the LPA). The basis of the plaintiff’s appeal is that the Review Panel made an error of law by failing to take into account an affidavit of the plaintiff sworn 5 September 2017 indicating that he was not served with the Application for Assessment of Costs. This affidavit was filed with the Supreme Court of New South Wales for provision to the Review Panel.

12. The affidavit of Mr Patrick Wiggins of 10 July 2018 (Exhibit 2) indicates at paragraph 5 that the plaintiff’s affidavit was filed in triplicate with the Supreme Court of New South Wales on 5 September 2017. The affidavit of the plaintiff, which is annexure B to Mr Wiggins affidavit, records relevantly as follows:

‘RE: COHEN

I am the Costs Review Applicant.

I currently reside in China on a fulltime basis and have been since 22 April 2015.

The address of XXX Bossley Road, Bossley Park NSW 2176 (‘Bossley Park’) is my former matrimonial address. My son Joshua and ex-wife Vony still reside at Bossley Park.

I have not resided at that address since leaving Australia on or about 22 April 2015.

I have never been served with an Application for Costs Assessment in the Supreme Court of NSW.

I was not put on notice of any application, nor have I had the opportunity to prepare a response to the application.

The last time I was in Australia was between on or about 28 October 2016 and 8 November 2016. I did not enter Australia between on or about 8 November 2016 and 31 August 2017.

I am currently in Australia at the time of swearing this affidavit. I arrived in Australia on 31 August 2017 and will be leaving Australia on Wednesday 6 September 2017.

Annexed hereto and marked ‘A’ is a copy of my passport and all relevant pages showing my exit and entry into China.

I was made aware of the Certificates of Determination dated 20 July 2017 by my son Joshua on or about 25 July 2017. My son Joshua resides at Bossley Park NSW with his mother.

Since that date I have engaged my solicitors Paramonte legal to prepare a review of the determination.’

13. It is apparent from reading the Costs Assessment Review Panel’s Reasons that they were not aware of the affidavit of the Plaintiff, and thus the plaintiff contends he has been denied procedural fairness because he was

1. not served with the application for the assessment of costs, and

2. the Review Panel did not consider his affidavit which explained why he did not receive the Application for Assessment of Costs.

14. Subsequent to the defendants filing the Costs Certificate with the District Court and obtaining a judgment in their favour against the plaintiff, they sent further correspondence to the plaintiff’s current solicitors indicating that they had filed a Bankruptcy Notice against the plaintiff in respect of the costs dispute.

15. Mr Wiggins confirms in his affidavit that he was instructed to not accept service of the Bankruptcy Notice thus the plaintiff seeks a stay of the judgment of this court so as the defendants cannot seek sequestration orders against the plaintiff in respect of the costs determinations which are the subject of an appeal.

16. Counsel for the defendants most fairly, having taken instructions, informed the court that no application will be made for a sequestration order when the matter returns to the Supreme Court on 17 July 2018. The only order that they will seek will be an order for substituted service.

17. The defendants by way of motion seek security for the costs of the appeal to this court.

18. In resisting a stay of execution the defendants submit that:

1. their professional costs have not to date been paid by the plaintiff,

2. they have a certificate in their favour of the Costs Review Panel’s Determination,

3. the plaintiff’s grounds of appeal are manifestly weak,

4. the plaintiff has failed to bring forward any objections to the defendant’s assessed bill of costs nor any indication of the submissions that he would seek to make before the Review Panel on the remitter that he seeks, and

5. the plaintiff has failed to demonstrate any good reasons as to why the defendants should have withheld from them the fruits of their judgment.

19. The Application for Review of a Determination of a Costs Assessor was filed by the plaintiff’s present solicitors, Paramount Legal, which provided the address for service on the plaintiff as the Bossley Park address.

20. An affidavit of George Hadchiti of 2 July 2018 filed in these proceedings and marked Exhibit 3 deposes that when the Application for a Review was filed, he noted the plaintiff’s address incorrectly and that it was an administrative error and an oversight by him.

21. The plaintiff asserts he was only made aware of the Certificate of Determination of Costs by his son who resides at the Bossley Park address but did not receive the Application for Assessment of Costs which was sent to that same address as he asserts that his son and ex-wife reside there and he was not living there but was living in China.

22. In summary, it is clear that the highest point that can be made of the plaintiff’s argument that he was denied procedural fairness on the assessment of costs, and the review determination because he didn’t receive the documents at the Bossley Park address and the Review Panel did not have regard to his affidavit sworn 5 September 2017.

23. This was the last known address that the defendants had when the last acted for the plaintiff, that is the address to which the costs assessor and review panel addressed their correspondence to the plaintiff, and it was the address that the plaintiff’s current solicitors indicated in the application for review as his current address, which they now say was an error. A company search which was tendered in these present proceedings (exhibit C) also details the address a number of companies of which the plaintiff is a director as the Bossley Park address.

24. To date the plaintiff has not paid any legal costs to the defendants for the original Supreme Court, nor has he paid any of the outstanding judgment monies in favour of Mr Diao as a consequence of the judgment of Lindsay J.(see Exhibit A affidavit of Fred David 25 May 2018 paragraph 17 and annexure at tab 7 of the affidavit).

25. The only correspondence that seems to have come from the plaintiff is the Application for a Review which did not provide appropriate objections or grounds for review save as to say that he did not receive the original Application for Assessment of Solicitor/Client Costs. It is somewhat curious that the only correspondence the plaintiff concedes he has received is the Determination of the Review Panel.

26. The court has the power to suspend the determinations of a costs assessor and the review panel pursuant to s 386 of the Legal Profession Act 2002. The court has the power to stay the Judgment pursuant to s 135 of the Civil Procedure Act 2005 (NSW).

27. The principles on which a stay might be ordered was stated in Alexander v Cambridge Credit Corporation Limited (Receivers Appointed) (1985) 2 NSWLR 685 @ 694-695 as follows:

‘The onus is upon the applicant to demonstrate a proper basis for a stay that would be fair to all parties. The mere filing of an appeal will not of itself provide a reason or demonstrate an appropriate case, nor will it discharge the onus on which the applicant bears. The court has a discretion whether or not to grant the stay and, if so, as to the terms that would be fair. In the exercise of its discretion the court will weigh considerations such as the balance of convenience and the competing rights of the parties before it … Two further principles can be mentioned. The first is that where there is a risk that the appeal will prove abortive if the appellant succeeds and a stay is not granted the courts will normally exercise their discretion in favour of granting a stay. Secondly, although the courts approaching applications for a stay will not generally speculate about the appellant’s prospects of success, given that argument concerning the substance of the appeal is typically and necessarily attenuated, this does not prevent them considering the specific terms of a stay that will be appropriate fairly to adjust the interest of the parties, from making some preliminary assessment about whether the appellant has an arguable case. This consideration is protective of the position of a judgment creditor where it may be plain that an appeal, which does not require leave, has been lodged without any real prospect of success and simply in the hope of gaining a respite against immediate execution upon the judgment.’

28. I am not satisfied that the plaintiff has provided any good reason as to why David Legal should be withheld from having the fruits of their judgment.

29. To date Mr Cohen has not paid legal fees to his previous solicitors, nor the judgment debt which arises as a consequence of the initial proceedings in the Supreme Court. He has not provided any objections to David Legal’s assessed Bills of Costs nor made any indication as to the submissions he may wish to make in that assessment, apart from the fact that he states that he was not served with the original application for assessment of costs.

30. In Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737 at [28], the court said:

A successful party is prima facie entitled to the fruits of his judgment. He is entitled to be protected, as far as practicable, from the risk that if the appeal fails assets which earlier were available to satisfy the judgment will no longer be available for that purpose. The Court will endeavour to see that a stay does not cause that kind of prejudice to a judgment creditor. An appellant may be required to provide appropriate security as the price of a stay which may make the judgment creditor a secured creditor.

31. It is hard to imagine what else David Legal could have done to recover the fees they are entitled to, and I decline to grant a stay of enforcement.

32. With the regard to the application for security for costs, I note that the plaintiff’s proceedings are a statutory appeal to the District Court pursuant to sections 382 and 384 of the LPA. Accordingly, part 50 of the Uniform Civil ProcedureRules 2005 (NSW) (UCPR) applies to these proceedings. Pursuant to rule 50.8 of the UCPR, the court can only order security for costs where there are “special circumstances”.

‘50.8   Security for costs

(1)   In special circumstances, the court may order that such security as the court thinks fit be given of the costs of an appeal to the court.

(2)   Subject to subrule (1), no security for the costs of an appeal to the court is to be required.

(3)   If an appellant or cross-appellant fails to comply with an order under this rule, the court may order that the appellant’s appeal or cross-appellant’s cross-appeal be dismissed.

Subrules (1), (2) and (2A) do not affect the powers of the Court under rule 42.21 (which relates to security for costs).’

33. In Batterham v Makeig (No 2) [2009] NSWCA 314, Macfarlan JA observed at [7]-[9]:

7 It is common ground that the first appellant is, within the meaning of that rule, “ordinarily resident outside New South Wales”, he being a resident of Rabaul, Papua New Guinea.

8 The residence of the first appellant outside Australia is a powerful factor in favour of the ordering of security. Its force is emphasised in the present case by the difficulties which the respondent encountered in serving a Bankruptcy Notice on the first appellant. In response to an attempt by the respondent to serve a Bankruptcy Notice by forwarding it to the first appellant at Kitchener, New South Wales, he received a letter from the appellants’ solicitors’ Cessnock office. That letter asserted that there were a variety of respects in which service of the Notice was deficient, not least that leave to serve it outside Australia had not been obtained. It was further asserted that the appellant would resist any petition for a sequestration order on the basis that:

‘(a)   Brian Batterham [the first appellant] is not personally resident or ordinarily resident in Australia;

(b)   He does not live at Kitchener, nor does [he] have a place of business in Australia;

(c)   He is not carrying on business in Australia; and

(d)   He is not a member of a [firm] or partnership carrying on business in Australia’.

9 In my view there are no significant factors pointing against the order of security. Whilst the appellant owns land in New South Wales and it is said that the monthly payments referred to in paragraph [6] of my previous judgment are “sourced in New South Wales”, there is no certainty that this will remain the position at the time the respondent comes to enforce any order which he might obtain for the costs of the appeal.

34. In determining whether or not I ought make an order for security for costs, I note that the plaintiff is ordinarily resident outside Australia, there has been considerable dispute between the parties about the address for service of the plaintiff, and the affidavit of Mr David in support of the motion notes that the plaintiff has not paid the judgment monies in the initial proceedings before Lindsay J. The defendant has a judgment debt against the plaintiff, and the plaintiff has instructed his solicitor in these proceedings to not accept service of the bankruptcy notice. These features satisfy me that this has created “special circumstances” under which I can order security for costs, and I propose to do so.

35. Counsel made detailed and helpful submissions as to the appropriate amount of security that ought be ordered. Having had regard to the figures and hourly rates contained in exhibit A and exhibit 1, I am of the view that the appropriate amount is $50,000.00

Orders

36. Therefore I make the following orders:

1. The plaintiff’s motion for a stay of enforcement is dismissed.

2. I order the plaintiff pay into court the sum of $50,000.00 as security for costs within 28 days of this date.

3. The proceedings are stayed until the monies referred to in order 2 are paid into court.

4. I order the plaintiff to pay the defendant’s costs of and associated with the two motions.

5. I grant the parties liberty to apply.

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Decision last updated: 09 August 2018