Dai (Trading as Australia Legal Advisory Centre) v Dai
[2018] VCC 2235
•17 December 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-18-04677
| MIN JUAN DAI (Trading as Australian Legal Advisory Centre) (ABN 38836849854) | Plaintiff |
| v | |
| FANG MING DAI (also known as Bob) | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 17 December 2018 | |
DATE OF JUDGMENT: | 17 December 2018 | |
CASE MAY BE CITED AS: | Dai (Trading as Australia Legal Advisory Centre) v Dai | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 2235 | |
RULING
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Love | Australian Legal Advisory Service |
| For the Defendant | Mr D Buchanan | Victorian Legal Costs Assessors |
HIS HONOUR:
1 The plaintiff entered in judgment in default of appearance on 22 November 2018 for the sum of $204,845.93 constituted by a claim for legal costs in the sum of $199,092.00; interest $3,346.93; and costs of $2,407. I now have before me a summons issued on behalf of the defendant, Mr Dai, seeking that the judgment in default of appearance be set aside; that the proceeding be dismissed and that the plaintiff pay his costs.
2 In Mr Dai’s affidavit he admits to having been served with the relevant writ of summons but he is unable to recall the date upon which service was affected. He says that on 13 November of this year, he forwarded the writ and associated documents to his solicitor, Mr Sizenko and assumed after sending the letter to his solicitor that he would take the necessary steps to defend the proceeding. In fact no such step was taken and the plaintiff legal practitioner entered a judgment in default of appearance against the defendant.
3 In an application such as the present, there are fundamentally two matters for consideration. The first is as to whether the defendant seeking to have the judgment in default set aside, demonstrates the existence of an arguable defence; and secondly, whether the defendant provides an explanation as to how the matter was allowed to go by default. I should note that on the present stated facts, there is no contention, viewed in terms of the Rules of Court, that the plaintiff acted irregularly in entering the judgment now the subject of the application; that is, the judgment is one which has been regularly entered.
4 Mr Love, who appears on behalf of the plaintiff to oppose the setting aside of the judgment, contends that in the circumstances no proper explanation has been given as to why the matter was allowed to go by default. He notes that this event occurred in the context of a hotly debated dispute as to which of a number of persons involved in Supreme Court litigation was the true party liable for the relevant costs. He took me to correspondence between his instructor and the defendant’s solicitor, the upshot of which, he said, was that far from there being any inadvertence, the defendant’s solicitor made a deliberate decision not to enter an appearance in support of the defendant’s contention; that is, the defendant, Mr Dai, that the costs in question were properly chargeable to a party not involved in this proceeding; namely, Blue Stars Real Estate Pty Ltd (“Blue Stars”). The failure to enter an appearance was therefore deliberate and not inadvertent.
5 Mr Love said that this interpretation should be accepted because a summons for assessment of the costs that are claimed and awarded in the judgment which has been entered was filed by those by those acting for Mr Dai in the Costs Court before the commencement of this proceeding. This application, according to the plaintiff, is an invalid and misconceived one because the proper party chargeable with the costs is not Blue Stars, but Mr Dai. Mr Buchanan, appearing on behalf of Mr Dai, submits that I should accept at face value the affidavit in which Mr Dai describes his situation. He conceded that there was no affidavit material from the practitioner in question, Mr Sizenko. Nevertheless, he invited me to infer that the failure to enter the appearance was a matter of inadvertence and confusion, noting the undoubted fact that there is a complex of proceedings at a number of different venues.
6 Mr Love’s contention at to the proper interpretation of matters is a compelling one. However, on my understanding of the authorities, provision of an explanation as to how matters were allowed to go by default is a highly desirable but not an essential component of a successful application to set aside a judgment regularly entered. It may be dispensed with in circumstances where a good arguable defence is demonstrated to be available to the defendant.
7 In my view, however, I should not reject the explanation given by the defendant who has not been subject to any application to cross-examine. In all the circumstances the explanation is not an especially compelling one but the cases indicate that such explanation is not required to be compelling and indeed is not in every case essential.
8 I turn therefore to the more significant issue; namely, whether an arguable defence has been demonstrated to exist. It is unnecessary at this point for me to go to the detail of the various matters which have been raised and relied upon by Mr Buchanan under the Legal Profession Uniform Law Application Act 2014 and in particular under the Legal Profession Uniform Law itself, which constitutes Schedule 1 to that statute. He has drawn attention to non-compliance with various elements in the rendering of the bill upon which this proceeding has been based. In particular, s192 of the Law, provides that a law practice must ensure that a bill includes or is accompanied by a statement setting out:
(a)the avenues that are open to the client in the event of a dispute in relation to legal costs; and
(b)any time limits that apply to the taking of any action referred to in paragraph (a).
9 The document which was attached to the bill was a form approved by regulation under the now repealed 2004 Act and whilst it stated that time limits apply, it did not, as s192(b) would appear to required, disclose what those limits were. Section 194 of the Law provides that legal proceedings must not be commenced to recover costs from a person unless a bill has been given in compliance with the requirements of the Law. At least arguably, the point made by Mr Buchanan demonstrates that the bill has not been given in accordance with the Law and therefore this proceeding ought not to have been commenced. Again, s198 of the Law precludes the commencement or maintenance of proceedings to recover costs where there is an assessment application pending before the Costs Court.
10 The plaintiff says that, whilst an application was brought before this proceeding was commenced and was and is pending, it is not a valid one for the purposes of the application of s198. The application was brought in the name of Blue Stars and the contention of the plaintiff is that the one and only person chargeable is Mr Dai. This has been a matter of debate between those acting for Mr Dai and the plaintiff’s solicitor for some time and this debate formed part of the background which led Mr Love to submit that the failure to enter an appearance was inadvertent but rather contumelious. It may be that the plaintiff is correct in her contentions that the assessment application or summons to the Costs Court is misconceived and invalid. Nevertheless, the thought that Blue Stars is the party liable or a party liable for these costs is at least arguable. Therefore, it is at least arguable that this proceeding is incompetent by reason of the operation of s198 of the Uniform Law.
11 There are further issues under s174 and s178 of the Law. Section 174 provides the requirements for disclosure. It is unnecessary for me to go to the detail of the affidavit material before me but the primary disclosure document discloses an estimate of costs of “from $18,000”. The amount claimed is almost $200,000. Section 174(1)(b) provides an obligation on the part of the law practice to make further disclosure “after there is any significant change to anything previously disclosed.” The only further disclosure pointed to was one email which was expressed to be “without prejudice except as to costs” and spoke entirely ex post facto as to costs already incurred and being claimed by the plaintiff practitioner and a further document addressed to the solicitors for the other parties in the relevant Supreme Court proceedings provided it seems for the purposes of mediation and given to this defendant only months after the event.
12 In my view, it is at least arguable that proper disclosure has not been made in accordance with the Uniform Law. The consequence of that by virtue of s178 is that the relevant costs agreement is void and a claim may only be made either through assessment in the Costs Court or by some process with the Victorian Legal Services Commissioner. Whether this is true or not, it is at least arguable. In my view the judgment entered must be set aside based upon these considerations.
13 The next question is whether I should take the further step which is advocated by Mr Buchanan of summarily terminating this proceeding. He says, as s63 of the Civil Procedure Act 2010 would require him to do, that there is absolutely no basis whatsoever for the bringing of this proceeding that there is absolute block or defence to its prosecution and that that matter is so clear that no further investigation is required. Particularly in light of the fact that there does seem to be an arguable dispute as to which is the real party that is liable for these costs, it seems to me that that level of confidence as to this proceeding’s being misconceived and unmaintainable does not exist. Therefore, whilst I am prepared to set the default judgment aside, I am not prepared to take the further step advocated by counsel for the defendant.
14 This then leaves us with the need at some point and in some venue to make a determination as to which party is properly chargeable upon the bills which are being sued for. Mr Love submits that such a determination cannot and would not be made by the Costs Court. Mr Buchanan disputes this. He submits, and I accept, that the usual range of interlocutory applications may be made in the Costs Court apart altogether or preparatory to a substantive assessment of costs. It would be surprising indeed if that were not the case. Again, since the Costs Court’s jurisdiction may be invoked by some people and those people only and not by any busybody, the Court must have jurisdiction to make determinations as to whether an applicant for assessment has the necessary connection to the costs issue. This is the sort of determination that would resolve the dispute as to who is liable on these costs.
15 Nevertheless, it seems to me that it is also within the jurisdiction of this Court to make that determination. Given that the Court has that jurisdiction, it would be improper for me to give any directions which would in effect stay this proceeding if the plaintiff wishes this proceeding to be the vehicle which will determine the matters which she seeks to agitate. Necessarily, if that is the case, we must foresee the prospects of a trial with witnesses and cross-examination and so forth.
16 Given that the Court has jurisdiction, I do not believe it would be right for me to decline to exercise it and so in the circumstances, having set aside the judgment, the Court should, if the plaintiff persists in her desire to have the matter as to the correct chargeable party resolved here, give directions for progressing the matter to trial.
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