DCL Constructions Pty Limited v Di Lizio

[2007] NSWSC 1180

CITATION:	DCL Constructions Pty Limited v Di Lizio [2007] NSWSC 1180
HEARING DATE(S):	10 October 2007
JUDGMENT DATE :	19 October 2007
JUDGMENT OF:	Harrison J
DECISION:	Plaintiff's notice of motion dismissed with costs
CATCHWORDS:	APPEAL – Uniform Civil Procedure Rules 50.3(1)(c) and 50.12(1)(c) - appeal from Associate Justice – whether wrong principle, extraneous or irrelevant matters or mistake of fact – no error found – appeal dismissed
LEGISLATION CITED:	Legal Profession Act 1987 - ss 184(4), 208L, 208M Uniform Civil Procedure Rules 2005 - rr 49.4, 50.3(1)(c), 50.12(1)(c)
CASES CITED:	Danny Kidron & Spaile Architects Pty Ltd v Garrett (1994) 35 NSWLR 572 Groth v Audet (2006) 65 NSWLR 388 House v The King (1936) 55 CLR 499 Laws Holdings Pty Ltd v Short (1972) 46 ALJR 563 Maitland v Nationwide News Pty Ltd [2004] NSWCA 155 McAndrew v Wyoming Nursing Home (Sperling J, 5 December 1997, unreported) McGarva v Boyd [1999] NSWSC 1149 Morrison v Judd (Court of Appeal, 10 October 1995, unreported) Morton v Jools (1992) Aust Tort Reports 81-164 Muriniti v Lyons [2004] NSWSC 135 Wentworth v Rogers (2006) 66 NSWLR 474 Williams v Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497
PARTIES:	DCL Constructions Pty Ltd (Plaintiff) Mario Di Lizio t/as Di Lizio & Associates (Defendant)
FILE NUMBER(S):	SC 14867 of 2006
COUNSEL:	M J Jenkins (Plaintiff) C P Locke (Defendant)
SOLICITORS:	Carroll & O'Dea (Plaintiff) Oliveri Attorneys (Defendant)
LOWER COURT JURISDICTION:	Supreme Court (Associate Judge)
LOWER COURT FILE NUMBER(S):	SC 14867/2006
LOWER COURT JUDICIAL OFFICER :	Harrison AsJ
LOWER COURT DATE OF DECISION:	27 June 2007
LOWER COURT MEDIUM NEUTRAL CITATION:	DCL Constructions v Di Lizio [2007] NSWSC 653

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HARRISON J

19 October 2007

14867 of 2006 DCL Constructions Pty Ltd v Mario Di Lizio t/as Di Lizio & Associates

JUDGMENT

1 HARRISON J: By its summons filed 5 October 2006 the plaintiff sought orders, inter alia, pursuant to rules 50.3(1)(c) and 50.12(1)(c) respectively of the Uniform Civil Procedure Rules 2005 for an extension of time to appeal against the decision of Christopher Gerard O’Brien made on 11 May 2005 (“the decision”) in accordance with s 208L of the Legal Profession Act 1987 (“the Act”), and an extension of time for leave to appeal against a determination made by him on the same date (“the determination”) in accordance with s 208M of the Act.

2 The matter came before Associate Justice Harrison on 18 June 2007 and her Honour delivered judgment on 27 June 2007. By agreement between the parties, her Honour was only asked to deal with these two matters. Her Honour refused both the application for an extension of time to appeal and for an extension of time for leave to appeal. Her Honour otherwise dismissed the summons with costs.

3 By its notice of motion filed 25 July 2007, the plaintiff appealed against her Honour’s decision pursuant to rule 49.4 UCPR. The appeal is to be determined having regard to the well known principles set out in the judgment of the High Court of Australia in House v The King (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and McTiernan JJ as follows:

“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”

Background

4 The defendant, who is a solicitor, was originally retained by the plaintiff to provide legal services in relation to a building dispute between the plaintiff and Norman Browne Constructions Pty Ltd. Those proceedings were complex and lengthy. The defendant acted for the plaintiff in those proceedings between 20 March 2001 and 12 February 2004. The plaintiff obtained a judgment in those proceedings but Norman Browne Constructions Pty Ltd went into liquidation shortly afterwards. Following completion of the proceedings, the defendant undertook further work for the plaintiff including winding up proceedings in this Court.

5 The plaintiff had entered into a written cost agreement with the defendant on 29 March 2001. In about March 2004 the defendant rendered a bill of costs to the plaintiff and an itemised bill of costs was rendered on 4 June 2004. The plaintiff failed to pay those costs. On 29 June 2004 the plaintiff's new solicitors wrote to the defendant querying the size of the bill and some items in it. The plaintiff contended that it had never been provided with the fee agreement. Furthermore, the letter went on to assert that even though the plaintiff had been successful in the proceedings, the judgment debtor had been able to avoid paying the judgment debt as a result of the negligent handling of the matter by the defendant.

6 On 8 September 2004 the defendant filed an application in this Court for assessment of his bill. On 11 May 2005, Costs Assessor O'Brien issued a Certificate of Determination in which he assessed the balance of fees due as $50,591.06. On 5 July 2005, the defendant registered the Certificate of Determination in the District Court and in due course a judgment was entered in favour of the defendant against the plaintiff in that amount. No application was made to set the judgment aside.

7 On 27 January 2006 the plaintiff commenced proceedings against the defendant in the District Court in which the plaintiff sought to resist payment of the judgment debt. Principal among the grounds upon which the plaintiff sought to resist payment was its contention that the amount owing to the defendant for the defendant's professional costs had, by oral agreement made between them, been limited to the sum of $10,000. The alleged agreement is said to contain other terms but they are not relevant for present purposes. The agreement is said to have been made in the course of a conversation in October 2002, which is conveniently recorded at par [17] of her Honour’s judgment. It is sufficient to note that the defendant disputes the agreement entirely.

8 The agreement has achieved significance going beyond the dispute as to its existence. That is because of the manner in which Costs Assessor O'Brien dealt with it. This is revealed in the extract from his reasons for decision that is recorded by her Honour at par [19] of her judgment as follows:

[19] At paragraph [3] of his written reasons for decision, the Costs Assessor stated:


“The Respondent contends that there was a discussion between he and Mr Di Lizio on 30 October 2002 in which Mr Di Lizio agreed to accept a further payment of $10,000.00 in full payment of all costs and indicated that any further costs would be recovered on a party/party basis. Mr Di Lizio denies that any such agreement was reached and points to the fact that he was absent from Australia between 29 October and 2 November 2002.

There is a clear dispute between the parties as to this issue which is unable to be resolved by me within the paper driven cost assessment process. My task in this assessment is to determine the fairness and reasonableness of the bill of costs submitted for assessment.”

9 It follows from this that the judgment ultimately obtained by the defendant against the plaintiff was obtained entirely without reference to the alleged oral agreement and did not in any way incorporate or accommodate the plaintiff's allegations concerning it. Accordingly, by its summons, the plaintiff sought to appeal against the decision of the costs assessor, asserting that he had erred in a number of ways, pursuant to the terms of ss 208L and 208M of the Act. However, as a preliminary matter, the creation of an opportunity for the plaintiff to litigate any such matters of substance had first to confront and to overcome the consequences of its delay in commencing the proceedings. That was the issue that Associate Justice Harrison was asked to decide. In the events that occurred, the plaintiff was unable to satisfy her Honour on that issue.

10 Sections 208L and 208M were relevantly in the following terms:

208L Appeal against decision of costs assessor as to matter of law

(1) A party to an application 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 Supreme Court, appeal to the Court against the decision.

(2) After deciding the question the subject of the appeal, the Supreme 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.

208M Appeal against decision of costs assessor by leave

(1) A party to an application relating to a bill of costs may, in accordance with the rules of the Supreme Court, seek leave of the Court to appeal to the Court against the determination of the application made by a costs assessor.

(2) A party to an application relating to costs payable as a result of an order made by a court or a tribunal may, in accordance with the rules of the court or tribunal, seek leave of the court or tribunal to appeal to the court or tribunal against the determination of the application made by a costs assessor.

(3) The Supreme Court or court or tribunal may, in accordance with its rules, grant leave to appeal and may hear and determine the appeal.

(4) An appeal is to be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given.

(5) After deciding the questions the subject of the appeal, the Supreme Court or court or tribunal may, unless it affirms the costs assessor’s decision, make such determination in relation to the application as, in its opinion, should have been made by the costs assessor.

11 Rules 50.3(1)(c) and 50.12(1)(c) UCPR are in following terms:

50.3 Time for appeal

(1) A summons commencing an appeal must be filed:


(a) within 28 days after the material date, or

(b) if the appeal relates to the decision of a judicial officer, within such further time as the judicial officer may allow so long as the application for such further time is filed within 28 days after the material date, or

(c) within such further time as the higher court may allow.


(2) An application for an extension of time under subrule (1)(c) must be included in the summons commencing the appeal.

50.12 Leave to appeal

(1) A summons seeking leave to appeal must be filed:


(a) within 28 days after the material date, or

(b) if the appeal relates to the decision of a judicial officer, within such further time as the judicial officer may allow so long as the application for such further time is filed within 28 days after the material date, or

(c) within such further time as the higher court may allow.


(2) An application for an extension of time under subrule (1)(c) must form part of the summons seeking leave to appeal.

(3) The summons must contain a statement as to:


(a) whether the appeal relates to the whole or part only, and what part, of the decision of the court below, and

(b) what decision the plaintiff seeks in place of the decision of the court below.

(4) The plaintiff must file and serve with the summons a statement of:


(a) the nature of the case, and

(b) the reasons why leave should be given, and

(c) if applicable, the reasons why time to apply for leave should be extended,

setting out briefly but specifically the grounds relied on in support of the appeal including, in particular, any grounds on which it is contended that there is an error of law in the decision of the court below.

12 The defendant takes no issue that the plaintiff’s summons was a proper vehicle for commencement of its appeal against the decision of Costs Assessor O'Brien with respect to ss 208L and 208M of the Act. However, both the appeal and the application for leave to appeal were required by the terms of the relevant rules to have been filed within 28 days of the material date. For present purposes, that date was 11 May 2005, the date upon which Costs Assessor O'Brien issued the Certificate of Determination. Accordingly, the last date upon which the summons could properly have been filed without the need to apply for an extension of time was 8 June 2005. In the circumstances, the summons was filed three days short of 16 calendar months out of time. Her Honour described this as "a lengthy period".

13 The plaintiff submitted that, whether or not that period can properly be described as a lengthy period must be answered having regard to the particular circumstances of the case and to what occurred throughout it. The plaintiff contended that her Honour's discretion miscarried as the result of a series of errors made by her in forming her views upon whether or not to grant the extensions of time that it sought. It is necessary to examine these contentions in detail.

The plaintiff’s submissions

14 The plaintiff made the general submission that the utility of granting the extensions of time that it sought was described by the events that have occurred. It was for the costs assessor either to determine the contractual liability agitated before him by the plaintiff or alternatively, to resolve not to continue with the assessment of the application and to allow the parties to have the contractual issue decided. The costs assessor did neither but instead proceeded to an assessment of quantum only. In proceeding to the point of issuing the Certificate of Determination, the costs assessor armed the defendant with the ability to obtain a judgment without any adjudication of the contractual issue.

15 The plaintiff then isolated what it submitted were three distinct categories of error committed by her Honour. First, her Honour formed the view that the plaintiff's chances of success on appeal were "slim". According to the plaintiff, that conclusion was erroneous because of her Honour’s:

(i) failure to take into account a relevant consideration in the decision of the Court of Appeal in Wentworth v Rogers (2006) 66 NSWLR 474 as to the construction and application of s 184(4) of the Legal Profession Act 1987 , per Basten JA at [146] - [147] and per Santow JA at [30] and [34], and

(ii) failure to give any reasons for impliedly not accepting or rejecting the decision, or the reasons, of Basten JA in Wentworth v Rogers, or the argument there accepted by his Honour, for which the plaintiff contends in the present case, particularly in circumstances where the plaintiff is required only to show on a preliminary basis the apparent viability of the appeal.

16 The plaintiff acknowledged that on an application for an extension of time, it is for the claimant to establish that there is sufficient merit to the substantive claim for relief so that the grant of an extension of time would not be futile. In Williams v Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497, Kirby P described the obligation, as follows:

“The existence of an apparently viable cause of action is, in the manner that will shortly be described, a relevant consideration for the provision of the extension sought … Self-evidently, if for reasons of law or lack of vital evidence, the provision of an extension of time would be futile, it will not be granted.” (at 507)

“By the same token, it is obviously unnecessary for a Claimant to establish a case in the detail that would be required at the trial. The reason for this was sufficiently explained by Hunt J in analogous circumstances in Martin v Abbott Australasia Pty Ltd [1981] 2 NSWLR 430 at 437. The alteration of the legislation has not removed the need to demonstrate, in an appropriately preliminary way, the apparent viability of the action and, thus, the utility in providing the extension of time sought.” (at 508)

“All that needs to be determined at this stage is that her causes of action, for which she requires the extension under the Act, are viable so that the provision of the extension sought is not a futility.” (at 515).

17 In relation to the question of the existence of a viable cause of action, her Honour dealt with the matter at par [25] as follows:

. . . The issue that the costs assessor did not resolve was whether there was a subsequent oral agreement between the parties. However, under s 184(4) a costs agreement is void if it is not in writing or evidenced in writing. Therefore, why would a Costs Assessor concern himself or herself with determining whether or not there is an oral costs agreement, if it is void?

18 Her Honour dealt with the matter further at par [37] in the following terms:

“The Wentworth v Rogers decisions and the Graham decision address the issue of what is meant by “pro bono” and whether there is a liability to pay Counsel’s fees. In Wentworth v Rogers [2006] Basten JA did not decide the issue [at 185]. Santow JA decided that the issue of whether there was a liability to pay pro bono costs was one that should be determined by a Costs Assessor. Santow JA expressed the view that Muriniti should be overruled. One of the considerations would be the actual terms upon which Counsel agreed to do the work he was asked to do. It seems to me that these cases involved the interpretation of a written costs agreement. However, dispute raised before the Costs Assessor in these current proceedings involve whether or not the parties made an oral agreement. This dispute depended on the credibility of the witnesses, which could only be resolved by the giving of evidence and cross examination and a Court is the appropriate forum. But even if there were an oral agreement, according to s 184(4) it would be void. It is my view DCL Construction’s chances of success on appeal are slim.”

19 Her Honour concluded at par [38] that the plaintiff had a low chance of success under s 208L and s 208M of the Act.

20 The plaintiff contended that her Honour had apparently acted upon the basis that the costs agreement in Wentworth v Rogers (supra) was not oral so that, by inference at least, the construction and effect of s 184(4) did not arise in that case. According to this submission, if that were an accurate representation of her Honour’s reasoning, it would not appear to be correct. The agreement which was at the heart of the contest between the parties in Wentworth v Rogers, and at the heart of the decision of the Court of Appeal, was entered into orally on or about 12 December 1994 and was much later reduced to writing on 10 February 1997. Reliance was placed upon the oral agreement. It is referred to as a notation to the reproduction of the agreement in writing (“Notation: Such agreement was entered into orally on or about 12 December 1994”) in Wentworth v Rogers at [80]. Secondly, in Wentworth v Rogers, both Santow and Basten JJ A specifically addressed s 184(4). There was no need to do so in the event that the relevant costs agreement was in writing. Wentworth v Rogers is not distinguishable, if that was the conclusion that her Honour intended to draw.

21 The plaintiff submitted that the reasoning in Wentworth v Rogers is fundamental to the apparent viability of its claim. Her Honour opined that because of s 184(4), the oral agreement was unenforceable. It followed, therefore, that it was no part of the function of the costs assessor to determine any issue in respect of such an agreement. According to the plaintiff, this reasoning is only sound in the event that, upon its proper construction, s 184(4) means that the plaintiff was never entitled to rely upon the oral agreement as a basis for limiting its liability to the defendant. The construction of s 184(4) is then critical.

22 Much was said in Wentworth v Rogers in relation to the proper construction of s 184(4) and the capacity of a client to rely upon an oral agreement. Basten JA specifically addressed the background to s 184, at pars [141] - [147]. The conclusion he reached was that s 184(4) did not apply to an oral agreement between a practitioner and a client for the benefit of the client and in particular, did not apply so as to render the agreement invalid or void. That conclusion is articulated in very clear language at pars [146] and [147]:

“[146] But it then follows that a costs agreement which is rendered void, if not in writing or evidenced in writing, pursuant to subs (4), would not be read to include a costs agreement favourable to the client, which required no statutory authority for its enforceability.

[147] Given this statutory context, it would be a startling proposition that s 184(4) render invalid or void an oral agreement between practitioner and client under which the practitioner agreed to charge at a reduced basis or to act without fee. That construction should be rejected.”

23 Santow JA adopted a different rationale but appears to have come to the same conclusion at pars [30] and [34]:

“[30] … The costs assessor is not permitted to apply the terms of any such agreement when determining what were fair and reasonable costs. However, Barrett J correctly observed in Wentworth v Rogers [2002] NSWSC709 at [48]:

‘[48] The content of the costs agreement may, however, be used for other purposes relevant to the assessment. It will thus be available for consideration by the assessor if, as here, it is asserted that there is a term positively excluding the charging of costs by the lawyer, so that there is no liability for costs by reference to which a costs order can effectively operate. Use of the costs agreement for that purpose goes to the question whether costs should be assessed at all, rather than the question of the amount that is fair and reasonable.’”

“[34] It is arguable that the extreme case of an oral agreement to charge no fees at all in any and all circumstances is not a ‘costs agreement’ within the Act, notwithstanding the conclusion to the contrary by Barrett J (at [39]). But that is not this case, insofar as the written version of the costs agreement is concerned.”

24 Both Santow and Basten JJA resolved that an oral agreement which went to the liability of the client to pay costs at all was either not of a kind which attracted the application of s 184(4) or alternatively, s 184(4) on its proper construction did not apply so as to render the oral agreement invalid or void. Her Honour was specifically referred to Wentworth v Rogers in relation to the proposition that the oral agreement was not rendered void by reason of s 184(4) and in particular to the decision of Basten JA at [146] and [147].

25 The proper construction of s 184(4), the reasoning articulated by Basten JA and his judgment at [141] - [147], was each a material consideration that her Honour ought to have taken into account. According to the plaintiff, she did not do so, thus leading to error.

26 Alternatively, the plaintiff submitted that her Honour, having been specifically referred to the decision of Basten JA in Wentworth v Rogers, was in error in failing to articulate her reasons for not accepting it, or for rejecting it.

27 Secondly, the plaintiff submitted with respect to the question of delay that her Honour failed to take into account relevant considerations as to:

27.1 The plaintiff’s cogent explanation for the delay.

27.2 The lack of any prejudice to the defendant in engaging in a fair hearing as to any appeal under the Legal Profession Act 1987 .

27.3 Fault on the part of the plaintiff’s legal advisers (rather than the plaintiff itself) leading to delay.

28 Furthermore, the plaintiff submitted that her Honour took into account an irrelevant consideration, to the extent that she treated the length of the delay simpliciter as a consideration mandating the rejection of the application for an extension of time. The plaintiff also submitted that her Honour gave no reasons to support her conclusion that the length of the delay should have lead to that result.

29 The plaintiff accepted that the length of delay is a relevant consideration. However, it submitted that delay alone was not sufficient to lead to the result that the applications for an extension of time should have been rejected. According to the plaintiff's submission, any delay must be forensically considered having regard first to the production of any disadvantage or prejudice to the defendant’s capacity to engage in a fair hearing of any appeal or application for leave to appeal, secondly to any explanation for the delay and thirdly to whether or not the delay is attributable to the plaintiff or to its legal advisers.

30 The plaintiff argued that the defendant did not suggest to her Honour that he was, by reason of the length of the delay, unable to participate in the fair hearing of an appeal. The evidence adduced did not suggest that the defendant had lost evidence that might otherwise have assisted him to engage in or oppose any appeal. In the District Court proceedings, prior to claiming the benefit of the judgment as an estoppel, the defendant prepared and served affidavit evidence concerning the oral agreement alleged by the plaintiff. Those affidavits showed that the defendant and his witnesses purported to have retained a clear account of the relevant events. The Reasons for Determination of the costs assessor is a record that has been retained. The Costs Certificate is available. The defendant’s bill of costs is available. No documentary evidence has been lost. No memory has become impaired. An available conclusion is that the defendant is as well placed now to engage in any appeal as he was in June 2005.

31 The plaintiff submitted that a cogent explanation for its delay was available. That explanation included factors such as the following:

31.1 The plaintiff was unaware that it had a right of appeal at the material time and for some time thereafter received no advice from the solicitor or barrister then retained that it had a right of appeal, or as to the value of such an appeal or the limitation period which applied to it.

31.2 The plaintiff actively pursued a course upon advice that brought it into direct conflict with the estoppel ultimately claimed by the defendant in reliance upon the judgment. In doing so, the plaintiff at all times attempted to promote its reliance upon the agreement to the knowledge of the defendant. The defendant was accordingly on notice from the earliest time that the plaintiff claimed the benefit of the agreement in answer to the defendant's assertion that it was liable to pay the costs as assessed.

31.3 The defence filed by the defendant in the District Court proceedings on 10 March 2006 did not claim an estoppel in reliance upon the judgment and did not plead the judgment as a basis for his opposition to the plaintiff’s proceedings. Part 9 Rule 9 of the District Court Rules and Laws Holdings Pty Ltd v Short (1972) 46 ALJR 563, at 571 combined to require the defendant specifically to plead the estoppel. The first notice given by the defendant of an intention to rely upon the judgment in that way was in the service of his outline of submissions and argument in the District Court proceedings in July 2006.

31.4 Legal advice was given to the plaintiff by letters dated 31 July 2006 and 18 July 2006 in respect of an appeal pursuant to the Legal Profession Act 1987 . The plaintiff clearly acted quickly to obtain legal advice in response to the estoppel as soon as it was raised. Between 18 August and 5 October 2006, instructions were given to file the summons, which together with supporting affidavit material, was prepared and filed promptly.

32 Further, the plaintiff argued that as a matter of principle, in the context of an application for an extension of time, the plaintiff is not necessarily to be blamed for a delay generated by incorrect legal advice. The cases describe two propositions. First, that a client ought not to be blamed for delays that result from acting on the advice of a legal representative: see Morton v Jools (1992) Aust Tort Reports 81-164, McAndrew v Wyoming Nursing Home (Sperling J, 5 December 1997, unreported), and McGarva v Boyd [1999] NSWSC 1149. In Morton v Jools, Carruthers J said at 61,302:

“The learned Master seems to have overlooked entirely that the plaintiff was entitled to place reliance upon the advice which she received from her solicitor, even though she may have had in her possession facts which may be thought to have provided sufficient evidence to justify the commencement of proceedings at an earlier date against the proposed defendants.”

33 Secondly, a potential claim in negligence against a legal adviser is a relevant consideration, but a consideration which “cannot carry much weight”: see Morrison v Judd (Court of Appeal, 10 October 1995, unreported), referred to more recently with approval in Groth v Audet (2006) 65 NSWLR 388 per Tobias JA, at par [27], with whom Mason P and Basten JA agreed.

34 In assessing the delay, prejudice to the defendant in participating in a fair trial, explanation for the delay and fault in the plaintiff’s legal advisers, was each a material consideration. Her Honour appeared to accept, by implication, that the plaintiff did not know of its right to appeal at the material time. For example, at par [7] of her judgment her Honour said:

“However, I accept that if DCL Constructions did not know of its right to appeal against the decision of the Costs Assessor, it was unlikely to know of its right to appeal to a Costs Review Panel.”

35 According to the plaintiff, her Honour also appeared to accept the relevance of the lack of prejudice to the defendant if required to engage in an appeal, although her Honour reached no conclusion in relation to that important issue, either for or against the plaintiff. At par [38] of her judgment her Honour said:

"While DCL Constructions submitted that Di Lizio will be able to adequately present [his] case of appeal, it does not follow that [he has] not suffered any prejudice.”

36 Her Honour referred to aspects of these two material considerations but did not expose in her judgment if or how the considerations were taken into account in the exercise of her discretion. The plaintiff submitted that that they were not taken into account and that, to the contrary, her Honour had regard to the length of the delay, without more. No consideration was given by her Honour to the fact that the plaintiff had acted promptly to agitate the oral agreement or that the delay in the appeal was the fault of the plaintiff’s legal advisers. According to this submission, her Honour was in error in failing to take it into account these three material considerations relevant to delay.

37 The length of the delay per se is put by her Honour as the reason for refusing the extension of time. Delay itself, however, is not a consideration that mandates the refusal of the application. The relevance of delay and associated considerations in an application for an extension of time in the context of relief claimed by way of an appeal or leave to appeal under the Legal Profession Act 1987 is described in Muriniti v Lyons [2004] NSWSC 135 at [52] - [53], at par [52] and [53] as follows:

“[52] In considering whether an extension of time should be granted, the Court must look at the whole of the circumstances, including whether there is an adequate explanation for the delay, but the refusal of relief to an applicant is not automatically justified because he has failed to establish such adequate explanation for the delay; such a failure must be considered in the light of all the circumstances, including what if any, prejudice will flow to the other party by the grant of such extension; and if merits are shown the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication: Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503 at 506 citing Evans v Bartlam [1937] AC 473 at 489.

[53] It is not the case that delay MUST be satisfactorily explained before discretion can be exercised in favour of an applicant, and gross negligence does not necessarily prevent the exercise of the discretion, but only causes the court to examine more closely the question whether there really is a triable issue going to the merits: Cohen v McWilliam (1995) 38 NSWLR 476 at 479 per Priestley JA and cases cited including his Honour’s quotation from the judgment of Griffiths CJ in Rowe v Australian United Steam Navigation Co Ltd (1909) 9 CLR 1 at 6,

‘(that) the right of every man to a fair hearing before he is condemned lies at the root of the tree of justice’.”

(The emphasis is that of Dunford J.)

38 In Danny Kidron & Spaile Architects Pty Ltd v Garrett (1994) 35 NSWLR 572 and Maitland v Nationwide News Pty Ltd [2004] NSWCA 155, in a different context, similar observations were made. In Garret, Priestley JA, with whom Sheller JA agreed, said at 578:

“It seems to me that it follows from the above that Meagher JA’s exercise of discretion miscarried in that it was based solely on what was said to be a failure to explain delay and did not take into account the absence of any prejudice on which the other parties could rely. It was not argued that the architect’s appeal had no prospect of success. Where delay is small, an appeal is not hopeless, and no relevant prejudice will be caused by an extension of time, it seems to me that a due exercise of discretion requires the granting of an extension of time. To refuse to grant an extension in such circumstances solely because of lack of satisfaction with the reasons for delay seems to me to show failure to take into account the other highly relevant factors I have mentioned and in this case to have led to a miscarriage of discretion.”

39 In Maitland, McColl JA, with whom Davies A-JA agreed, said at pars [16] and [21]:

“[16] In considering whether the discretion to extend time for leave to appeal ought be granted, the Court is concerned to determine whether strict compliance with the rules will "work an injustice" upon the claimants: Gallo v Dawson (1990) 93 ALR 479 at 480 per McHugh J. In Outboard Marine Australia Pty Limited v Byrnes [1974] 1 NSWLR 27 at 30 the Court of Appeal (Reynolds, Hutley and Bowen JJA) held that "where genuine issues ought to be litigated, if such can be done with fairness to all concerned, it is appropriate to take a benign view of applications to extend time.”

[21] The explanation for the delay is less than satisfactory. It amounts to blasé indifference to the Rules. Nevertheless the respondent properly concedes that it has suffered no prejudice. In my view, the appeal is not "hopeless" as the respondent submits. There are genuine issues to be litigated warranting benign consideration of the application for an extension of time. In my view, the appellants ought be granted an extension of time for filing the application for leave to appeal.”

40 In assessing the issue of the delay in filing the summons, her Honour was in error in focusing solely upon the length of the delay and thereby was distracted from and failed to take into account relevant considerations in the exercise of the discretion including the plaintiff’s explanation for the delay, the absence of prejudice to the defendant in participating in a fair hearing in respect of any appeal, and the fault in the plaintiff’s legal advisers causing delay.

41 In the exercise of the discretion by the appellate court, there are five considerations relative to the delay. The first is the cogency of the explanation offered. The second is the lack of prejudice to the defendant in engaging in an appeal. The third is that the length of the delay without more does not, as a matter of principle, justify the rejection of the extension of time. The fourth consideration is, in this context, the apparent viability of the plaintiff’s substantive claim. The fifth is the lack of blame attributable directly to the plaintiff. The adequate explanation for the delay, the lack of prejudice in obtaining a fair hearing and the merits demonstrated as to the apparent viability of the appeal are, in particular, matters which when taken together with the length of the delay, justify the exercise of the discretion in favour of the plaintiff.

42 Finally, the plaintiff submitted that her Honour dealt erroneously with the question of general prejudice. At par [38] of the judgment her Honour said:

“Di Lizio obtained judgment on 5 July 2005, almost two years ago. They have not received the moneys due and owing. Further, Di Lizio have been called upon to incur legal fees and expend time in defending themselves in the District Court in relation to the same bill of costs because DCL Constructions did not receive legal advice about the right to appeal but did receive legal advice to take District Court proceedings.”

43 The plaintiff quite properly conceded that general prejudice to the defendant is relevant. However, in the plaintiff's submission, her Honour did not identify or take into account all of the relevant facts. For example, the defendant obtained judgment on 5 July 2005. Between October 2005 and about January 2006, the defendant served a creditor’s statutory demand. The plaintiff sought an order that the demand be set aside and the defendant withdrew it. Two things are said to be apparent from this process. One is that the plaintiff maintained its reliance upon the oral agreement asserting that it had no liability to the defendant to pay the costs and the defendant was on early notice. The other is that any prejudice to the defendant in this period was of his own making in pursuing a procedure based upon a demand that was liable to be set aside and which was ultimately withdrawn.

44 Her Honour then identified prejudice to the defendant in the legal fees and time incurred by him in defending himself in the District Court proceedings. With respect to the first of these matters, the District Court proceedings were appropriate for the agitation of the contest in relation to the oral agreement until the belated reliance by the defendant upon the estoppel, which ought to have been pleaded in the defence filed on 10 March 2006 but which was not raised until service of the defendant’s outline of submissions in July 2006. Secondly, the plaintiff has paid the defendant’s costs thrown away by the vacation of the hearing date in the District Court on an indemnity basis. Her Honour failed to take these matters into account in identifying the nature and extent of the prejudice.

45 Finally, in this present context, the plaintiff submits that to suggest that the judgment was obtained “almost two years ago” is somewhat unfair. It ignores other relevant matters. The summons was filed on 5 October 2006 and up until about January 2006 the defendant was pursuing its own course in reliance upon the creditor’s statutory demand. The period for which the plaintiff was “responsible” is the period in between i.e. something in the order of about 9 months.

46 In summary the plaintiff submitted that the evidence demonstrates the existence of a viable cause of action. A cogent explanation for the delay is given. There is no evidence that the defendant is unable to participate in a fair hearing in relation to any appeal as a result of the length of the delay. The delay itself does not mandate the rejection of the application for an extension of time. The defendant has suffered general prejudice. He has incurred costs in relation to the District Court proceedings, but the plaintiff has met these on an indemnity basis. There has been delay in identifying the correct legal mechanism to ventilate the existence and effect of the oral agreement, but that is the consequence of a failure on the part of the plaintiff’s legal advisers and not a failure on the part of the plaintiff itself. The plaintiff sought advice at an early time directed to ventilating the dispute in relation to the agreement. It is also partly the result of the defendant’s unsuccessful statutory demand and his late reliance upon an estoppel. An error of principle is disclosed in the Costs Assessor O'Brien's determination in failing to determine the contractual issue or to take a course to have it determined by a court. In addition to an error of principle, a miscarriage of justice has occurred in the registration of the costs certificate resulting in a judgment in the District Court permitting the defendant to foreclose upon a determination of the contractual issue. There is reasonable evidence to establish the existence of the oral agreement. For all these reasons the plaintiff submitted that the grant of an extension of time was warranted.

The defendant’s submissions

47 In the proceedings before her Honour, the defendant relied upon a series of submissions that he reiterated in the proceedings before me. Those submissions were as follows:

47.1 the plaintiff was guilty of gross delay the appeal proceedings being “out of time” by one year and four months;

47.2 the plaintiff’s explanation for delay was incomplete and unsatisfactory in that, while it was asserted that no legal advice was received in respect of an appeal or the applicable limitation period, the plaintiff did not provide any explanation for the protracted delay in seeking such advice;

47.3 the plaintiff failed to avail itself of its right to seek a review of determination of the costs assessor pursuant to s 208KA of the Act, being a remedy which was available as of right (subject only to an application for review being lodged within 28 days of the date of issue of the certificate of determination);

47.4 the issue of the alleged oral costs agreement had been ventilated during the costs assessment and the costs assessor had declined to resolve it;

47.5 the plaintiff failed, prior to the conclusion of the costs assessment, to avail itself of any right of appeal under s 208L;

47.6 the plaintiff failed, prior to the conclusion of the costs assessment, to seek an order staying the costs assessment until such time as the issue of the alleged oral costs agreement had been determined by a court;

47.7 the plaintiff failed, prior to the defendant obtaining and seeking to enforce the judgment obtained by registration of the certificate of assessment, to avail itself of any right to seek leave to appeal under s 208M;

47.8 the explanation relied upon by the plaintiff for delay was accordingly without merit.

47.9 the alleged oral costs agreement was void and could not found any claim for relief on the part of the plaintiff: s 184(4);

47.10 the existence of the oral costs agreement was in dispute, and could not have been resolved without the taking of evidence and cross-examination of witnesses;

47.11 the costs assessor did not have the curial power to permit the taking of evidence or the cross-examination of witnesses;

47.12 the costs assessor was correct in proceeding as he did when making the costs assessment (which was based upon a written costs agreement between the plaintiff and the defendant which pre-dated the alleged oral costs agreement);

47.13 no error of principle on the part of the costs assessor had been demonstrated by the plaintiff;

47.14 there would not be any miscarriage of justice in the event that an extension of time or leave to appeal were refused;

47.15 the substantive relief sought by the plaintiff against the defendant would, if granted, conflict with and/or amount to a collateral attack upon, the judgment which had been obtained by the defendant by registration of the certificate of determination pursuant to s 208J(3);

47.16 while the costs assessor was not acting as an officer of the Court, the better view is that any judgment arising from the filing of the certificate of determination in a court of competent jurisdiction constitutes a res judicata notwithstanding that the costs assessor did not have the power to determine all of the issues raised in the assessment;

47.18 the judgment arising from the filing of the Certificate of Determination in a court of competent jurisdiction gave rise to an issue estoppel and/or an estoppel by record and/or a res judicata which precluded the plaintiff from seeking relief in reliance upon the alleged oral costs agreement (or any other matter which conflicts with the factual and legal basis upon which the judgment is expressly or impliedly founded); and

47.19 the granting of leave would be futile as the appeal was bound to fail.

48 The defendant made further submissions specifically directed to the categories dealt with by the plaintiff. The defendant dealt first with the issue of delay and the plaintiff's explanation for delay.

49 While her Honour did not make specific reference to the plaintiff’s explanation for delay, it is clear that she took it into account. The delay in commencing the present proceedings was very extensive. Such delay could be fairly described as gross. The plaintiff’s explanation for such delay was deficient having regard, inter alia, to the unexplained delay in seeking legal advice in relation to the remedies which might be available in respect of the decisions of and/or the assessment made by the costs assessor. Her Honour did not fall into error in taking into account in the exercise of her discretion, the lengthy delay on the part of the plaintiff in commencing the present proceedings.

50 The defendant dealt next with the merits of the appeal and the application for leave to appeal. The plaintiff argued that, when considering the utility of a grant of extension of time, her Honour failed to take into account the decision of the Court of Appeal in Wentworth v Rogers (supra) as to the construction and application of s 184(4) of the Act. However, according to the defendant, such an assertion is based upon an incorrect assumption that her Honour exercised her discretion on the basis that the alleged oral costs agreement was void.

51 At par [25] of her judgment, her Honour said, “[h]owever, under s 184(4) a costs agreement is void if it is not in writing or evidenced in writing”. She then posed the rhetorical question, “Therefore, why would a costs assessor concern himself or herself with determining whether or not there is an oral costs agreement, if it is void?” Finally, at par [37], her Honour said, “[B]ut even if there were an oral agreement, according to s 184(4) it would be void.” However, her Honour then said at par [37], “It is my view that [the plaintiff's] chances of success on appeal are slim” and at par [38], “It is my view that ... because of …[the plaintiff’s] low chance of success under s 208L and s 208M of the Act ... an extension of time to lodge an appeal or alternatively seek leave to appeal should not be granted.”

52 Her Honour's assessment that the plaintiff had “slim” or “low” chances of success on appeal is inconsistent with her discretion having been exercised on the footing that the alleged oral costs agreement was void. According to the defendant, her Honour’s assessment actually recognises that the appeal could have succeeded; there was no authority binding upon her Honour in relation to the issue of whether or not the alleged oral costs agreement was void, and the judgments cited in plaintiff’s Outline of Submissions did not support its contention to the contrary.

53 The issuing of a certificate of assessment by the costs assessor did not, contrary to the plaintiff’s contention, permit the defendant to obtain a judgment which foreclosed upon any adjudication of a contractual issue going to the liability of the plaintiff. The defendant submitted that the costs assessor was correct in deciding that he should not determine the issue of the alleged oral costs agreement.

54 Insofar as it is contended by the plaintiff that the costs assessor ought to have discontinued the assessment in order that liability could be separately determined by a judge, it was relevant to the exercise of her Honour’s discretion that the plaintiff made no such submission during the costs assessment, nor did it make an application for the costs assessment to be stayed. According to the defendant, the plaintiff sat on its hands and did not commence the present proceedings until well after judgment had been obtained by the defendant by registration of the certificate of assessment.

55 On an application for an extension of time, it is necessary for the plaintiff to establish that there is sufficient merit to the substantive claim for relief that the grant of an extension of time would not be futile. It is implicit in her Honour’s findings that she did not regard the plaintiff’s prospects of success on appeal as having sufficient merit to warrant the grant of the relief sought. According to the defendant, neither her Honour’s assessment of the prospects of success of an appeal, nor her exercise of discretion has been shown to be erroneous or susceptible to appellate review.

56 Finally, with respect to the question of prejudice generally, the defendant submitted that her Honour did not fall into any relevant error in taking into account, in the exercise of her discretion, that the defendant had suffered prejudice by reason of having obtained judgment on 5 July 2005 but had not received the moneys due and owing or that the defendant had been called upon unnecessarily to incur legal fees and to expend time in defending himself in the District Court.

57 The defendant submitted that the plaintiff's notice of motion should be dismissed with costs.

Consideration

58 It is uncontroversial that in order to succeed the plaintiff must establish that her Honour made an error in exercising her discretion. In this regard it is, in general terms, necessary for the plaintiff to demonstrate that her Honour acted upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect her, made factual mistakes, or failed to take into account some material consideration.

59 The plaintiff's argument with respect to her Honour’s interpretation of s 184(4) of the Act should be dealt with first. As will by now be apparent, the plaintiff contended that her Honour formed the view, contrary to authority, that s 184(4) always operated so that any oral costs agreement between the plaintiff and the defendant would be void. According to this argument, that error so fatally infected the exercise of her Honour's discretion that it should be set aside. One view of the authorities suggests that oral costs agreements are not wholly void and that any discretion exercised upon the basis that they are is erroneous.

60 There is no doubt that, taken alone, the penultimate sentence in par [37] of her Honour's judgment gives the impression that she formed that few of the operation of the section. However, as the defendant, in my opinion correctly, points out, her Honour’s description of the plaintiff's chances of success on appeal as "slim" is inconsistent with the notion that she treated s 184(4) as operating in that way. It seems to me that a fair reading of her Honour's reasons must incorporate a reference to her view that the dispute concerning the existence or otherwise of the alleged oral agreement depended upon the credibility of witnesses and the need for that to be resolved by the giving of evidence and cross-examination in a court. Her Honour was made aware of the competing versions of this issue and must in my opinion be taken to have formed her view that the plaintiff's chances were "slim" having regard to that competition. The burden of the plaintiff's submission in this regard is ultimately that her Honour erroneously formed the view that the plaintiff had no chance of relying upon the alleged oral agreement. However, it is not possible to read her Honour’s judgment in so limited a fashion.

61 This issue is also connected with what occurred during the costs assessment proceedings. It does not appear to be in dispute that resolution of the existence or otherwise of the alleged oral agreement was beyond the jurisdiction of the costs assessor or, even if it were not, that the costs assessor had unambiguously indicated his disinclination to have anything to do with the issue. According to the defendant, the plaintiff should timeously have taken steps to have the matter adjudicated in an appropriate forum. This was not done, and no application for a stay so that it could be done was made to the costs assessor or to a court. In my opinion, the plaintiff has not demonstrated that her Honour fell into error in forming the view that the costs assessor did not have the power to resolve the dispute, or in treating the plaintiff's failure somehow promptly to bring the matter to a conclusion as counting against it in her overall assessment of the importance of the various reasons for delay.

62 There is no doubt that her Honour expressed the view that the delay was lengthy. Whatever adjective may have been used to describe it, the description ought properly to have been chosen as a reflection of a balanced assessment of what caused the delay. The plaintiff's complaint is that in performing that exercise her Honour failed properly or adequately to give sufficient weight to those factors that favoured the plaintiff. However, in my opinion, it is difficult to form a view that contributions to delay were not equally shared between the plaintiff and the defendant. It is not possible to point to any factor causing delay that unarguably outweighed any other or others.

63 The same may be said with respect to her Honour’s comparison of competing prejudice. The plaintiff argued that there was little prejudice to the defendant if forced to confront the existence an agreement that was always in contest, whereas the prejudice to the plaintiff was, on the contrary, manifest and complete. Her Honour would appear clearly to have formed the view that inconvenience and further delay did amount to prejudice that was at least as significant as that which confronted the plaintiff. The prospects of success that her Honour calculated cannot be disregarded in this assessment of the plaintiff’s position. It is not possible to conclude that the view taken by her Honour was not open to her or arrived at as the result of extraneous or irrelevant considerations or error of principle.

64 The essence of a search for error in the exercise of discretion is the search for a factor or a series of factors upon or about which informed minds should not reasonably differ. The application of wrong principle, surrender to the influence of extraneous or irrelevant matters, the making of factual mistakes, or a failure to take into account some material consideration are examples of such matters. Beyond the demonstration of such matters, the plaintiff cannot complain about the decision that her Honour reached. In my view, the plaintiff's complaints are all directed to the opinions that her Honour formed, about which there is obviously scope for difference. The plaintiff has not to my mind demonstrated illegitimacy in the process employed by her Honour in arriving at those opinions.

Conclusion

65 In my opinion the plaintiff’s notice of motion should be dismissed with costs.

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