Mendonca v Dooley and Associates Solicitors Pty Ltd

[2016] NSWCA 144

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Mendonca v Dooley & Associates Solicitors Pty Ltd [2016] NSWCA 144

Hearing dates:

7 June 2016

Decision date:

27 June 2016

Before:

Simpson JA, Sackville AJA

Decision:

1. The application for leave to appeal be dismissed.
2. The Applicant pay the Respondents’ costs of the application.

Catchwords:

COSTS – unsuccessful party to litigation seeks costs orders against his legal representatives – whether primary judge erred in concluding that there was no basis for orders under Legal Profession Act 2004 (NSW) s 348 or Civil Procedure Act 2005 (NSW) s 99 – leave to appeal refused

Legislation Cited:

Fair Work Act 2009 (Cth)
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), s 4(4)(ab)
Workplace Relations Act 1996 (Cth), ss 170CP, 170CS

 

Civil Procedure Act 2005 (NSW), s 99
Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), ss 5, 8(1)(b)(ii)
Legal Profession Act 2004 (NSW), ss 345, 348, 349
Supreme Court Act 1970 (NSW), s 101(2)(c)

Uniform Civil Procedure Rules 2005 (NSW), r 51.12(3)(a)

Cases Cited:

Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] HCA 26; 179 ALR 406
Chan v Johnson [2014] NSWSC 1439
Degman Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354
Fencott v Muller [1983] HCA 12; 152 CLR 570
Goldman Sachs JB Were Services Pty Ltd v Nikoich [2007] FCAFC 120; 163 FCR 62
Haydon Fowler Corbett Jessop v Toro Constructions Pty Ltd [2008] NSWCA 178
La La Land Byron Bay Pty Ltd v The Independent Liquor and Gaming Authority [2015] NSWCA 254
Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; 63 NSWLR 300
Mendonca v Chan & Naylor (Parramatta) Pty Ltd [2014] FCCA 1042
Mendonca v Chan & Naylor (Parramatta) Pty Ltd as Trustee for Chan & Naylor (Parramatta) Trust (District Court (NSW), Balla DCJ, 12 June 2014, unrep)
Mendonca v Chan & Naylor (Parramatta) Pty as Trustee for Chan & Naylor (Parramatta) Trust (District Court (NSW), Balla DCJ, 27 June 2014, unrep)
Mendonca v Chan & Naylor (Parramatta) Pty Ltd as Trustee for Chan & Naylor (Parramatta)Trust (District Court (NSW), McLoughlin DCJ, 6 November 2015, unrep)
Mendonca v Chan & Naylor (Parramatta) Pty Ltd as Trustee for Chan & Naylor (Parramatta) Trust (District Court (NSW), McLoughlin DCJ, 18 November 2015, unrep)
Mylan v Health Services Union NSW [2013] FCA 190
Woodland Home Products Pty Ltd v Picalovski [2010] NSWSC 629

Category:

Principal judgment

Parties:

Gerard Mendonca (Applicant)
Dooley & Associates Solicitors Pty Ltd As Trustee for Dooley & Associates Solicitors Unit Trust (First Respondent)
Malcolm Campbell (Second Respondent)
Mark Gunning (Third Respondent)

Representation:

Counsel:
Self represented (Applicant)
Mr D Lloyd (First and Second Respondents)
Mr A Zahra (Third Respondent)

  Solicitors:
N/A (Applicant)
Kennedys (First and Second Respondents)
Sparke Helmore (Third Respondent)

File Number(s):

2015/344243

 Decision under appeal 

Court or tribunal:

District Court (NSW)

Date of Decision:

6 November 2015
18 November 2015

Before:

McLoughlin DCJ

File Number(s):

2012/200753

Judgment

1. THE COURT: The applicant seeks leave to appeal against judgments and orders of the District Court. In the first judgment, given on 6 November 2015, McLoughlin DCJ dismissed an amended notice of motion in District Court proceedings by which the applicant sought personal costs orders against the first and second respondents (Solicitors) and the third respondent (Barrister). [1] In the second judgment, given on 18 November 2015, his Honour dismissed a motion by the applicant seeking orders setting aside the orders made in the first judgment. [2] The Solicitors and Barrister had represented the applicant in the District Court proceedings, which were brought by the applicant against his employer, Chan & Naylor (Parramatta) Pty Ltd as Trustee for Chan & Naylor Parramatta Trust (Employer). The applicant’s claim against the Employer was dismissed by Balla DCJ. [3] We refer to McLoughlin DCJ as the primary Judge.

   1. Mendonca v Chan & Naylor (Parramatta) Pty Ltd as Trustee for Chan & Naylor (Parramatta) Trust (District Court (NSW), McLoughlin DCJ, 6 November 2015, unrep) (Primary Judgment).

   2. Mendonca v Chan & Naylor (Parramatta) Pty Ltd as Trustee for Chan & Naylor (Parramatta) Trust (District Court (NSW), McLoughlin DCJ, 18 November 2015, unrep) (Supplementary Judgment).

   3. Mendonca v Chan & Naylor (Parramatta) Pty Ltd as Trustee for Chan & Naylor (Parramatta) Trust (District Court (NSW), Balla DCJ, 12 June 2014, unrep) (Bonus Judgment).

2. The applicant requires leave to appeal since the orders of the District Court he wishes to challenge relate only to the costs of the proceedings. [4] Leave to appeal involves a discretionary determination by the Court as to whether the matter is one in which it is appropriate to grant leave. The general principle is that leave will be granted only if the proposed appeal raises a question of principle or public importance, or if the applicant demonstrates that the decision of the trial court involves an injustice beyond that which is merely arguable. [5] In determining a leave application, the Court is not required to give reasons such as would be appropriate on an appeal after a full hearing on the merits of the appeal. [6] In this case, however, some background is necessary before addressing the applicant’s contentions.

   4. Supreme Court Act 1970 (NSW), s 101(2)(c).

   5. La La Land Byron Bay Pty Ltd v The Independent Liquor and Gaming Authority [2015] NSWCA 254 at [5] per curiam and cases cited there.

   6. La La Land Byron Bay Pty Ltd v The Independent Liquor and Gaming Authority [2015] NSWCA 254 at [8]-[9].

Bonus Proceedings

3. The applicant commenced the District Court proceedings against the Employer on 27 June 2012 (Bonus Proceedings). At that stage, the applicant was still employed by the Employer, although his employment was ultimately terminated on 27 August 2012. The applicant was self-represented and presumably drafted the statement of claim in the Bonus Proceedings himself. The pleading did not clearly identify a cause of action.

4. The applicant subsequently retained the Solicitors to act on his behalf in the Bonus Proceedings. The Solicitors filed an amended statement of claim on behalf of the applicant on 17 August 2012.

5. The amended statement of claim pleaded that the applicant’s employment agreement with the Employer included a term entitling him to a performance bonus in addition to his salary and that he had been underpaid in an amount of about $138,000. His pleaded case also included a claim that the Employer was estopped from denying an agreement requiring the payment of a performance bonus.

6. The applicant’s case in the Bonus Proceedings rested principally on conversations that he claimed occurred in about March to April 2006, in the course of discussions that led to him accepting the Employer’s offer of employment as an accountant. The applicant claimed that Mr Nelson, the Employer’s managing director, promised that the applicant would be entitled to a performance bonus in accordance with a “Staff Bonus Calculator”. The applicant also relied on a document described as a “Bonus Policy” which he said was given to him in 2008 by Mr Safetli, who at the time was the General Manager of the Employer.

7. Mr Nelson denied the relevant conversations. The Employer also disputed that the Bonus Policy document was genuine.

8. The applicant was represented at the trial of the Bonus Proceedings by the Barrister, who was instructed by the Solicitors. After a six day hearing, the applicant’s case was comprehensively rejected by Balla DCJ in the Bonus Judgment. Her Honour found that the applicant was not a reliable witness and declined to accept his evidence. In particular, her Honour found that:

• the applicant’s case depended on acceptance of his evidence and that of his wife;

• the applicant had created the Bonus Policy document for the purposes of the proceedings;

• contrary to his evidence, the applicant had not had a conversation with his assistant concerning the Bonus Policy Document, nor had he instructed his assistant to destroy the document;

• the Staff Bonus Calculator document that the applicant said had been discussed with Mr Nelson did not exist at the time the alleged conversations took place;

• insofar as the evidence of Mr Nelson and the applicant conflicted, the former was to be preferred;

• the wife’s evidence did not corroborate that of the applicant; and

• the applicant had not made out any of his pleaded causes of action.

9. In a separate judgment delivered on 27 June 2014, Balla DCJ ordered the applicant to pay the Employer’s costs of the Bonus Proceedings on an indemnity basis. [7] Her Honour applied Degman Pty Ltd (in liq) v Wright (No 2),[8] a case in which indemnity costs were awarded against a defendant because his claims were deliberately concocted in an attempt to defeat the plaintiff’s rights. Balla DCJ rejected a submission made on the applicant’s behalf that until the Bonus Proceedings were heard and evidence was tested by cross-examination, the applicant’s case could not have been assessed as manifestly hopeless or doomed to fail. Her Honour observed that the applicant:

“was aware of the [Employer’s] case because all of the evidence was served well before the hearing and should have appreciated the strength of that case”.

7. Mendonca v Chan & Naylor (Parramatta) Pty as Trustee for Chan & Naylor (Parramatta) Trust (District Court (NSW), Balla DCJ, 27 June 2014, unrep) (Indemnity Costs Judgment).

8. [1983] 2 NSWLR 354 at 358 (Holland J).

The Federal Circuit Court Proceedings

10. It appears that on 27 July 2012 the applicant, acting on his own behalf, lodged a complaint against his Employer with the Fair Work Ombudsman. On 30 August 2012, the Solicitors (who by this time had been retained in the Bonus Proceedings) wrote to the applicant advising him that they had learned of his complaint to the Fair Work Ombudsman. The Solicitors advised the applicant that if he wished to consider pursuing a separate claim against the Employer in relation to the termination of his employment, the firm would open a second file on his matter.

11. On 19 November 2012, the Solicitors filed a claim in what was then the Federal Magistrates Court alleging that the Employer had terminated his employment in breach of provisions of the Fair Work Act 2009 (Cth) (Fair Work Act).

12. The hearing of the applicant’s claim in the Federal Circuit Court took place over four hearing days in April 2014. The applicant was represented by the Solicitors, who briefed counsel (not the Barrister) to appear on the applicant’s behalf. The Federal Circuit Court in substance dismissed the applicant’s claim in a judgment delivered on 2 June 2014. [9]

    9. Mendonca v Chan & Naylor (Parramatta) Pty Ltd [2014] FCCA 1042. The applicant succeeded to the extent of establishing an entitlement to unpaid annual leave.

The Motion

13. The applicant did not appeal from the orders made by Balla DCJ in the Bonus Judgment or the Indemnity Costs Judgment. However, by an amended notice of motion in the Bonus Proceedings, he sought orders against the Solicitors and Barrister. The relief sought included the following:

• orders pursuant to s 348(1)(a) of the Legal Profession Act 2004 (NSW) (Legal Profession Act) directing that the Solicitors and Barrister repay to the applicant the costs he was ordered to pay to the Employer;

• orders pursuant to s 348(1)(b) of the Legal Profession Act directing the Solicitors and Barrister to indemnify the applicant against the costs payable by him; and

• orders pursuant to s 99(2)(a) of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act) disallowing the costs of the proceedings as between the Solicitors and the applicant and the Barrister and the applicant.

14. The applicant’s motion was heard over five days, with the applicant representing himself. The Solicitors and Barrister were each separately represented.

The Legislation

15. The provisions of the Legal Profession Act which were in force at the relevant times and on which the applicant principally relied were as follows:

“345   (1)   A law practice must not provide legal services on a claim or defence of a claim for damages unless a legal practitioner associate [10]  responsible for the provision of the services concerned reasonably believes on the basis of provable facts and a reasonably arguable view of the law that the claim or the defence (as appropriate) has reasonable prospects of success.

(2)   A fact is provable only if the associate reasonably believes that the material then available to him or her provides a proper basis for alleging that fact.

(3)   This Division applies despite any obligation that a law practice or a legal practitioner associate of the practice may have to act in accordance with the instructions or wishes of the client.

(4)   A claim has reasonable prospects of success if there are reasonable prospects of damages being recovered on the claim. A defence has reasonable prospects of success if there are reasonable prospects of the defence defeating the claim or leading to a reduction in the damages recovered on the claim.

(5)   Provision of legal services in contravention of this section constitutes for the purposes of this Division the provision of legal services without reasonable prospects of success.

…

348   (1)   If it appears to a court in which proceedings are taken on a claim for damages that a law practice has provided legal services to a party without reasonable prospects of success, the court may of its own motion or on the application of any party to the proceedings make either or both of the following orders in respect of the practice or of a legal practitioner associate of the practice responsible for providing the services:

(a)    an order directing the practice or associate to repay to the party to whom the services were provided the whole or any part of the costs that the party has been ordered to pay to any other party,

(b)    an order directing the practice or associate to indemnify any party other than the party to whom the services were provided against the whole or any part of the costs payable by the party indemnified.

…

349    (1)   If the court (the "trial court") hearing proceedings on a claim for damages finds that the facts established by the evidence before the court do not form a basis for a reasonable belief that the claim or the defence had reasonable prospects of success, there is a presumption for the purposes of this Division that legal services provided on the claim or the defence (as appropriate) were provided without reasonable prospects of success.

…

(3)    A presumption arising under this section is rebuttable and a person seeking to rebut it bears the onus of establishing that at the time legal services were provided there were provable facts (as provided by section 345 (Law practice not to act unless there are reasonable prospects of success)) that provided a basis for a reasonable belief that the claim or the defence on which they were provided had reasonable prospects of success.”

16. Section 99 of the Civil Procedure Act relevantly provides as follows:

“(1)   This section applies if it appears to the court that costs have been incurred:

(a)   by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or

(b)   improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.

(2)    After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following:

(a)   it may, by order, disallow the whole or any part of the costs in the proceedings:

(i)   in the case of a barrister, as between the barrister and the instructing solicitor, or as between the barrister and the client, as the case requires, or

(ii)   in the case of a solicitor, as between the solicitor and the client,

(b) it may, by order, direct the legal practitioner:

(i)   in the case of a barrister, to pay to the instructing solicitor or client, or both, the whole or any part of any costs that the instructing solicitor or client, or both, have been ordered to pay to any other person, whether or not the solicitor or client has paid those costs, or

(ii)   in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs,

(c)   it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party.”

The Primary Judgment

17. The primary Judge accepted the submission made on behalf of the Solicitors and Barrister that Balla DCJ’s finding in the Indemnity Costs Judgment, that his case was manifestly hopeless, was a finding made against the applicant himself and not against his legal representatives. The primary Judge also accepted that Mr Campbell, who handled the matter on behalf of the Solicitors, relied on the applicant’s instructions and evidence to establish a prima facie case and to enable Mr Campbell to conclude that at all times there were “reasonable prospects of success”, as that term is defined in s 345(4) of the Legal Profession Act.

18. The primary Judge rejected a complaint by the applicant that the Solicitors and Barrister had demonstrated serious neglect or incompetence by failing to interview Mr Safetli or call him as a witness in the Bonus Proceedings. His Honour found that the applicant had given instructions to the Solicitors not to interview Mr Safetli, who was in gaol after having been convicted of murder, because the applicant was frightened of Mr Safetli.

19. His Honour also found that the Solicitors and Barrister made a forensic decision that the onus was on the Employer rather than the applicant to call Mr Safetli in the Bonus Proceedings. While Balla DCJ said in the Bonus Judgment that the applicant bore the onus of calling Mr Safetli, the decision made by the Solicitors and Barrister was a proper one.

20. His Honour found, contrary to the applicant’s evidence, that he had not given instructions to the Solicitors to transfer the Bonus Proceedings to the Federal Circuit Court to be consolidated with the Fair Work Act proceedings. There was therefore no substance to the applicant’s contention that the Solicitors had caused unnecessary costs to be incurred by failing to take steps to consolidate both proceedings. In any event, the primary Judge was not satisfied that the Federal Circuit Court had jurisdiction to determine the applicant’s claims in contract and estoppel under State law that were the subject of the Bonus Proceedings.

21. The primary Judge pointed out that the applicant had been adamant at all times in the course of the Bonus Proceedings that the matters to which he had sworn were in fact correct and that the Bonus Policy document was genuine. He had also been confident in his dealings with the Solicitors that his evidence would be accepted.

22. His Honour accepted that the Solicitors and Barrister were under a continuing obligation to consider whether there was a reasonable basis for advancing the applicant’s case. However, in his Honour’s view, they had not breached their continuing obligation:

“[T]he facts of this case do not suggest to me any breach of that continuing obligation in that at all times both Mr Campbell [of the Solicitors] and [the Barrister] were entitled to accept that which [the applicant] told them was the truth and he maintained it was, maintained his situation in the witness box and maintained at every opportunity that the conversation between [him] and Mr Nelson is, as he had deposed, and that the bonus document was given at that time.”

23. The primary Judge was satisfied that the matters dealt with in the applicant’s affidavits and sworn evidence were “provable facts” within s 345(2) of the Legal Profession Act, notwithstanding that Balla DCJ did not accept the applicant’s evidence. In effect, the applicant was contending that the Solicitors and Barrister should have decided that his evidence was unbelievable and advised him accordingly. That proposition was untenable and was not supported by any comment made by Balla DCJ in the Bonus Judgment or the Indemnity Costs Judgment.

The Application for Leave to Appeal

24. The applicant filed 13 volumes of material in support of his application for leave to appeal from the orders made by the primary Judge. Not surprisingly, very little of this material was referred to in argument or in written submissions. Despite the quantity of material filed, some documents that were relevant to the application, such as the Supplementary Judgment and the judgment of the Federal Circuit Court on the application under the Fair Work Act, were not included.

The Grounds

25. The applicant filed lengthy written submissions that greatly exceeded the 10 page limit for the summary of argument prescribed by the Uniform Civil Procedure Rules. [11] It is not easy to discern from the submissions the precise complaints made by the applicant. However, in his oral submissions the applicant identified four errors said to have been committed by the primary Judge. These are as follows:

(i)   His Honour incorrectly held that the Federal Circuit Court did not have jurisdiction to determine the matters involved in the Bonus Proceedings. His Honour therefore erred in not finding that the Solicitors and Barrister incurred unnecessary costs by improperly or unreasonably failing to transfer the Bonus Proceedings to the Federal Circuit Court.

(ii)   The primary Judge erred in failing to find that the Solicitors and Barrister acted unreasonably or incompetently by not interviewing Mr Safetli or calling him as a witness.

(iii) The primary Judge should have accepted that Balla DCJ made a finding that the facts established by the evidence in the Bonus Proceedings did not form a basis for a reasonable belief that the claim had reasonable prospects of success. Section 349(1) of the Legal Profession Act therefore created a presumption that the legal services provided in the claim were provided without reasonable prospects of success. The primary Judge erred in failing to apply the presumption.

(iv)   The primary Judge denied procedural fairness to the applicant because the Solicitors were permitted to file an affidavit from Mr Campbell on the second day of the hearing and the applicant did not have a proper opportunity to cross-examine Mr Campbell.

11. Uniform Civil Procedure Rules 2005 (NSW) r 51.12(3)(a).

Preliminary Observations

26. Before addressing these matters three points should be made.

27. First, while legislation such as ss 348 and 349 of the Legal Profession Act must be construed according to its terms, courts have consistently stated that the jurisdiction to order a legal practitioner to pay the costs of legal proceedings in respect of which he or she provided legal services must be exercised with care and discretion and only in clear cases. [12] If the powers are used too freely the interests of practitioners will be set against those of the client and much satellite litigation will be encouraged. [13] The present case illustrates the dangers.

    12. Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; 63 NSWLR 300 at [92] (McColl JA, Hodgson and Ipp JJA agreeing), and cases cited there.

    13. Fowler, Corbett and Jessop trading as Haydon Fowler Corbett Jessop v Toro Constructions Pty Ltd [2008] NSWCA 178 at [18]-[19] (Basten JA, McColl JA and Young J in Eq agreeing).

28. Secondly, it is well established that a legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he or she acts for a party who pursues a claim which is bound to fail. [14]

    14. Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300 at [92(b)].

29. Thirdly, a legal practitioner is not a de facto judge and his or her role is not to determine the credibility of witnesses, including that of the client, or pre-empt judicial decision-making. [15]

    15. Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] HCA 26; 179 ALR 406 at [34] (Callinan J); Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300 at [92(c)].

The First Ground

30. In support of his first argument the applicant relied on the decision of the Full Federal Court in Goldman Sachs JB Were Services Pty Ltd v Nikolich. [16] In that case, the Full Court considered the scope of s 170CS of the Workplace Relations Act 1996 (Cth). That provision limited the circumstances in which a costs order could be made against a party to a proceeding brought under s 170CP (which provided remedies for unlawful termination of employment). The Court held that s 170CS precluded an award of costs against an unsuccessful claimant not only in respect of a claim under s 170CP, but in respect of a common law claim within the accrued jurisdiction of the Court.

    16. [2007] FCAFC 120; 163 FCR 62.

31. It is arguable, although by no means certain, that the applicant’s common law claim might have been instituted in the Federal Circuit Court at the same time as the Fair Work Act proceedings were commenced in that Court. That could have happened if the common law claim was within the accrued jurisdiction of the Federal Circuit Court. That would depend, among other things, on whether the two claims could be said to arise out of common transactions and facts, so that both claims could be characterised as aspects of a single matter arising under federal law. [17]

    17. Fencott v Muller [1983] HCA 12; 152 CLR 570 at 607 (Mason, Murphy, Brennan and Deane JJ).

32. But by the time the Solicitors were retained in relation to the applicant’s Fair Work Act claim, the applicant himself had already commenced the Bonus Proceedings in the District Court. Since the District Court did not have jurisdiction to entertain the Fair Work Act claim,[18] the two proceedings could have been consolidated only if the Bonus Proceedings were somehow transferred to the Federal Circuit Court, or if the Bonus Proceedings were discontinued and the Fair Work Act proceedings were then amended to incorporate the applicant’s common law claims.

    18. Cf Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), s 4(4)(ab) (excluding matters arising under the Fair Work Act from the conferral of jurisdiction on State Supreme Courts); Mylan v Health Services Union NSW [2013] FCA 190 at [12]-[13] (Buchanan J) (stating that the Supreme Court of New South Wales lacks jurisdiction in matters arising under the Fair Work Act).

33. The applicant’s case before McLoughlin DCJ was that he had instructed the Solicitors to seek an order for the transfer of the Bonus Proceedings to the Federal Court Circuit. His Honour did not accept the applicant’s evidence on this point and the applicant has not established an arguable basis for challenging the finding.

34. The procedure (if any) by which the Bonus Proceedings might have been transferred to the Federal Circuit Court was not addressed in submissions on the application for leave to appeal. The applicant’s argument appeared to assume that the District Court could have made an order for the transfer of the Bonus Proceedings and that, if an application for transfer had been made, it would have been granted as a matter of course. The assumption is incorrect.

35. The District Court had no power to order the transfer of the Bonus Proceedings to the Federal Circuit Court. Section 8(1)(b)(ii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) (NSW Cross-Vesting Act) enables a party to proceedings in the District Court (and certain other courts) to apply to the Supreme Court to remove the proceedings to that Court so that consideration can be given to determining whether the proceedings should be transferred to another court. The Solicitors or Barrister could in theory have made an application under s 8(1)(b)(ii) of the NSW Cross-Vesting Act to remove the Bonus Proceedings to the Supreme Court. [19]

    19. See, for example, Woodland Home Products Pty Ltd v Picalovski [2010] NSWSC 629 (Ball J).

36. The NSW Cross-Vesting Act, however, does not empower the Supreme Court to transfer proceedings to the Federal Circuit Court. [20] Section 5(1) of the NSW Cross-Vesting Act allows and indeed requires the Supreme Court to order a transfer of proceedings in certain circumstances, but only (relevantly) to the Federal Court. Moreover, the Supreme Court can make an order to transfer proceedings only after it has taken specified criteria into account. In substance, these are whether the proceedings would have been incapable of being instituted in the Supreme Court but capable of being instituted in the Federal Court; the extent to which the matters in issue in the proceedings arise under Commonwealth law; and the interests of justice.

    20. See Chan v Johnson [2014] NSWSC 1439 at [3]-[5] (Brereton J).

37. Quite apart from the lack of power in the Supreme Court to transfer proceedings to the Federal Circuit Court, it is difficult to see how the applicant could have satisfied the criteria laid down by s 5(1) of the NSW Cross-Vesting Act. In any event, even if a transfer of proceedings was a possibility, there was no evidence before the primary Judge as to the likely attitude of the Employer to an application for transfer. Assuming there was power to order a transfer, the opposition of the Employer to an application would have led to uncertain and potentially expensive satellite litigation.

38. Had the Bonus Proceedings in the District Court been discontinued, the applicant presumably would have had to pay the Employer’s costs of those Proceedings. Moreover, given that the applicant’s common law and Fair Work Act claims arose out of distinct transactions or events, it is not at all clear that any attempt to join the common law claim to the Fair Work Act claim in the Federal Circuit Court in reliance on that Court’s accrued jurisdiction would have succeeded.

39. In these circumstances, there is no foundation for the applicant’s contention that the primary Judge erred in not finding that the Solicitors’ failure to seek a transfer of the Bonus Proceedings to the Federal Circuit Court amounted to serious neglect, serious incompetence or serious misconduct within the meaning of s 99(1)(a) of the Civil Procedure Act. Nor is there any foundation for the contention that his Honour should have found that the failure to seek an order for the transfer of the Bonus Proceedings resulted in costs being incurred improperly or without reasonable cause within the meaning of s 99(1)(b) of the Civil Procedure Act.

Second Ground

40. The primary Judge found that the applicant had given specific instructions that the Solicitors were not to interview Mr Safetli. The applicant did not advance any cogent argument for setting aside that finding. Since the applicant gave those instructions, there is no arguable basis for the contention that the Solicitors acted unreasonably or incompetently by not interviewing Mr Safetli or calling him as a witness in the Bonus Proceedings.

The Third Ground

41. The applicant’s submissions in support of his third ground assumed that the findings made by Balla DCJ in the Bonus Proceedings were to the effect that “the facts established by the evidence [did] not form a basis for a reasonable belief that the claim … had reasonable prospects of success”. It is by no means apparent that this assumption is correct.

42. The finding made by Balla DCJ in the Indemnity Costs Judgment was that the applicant himself (not the Solicitors or the Barrister) should have appreciated that his case was doomed to fail. It is arguable that s 349(1) of the Legal Profession Act creates a presumption that legal services were provided on a claim without reasonable prospects of success only if the Court finds that the facts established by the evidence do not form a basis for a reasonable belief by the legal representatives that the claim had no reasonable prospects of success. Balla DCJ made no such finding.

43. The assumption made by the applicant may not be correct for another reason. The applicant failed in the Bonus Proceedings not because Balla DCJ made affirmative findings of fact inconsistent with the applicant’s case, but because he could not establish on the balance of probabilities the facts required to make out his pleaded causes of action. It is therefore doubtful whether her Honour found that “the facts established by the evidence … do not form a basis for a reasonable belief that the claim … had reasonable prospects of success”.

44. It is true that Balla DCJ made two affirmative findings adverse to the applicant. The first was that he had created the Bonus Policy document for the purposes of the proceedings and the second was that the Staff Bonus Calculator document did not exist at the time the disputed conversations with Mr Nelson occurred. However, while her Honour regarded these matters as casting considerable doubt on the applicant’s reliability, she did not find that, of themselves, they were fatal to his claim or that they demonstrated that there was no reasonable basis for the claim.

45. As it happens, her Honour’s approach was consistent with advice given by the Barrister before the hearing of the Bonus Proceedings. In his advice, the Barrister addressed the contents of an expert’s report which cast doubt on the authenticity of the Bonus Policy document. The Barrister considered that the expert’s opinion would not necessarily be accepted, for reasons he gave. The Barrister recognised that if the expert’s opinion was accepted, the applicant’s case would be seriously compromised, but considered that it would not necessarily be fatally affected. The Barrister pointed to the possibility that if the document was not genuine, a finding might be made that the author was Mr Safetli. The Barrister was also alive to the question of which party had the onus of calling Mr Safetli and expressed the perfectly defensible view (as the primary Judge found) that it was a “moot point”.

46. It is not necessary to resolve these issues because the primary Judge expressly found that the account to which the applicant adhered at all times and to which he swore in the witness box constituted “provable facts” within the definition in s 345(2) of the Legal Profession Act. His Honour found that the statements made and evidence given by the applicant supported a reasonable belief by the Solicitors and Barrister that the material available to them provided a proper basis for alleging the facts to which the applicant swore were correct. That finding is consistent only with a conclusion that any presumption arising by virtue of s 349(1) of the Legal Profession Act had been rebutted in accordance with s 349(3). That is, assuming the presumption applied, the primary Judge found that when the Solicitors and Barrister provided legal services to the applicant, there were “provable facts” providing a basis for a reasonable belief that the applicant’s claim had reasonable prospects of success.

47. The applicant’s argument in this Court cast no doubt on the finding made by the primary Judge. Accordingly, the applicant has not made out an arguable case that the primary Judge erred in failing to apply the presumption in s 349(1) of the Legal Profession Act.

The Fourth Ground

48. There is no substance to the applicant’s complaint that he was denied procedural fairness. The affidavit to which he referred in his argument was read in the proceedings before McLoughlin DCJ in response to his Honour granting the applicant leave to amend his particulars of claim in the course of the hearing. The applicant was given ample opportunity to cross-examine the deponent and availed himself of that opportunity. Indeed he made no complaint to McLoughlin DCJ about the affidavit being read.

Orders

49. The applicant has not demonstrated that he has an arguable case that the decision of the primary Judge was wrong. Nor has he shown that he would suffer injustice if leave is refused. The applicant’s liability to pay indemnity costs to his Employer arose because, on the unchallenged findings of Balla DCJ, he persisted in mounting a case which he knew was false in material respects. Yet he consistently maintained to the Solicitors and the Barrister that his evidence was truthful.

50. The application for leave to appeal must be dismissed. The applicant must pay the costs of the Solicitors and the Barrister.

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Endnotes

10. The term “legal practitioner associate” was defined in s 7 of the Legal Profession Act to include a partner in a law firm and a director of an incorporated legal practice.

Decision last updated: 27 June 2016