Metledge v Koutsourais & Anor

[2005] HCATrans 425

[2005] HCATrans 425

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S491 of 2004

B e t w e e n -

MARY METLEDGE T/AS METLEDGE & ASSOCIATES

Applicant

and

MANUEL KOUTSOURAIS

First Respondent

BAMBAKIT PTY LIMITED

Second Respondent

Application for special leave to appeal

McHUGH J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 17 JUNE 2005, AT 11.54 AM

Copyright in the High Court of Australia

MR D.K.L. RAPHAEL:   If it please the Court, I appear for the applicant with my friend, MR A. BLANK.  (instructed by M.R. Barber & Associates)

MR T.D. TZOVARAS:   May it please the Court, I appear for the first respondent.  (instructed by Tzovaras Legal)

McHUGH J:   Yes, Mr Raphael.

MR RAPHAEL:   We seek leave to appeal to the High Court.  We say there are three reasons why leave should be granted, and that this is a matter of universal importance and, indeed, in a sense, of national importance.  In so saying, we leave out those reasons, the ultimate question which, in our submission, is one for the Full Court of this Court, namely, whether or not the learned magistrate Master Malpass, Grove J and Bryson JA are correct in saying that this particular accord and satisfaction takes the agreement to pay a sum of money after the purview of section 192 of the Legal Profession Act, or indeed, whether the converse is the case.

The points which we seek to rely upon, and I will go through them very swiftly, your Honours, and then elaborate on them, are these.  There is clearly a difference of opinion in the Court of Appeal, and on one view of the Court of Appeal’s reasons, there are three incompatible views.  If I might refer you shortly to paragraph 3 of our summary of reply to the respondent’s submissions.

The second aspect is that this is a question of whether or not an accord and satisfaction of the type found by Justice Bryson which – and of course, an accord and satisfaction is of itself in general terms, a cause of action - whether that takes the amount of a claim outside the purview of section 192 and this is of itself, a matter of general importance.  This is because the analogue of section 192 in the Legal Profession Act 2004, namely, section 331 is to like effect to section 192.  Of course, the 2004 New South Wales Act is to be the prototype for the Acts of like type to be enacted throughout Australia.  In our special leave submissions printed, I refer to what is said by the Minister who introduced that legislation. 

Thirdly, and perhaps in a sense, most importantly, your Honours, this Court ought to pronounce upon the question so that – let it be assumed that leave is granted and we are successful on the appeal.  Each of the State governments, including New South Wales which has already enacted this legislation, but not proclaimed it to commence, will have the opportunity to consider whether or not they, taking into account the decision of the High Court, as I say, assuming it is favourable to us, they wish to amend the terms of section 331.  Similarly, it would give the legislatures of the other States the opportunity to give like consideration.  These, in our submission, are the prime points and they are the prime points of importance which explain why this matter ought to be granted special leave.  

Whether we are ultimately successful or not is not quite the question, of course, from my client’s point of view.  Naturally, we wish to be successful, but most importantly, it will give the State legislatures the opportunity to consider whether or not an accord and satisfaction of the type found by Justice Bryson is sufficient to cause the legislation to change the Act.  It is clearly of great importance.

Now, your Honours, if I might take you to page 97 of the appeal book, paragraph 3.  In that, we point out there is one feature of the respondent’s argument which underlies its inadequacy.  The respondent points out in paragraph 10 of his argument that Justice Beazley agreed with Justice Hodgson that the Local Court proceedings were in substance proceedings for the recovery of costs.  This is correct, but the respondent did not deal with a matter that it is submitted is important from the point of view of special leave, namely that Justice Beazley did not agree with what Justice Hodgson said in paragraph 11 of his reasons.  This latter paragraph seems to have been intended to help practitioners and clients distinguish between proceedings not barred by section 192 although based, at least in part, on a lawyer’s entitlement to costs, and proceedings which are so barred.

Your Honours, the point which can fairly be made is that on one basis where you take the view of Justice Hodgson, he says an accord and satisfaction, plus other things, lessening of amount or whatever.

McHUGH J:   Yes, but what you have to face up to, Mr Raphael, is that the Court of Appeal did not engage in an interpretation of section 192.  What they engaged in was a factual assessment of the nature of the agreement of 17 July, and whether proceedings for its breach were proceedings for the recovery of costs by a solicitor.  It is just a factual matter; application of a statute to a set of facts.

MR RAPHAEL:   With respect, your Honour, might I, with some timorous voice seek to ‑ ‑ ‑

McHUGH J:   No, there is no need to be timorous.

MR RAPHAEL:   Very well, I shall not, but your Honour knows me anyway, I am not.  The fact of the matter is, I think your Honour is, with respect, over‑simplifying the matter.  There are three possible interpretations of this.  Justice Beazley would say nothing can escape the scope, the ambit of section 192.  Justice Hodgson would say, in certain circumstances where a lot more is given up or obtained, it would.  Justice Bryson says, in effect, that if there is a proper accord and satisfaction of the completed type referred to in the decisions, then it is in order.

Now, that is not a simple factual matter.  Those three views do go to the interpretation of section 192.  In our respectful submission, it really is a lot more, a lot, lot more, than dealing with just facts.

McHUGH J:   But all Justice Beazley said was, at page 49:

I agree with the Orders proposed by Hodgson JA and with his reasons save that I do not consider it necessary to express an opinion as to when proceedings might not be proceedings for recovery of costs ‑ ‑ ‑

MR RAPHAEL:   Yes.  Of course, that is precisely what she says, your Honour, but ‑ ‑ ‑

McHUGH J:   But what his Honour says is an obiter dictum and undoubtedly, that is why her Honour said this was not necessarily an expression of opinion.  It was not necessary to decide the case.

MR RAPHAEL:   Yes, of course that is so, your Honour, it is clearly obiter.  But the point is, he offered that obiter as a means, one can only assume, to assist the profession.

McHUGH J:   This Court will be very busy if we grant special leave in respect of judges’ obiter dicta.

MR RAPHAEL:   Your Honour, I hear what you say, but I would ask that you again consider what I have, a few moments ago, said.

McHUGH J:   We are dealing with a relatively small sum of money in terms of recovery.  You would have to be blind to see that this case now is really about the costs of litigation.  It has been through so many levels.

MR RAPHAEL:   Yes, I appreciate what your Honour is saying, but one example ‑ ‑ ‑

McHUGH J:   It would be surprising if the cost of this litigation was not five or six times the amount now in issue.

MR RAPHAEL:   I think that could well be so, but your Honour, that dreaded stamp duty case, the DKLR Holding Co was about $52, and that not only found its way to the High Court, after a special leave application, but has been on numerous occasions referred to as your Honour knows.  With respect, the amount of money involved really is not what is at issue; it is what should be the principles applied, and whether this Court and, in our respectful submission, it ought to take on this matter and say we will give assistance in the proper interpretation of section 192.  I would urge that this Court ‑ ‑ ‑

McHUGH J:   But the Court is not here to give to give advisory opinions.  It is here to determine cases, and in the course of doing so, it will lay down general principles of law that have a general application.  But it is not its function to give advisory opinions.  In fact, the jurisprudence of this Court is that, it is unconstitutional for the Court to give advisory opinions.

MR RAPHAEL:   I fully appreciate that, your Honour, and of course, it was a poor choice of words, but I ask you to ignore the poor choice of words and to accept that this is a matter which will involve one piece of legislation now enacted but yet to be proclaimed, which is to be the prototype for the like legislation around Australia.  It is important that your Honours deal with this question of whether or not an accord and satisfaction of the type referred to by Justice Bryson in paragraph 52 of his reasons is such that takes this matter outside a mere factual finding.  I would urge your Honours to consider those aspects, and to consider the fact that it would enable - this Court’s judgment would, if one likes, telegraph to the States of Australia this is a particular problem, either accept it or reject it.  Your Honour, it is an important ‑ ‑ ‑

McHUGH J:   Well, the legislature can do that now.  The legislatures around the nation can look at this judgment and say we are going to make sure there is no argument about this, or we are going to amend it to allow this sort of situation.  But all that happened here, correct me if I am wrong, is that Justice Bryson looked at the facts of the case and said in the light of the factors that he referred to, that the new contractual promise had come into existence, and the action of the Local Court was based on the enforcement of the new promise, and not on the earlier claims for costs against the first and second respondents in those proceedings.  That is the difference, is it not?  He saw it as a new promise, divorced from the earlier action for claim for costs.

MR RAPHAEL:   Yes, your Honour, and Justice Hodgson, to the contrary, put that it was just, in effect, a sham.  He does not use that word, but it was essentially still a matter for recovery of costs and his Honour does not and did not refer to the fact that one party was released, that a party, Bambakit, had accepted a liability to pay a much larger sum than was originally its obligation.  In effect, the two decisions are diametrically opposed and ‑ ‑ ‑

McHUGH J:   The effect of Justice Hodgson’s judgment is that he says that, nevertheless, suing on this agreement of proceedings for the recovery of costs by a barrister or solicitor.  That is what he says, in substance.

MR RAPHAEL:   Yes, your Honour, but it is really saying it does not matter how you disguise it.  Let me put this as a proposition to you, your Honour.  If it had clearly been said I and my company owe $25,000; $125,000, figures are irrelevant.  If you will just look to one of us, that party will pay you over a number of years.  It is a completely new deal and, in effect, what we are saying is, that this is not a disguise, this is permitting people in commerce to freely contract with one another.  Perhaps I may be overemphasising but I do not think so and I would submit it is not, with respect, the simple matter which your Honour is tending to characterise it as. 

McHUGH J:   Well, if, for instance the parties had agreed that instead of paying the 9,000 that was outstanding, there would be a sale of some property, then you might be in a different area of discourse.  One might then say, well it is not an action for the recovery of costs when you are suing on that agreement.  It is an action to recover the property or for breach of promise to convey property, but the view was taken in this case that there was not enough distinction between the earlier agreement and the later agreement, what you call an “accord and satisfaction”, to bring it outside the section.

MR RAPHAEL:   Your Honour, the reason we would say it is outside the section is that one party agreed to pay a lot more money than had originally been sought from it.  In whatever respect one takes it, there is genuine conflict and if you go to paragraph 10 of Justice Hodgson’s decision ‑ ‑ ‑

McHUGH J:   But what was it?  There was a debt of $9,000‑odd owing and under the agreement the debt was to be paid by way of monthly instalments of not less that $1,000 at 12 per cent interest.

MR RAPHAEL:   Yes, your Honour, but of course, that was the obligation accepted by Bambakit, the company, in lieu of ‑ ‑ ‑

McHUGH J:   I know, there was an argument as to whether both of them were responsible in the first place ‑ ‑ ‑

MR RAPHAEL:   Yes, your Honour, and she genuinely believed it.  As you see at the final sentence of paragraph 8:

I would accept that the solicitor had a bona fide belief that she was entitled to do these things, and that would be sufficient for consideration.

Now, your Honour, give further thought to it.  It really is a different matter.  It is not just a matter of finding of facts.  This is a difficult area and a matter that is fitting and suitable for this Court to pronounce upon.  Forgive me for ending a sentence in a preposition.  I will not make the rest of the joke.

McHUGH J:   Winston Churchill used to end sentences in prepositions and he was a master of English, even though he once said that this is English up with which I would not put, but ‑ ‑ ‑

MR RAPHAEL:   I know, your Honour, I am almost old enough to have voted at that time but forgive the moment of levity on my part, your Honour, but we really see this as important.  Can I assist your Honours any further?

McHUGH J:   No, we have read your submissions and I think we understand your point.  Thank you.

MR RAPHAEL:   That is the case for the applicant.

McHUGH J:   Thank you, Mr Raphael.  The Court need not hear you, Mr Tzovaras.

The Court is of the view that this case turns on the nature of the 17 July agreement between the parties and it does not raise any question of general principle calling for the intervention of this Court.  Accordingly, the application is dismissed with costs.

AT 12.13 PM THE MATTER WAS CONCLUDED