Michael Phontos t/as Phontos Legal v CBS Build Pty Ltd

[2022] NSWDC 33

District Court

New South Wales

Medium Neutral Citation:

Michael Phontos t/as Phontos Legal v CBS Build Pty Ltd [2022] NSWDC 33

Hearing dates:

3 February 2022

Date of orders:

3 February 2022

Decision date:

25 February 2022

Jurisdiction:

Civil

Before:

Wilson SC DCJ

Decision:

ORDERS

1. I refuse leave to the Defendants to make an application, without Notice of Motion, to vacate the hearing date on the day of the Hearing;

2. alternatively, the application to vacate Hearing refused;

3. reasons for those decisions are reserved, so as to allow the hearing to commence before another Judge forthwith;

4. the Defendants have further applied, without notice, to stay the Proceedings. I refuse that application;

5. the Defendants are to pay the costs of the Plaintiff’s applications made before me today.

Catchwords:

CIVIL – application without Notice of Motion to vacate Hearing date on first day of Hearing refused – application without Notice of Motion to stay proceedings refused.

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Legal Profession Uniform Law 2014 (NSW)

Cases Cited:

Aon Risk Services Australia Pty v Australian National University [2009] HCA 27

ReBitar Pty Ltd [2015] NSWSC 2158

Texts Cited:

None

Category:

Procedural rulings

Parties:

Michael Phontos t/as Phontos Legal (Plaintiff)
CBS Build Pty Ltd (1st Defendant)
Rusmir Gagic (2nd Defendant)

Representation:

Counsel:
Mr Freeman (Plaintiff)
Mr Young (Defendant)

File Number(s):

2021/138732

Publication restriction:

None

Judgment

1. These proceedings were fixed for Hearing on Thursday 3 February 2022. On that day, the Defendants made an oral application to vacate the Hearing date as the Defendants had only instructed legal representation for the first time on 31 January 2022 (T1.37).

2. Upon that application being made and the parties being heard I made orders to the following effect;

1. I refuse leave to the Defendants to make an application, without Notice of Motion, to vacate the hearing date on the day of the Hearing;

2. alternatively, the application to vacate Hearing refused;

3. reasons for those decisions are reserved, so as to allow the hearing to commence before another Judge forthwith;

4. the Defendants have further applied, without notice, to stay the Proceedings. I refuse that application;

5. the Defendants are to pay the costs of the Plaintiff’s applications made before me today.

3. The matter was then referred to Judge Weber who commenced the Hearing at 2pm. It continued briefly into the next day.

4. These are my reasons for the orders made 3 February 2022.

The Proceedings by Statement of Claim 17 May 2021

5. The Plaintiff seeks recovery of legal costs and disbursements from the Defendants. The claim is based on work done pursuant to Costs Agreement entered into between the parties on 5 September 2017, 26 September 2019 and 12 October 2019.

6. On 14 December 2020 the Plaintiff issued three Tax Invoices to the Defendant in the amounts of $89,452.00, $174,669.00 and $35,981.00. Payment was due within 30 days but was not made.

7. On 16 June 2021, the Defendants filed a defence in which the Defendants denied entering into the Costs Agreements referred to in the Statement of Claim and further:

“[3] the Defendants made alternative arrangements in lieu of the payment of legal fees by way of the provision of building services in the capacity of Director and nominated registered Building Supervisor of Buildevelop Constructions Pty Ltd”

8. The defence was verified by affidavit sworn by the Second Defendant being a director of the first Defendants company.

Proceedings Before the Court

9. These proceedings were carefully case managed by the Judicial Registrar. Mr Freeman of counsel appeared on behalf of the Plaintiff and Mr Gagic on behalf of the Defendants before the Judicial Registrar on 4 August 2021, at which time the matter was listed for pre-trial conference on 18 September 2021 at 9.30am. The Judicial Registrar also ordered that any further adjournment to be supported by an affidavit.

10. On 8 September 2021, the matter came again before the Judicial Registrar. Mr Freeman of counsel appeared for the Plaintiff and Mr Gagic represented himself and the First Defendant on this occasion “over serious objections of Mr Freeman ”. ^[1] The Judicial Registrar ordered that, in the event the Defendants had not made an application for costs assessment by 21 October 2021, the matter would be listed for direction and Hearing. The Judicial Registrar listed the matter for a directions Hearing on 21 October 2021 and ordered that any further adjournment was to be supported by an affidavit.

    1. See MFI 2, page 2

11. On 21 October 2021, the matter came again before the Judicial Registrar. Mr Freeman of counsel appeared for the Plaintiff. There was no appearance for the Defendants. At that time, the Judicial Registrar made the following orders:

1. fixed for hearing on 3 February 2022 for 1 day;

2. Standard Orders for Hearing;

3. Defendants to serve evidence by 3 December 2021;

4. Case Managed List Directions Hearing 22 November 2021 at 9:30am;

5. notices to issue to the Defendants at [email protected];

6. if the Defendants does not appear on 22 November 2021, the Defence filed on 16 June 2021 will be struck out under rule 12.7 of UCPR 2005.

12. The Standard orders are annexed to District Court Civil Practice Note 1.

13. On 22 November 2021, Mr Freeman of counsel appeared for the Plaintiff and Mr Gagic appeared for the Defendants. At the time Mr Freeman submitted that the court was in error in making the orders of 8 September 2021 regarding the Defendants filing an application for the assessment of costs. As I understand the submission, that order was made on the basis that the filing of such application would effectively stay these proceedings. Mr Freeman referred the court to section 198(7)(b) of the Legal Profession Uniform Law 2014 (NSW) and a decision of Brereton J in the matter of Bitar Pty Ltd [2015] NSWSC 2158. The effect of that decision was that the new uniform law which commenced 1 July 2015 prohibited the commencement but not the maintenance of proceedings such as these. An earlier iteration of that Act prohibited both.

14. In any event, on 22 November 2021 the Defendants sought an extension of time by which to file and serve evidence (beyond 3 December 2021). That application was refused and the Hearing date was confirmed.

15. The matter was again before the Judicial Registrar for Mention on 1 February 2022. Mr Freeman of counsel appeared for the Plaintiff and Mr Ahmed appeared for the Defendants. The Judicial Registrar made the following orders:

1. Confirm hearing date;

2. note: Defendants will make an application to vacate the hearing date on 3/2/22;

3. note: Defendants instructed solicitors on 31/1/2022;

16. It was with that background that the matter came before me as Civil List Judge amidst a busy list on 3 February 2022.

Application Without Notice to Vacate Hearing Date

17. When the matter came before me on 3 February 2022 Mr Freeman of counsel appeared for the Plaintiff and Mr Young of counsel appeared for the Defendants. The Defendants sought to rely upon an unexecuted affidavit of the 2nd Defendant dated 31 January 2022 filed 1 February at 12.28 am. As the affidavit had been signed but not witnessed, objection was taken and that evidence was excluded. Mr Young indicated he had sought to rely on the affidavit to establish a fact stated in the first sentence in paragraph 8: “on 16 December 2021 I sent a complaint to the office of the Legal Services Commission about Mr Michael Phontos and Mr Rodney Freeman” (MFI 3, page 3).

18. To overcome the difficulty with the affidavit, I asked Mr Freeman if he would agree to that matter as an agreed fact, which he did.

19. The Defendants also sought to rely upon an affidavit of Mr Gagic affirmed 29 October 2021 (Exhibit 1). Attached to Exhibit 1 was an Application for Costs Assessment apparently dated 21 October 2021.

20. The Plaintiff relied upon an affidavit of Michael Phontos sworn 2 February 2022, filed the same day at 12.20 pm (Exhibit A).

21. Both parties relied upon written submissions. The Plaintiff submissions were filed on 2 February 2022 at 2.03 pm (MFI 2). The Defendants written submissions were filed 3 February 2022 at 9.29 am, 1 minute before the listing (MFI 4).

22. In addition, the Plaintiff provided a chronology which had been filed 2 February 2022 at 6.25pm (MFI 1).

The Application

23. Prior to the Hearing date, the Plaintiff did not know the nature of the application intended to be made by the Defendants, that is, whether it was to vacate the hearing, stay the proceedings or seek an adjournment. The Plaintiff objected to the Defendants bringing the application without filing a Notice of Motion and providing an affidavit making out the basis for the application.

24. UCPR 18.2 provides:

18.2 Requirement for Notice

(1)   a person may not move the court to make any order unless Notice of Motion has been filed and served on each person affected by the proposed order.

25. Subsection 2 then provides for circumstances when such an application may be made without filing a Notice of Motion. The only possible relevance is sub-rule (b) which permits the making of an application without a Notice of Motion if the filing or service of the same would “cause undue delay or other prejudice to the person by whom the order is sought”. There was no submission made on behalf of the Defendants in that regard. In any event, I note solicitors for the Defendants were appointed on 31 January 2022 and the matter was mentioned before the Judicial Registrar on 1 February 2022. There is no reason why a Notice of Motion could not have been filed prior to the day of the Hearing. The fact Mr Ahmed informed the Judicial Registrar on 1 February 2022 that the Defendants intended to make an application to vacate does not excuse compliance with the rules. In those circumstances the application to move the Court without the filing of a Notice of Motion with affidavit evidence in support was refused.

Alternatively, Application to Vacate Refused

26. Even if the Defendants had properly made out a basis of leave to make the application without the Notice of Motion, the application to vacate the Hearing would have been refused. The only evidence relied upon by the Defendants was the affidavit of Mr Gagic 29 October 2021 (Exhibit 1) which provided 2 paragraphs and annexes the Application for Assessment of Costs. No evidence was presented by the Defendants which would have justified vacating the Hearing, in any event.

27. Mr Young for the Defendants sought to rely upon annexures to Exhibit A to make out a submission that “the Defendants had difficulty obtaining legal representation in December and January” [MFI 4, paragraph 8].

28. In my opinion, the selective reference to the annexures by the Defendants was misleading. The affidavit of Mr Phontos must be considered in its entirety.

29. I should also observe that the Standard Orders for Hearing, provide:

“[14] subject to sections 56-60 of the Civil Procedure Act, hearings will only be vacated or adjourned where there is a very good reason. This must be demonstrated by the parties seeking the vacation or adjournment. The unavailability of counsel, or the failure to comply with court orders or to properly prepare the matter for hearing, will not normally be sufficient reasons.

[15] any application for an adjournment must be made by way of a Notice of Motion with affidavit in support and must be made at the earliest possible time”

30. In my opinion, the Defendants have failed to comply with both clauses 14 and 15 of the Standard Orders for Hearing. The Defendants failed to make out a “very good reason” and failed to file a Notice of Motion with an affidavit in support “at the earliest possible time”.

31. The only evidence regarding the history of the proceedings is contained in the affidavit of Mr Phontos (Exhibit A).

32. I note that on 30 July 2021 Mr Phontos received a telephone call from James Burns of Australia Litigation Funding. In an email to Mr Freeman, Mr Phontos recounted the conversation with Mr Burns including the following:

“[H]e said he was about to spend 30k to 40k and he has known Des Fagan for 30 years and his judgment should cause me difficulty, he is appointing Yates Biagi who are an aggressive firm and Andrew Fernin of counsel.”

33. It was not disputed by the Defendants that that conversation took place and that Mr Burns was making representations on behalf of the Defendants. It follows that as long ago as 30 July 2021, the Defendants had been provided with litigation funding and access to legal representation. No explanation is provided for why that representation was not taken up or whether Mr Burns spent $30,000 - $40,000 over the weekend for the lawyers to prepare the matter for the Defendants.

34. Further, there is no explanation for the delay between 30 July 2021 when Mr Burns indicated that representation had been arranged and 31 January 2022 when the current lawyers were retained. Absent any such explanation the court’s discretion could not be exercised favourably as the Defendants had failed to demonstrate that there was very good reason to vacate the Hearing date.

35. When Exhibit A was sought to be tendered objection was taken on behalf of the Defendants to Annexure A (a statement of Michael Photons dated 11 June 2021). It is unnecessary to refer to it in detail or even in terms. It is sufficient to note that on the day prior (10 June 2021) Mr Gagic and another man attended Mr Phontos’ office and made threatening remarks in an attempt to persuade Mr Phontos to discontinue these proceedings.

36. Mr Freeman relied upon these threats, which apparently extended to Mr Phontos’ family and to Mr Freeman and his family, to submit that vacating the Hearing date would be prejudicial to the Plaintiff.

37. Further, no explanation was offered by the Defendants as to why they failed to comply with the order made by the Judicial Registrar on 21 October 2021 (when fixing the matter for Hearing) that the Defendants serve evidence by 3 December 2021. Again, absent any such evidence, the court’s discretion ought not be exercised in favour of the Defendants.

38. The overriding purpose of the Civil Procedure Act (CPA) and the rules of court “is to facilitate the just, quick and cheap resolution of the real issues in the proceedings” (section 56 CPA).

39. By reason of section 56(3) every party to a civil proceeding is under a duty to assist the court to further the overriding purpose “and, to that effect, to participate in the processes of the court and to comply with the directions and orders of the court”. The Defendants have failed to participate in the processes of the court. By way of example, when the Hearing was fixed, the Defendants failed to appear. By way of further example, the Defendants failed to serve evidence in accordance with the timetable set 21 October 2021. In respect of the application, the Defendants have failed to move the court by the filing of a Notice of Motion and have not put on evidence which would warrant the orders which they seek. The Defendant’s conduct has been such that it has in fact frustrated the processes of the court and the courts capacity to comply with the overriding purpose of the Act and Rules.

40. Further, the Defendants conduct falls foul of the objects of case management set out in section 57 of the CPA. The delay which has been occasioned by vacating the Hearing date would have not only caused inconvenience and prejudice to the Plaintiff, but rendered inefficient the use of available of judicial and administrative resources. As the High Court observed in Aon Risk Services Australia Pty v Australian National University [2009] HCA 27 the time of the court is a publicly funded resource, French CJ continued:

“[5] Inefficiency in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system.”

41. Further, his Honour at [26] when considering an appeal from the Full Court of the Supreme Court of Victoria stated that:

“[26]… the judge of the busy court is entitled to consider ‘the effects of the adjournment on court resources and the competing claims by litigants in other cases awaiting hearing in the court as well as the interests of the parties.”

42. When the Defendant’s application came before me on the day of the Hearing, a judge was available to hear the matter and, in fact, did so. The District Court of NSW is a busy court with about 3000 cases awaiting determination. Whilst the court is capable of managing that caseload it relies upon the exercise of diligence by the parties. The listing of any matter for Hearing displaces another matter from being heard at that time. The court has a strong record of reaching matters on the day on which they are listed. These are further relevant considerations in exercising the courts discretion.

43. The court in considering these applications is to act in accordance with the dictates of justice (section 58(1) CPA). In doing so I have had regard to sections 56 and 57 together with the specific consideration in section 58(2)(b) CPA, none of which assist the Defendants.

44. It is for these reasons that I made the orders refusing the Defendants’ applications.

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Endnote

Decision last updated: 25 February 2022