Mutokoyi v The Public Trustee of Queensland

[2024] NSWSC 1005

Supreme Court

New South Wales

Medium Neutral Citation:

Mutokoyi v The Public Trustee of Queensland [2024] NSWSC 1005

Hearing dates:

7 August 2024

Date of orders:

7 August 2024

Decision date:

07 August 2024

Jurisdiction:

Equity - Duty List

Before:

Kunc J

Decision:

Notice of motion for payment of funds out of court dismissed.

Catchwords:

COSTS — Solicitor/Client — Recovery — Solicitor’s lien — Settlement proceeds paid into Court pending costs assessment

Cases Cited:

Cachia v Hanes (1994) 179 CLR 403

Drexler v Karabay [2014] NSWSC 1863

Category:

Procedural rulings

Parties:

Partreck Mutokoyi (Applicant)
Brazel Moore Lawyers Pty Ltd (Respondent)

Representation:

Counsel:
AJ Merrett (Respondent)

Solicitors:
Brazel Moore Lawyers (Respondent)

Other:
Partreck Mutokoyi (Self)

File Number(s):

2023/3426

EX TEMPORE JUDGMENT (REVISED)

Summary

1. This application concerns $90,000 currently held in Court (the Fund) in aid of the enforcement of a solicitor's lien over the fruits of an action. The applicant, Mr Partreck Mutokoyi, is the former client of the respondent solicitors, Brazel Moore Lawyers Pty Limited (BML). Mr Mutokoyi today appeared for himself. BML was represented by Ms AJ Merrett of Counsel.

2. By motion filed on 25 July 2024, Mr Mutokoyi seeks release of $43,920 from the Fund because he says, and it was not disputed by BML, that he is in severe financial distress. That distress is why the matter has been heard in the Duty List. For the reasons which follow, Mr Mutokoyi's motion will be dismissed.

Procedural history

3. In the original proceedings, Mr Mutokoyi brought family provision proceedings against the defendant, the Public Trustee of Queensland (PTQ). BML originally acted for Mr Mutokoyi but during the course of the proceedings ceased to do so. Mr Mutokoyi then represented himself. He successfully negotiated a settlement which resulted in a sum to be paid to him. That sum includes what is now the Fund.

4. BML served a notice of intention of ceasing to act on Mr Mutokoyi on 25 April 2023. In anticipation of the termination of its retainer, BML had informed Makinson d'Apice, the solicitors for PTQ, that BML would press a solicitor's lien for its fees and disbursements over any verdict or settlement payable by PTQ to Mr Mutokoyi.

5. BML terminated its retainer with Mr Mutokoyi on 14 June 2023. On the same day, BML issued a tax invoice for its services to Mr Mutokoyi in the sum of $98,546.25. That invoice did not include counsel’s fees or other disbursements.

6. Some weeks later, BML followed up Mr Mutokoyi for payment. On 2 August 2023, BML sent Mr Mutokoyi an unsealed statement of claim to be filed in the Local Court if he did not respond to BML's requests for payment. No response was received, so on 28 August 2023 BML filed a statement of claim against Mr Mutokoyi for its fees in the Local Court at Gosford. Mr Mutokoyi did not file a defence to the statement of claim.

7. On 30 January 2024, Makinson d'Apice informed BML that the family provision proceedings had been settled the day before. That was correct. On 29 January 2024, Rees J had made orders in chambers including:

“2 Orders, pursuant to section 59 of the Succession Act 2006 (NSW), that the Plaintiff receive, by way of provision, out of the estate of the deceased a lump sum of $145,000 (“Lump Sum”).

3   Orders that the Lump Sum referred to in paragraph 2 be paid within 28 days of the date of these orders.

4   Orders that no interest is to be paid on the Lump Sum if such amount is paid within 28 days of the date of these orders and if not so paid….”

8. Being concerned that Mr Mutokoyi would not pay BML's costs, BML did two things.

9. First, on 1 February 2024, BML filed a notice of motion for default judgment in the Gosford Local Court. On the same day, default judgment was entered against Mr Mutokoyi in the sum of $101,669.96.

10. Second, on 23 February 2024, BML caused a notice of motion to be filed in Court in these proceedings seeking a declaration that BML had a solicitor's lien over the money to be paid to Mr Mutokoyi pursuant to Rees J’s orders. The day before filing that motion, BML made an open offer to Mr Mutokoyi that it would accept $68,082.85 inclusive of counsel's fees in full and final settlement of its claim for costs against Mr Mutokoyi. Mr Mutokoyi did not accept the offer.

11. On 23 February 2024, BML’s motion came before me, then sitting as the Succession (Family Provision) list judge. Mr R D Turnbull of Counsel appeared for BML. Mr N Kirby of Counsel appeared for PTQ. Upon BML by its counsel giving the usual undertaking as to damages, I made orders in Mr Mutokoyi’s absence which included:

4           Vacate orders 3 and 4 made by Rees J on 29 January 2024 and in lieu:

“Orders that the Lump Sum referred to in Order 2 be paid as follows:

a.   The sum of $101,661.96 into Court; and

b.   The sum of $41,338.04 to the plaintiff

by 4pm on 26 February 2024.”

12. On 29 February 2024, Mr Mutokoyi filed an application for BML's costs to be assessed.

13. On 1 March 2024, BML's motion came back before me in the Succession (Family Provision) List. On that occasion Mr Mutokoyi appeared for himself. For reasons no longer relevant, I directed that $11,661.96 of the funds paid into Court pursuant to the order that I had made on 23 February 2024 should be paid forthwith to Mr Mutokoyi. This meant that Mr Mutokoyi would receive $53,000 from the settlement and left the Fund in Court.

14. Also on 1 March 2024, Mr Mutokoyi filed in the Local Court at Gosford a notice of motion to set aside BML's default judgment.

15. On 16 March 2024, Mr Mutokoyi had offered to pay BML $48,500 in final settlement of all outstanding fees. Two days later, BML rejected that offer and renewed a previous offer to accept $60,000 to Mr Mutokoyi. He did not accept that proposal.

16. Mr Mutokoyi’s motion to set aside the default judgment was heard on 12 and 14 June 2024. The orders made on 14 June 2024 by the Local Court were:

1. Notice of motion granted.

2. Set aside final judgment/order.

3. The matter is listed for mention on 9 September 2024 at 9.30am before the Local Court Civil at Gosford.

4. Part heard before Magistrate J Peach.

5. Costs reserved.

6. Stay granted pending assessment in Supreme Court.

17. What I have set out in the previous paragraph appears from a Notice of Orders Made sent to Mr Mutokoyi by the Local Court. There was no evidence before me as to the learned magistrate’s reasons for those orders.

18. It was common ground that the costs assessment of BML's costs requested by Mr Mutokoyi is now under way before a costs assessor. BML has provided to the costs assessor a bill in assessable form for $114,692.17 including Counsel’s fees.

Matters of agreement

19. Mr Mutokoyi filed 24 pages of submissions which I have taken into account, together with affidavits and exhibits of some length which he addressed in the course of his oral submissions. BML relied on two affidavits of Mr Brazel, the principal of BML, together with a three page outline of submissions prepared by Mr R D Turnbull of Counsel, which were supplemented by Ms Merrett in the course of her address.

20. Before turning to the parties' contentions, two matters of agreement should be noted.

21. First, Ms Merrett, properly in my respectful view, accepted that it was clear from his evidence that Mr Mutokoyi is currently in a position of genuine financial hardship. He produced an exhibit referred to as Annexure P and headed "Immediate and Urgent Costs Requirements" totalling $43,920. Some of those requirements relate to payments such as mortgage payments and utilities. Others are of a more discretionary nature.

22. Mr Mutokoyi mentioned on several occasions that he has only been able to afford a one-way ticket to Perth to accompany his son to an important sporting tournament and needed money to pay for their return ticket. While I can appreciate the importance to a parent of being able to provide for a child in that way, I respectfully observe that such expenses do not fall into the same category of urgency of matters such as mortgage and utility payments.

23. I also accept there was some force in Ms Merrett's submission that there was no evidence as to the consequences of those essential payments being in arrears. The absence of evidence of those consequences is not, however, something which I have taken into account in reaching my decision to dismiss Mr Mutokoyi's motion.

24. The second matter of common ground was that Mr Mutokoyi accepted that BML had a solicitor's lien over the Fund. However, he submitted that the Court had a discretion to order payment out of some of it. Ms Merrett did not expressly challenge whether or not the Court did have such a discretion, properly understood as such, and I have proceeded on the basis that I do, notwithstanding Mr Mutokoyi’s concession as to the existence of the lien.

Consideration

25. Because I have accepted the submissions made by Ms Merrett, it is convenient for me first to set out and resolve each of Mr Mutokoyi's reasons that he advanced in favour of his motion.

26. First, he submitted that he was in serious financial hardship. So much has been accepted, although how he had reached that position having (I assume) received $53,000 of the settlement (see [13] above) was not the subject of evidence or debate before me. In and of itself, I do not accept that financial hardship is a sufficient reason to order payment out of any part of the Fund. That hardship and any other matters must be weighed against the considerations advanced on behalf of BML to which I shall come. Furthermore, I do not accept (to the extent that Mr Mutokoyi seemed to be suggesting this) that his current financial position had been caused by any improper conduct of BML. Nor was it obvious from his evidence how that hardship had been caused by the mere fact that BML had taken steps to recover and secure its fees.

27. Second, Mr Mutokoyi drew to attention that the default judgment had been set aside. That again may be accepted. However, as Mr Mutokoyi himself acknowledged, BML has an equitable lien over the Fund. The existence of that lien did not depend upon the existence of the default judgment.

28. Third, he submitted that even if BML was found to be entitled to the entire Fund as a result of the costs assessment, he had a costs claim against BML which would far exceed the amount of the Fund.

29. In explaining what the value of that claim might be, he first said that he had suffered a loss of income by reason of the default judgment because if he had obtained the full benefit of the settlement, he had been intending to make improvements to his family home by adding an extra storey which would then have generated an income by being rented out. That, with respect, is entirely speculative.

30. Mr Mutokoyi also tendered some evidence which established that he has the possibility of employment as a planner with an employer who had offered to pay him $120 per hour. He said that he had lost that income because he had been unable to take up that employment due to being so occupied with the proceedings in the Local Court.

31. As best I understood him, both of the matters to which I have just referred were matters which Mr Mutokoyi said he would be seeking as part of his costs of setting aside the default judgment in the Local Court proceedings. As I have already noted, those costs have been reserved. However, there is a more fundamental difficulty. That is that Mr Mutokoyi is a litigant in person. While he may recover his reasonably incurred disbursements and witness expenses including costs and disbursements for legal work done by others, he is not able to recover as costs matters such as travelling expenses or loss of earnings: Cachia v Hanes (1994) 179 CLR 403. I am therefore not satisfied that the matters upon which he apparently relies for his costs claim would (even assuming there was proper proof of quantum) be recoverable as such in the Local Court.

32. Fourth, in a number of different ways, Mr Mutokoyi challenged BML's entitlement to costs and raised issues concerning the costs agreement between him and BML. He said it no longer "held water" after the setting aside of the default judgment; that BML had failed to comply with the costs disclosure requirements; that BML had illegally terminated its retainer agreement and had irregularly performed work; that he had been misled by an original estimate of $35,000 when he had been presented with a bill for just over $100,000; and, that the costs that had been charged were excessive and unreasonable and therefore irrecoverable (relying in part on correspondence from PTQ which had expressed the opinion that BML's fees were excessive).

33. In my respectful view, all of these matters are matters which will be determined, to the extent that Mr Mutokoyi wishes to raise them, in the costs assessment. It is neither possible nor appropriate for this Court on an application of this kind to come to any view about the amount by which BML's entitlement to costs may be reduced by the costs assessor, beyond observing that I am satisfied, as a matter of the Court’s experience, that $90,000 is within the range to which a bill for $114,692.17 (inclusive of counsel’s fees) might be finally allowed on assessment.

34. Insofar as the ongoing costs assessment is concerned, I accept the submission made on behalf of BML that the fact of the assessment has no impact upon the existence of the lien itself: Drexler v Karabay [2014] NSWSC 1863 at [36] – [37] per White J (as his Honour then was).

35. Fifth, Mr Mutokoyi relied on the effect that he said the litigation had had on his health and the emotional distress which it had caused him. Again, so much may be accepted, and I well understand how stressful litigation can be for people. However, the Court’s understanding of, and sympathy for, those circumstances are not sufficient to justify the relief which he seeks.

36. Sixth, Mr Mutokoyi drew attention to the offers which had been made by BML (see [10] and [15] above). He submitted that the Court should conclude that if BML had offered $60,000 by way of settlement, BML must be of the view that it was not entitled to any more than that. He submitted that was a basis on which the Court could safely conclude that $30,000 of the Fund should be paid out to him.

37. I do not accept that submission. There are many reasons why a party may sensibly make offers of the kind which BML has made. The amount a party such as BML offers in settlement does not necessarily, and frequently does not, reflect the offeror's view as to what it might ultimately receive at the conclusion of, in this case, the assessment.

38. Seventh, he said that there had been a breach of confidence by Makinson d'Apice in alerting BML to the fact that the proceedings had settled, such that there would be a fund available over which BML could exercise its lien. Even assuming (and I express no view) that there had been some kind of breach of confidence by Makinson d'Apice, the consequences of that cannot be visited on BML.

39. I will next set out the matters expressly relied upon by BML, all of which I accept.

40. First, and most importantly, BML has an undisputed security interest in the Fund. Any payment out will deplete the Fund, and to the extent the balance of the Fund is less than the assessed costs, BML will be left an unsecured creditor of Mr Mutokoyi.

41. Second, and related to the first point, it was accepted that Mr Mutokoyi is in real financial difficulty. It follows that to the extent BML might become an unsecured creditor of Mr Mutokoyi for its fees, the evidence suggests that it will not be paid to the extent it is an unsecured creditor.

42. Mr Mutokoyi submitted in response that he was intending, subject to some logistical difficulties, to take up the offer of employment to which I have referred in [30] above. The difficulty is that there is no evidence before the Court of how much Mr Mutokoyi is likely to earn were he to take up that employment. Furthermore, and regrettably, the evidence does suggest that Mr Mutokoyi’s financial situation is so poor that, even if he does take up the offer of employment and begin to earn $120 an hour, it is unlikely to resolve completely the serious financial position in which he finds himself.

43. Next, I accept BML's submission based upon the fact that it is Mr Mutokoyi who has initiated the costs assessment. That is his right, as is his right to refuse the offers of settlement which have been made by BML. I express no view as to whether those offers were reasonable or whether Mr Mutokoyi's refusal of them was unreasonable. However, I do accept BML's submission that having initiated the costs assessment, he should abide the outcome, including the unfortunate but inevitable delay that almost always accompanies the costs assessment process.

44. Finally, and related to the previous point, I also accept BML's submission that Mr Mutokoyi has the benefit of BML's undertaking as to damages. There is no suggestion before me that BML’s undertaking is other than one of real value.

Conclusion

45. For these reasons, Mr Mutokoyi's notice of motion filed on 25 July 2024 will be dismissed. Ms Merrett has informed the Court that despite her client's success, her instructions are not to seek costs.

46. The orders of the Court are:

1. The applicant's notice of motion filed 25 July 2024 is dismissed.

2. Note that the respondent does not seek its costs, and no order is made accordingly.

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Decision last updated: 12 August 2024