Patakas v Bevan

Case •

[2017] NSWSC 1592

•

22 November 2017

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Patakas v Bevan [2017] NSWSC 1592
Hearing dates:16 November 2017
Date of orders: 16 November 2017
Decision date: 22 November 2017
Jurisdiction:Equity
Before: Ward CJ in Eq
Decision:

1.   Refuse first defendant’s application for the relief sought in prayer 2 of first defendant’s notice of motion filed 29 August 2017.
2.   Upon the undertaking of the first defendant that he will not seek leave further to amend his cross-claim in these proceedings to include any relief in relation to costs assessment applications the subject of the notation made by Sackar J to the orders made by his Honour on 3 February 2017, grant leave to the first defendant to amend his defence in the form annexed to the affidavit of William Anthony Musgrave sworn 6 November 2017.
3.   Direct the first defendant to file the amended defence by 4pm on Friday 17 November 2017.
4.   Order the first defendant to pay the plaintiff’s costs thrown away by the amendment of the defence.
5.   Order the first defendant to pay the plaintiff’s costs of the hearing today of the application for the orders sought in prayer 2 of the Notice of Motion filed 29 August 2017 and prayer 1 of the Notice of Motion filed 6 November 2017.

Catchwords:

CIVIL PROCEDURE — Pleadings — Amendment

  CIVIL PROCEDURE — Orders and notations – Leave sought to “withdraw” a statement or offer said to have been recorded in a notation to court orders – Status of notation – Whether notation amounted to acceptance of an undertaking proffered in lieu of an injunction –Notation no more than a record of forensic decision taken in the course of proceedings; neither an undertaking accepted in lieu of an injunction nor an “open offer”
Legislation Cited: Australian Consumer Law, s 237
Competition and Consumer Act 2010 (Cth), Sch 2
Cases Cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Australian Receivables Ltd v Tekitu Pty Ltd [2011] NSWSC 1425
Biba Ltd v Stratford Investments Ltd [1973] Ch 281
Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738
Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84
Jeans v Commonwealth Bank Ltd (2003) 204 ALR 327; [2003] FCAFC 309
Lavery-Fenelon v Nicholas [2014] NSWCA 342
Le Meilleur Pty Ltd v Jin Heung Mutual Savings Bank Co Ltd [2011] NSWSC 1115
Patakas v Bevan [2016] NSWSC 1618
Seaton v Burnand [1900] AC 135
Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150
Texts Cited: K Handley, Estoppel by Conduct and Election (1st ed, Sweet & Maxwell)
Category:Procedural and other rulings
Parties: Evangelos Patakas (Plaintiff)
Christopher John Bevan (First Defendant)
Richard Mark Hamwood (Second Defendant)
Frances Alexandra Hutley (Third Defendant)
Stephen Lancken (Fourth Defendant)
John Levingston (Fifth Defendant)
John McGruther (Sixth Defendant)
Representation:

Counsel:
M Ashurst SC with S Tame (Plaintiff)
S Lawrance (Defendant)

  Solicitors:
Judd Commercial Lawyers (Plaintiff)
WM Lawyers Pty Ld (First Defendant)
File Number(s):2016/00124927
Publication restriction:N/A

Judgment

  1. HER HONOUR: Before me for hearing on 16 November 2017 were two interlocutory applications by the first defendant (Mr Bevan) in these proceedings:

  1. an application for the relief sought in prayer 2 of his notice of motion filed 29 August 2017 for leave to withdraw “the order or statement the subject of the notation to the Court’s orders dated 3 February 2017”; and

  2. an application for the relief sought in prayer 1 of his notice of motion filed 6 November 2017 for leave to amend his defence in the form annexed to the affidavit sworn 6 November 2017 of his solicitor, William Anthony Musgrave.

  1. There have been a number of interlocutory applications dealt with by me as part of the case management of these proceedings (which at this stage have been tentatively listed for a lengthy hearing commencing in March next year before another judge in the Equity Division). The above aspects of the respective motions were not able to be dealt with, due to pressure of time, at earlier directions hearings in the matter.

  2. I heard the above applications and made orders on 16 November 2017, refusing the relief sought in prayer 2 of the 29 August 2017 motion and granting (upon the giving of an undertaking to the Court by Mr Bevan to which I will return in due course) the relief sought in prayer 1 of the 6 November 2017 application. I ordered Mr Bevan to pay any costs thrown away by the amendment to the defence for which leave was granted and to pay the costs of the plaintiff (Mr Patakas) of the hearing of the above aspects of the two notices of motion on 16 November 2017. I indicated that I would provide short reasons for my decisions on those matters as soon as practicable. These are those reasons.

Background

  1. Broadly speaking, these proceedings (“the fee dispute proceedings”) relate to a dispute between Mr Bevan (a barrister) and Mr Patakas (a solicitor) as to fees claimed by Mr Bevan in respect of a number of matters in which he was retained in his professional capacity by Mr Patakas to act on matters for clients of Mr Patakas. There are other related proceedings between these and other parties (2017/00118311; the “oppression proceedings”) in which issues as to the delay in pursuing recovery of favourable costs orders on some or all of the said client matters have been raised.

  2. The present applications relate only to the fee dispute proceedings. In those proceedings, allegations of fraud have been made in relation to the issue of certain fee notes by Mr Bevan. Among other relief, Mr Patakas has sought damages for an abuse of process said to have occurred by the lodgement by Mr Bevan in January 2016 of costs assessment applications in relation to costs claimed as outstanding in the various client matters.

  3. The present interlocutory stoush between the parties relates to the import of a notation that was made by Sackar J, when the matter came before his Honour as expedition list judge on 3 February 2017, to the orders then made by his Honour (see [8] below) and to Mr Bevan’s application for leave to amend his defence (in part to remove paragraphs relating to the subject matter of the said notation). The application for leave to amend the defence is opposed by Mr Patakas only insofar as Mr Bevan seeks to amend those parts of the defence that reflect the subject matter of the notation.

  4. It is convenient at this stage to set out the notation in question and the circumstances in which it came to be made.

Notation to the orders of 3 February 2017

  1. The notation is in the following terms:

THE COURT NOTES THAT:

6   Regardless of the outcome of these proceedings, the first defendant will not pursue the plaintiff for the fees the subject of the assessments referred to in the attached schedule, save for the matter of Delmege and in the case of the matter of Delmege will not pursue the plaintiff for that part of the assessment application referred to in the attached schedule as “Delmege (No 2)”.

  1. There followed a schedule in which nine matters were listed by reference to a table set out at [5] of the second further amended statement of claim filed on 8 December 2016 in the proceedings. Since the notation only refers to part of the assessment application in one of the nine matters, the relevant cost assessment applications were referred to in the course of argument on the hearing before me as the “8½ costs assessment applications”.

  2. The 8½ costs assessment applications that the notation records Mr Bevan as not pursuing are part of 15 costs assessment applications in respect of which Mr Patakas, in the substantive proceedings, is seeking declaratory and final injunctive relief (and damages for breach of contract, fraud, contraventions of the Australian Consumer Law (being Sch 2 to the Competition and Consumer Act 2010 (Cth)), and for the tort of abuse of process, as well as statutory compensation pursuant to s 237 of the Australian Consumer Law). The declaratory and injunctive relief sought by Mr Patakas is, relevantly, as follows:

1.   Declarations that:

…

(c)   the First Defendant has no present entitlement to payment of fees for any other work done under the retainers identified in paragraph 3 of this Second Further Amended Statement of Claim, nor any present entitlement to payment of interest on such fees;

(d)   alternatively to (c), the First Defendant’s right and title to fees for work done under the retainers identified in paragraphs 3.1 and 3.3 to 3.10 of this Second Further Amended Statement of Claim, or interest thereon, has been extinguished by operation of s 63 of the Limitation Act 1969 (NSW) to the extent identified in paragraph 26 of the Second Further Amended Statement of Claim.

2. An injunction in equity or alternatively, pursuant to s 232 of the Australian Consumer Law, restraining the First Defendant from: (a) pursuing the Assessment Applications referred to in paragraph 29 of the Second Further Amended Statement of Claim [which by reference to [5] include the 15 and hence also the 8½ costs assessment applications in question]; and (b) seeking enforcement of any certificate as to determination issued in respect of any of the Assessment Applications referred to in paragraph 5 of this Second Further Amended Statement of Claim.

  1. The 15 costs assessment applications identified in the table at [5] of the second further amended statement of claim include claims for fees totalling just over $4 million.

Circumstances in which notation was made

  1. Mr Bevan lodged the 15 cost assessment applications in January 2016. Subsequently, an interlocutory injunction was granted by Robb J on 10 June 2016, and extended by McDougall J on 18 November 2016 (Patakas v Bevan [2016] NSWSC 1618), in effect staying the proceedings before the costs assessors in relation to the 15 costs assessment applications pending the final determination of this proceeding. (The costs assessors have been joined as defendants to the fee dispute proceedings but have filed submitting appearances.)

  2. On 16 January 2017, Mr Bevan filed a notice of motion in which, among other things, he sought: first, a variation of the interlocutory injunction to permit him to withdraw the 8½ costs assessment applications upon an undertaking by him to the Court that was there set out; and, second, orders striking out the paragraphs of the statement of claim relating to those assessment applications (see Annexure A to the affidavit sworn 6 November 2017 of Mr Musgrave).

  3. That application came before Sackar J on 3 February 2017. The transcript is annexed to Mr Musgrave’s affidavit sworn 6 November 2017 (Annexure C). It is necessary, to put the application now made in relation to the notation in context, to explain in some detail what occurred on that occasion.

  4. Mr Lucarelli of Counsel appeared for Mr Bevan. Mr Parker SC, as his Honour then was, appeared for Mr Patakas. At the outset of the hearing of Mr Bevan’s applications, Mr Parker informed his Honour that the strike-out application was not being pursued by Mr Bevan and that Mr Bevan now wished “to abandon 8 of the 15 assessments” but that there was not an agreement between the parties as to the terms to effectuate that; and there was also the question of costs (T 1.19-30). The application to vary the injunction was, in those circumstances, opposed by Mr Patakas.

  5. Mr Patakas’ position as to the 15 cost assessment applications was explained to his Honour as being that there was an understanding that nothing would be payable by Mr Patakas to Mr Bevan unless and until moneys were received from the clients (T 3.10). Mr Parker made clear that, whether or not the 8½ costs assessment applications claims were abandoned by Mr Bevan, this would not result in any consequential amendment to the statement of claim (noting Mr Patakas’ claims for damages in respect of them) (T 6.25-34). Proposed short minutes of order (not agreed by Mr Bevan) were handed up, which (from the transcript at least) seemingly contemplated the making of declarations in relation to the claims then said to be being abandoned. His Honour then said this:

HIS HONOUR: Why would I not do this, why would I not simply note, and Mr Lucarelli will confirm for the transcript, that none of these claims from his client’s point of view had any longer been pressed. No evidence will be forthcoming and I would not permit any ventilation of those claims. From his point of view, he simply does not press them.

For me to make a declaratory order, I am not sure I would be very comfortable doing it on the basis of a comprehensive and accurate distillation of what it is all about and what the issues are. Why would I not stay my hand in relation to each of these claims, that simply note that they will play no part, at least from the Bevan side of the process in the proceedings, that leads [sic; query “leaves”?] open the factual issues that you needing to advance for the purposes of establishing in so far as any of these cases do give rise to damages, whatever else is required. Assuming he is put in a straight jacket and heavily medicated and cannot run any of these cases and herein after effectively stayed, I mean it is not what I can do, why would that not give you the same level of comfort? It would not finally determine the issues. I am very reluctant, asking this on a Friday morning in half an hour to make a declaratory order if Mr Lucarelli says that they are not being proceeded with. Why is that not sufficient? (T 6.36-7.4) (my emphasis).

  1. Rather presciently, as it has turned out, Mr Parker’s response was that “[w]e are simply concerned to ensure that the abandonment is permanent”.

  2. His Honour indicated that there might be something that could be done in that regard, perhaps a direction that the matters not proceed, and went on to say:

… but if Mr Lucarelli tells me he has instructions as a considered position that he will no longer be pressing, it is not quite as iron clad as you may like, but from a forensic point of view is not too bad and I would fix the hearing for the balance of the substantive issues and no-one will be proposing from your side to meet the quantum claims that were made but you will be entitled, obviously, because you are reserved under your search, any evidence, materials that go to proving in each and every case. If there be damages that accrue as a result of the abandoned assessment. (my emphasis) (T 7.11-19)

  1. Responding to the proposition by Mr Parker that if that course were followed Mr Patakas would probably still be asking the Court to make the declarations, his Honour then said:

No. You would not be abandoning the relief that you need and I would finally determine the issues because they need to be determined. All I am really saying is you have said by consent. It clearly is not by consent but the mere fact there is some corrobary or whether I do make a declaration, I am not making on a summary basis.

Really, what I am saying, if Mr Lucarelli’s hands are tied, a straight jacket is supplied, heavily medicated and reliance in that state in relation to the eight claims having been abandoned it, as I assume he is instructed to, do you proceed on the basis that it plays no part in the proceedings unless the damages’ claim you say do or do not arise and he is entitled to contest the damages’ claim you make. (T 7.27-39) (my emphasis)

  1. Mr Lucarelli’s response to that suggestion was that “we can do better. I have got those instructions” and referred to short minutes to provide for the issue of certificates of determination “for nil, zero, and for the registration of those certificates as judgments of the Court” (T 7.41). Seemingly, at that stage, Mr Bevan was proposing that there be certificates of determination issued for each of the 8½ costs assessments in zero amounts.

  2. Mr Parker’s position was that that was not as good as declaratory relief, to which Sackar J responded:

But if you get that pro tem and I leave to you the right to claim declaratory relief for reasons you can argue later in due course, he will say you don’t need, and the Court need not make a declaration but if I leave it open to you, the right to continue to persist in seeking that relief, that is better than him abandoning it on the transcript. (T 8.1-6)

  1. Mr Parker raised a technical problem, that being Mr Patakas’ challenge to the cost assessors’ jurisdiction, such that if Mr Patakas were correct then there would be no basis for a certificate and any certificate would be an anomaly (T.8).

  2. His Honour then explored the possibility of a regime whereby an open offer could be made by Mr Bevan:

If Mr Lucarelli simply today makes unequivocally here [sic; query “clear”?], 1. He is not proposing these claims; 2, he makes an open offer of such a certificate in each case, that leaves open to 1, three things, one the right to press for declaratory relief; 2, I should not accept as part of the proceedings in order to determine them such a certificate for reasons you have advanced, 3, it leaves open the capacity for you to claim damages in relation to each of the assessments. (T 8.12-18)

  1. Mr Parker responded that it needed to be clear that “[w]e are not talking just about the claims as advanced in the assessment proceedings. We are talking about the substantive claim to entitlement for, in any other way”.

  2. His Honour then suggested that Counsel have a discussion about this, saying:

You [Mr Lucarelli] would make it clear that you are instructed not to proceed. You would make an open offer to the effect of the certificates that you have suggested that, would protect you arguably on costs, and that will be recorded. Mr Parker will have his case, whether certificates are appropriate. He will proceed with his declaratory relief in relation to each of these matters and wants to adduce evidence such as to invite me to make an order for damages in all of those cases. (T 8.30-36)

  1. Mr Lucarelli informed his Honour that the “motivation for withdrawing, has been abandoned, is commercial and to get to the real issues quickly and to confine the trial” (T 8.39-40) and, at T 8.44, said:

If my friend wants to be able at the hearing to agitate all of the facts and circumstances and the historical basis of the estoppel claim with respect to the nine proposed, withdrawn claims, no evidence at all is achieved and I can anticipate my instructions will be George [sic; query, Judge?] we tried to deliver the trial but we failed, so at the moment withdraw them at all.

  1. His Honour responded to the effect that Mr Bevan could still put his own offer on the table and claim a special costs order if those matters had to be agitated (T 9.4-11), foreshadowing that nothing would stop Mr Bevan making a claim under the indemnity basis for those eight or nine matters; and Mr Lucarelli said “[t]hat is where we are coming from” and again that he was motivated by a desire “to get the real issues heard quickly (T 9.9; 9.18).

  2. There was a short adjournment, at which stage his Honour was contemplating that Mr Lucarelli might put “some open offer for the purpose of costs” (T 9.39). When the matter resumed, Mr Lucarelli handed up proposed orders, which were opposed, and Mr Lucarelli then spoke to the proposed orders, indicating that what Mr Bevan was seeking to do was to “lift those injunctions so as to bring to an end certain of those applications for assessments and or reviews” and said “That’s all we are seeking to do”, indicating that Mr Bevan sought to do that “not because we concede at all any part of the plaintiff’s case, but because … in the injunction application itself there was evidence from or concerning the plaintiff’s economic circumstances, and because by withdrawing those claims we hope and expect the final hearing can be directed to the real issues” (T 13.5-13). Mr Lucarelli continued:

So what we are trying to achieve, your Honour, is to withdraw the claims and bring finality, and we seek to bring finality to those claims so that we can never make those claims again by paragraph (1)(v) entering a nil certificate of determination.

Now, if your Honour wants an open offer or an undertaking in open court, I can give that as well. But to the effect that we will not take any further steps. (T 13.15-21). (my emphasis)

  1. There were continued exchanges between his Honour and Mr Lucarelli in which his Honour made clear that his concern was to preserve everybody’s right either to seek a declaration ultimately or otherwise and his concern that if he varied the injunction Mr Patakas might be prejudiced being someone who “ultimately want[s] declaratory relief and or who want[s] to agitate facts and matters for the purposes of the damages claim”, then saying to Mr Lucarelli:

Now, how does it harm you, or rather, how does it further advance your position if you make it plain today, as you have indicated on numerous occasions you are prepared to do, that you make an open offer to this effect which protects you on costs.

…

… you are going to down tools from your side in relation to these matters, but tools are not going to downed on the other side, because they want to make a claim, at least theoretically, in respect to each and every one of these to say that, somehow or other, damages flow or should be awarded as a result of things that have occurred.

Now how can you be prejudiced in any way if you simply make the offer, down your tools from your point of view, you have got to be reactive to whatever occurs, then I leave open the argument as to whether I should or should not make a declaration in due course. And it is said there is no jurisdiction in the first place.

So I don’t see how it is you would be prejudiced simply by placing your position, as you have done or indicated that you would, unequivocally on the table and we move on (T 13.38-14.3).

  1. Mr Lucarelli indicated his agreement with that position but pressed for the making of orders “to enable the cessation of those revocations” (whatever that may have meant) and his Honour said:

But you down tools, and you simply tell the Court on instructions that you are not going to do anything more, you are not pressing these matters, full stop end of story. (T 14.11)

referring in that context again to the possible protection against costs in due course if Mr Lucarelli were to persuade his Honour that the orders he sought should not have been opposed by Mr Parker.

  1. Again, Mr Lucarelli emphasised that his client’s focus was to “get what should be an expedited hearing, limited –” (T 14.40-41).

  2. His Honour, after further debate, said (at T 15.5ff):

So what I am really getting at, and I am really finding it very difficult to understand, what it is that would be a problem for you going forward if you simply indicate that you are not pressing these matters from your point of view, full stop, and reserving your position on costs get one with it.

And I am not going to make orders, I can tell you, of this sort in a Friday list, given the fact that one side opposes it. That is not the only reason, but I have heard some of the reasons why, and I am genuinely concerned to get to the bottom of this in due course in a substantive hearing.

  1. Mr Lucarelli, expressing himself to be in furious agreement with his Honour, then handed up a notation that he said he had prepared “following your Honour’s suggestion”, which he suggested “may just be the short way home” (T 15.28-30).

  2. His Honour said, of the proposed notation:

It is a notation only. It doesn’t mean anything. It is simply - when I say it doesn’t mean anything, it simply means that, regardless of the outcome, you are not going to pursue. And that leaves open declaratory relief in respect of each of the assessments, if the Court thinks it appropriate, plus the damages awarded in respect of any or all of them. (T16.10) (my emphasis)

  1. Mr Parker indicated that that was the way he saw it too (T 16.16) and, following discussion about orders for the ongoing timetable for the matter (T 16.18-17.18), there was a debate about the costs of the motion (T 17.20-18.43) and his Honour indicated that Mr Bevan should pay Mr Patakas’ costs of the motion (T 18.28, T 18.39). The notation was then duly made (as set out earlier).

Observations

  1. A number of things may be drawn from the above review of the transcript (not least being the irony that Mr Patakas appears to have resisted – albeit as inconsistent with his position as to the lack of jurisdiction on the part of the costs assessors – the issuance of nil costs certificates in relation to the 8½ costs assessment applications that Mr Bevan now wishes to be able to pursue if he is successful in resisting the declaratory relief sought by Mr Patakas).

  2. The first is that, despite much discussion about the possibility of the making of an “open offer”, no such “open offer” was made on the transcript and the notation was not couched in those terms. Nor was the notation put to his Honour in terms of a formal undertaking to the Court and the transcript does not record an undertaking actually being proffered (as opposed to it being said that, if his Honour wanted an undertaking in open court, that could be given as well – at least to the extent that “we will not take any further steps”; T 13.21). The second is that his Honour clearly saw the position as being one where what was being put on the record was a forensic decision made by Mr Bevan, to which Mr Bevan would be held in the further conduct of the proceedings (hence the reference to straitjackets). The third is that Mr Patakas’ position was being made clear: that he wished to rely on the lodgment of the costs certificates for the purposes of his damages claims. And the fourth is that Mr Bevan’s position (as communicated to the Court by his Counsel) was that he was seeking to withdraw those 8½ costs assessment applications, or not to pursue entitlements in relation to the fees the subject of those applications, not because of any concession as to the plaintiff’s case but in order to limit the issues in the hearing with a view to ensuring an expedited hearing.

Defence/cross-claim

  1. Mr Bevan subsequently filed his defence on 9 March 2017. That defence referred: (at [4(a)]) to the filing of the notice of motion on 16 January 2017, by which it is said that he gave notice that “he no longer claims recovery of his fees in the matters listed in Schedule One hereto (the Withdrawn Matters); (at [4(b)]) to the withdrawal as being “a decision made on the ground that on his assessment there is no realistic prospect of recovery from the plaintiff of those fees in those matters due to the apparent impecuniosity or financial position of the plaintiff”; and (at [4(c)]) to the 3 February 2017 notation as an “open offer” made by Mr Bevan. At [4(d)], it was said:

although he is entitled to pursue recovery of the fees claimed in the Withdrawn Matters, he does not intend to pursue or proceed to enforcement of certificates and will not further pursue the plaintiff for any of the fees in the Withdrawn Matters (save for the matter of Delmege, and in the matter of Delmege, he will not pursue the plaintiff for that part of the assessment application referred to as “Delmege (No. 2)” for the reason addressed in paragraph 4 (b) above.

  1. Other paragraphs of the defence pleaded that certain issues were “irrelevant” as a result of Mr Bevan’s decision not to pursue Mr Patakas for fees in the matters in question (see [10(a)], [11(a)]) and raised other points based on the 3 February 2017 notation (see [5(k)], [14(b)], [20(a)], [21(c)], [42] and Schedules 1 and 2.

  2. Mr Bevan also filed a cross-claim, predicated on Mr Patakas succeeding in his challenge to the costs assessors’ jurisdiction, in which case Mr Bevan brought in debt, “quasi-debt” or a quantum merit for the work performed by him on those matters (T 18).

Mr Bevan’s present position in relation to the notation

  1. In a letter dated 17 August 2017 from his solicitors, Mr Bevan indicated his intention to withdraw the “offer” the subject of the 3 February 2017 notation (Annexure D to Mr Musgrave’s affidavit), referring to an “offer” not to pursue the said assessments. The letter stated:

It is now apparent that our client’s offer not to pursue those 8 assessments will not materially reduce the length or complexity of this proceeding. That is because your client wishes to press his claims for relief in respect of those 8 assessments, including his claim for damages at [34] of the statement of claim.

Consequently, our client withdraws his offer not to pursue those 8 assessments.

  1. To similar effect, Mr Musgrave’s affidavit deposes that he and Mr Bevan understood at the time that the effect of the notation was that it was to be an open offer (at [6]), that aspect of Mr Musgrave’s understanding not being challenged on the present applications.

  2. Pausing there, although the letter of 17 August 2017 suggests that it is only “now apparent” that the “offer” not to pursue the 8 (presumably meaning the 8½) costs assessment applications will not materially reduce the length or complexity of this proceeding, because Mr Patakas wishes to press his claim for relief, including his claim for damages, in relation to those assessments, as already noted Mr Patakas’ intention to pursue that claim for damages (irrespective of whether those assessments were abandoned) was made very clear in the course of the argument before Sackar J on 3 February 2017 (see the extracts from the transcript set out earlier in these reasons). While it may well be that Mr Bevan or his legal representatives had not at the time appreciated that not pursuing the 8½ costs assessment applications would not materially reduce the time and complexity of the trial, it is difficult to attribute such a misapprehension to any suggestion that Mr Patakas was not then intending to pursue his claim for damages or other relief in respect of those to-be-abandoned assessments. Mr Patakas’ intention to do so was made very clear (and that aspect of Mr Musgrave’s letter has been challenged in the evidence relied upon by Mr Patakas on the present applications (an affidavit sworn by his solicitor, Christiaan Barclay Stanton Roberts sworn 26 October 2017)).

  3. The response from Mr Patakas’ solicitors to the 17 August 2017 letter was that it was clear from the transcript that the withdrawal of the said claims “was given and intended to be an undertaking to the Court and to our client” and that they were not in a position to consent to the withdrawal of the undertaking as it was given to the Court. They also sought confirmation as to whether Mr Bevan would be amending his cross-claim to claim his alleged fees in this proceeding. The response to that from Mr Bevan’s solicitors on 30 August 2017 was to disagree with the characterisation of the notation but then to advise that “if granted leave to withdraw the offer or statement the subject of the notation, our client does not intend to amend his cross-claim”. (Mr Bevan’s counsel made clear on the present applications that Mr Bevan adheres to that position, it being accepted by him that if Mr Bevan were to include the fees the subject of the 8½ cost assessment applications in his quantum meruit cross-claim this would expand the factual matters to be explored in the fee dispute proceedings.)

  4. The position ultimately reached between the parties was that Mr Patakas was prepared to consent to the notation being withdrawn, provided Mr Bevan gave an undertaking and indemnity to Mr Patakas: first, that he will not make any claim on the undertaking as to damages (given as a condition of the interlocutory injunctive relief) in respect of the withdrawn claims for the period since 3 February 2017 and will indemnify Mr Patakas in respect of any claim made by any other person on that undertaking so far as it concerns the withdrawn claims; and, second, that the limitation undertaking given by Mr Patakas (an undertaking not to rely on any limitations defence during the period of the injunction) be amended so as not to apply in respect of the withdrawn claims for the period from 3 February 2017 to the date leave be granted to withdraw the notation (see points (i) and (ii) in a letter of 14 September 2017 from Judd Commercial Lawyers – Exhibit 1). The giving of that undertaking and indemnity was not acceptable to Mr Bevan.

Issues

  1. There were two issues identified by Mr Bevan as arising on the present applications.

  2. The first issue is as to the proper construction, or legal effect, of the notation. As noted above, Mr Bevan characterises it as an “open offer” (which, not having been accepted by Mr Patakas, is open to be withdrawn and does not amount to an accord and satisfaction); whereas Mr Patakas contends that it amounts to an undertaking to the Court.

  3. Mr Bevan accepts that if the notation records an undertaking accepted by the Court in lieu of a permanent injunction (so as finally to dispose of Mr Patakas’ claim for relief in prayer 2 of the second further amended statement of claim insofar as it concerned the 8½ cost assessment applications – see for example the discussion in Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 164-165) then the application now brought by him in his 29 August 2017 notice of motion should be dismissed. (He says that the notation cannot be the equivalent of an undertaking given in lieu of an interlocutory injunction: first, because there was already an interlocutory injunction in place (which he was seeking at the time to vary); and, second, because it is expressed to operate after the determination of the proceedings.)

  4. Mr Bevan says that if the recording of the notation is not of that character (i.e., does not record acceptance of an undertaking in lieu of a final injunction), then the question whether the Court should grant leave to him to withdraw the offer the subject of the notation (and make the consequential amendments to his defence) is a question of discretion (the latter being the second issue identified on the present applications).

  5. Mr Patakas argues that the notation does record an undertaking to the Court but says that, if that not be accepted, then there is no power for the Court to exercise in relation to a “withdrawal” of the notation; in other words, it is not for the Court now to expunge the record of what transpired when the proceedings were before Sackar J as recorded in the notation.

First issue – Characterisation of notation

  1. As to this first issue, Mr Bevan points to a number of matters as supporting the contention that what occurred on 3 November 2017 was not the acceptance by the Court of the statement in the notation as an undertaking in lieu of a permanent injunction thus having the effect of an order of the Court for the purposes of enforcement (Biba Ltd v Stratford Investments Ltd [1973] Ch 281 at 285-287, Thomson at 164-165).

  2. Those matters include the form of the notation; its opening words (“[r]egardless of the outcome of these proceedings”), which are said to be inconsistent with an undertaking to the Court that finally disposes of part of the proceedings; and the circumstances in which it was made. In relation to the last, Mr Bevan refers to what was said by Sackar J at the time (as extracted above in relation to the notation not really meaning anything) and says the notation was “an alternative to final orders”, being a notation of the “open offer” that Sackar J had contemplated (at T 9.39 and T 13.32).

  3. Mr Bevan argues that if the notation had finally disposed of the claim for injunctive relief in respect of the 8½ cost assessment applications, then Mr Parker would have sought Mr Patakas’ costs of that part of the proceedings and the interlocutory injunction would have been varied to remove reference to those applications.

  4. Mr Bevan also points to the terms of his defence, in which the notation is described as an “open offer”, to which he says that there has been no demur, or reply, from Mr Patakas before 29 August 2017.

  5. Mr Patakas’ position, as adverted to above, is that if what occurred is the equivalent of an interlocutory undertaking then what Mr Bevan must show is that there has been a relevant change in circumstances and that Mr Bevan has not done so (referring to Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 178); whereas if all this is is a notation recording the stance adopted by Mr Bevan in the litigation then there is no relief that can Mr Bevan now be seeking – in that the Court cannot expunge the notation of what Mr Bevan’s position was at the date the orders were made.

Determination

  1. I accept Mr Bevan’s submission that the notation does not record an undertaking in lieu of a final (or interlocutory) injunction. The transcript makes clear that, although Mr Lucarelli informed his Honour that he was in a position to make an open offer or to give an undertaking to the Court in relation to the non-pursuit of the 8½ cost assessment application, no such open offer or undertaking was ultimately required by his Honour and none was formally proffered. Rather, the matter proceeded on the basis that, and the notation is to be read as recording that, Mr Bevan was then taking a forensic position in the litigation (to which his Honour was making clear Mr Bevan would be held).

  2. As to the legal status of notations, I note that in Lavery-Fenelon v Nicholas [2014] NSWCA 342, a party sought leave to appeal, inter alia, from two notations which were in the following terms:

1. NOTE that the plaintiffs advise the Court that the only business outstanding in administration of the estate … is lodgement of a tax return for the year ended 30 June 2014, in respect of which a refund to the estate is anticipated.

…

6. NOTE that these orders and notations are intended to be a determination of all matters presently in dispute between the parties to these proceedings.

  1. It can be observed that the sixth notation expressly refers to the “orders and notations” (my emphasis) as being intended “to be a determination of all matters presently in dispute” between those parties. Nonetheless, in the circumstances of that case, Basten JA (with whom Meagher JA agreed at [19]) said (at [11]):

Neither of the notations is an order made by the court, nor did it reflect any finding made by the court. There is no right of appeal from a “notation“: cf Re Felicity; FM v Secretary, Dept of Family and Community Services (No 3) [2014] NSWCA 226 at [41]–[42]. …

  1. His Honour considered in that case that the effect of the notations was inconsequential. That said, there is no doubt that, broadly speaking, there are circumstances in which parties may be bound by forensic decisions made in the conduct of the litigation (whether or not those decisions are recorded in a notation to a court order) – see Handley AJA writing extra-judicially in Estoppel by Conduct and Election (1st ed, Sweet & Maxwell) at [15-041] (there referring to Seaton v Burnand [1900] AC 135 at 145 where Lord Morris observed that in an ordinary case parties must be bound by “what is called the course of the trial” and there referred to a situation in which both sides acquiesce in the questions to be put to a civil jury). The notation at issue in the present case was not, of course, made in the course of the final hearing but that does not necessarily mean that an estoppel (or, for that matter a waiver or election) could not potentially have been argued to preclude a departure from the position so recorded.

  2. As I noted in Australian Receivables Ltd v Tekitu Pty Ltd [2011] NSWSC 1425 at [16], ordinarily one would test whether a party should be held bound by a forensic decision made in the course of litigation by reference to the prejudice the other would suffer if the former were not held to be so bound. The proposed departure in the present case is from the statement of intention not to pursue certain costs assessments. Mr Bevan has apparently changed his mind and now wishes to pursue what he disavowed pursuing at an earlier stage of the proceedings.

  3. I accept Mr Bevan’s submission that the notation does not have operative effect as an order of this Court but I also accept Mr Patakas’ submission that it is not appropriate to give leave to “withdraw” a statement made in a notation to court orders, insofar as that notation records what happened at the time –namely, that there was a deliberate forensic decision made by Mr Bevan to the effect there noted. The taking of that deliberate forensic decision is not something that can simply be expunged from the record. It happened. If it had been confined to a statement on the transcript, it still would have happened and it is not appropriate now to “change history”, so to speak.

  1. Accordingly, having heard the application, I refused the leave sought in prayer 2 of the notice of motion filed 29 August 2017.

Second issue – Amendment of defence

  1. That leads to the second issue, namely the question whether to exercise the discretion to permit the defence to be amended so as to remove references to the notation (see [4], [10a], [11a] and [42]). Mr Bevan accepts that leave to amend his defence in order to remove those paragraphs is required (even if leave is not strictly required to “withdraw” the “offer or statement” the subject of the notation itself). As already noted, leave is not opposed for any of the proposed amendments other than those relating to the notation.

  2. The principles relating to an application to amend pleadings are well-known – and need not here be re-stated. Mr Bevan submits that the following considerations favour the grant of leave to amend.

  3. First, he says there is no prejudice to Mr Patakas since all of the issues raised in relation to the briefs that are the subject of the 8½ cost assessment applications are already issues in the proceeding and have been addressed by Mr Patakas in his evidence.

  4. Second, Mr Bevan argues that there is substantial prejudice to him if leave is refused (the fees the subject of the notation exceeding $1.4 million). It is submitted that if leave to amend the defence is not given, there is at least the real prospect that the Court would proceed to make the declaration sought by prayer 1(c) in the second further amended statement of claim and the injunction sought by prayer 2 in that pleading in respect of the matters and assessments that are the subject of the notation, and Mr Bevan would effectively lose his right to recover those fees (a right, I interpose to note, that Mr Bevan was seemingly willing to lose at the time he proposed that orders be made providing for the issue of nil assessments in respect of the 8½ costs assessment applications).

  5. Third, it is said that the grant of leave will not jeopardise the tentative hearing date since Mr Bevan has already served (on 28 August 2017) his evidence going to the making of the costs agreements relevant to the matters that are the subject of the notation, Mr Patakas’ evidence (more recently served) addresses those matters for the purpose of his damages case, and Mr Bevan’s evidence in reply is due in January 2018.

  6. Fourth, Mr Bevan points to the explanation given for his change of position in Mr Musgrave’s affidavit (at [7]) (which Mr Patakas urges me not to accept), that it is now apparent that abandonment of these assessments will not reduce the length or complexity of the hearing. To the extent that that evidence is challenged in Mr Roberts’ affidavit (at [12], [13], [16]-[23]), Mr Bevan emphasises that the explanation given at [7] of Mr Musgrave’s affidavit was as to his misunderstanding at the time that abandonment would result in a saving of time. (Pausing here, while it is difficult to see how there would have been an understanding of the kind to which Mr Musgrave has deposed in circumstances where Mr Patakas’ clear position was that he would be pressing his claim in relation to all the costs assessment applications, there was no little emphasis placed during the exchanges with Sackar J by Mr Lucarelli that the reason for the withdrawal was a desire to have a limited and more expeditious hearing; hence it would appear that this was indeed (however misguided) the understanding held by Mr Bevan and his advisers at the time.)

  7. Finally, it is said that if leave were refused, it would mean that Mr Bevan would be put to the expense of preparing evidence to defend some of Mr Patakas’ claims (such as the claim for damages) but would be unable to use the same evidence for the purpose of defending other of Mr Patakas’ claims (such as the claim for injunctive relief).

  8. In response, Mr Patakas submits that there is no utility in the amendment of the defence and says that in the absence of a satisfactory explanation for Mr Bevan seeking to resile from the position taken in February this year, leave should not be granted to permit the removal from the defence of the paragraphs dealing with the notation.

Determination

  1. To the extent that (and Mr Patakas accepted that to a limited extent some analogy might be able to be drawn – T 28.35) an analogy may usefully be drawn from cases in which a party seeks to withdraw an admission (see, for example, Jeans v Commonwealth Bank Ltd (2003) 204 ALR 327; [2003] FCAFC 309), the ultimate question has been said to be one of the attainment of justice.

  2. I readily accept that it is an imperfect analogy, since in the case of withdrawal of an admission one looks to matters such as the nature of the admission; the stage at, and circumstances in which, the admission was made and (at least where there is a formal admission), the competing policies articulated in Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 at 750 (see for example the discussion in Le Meilleur Pty Ltd v Jin Heung Mutual Savings Bank Co Ltd [2011] NSWSC 1115 at [311]-[312]). Nevertheless it does give some guidance as to the matters that may usefully be considered in the exercise of a discretion whether to permit the resiling from a forensic position adopted by a party and reflected in that party’s pleading.

  3. In the present case, there was clearly a forensic decision made by Mr Bevan to abandon the 8½ costs assessment applications from which Mr Bevan wishes to resile.

  4. The decision in my opinion ultimately came down to a balancing as between the prejudice to Mr Patakas of allowing the amendments to Mr Bevan’s defence (so as to remove the paragraphs that reflect the now sought to be abandoned concession) and the utility to Mr Bevan of permitting the amendment (or, in other words, prejudice to him if it is not made).

  5. For Mr Bevan it is submitted that whether or not the defence is permitted to be amended, if (as I have concluded) the notation does not constitute acceptance of an undertaking in lieu of a final injunction, then it would be open to him (if he succeeds in resisting the challenge to the costs assessors’ jurisdiction and in defending the proposition that these were, in effect, non-recourse costs agreements) to press the 8½ costs assessment applications. Mr Patakas asks, rhetorically, if so, what is the utility of an amendment of the defence?

  6. I considered (and raised in discussion with Counsel) that there might be some utility in an amendment to the defence of the kind sought – at least in precluding an argument later down the track that the notation as made (or the pleading of the notation) gives rise to some form of estoppel, waiver or election (see, for example, albeit in a much different context, the circumstances in which a notation on a Family Court order was held to give rise to an estoppel – Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84; Handley AJA with whom Allsop P, as his Honour then was, and Giles JA agreed).

  7. Ultimately, I was of the view that, notwithstanding that a deliberate decision was made by Mr Bevan not to pursue the 8½ costs assessment applications, back in February this year, and notwithstanding that the explanation for the change in that position rests on a stated misapprehension as to the costs/time savings that would have ensued by abandoning those costs assessment applications (the basis for which is difficult to understand given the very clear intimation by Mr Parker at the time that the withdrawal of those costs assessment applications would cause no amendment to the statement of claim and that the damages claim would continue to be pressed in relation to them), there would be no real prejudice to Mr Patakas if the amendment were to be permitted. The ambit of the evidence will remain the same and the tentative date for hearing is not thereby threatened (as long as Mr Bevan adheres to his statement that he does not seek a consequential amendment to his cross claim to include these 8½ costs assessments).

  8. Balancing the lack of any prejudice to Mr Patakas and the possibility (however remote it may be) of an estoppel/waiver or election argument being raised based on the notation, or the pleading of the notation in the defence, I formed the view that leave should be granted to permit the amendment conditional upon an undertaking to the Court by Mr Bevan that he will not seek to amend his cross claim (that condition being necessary to ensure a more effective “straitjacket” this time). That undertaking was proffered and I accepted it.

Costs

  1. As to costs, I was of the view that not only should Mr Bevan pay any costs thrown away by Mr Patakas by reason of the amendment of the defence but also, notwithstanding that Mr Bevan had succeeded in his application for leave to amend the defence, that Mr Bevan should pay Mr Patakas’ costs. In essence this was because Mr Bevan was seeking the indulgence of being permitted to resile from a deliberate forensic decision made earlier in the year in relation to the litigation.

Orders

  1. It was for the above reasons that I made the orders set out below. I also made various directions for the ongoing conduct of both the fee dispute proceedings and the oppression proceedings (including ordering the parties to participate in a mediation of their disputes on 21 December 2017), which it is not necessary here to set out.

  2. The relevant orders made on the respective applications heard by me on 16 November 2017 were as follows:

1.   Refuse first defendant’s application for the relief sought in prayer 2 of first defendant’s notice of motion filed 29 August 2017.

2.   Upon the undertaking of the first defendant that he will not seek leave further to amend his cross-claim in these proceedings to include any relief in relation to costs assessment applications the subject of the notation made by Sackar J to the orders made by his Honour on 3 February 2017, grant leave to the first defendant to amend his defence in the form annexed to the affidavit of William Anthony Musgrave sworn 6 November 2017.

3.   Direct the first defendant to file the amended defence by 4pm on Friday 17 November 2017.

4.   Order the first defendant to pay the plaintiff’s costs thrown away by the amendment of the defence.

5.   Order the first defendant to pay the plaintiff’s costs of the hearing today of the application for the orders sought in prayer 2 of the Notice of Motion filed 29 August 2017 and prayer 1 of the Notice of Motion filed 6 November 2017.

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Decision last updated: 22 November 2017

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Cases Cited

11

Statutory Material Cited

2

Patakas v Bevan [2016] NSWSC 1618
Thomson Australian Holdings Pty Ltd v Trade Practices Commission [1981] HCA 48
Thomson Australian Holdings Pty Ltd v Trade Practices Commission [1981] HCA 48