Paul v Girgis

[2013] NSWSC 1725

Supreme Court

New South Wales

Medium Neutral Citation:

Paul v Girgis [2013] NSWSC 1725

Hearing dates:

21 November 2013

Decision date:

21 November 2013

Jurisdiction:

Common Law

Before:

Davies J

Decision:

1. I order pursuant to Rule 25.3 UCPR that the Defendant pay $120,000 from the proceeds of sale of the property at 50 Honiton Avenue, Carlingford into Court pending the finalisation of court proceedings and the costs assessment process.

2. I vacate the hearing of the proceedings fixed for 5 December 2013.

3. I dismiss the Defendant's Notice of Motion filed 21 November 2013.

4. I stand the proceedings over to 5 February before me at 9.30.

5. I reserve the costs of today and also the costs of vacating the hearing.

6. I grant liberty to apply on two day's notice in term time to me and, if any issue arises during vacation, liberty to apply on two day's notice to the vacation judge

Catchwords:

PROCEDURE - costs - settlement of sale of property - costs payable out of sale pursuant to mortgage - application by mortgagor for costs assessment - whether stay under s 355 Legal Profession Act 2004 - whether order can be made to pay funds into court - whether application for costs assessment made in accordance with the Act

Legislation Cited:

Legal Profession Act 2004
Uniform Civil Procedure Rules

Category:

Interlocutory applications

Parties:

Michael Antony Paul (First Plaintiff)
Carly Jane Middleton (Second Plaintiff)
Marcelle Girgis (Defendant)

Representation:

Counsel:
S Chapple (Plaintiffs)
In person (Defendant)
Solicitors:
Paul & Paul Lawyers (Plaintiffs)
In person (Defendant)

File Number(s):

2013/140580

Judgment

1. The Defendant was a client of the Plaintiffs' law firm. The Plaintiffs carried out work for the Defendant in respect of a number of matters and an issue arose about the payment of the Plaintiffs' fees. The Defendant was the owner of two properties, being a property at 11A Llewellyn Street, Rhodes, where she resided, and a rental property she owned at 50 Honiton Avenue, Carlingford.

1. It was agreed between the parties that a mortgage would be provided by the Defendant to the Plaintiffs over both of those properties, although it was initially expected that the fees owing to the Plaintiffs would be able to be met out of the sale of the Rhodes property. The Plaintiffs advised the Defendant to seek independent legal advice before she signed the mortgage.

1. She obtained, eventually, independent advice from a Mr Craig Milne who was the witness to the mortgage and the other associated documents. The mortgage recited an agreement that as at 31 July 2012, the Defendant owed to the Plaintiffs the sum of $39,354.27. The mortgage secured that sum. It also secured any further amounts of costs that were incurred by the Defendant to the Plaintiffs for further work that the firm carried out for her.

1. The property at Rhodes was sold by a contract dated 22 September 2012, such contract being completed on 16 November 2012. By reason of the fact that Defendant understated the amount owing to another creditor by about half, there was no money left over to pay the fees secured under the mortgage. Proceedings were commenced on 7 May 2013 seeking possession of the property at Carlingford and claiming the amount owed in fees to the Plaintiffs.

1. The Defendant was initially unrepresented but was then represented for a period of time by Mr Baker, solicitor, who was responsible for filing an Amended Defence in the proceedings. That Amended Defence raises the unjustness of the contract constituted by the mortgage. The matter was fixed for hearing on 5 December 2013 as a result of a direction I gave on 3 September 2013.

1. In the meantime, the Defendant has arranged the sale of the Carlingford property. That sale is to settle on Monday 25 November and it was that settlement that prompted this urgent application by the Plaintiffs for payment into Court of an amount to cover what the Plaintiffs claim is owing to them in fees. The Notice of Motion filed 14 November 2013, seeks that a sum of $115,000 be paid into Court out of the settlement of the sale of the Carlingford property.

1. On 2 September 2013 for the first time the Defendant made an application for an assessment of the Plaintiffs' costs. There were eleven tax invoices, the subject of the application for assessment. However, only three of those invoices were rendered within the twelve month period referred to in s 350(4) of the Legal Profession Act 2004.

1. The amount of approximately $115,000 referred to in the Notice of Motion is made up of three separate amounts. The first is an amount of $50,864.27 said to be owing pursuant to the agreement contained in the mortgage. The second amount of $28,413 is the total of the tax invoices that are the subject of the costs assessment application. The third amount of $47,386 represents the costs of these present proceedings.

1. Section 355 of the Legal Profession Act provides:

If an application for a costs assessment is made in accordance with this Division:

(a) the costs assessment must take place without any money being paid into court on account of the legal costs the subject of the application, and

(b) the law practice must not commence or maintain any proceedings to recover the legal costs until the costs assessment has been completed.

1. The Defendant appeared herself today unrepresented, and sought to file in Court a Notice of Motion with an affidavit asking for an adjournment of the present application and the proceedings. She indicated, however, that although she did not agree that the $115,000 should be paid into Court it would be appropriate for an amount of $85,000 to be paid into Court. I did not consider it appropriate to adjourn the application because settlement of the property is scheduled for 25 November, and the sale and settlement were arranged by the Defendant.

1. It seems to me that s 355 imposes a limitation on the amount that I can direct should be paid into Court. Section 355 does not, however, affect the first of the three categories of fees I have referred to, namely, the fees that form the agreement under the mortgage itself of $50,954.27.

1. Secondly, s 355 does not restrict the payment of the third amount of $47,386. They are not costs that are owing to the Plaintiff by reason of a retainer by the Defendant Plaintiffs. Rather, they are the costs the Plaintiffs have incurred in these proceedings. In any event, there has been no application for assessment of those costs at this stage.

1. The second category falls partly within the restriction under s 355. The opening words to that section provide that the section applies to an application that is made in accordance with the Division. Section 350(4) requires the application to be made within twelve months after the bill is provided. The total amount of the tax invoices that fell within the twelve month period is $7,314.14.

1. The cost assessment application in respect of the remainder of the tax invoices has not been made within the twelve month period, nor has any application been made by the Defendant for an extension of time under s 350(5). The Defendant has informed me from the bar table that she intends to make such an application. Nevertheless for the present purposes, it does not appear to me that the tax invoices older than twelve months at the time of the cost assessment application, fall within the restriction under s 355 because they do not form part of an application made in accordance with the Division.

1. The total amount not subject to s 355 is $119,439.13. In the circumstances, I consider it is appropriate to order that an amount of $120,000 from the proceeds of sale be paid into Court to await the completion of the costs assessment process and the final hearing of these proceedings. The proceeds, as I've said, are fixed for hearing on 5 December. Given that the costs assessment process has not been completed, there may be some difficulty in the proceedings being finalised on that day. Indeed, on one view of s 355 it may not be possible for the Plaintiffs to proceed to a hearing on that day because it is not only commencement but maintenance of proceedings which is prohibited in the circumstances governed by s 355.

1. A further problem emerged during the course of the hearing. On 3 September I directed that the Defendant was to file and serve any affidavits that she relied on by 24 September and that any affidavit filed outside that time would not be permitted to be relied upon without my leave or the leave of the trial judge. For reasons that were not explained by the Defendant, she filed an affidavit on that day but has never served it on the Plaintiffs. The first time they have seen it is in Court today. It may be that they will need time to respond to that affidavit.

1. In those circumstances, I consider it appropriate to vacate the hearing on 5 December 2013. I will stand the proceedings over to a date in the new term where I can be informed of the process of the costs assessment and with a view to appointing a further hearing date.

1. Accordingly I make the following orders:

(1) I order pursuant to Rule 25.3 UCPR that the Defendant pay $120,000 from the proceeds of sale of the property at 50 Honiton Avenue, Carlingford into Court pending the finalisation of court proceedings and the costs assessment process.

(2)   I vacate the hearing of the proceedings fixed for 5 December 2013.

(3)   I dismiss the Defendant's Notice of Motion filed 21 November 2013.

(4)   I stand the proceedings over to 5 February before me at 9.30.

(5)   I reserve the costs of today and also the costs of vacating the hearing.

(6)   I grant liberty to apply on two day's notice in term time to me and, if any issue arises during vacation, liberty to apply on two day's notice to the vacation judge.

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Decision last updated: 26 November 2013