Poon v Proctor Phair Lawyers Pty Ltd
[2024] FedCFamC2G 116
•14 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Poon v Proctor Phair Lawyers Pty Ltd [2024] FedCFamC2G 116
File number(s): SYG 859 of 2023 Judgment of: JUDGE D HUMPHREYS Date of judgment: 14 February 2024 Catchwords: BANKRUPTCY – Bankruptcy Notice – Costs assessment – Application to set aside judgement debt – Whether the court should set aside a bankruptcy notice – Review of a Registrars Decision – Application dismissed Legislation: Legal Profession Uniform Law Act 2014 Cases cited: Corney v Brian (1951) 84 CLR 343
Emerson v Wreckair Pty Ltd (1992) 33 FCR 581
Olivieri v Stafford (1989) 24 FCR 413
Wren v Mahoney (1972) 126 CLR 212
Wu v Wan Ze Property Development (Aust) Pty Ltd (in liquidation) (2014) 315 ALR 523
Division: Division 2 General Federal Law Number of paragraphs: 21 Date of last submission/s: 9 February 2024 Date of hearing: 9 February 2024 Place: Parramatta Counsel for the Applicant: The Applicant appeared in person. Counsel for the Respondent: Mr Bailey Solicitor for the Respondent: Proctor Phair Lawyers Pty Ltd ORDERS
SYG 859 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF KALINA POON
BETWEEN: KALINA POON
Applicant
AND: PROCTOR PHAIR LAWYERS PTY LTD
Respondent
ORDER MADE BY:
JUDGE HUMPHREYS
DATE OF ORDER:
14 FEBRUARY 2024
THE COURT ORDERS THAT:
1.The application is dismissed.
2.The Applicant is to pay the Respondent’s costs fixed in the amount of $1140.00.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE D HUMPHREYS
INTRODUCTION
This is an application by Ms Poon for a review of a Registrar’s decision of 17 August 2023 not to set aside Bankruptcy Notice BN259694 issued on 26 April 2023 and Ms Poon pay costs fixed in the sum of $6850.00.
BACKGROUND
On 26 April 2023, a Bankruptcy notice was issued against Ms Poon following receipt of a determination by a Costs assessor under the Legal Profession Uniform Law Act 2014 (LPUL) that Ms Poon should pay the respondent the sum of $58,560.09 in respect of certain work performed by the respondent on behalf of Ms poon.
That costs assessment was subsequently registered in the Local Court of NSW as a certificate of judgement debt. Following this registration, the respondent applied for a Bankruptcy Notice for the amount of the order, less the amount of the Certificate of Determination of the Manager’s Assessment of Costs paid by the applicant.
The Bankruptcy Notice was served on the applicant on 2 May 2023 by express post and email. The applicant subsequently commenced proceedings in this Court to have the bankruptcy Notice set aside.
THE APPLICANT’S CONTENTIONS
The applicant instructed the respondents to act for her in a Statement of Claim issued by Ms Poon’s sister, that the applicant was holding a property situated at 53/333 Bulwara Road Ultimo as trustee for her sister (Pun) as to 87.4% and an order that the property be sold and costs on an indemnity basis be awarded against Ms Poon.
The proceedings ultimately settled. Ms Poon was invoiced a total of $280,727.76 by the respondent. An amount of $212,443.35 had been paid by Ms Poon, leaving an amount outstanding of $68,284.41. The applicant applied for a costs assessment of that amount, which resulted in a certificate of determination of costs being issued for the sum of $58,560.09.
Whilst the cost determination related to only a small number of the total number of invoices issued to Ms Poon, she submits that in fact she is entitled to be repaid further amounts of costs already paid to the respondents. She claimed she is entitled to an amount of $147,723.63. No action has been taken by Ms Poon to have the previous invoices paid by her assessed by a costs assessor.
Ms Poon tendered to the Court a notice of motion to set aside judgement filed at the Local Court in Sydney on 1 February 2024 in relation to the judgement debt registered by the respondents, together with a Statement of Claim in the sum of $90,000.00, also relating to legal costs incurred by her and paid to the respondents.
Ms Poon claims she is entitled to a set off in the amount under the Statement of Claim and that the Court should set aside the Bankruptcy Notice until such time as the Local Court proceedings are finalised, including the application to set aside the judgement debt in relation to the amount assessed is owing under the costs assessment.
THE RESPONDENT’S CONTENTIONS
It was submitted that there being no review or appeal taken by the applicant’s concerning the costs determination, the amount determined under the costs assessment should be regarded as fair and reasonable costs in respect of invoices issued by the respondent on 23 and 26 July 2021. In the absence of any appeal, these costs are incapable of being disputed. It was submitted that this Court cannot and should not exercise the appellate jurisdiction conferred on either the District Court or the Supreme Court of New South Wales conferred by the LPUL. Once a costs assessment and review has been completed, the determination is final.
Once registered in the Local Court, the costs assessment is taken to be a judgement of the Local Court and the orders accompanying the Bankruptcy Notice remain a final order, the execution which is not stayed.
The relevant principles to be considered by the Court are set out by Robertson J in Wu v Wan Ze Property Development (Aust) Pty Ltd (in liquidation) (2014) 315 ALR 523 at [55] – [66]. They are as follows:
a) in an appropriate case (including on an application to set aside a Bankruptcy Notice: Olivieri v Stafford (1989) 24 FCR 413), a Court exercising jurisdiction in bankruptcy can go behind a judgement to see whether in truth and reality there is a debt due from the judgement debtor that the judgement creditor: Corney v Brian (1951) 84 CLR 343; Wren v Mahoney (1972) 126 CLR 212, however, it is not a power readily exercised if there has been a hearing on the merits by the Court in which the judgement was obtained.
b) The Court exercising jurisdiction in bankruptcy has no power to set aside the judgement(s) on which the bankruptcy notice is based, it only has power to prevent the judgement creditor from having recourse to the provisions of the Bankruptcy Act - as between the parties the judgement remains an impeached until set aside by the court that granted it and the judgement may be enforced by whatever other means are available.
c) Corney concerned an appeal from an order sequestrating a debtor on a judgement obtained in default of appearance. Wren also involved a judgement in default of a plea.
d) Emerson v Wreckair Pty ltd (1992) 33 FCR 581 at [66] was a case where there was a full hearing with both parties legally represented, all issues being examined and judicially determined, and where the discretion to go behind the judgement was not exercised in favour of the applicant.
In circumstances where the applicant availed herself of the opportunity to participate in the costs assessment and a determination has been made regarding invoices issued on 23 and 26 July 2021, the Court exercising bankruptcy jurisdiction would act upon the reliability afforded by these determinations.
It is no answer to a claim for costs determinable through the costs assessment system that the solicitor is liable to a client by damages in negligence. Determinations concerning other similar claims and damages would follow by analogy. In any event, costs assessments are not court proceedings. There is no counterclaim, set-off or cross demand that the applicants can set up against the respondent in respect of the certificate of judgement filed in the Local Court.
CONSIDERATION
Reviews of Registrars decisions are De Novo hearings, and the Court is entitled to consider any new evidence that might be provided by either party in support of their case.
The Court notes that Ms Poon has made a request for pro-bono legal assistance. She asks that the application under consideration be adjourned until such time as she is able to obtain legal assistance. She asserts that she has sought assistance from private lawyers, legal aid, the law society of New South Wales however none has elected to be involved in the matter. The Court notes that these proceedings have been on foot since the first half of 2023. The Court is of the view that they need to be finalised, noting that Ms Poon was granted a number of adjournments by the Court prior to the Registrar finalising their part of the proceedings in August 2023. The applicant has subsequently had some months to arrange legal representation.
Given the relatively short compass of the facts and the law in relation to the proceedings currently before the Court, the Court is satisfied that the matter should proceed to finalisation and that a referral for pro bono legal assistance should be denied.
The Court is reasonably satisfied that the applicant participated in a costs assessment in relation to legal fees contained in invoices issued to her in respect of legal work done on her behalf. The costs determination has been undertaken and a Certificate of Costs issued, which has been registered in the Local Court as a judgement debt.
The Court is reasonably satisfied in those circumstances the Bankruptcy Notice was validly issued. This Court is not in a position to go behind the judgement debt registered in the Local Court simply because the applicant has belatedly filed in January 2024, a Statement of Claim against the respondent and an application to have the judgement debt set aside. Whilst it is not for this Court to determine, it is difficult to see how in circumstances, where there has been a valid costs assessment, which resulted in an amount being determined as due and payable by the applicant, that the judgement debt relating to that costs assessment could be set aside. Further, in relation to the Statement of Claim, it is mere assertion, which is beyond the power of this Court to deal with.
The Court is satisfied that no valid grounds have been raised by the applicant such that the Bankruptcy Notice the subject of these proceedings should be set aside.
The order of the Registrar of the Court that the application for the Bankruptcy Notice to be set aside is confirmed and the application is dismissed. The Court will hear the parties in relation to costs.
I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Humphreys. Associate:
Dated: 14 February 2024
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