Rahman v Kent

Case [2022] FCA 485

FEDERAL COURT OF AUSTRALIA

Rahman v Kent [2022] FCA 485

Appeal from: Kent and Orlizki v Rahman (No 2) [2019] FCCA 1357; Kent and Orlizki v Rahman (No 3) [2019] FCCA 1999
File number(s): NSD 1280 of 2019
Judgment of: STEWART J
Date of judgment: 3 May 2022
Catchwords:

PRACTICE AND PROCEDURE – appeal from Federal Circuit Court’s (“FCC”) dismissal of a review of a Registrar’s orders – where Registrar awarded costs of self-represented solicitors including professional fees – where FCC’s decision handed down prior to the High Court’s decision in Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; 269 CLR 333 – where notice of appeal filed out of time but prior to the High Court’s decision in Bell Lawyers – whether an extension of time should be granted – where entitlement of self-represented solicitors to obtain their own professional costs not challenged in FCC – whether leave to raise point not argued below should be granted – where appeal is otherwise unanswerable

COSTS – appeal from FCC costs orders – where appellant unsuccessful in FCC but ought to have succeeded in light of subsequent decision of the High Court in Bell Lawyers – appropriate costs order  
Legislation:

Bankruptcy Act 1966 (Cth) s 32

Federal Circuit Court of Australia Act 1999 (Cth) s 104(2)

Federal Court of Australia Act 1976 (Cth) ss 37M, 37N

Federal Court Rules 2011 (Cth) rr 36.03, 36.05, 36.10

Civil Procedure Act 2005 (NSW) s 98(1)
Cases cited:

Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; 269 CLR 333

Cachia v Hanes [1994] HCA 14; 179 CLR 403

Coulton v Holcombe [1986] HCA 33; 162 CLR 1

Guss v Veenhuizen [No 2] [1976] HCA 57; 136 CLR 47

Hunter Valley Developments Pty Ltd v Cohen [1984] FCA 186; 3 FCR 344

Jackamarra v Krakouer [1998] HCA 27; 195 CLR 516

Kent and Orlizki v Rahman (No 2) [2019] FCCA 1357

Kent and Orlizki v Rahman (No 3) [2019] FCCA 1999

London Scottish Benefit Society v Chorley (1884) 13 QBD 872

Parker v R [2002] FCAFC 133

Pentelow v Bell Lawyers Pty Ltd [2018] NSWCA 150

Ratkovic v Hadzic [2019] NSWSC 1627

Suttor v Gundowda Pty Ltd  [1950] HCA 35; 81 CLR 418
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 57
Date of hearing: 28 April 2022
Counsel for the Appellant: N G Olson, pro bono
Counsel for the Respondent: B Dean
Solicitor for the Respondent: Angel Legal

ORDERS

NSD 1280 of 2019
BETWEEN:

FAHMID RAHMAN

Appellant
AND:

RODNEY KENT AND TIM ORLIZKI (TRADING AS "KENT ATTORNEYS")

Respondent

ORDER MADE BY:

STEWART J

DATE OF ORDER:

3 MAY 2022

THE COURT ORDERS THAT:

1.The appellant be granted an extension of time to 12 August 2019 to file a notice of appeal against the judgment of the Federal Circuit Court given on 24 May 2019.

2.The appellant have leave nunc pro tunc

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AGLC
Rahman v Kent [2022] FCA 485
Case
[2022] FCA 485
Decision Date

CaseChat Overview and Summary

In Rahman v Kent, the appellant, Rahman, appealed against the Federal Circuit Court's dismissal of a review of a Registrar's orders. The Registrar had awarded costs to the respondent, Kent, which included professional fees. The appeal was filed out of time but before the High Court's decision in Bell Lawyers Pty Ltd v Pentelow. The legal issues included whether an extension of time should be granted and whether leave to raise points not argued below should be granted. The court found that the Federal Circuit Court's decision was handed down prior to the High Court's decision in Bell Lawyers, which held that the Chorley exception was not part of the common law of Australia. The court held that an extension of time should be granted, and leave to raise points not argued below should be granted as the appeal was otherwise unanswerable. The court also found that the appellant should not have to pay the costs of the review as he was achieving success in the appeal. The court set aside the orders of the Federal Circuit Court and ordered that the parties bear their own costs of the review. The parties were given 14 days to provide an agreed quantification of the respondent’s costs of the creditor’s petition, or failing agreement, the evidentiary material for the assessment of those costs that was before the Federal Circuit Court. The respondent was ordered to pay the appellant’s costs of the appeal as agreed or taxed.

Orders

Orders of the court

1. The appellant be granted an extension of time to 12 August 2019 to file a notice of appeal against the judgment of the Federal Circuit Court given on 24 May 2019.

2. The appellant have leave nunc pro tunc to file an amended notice of appeal in the form filed on 19 December 2019.

3. The appeals be allowed.

4. The orders of the Federal Circuit Court made on 24 May 2019 be set aside and in lieu thereof it be ordered that:

(a) the application for review filed on 5 March 2019 be allowed;

(b) order 2 of the orders made by the Registrar on 12 February 2019 be set aside and in lieu thereof it be ordered that “the respondent pay the applicant creditor’s costs (including reserved costs) of the petition”; and

(c) the parties bear their own costs of the review.

5. Order 2 of the orders of the Federal Circuit Court made on 16 July 2019 be set aside and in lieu thereof it be ordered that “the parties bear their own costs on the application in a case filed by the respondent on 12 June 2019”.

6. Within 14 days of these orders, the parties provide to my Associate an agreed quantification of the respondent’s costs of the creditor’s petition and failing agreement the evidentiary material for the assessment of those costs that was before the Federal Circuit Court on 24 May 2019.

7. The respondent pay the appellant’s costs of the appeal as agreed or taxed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Until 4 September 2019 when Bell Lawyers was published, it was thought that the Chorley exception was part of the common law of Australia such that statutory provisions for “costs” to be awarded meant that other than solicitors in respect of their own professional fees, self-represented litigants could not recover the costs of representing themselves in the litigation: Bell Lawyers at [63] per Gageler J. That understanding was reflected at the level of the High Court as exemplified by Guss v Veenhuizen [No 2] [1976] HCA 57; 136 CLR 47 in which it was accepted that the Chorley exception formed part of the common law of Australia. Nevertheless, the Chorley exception was recognised as “somewhat anomalous” in Cachia v Hanes [1994] HCA 14; 179 CLR 403 at 411.Background The appellant, as client, retained the respondent, as solicitor, in respect of certain legal services. The respondent raised a number of invoices for the services performed by it. A dispute arose about the appellant’s liability for the fees reflected in the invoices. The respondent ultimately prevailed in the Local Court of New South Wales and obtained judgments against the appellant. In November 2018, the respondent issued a bankruptcy notice against the appellant for the sum of $15,251.14 based on the judgments. In December 2018, the respondent filed a creditor’s petition against the appellant in the Circuit Court. The appellant eventually paid the respondent the sum claimed on 5 February 2019. On 12 February 2019, the creditor’s petition came before District Registrar Wall in the Circuit Court. As the debt had by then been paid, the respondent sought that the creditor’s petition be dismissed and that the appellant pay its costs. The Registrar so ordered and fixed the respondent’s costs in the sum of $10,630.11. The relevant order of the Registrar was as follows:2.The Respondent pay the Applicant Creditor’s costs (including reserved costs) of the Petition fixed in the amount of $10,630.11. It is to be observed that that order has in effect two components: one is to hold the appellant liable for the respondent’s costs and the other is to quantify those costs in a fixed amount. Section 32 of the Bankruptcy Act 1966 (Cth) gave the Registrar the power to make a costs order on the creditor’s petition. That section provides for the making of such orders as to “costs” in such a proceeding as the court thinks fit. Although Bell Lawyers was decided with reference to a different statutory provision for the ordering of “costs”, namely s 98(1) of the Civil Procedure Act 2005 (NSW), the reasoning of the High Court applies equally to other statutory costs provisions including the provision applicable in this case. No suggestion was made to the contrary. The appellant sought review of the costs order made by the Registrar pursuant to s 104(2) of the Federal Circuit Court of Australia Act 1999 (Cth). Specifically, he sought that order 2 made by the Registrar be set aside and that the costs of the petition be reserved pending determination of other proceedings in the District Court of New South Wales. It is to be noted that the gravamen of the appellant’s case on review was that costs should not have been ordered against him in circumstances where he had paid the debt underlying the creditor’s petition; it was not his case that the costs had been wrongly assessed to include the respondent’s own professional charges. Nevertheless, the primary judge necessarily considered the Registrar’s assessment of the costs and confirmed their assessment at the sum of $10,630.11. It is common ground that that sum substantially includes allowance for the respondent’s own professional charges.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Thirdly, it is not uncommon for a notice of appeal to be amended to introduce grounds not contained within the original notice of appeal. Indeed, r 36.10 gives an appellant the right to amend a notice of appeal during the period of 28 days after filing the notice of appeal by filing a supplementary notice of appeal. It is of course true that the amended notice of appeal in this case was filed well outside that period. The point, however, is that an appellant is not held forever to the points taken in its original notice of appeal. It is thus no determinative objection to the Bell Lawyers point being raised for the first time on appeal that it was not raised in the original notice of appeal.Consideration Given that it is common ground that a substantial part of the Registrar’s assessment of the respondent’s costs of the creditor’s petition in the sum of $10,630.11 constituted the respondent’s own charges for professional services representing itself, there is no doubt that that assessment is contrary to the respondent’s legal entitlement. It follows that the assessment is wrong, and the primary judge’s dismissal of the review of the assessment and his Honour’s effective confirmation of the assessment in Rahman No 2 must be set aside. The line between what the respondent is entitled to and what it is not entitled to in the assessment of its costs is likely to be a relatively clear one. It submitted an itemised bill of costs confirmed by affidavit to the Registrar for assessment, which affidavit was before the primary judge. It is, therefore, technically before me on the appeal although neither side of the case has put it before me in any practical sense. Rather than remitting the assessment to the primary judge with the resultant delay and cost that that would occasion, the best course is for the parties to be given the opportunity to agree a fresh assessment in accordance with these reasons, i.e., on the basis that the Chorley exception is not available to the respondent. In seeking to reach agreement, the parties will no doubt bear in mind the relatively modest sum at stake and their obligations to conduct the proceeding, including negotiating any settlement, in a manner consistent with the overarching purpose of the civil practice and procedure provisions, i.e., to facilitate the just resolution of the dispute as quickly, inexpensively and efficiently as possible: ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth). If the parties are unable to agree, they should put before me the relevant documents from the record of the case below so that I can consider whether it is practical for me to do the assessment on appeal. If it is not, then the matter will have to be remitted to the Circuit Court. In Rahman No 2, the primary judge ordered that the appellant pay the costs of the unsuccessful the review application. However, since the appellant is in the appeal now achieving success in Rahman No 2, on one view he should not have to pay the costs of Rahman No 2; that is to say, there is no event in the respondent’s favour on which a costs order in its favour should or can turn. Against that is the submission that since the appellant is succeeding on a point in the appeal that was not raised by him below, nor could he have succeeded on it below even if he had raised it, there is no occasion to disturb the costs order below.