Slattery v Fordyce; Fordyce v Slattery

[2019] NSWSC 173

Supreme Court

New South Wales

Medium Neutral Citation:

Slattery v Fordyce; Fordyce v Slattery [2019] NSWSC 173

Hearing dates:

13 June 2018

Date of orders:

28 February 2019

Decision date:

28 February 2019

Jurisdiction:

Common Law

Before:

Walton J

Decision:

The Court makes the following orders:

 

(1) The first defendant shall file and serve short minutes of order reflecting this judgment within 14 days of the publication of this judgment.

 

(2) The plaintiff shall file and serve within a further 7 days any alternative proposed orders in the event of a dispute. In the event there is no dispute that fact shall be communicated either by the first defendant at the time of filing short minutes of order pursuant to (1) above or by a note provided by the plaintiff within the time specified in this order.

 

(3) Any application as to costs should be filed and served within 14 days of the publication of this judgment.

 

(4) Subject to (3) above, costs are reserved.

 

(5) In the event that orders are filed and served pursuant to (2) above, reflecting a dispute as to the form of orders, or an application is made under (3) above, the Court shall issue further directions for the disposition of any such issues.

 (6) The parties have liberty to apply to the Chambers of the Court as to the disposition of those issues referred to in (1) to (5) above.

Catchwords:

APPEAL – appeal from Local Court – ss 39 and 40 of the Local Court Act 2007 (NSW) – grounds of appeal – costs assessment under s 352(1) of the Legal Profession Act 2004 (NSW) – application of the Legal Profession Act 2004 (NSW) – construction of s 355 of Legal Profession Act 2004 (NSW) – questions of law – commence or maintain – whether cost assessment render no jurisdiction – defence of payment – appeal as to the determination of costs – application of r 42.14 of the Uniform Civil Procedure Rules 2005 (NSW) – discretion to award costs pursuant to s 98 of the Civil Procedure Act 2005 (NSW) – principles of finality – indemnity costs – question of leave – mixed question of fact and law – disclosure – whether application brought out of time – general principles as to an extension of time application in Currabubula – orders

CROSS-APPEAL – appeal from Local Court – cross-summons – appeal as of right – s 39 of the Local Court Act 2007 (NSW) – form of cross-summons – s 63 of the Civil Procedure Act 2005 (NSW) – irregularities which do not invalidate the proceedings – operation of ss 127 and 129 of the Corporations Act 2001(Cth) – legal capacity to execute contract on behalf of company – without common seal – error of law – cross-appeal upheld

Legislation Cited:

Civil Procedure Act 2005 (NSW)
Conveyancing Act 1919 (NSW)
Corporations Act 2001 (Cth)
Interpretation Act 1987 (NSW)
Legal Profession Act 2004 (NSW)
Legal Profession Uniform Law Application Act 2014 (NSW)
Legal Profession Uniform Law (NSW)
Local Court Act 2007 (NSW)
Supreme Court Act 1970 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Air Tahiti Nui Pty Ltd v McKenzie [2009] NSWCA 429
Australian Education Union v Lawler [2008] FCAFC 135
B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; [2008] NSWCA 187
Banner v Johnston (1871) LR 5 HL 157
Branson v Tucker [2012] NSWCA 310
Colbron v Freeman [2014] NSWSC 1210
Coshott v Barry [2015] NSWCA 257
Creswick v Coast RV Pty Ltd [2013] NSWSC 1078
Currabubula v State Bank NSW [2000] NSWSC 232 (31 March 2000)
Daley v Hughes [2014] NSWCA 268
Davis v NSW Land and Housing Corporation [2016] NSWCA 325
Dee-Tech Pty Ltd v Neddam Holdings Pty Ltd [2010] NSWCA 374
Dee-Tech Pty Ltd v Neddam Holdings Pty Ltd (No 2) [2009] NSWSC 1355
In the matter of Bitar Pty Ltd [2015] NSWSC 2158
Minister for Immigration & Ethnic Affairs v Polat (1995) 57 FCR 98
Neil v Legal Profession Complaints Committee [2011] WASCA 48
O’Connor v Soul [2015] NSWDC 294
Pantorno v The Queen (1989) 166 CLR 466; [1989] HCA 18
Pentelow v Bell Lawyers Pty Ltd trading as Bell Lawyers [2013] NSWSC 111
Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110
Russo v Acebond Pty Ltd [2012] NSWSC 300
TriCare (Hastings) Ltd v Allen [2015] NSWCA 344
Wang & Liu v State of New South Wales [2011] NSWCA 321
Zobel v Croudace (1899) 16 WN (NSW) 32

Texts Cited:

G E Dal Pont, Law of Costs (LexisNexis, 4th ed, 2018)

Category:

Principal judgment

Parties:

The Appeal

 

Rhonda Daily Slattery (Plaintiff)
Paul Mervyn Fordyce trading as PMF Legal (First Defendant)
Bennett Joseph Slattery (Second Defendant)
Dee-Tech Pty Ltd (Third Defendant)
Bright Star Laundry Pty Ltd (Fourth Defendant)

 

The Cross-Appeal

  Paul Mervyn Fordyce trading as PMF Legal (Cross-Claimant)
Rhonda Daily Slattery (First Cross-Defendant)
Dee-Tech Pty Ltd (Second Cross-Defendant)
Bright Star Laundry Pty Ltd (Third Cross-Defendant)

Representation:

Counsel:
M Castle (Plaintiff / Cross-Defendant)
J C McDonald (First Defendant / Cross-Claimant)

  Solicitors:
PMF Legal (First Defendant / Cross-Claimant)

File Number(s):

2017/240216

 Decision under appeal 

Court or tribunal:

Local Court of New South Wales

Jurisdiction:

Civil

Date of Decision:

10 July 2017

Before:

Pierce LCM

File Number(s):

2014/189350

Judgment

INTRODUCTION

1. HIS HONOUR: This appeal is brought by a further amended summons filed in Court on 13 June 2018 (“the further amended summons”) from a decision of Pierce LCM of 10 July 2017, insofar as that judgment determined that Ms Rhonda Daily Slattery (“the plaintiff”) was liable to pay the professional costs of Mr Paul Mervyn Fordyce (trading as PMF Legal) (“the first defendant”) and a consequential order for the plaintiff to pay indemnity costs to the first defendant. There were also other defendants, party to those proceedings, which were not found to be the subject of any liability, which will be discussed later in this judgment.

2. That description of the appeal will require expansion but it is important to observe at the outset that Pierce LCM gave a judgment in favour of the first defendant for professional costs with respect to an agreement for the provision of legal services in relation to appellate proceedings (“the Appeal Matter”), which will be described later in this judgment as “the First Costs Agreement”, but dismissed an application for professional costs with respect to a further set of proceedings, which will be broadly described as “the Taking of Accounts Matter”. In that case, there was a claimed agreement supportive of professional costs (“the second proposed agreement”), which proposition, broadly expressed, was rejected by Pierce LCM.

3. In order to reach that decision, Pierce LCM bifurcated the proceeding into proceedings on liability and quantum. In determining the issues, he delivered a judgment on liability dated 12 October 2015 (“the liability decision”) and two judgments in the quantum proceedings: the first, delivered on 18 May 2017, concerned the quantum of professional costs in relation to the Appeal Matter payable to the first defendant (“the quantum decision”); and the second, delivered on 10 July 2017, dealing with the question of disbursements, interest, costs and orders (“the costs decision”). By the costs decision, Pierce LCM pronounced orders but the orders were later entered on 20 July 2017.

4. No issue was taken as to the form of the appeal insofar as it restricted attention to the decision date of 10 July 2017. The grounds of appeal variously attacked the liability decision (grounds 1-4 and 7), the quantum decision (ground 5) and the costs decision (insofar as indemnity costs were concerned, ground 6). The grounds of appeal will be set out below.

5. The first defendant contended that ground 5-7, inclusive, were brought out of time and that the further amended summons was defective in that there was a failure to seek leave to extend time (see Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 50.3). (The plaintiff accepted that ground 7 was out of time but submitted that the Court should, notwithstanding the form of the further amended summons, hear and determine the ground).

6. A further issue was raised as to the form of the further amended summons. Whilst the further amended summons does not allude to the Local Court Act 2007 (NSW), it is plain from the submissions of the parties that the plaintiff’s appeal was entirely predicated upon the provisions of that Act permitting appeal to this Court. The first defendant accepted the first four grounds of appeal constituted an appeal as of right under s 39 of the Local Court Act, but contended that the remaining grounds required leave pursuant to s 40 of the Local Court Act because they either agitated questions of fact, for which no appeal lies, or constituted an appeal involving mixed questions of fact and law (s 40(1)), or concerned an order for costs (s 40(2)(c)). That contention was disputed by the plaintiff, save that the plaintiff accepted ground 6 (regarding indemnity costs) required leave pursuant to s 40(2)(c). As noted, no application for leave under that provision appears on the face of the further amended summons but the plaintiff, during the course of the proceedings, sought, by her counsel, leave with respect to that ground.

7. On 16 March 2018, the first defendant filed an amended cross-summons (“the cross-summons”), effectively seeking to have the remaining defendants declared party to the First Costs Agreement and the obligations to pay professional costs arising therefrom.

8. It should also be noted, by way of introduction, that the proceedings before Pierce LCM involved a substantial number of hearings because his Honour ultimately became immersed in a lengthy and complex dispute as to the assessment of the quantum of professional costs with respect to which liability had been found.

BACKGROUND

9. The plaintiff is the sole director and shareholder of two companies:

1. Dee-Tech Pty Ltd (“Dee-Tech”) (the third defendant in the appeal before this Court); and

2. Bright Star Laundry Pty Ltd (“Bright Star”) (the fourth defendant in the appeal before this Court).

10. Dee-Tech operates an internet café and computer consultancy business, which is run by Mr Bennett Joseph Slattery, the plaintiff’s husband (and the second defendant in the appeal before this Court), with the assistance of the plaintiff. Bright Star operates a commercial laundry business, which is run by the plaintiff, with the assistance of Mr Slattery. (Dee-Tech and Bright Star shall hereinafter be collectively referred to as “the plaintiff’s companies”).

11. The plaintiff’s companies operated their respective businesses from the premises leased by Neddam Holdings Pty Ltd (“Neddam”) at 3, 217 The Entrance Road, Erina (“the premises”), with Dee-Tech as lessee and Bright Star as sub-lessee.

Proceedings before the Supreme Court

Proceedings before Gzell J

12. On 24 April 2007, the plaintiff’s companies commenced proceedings in the Supreme Court.

13. By a statement of claim filed on 7 March 2008, they sought a vaguely worded declaration that “at all material times [Dee-Tech] has validly exercised any option to renew registered lease number 63994Q [sic] (as varied)”. In the alternative, they sought a more precisely worded declaration that Dee-Tech had “validly exercised the option to renew registered lease number 63994Q [sic] (as varied) for a term of three years commencing from 1 February 2008 and terminating on 31 January 2011”. In the further alternative, the plaintiff’s companies sought an order that Dee-Tech “be relieved of forfeiture of the lease of the premises”. Bright Star also sought relief from the forfeiture of its sub-lease.

14. By an amended cross-claim filed on 19 December 2008, Neddam sought an order against the plaintiff’s companies for possession of the premises (the plaintiff and Mr Slattery were cross-defendants in the proceedings). Neddam also sought an order for rectification of the variation of lease, in order to change the date that from which Dee-Tech was required to pay outgoings in respect of the premises.

15. The matter was heard before Gzell J of the Equity Division of this Court on 12-13 October 2009.

16. In a judgment given on 8 December 2009 Gzell J held, in substance, that Neddam was entitled to the relief it sought and that Dee-Tech’s claim for relief against forfeiture of the lease of the premises should be rejected: Dee-Tech Pty Ltd v Neddam Holdings Pty Ltd (No 2) [2009] NSWSC 1355.

17. On 17 December 2009, his Honour made orders dismissing the plaintiff’s companies’ statement of claim and granted the relief sought by Neddam.

The Appeal Matter

18. The plaintiff’s companies sought to appeal the decision of Gzell J and stay the orders, with respect to possession, of 17 December 2009.

19. On 1 December 2010, the appeal was brought before the Court of Appeal. In a judgment given on 22 December 2010, Sackville AJA (with whom Campbell and Young JJA agreed) allowed the appeal and, inter alia, remitted the matter to the Equity Division of the Supreme Court to be determined in accordance with law: Dee-Tech Pty Ltd v Neddam Holdings Pty Ltd [2010] NSWCA 374.

20. The proceedings before the Court of Appeal, together with the application for a stay of judgment, shall hereinafter be referred to as “the Appeal Matter”.

The Taking of Accounts Matter

21. Further proceedings were brought and listed before White J in the Equity Division of the Court, which concerned the taking of accounts on the moneys owed by Dee-Tech for outstanding contributions to outgoings (matter number 2007/254642, which shall hereinafter be referred to as “the Taking of Accounts Matter”). (For completeness it should be noted, the Taking of Accounts Matter was heard together with matter number 2010/393169, which concerned the validity of notices purportedly given under s 133E of the Conveyancing Act 1919 (NSW) and a claim by Dee-Tech for relief under s 133F of the Conveyancing Act for relief against the effect of such breaches as are found).

22. The matter was heard over three days: 14, 16 and 17 June 2011.

23. On 3 May 2012, White J made the following orders with respect to the Taking of Accounts Matter:

1. Give judgment for Neddam against Dee-Tech in respect of outgoings and interest payable up to and including 30 April 2012 under the renewals of lease no 639942Q dated 23 November 1999 as varied by a variation of lease dated 28 May 2002 (after deduction of $4,000 payable by Neddam to Dee-Tech pursuant to the orders of 9 June 2005 and interest thereon at the prescribed rates), in the sum of $51,912.09.

2. Order that the Dee-Tech pay two-thirds of Neddam's costs of the account ordered by Gzell J on 17 December 2009 on the ordinary basis.

3. Order that all moneys held in the escrow account of LJ Hooker Commercial Central Coast in respect of the payment of outgoings, including any interest earned thereon, be paid to Neddam.

4. Order that, except as has been otherwise ordered, Dee-Tech’s claims for relief in its Statement of Claim and Neddam's claims for relief in its amended cross-claim be dismissed.

24. Reasons for decision were published on 22 March 2012: Dee-Tech Pty Ltd v Neddam Holdings Pty Ltd [2012] NSWSC 251. A subsequent judgment was also issued, with respect to the orders that followed and costs, on 18 May 2012: Dee-Tech Pty Ltd v Neddam Holdings Pty Ltd (No 2) [2012] NSWSC 517.

The Plaintiff’s engagement of Paul Mervyn Fordyce

25. On 8 February 2010, the plaintiff first met with the first defendant in relation to the Appeal Matter.

26. On 18 February 2010, the plaintiff received a draft engagement letter via email (the document received included tracked changes). The draft engagement letter, together with the Schedule of Fees and Expenses and the Terms of Engagement, set out the proposed agreement in relation to the costs of the legal services to be provided by the first defendant (“the proposed agreement”). The proposed agreement concerned the provision of legal services by the first defendant in relation to the Appeal Matter.

27. On 22 February 2010, following further amendments to the proposed agreement, the plaintiff signed the third page of engagement letter (“the First Costs Agreement”). The plaintiff’s signature appeared three times: once above the words “Dee-Tech Pty Ltd”; once above the words “Bright Star Laundry Pty Ltd”; and once above the words “Rhonda Slattery”. Two further handwritten notations featured on the third page, namely, the date “22/2/10” next to the first recording of the plaintiff’s signature, and the first defendant’s signature above the words “Paul Fordyce”. It was a point of contention between the parties to these proceedings as to whether the First Costs Agreement also engaged the plaintiff’s companies (this will be discussed later in the context of the first defendant’s cross-summons). The First Costs Agreement, signed by the plaintiff, was sent to the first defendant by email on 23 February 2010.

28. The First Costs Agreement provided an estimate of the “likely amount” of costs to be of “approximately $50,000.00 (not including GST)”, which included $15,000 for counsel’s fees.

29. On 26 February 2010, the first defendant sent documents to secure charges over the plaintiff’s companies to the value of $250,000 each.

30. On 8 March 2010, the plaintiff requested by email that the first defendant “review, prepare and provide an invoice to me soon”, as she wanted to make a drawing from her loan facility. By the same communication, the plaintiff also requested an updated “estimate of costs and timeframe”. On the plaintiff’s submission, there was no reply from the first defendant as to the request for an updated estimate nor an indication that the security for charge documents should be viewed as an updated estimate.

31. On 19 April 2010, the first defendant prepared a subsequent engagement letter concerning the provision of legal services in relation to the Taking of Accounts Matter (“the second proposed agreement”). It provided for an estimate of the “likely amount” of costs to be of “approximately $15,000.00 (not including GST)”. The second proposed agreement was never received or signed by the plaintiff or Mr Slattery. Notwithstanding that fact, it is not disputed that the first defendant provided legal services in relation to the Taking of Accounts Matter. It may also be noted that it was not disputed that the first defendant provided legal services with respect to the Appeal Matter.

32. During the course of the retainer, from 22 February 2010 to 4 August 2010 (“the retainer”), the first defendant issued 29 invoices, totalling $149,639.10. Of that amount, $56,016.50 was for counsel's fees and the remainder was for professional fees and other disbursements.

Engagement of Counsel

33. Over the course of the retainer, the plaintiff retained four barristers, which were briefed by the first defendant as instructing solicitor to act for the plaintiff. They were as follows:

1. Mr Todd Alexis SC;

2. Mr David Mackay;

3. Mr Luca Shipway; and

4. Mr Imtiaz Ahmed.

Mr Alexis

34. Mr Alexis first appeared for the plaintiff on an urgent basis, prior to the retainer, in December 2009, with respect to the Appeal Matter. Mr Alexis was being briefed by the plaintiff’s previous solicitor at that stage. Those fees were paid through another law firm and are not relevant to the present matter.

35. On or around 2 and 4 February 2010, the plaintiff approached Mr Alexis to run the Appeal Matter. It would appear that Mr Alexis proposed to accept instruction directly from the plaintiff, as a person who is not a solicitor or officer of a government department or agency whose usual duties include engaging lawyers, with a payment of $12,000 made directly into his account (via two separate bank transfers of $10,000 and $2,000, respectively) (see r 22 of Legal Profession Uniform Conduct (Barristers) Rules 2015 (NSW)).

36. On 10 February 2010, an agreement was reached between the plaintiff, the first defendant and Mr Alexis, that Mr Alexis would transfer the $12,000, received from the plaintiff as payment for counsel’s future fees, into the PMF Legal Trust Account. It would appear by this agreement that Mr Alexis accepted a brief by the first defendant as instructing solicitor.

Mr Mackay, Mr Shipway and Mr Ahmed

37. Mr Mackay and Mr Shipway were also briefed as junior counsel, it would appear, to assist Mr Alexis.

38. On 10 March 2010, Mr Mackay was briefed to assist Mr Alexis with the Appeal Matter.

39. On 23 March 2010, the first defendant advised the plaintiff to notify Mr Mackay directly that she did not propose to utilise Mr Mackay’s services for the Taking of Accounts Matter but would be using the services of Mr Shipway.

40. On 6 April 2010, Mr Shipway was briefed to assist the plaintiff in preparing her evidence in relation to the falsifications and surcharges for the Taking of Accounts Matter. (Mr Shipway was also previously briefed to assist Mr Alexis in relation to a security for costs matter, which was heard on or about 29 March 2010).

41. On 22 June 2010, Mr Shipway arranged for Mr Ahmed, a reader on the floor, to be briefed, in an effort to reduce costs to the plaintiff, in relation to the Taking of Accounts Matter.

42. On 25 June 2010, the first defendant advised the plaintiff that “[a]s far as dealing with the junior counsel it is more expedient for you to deal directly with him than go through [the offices of the first defendant]”.

Payment of Counsels’ Fees

43. On the submission of the plaintiff, counsels’ fees were paid in full. First, with respect to Mr Alexis, the money held on trust was ultimately released to Mr Alexis in payment of his services. Over the course of the retainer, further amounts were paid by the plaintiff, with respect to counsels’ fees, into the PMF Legal Trust Account.

44. Following the termination of the retainer on 4 August 2010, the plaintiff paid $25,006.60 ($23,769 and $1,237.50, respectively) directly to counsel in respect of liabilities which had been included in invoices issued by the first defendant.

45. A total of $31,010 was paid to the first defendant, to satisfy counsels' fees of $56,016.50, with the balance of $25,006.50 having been paid directly to counsel by the plaintiff.

Termination of the retainer

46. On 4 August 2010, the first defendant filed and served Notices of Ceasing to Act with respect to the Appeal Matter and the Taking of Accounts Matter.

47. That same day, after receiving the first defendant’s notices, the plaintiff wrote to the first defendant to confirm she “will meet the costs of the Barristers fees that have not been paid” and “hopes” to resolves the first defendant’s fees by agreement. In the event agreement could not be reached, the plaintiff advised she would “submit your fees for costs assessment scheme and will meet them in due course pending determination”.

The Local Court Proceedings and the Judgment Below

48. By a statement of claim filed in the Local Court on 26 June 2014, the first defendant commenced proceedings against the plaintiff, the plaintiff’s companies and Mr Slattery, for unpaid legal costs incurred during 2010 (“the statement of claim”). The total relief claimed was $116,807.05.

49. The first defendant pleaded that there was a breach of contract with reference to both the First Costs Agreement and the second proposed agreement (collectively, “the agreements”). (It should be noted, the first defendant pleaded that the second proposed agreement constituted “the Second Agreement”).

50. As to the First Costs Agreement, it was pleaded:

On or about 8 February 2010, by an agreement between the plaintiff and defendants, the plaintiff agreed to act as solicitor for the defendants and the defendants agreed to pay for legal services in accordance with the Engagement Letter and Schedule of Fees and Expenses.

51. As to the second proposed agreement, it was pleaded:

On or about 19 April 2010, by an agreement between the plaintiff and defendants, the plaintiff agreed to act as solicitor for the defendants and the defendants agreed to pay for the legal services in accordance with the Engagement Letter and Schedule of Fees and Expenses.

52. The first defendant did not distinguish between the plaintiff, Mr Slattery or the plaintiff’s companies (collectively described as “the defendants” in the statement of claim): each was considered party to both agreements. Further, as to start date of the First Costs Agreement, the first defendant relied upon the date the plaintiff first met with him (as opposed to the date of the written agreement).

53. The first defendant also pleaded that the total amount invoiced for the provision of legal services (including disbursements) was $149,639.10 and that “the defendants” had only paid $55,657.35.

54. On 27 January 2015, the matter commenced in the Local Court before Pierce LCM. The hearing of the matter, whilst not initially intended, was ultimately divided into two separate hearings for the purposes of determining liability and quantum, respectively. They shall be addressed in turn below.

Liability

55. The liability hearing was heard over three days: 27 January, 30 March and 24 June 2015. His Honour handed down his reasons for decision on 12 October 2015 (“the liability decision”).

56. Pierce LCM held the First Costs Agreement was constituted by the engagement letter dated 22 February 2010 “and its return duly executed [by the plaintiff] on 23 February”. His Honour described the agreement as follows:

The [first defendant’s] letter of engagement of 22nd February provided for a fee of $500.00 per hour, and $350.00 for work done by an employed solicitor. It estimated fees for the work at $50,000.000, although $15,000.00 of that figure was for counsel’s fees. The $35,000.00 which represented estimated fees of the [first defendant] was exceeded when work in the first few weeks after engagement became the subject of three invoices issued together or in rapid succession. [The plaintiff] had been the person with whom the [first defendant] had most contact, and she had from the beginning been extremely cautious and concerned about the need to contain fees. The [first defendant] sought security for costs in an amount of $250,000.00, and in an early email she responded indicating that she thought $150,000.00 was enough.

57. His Honour made the following findings, inter alia, with respect to liability under the First Costs Agreement:

1. the plaintiff was bound by the First Costs Agreement;

2. the first defendant had met his disclosure obligations under ss 316 and 317 of the Legal Profession Act 2004 (NSW) (“the LPA”), vis-à-vis the plaintiff;

3. the plaintiff was the sole director of the plaintiff’s companies;

4. that despite the plaintiff signing the First Costs Agreement for the plaintiff’s companies, the plaintiff’s companies were not liable under the First Costs Agreement;

5. as to the contended liability of Mr Slattery, there was no evidence of agreement by conduct and absent the necessary disclosures, as required by the LPA, “it is not possible to hold Mr Slattery liable”;

6. the first defendant “was entitled to be paid for the work done in relation to the first agreement (the appeal and stay)”;

7. as to work completed prior to First Costs Agreement, it was held that such work “must have been pursuant to [an] earlier (if tacit) agreement”. However, it was also noted that the plaintiff acknowledged the work completed prior to the First Costs Agreement and did not take issue with the first defendant’s entitlement to be paid for that work. Hence, Pierce LCM made the following recommendation to the first defendant:

… even at this late stage, amended prior to the formal entry of judgment to plead quantum meruit for the earlier work (by pleading restitution for unjust enrichment) and so regularise the record, and I invite the parties to agree to such an amendment. … It is a preferable course, but in spite of what I perceive to be an incorrect pleading (failure to pick up what ought to be seen as a quantum meruit (even in the absence of amendment the [first defendant’s] claim must be regarded as extending that far.

8. that the amount for which the first defendant was entitled to succeed on, with respect to the claim brought before the Local Court, was the total of the invoices appearing on a table that had been handed up, (but unmarked), which related to the Appeal Matter, but not those related to the Taking of Accounts Matter.

58. As to the above finding with respect to disclosure obligations under the First Costs Agreement, in light of the matters raised on appeal, further elaboration is required.

59. First, his Honour referred to email correspondence sent from the first defendant to the plaintiff on 2 March 2010, which advised: “the needed stay of proceedings had been achieved and indicat[ed] quite explicitly that $125,000.00 would be likely to ‘cover the matter’”. His Honour found, notwithstanding its form, the email “sufficiently conveyed that [the first defendant’s] fees would be in that vicinity, and more to the point certainly conveyed that there had been a substantial change to the fees likely to be incurred”.

60. Second, in another email dated 17 March 2010, the first defendant cautioned against the uncertainties of litigation and indicated, “if pressed to its conclusion, the appeal proceedings could attract additional costs of about $300,000.00”. His Honour found “[i]t is therefore a yet further advice as to costs which made it plain that there had been a substantial change in the likely estimated costs”.

61. Turning to the second proposed agreement, his Honour found:

1. the first defendant relied upon a second proposed agreement, however “there was no agreement and no disclosure in relation to that matter" with any of the named parties, as the second proposed agreement had not been received by them;

2. however, the first defendant did do work in relation to the second proposed agreement, and the plaintiff was aware he was doing that work; and

3. as to the fees, with respect to the Taking of Accounts matter, notwithstanding no agreement was found, the first defendant “will have to await assessment”.

62. Thus, his Honour rejected that aspect of the first defendant’s claim, with respect to the Taking of Accounts Matter: he found it “cannot succeed” in the absence of a costs agreement. (For completeness, it should be noted, the first defendant did not ultimately amend its claim to include quantum meruit as suggested by Pierce LCM).

63. In summary, with respect to liability under the agreements, Pierce LCM held:

• There was agreement (and disclosure) with [the plaintiff] in relation to the work regarding the appeal and stay (the first agreement), but not the work in relation to the taking of accounts (the second agreement),

• There was no agreement or disclosure with [the plaintiff’s companies or Mr Slattery] in relation to either agreement.

64. Following his Honour’s findings with respect to liability, in light of difficulties identified with respect to the determination of quantum (which included confusion as to the identification of invoices issued by the first defendant, namely, being mistakenly noted as relating to the Appeal Matter but, in fact, properly concerning the Taking of Accounts Matter), Pierce LCM, concluded that further “evidence and submissions would be needed” and directed the parties to advise the Court, “if the matter need[ed] to be set down for further hearing for that purpose”.

65. Pierce LCM concluded:

Once the total of the payments is arrived at it may be deducted from the total of invoices relating to the appeal and stay matter, and apart from interest the result will be the amount for which the plaintiff will succeed. I will need the parties to agree on that figure before entering judgment, and failing agreement I will have to set the matter down for further argument.

…

The judgment to be entered will be only against [the plaintiff in respect of the Appeal Matter].

66. No orders were entered at this stage, owing to the need to determine quantum.

Quantum

67. Following the liability hearing, the parties were unable to reach agreement on quantum. The quantum hearing was heard over 12 days, commencing on 19 October 2016, with judgment reserved on 8 March 2017. As earlier mentioned, his Honour delivered two sets of reasons as to “quantum” and “disbursement, interest and costs”, respectively, to which I now turn.

68. It should be noted that the day before the delivery of the quantum decision the plaintiff filed a written submission on costs that contended s 355(b) of the LPA (as set out and discussed below) had the effect that the proceedings before the Local Court should not have been brought and could not be maintained. It was argued that, accordingly, the first defendant should be ordered to pay costs of the proceedings. No submission was made that the provisions would otherwise effect the disposition of the proceedings below.

Reasons re Quantum

69. On 18 May 2017, Pierce LCM delivered a “note of reasons on quantum” (the quantum decision).

70. The first paragraph of the quantum decision reads as follows:

After I gave reasons in the substantive proceedings dealing with liability, deciding in favour of the [first defendant] against [the plaintiff] only, and only in respect of the claim for work relating to the appeal and stay, the parties were unable to reach agreement on quantum. An attempt was made to persuade them to have the quantum assessed, but they could not agree on that course, and I was left to determine quantum on a disputed basis. Other than very brief determinations, that is the only time in thirty years on the bench that I have had to perform anything even remotely like such a large exercise when determining the quantum of damages on an action by a solicitor for unpaid costs. It is like an old-fashioned taxing of costs, and it is most regrettable that it had to occur.

71. Pierce LCM set out the procedure he adopted, with respect to the determination of quantum, in summary, as follows (at 1): to “improve the chances of dealing with quantum more expeditiously” his Honour required the parties to prepare a “Scott Schedule” and, ultimately, a second supplementary schedule (“the schedules”). The schedules were prepared and used during oral submissions. The matter then proceeded “on the basis that we went through the line items in the first schedule one by one” (at 9).

72. His Honour noted (at 10):

Eventually, after many days hearing, we reached a point where [the plaintiff’s] interruptions, over-talking and repetitions became so great that I could no longer conduct an oral hearing. She did eventually apologise, indicating that she had been tired and not well.

I provided for written submissions. There were delays and some extensions, but some material was eventually provided.

73. On 8 March 2017, following the difficulties proceeding with an oral hearing – “occasioned by intemperate behaviour on [the plaintiff’s] part” – Pierce LCM made orders for the filing of written submissions. Those orders were set out at the start of the quantum decision (at 1). In summary, the parties were directed to provide a series of written submissions, within the specific parameters defined by the Court, that included references to line items in the schedules.

74. At the same juncture, Pierce LCM made the following observations as to the written submissions provided by the plaintiff: “Her submission did not deal with each line item seriatim but made global submissions in relation to groups of items. In the process she did in fact seek to re-agitate issues already decided”. Further, as to a note relating the supplementary schedule, it was provided “unreasonably late” and was not had regard to by Pierce LCM.

75. The quantum decision then turned to explain the approach Pierce LCM took to the allowance or disallowance of items, which he marked on the schedules. Pierce LCM also determined the extent of counsels' fees and the extent to which such fees were paid, by the first defendant, or directly by the plaintiff.

76. The following observations of Pierce LCM in the quantum decision are also relevant to the arguments of the parties with respect to ground 5 (which will be discussed below):

1. “There were a great deal of submissions back and forth as to each line item. Many line items and part of items were conceded by the [first defendant] as unrelated to the appeal and stay with which we are concerned, being concerned rather with the taking of accounts matter on which the plaintiff did not succeed” (at 9);

2. “As we went, I made rulings on a large number of items, finding amounts proved relating to them, and I made notes on the schedule of the amount disallowed in relation to each item. In addition to those items not reached in the hearing I also made some notes in red or green ink when preparing these reasons, a small number of which had not been correctly noted at the hearing. They are items where the [first defendant] had made a concession as to an item not being owing, but that concession had not been noted on the schedule and perhaps was not addressed” (at 10);

3. “When I gave written reasons in the substantive hearing I expressly indicated that the [first defendant] would succeed in respect of the work done in relation to the appeal and the stay. It is too late now to seek to go behind the findings I made. I also made it quite clear that I would not in the present quantum hearing permit the re-canvassing of findings already made” (at 12);

4. “[I]t is not necessary to address much of [the plaintiff’s] submissions. Where I do not address them it is because they amount to no more than general criticisms or they fail to identify line items in the Scott schedule or fail to explain why she was not able to address them at the hearing. In each and every case I have considered all the line items and where not expressly addressed find that it is apparent on their face that they are reasonable. When throughout these reasons I have not addressed any item I have accepted it, without taking up time expressly identifying the reasons – which in each case will be obvious on the face of the item. I have not however, addressed those items in respect of which [the plaintiff] had an opportunity to put her submissions orally in the hearing and did not do so)” (at 19);

5. “[The plaintiff] did not address the supplementary schedule within the allowed time. Several times in the course of the matter it was necessary to allow her additional time. She was accommodated, but as the matter ground on it became apparent that she was making little effort to comply with timetables… I declined to allow further time” (at 27);

77. As to a determination with respect to the payment of counsels’ fees, Pierce LCM had regard to the following:

1. The plaintiff’s submission of 11 April, which included a table showing what the plaintiff contended to be “all the payments made to counsel” (“Table AA”). A copy of the table was extracted in the judgment (at 29); and

2. The first defendant’s summary as to the allocation of monies, which included two tables: Table A (set out amounts paid by the plaintiff directly to counsel, as well as amounts paid by the plaintiff directly to the first defendant, as prepared by the plaintiff) and Table B (outlining “Payments to Barristers” and refers to “Proof of Payment” vis-à-vis “Exhibit 9”, without reference to the source of payment to counsel (i.e. the first defendant or the plaintiff).

78. Pierce LCM proceeded to make observations with respect to the payment of counsels’ fees in light of the submissions of the parties:

1. “[The plaintiff] says that by the [first defendant’s] summary the [first defendant] is intentionally misleading the Court. She says that Table B identifies all the memos of fees provided by counsel to the [first defendant] but does not record payments by the [first defendant]. However, that is an incorrect submission because the table, as can be seen above, provides references to proof of payment. If all she meant to say was that counsel had been paid but perhaps by her personally or by other defendants rather than by [the first defendant], she does not say so. Moreover, the [first defendant’s] summary… does not purport to say who paid counsel, but rather cites the table to show that there are no monies outstanding to counsel” (at 32);

1. As to the $15,000 paid to the first defendant on 23 March 2010 that the plaintiff contended concerned counsels’ fees, his Honour found, with reference to Table A, “that the money came in originally for the [first defendant’s] fees” and hence probably appeared in the first defendant’s general ledger as opposed to the trust account. He also found: “the records and evidence do not show that the [first defendant’s] trust account records were unreliable” (at 33).

2. As to amounts paid to counsel that do not appear in either Table A or B (or Table AA), his Honour also made reference to the probability of payments to counsel via the general account as opposed the trust account. His Honour found:

I have reached a view that on the balance of probabilities neither have the defendants been charged for fees of counsel which were separately met by them, nor is there any amount related to counsels’ fee unaccounted for by the plaintiff

4. As to direct payments made by the plaintiff to counsel:

1. Pierce LCM referred to the first defendant’s submission that “a total of $69,969.00 [was] paid by [the plaintiff] of which $23,769.00 was paid by her directly to counsel. He then says that the total payments to counsel of all outstanding fees was $56,016.15, which he concludes means that the $13,952.50 deference (presumably sitting in trust), subject to the present determination of quantum, should be available for his fees” (at 34);

2. “The total sums paid to Mr Alexis, as appearing form Table B, come to about $32,000.00. The payment direct to Mr Alexis [by the plaintiff] on Table 1 [also referred to as Table A] only, at items 1, 2, 9, and 11, come to $26,400.00. It must follow that there were other payments made to Mr Alexis to bring the total described in Table B as having been paid to the sum of about $32,000.00” (at 35);

3. “It is extremely improbable that the extra amounts which must have been paid to Mr Alexis were paid by the defendants; given her attention to detail [the plaintiff] would certainly have produced a note of them if they had. It is therefore highly likely that those payments came from the [first defendant], whether paid from trust or from his trading account. As I said above, we know of at least one payment of $15,000.00 which very likely went through the trading account” (at 35);

4. As to direct payments made to Mr McKay, the plaintiff made a direct payment of $12,375.00, but the invoices record approximately $15,800, which matches the amount paid per Table B (at 35); and

5. “What all that boils down to is that counsel were paid, some payments must have been made beyond those set out in Table 1 [also referred to as Table A], and the difference can only have come from [the first defendant]” (at 35).

79. By the quantum decision, Pierce LCM made the following findings:

1. that of "the work set out in the first Scott Schedule, and subject to any payments that may have been made, the [first defendant] is entitled to succeed in an amount of $40,806.61, which excludes counsel's fees and disbursements, [being] items 259-262, 267,268, 270, 271 and 275";

2. that the amount to be allowed for items in the supplementary schedule totalled $8,272.00;

3. that the first defendant was owed an amount of $402.50 for items 259-262, 267,268, 270, 271 and 275; and

4. that the first defendant would succeed in the sum of $49,481.11.

80. By the same note, his Honour directed: “[t]he parties can address costs and interest separately”. No orders were entered on that occasion.

Disbursements, Interest and Costs

81. Following the quantum decision, the matter of “costs and interest” was dealt with on the papers.

82. The first defendant provided written submissions together with a spreadsheet listing invoice numbers and the items claimed for within each, as well as calculations of interest broken down by invoice.

83. The plaintiff was initially directed to provide her written submissions by 19 July 2017. An extension was sought and granted to 27 June 2017. A further extension of 4-6 weeks was sought and denied. Notwithstanding her unsuccessful application, the plaintiff emailed her “Written Final Submissions” (dated 4 July 2017) to the Chief Magistrate’s Office on 5 July 2017 (“the plaintiff’s written final submissions”).

84. On 10 July 2017, Pierce LCM delivered a “note of reasons on disbursement, interest and costs” and, by the same note, pronounced orders.

85. As to the plaintiff’s written final submissions, Pierce LCM confirmed that the Court did not have regard to them (at 2). He also referred to a subsequent email sent by the plaintiff to the Chief Magistrate’s Office on 6 July 2017, which requested that Pierce LCM “take into account a number of arguments related to the 2015 Legal Profession Act. … [h]er request required confirmation from me that I would take those arguments into consideration. I did not take them into consideration… Without any application to re-open it was and is much too late in the day to have fresh legal arguments raised (in spite of the fact that there had been a passing reference to the new legislation in the course of the hearing)”.

86. His Honour also noted:

[The plaintiff] was given ample time to provide her submissions, and her failure to do so within the extended time (27th June) is unacceptable. There has to be an end to litigation. The additional four to six weeks she then sought is completely unacceptable.

…

The litigation has been very complex and has occupied a huge amount of time. A high proportion of the time used up was occasioned by [the plaintiff] having repeatedly ignored directions not to continue raising and repeating arguments which had been the subject of adverse rulings, and be her failure to couch her earlier submissions in a way that would address the Scott Schedule relating the [first defendant’s] fees. Moreover, there was a later supplementary schedule provided by [the first defendant], and she missed the deadline to respond to it also, as a result of which I had regard only to what was put by [the first defendant].

[The plaintiff] has continued to send me emails, through the Chief Magistrate's Office, the last one being two days ago, 8th July.

87. After assessing the claims for disbursements, determining interest and correcting some errors of additions in the Scott Schedule, Pierce LCM pronounced judgment for the first defendant as follows (at 13):

There will be judgment for [the first defendant] on the amount of professional costs as set out in the reasons on quantum, $49,481.11, plus disbursements as set out in these reasons, $3,345.94 and contractual interest as set out in the totals in blue in the appendix, the total of all those amounts being $65,750.90.

The statutory post judgment interest will accrue from today.

There will, of course, be judgment for the [Mr Slattery], [Dee-Tech] and [Bright Star] against the plaintiff.

88. The above figures as set out by Pierce LCM, due to a mathematical error discovered before the entry of orders, were subsequently reduced: namely, $49,481.11 to $47,119.61, which reduced the total amount from $65,750.90 to $63,389.40.

89. Thus, in respect of the first defendant’s claim as to payment for the provision of legal services with respect to the Appeal Matter, a total of $63,389.40 was awarded to the first defendant (following a subsequent amendment, to rectify a mathematical error, to the calculation of professional costs).

90. Turning to costs, the Magistrate was of "no doubt that the [first defendant] is entitled to his costs against [the plaintiff]". He then proceeded to consider the effect of the various offers of settlement that had been made by the first defendant during the course of the proceedings. His Honour stated (at 14):

Most of the early offers were to take amounts higher than the amount the plaintiff had succeeded on. But the offer of 23rd January, 2015, which was both a Rules and Calderbank offer, was to take $50,000. Although it was only open for four days, in my view that was a very reasonable offer and plainly a genuine offer of compromise. Applying UCPR 42.14, I will make an indemnity costs order in favour of the [first defendant] from 28th January, 2015.

…

On 20th September, 2016 the [first defendant] offered to take $35,000.00, which again was a Rules and Calderbank offer. It was open for six days. That was a most reasonable offer, and if I wrong in taking the view that the 2015 offer entitled the [first defendant] to indemnity costs I would certainly order them from 28th September, 2016.

91. The plaintiff was also ordered to pay “90% of the [first defendant’s] costs to which [the first defendant] would otherwise be entitled”.

Judgment Entered

92. Final orders were subsequently entered on 20 July 2017, as follows:

TERMS OF JUDGMENT/ORDER

Judgment:

Rhonda Daily Slattery, First Defendant

is to pay

PAUL MERVYN FORDYCE trading as PMF Legal, First Plaintiff

the sum of

Claim amount: $63389.40

…

TOTAL: $63389.40

Verdict for Plaintiff

Judgment given for Plaintiff for $63389.40 (which includes contractual interest to date)

Court Costs Professional Costs 1st Defendant (Mrs. Slattery) to pay Plaintiff’s costs, on the ordinary basis up to and including 27.1.15, and thereafter on an indemnity basis

Order, however, that the Plaintiff have only 90% of costs otherwise payable. All payable forthwith.

Judgment for the 2nd, 3rd and 4th Defendants.

[The above classification of the parties reflects their respective roles throughout the Local Court proceedings.]

The Costs Assessment

93. On 22 July 2016, following the liability decision and prior to the quantum hearing, the first defendant made an application for an assessment of costs with respect to the Taking of Accounts Matter (“the application”). For the purposes of the application, the first defendant was listed as “the costs applicant” and the plaintiff, together with the plaintiff’s companies, as “the costs respondents”.

94. The application was lodged in light of Pierce LCM’s conclusion that the first defendant had not met its disclosure obligations, with respect to the second proposed agreement (namely, the Taking of Accounts Matter) and, in the result, his Honour remarked that the first defendant “will have to await assessment” as to the same.

95. The costs to be assessed were identified on the application as follows:

Costs of acting for the Costs Respondent in relation to 2007/254642 in the Equity Division of the Supreme Court of New South Wales - being the taking of accounts in respect of claims by Neddam Holdings Pty Ltd - the landlord of the premises known as Unit 3, 3 Mandina Road, West Gosford NSW 2250.

96. The application also provided the costs assessor with an explanation as to the Local Court proceedings. First, it cited and attached the liability decision given on 12 October 2015. Second, it noted the quantum hearing fixed for 27 September 2016 (that was ultimately vacated and the proceedings adjourned to 19 October 2016). As to the latter, the following information was identified on the application as “further information that is relevant to the assessment of costs”:

… Magistrate Pierce has set down for quantum determination hearing by him on 27 September 2016 the question of which costs relate to the taking of accounts proceedings. His Honour will not determine if those amounts are payable or not. He will simply determine if those claimed costs should not form part of his judgment as to what costs the Cost Respondent, Rhonda Slattery, has to pay to the Costs Applicant. These proceedings are therefore necessary to make that determination. The decisions of the Costs Assessor need to be consistent with the determination of the Magistrate in that regard. The more appropriate course may be for the Cost Assessor to make this determination and then provide it in a form that can be tendered to the Magistrate.

Given the wide ranging scope of objections by Rhonda Slattery to the costs claimed in the Local Court Proceedings, the course adopted here has been to include all costs and disbursements incurred in the appeal and the taking of accounts matter to avoid any errors being made.

97. On 25 July 2016, the first defendant wrote to the plaintiff, suggesting that the quantum hearing should be “held over” until the costs assessment had been completed. Following that communication, the plaintiff wrote to the then costs assessor, Mr Chris Plummer. By an email dated 15 August 2016, she advised that “[t]hese proceedings are continuing for final determination before the Court”, and contended that the application should be dismissed. In the alternative, the plaintiff submitted that the application “should be stayed pending the conclusion of the Local Court Proceedings between the parties”.

98. On 24 August 2016, the plaintiff wrote to the manager of the costs assessor. She again contended that “assessment should be stayed until final determination is reached in the Local Court matter”. The manager responded to the plaintiff’s letter that any stay of the application was a matter for the costs assessor.

99. On 1 September 2016, the first defendant wrote to the Mr Plummer, providing further explanation as to the quantum hearing and made a submission, in that light, as to the necessity of the costs assessment:

[T]his matter should be concluded as quickly and as prudently as possible [as] we believe that an assessment of the Taking of Accounts matter is necessary. Once the assessment process is complete it will, by immense measure, curtail the quantum process in relation to the costs for the Appeal matter. Plainly, whatever costs are assessed as belonging to the Taking of Accounts matter will mean that the remainder of all other costs can be attributed to the Appeal matter, thereby resulting in very little need for the Local Court quantum hearing process.

100. On 9 September 2016, the application was assigned to an alternate costs assessor, Mr Bruce Bentley, due to the initial costs assessor, Mr Plummer, having a conflict of interest.

101. On 13 September 2016, the first defendant wrote to Mr Bentley to inquire whether he had received copies of all the relevant documents. The letter contained the following:

There is some urgency to the matter as Magistrate Pierce in the Local Court has set down on 26 September 2016 for hearing 10 days of submissions and argument over the costs incurred in relation to what is called the "Appeal Matter"- which is not the subject of the costs assessment that has been referred to you, those being in relation to the "Taking of Accounts Matter”.

[Original emphasis.]

102. On 16 September 2016, Mr Bentley confirmed receipt of the first defendant’s email but advised that “[t]he current position of the costs respondents is not so clear but it appears to be that I should not proceed to assess those costs”.

103. On or around 21 September 2016, the first defendant applied to have the quantum hearing adjourned, pending the costs assessment. By email from the Chief Magistrate's Office, the parties were advised that the matter was listed for hearing, commencing on 19 October 2016, and that the first defendant’s “request for a mention date for directions regarding the Costs Assessment has been refused. His Honour has indicated that he has no issue with the Costs Assessment & Local Court proceeding running at the same time”.

104. On 22 September 2016, the first defendant wrote to Mr Bentley and provided further information in relation to the dispute in the Local Court and suggested the following:

[T]hat prior to proceeding with the actual assessment process of the Taking of Accounts items, the Costs Assessor should differentiate the Disputed Items as being owed between the two matters (the Differentiation Process). This would give certainty as to exactly which items belong to which matter prior to proceeding with the Assessment and the Quantum Hearing processes. This would also certainly assist in alleviating an unnecessary wastage of court time.

105. The letter also enclosed a spreadsheet, referred to as the "Adapted Spreadsheet", which listed the items which required differentiation by the costs assessor.

106. On 30 September 2016, the Mr Bentley advised that he would proceed with the costs assessment if the proceedings before the Local Court were adjourned.

107. Between 11 October 2016 and 10 July 2017, the costs assessment remained stayed, with the first defendant providing updates to the costs assessor, over the course of that period, as to the status of the Local Court proceedings.

108. On 12 July 2017, following the delivery of reasons in the quantum hearing and the delivery of judgment, the first defendant wrote to the costs assessor requesting that the costs assessment process continue. A copy of the liability decision, the quantum decision and costs decision were enclosed, together with a copy of the Scott Schedule, the supplementary schedule and the disbursements schedule.

109. On 7 August 2017, the plaintiff filed a summons commencing appeal. A copy was sent to the costs assessor on 8 August 2017.

110. On 23 August 2017, in light of the decision of Pierce LCM, the costs assessor confirmed that he proposed to proceed with the costs assessment. By the same communication the costs assessor requested:

If I am to proceed, I will require the applicant to prepare a single composite schedule of all individual items of billing claimed in respect of the Taking of Accounts matter, individually numbered and send it to me and the respondent.

111. On 29 August 2017, the plaintiff wrote to the costs assessor advising that her appeal was listed for hearing on 8 November 2017 and requested that he hold the matter in abeyance pending the appeal.

112. On 2 November 2017, Harrison J vacated the hearing date for the appeal on the basis that the matter was not ready.

113. On 14 November 2017, following the decision of Harrison J, the plaintiff wrote to the costs assessor advising of the vacation of the hearing date but maintained her request that he hold the assessment in abeyance pending the determination of the appeal and the first defendant’s cross-appeal (filed on 28 August 2017).

114. On 16 November 2017, the costs assessor wrote to the parties advising that he was reluctant to continue to hold the file in abeyance and repeated the request set out in his letter dated 23 August 2017 (extracted above). The first defendant responded to the costs assessor by a letter dated 29 November 2017, requesting the costs assessor proceed with his determination and seeking some additional information regarding the nature of the schedule he required.

115. On 30 November 2017, the plaintiff wrote to the costs assessor stating that he was not at liberty to proceed with the assessment due to her appeal.

116. On 14 December 2017 the costs assessor wrote to the parties setting out his preliminary view that:

1. the costs of the Appeal Matter were not before him;

2. Magistrate Pierce's decision that the first defendant “had no agreement with [the plaintiff], or any of the other defendants, for the work in relation to the taking of accounts" and that "no disclosure was made by the applicant in relation to that work" in circumstances where his Honour decision in relation to that matters had not been appealed "creates a res judicata and issue estoppel with respect to this determination" and accordingly he "is unable to find that there is a costs agreement between the applicant and the respondents for the taking accounts work or that the applicant made proper disclosure in accordance with s 316 of the LPA in relation to that work"; and

3. nevertheless, the first defendant is entitled to costs of the Taking of Accounts Matter by virtue of s 319 of the LPA.

117. The costs assessor invited the parties to make submissions in relation to his preliminary views and requested the first defendant provide further documents.

118. The cost assessment, as at the hearing of this appeal, was yet to be completed.

THE APPEAL

119. The plaintiff appeals the decision of Pierce LCM to find her liable with respect to the First Costs Agreement and to pay indemnity costs from 23 January 2015.

119. By the further amended summons, the plaintiff seeks the following orders:

1. Appeal allowed.

2. Judgment and orders of the Court below be set aside against the plaintiff.

3. Judgment for the plaintiff against the first defendant.

4. Order that the first defendant pay the plaintiff’s costs of and incidental to the entire hearing in the Court below.

5. Order that the first defendant pay the plaintiff’s costs of and incidental to this appeal.

Grounds of Appeal

121. The grounds of appeal are set out below (with adjustment reflecting the parties’ roles in these proceedings, as opposed to their respective roles in the Court below):

1. Pierce LCM erred in law, after the first defendant applied on 22 July 2016 for a costs assessment under s 352(1) of the LPA, by hearing and determining that part of the action in the Court below that related to the First Costs Agreement, as the costs which were the subject matter of that agreement were also the subject matter of the costs assessment.

2. Section 355(b) of the LPA prohibited the first defendant from maintaining the action in the Court below until the costs assessment had been completed.

3. The costs assessment has not been completed.

4. As a result, after 22 July 2016, the plaintiff was immune from suit in the Court below until the costs assessment is completed, and the Court below lacked jurisdiction to continue to hear the action in that court.

5. Further, or in the alternative, Pierce LCM erred in law by failing to determine the defence of payment pleaded by the plaintiff on the basis of evidence tendered and admissions made before him. In particular, His Honour failed to make any finding:

1. as to the total amount of all payments made by the plaintiff to the first defendant and/or to counsel; and

2. as to the total amount of counsel's fees payable.

Accordingly, Pierce LCM failed to provide any reasons for finding that the plaintiff was not entitled to credit for the difference between the total amount of such payments and the total amount of counsel's fees payable. In the premises such failures amounted to errors of law.

6. Further, or in the alternative, Pierce LCM’s order for indemnity costs was bad in law because the UCPR r 42.14 did not entitle him to make such an order on the basis of the Offer of Compromise dated 23 January 2015 made by the first defendant.

7. Pierce LCM erred in determining that he had jurisdiction to hear the matter as a result of his determination that the first defendant had made disclosure of costs to the plaintiff as required by the LPA.

Evidence

122. The Court received in evidence a substantial amount of documentary material, tendered by the first defendant without objection, as follows:

1. Affidavit of Mr Davor Dadic sworn 13 October 2017, annexing exhibit DD1 (consisting of three volumes – 1077 pages); and

2. Affidavit of Mr Davor Dadic sworn 14 February 2018, annexing exhibit DD2 (consisting of two volumes – 669 pages).

123. A further bundle of material was adduced by the respective parties, without objection, consisting of, inter alia, email correspondence from the Chief Magistrate’s Office, correspondence with the costs assessor, as well as copies of exhibits to affidavits previously filed by the plaintiff (which were not separately marked for purpose of these proceedings).

RELEVANT LEGISLATION

The LPA

124. The LPA was repealed by s 167(a) of the Legal Profession Uniform Law Application Act 2014 (NSW) (“the Application Act”) as of 1 July 2015. By s 4 of the Application Act, the Legal Profession Uniform Law set out in Sch 1 to the Legal Profession Uniform Law Application Act 2014 (Vic) applies as a law of the State of New South Wales and may be referred to as the “Legal Profession Uniform Law (NSW)” (and so applies as if it were an Act). The Legal Profession Uniform Law commenced on 1 July 2015 (“the commencement date”).

125. The relevant transitional provisions under the Legal Profession Uniform Law are set out in Sch 4 of that Act. Clause 18 of Sch 4 is extracted below:

18 Client information and legal costs

(1) Subject to subclause (2)—

(a) Part 4.3 of this Law applies to a matter if the client first instructs the law practice on or after the commencement day; and

(b) the provisions of the old legislation relating to legal costs (other than provisions prescribed by the local regulations) continue to apply to a matter if the client first instructed the law practice in the matter before the commencement day.

(2) If a law practice is retained by another law practice on behalf of another client on or after the commencement day in relation to a matter in which the other law practice was retained by the client before the commencement day—

(a) Part 4.3 of this Law does not apply in respect of the other law practice in relation to that matter; and

(b) in that case the provisions of the old legislation relating to legal costs (other than provisions prescribed by the local regulations) continue to apply.

(3) Until a Uniform Rule prescribing an amount for the purposes of section 174(4) of this Law takes effect, the lower threshold is $750 for those purposes.

(4) Until a Uniform Rule prescribing an amount for the purposes of section 174(5) of this Law takes effect, the higher threshold is $3000 for those purposes.

126. For present purposes, in the light of cl 18(1)(b), as the plaintiff first instructed the first defendant prior to the commencement date of the Legal Profession Uniform Law, namely, in February 2010, the LPA, continues to apply to these proceedings.

127. Division 9 of Pt 2.4 of the LPA is entitled “Practice as a barrister or solicitor”. Section 83(3) falls under that division and provides as follows:

83 Client access

…

(3) Contracts

A barrister or solicitor may enter into a contract for the provision of services with a client or with another legal practitioner. The barrister or solicitor may accordingly sue and be sued in relation to the contract.

128. A client is defined in s 4(1) of the LPA as including “a person to whom or for whom legal services are provided”.

129. Part 3.2 of the LPA provides for the regulation of costs disclosure and assessment concerning legal services. Section 301 provides that the purpose of the LPA, in that respect, is as follows:

(a) to provide for law practices to make disclosures to clients regarding legal costs,

(b) to regulate the making of costs agreements in respect of legal services, including conditional costs agreements,

(c) to regulate the billing of costs for legal services,

(d) to provide a mechanism for the assessment of legal costs and the setting aside of certain costs agreements.

130. Legal costs are defined in s 4(1) to mean “amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services including disbursements but not including interest”.

131. Section 309 deals with mandatory disclosures to a client by a legal practice. Section 309(1)(c) provides:

(1) A law practice must disclose to a client in accordance with this Division:

…

(c) an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs, …

132. It is also appropriate, having regard to some of the grounds of appeal to make reference to ss 316 and 317, which are in the following terms:

316 Ongoing obligation to disclose

A law practice must, in writing, disclose to a client any substantial change to anything included in a disclosure already made under this Division as soon as is reasonably practicable after the law practice becomes aware of that change.

317 Effect of failure to disclose

(1) Postponement of payment of legal costs until assessed If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, the client or associated third party payer (as the case may be) need not pay the legal costs unless they have been assessed under Division 11.

Note. Under section 369, the costs of an assessment in these circumstances are generally payable by the law practice.

(2) Bar on recovering proceedings until legal costs assessed A law practice that does not disclose to a client or an associated third party payer anything required by this Division to be disclosed may not maintain proceedings against the client or associated third party payer (as the case may be) for the recovery of legal costs unless the costs have been assessed under Division 11.

(3) Setting costs agreement aside If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed and the client or associated third party payer has entered into a costs agreement with the law practice, the client or associated third party payer may also apply under section 328 for the costs agreement to be set aside.

(4) Reduction of legal costs on assessment If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, then, on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the costs assessor to be proportionate to the seriousness of the failure to disclose.

(5) Effect on legal costs where law practice retains another law practice that fails to disclose If a law practice retains another law practice on behalf of a client and the first law practice fails to disclose something to the client solely because the retained law practice failed to disclose relevant information to the first law practice as required by section 310 (2), then subsections (1)–(4):

(a) do not apply to the legal costs owing to the first law practice on account of legal services provided by it, to the extent that the non-disclosure by the first law practice was caused by the failure of the retained law practice to disclose the relevant information, and

(b) do apply to the legal costs owing to the retained law practice.

…

133. Division 4 of Pt 3.2 provided for the recovery of legal costs. Given recovery was sought pursuant to a costs agreement said to constitute a contract, reference should be made to s 319(1)(b), which is in the following terms:

319 On what basis are legal costs recoverable?

(1) Subject to the provisions of this Part, legal costs are recoverable:

…

(b) if paragraph (a) does not apply, under a costs agreement made in accordance with Division 5 or the corresponding provisions of a corresponding law, …

134. Division 5 concerns costs agreements. Section 322(1)(a) provides for the making of such agreements:

322 Making costs agreements

(1) A costs agreement may be made:

(a) between a client and a law practice retained by the client,

…

135. Section 326 deals with the effect of a costs agreement as follows:

326 Effect of costs agreement

Subject to this Division and Division 11, a costs agreement may be enforced in the same way as any other contract.

136. Division 11 of Pt 3.2 concerns costs assessment. Section 352(1) and (3) appear in Subdiv 1 and provides:

352 Application for costs assessment by law practice giving bill

(1) A law practice that has given a bill may apply to the Manager, Costs Assessment for an assessment of the whole or any part of the legal costs to which the bill relates.

…

(3) An application for a costs assessment may be made even if the legal costs have been wholly or partly paid.

137. Section 354 deals with how to make an application for costs assessment. Subsections (1) and (2) provides as follows:

(1) An application for a costs assessment:

(a) must be made in accordance with the regulations (if any), and

(b) subject to subsection (4), must be accompanied by the fee prescribed by the regulations.

(2) The application must authorise a costs assessor to have access to, and to inspect, all documents of the applicant that are held by the applicant, or by any law practice, Australian legal practitioner or Australian-registered foreign lawyer concerned, in respect of the matter to which the application relates.

138. Section 355 falls within the same division and is central to grounds 1-4. That provision is in the following terms:

355 Consequences of application

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.

139. Finally, s 366 falls within Div 11 and provides:

366 Court or tribunal may determine matters

This Division does not limit any power of a court or a tribunal to determine in any particular case the amount of costs payable or that the amount of the costs is to be determined on an indemnity basis.

The Local Court Act

140. Section 39(1) of the Local Court Act provides an appeal is a right to a party who is dissatisfied with a judgment or order of the Local Court to this Court “on a question of law”.

141. Such an appeal must be predicated upon “an identified question of law” or “an erroneous answer in respect of a question of law”: see B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; [2008] NSWCA 187 at [75] (per Allsop P) and [150] (per Basten JA).

142. It may be observed, an appeal lies to the Supreme Court against a judgment or order of the Local Court sitting in its General Division, by leave, on a ground which involves a question of mixed law and fact (s 40(1)) or which is an interlocutory judgment or order, a consent judgment or order or an order for costs: s 40(2). That provision is in the following terms:

40 Appeals requiring leave

(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.

(2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court:

(a) an interlocutory judgment or order,

(b) a judgment or order made with the consent of the parties,

(c) an order as to costs.

143. Pursuant to s 41(1) of the Local Court Act, the Supreme Court may determine an appeal made under ss 39(1) or 40:

(a) by varying the terms of the judgment or order, or

(b) by setting aside the judgment or order, or

(c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or

(d) by dismissing the appeal.

144. Sections 29, 29A and 30(1) of the Local Court Act provide:

29 Jurisdictional limit of Court

(1) For the purposes of this Part, the jurisdictional limit of the Court is:

(a) $100,000, when sitting in its General Division, and

(b) $10,000, when sitting in its Small Claims Division.

(2) However, the jurisdictional limit of the Court, when sitting in its General Division, in relation to a claim for damages arising from personal injury or death is $60,000.

29A Money claim—meaning

In this Part, money claim means a claim for recovery of any debt, demand or damages (whether liquidated or unliquidated).

30 Conferral of jurisdiction

(1) Subject to this Part, the Court sitting in its General Division has jurisdiction to hear and determine:

(a) proceedings on any money claim, so long as the amount claimed, whether on a balance of account or after an admitted set-off or otherwise, does not exceed the jurisdictional limit of the Court when sitting in that Division, and

(b) proceedings to recover detained goods, or to recover the assessed value of detained goods, so long as the value of the goods, together with the amount of any consequential damages claimed for their detention, does not exceed the jurisdictional limit of the Court when sitting in that Division, and

(b1) proceedings involving company title home unit disputes under section 34A, and

(b2) substituted proceedings within the meaning of Part 3A of the Civil and Administrative Tribunal Act 2013, so long as the amount of any money claim, or the value of any goods or property, to which the proceedings relate does not exceed the jurisdictional limit of the Court when sitting in that Division, and

(c) proceedings that, pursuant to any other Act, are required to be dealt with by the Court sitting in that Division.

The UCPR

145. The question of leave to appeal is also addressed in Pt 50 Div 4 of the UCPR. Rules 50.12 and 50.13 are extracted below:

50.12 Leave to appeal

(1) A summons seeking leave to appeal must be filed:

(a) within 28 days after the material date, or

(b) if the appeal relates to the decision of a judicial officer, within such further time as the judicial officer may allow so long as the application for such further time is filed within 28 days after the material date, or

(c) within such further time as the higher court may allow.

(2) An application for an extension of time under subrule (1) (c) must form part of the summons seeking leave to appeal.

(3) The summons must be in the approved form and must contain a statement as to:

(a) whether the appeal relates to the whole or part only, and what part, of the decision of the court below, and

(b) what decision the plaintiff seeks in place of the decision of the court below.

(4) The summons must also contain a statement of:

(a) the nature of the case, and

(b) the reasons why leave should be given, and

(c) if applicable, the reasons why time to apply for leave should be extended,

setting out briefly but specifically the grounds relied on in support of the appeal including, in particular, any grounds on which it is contended that there is an error of law in the decision of the court below.

(5) This rule does not apply to an appeal under section 39 of the Victims Support and Rehabilitation Act 1996.

Note. See instead rule 50.23.

50.13 Leave to cross-appeal

(1) A cross-summons seeking leave to cross-appeal must be filed:

(a) within 14 days after service of the summons commencing the appeal or the summons seeking leave to appeal, or

(b) within such further time as the higher court may allow.

(2) An application for an extension of time under subrule (1) (b) must form part of the summons commencing the appeal.

(3) The cross-summons must contain a statement as to:

(a) whether the cross-appeal relates to the whole or part only, and what part, of the decision of the court below, and

(b) what decision the defendant seeks in place of the decision of the court below.

(4) The cross-summons must also contain a statement of:

(a) the nature of the case, and

(b) the reasons why leave should be given, and

(c) if applicable, the reasons why time to apply for leave should be extended,

setting out briefly but specifically the grounds relied on in support of the cross-appeal including, in particular, any grounds on which it is contended that there is an error of law in the decision of the court below.

146. The requirements for the bringing of a cross-appeal are set out in r 50.10. That rule provides for the following:

50.10 Cross-appeal

(1) If a defendant to an appeal wishes to appeal from the whole or part of a decision, that defendant must file a cross-summons.

(2) The defendant must file the cross-summons:

(a) within 28 days after service of the summons commencing the appeal on the defendant, or

(b) if the appeal relates to the decision of a judicial officer, within such further time as the judicial officer may allow so long as the application for such further time is filed within 28 days after service of the summons commencing the appeal on the defendant, or

(c) within such further time as the higher court may allow.

(3) An application for an extension of time under subrule (2) (c) must form part of the cross-summons.

(4) Subject to subrules (1), (2) and (3), Division 2 applies to the cross-appeal and cross-summons.

248. Further, by the same application, the first defendant noted the extant quantum proceedings, with respect to the Appeal Matter, which would be addressing the question of costs relating to the Taking of Accounts Matter for the strict purpose of “determin[ing] if those claimed costs should not form part of his judgment [in relation to costs on the Appeal Matter]”.

249. As to the plaintiff’s contentions with respect to the first defendant’s “suggested assessment process”, namely, “the differentiation process” (referred to earlier in this judgment), two observations may be made:

1. First, the exercise was framed as a process of exclusion and not inclusion, with the parameters of the assessment already set out on the original application (see above), and reinforced within the same application by annexing of 29 invoices (namely, each bill from the first defendant to the plaintiff), which related to the Taking of Accounts Matter. The costs assessor also had a copy of the Schedules prepared in relation to the quantum hearing, as well as an adapted schedule, prepared by the first defendant, which was annexed to the letter which recommended the differentiation process. The adapted schedule identified items that were in dispute, namely, items contended to be owed between the Appeal Matter and the Taking of Accounts Matter, which also contained the parties’ respective submissions as to the same. By this provision of information the first defendant suggested a process of excluding irrelevant material from the assessment process, namely, that concerning the Appeal Matter. The process neither invited nor required the costs assessor to formulate a view with respect to the costs of the Appeal Matter.

2. It is clear that the differentiation process did not engage an assessment for the purposes of s 355 of the LPA because, at its highest, the process involved the costs assessor identifying items as relevant to costs on the Appeal Matter but never for the purposes of recovery of costs with respect to that matter by the costs assessment. The process of identification, as stated above, facilitated the exclusion of unrelated costs that were not the subject of the costs assessment.

250. I accept that the abovementioned correspondence to the costs assessor, together with the information provided on the application itself, was provided with the sole purpose of assisting the costs assessor in conducting his assessment of legal costs as to the Taking of Accounts Matter (see s 363 of the LPA) (there is no information as to whether or not it did) and to avoid traversing and undertaking a costs assessment of the Appeal Matter.

251. Further, whilst the costs assessment is yet to be completed, the preliminary view of the costs assessor confirmed that the costs of the Appeal Matter were not before the costs assessor and that the first defendant was entitled to costs of the Taking of Accounts Matter by virtue of s 319 of the LPA.

252. Thus, in my view, at no time did the first defendant “commence or maintain any proceedings” to recover legal costs which were the subject of an application for costs assessment. The extant proceedings before the Local Court did not concern a determination of quantum with respect to the Taking of Accounts Matter. The only proceedings the first defendant maintained, after lodging the application for assessment, were the Local Court proceedings for the costs of the Appeal Matter, namely, the quantum hearing.

253. Whilst it is not necessary to decide, I consider the first defendant was entitled to raise the issue of estoppel. There can be no estoppel on the face of a statute (Coshott v Barry at [96]) but in this case there was, as I have found, no absence of jurisdiction.

254. I dismiss grounds 1-4.

Ground 5

255. As earlier mentioned, the plaintiff contended, that a failure to deal with a pleaded defence is a failure to exercise jurisdiction and is an error of law. Such a ground attracts the provision of s 39 of the Local Court Act.

256. However, the foundation upon which the ground proceeds is flawed.

257. Whilst Pierce LCM’s reasons, in this respect, are somewhat opaque, when considered as a whole, and having regard to the nature of the issues his Honour was required to resolve, they demonstrate that his Honour addressed the substance of the defence of payment contentions of the plaintiff in the proceedings below, so far as they were advanced, with respect to the subject payments described in ground 5 within the scope of the methodology his Honour employed (which was not challenged on appeal).

258. The plaintiff also raised, in association with this ground, a failure to take into account or exclude costs associated with the Taking of Accounts Matter. That was not the subject of the ground. The challenge brought under ground 5, by its nature, was directed to the quantum decision, which was confined to the Appeal Matter, his Honour having rejected the Taking of Accounts contention by the first defendant. It is tolerably clear that the subject matter of paras (a) and (b) in this ground concern costs in the Appeal Matter. I will, therefore, only briefly attend to the issue.

259. Before turning to those questions it is, however, useful to firstly address the manner in which those issues were ventilated before his Honour and the methodology his Honour employed in reaching a resolution. The procedure, which was not the subject of complaint on appeal, was, in my view, entirely open to his Honour having regard to the nature of the proceedings before him.

260. As previously noted, due to the inability of the parties to reach agreement, Pierce LCM adopted the laborious and painstaking process of proceeding line-by-line through the schedules, produced by the parties prior to the quantum hearing, in making his determinations as to quantum. By the same process, his Honour afforded the parties the opportunity to advance submissions with respect to each contentious item until his Honour deemed the exercise no longer profitable in assisting the Court to make its determination due to the highly repetitive and lengthy approach to submissions adopted by the plaintiff (who appeared for herself, at that stage, without the aid of counsel). His Honour decided that the balance of the matter would to be resolved on the papers and provided specific directions as to the course to be taken.

261. The plaintiff’s written submissions, in that respect, were identified at the outset of the quantum decision as not being compliant with the orders made by Pierce LCM, namely, she did not adopt the appropriate style of referencing, sought to re-canvass and re-agitate issues already decided and provided submissions late and/or out of time.

262. Two further observations may be made in the resolution of this ground as follows:

1. The plaintiff’s submissions with respect to ground 5 fixed upon the failure of Pierce LCM to make “any finding” as to payments made by the plaintiff to the first defendant and/or to counsel (ground 5(a)) or as to the total amount of counsel's fees payable (ground 5(b)). However, the plaintiff did not identify with any clarity just where the deficiencies in the reasons of Pierce LCM may be found (or where his Honour failed to deal with the defence of payment issue). It may be accepted that the plaintiff could not reasonably be required to deal with “a negative” but that course was not available when, in my view, Pierce LCM’s judgment does indicate that he dealt with the defence both generally and by his reference to the subject matter of payments relied upon by the plaintiff in that respect.

2. Insofar as Pierce LCM dealt with the Taking of Accounts Matter costs, the appeal does not challenge Pierce LCM’s decision as to merits.

263. Bearing in mind those observations and limitations, when properly analysed, I consider that Pierce LCM did grapple with the issue of payments made by the plaintiff to the first defendant and/or to counsel, and was careful to delineate matters falling within the Appeal Matter (for inclusion) and the Taking of Accounts Matter (for exclusion).

264. Pierce LCM expressly dealt with the question as to whether payment had been made by the plaintiff to the first defendant (see, for example, at [77(2)] and [78(2)] of this judgment) and by the plaintiff to counsel (see examples at [77(1)], [77(2)], [78(1)] and [78(4)] above).

265. Some further remarks should be made regarding payments made by the plaintiff to the first defendant. His Honour made it clear in the liability decision (at 27) that he was concerned to delineate between invoices and payments made (or “credits”). The methodology he ultimately adopted, as discussed earlier, was designed to systematically and comprehensively analyse monies due and monies paid (or not due) on a line-by-line basis.

266. Ultimately, the plaintiff did not wholly participate in that process. The line-by-line analysis, at the quantum hearing, had to be discontinued because of the plaintiff’s approach to it. Provision was then made for written submissions but some of the plaintiff’s submissions were not allowed because of lateness; no appeal was brought from that decision. Some of the submissions not received on that basis were directed to the defence of payment.

267. More fundamentally, however, and notwithstanding the heading in the quantum decision, the component of the quantum decision falling under the heading “Disbursements” deals specifically (at 29-36) with payments made by the plaintiff to the first defendant (some of which is in tabular form).

268. His Honour also expressly indicated that he had been careful to delineate between the Appeal Matter and the Taking of Accounts Matter, so as to exclude costs relating to the latter (at [76(1)]-[76(3)] above).

269. I turn to the second limb of this ground, it is true, there plainly is a requirement to give reasons: Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [56]-[67] (per McColl JA). However, this ground is predicated upon a failure to exercise the jurisdiction by not engaging, it was contended, with the plaintiff’s submissions below. This is not an appeal predicated upon the Court below grappling with the contentions raised but providing inadequate reasons for refusing to accept those contentions. If the alternative submission is that Pierce LCM did deal with the defence of payment submissions of the plaintiff but either did not regard them and gave inadequate reasons for the same I would reject that submission based upon my aforementioned analysis as to Pierce LCM’s approach to the task and his discussion of outcomes in that light.

270. If time was required with respect to this ground (which I doubt), I would grant leave to bring the ground. This ground is dismissed.

Ground 6

271. Ground 6 of the appeal concerns an appeal as to the determination of costs of the proceedings before the Local Court. The ground concerns a costs order and thereby requires leave to appeal pursuant to s 40(2)(c) of the Local Court Act. No leave was sought in the amended summons filed on 28 May 2018 or the further amended summons.

272. The ground revolves around a singular issue, namely, that Pierce LCM misapplied r 42.14 of the UCPR and was, therefore, bad in law. The failure was said to derive from the reliance upon an offer of compromise, as opposed to a Calderbank offer or general exercise of discretion and the fact that the outcome of the proceedings was less favourable than the offer made by the first defendant. The offer was less favourable, it was contended, because it was predicated upon judgment being entered against three parties (whereas orders were only made against the plaintiff).

273. It is tolerably clear that his Honour based the indemnity costs order operating form 28 January 2015 on r 42.14, even though he referred to the requisite “offer” as being both a “Rules and Calderbank” offer. The same may not be said for the alternative finding by the Local Court (providing that indemnity costs would operate from a later date) which appears to have been predicated on both a Rules and Calderbank offer, although that judgment is not the subject of this appeal.

274. If judgment was entered only against the plaintiff, there would appear to be some force in the plaintiff’s contention that orders were not warranted under the provisions of r 42.14 given that the offer was predicated upon judgment against three defendants (and on that basis less than the outcome achieved), although submissions were never fully developed as to whether the same conclusion should be reached with respect to a Calderbank offer (save for the plaintiff contending that such an offer could not attract indemnity costs if the offer was less than the outcome achieved). However, in consequence of the determination of the cross-appeal (see below), the foundation for that contention is, in the result, no longer sound.

275. In any event, I consider leave to appeal should be refused.

276. Each of the factors relied upon by the first defendant for the refusal of leave set out earlier in this judgment (at [168]), in my view, are apposite.

277. Further, whether or not orders were available upon the basis of a Calderbank offer, in my view, it was entirely open Pierce LCM in the exercise of his discretion to award costs pursuant to s 98 of the Civil Procedure Act and to do so on an indemnity basis based upon the conduct of the plaintiff (see the discussion in G E Dal Pont, Law of Costs (LexisNexis, 4th ed, 2018) at [16.39]-[16.48]). This is so for the very reasons given by Pierce LCM for refusing to receive the late submissions on the question of costs; reasons that are directly applicable to the question of whether costs should be awarded on an indemnity basis. (It may be noted that the determination to further extend time for the plaintiff the costs submission had not been approved).

278. It follows that the appeal does not ultimately attract issues of principle, general public importance and there is no injustice to the plaintiff. There was a proper basis to award indemnity costs upon the basis of the plaintiff’s conduct in the proceedings below resulting in a wastage of time and costs as found by Pierce LCM. Further, the principles of finality should be applied, particularly when the costs of any further proceedings would substantially outweigh, what appear to be, a small amount of costs involved in this case.

279. The first defendant’s submissions as to this ground being out of time are unclear. They appear to concern the date when the amended summons was filed (this ground being introduced by that summons). However, no objection as to time was raised, as to this ground, with respect to the further amended summons. If the ground be out of time, it is appropriate to extend time to accommodate it.

280. In my view, leave to appeal should be refused with respect to this ground.

Ground 7

281. It is common ground that this ground of appeal was brought out of time. That position is, in my view, correct given the ground was brought in with the further amended summons.

282. There was a debate as to whether this ground otherwise required leave. The plaintiff contended that the determination that the first defendant had made disclosures of costs was an error of law as s 317(2) of the LPA prohibited proceedings against the plaintiff for the recovery of legal costs until costs have been assessed.

283. I consider the first defendant is correct to raise whether, as pleaded, this ground may be properly characterised as an appeal under s 39 of the Local Court Act. As framed, the question of jurisdiction raised by the ground only manifests itself if the Court were first to find that Pierce LCM was wrong in finding that the first defendant had made a disclosure of costs to the plaintiff pursuant to the requirements of Div 3 of Pt 3.2 of the LPA.

284. This ground squarely constitutes an attack on the first instance decision as to findings of fact vis-à-vis the existence or otherwise of the requisite disclosure. As framed, the ground may be properly described as a mixed question of fact and law, although, as will be developed below, such a conclusion has little practical significance for the determination of the appeal as the premise for the ground, as I will now demonstrate, is fundamentally wrong.

285. It was open to Pierce LCM to find the first defendant had given disclosure required by Div 3 of Pt 3.2 of the LPA Act to the plaintiff with respect to the costs in the Appeal Matter.

286. The findings of Pierce LCM in the liability decision, in this respect, were open to him for the following reasons (repeating that set out earlier in this judgment):

1. The first defendant gave an estimate of fee for work at $50,000 with $15,000 of that being counsel's fees (at 2 and 11).

2. The estimate was exceeded when work in the first few weeks, following the execution of the First Costs Agreement, became the subject of three invoices issued in rapid succession, which "implicitly conveyed [the necessary advice about fees] (because their content necessarily put [the plaintiff] on notice that work beyond the initial estimate $35,000.00 was being done)” and that the requirement for express notice was "supplemented by notice implicit in the detailed invoices" (at 9).

3. "[T]here was express notice that complied with the section, notice which was to a substantial degree fleshed out by means of the information contained in the invoices" (at 10-11).

4. On 2 March 2010, the first defendant emailed the plaintiff "advising her that the needed stay of proceedings had been achieved and indicating quite explicitly that $125,000.00 would be likely to ‘cover the matter’” (at 11).

5. On 17 March 2010, by an email addressed to the plaintiff, the first defendant sent a "letter of advice cautioning against the uncertainties of litigation, and indicat[ing] a likelihood that if pressed to its conclusion the appeal proceeding could attract additional costs of about $300,000" (at 12).

287. Further, in my view, the plaintiff’s contention that only one estimate of costs was provided cannot be sustained.

288. I turn briefly to consider whether leave should be granted to extend time to appeal.

289. Applying the general principles as to the grant of leave to extend time in Currabubula (at [87]) on the conclusions reached above and accepting, as correctly stated, the list of factors listed above at [211] of this judgment, I consider there is a proper basis to refuse leave to extend time.

290. Leave to extend time to appeal is refused. Otherwise, if time were properly to be granted, I would refuse leave to appeal under s 40 of the Local Court Act and in any event dismiss the ground.

The Cross-Summons

291. The cross-summons challenges two determinations by the Court below, both of which were to the same effect in rejecting the first defendant’s claims against the plaintiff’s companies (“the third and fourth defendants” in the Court below).

292. First, it was found that the plaintiff’s companies were not party to the First Costs Agreement as the signature of the plaintiff above the names of those corporations in the engagement letter did not “execute” the engagement letter for the purposes of s 127 of the Corporations Act.

293. Secondly, in consequence of that fact, the first defendant’s disclosure to the plaintiff’s companies had not occurred – the letter of engagement was not signed and returned by the plaintiff’s companies.

294. I first turn then to the circumstances in which the engagement letters were exchanged between the first defendant and the plaintiff.

295. An engagement letter was forwarded by the first defendant to the plaintiff which bore the names the plaintiff’s companies, namely, the third and fourth defendants, with a provision for signature. The plaintiff’s signature was entered above each company title as well as above her own name. No other description or notation appears as to the plaintiff. In particular, the words or word to the effect of “sole director/secretary” do not appear on the document either near the place allocated for signatures or in any other place on the document.

291. The parties’ submissions, in this respect, were set out above. Putting aside issues as to the form of the cross-summons and whether leave was required under s 40 of the Local Court Act (and, in particular, whether a finding as to the existence of an agreement was amenable to appeal under s 39), the arguments of the parties revolved around the operation of ss 127 and 129 of the Corporations Act.

292. Section 127(1) is in the following terms:

127 Execution of documents (including deeds) by the company itself

(1) A company may execute a document without using a common seal if the document is signed by:

(a) 2 directors of the company; or

(b) a director and a company secretary of the company; or

(c) for a proprietary company that has a sole director who is also the sole company secretary—that director.

Note: If a company executes a document in this way, people will be able to rely on the assumptions in subsection 129(5) for dealings in relation to the company.

298. Section 129(1) and (5) are in the following terms:

129 Assumptions that can be made under section 128

Constitution and replaceable rules complied with

(1) A person may assume that the company’s constitution (if any), and any provisions of this Act that apply to the company as replaceable rules, have been complied with.

…

Document duly executed without seal

(5) A person may assume that a document has been duly executed by the company if the document appears to have been signed in accordance with subsection 127(1). For the purposes of making the assumption, a person may also assume that anyone who signs the document and states next to their signature that they are the sole director and sole company secretary of the company occupies both offices.

299. In the judgment below, Pierce LCM found that a person dealing with a company “is entitled to assume that document has been duly executed if signed in accordance with [s 127]”. He relied, in that respect, upon the “combined effect of [ss 128 and 129]”. However, his Honour found that the engagement letter “was not so signed” such that the first defendant could not rely upon the plaintiff’s signature above the names of the plaintiff’s companies to bind them.

300. The basis upon which Pierce LCM found that the engagement letter had not been duly signed in that fashion is not fully explained in the judgment but it would appear from the opening section of the earlier extract from the liability decision in this judgment that his Honour found the lacuna arose because the engagement letter was not signed by “two directors or a director and secretary”, presumably a reference to two persons in each case (his Honour later referred to a “second signature” of a person purporting to be the company secretary).

301. Before resolving the cross-appeal, it is necessary to mention four further matters:

1. The first defendant pleaded in the cross-summons that the plaintiff was the sole director and secretary of the plaintiff’s companies.

2. The Court below found that the plaintiff was the sole director of those companies (consistent with the evidence of the plaintiff, the first defendant and ASIC historical company extracts).

3. The evidence of the first defendant in the cross-summons was that the plaintiff was the sole secretary of the plaintiff’s companies (again, consistent with the ASIC historical company extracts).

4. There was no dispute that the plaintiff’s companies were proprietary companies.

302. In those circumstances, by the operation of s 127(1)(c), the plaintiff had the legal capacity to execute the engagement letter on behalf of the plaintiff’s companies: Creswick v Coast RV Pty Ltd [2013] NSWSC 1078 at [33]. The plaintiff was the sole director and secretary of two proprietary companies and executed the engagement letter by signing the document above the name of the third and fourth defendant, thereby indicating that she was signing on their behalf. If it were necessary to find, it may be concluded that the first defendant was aware of the plaintiff’s positions or capacity in that respect. In other words, the plaintiff had actual authority to bind the plaintiff’s companies to the First Costs Agreement, namely, the agreement for the provision of legal services with respect to the Appeal Matter. Reliance upon s 129(5) is strictly unnecessary, although, in my view, there is nothing inconsistent with this conclusion and the provisions of that subsection.

303. It follows that the judgment of Pierce LCM in that respect, constituted an error of law. By virtue of s 127(1)(c), the plaintiff was able to execute the engagement letter for the plaintiff’s companies without using a common seal and such execution had the effect of binding those corporations to contract for legal services with the first defendant for the Appeal Matter. No issue of disclosure arose on the decision below, in this respect, as Pierce LCM’s rejection of disclosure was predicated upon there being an absence of agreement, namely, the failure to execute the letter of engagement with respect to the third and fourth defendants.

304. The cross-appeal is available as of right pursuant to s 39 of the Local Court Act. There are deficiencies in the cross-summons by virtue of the absence of grounds (see UCPR r 50.10(4)) but these should be treated as irregularities which do not invalidate the proceedings (s 63 of the Civil Procedure Act), noting that there would not appear to be any inadequacy in the notice given to all parties of the relief sought by the first defendant and the contentions advanced in support thereof (there being, therefore, no prejudice or unfairness to any party). The Court should, in my view, correct the error of law in the judgment below.

305. The cross-summons should be upheld as to the primary relief claimed.

CONCLUSION

306. In view of the findings earlier made, grounds of appeal 1-5 are dismissed; leave is refused to bring ground 6 and leave to extend time is refused with respect to the bringing of ground 7, although if it were found time should be granted, leave should be refused or the appeal dismissed. In the result, the appeal brought by the plaintiff is not upheld.

307. The primary relief in the cross-summons should be granted.

308. In the circumstances, upon the principles that costs follow the event, an award for costs of the further amended summons commencing an appeal and the cross-summons would normally be made in favour of the first defendant as against the plaintiff with no order as to costs against Mr Slattery. Any costs orders against other parties will require further submissions, having regard to that fact that Mr Slattery, together with the third and fourth defendants, entered submitting appearances save as to costs. I will make provision to hear the parties as to costs.

ORDERS

309. The Court makes the following orders:

1. The first defendant shall file and serve short minutes of order reflecting this judgment within 14 days of the publication of this judgment.

2. The plaintiff shall file and serve within a further 7 days any alternative proposed orders in the event of a dispute. In the event there is no dispute that fact shall be communicated either by the first defendant at the time of filing short minutes of order pursuant to (1) above or by a note provided by the plaintiff within the time specified in this order.

3. Any application as to costs should be filed and served within 14 days of the publication of this judgment.

4. Subject to (3) above, costs are reserved.

5. In the event that orders are filed and served pursuant to (2) above, reflecting a dispute as to the form of orders, or an application is made under (3) above, the Court shall issue further directions for the disposition of any such issues.

6. The parties have liberty to apply to the Chambers of the Court as to the disposition of those issues referred to in (1) to (5) above.

Decision last updated: 28 February 2019