Spencer v GMG Legal Services Pty Ltd (ACN 074 972 231)

[2013] SASC 19

SUPREME COURT OF SOUTH AUSTRALIA

(Appeal from a Master: Civil)

SPENCER & ANOR v GMG LEGAL SERVICES PTY LTD (ACN 074 972 231)

[2013] SASC 19

Reasons for the Orders of The Honourable Justice Stanley

26 February 2013

MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT

PROCEDURE - COSTS - APPEALS AS TO COSTS - JURISDICTION TO ENTERTAIN

Appellants appeal a provisional costs adjudication by a Master on the grounds that the Master made various procedural errors in the hearings of the costs adjudication.

Appellants also seek extension of time and permission to appeal.

APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA

Respondent submits that the appeal is incompetent for various reasons:  the appeal is incompetent as a provisional costs order must be reviewed by a Master of the Supreme Court before it can be appealed to a Judge; appeal is out of time; appeal is inutile; further, as the respondent has recovered the amount subject to the costs order of the Master, the appeal is moot and lacks utility

Held: permission to appeal and application for extension of time refused - the appellant is required by the Supreme Court Rules to appeal the adjudication to a Master before appealing to a Judge - the respondent has recovered the amount from another plaintiff, Mr Townley, who is not a party to this appeal - the appeal is moot and lacks utility.

Supreme Court Civil Rules 2006 r 276, r 278, r 279, r 281, r 283, r 288, r 295; Bankruptcy Act 1966 (Cth) s 58(3), s 82, referred to.
Gardner v The Dairy Industry Authority (NSW) (1978) 52 ALJR 180, discussed.
Catto v Hampton Australia Ltd (In Liq) (2008) 257 LSJS 245; Pickering v Smoothpool (No. 6) (2001) 217 LSJS 178; Le Poidevin v Gordon (1989) 152 LSJS 67; State of South Australia v Lampard-Trevorrow [2008] SASC 370; Shire of Yarra Ranges v Russell (2009) 25 VR 560; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334, considered.

SPENCER & ANOR v GMG LEGAL SERVICES PTY LTD (ACN 074 972 231)
[2013] SASC 19

Appeal from a Master

STANLEY J:

Introduction

1. On 16 January 2012 Master Lunn, on the respondent’s application for an adjudication upon costs, made a provisional order for the payment of costs by the appellants to the respondent. The master’s order was made pursuant to 6SCR 276. The master fixed costs at $69,432.99. He allowed $11,000 by way of the costs of the application. He made a provisional costs order for the adjudication (including GST) in the amount of $88,475.99 plus any taxing fees.

2. The appellants were former clients of the respondent.  The respondent had acted for the appellants in relation to Federal Court proceedings in which the respondent also acted for Peter Townley and Mark Norton.  The appellants are, and at all relevant times have been, undischarged bankrupts. 

3. On 7 February 2012 the appellants filed a notice of appeal from the order of the master. 

4. The respondent did not have notice of the appeal proceeding until 15 October 2012, and the notice of appeal was not served on the respondent until 5 November 2012. 

5. The respondent has challenged the competency of the appeal.  In the alternative, it has asked that the court order security for costs or payment of a sum into court by the appellants as a condition of the appeal proceeding. 

   The respondent’s submissions on the competency of the appeal

6. Mr B Doyle, counsel for the respondent, accepted that the appellants’ status as undischarged bankrupts did not deprive them of standing to appeal as the claim for adjudication of costs was not in respect of a provable debt within the meaning of s 82 of the Bankruptcy Act 1966 (Cth). Section 58(3) of the Bankruptcy Act imposes a restriction on a creditor commencing or taking a step in a proceeding in respect of a provable debt without leave.  In this instance the debt was a post-bankruptcy debt.  The appellants were declared bankrupt in 2007.  The appellants were joined as respondents to the Federal Court proceedings, in respect of which the claimed costs were incurred, pursuant to an order of Lander J of 8 December 2010. 

7. Nonetheless, Mr Doyle submitted that the appeal was incompetent on three bases.  He put this submission both on procedural and substantive grounds. 

8. First, he submitted that pursuant to the rules, a party dissatisfied with a provisional costs order must first apply for a review of the order by a master. It is only where a party has gone through that review process that there is a further right of review by a judge pursuant to 6SCR 278(5).[1]

   [1]    Catto v Hampton Australia Ltd (In Liq) (2008) 257 LSJS 245 at 250 [21].

9. If an application for review of the provisional costs order is not made within 14 days of the provisional costs order being made, that costs order may be entered as a judgment pursuant to 6SCR 279.

10. The appellants did not seek a review of the provisional costs order. The notice of appeal filed on 7 February 2012 does not act as an application for review. In any event, it was not brought within 14 days of the provisional costs order as required by 6SCR 279.

11. Second, the respondent submits that despite this procedural obstacle, there may be circumstances in which an appeal may proceed notwithstanding the absence of an application for review to a master.[2] But an appeal against a provisional costs order is subject to a grant of permission pursuant to 6SCR 288(1)(b). The appellants have neither sought nor obtained permission to appeal. In any event, the appeal was required to have been filed by 6 February 2012 pursuant to 6SCR 281(1). The appeal is therefore out of time.

    [2]    Catto v Hampton Australia Ltd (In Liq) (2008) 257 LSJS 245 at 251 - 252 [28]; Pickering v Smoothpool (No. 6) (2001) 217 LSJS 178 at 181 – 182 [16] – [17]; Le Poidevin v Gordon (1989) 152 LSJS 67.

12. Third, any application for permission or for an extension of time within which to bring the appeal, should be refused because the appeal is inutile.  The first notice the respondent had of the appeal was 15 October 2012.[3]  In the intervening period, the respondent had recovered the amount ordered by Master Lunn on the provisional costs order from one of its other clients, Peter Townley.  Mr Townley has not appealed or applied for a stay of execution.  The respondent has received the amount of the costs order and dealt with those funds.  Having recovered against Mr Townley, the respondent is not now entitled to pursue enforcement or execution of the amount of the provisional costs order, the subject of the notice of appeal by the appellants, against the appellants because of the principle prohibiting double recovery.  If the respondent was to pursue the appellants for recovery of the amount of the provisional costs order, they would be entitled to an order for summary dismissal of that action.[4]

    [3]    Affidavit of Bernard Colin Walrut sworn 10 December 2012 paragraph 36.

    [4]    State of South Australia v Lampard-Trevorrow [2008] SASR 370 at [20]; Shire of Yarra Ranges v Russell (2009) 25 VR 560 at 567.

13. Accordingly, the respondent submits the appeal is incompetent.

    Submission of the appellants as to competency of the appeal

14. The appellants filed and served an affidavit of the second appellant sworn 23 January 2013, which I have received. 

15. The appellants put a number of submissions in response to the respondent’s contention that the appeal is incompetent. 

16. First, they submit that they failed to appreciate the nature of the order made by the learned master, the subject of the appeal, namely, that it was a provisional costs assessment. Given that there are circumstances in which the Court may permit an appeal to proceed notwithstanding the failure of the purported appellant to seek a review pursuant to 6SCR 278(1), this is a category of case which warrants an appeal so proceeding.[5]  In the alternative, the Court should consider remitting the matter for review before a master. 

    [5]    Catto & Ors v Hampton Australia Ltd (In Liq) & Ors (2008) 257 LSJS 245 at 251 – 252 [27] – [29].

17. Second, the appellants submit that on 3 February 2012 they sent to the Registry the notice of appeal to the Full Court in the expectation it would arrive for filing by 6 February 2012, although this apparently did not occur.  In the circumstances, the Court should extend time where the notice was received one day later. 

18. Third, the appellants submit that they failed to serve the notice of appeal for many months because of difficulties they experienced with the Registry of the Court because, initially, it refused to allow the appeal notice to be filed because of the appellants’ status as undischarged bankrupts, and subsequently there was a lengthy process by which the appellants brought an application for the waiver of fees.  In any event, the appellants submit that the respondent had been placed on notice of the fact of the appeal by a letter from Mr Townley of 4 April 2012 in which he stated, “Payment is also made without prejudice to the appeal in this matter that my joint clients, Spencer and Perovich, are attempting to file.” 

19. Fourth, the appellants submit that it is disingenuous of the respondent to rely upon the fact of Mr Townley not having appealed when the basis upon which he paid the judgment sum was expressly without prejudice to his right to later seek to recover those costs as part of a more general claim against the respondent. In addition, the appellants submit that 6SCR 283(1) deems Mr Townley to be a party to the appeal in which they submit he is vitally interested, and has assisted them with the preparation thereof.

20. Fifth, the appellants submit that the appeal is not hypothetical in that they are liable to a claim by Mr Townley in respect of the judgment debt, the original assessment of which involves important matters of principle.

21. Sixth, the appellants submit that they did not save up interlocutory rulings, and given the nature of the proceedings, it would have been an imposition upon the Court and the respondent to appeal each of those interlocutory decisions in circumstances where the appellants believed they could resolve the whole matter through their application to have the matter before Master Lunn adjourned to March 2012.  They complain of the Master’s refusal to adjourn and to proceed with the adjudication in January 2012. 

22. In any event, the appellants submit that there is power conferred upon the Court pursuant to the rules to relieve the appellants of any failure on their part to comply with the requirements set out therein, pursuant to 6SCR 295(1). In the circumstances, they submit that the facts of this case justify the Court exercising these powers to permit a hearing of the substantive issues raised by the notice of appeal.

    Consideration

23. In my view, the appeal is incompetent. 

24. The rules establish a regime for the review of a provisional order for the payment of costs upon an adjudication by a master.  The appellants have not followed that procedure.  Any right of appeal is conditioned by the grant  of permission.  The notice of appeal was filed and served without a grant of permission.  In addition, the appeal is out of time. 

25. If the only issue was that the appeal had been filed a day late, I would have been inclined to grant an extension of time.  In these circumstances, however, where permission has not been obtained, and for reasons which I will now explain, I would not grant permission, neither would I grant an extension of time. 

26. I would not grant permission to appeal or extend time to appeal principally on the ground that the appeal is inutile. 

27. Courts do not ordinarily, as a matter of principle, determine proceedings involving issues which are not live as between the parties.  The aversion of courts to determining issues which are moot, hypothetical or academic is well known.[6]  In relation to an appeal, it was said by each of Mason J (as he then was) and Aickin J in Gardner v The Dairy Industry Authority (NSW)[7] that the court should not determine an appeal which would produce “no foreseeable consequences for the parties”.

    [6]    Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582; Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334 at 355 – 357; Shire of Yarra Ranges v Russell (2009) 25 VR 560 at 563 – 566.

    [7] (1978) 52 ALJR 180 at 188 and 189.

28. The respondent has recovered its costs from Mr Townley.  It has no further entitlement to recovery of costs against the appellants. 

29. While Mr Townley apparently purported to pay the costs order under protest, he neither sought a stay of the order nor has he appealed against it.    The respondent, on the other hand, has acted in good faith.  To permit the appeal to proceed now would be to its obvious prejudice.  It would be required to defend proceedings in which it has no real enduring interest in circumstances where, given the appellants are undischarged bankrupts, a real question would arise as to whether it could successfully recover any costs on the appeal if it was successful and an order for costs was made in its favour. 

30. The appellants submit that Mr Townley is vitally interested in the appeal, and has, to some extent, assisted the appellants in the preparation of the argument. In addition, they submit that by reason of the operation of 6SCR 283(1), he is deemed a party to the appeal.

31. Dealing with the latter submission first, I consider that this argument involves a misunderstanding of the effect of the rule. 

32. 6SCR 283 provides:

    283—Parties to appeal

    (1)A party to the proceedings in which the judgment under appeal was given is a party to the appeal unless the party has no interest in the subject matter of the appeal.

    (2)The Court may order the addition or removal of a person as a party to an appeal.

    (3)A person cannot be added as an appellant without the person's consent.

33. Plainly, Mr Townley has not appealed from the orders made by Master Lunn. 6SCR 283(1) is not self-fulfilling in the way the appellants contend. It requires an appellant to join as a party to an appeal, the parties to the proceeding below. 6SCR 283(3), however, makes clear that a person cannot be added as an appellant without that person’s consent. That presupposes that the rule does not operate automatically to deem any unsuccessful party in the proceedings below to be an appellant to a subsequent appeal by another unsuccessful party. Accordingly, the contention that Mr Townley is a party to the appeal is untenable. The appellants have not sought to make him a party to the appeal. In any event, they could not do so without his consent. As he is not an appellant, the appeal is moot and lacks utility.

34. Moreover, I consider that to permit the appeal to proceed in the present circumstances would constitute an abuse of process.  Without the joinder of Mr Townley, the appeal lacks utility.  To allow the appeal to proceed would permit Mr Townley to stand behind two impecunious appellants and enjoy the benefit of an appeal in circumstances where he would not expose himself to a liability for the costs of the appeal if it failed. 

35. In my view, that is sufficient to dispose of the matter. 

36. Accordingly, it is unnecessary to consider the respondent’s application for an order for payment into court or for an order for security for costs. 

    Conclusion

37. I would refuse permission to appeal and the application for an extension of time.