State of New South Wales v Anthony Hamod

[2008] NSWDC 263

CITATION:	State of New South Wales v Anthony Hamod [2008] NSWDC 263
HEARING DATE(S):	25 November 2008
EX TEMPORE JUDGMENT DATE:	25 November 2008
JURISDICTION:	Civil
JUDGMENT OF:	Goldring DCJ
DECISION:	1. Order pursuant to rule 6.27 Uniform Civil Procedure Rules, that the applicant be joined as a defendant to the proceedings. 2. Order that the applicant have leave to file a cross-claim against the plaintiff and the defendant in the terms of the draft cross claim annexed to the Notice of Motion filed on 3 October 2008. 3. Order that the District Court proceedings 4339/08 be transferred to the Supreme Court of New South Wales pursuant to s 144 of the Civil Procedure Act 2005. 4. Order that each party pay its own costs of today's proceedings.
CATCHWORDS:	CIVIL PROCEDURE - parties - joinder - nature of interest - CIVIL PROCEDURE - equitable claim - jurisdiction of District Court
LEGISLATION CITED:	Legal Profession Act 2004 Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 District Court Act 1973
CASES CITED:	Ex parte Patience, Makinson v the Minister (1940) 40 SRNSW 96 Firth v Centrelink (2002) 55 NSWLR 451
PARTIES:	Simon Diab (Applicant) State of New South Wales (Respondent) Anthony Hamod (Respondent)
FILE NUMBER(S):	4339/08
COUNSEL:	R McKeand SC (Applicant) W Hutchings (Respondent) C Jackson (Respondent)
SOLICITORS:	Simon Diab & Associates (Applicant) I V Knight, Crown Solicitor (Respondent) Schreuder & Partners (Respondent)

JUDGMENT

1 HIS HONOUR: This is an application by Simon Diab to join him as a defendant in a matter which is properly before this court. Originally that was the only order that Mr Diab sought, but now he also seeks a declaration as to certain rights, and an order that the matter be transferred to the Supreme Court. That consequential order that he seeks arises because of the way in which these proceedings have evolved.

2 Mr Diab, according to his unchallenged affidavit evidence, was the solicitor who acted for a Mr Anthony Hamod, who was a party to proceedings brought by the plaintiff, the State of New South Wales, in the Supreme Court. Those matters came before various judicial officers in the Supreme Court and ultimately to the Court of Appeal. At one stage, her Honour Simpson J dismissed an appeal from Harrison AJ's order relating to an order for discovery and consequential costs. In a judgment dated 6 June 2007, her Honour Simpson J ordered that the costs of the discovery application be assessed and payable forthwith. The Court of Appeal refused leave from that order. A bill of costs was served and the plaintiff, the State, filed an application for the assessment of costs. On 16 July this year the costs assessor issued a certificate of costs and his reasons. On 15 July the plaintiff filed an application for review, and that came before a review panel consisting of Mr John Sharpe, who I know to be a barrister, and Mr Anthony McGruther, who I understand is a solicitor. They issued certificates of determination of costs by a review panel and their reasons.

3 This matter came before this court because on 16 September the State of New South Wales issued a summons seeking a review of the orders by the review panel. It did so pursuant to s 384 of the Legal Profession Act 2004. Subs (1) provides:

“A party to an application for a costs assessment who is dissatisfied with the decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the Rules of the District Court, appeal to the Court against the decision.”

4 The plaintiff in the summons is the State. The defendant is not named in the summons, but clearly Mr Hamod is a party and the review panel, Mr Sharpe and Mr McGruther, are named in the summons. Mr Diab says that he has an interest in those proceedings. As I have said, he was the solicitor for Mr Hamod in the Supreme Court proceedings in respect of which these costs were assessed. He says that as a result of his acting as a solicitor he has an equitable interest in any costs payable by the State to Mr Hamod. He relies on some principles originally set out by Jordan CJ in Ex parte Patience, Makinson v The Minister (1940) 40 SRNSW 96 particularly at 100-101. I am going to read the passage. I have the original here but I am going to quote from para 34 of a judgment of Campbell J in Firth v Centrelink (2002) 55 NSWLR 451:

“Jordan CJ said (at 100 – 101):
‘A solicitor has no lien for his costs over any property which has not come into his possession. If, however, as the result of legal proceedings in which the solicitor has acted for the client, the client obtains a judgment or award or compromise for the payment of money, although the solicitor acquires no common law title to his client’s right to receive the money or to any part of that right, he acquires a right to have his costs paid out of the money, which is analogous to the right, which would be created by an equitable assignment of a corresponding part of the money by the client to the solicitor. That is to say, the solicitor has an equitable right to be paid his costs out of the money; and if he gives notice of his right to the person who is liable to pay it, only the solicitor and not the client can give a good discharge to that person for an amount of the money equivalent to the solicitor’s costs.’

His Honour cited some authority. He continued.

‘If the person liable to pay refuses, after notice, to pay the costs of the solicitor, the solicitor may obtain a rule of Court directing that the amount of his costs be paid to him and not to the client, and payment by the judgment debtor to the client after notice of the solicitor’s claim is no answer to an application for such a rule.’

His Honour cites some further authorities, and indeed he goes on to make some general remarks comparing the right which a solicitor has to an equitable claim on monies held by a third party to the more usual solicitor’s lien. He concludes by saying this:

‘In practice, however, the solicitor has always been treated as possessing equitable rights in the judgment independently of any declaration of those rights, and the Court’s assistance is invoked not to create the rights but to enforce them.’”

5 In the 2002 case Campbell J adopted what Jordan CJ said and affirmed the principle, and I do not think that the principle itself is in doubt. What is in dispute here is Mr Diab’s right to become a party to the appeal proceedings.

6 It is clear from the material before me that the review panel, and the costs assessor before the review panel, assessed costs in the sum of $273,660.34 and costs of the assessment. So this is a considerable sum. It was conceded by Mr McKeand, who appears for Mr Diab in these proceedings, that there is a dispute between Mr Diab and Mr Hamod as to the amount of costs payable. Nevertheless, it is apparent to me, from the undisputed evidence before me, that Mr Diab, as solicitor, does have an equitable interest in any monies held by a third party on account of costs payable to Mr Hamod. The question then arises as to whether Mr Diab should become a party to the appeal proceedings. I should say that, in his affidavit supporting the notice of motion, Mr Diab has clearly given notice to the State of New South Wales and its solicitors that he makes the claim, so he has done what the authorities say is necessary to assert his right.

7 I then come to some provisions of the Civil Procedure Act and to the Uniform Civil Procedure Rules. First I have been referred to s 56 of the Act, which is now I think, etched in the hearts and minds of all judicial officers in this State. S 56(1) says:

“The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.”

and the section goes on to provide certain consequential matters. It is argued that to join Mr Diab to the appeal proceedings would unnecessarily complicate and lengthen the nature of the appeal to this court, which is now provided by statute, and I should say that the provisions of the Legal Profession Act to which I have referred have come into operation very recently. The relevant rules - I will start with r 6.24 of the Rules - provides in subr (1):

“If the court considers that a person ought to have been joined as a party, or is a person whose joinder as a party is necessary to the determination of all matters in dispute in any proceedings, the court may order that the person be joined as a party.”

8 Mr McKeand argues that as a matter of natural justice Mr Diab ought to be joined as a party to the appeal. It is quite clear to me that, in practice, both Mr Hamod and Mr Diab have an interest in ensuring that the appeal against the assessment of costs is pursued and contested, Mr Hamod, because he says that a substantial part of the costs order is his property, Mr Diab because he has undoubtedly an equitable interest in any costs which are recoverable by Mr Hamod. Both of them have an interest in ensuring that the appeal is contested and all relevant matters are brought to the attention of the court hearing the appeal. It is a case where it would be appropriate, in my view, that Mr Diab be joined as a party, because he needs to be joined as a party in order to protect his interest. I have in mind s 56, but it appears to me that if Mr Diab is not joined as a party to the proceedings at this stage, the consequence may be duplication of proceedings and challenges to the proceedings, and it is not correct, with respect to Mr Jackson who appears for Mr Hamod, to say that the only parties to the appeal are Mr Hamod and the State of New South Wales, and possibly the review panel. I make that finding because of the findings I have already made, because of Mr Diab’s equitable interest in the funds that are the subject of the costs order.

9 The amended notice of motion which was filed in court by consent, refers to a cross-claim which Mr Diab would make, and that cross-claim seeks as relief a declaration that the cross-claimant is entitled to a lien over the money payable by the State to Mr Hamod. I have already indicated the amount of that claim, and it is clearly in excess of $20,000. The equitable jurisdiction of this court is limited. Section 134 of the District Court Act gives the court jurisdiction to entertain equitable claims of the same nature as those entertained by the Supreme Court where the enforcement of a charge lien or debt is involved, and that charge lien or debt does not exceed $20,000. It is quite clear that the court does not have power to entertain this claim. If I do grant the application of Mr Diab to become a party, and also grant him leave to file that cross-claim, it would be one which would fall foul of that rule, and that invokes s 144 of the Civil Procedure Act. Subs (2) of that section says:

“If, during proceedings to which this section applies, the District Court decides that it lacks, or may lack, jurisdiction to hear and dispose of the proceedings, the District Court must order that the proceedings be transferred to the Supreme Court.”

10 If I do that, it clearly means that a matter vested by statute in this court, namely an appeal against an order of a costs assessor, would have to be transferred out of this court. However, in the circumstances, I can see no alternative to making the order to transfer the matter to the Supreme Court and having the appeal dealt with there. Notwithstanding s 56 of the Civil Procedure Act, it appears to me, that Mr Diab has a legitimate interest in ensuring that the appeal is conducted properly. It is also clear to me that if there is a dispute between Mr Diab and Mr Hamod, as to the quantum of the entitlement to either of them, it is a matter which would have to be resolved in the Supreme Court, and all those matters, in my view, mitigate in favour of having the matter transferred to the Supreme Court.

11 I make the orders sought in paras 1-3 of the amended notice of motion. I should say, before I come to the issue of costs, that the State of New South Wales has quite properly conceded that, because it knows of the dispute between Mr Diab and Mr Hamod, as to the entitlement to which each of them may be entitled out of the costs order, it has undertaken not to pay money to anybody. That, however, in my view, is not sufficient to preserve Mr Diab’s interest in that corpus. It is necessary, in my view, that he be represented as a party in the appeal. While it was alleged that the State did not recognise Mr Diab’s claim, I think that should be read down as meaning that the State did not acknowledge the full nature and extent of Mr Diab’s claim, but it does acknowledge that he does have an equitable claim.

12 In this case the applicant seeks payment of his costs. Mr Hamod says that he should not be liable for the costs of the application. He did not want to be here, and the State of New South Wales says it could not have consented to the application until it heard the argument today. This is a difficult situation where I have sympathy with all the parties, but it does appear to me that although, in general terms, it has been apparent since 13 November that the applicant would be seeking some relief in the nature of that which was ultimately sought in the amended notice of motion, it was not clear until today the precise nature of that relief.

13 Therefore my order will be that each party pay its own costs of today’s proceedings.

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