Translawcom Pty Ltd v Daniel

[2020] NSWLC 10

Local Court

New South Wales

Medium Neutral Citation:

Translawcom Pty Ltd v Daniel [2020] NSWLC 10

Hearing dates:

27 May 2020

Date of orders:

28 May 2020

Decision date:

28 May 2020

Jurisdiction:

Civil

Before:

Nash LCM

Decision:

Plaintiff’s Statement of Claim dismissed. Costs reserved.

Catchwords:

Practice and Procedure – Defendant’s motion for summary dismissal of claim – principles to be applied – whether no reasonable cause of action – whether abuse of process

Legislation Cited:

Civil Procedure Act 2005

Legal Profession Uniform Law (NSW) No 16a

Local Court Act 2007

Uniform Civil Procedure Rules 2005

Cases Cited:

Bank of New South Wales v Murray [1963] NSWR 515

Batistatos v Roads and Traffic Authority of New South [2006] HCA 27; (2006) 227 ALR 425

Brimson v Rocla Concrete Pipes [1982] 2 NSWLR 937

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87

NRMA Insurance Ltd v AW Edwards Pty Ltd (1995) 11 BCL 200

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125

Sidebottom v Cureton (1937) 54 WN (NSW) 88

Wickstead v Browne (1992) 30 NSWLR 1

Texts Cited:

Nil

Category:

Procedural rulings

Parties:

Translawcom Pty Ltd (Plaintiff)
Ray Daniel (Defendant)

Representation:

Solicitors:
Jason Francis, Solicitor (Plaintiff/Respondent on motion)
Michael Birch, Solicitor (Defendant/Applicant on motion)

File Number(s):

2019/00294753

Publication restriction:

Nil

Judgment

A. INTRODUCTION

1. Before the Court is the Defendant’s motion seeking summary dismissal of the Plaintiff’s Statement of Claim filed on 20 September 2019. The motion for summary dismissal was filed on 5 May 2020. I heard this motion yesterday on 27 May 2020 and reserved my decision.

2. During the course of the Defendant’s submissions, I queried with Mr Birch, who appeared for the Defendant (the Applicant on the motion), the source of power he relied on under the Uniform Civil Procedure Rules 2005 in support of the motion, and I was told he relied on Part 13.4(2)(b) and/or (c), namely, that the Plaintiff’s claim discloses no reasonable cause of action, or alternatively that the claim is an abuse of process of the Court.

3. However, by operation of Schedule 1 of the Uniform Civil Procedure Rules 2005, Part 13 is excluded in proceedings brought under Part 3 of the Local Court Act 2007 that are held before the Local Court sitting in its Small Claims Division. As is made clear below, the amount claimed in the Plaintiff’s Statement of Claim is $9,366.50, which means these proceedings are in the Small Claims Division.

4. During the hearing of the motion, the parties did not bring Schedule 1 of the Uniform Civil Procedure Rules 2005 to the Court’s attention. Rather, I identified Schedule 1 when refreshing my memory reading the commentary on summary dismissal applications in the Local Court Bench Book.

5. Part 2.1 of the Uniform Civil Procedure Rules 2005 provides that the court may, at any time and from time to time, give such directions and make such orders for the conduct of any proceedings as appear convenient (whether or not inconsistent with these rules or any other rules of court) for the just, quick and cheap disposal of the proceedings. Part 2.3 does not limit the effect of Part 2.1. Accordingly, although Part 13 of the Uniform Civil Procedure Rules 2005 does not apply to these proceedings, I am satisfied that I can dispose of the Defendant’s motion in his favour, or otherwise, according to the general power in Part 2.1, and I propose to do so because:

1. The Defendant’s motion has been fully argued and the parties rightfully expect a judgment to be delivered swiftly; and

2. The relatively modest amount in dispute between the parties is such that there is no justification in wasting the time and costs spent in arguing the motion yesterday.

6. In other words, the course I propose to take is consistent with the ‘just, quick and cheap’ disposition of the Defendant’s motion and the proceedings generally, consistent with s 56 of the Civil Procedure Act 2005. I also note that the court has an inherent power to dismiss proceedings which are frivolous or vexatious or otherwise an abuse of process: Brimson v Rocla Concrete Pipes [1982] 2 NSWLR 937. As I explain below, the Defendant does not argue that the proceedings are frivolous or vexatious. I agree that these epithets are not an appropriate characterisation of the Plaintiff’s claim. I deal with ‘abuse of process’ further below.

7. The context in which the Defendant’s motion arises is as follows. The Defendant is a former client of the Plaintiff. The Plaintiff is a law practice trading as ‘Brander Smith McKnight’. The Plaintiff provided legal services to the Defendant during the period from February 2019 to August 2019. The individuals responsible for the legal work were Mark Smith and Samuel Bailey. During the period of that retainer, the Plaintiff issued a series of invoices for legal work undertaken for the Defendant on its instructions. Some of these invoices were paid. Some invoices have not been paid.

8. On 17 September 2019, the Defendant lodged a complaint with the Office of the Legal Services Commissioner in relation to legal work which Mr Smith and Mr Bailey performed, on behalf of the Plaintiff, during the retainer with the Defendant. As stated above, on 20 September 2019, the Plaintiff filed a Statement of Claim seeking an order for payment of the outstanding legal fees, which it alleges is in the sum of $9,366.50. At the time the claim was filed, the Plaintiff was not aware that the complaint had been made to the Office of the Legal Services Commissioner.

9. Section 194(2) of the Legal Profession Uniform Law (NSW) No 16a relevantly provides:

…

(2)  A law practice must not commence legal proceedings to recover legal costs from a person who has been given a bill until—

(a)  where the legal costs are the subject of a costs dispute before the designated local regulatory authority—the authority has closed or resolved the dispute; and

…

B. CENTRAL ISSUE

10. The central issue on this motion is whether s 194(2) of the Legal Profession Uniform Law (NSW) No 16a precluded the Plaintiff from commencing its proceedings to recover the legal costs alleged to be payable by the Defendant.

11. In particular, the issue is whether those legal costs were, at the time the proceedings were commenced, ‘the subject of a costs dispute before the designated local regulatory authority’, in circumstances where that authority had not ‘closed or resolved the dispute’.

12. The parties inform me that it is not in dispute that the Office of the Legal Services Commissioner is the ‘designated local regulatory authority’ for the purposes of s 194(2) of the Legal Profession Uniform Law (NSW) No 16a. The parties further inform me that it is not in dispute that, at the time of the hearing of the motion yesterday, there was a ‘costs dispute before the designated local regulatory authority’. In other words, the central issue for me to determine is a temporal one, namely, whether s 194(2) of the Legal Profession Uniform Law (NSW) No 16a operates such that at the time the proceedings were commenced, the Plaintiff was barred from taking that action by reason of the fact that the impugned legal costs were subject to a costs dispute before the Office of the Legal Services Commissioner.

13. The parties were unable to point to any case authority which had previously addressed the central issue which I have identified. I have also attempted to locate any relevant authority, including, of course, any authority binding on me, and have been unable to do so. It appears this question has not previously been decided.

C. PARTIES’ SUBMISSIONS

14. Each party read, without objection, an affidavit in support of their respective positions on the motion. The Defendant (the Applicant on the motion) read the affidavit of Mr Birch affirmed on 5 May 2020. The Plaintiff (the Defendant on the motion) read the affidavit of Mr Smith sworn on 26 May 2020. The Plaintiff was represented on the motion by Mr Francis, Solicitor.

15. Mr Birch, appearing for the Defendant, made the following submissions:

1. The complaint to the Office of the Legal Services Commissioner was lodged on 17 September 2019, being very shortly before the Plaintiff’s Statement of Claim was filed;

2. In a letter from the Office of the Legal Services Commissioner dated 18 December 2019, the letter discloses that the complaint relates to allegations about Mr Smith’s and Mr Bailey’s conduct, including, inter alia, a ‘failure to provide appropriate costs disclosure’ and a ‘general allegation of overcharging’;

3. That letter also records that the Defendant ‘dispute[s] the costs charged… to date’;

4. Accordingly, as at 20 September 2019, when the Statement of Claim was filed, the legal costs identified in the Plaintiff’s Statement of Claim were the subject of a costs dispute before the Office of the Legal Services Commissioner, and therefore the Plaintiff, as a law practice, was precluded from commencing legal proceedings to recover the impugned legal costs; and

5. This is a defect that cannot be cured, such that the Plaintiff should either not have commenced the proceedings, or should have discontinued them when the alleged defect was brought to its attention by the Defendant’s solicitor in a letter dated 17 March 2020.

16. Mr Francis, appearing for the Plaintiff, made the following submissions:

1. A complaint alone does not trigger the operation of s 194(2)(a) of the Legal Profession Uniform Law (NSW) No 16a. There needs to be a ‘costs dispute’ and there is no evidence that at the time the proceedings were commenced, there was a ‘costs dispute’;

2. The Plaintiff had no knowledge of the complaint to the Office of the Legal Services Commissioner when its claim was commenced; and

3. There is, in effect, an implied requirement in s 194(2)(a) of the Legal Profession Uniform Law (NSW) No 16a that proceedings are only barred under that provision if at the time of commencement of the proceedings the Plaintiff had notice that a complaint about the impugned legal costs had been made.

17. In reply to Mr Francis’ submissions, Mr Birch made the following submissions:

1. The Defendant does not suggest that the Plaintiff commenced the proceedings ‘improperly’, or that it was aware of the complaint at the time the proceedings were commenced; and

2. Section 194(2)(a) of the Legal Profession Uniform Law (NSW) No 16a affords no discretion and the procedural irregularity cannot be cured after the commencement of proceedings.

18. I gave Mr Francis the opportunity, without objection from Mr Birch, to make some further closing submissions, in which he said as follows:

1. To give effect to s 194(2)(a) of the Legal Profession Uniform Law (NSW) No 16a, the law practice must have knowledge of the dispute in order for the bar on commencing proceedings to operate;

2. There are strong policy reasons why this is the case, namely, that a mere phone call to the Office of the Legal Services Commissioner making a complaint about a law practice concerning legal costs would be enough to constitute a ‘costs dispute’, and this may therefore lead to an inundation of phone calls; and

3. The Plaintiff’s position is supported by other provisions of the Legal Profession Uniform Law (NSW) No 16a such as s 291(2) and s 445(b).

D. FINDINGS

(i) Principles

19. I am dealing with an application for summary dismissal of the Plaintiff’s Statement of Claim. As I observed earlier, I am not determining this application pursuant to the provisions of Part 13 of the Uniform Civil Procedure Rules 2005. Rather, I am determining whether it is appropriate to make an order under Part 2.1 of the Uniform Civil Procedure Rules 2005 for the summary dismissal of the Plaintiff’s claim. Neither party made submissions as to the appropriate principles which apply on a summary dismissal application, however I set them out below.

20. Summary dismissal is a discretionary remedy. The more complex and arguable the legal point, or the more dependent it may be on debatable factual premises, the less likely that summary disposal will be appropriate, particularly if the relevant law is in a state of development: NRMA Insurance Ltd v AW Edwards Pty Ltd (1995) 11 BCL 200.

21. Summary judgment will not be granted where there is any serious conflict as to a matter of fact: Sidebottom v Cureton (1937) 54 WN (NSW) 88, or any question of credit involved: Bank of New South Wales v Murray [1963] NSWR 515. The power to order summary judgment should be exercised with great care, and not unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99.

22. In practice, the test applied to summary judgment applications by plaintiffs is the same as that applied to summary dismissal applications by defendants. The test is that ‘the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion. The test has been variously expressed, including ‘so obviously untenable that it cannot possibly succeed’ and ‘manifestly groundless’: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-129 per Barwick CJ.

23. The court will determine questions of law on such applications if satisfied that the point is clear: Silverton Ltd v Harvey [1975] 1 NSWLR 659 at 665. The Court examines the evidence, not for the purposes of making findings of fact, but only to determine whether a triable issue is disclosed: Wickstead v Browne (1992) 30 NSWLR 1 at 9.

24. The Defendant relies on 2 bases as grounding the relief sought in the motion, namely, that there is no reasonable cause of action and/or the Plaintiff’s claim is an abuse of process. I address these below.

(ii) No reasonable cause of action

25. This is not a case where the Plaintiff’s Statement of Claim does not disclose a reasonable cause of action. The Statement of Claim clearly does disclose a reasonable cause of action. The cause of action is a simple contract claim and has been pleaded as such. Simply because the cause of action is not presently available to the Plaintiff by operation of s 194(2) of the Legal Profession Uniform Law (NSW) No 16a does not, in my view, mean that there is no reasonable cause of action.

26. Accordingly, I do not accept the Defendant’s submissions to the extent they argue that the Statement of Claim does not disclose a reasonable cause of action.

(iii) Abuse of process

27. The categories of abuse of process are not closed: Batistatos v Roads and Traffic Authority of New South [2006] HCA 27; (2006) 227 ALR 425 at [9] – [15].

28. As the plurality observed in Batistatos at [15], citing Rogers v The Queen, although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories:

1. The court's procedures are invoked for an illegitimate purpose;

2. The use of the court's procedures is unjustifiably oppressive to one of the parties; or

3. The use of the court's procedures would bring the administration of justice into disrepute.

29. Their Honours also observed at [15] that ‘many, perhaps the majority of, cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court's process’.

30. I find that, if the Plaintiff’s claim was commenced contrary to s 194(2) of the Legal Profession Uniform Law (NSW) No 16a, this would constitute an ‘abuse of process’ because, at the least, it would bring the administration of justice into disrepute, as the claim would be carried on in direct defiance of legislated instruction.

31. In my view, the words of s 194(2) of the Legal Profession Uniform Law (NSW) No 16a are intractable. If legal costs are the subject of a costs dispute before the Office of the Legal Services Commissioner, legal proceedings must not be commenced to recover those costs. In the present instance, the legal costs were the subject of a costs dispute before the Office of the Legal Services Commissioner when the Plaintiff’s Statement of Claim was commenced. I find on the evidence that the Defendant had complained about, or had put in issue, both the alleged inadequacy of the disclosure of legal costs by the law practice, as well as alleged overcharging by the law practice. Once that complaint had been made in those terms, there was a ‘dispute’ about the legal costs which the Plaintiff now seeks to recover. By extension, the legal costs were ‘the subject of’ a costs dispute because the Office of the Legal Services Commissioner had, by letter to the Defendant dated 18 September 2019, confirmed receipt of the complaint and allocated file numbers to the complaint. At that point, I find that the legal costs were, at the least, the subject of a costs dispute. If a party to a contract is aggrieved about an aspect of the performance or otherwise of that contract, and that grievance has been communicated, even if to a non-party to the contract, this gives rise to a dispute. This is particularly so in a situation where, as here, the appropriate course for a party to take, if aggrieved, is to communicate that grievance to a regulatory authority. The Defendant had no obligation to communicate his grievance to the Plaintiff.

32. I find that s 194(2) of the Legal Profession Uniform Law (NSW) No 16a does not contain any requirement that the person or law practice the subject of the complaint or dispute have notice or knowledge of the complaint or dispute. The provision is unambiguous, and no occasion arises to imply any words into it. There may be a circumstance, such as here, where a person commences proceedings completely unaware that a complaint has been made about the matter the subject of a claim (such as to give rise to a ‘costs dispute’). But that does not influence the otherwise clear effect of s 194(2) of the Legal Profession Uniform Law (NSW) No 16a which is to preclude the commencement of legal proceedings to recover legal costs if there is, in any way, a subsisting, unresolved dispute in respect of those costs pending before the Office of the Legal Services Commissioner, even if the law practice is unaware the dispute exists.

33. I conclude that the central issue as I have described above is not complex and does not turn on debatable factual premises. Although there is apparently no case authority which has interpreted s 194(2) of the Legal Profession Uniform Law (NSW) No 16a, I suspect this is because the statutory language is clear.

34. I do not find that the Plaintiff invoked the Court's procedures for an illegitimate purpose, nor do I find that the claim is unjustifiably oppressive. Noting that the Defendant did not controvert the Plaintiff’s submission, I find that when the Plaintiff commenced the proceedings, it did so absent any knowledge of the Defendant’s complaint to the Office of the Legal Services Commissioner. I have found, however, that such lack of knowledge or notice does not affect the application of s 194(2) of the Legal Profession Uniform Law (NSW) No 16a.

35. To avoid doubt, I also note my earlier finding, consistent with the agreed position of the parties, that the Plaintiff’s claim is not ‘frivolous’ or ‘vexatious’. The filing of the Statement of Claim, however, having regard to the effect of s 194(2) of the Legal Profession Uniform Law (NSW) No 16a, constitutes an abuse of process, despite the fact that the Plaintiff had no knowledge of a subsisting costs dispute as set out in the complaint to the Office of the Legal Services Commissioner.

36. It follows, therefore, that I am satisfied that on this occasion, it is appropriate that I exercise my discretion in favour of the Defendant because I can reach a definite and certain conclusion on the Plaintiff’s claim, having regard to the effect of s 194(2) of the Legal Profession Uniform Law (NSW) No 16a.

(v) Conclusion

37. The appropriate order in disposing of the Defendant’s motion is to summarily dismiss the Plaintiff’s Statement of Claim. Despite that order, the effect of s 91 of the Civil Procedure Act 2005 is such that when the costs dispute between the parties has been ‘closed or resolved’, the Plaintiff may re-commence proceedings seeking recovery of the outstanding legal fees if it is otherwise entitled to do so.

38. I note that there is also a pending cross-claim, brought by the Defendant. The order summarily dismissing the Plaintiff’s claim does not affect that cross-claim and it will be a matter for the parties to navigate its fate.

39. Section 36 of the Local Court Act 2007 provides that a Magistrate or an Assessor is not to give judgment or make a final order in respect of proceedings being heard in the Court’s Small Claims Division unless the Magistrate or an Assessor has brought, or has used his or her best endeavours to bring, the parties to the proceedings to a settlement acceptable to the parties. By letter dated 17 March 2020, the Defendant adopted a ‘hard-line’ approach to s 194(2) of the Legal Profession Uniform Law (NSW) No 16a and invited the Plaintiff to consent to an order that its claim be discontinued/dismissed. The evidence discloses that the Plaintiff apparently made counteroffers through the online court site, but, consistent with its position on the Defendant’s motion, does not consent to an order dismissing its claim. Given the diametrically opposed positions of the parties on the motion, I am satisfied that further endeavours to try and settle the proceedings are likely to be fruitless and accordingly, s 36 of the Local Court Act 2007 does not preclude me from making final orders.

40. Finally, the parties did not address me on the question of costs of the Defendant’s motion. Although the Defendant has been successful, I note s 37 of the Local Court Act 2007. In light of these matters, it is appropriate that I reserve the question of costs.

E. ORDERS

41. Consistent with the reasons I have given, the orders of the Court are:

1. The Plaintiff’s claim is dismissed.

2. Costs reserved.

42. I propose to make any necessary further orders and directions for the future conduct of the proceedings following discussions with the parties.

Magistrate Scott Nash

Sutherland Local Court

28 May 2020

**********

Decision last updated: 14 January 2022