This is a notice of motion filed by the plaintiffs seeking orders as follows:
1. Effectively, a declaration that the appointment of Grace Lawyers to represent the defendant was not valid and therefore Grace Lawyers cannot represent the defendant;
2. Grace Lawyers purported to act for the defendant without authority and therefore their legal costs claim be dismissed including the legal costs for these proceedings and the proceedings with the Local Court;
3. The defendant to pay the plaintiffs' costs of and incidental to this motion and summons; and
4. Such other orders as the Court considers to be necessary or appropriate.
I interpolate that part of the second order sought, being or relating to the legal costs for the proceedings in the Local Court, would appear at least to have some, if not some significant, crossover with the relief sought in the summons initiating the substantive proceedings, in relation to which this notice of motion is a preliminary skirmish.
It is necessary briefly to indicate that the summons filed back on 29 December 2021 is, in essence, an appeal against a decision made by the Local Court. The orders sought in the summons are that the appeal from the magistrate be allowed, that her Honour's orders and judgment be set aside, and that the cost claim awarded in the Court below be dismissed. The fourth order sought in the summons, which is very much related to the third, if not a particular of that order, is that the legal costs and claim of $28,348 be dismissed.
The background to that cause of action appears, on the material I have been taken to on the notice of motion, to arise from what was initially a dispute between the present plaintiffs and the owners association known as the Neighbourhood Association No DP 285853, which is the respondent, or more particularly the defendant in the substantive proceedings. The details of that dispute are not entirely apparent to me on the material relevant to the notice of motion, and nor should I really enter into the debate in relation to that, but at least on the plaintiffs' case what was a small debt allegedly owed by them to the defendant in the amount of approximately $500, or perhaps if you take into account some other associated costs and expenses something like $2,000, resulted ultimately in legal costs somewhere in the vicinity of $30,000. As I said, it is not for me to enter into the rights and wrongs of that, but it does on its face seem rather extraordinary; but, litigation is costly and those who take it on do so hopefully aware of the risks involved.
On the notice of motion there were read a number of affidavits and an abundance of annexed material. That included an affidavit of the first plaintiff, filed on 16 February 2022, and I have also read the affidavit of the first plaintiff filed (as I understand it) on 29 December 2021. The defendant read two affidavits of Kathleen O'Hea, affirmed respectively on 9 March 2022 and 22 March 2022. Again, those affidavits had annexed a number of documents relevant to the issue on the notice of motion and many of which, as I perceive it, will also be relevant to the fundamental issue between the parties, which is to say the dispute that was resolved adversely to the plaintiffs in the proceedings before the Local Court.
The submission made on behalf of the plaintiffs in support of the notice of motion is that the law firm, Grace Lawyers, are not properly authorised to act in these proceedings. The submission is that the firm could not be engaged by the managing agent because the authority in the managing agent and the retention of the solicitors was invalid. It seems, reading between the lines and drawing some inferences from the submissions made, that similar submissions arise in the substantive proceedings which again concern legal costs and expenses arising out of the initial dispute over what was a very small debt.
It is put that there was no valid executive committee in existence at the time under the relevant legislation, which today is the Community Land Management Act 2021 (NSW) and perhaps in the earlier part of the dispute was the Community Land Management Act 1989 (NSW). There have been some legal arguments between the parties as to the proper application of the legislation and, as I have said, there is some substantial crossover of the issues that will ultimately have to be determined on the appeal brought by way of the process to which I have referred.
In relation to the present submission that the law firm is not authorised to act, reliance is placed on a number of documents and one affirmed statement by Kathleen O'Hea in the affidavit read on behalf of the defendant. Ms O'Hea says in her affidavit that she is a licensed managing agent in the employ of O'Connors Strata & Property Specialists Pty Ltd. She goes through in her affidavit to set out the circumstances in which she says her firm was validly appointed to provide services to what I will call the owners association (or the defendant). Annexed to the affidavit was an agency agreement that was annexure 2, which (amongst other things) sets out the manager's responsibility under that agreement and authority. It included cl 5.5.5 authorising the taking of legal proceedings to recover outstanding levy contributions and so on.
Also annexed to that affidavit was a series of minutes of general meetings held over the course of about two or three years, which included a resolution on 4 December 2018. This resolution was to engage or appoint the services of a debt collection agency, obtain legal advice and so on, and legal representation of Grace Lawyers Pty Limited. The same clause, but cl 5.5.5(e), included filing an appeal or defending an appeal against any judgment concerning the collection of levy contributions.
Reference was also made to the minutes of a meeting held on 22 December 2021 which included again a resolution (at cl 7) for the engagement or appointment of a debt collection agency, obtaining legal advice and legal representation of or from Grace Lawyers and finally, specifically in relation to the current proceedings, reliance was placed on the costs agreement which was annexed as annexure H which, although unsigned, appears to have been executed by conduct (at least that would be a fair inference to make on its face).
Now the plaintiffs' argument, as I follow it, is that none of that stream of information is valid because the owners association was, as the first plaintiff put it, defunct since 2018 because it was, again to adopt his phrase or word, "dysfunctional" and was essentially being run by one member. That really is the issue as I see it ultimately to be determined at the final hearing.
On its face I am unable to accept the fundamental premise behind the current application because there appears to be a series of valid resolutions made at various meetings appointing both the managing agent and, in turn, specifically Grace Lawyers to act in relation to proceedings, such as those which form the background to the proceedings before the magistrate, and then a specific resolution relating to these proceedings and more pertinently to the current notice of motion.
I might also say it would be a rather extraordinary thing for a law firm to purport to act in a court case if they were not properly engaged. None of this engages with, nor was there any submission made about, the wisdom of appearing in a case which seems to be about the firm's legal fees and there is no suggestion of any conflict of interest arising from that. It would be an unusual course for a court, in the absence of very cogent evidence, to find that a lawyer or a law firm would act in the absence of authority in circumstances like these where that issue has been raised squarely by its opponent in litigation.
I should also say that the evidence produced or relied upon by the plaintiffs is, as was submitted, largely argument. There may be some validity to those arguments going back in time but there is no merit, as I perceive it, in the suggestion that Grace Lawyers should be subject to a declaration (which is in a sense what is being sought by this notice of motion), one, that they cannot represent the respondent or defendant or, two, that they are currently acting without authority.
None of that is to predetermine the issues that might be decided by the judge ultimately hearing the summons, and I should say also in that regard that at this stage the transcript of the proceedings before the Local Court, the submissions made to the Local Court and the reasons for judgment of the Magistrate, have yet to be obtained. I am told by the first plaintiff that only in the last couple of days has he been advised that the transcript is available and he is required to make a payment to obtain them. Whilst that may not change the landscape in terms of the issues to be litigated on the summons, it certainly will be critical information for a judge to make a decision as to whether the appeal, is based on a question of law alone or, a question of law and fact or, either way, has any merit. That will be critical evidence for that purpose, but it is not critical evidence for today's notice of motion.
The evidence that I have attempted to summarise from the affidavit of Ms O'Hea is the critical evidence and there is nothing in the evidence brought to the contrary by the plaintiffs. For those reasons the notice of motion is dismissed and I refuse to make any of the orders sought in orders 1 to 3.
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Decision last updated: 27 May 2022