Beau Timothy John Hartnett trading as Hartnett Lawyers v Anthony Robert Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell

Introduction

1. This appeal raises a number of important questions concerning the ambit of the Supreme Court's inherent supervisory jurisdiction over an officer of the Court. In particular, it raises the question whether (a) that jurisdiction extends to requiring a solicitor who acted for a mortgagee in undefended possession proceedings to disgorge to the mortgagor amounts found to constitute excessive professional charges to the mortgagee, and (b) if it does, whether Peden J's (the primary judge) discretion miscarried in making such an order.
2. These questions arise in a regrettably complex procedural context which it will be necessary to traverse in order to consider an additional argument raised on appeal concerning parties and procedural fairness. Shortly stated, there were two relevant sets of proceedings which were ultimately heard together by the primary judge. These came to be referred to by the parties and the primary judge as the Possession Proceedings and the Equity Proceedings. The background to these two sets of proceedings is explained in more detail later in these reasons.
3. The orders in respect of which the appeal is brought were made in the Equity Proceedings and required Mr Beau Timothy John Hartnett (the Appellant) to pay the sum of $251,255.53; interest on that sum in the amount of $50,489.98; and interest on the sum of $33,792.46 in the amount of $9,610.96 to the Respondent, together with the Respondent's costs on an indemnity basis.

Background

1. Notwithstanding the procedural complexity of the matter, the bald background facts may be stated relatively briefly. A more comprehensive summary is set out at [6]-[98] of the primary judgment: Bell v Hartnett Lawyers (No 3) [2022] NSWSC 1204 (the primary judgment or PJ).
2. In late 2013, Mrs Mabel Deakin-Bell (Mabel or the mortgagor) died. Under her will, Mr Anthony Robert Bell (the Respondent), was left a property which was subject to a $30,000 mortgage to the late Ms Gwendoline Deakin-Bell (Gwendoline or the mortgagee). As will be seen, the Appellant, who acted for Gwendoline from 2014, charged her $288,601.03 to enforce the security in undefended proceedings in the Possession List of the Supreme Court.
3. Clause 5 in the Memorandum of Mortgage Q860000 provided: "In addition to all costs and expenses which the mortgagor may be liable at law or in equity to pay in respect of this security, or otherwise in relation thereto, the mortgagor will upon demand pay all costs and expenses, including costs as between solicitor and client, incurred by the mortgagee in consequence or on account of any default on the part of the mortgagor hereunder or incurred by the mortgagee for the preservation of or in any manner in reference to this security, all of which costs and expenses shall from the time of payment or expenditure thereof respectively until repaid to the mortgagee by the mortgagor be deemed principal moneys covered by this security, and shall carry interest at such higher rate as may be shown in the schedule to the mortgage."

The Costs Agreement

1. The only evidence of a costs agreement was that annexed to an affidavit of Haleema Junat Deen filed in the Equity Proceedings and affirmed on 24 June 2021.
2. In that affidavit, Ms Deen deposed to the fact that she is a solicitor in the employ of Hartnett Lawyers and has the conduct and carriage of the matter on behalf of the Defendant (the Appellant in the appeal). In [4] of her affidavit, Ms Deen deposed that: "On 17 January 2014 Mrs Gwendoline Rosemary Deakin-Bell (Gwendoline) met with Hartnett Lawyers and provided instructions to advise and assist in relation to the following matters, namely: a. the payment of monies owing pursuant to the terms of a family law property settlement agreement with her former husband Robert Deakin-Bell and which payment was secured by a mortgage over property owned by Mabel Deakin-Bell (deceased) at 4 Apsley Street, West Ballina, New South Wales; and b. Gwendoline's estate planning and the preparation of a new Will."
3. Ms Deen then asserted that on 12 February 2014, Hartnett Lawyers provided Gwendoline with "the firm's standard form disclosure of costs agreement", a copy of which was annexed to the affidavit (the Costs Agreement). The Agreement is unsigned, although it contained a typed Client Acknowledgement Form which contained the following statements: "The Client agrees to instruct the Firm in accordance with and be bound by the terms and conditions of the Costs Agreement. The Client acknowledges that the Client has read and understands the matters disclosed in the Costs Agreement." The Client Acknowledgement Form also made provision for Gwendoline's signature but, as noted, this remained unsigned.
4. The Costs Agreement purported to be issued "pursuant to the requirement of the Legal Profession Act 2007". The Costs Agreement indicated that Hartnett Lawyers' address was 60 Appel St, Surfers Paradise, Queensland, and the reference in the Costs Agreement to the Legal Profession Act 2007 was to the Queensland Legal Profession Act.
5. Clause 2.5 of the Costs Agreement stated: "The Firm will perform the following work for the Client; As detailed in a letter by the Firm to the Client dated 3 February 2014 (Hartnett Lawyers letter)." The letter of 3 February 2014 was not in evidence although Gwendoline's Will dated 12 February 2014 and drafted by Hartnett Lawyers was in evidence.

The Possession Proceedings

1. On 2 December 2014, Gwendoline commenced the Possession Proceedings in the Supreme Court of New South Wales by Statement of Claim seeking possession of the property and payment of the mortgage together with interest and costs, said to amount to $34,683.19 by 14 November 2014 (the Possession Proceedings). The Statement of Claim was in what may be described as "vanilla" form, running to 21 paragraphs, reciting details of the mortgaged property, entry into and key terms of the mortgage, a transfer of the mortgage from Robert Deakin-Bell to Gwendoline, Mabel's death, demand for payment and non-payment.
2. On 15 January 2015, Mr Hartnett applied for default judgment. That application was rejected shortly thereafter because the Respondent had been named as defendant but was not at that point in time the executor of Mabel's estate.
3. On 18 March 2016, an Amended Statement of Claim was filed naming the NSW Trustee and Guardian as defendant, removing the Respondent as a party. This delay was explained to the primary judge as a result of "Mr Hartnett continu[ing] to agitate that Mr Bell apply for probate": PJ [13]. The amendments were formal and perfunctory, simply replacing the Respondent as defendant in the Possession Proceedings and naming the NSW Trustee and Guardian as defendant.
4. These proceedings were undefended and, on 29 April 2016, Davies J made orders for possession and sale of the property. These orders were not opposed: see Deakin-Bell v NSW Trustee and Guardian [2016] NSWSC 540 (the possession judgment). Relevantly, those orders included (with emphasis added): "5. After the Property has been sold, the plaintiff be entitled to apply the proceeds of sale towards payment of: 5.1 the principal sum of $30,000 owing under the registered mortgage dated 11 November 1994 (the Mortgage); 5.2 pursuant to the terms of the Mortgage, and on an indemnity basis, the costs and expenses she has incurred in relation to the Mortgage and these proceedings to date, and any such costs that she incurs in the future; and 5.3 pre-judgement interest on the principal sum of $30,000.00 pursuant to section 100 of the Civil Procedure Act 2005 (NSW) for the period 6 September 2013 to 29 April 2016. 6. After deduction of the amounts referred to in Order 5 above, the plaintiff pay the balance of the proceeds of sale of the Property to: 6.1 any person who has by that time been appointed as the administrator or executor of the Estate of Ms Mabel Deakin-Bell; or 6.2 if no person has been appointed administrator or executor, then to the Court."

1. Correspondence between the parties continued until 10 January 2018. At that point, the Respondent's lawyers wrote to the Appellant noting that they intended to file an application in this Court seeking a costs assessment in respect of the Appellant's costs in the Possession Proceedings. That letter provided the Appellant with 21 days to object.
2. On 12 February 2018, the application for costs assessment was then assigned to Mr Christopher Wall. The costs assessment process commenced in earnest on 26 February 2018, when Mr Wall wrote to the parties.
3. The Appellant did not reply initially. Following several letters to follow-up, and extensions of time, he replied on 3 May 2018, the date of the extended deadline for Gwendoline to provide particulars. He requested a further extension of time (to 31 May 2018), noting that he had now formally received instructions to act on Gwendoline's behalf. However, as the primary judge noted, the Appellant had charged Gwendoline for reading each piece of correspondence from Mr Wall up to that point, and the only basis on which such a charge could be justified was if the Appellant already had instructions to act: PJ [59].
4. Following correspondence with the Respondent's lawyers, Mr Wall determined that an extension would be granted until 24 May 2018.
5. The Appellant never wrote to Mr Wall again.
6. In those circumstances, Mr Wall finalised the costs assessment on 24 May 2018 at $40,000, less the costs assessment filing fee of $2,654.50 (which the Respondent had paid) (the Wall Assessment). That led to a final assessment of the total amount payable pursuant to the order of Davies J of $37,345.50, up to the date of the application for a costs assessment.
7. On 31 May 2018, Gwendoline died.
8. Apart from correspondence on 24 July 2018 in which the Appellant wrote to the Respondent's lawyers asserting that he had instructions from Gwendoline's executor to "lodge an application for review of the determination of the costs assessor" (which was never made), the Appellant did not write to the Respondent again until 28 February 2019 and then only to seek an extension of time to reply to correspondence.
9. On 24 July 2020, the Respondent's lawyers wrote a twelve-page letter to the Appellant, relying on the costs assessment and demanding $287,551.30 be paid either into their trust account or to the Court by 31 July 2020.

Subsequent Procedural History

1. On 1 September 2020, the Respondent filed a Summons in the Equity Division of this Court in which he sought a declaration that the now Appellant, Mr Hartnett, held the amount of $287,551.30 as trustee for the plaintiff, together with an order that the Appellant pay him the amount of $287,551.30. Equitable compensation was also sought together with interest, costs and such "further other orders as are appropriate in the circumstances of the case." Certain interlocutory relief was also sought.
2. On 26 February 2021, Slattery J heard argument in relation to a dispute concerning the service of the proceedings. This resulted in a judgment delivered on 11 March 2021 (Bell v Hartnett Lawyers [2021] NSWSC 202 (first Slattery J judgment)), in which his Honour granted leave to the Respondent to proceed against the Appellant and directed that the Possession Proceedings be relisted. That latter order falls to be understood in the context of a number of observations made by Slattery J. In his judgment, Slattery J noted at [10] that: "Through over four years of voluminous correspondence, Mabel's estate has essentially been seeking an account of the use of the sale proceeds from Gwendoline, as the mortgagee, and then after May 2018, from Gwendoline's estate. In the absence of a representative of Gwendoline's estate, the solicitors for Mabel's estate, McVittie Legal, corresponded with Mr Hartnett. The correspondence has involved complaints to the Law Society of Queensland. A cost assessment was completed between the estates of Gwendoline and Mabel in September last year. But Mr Hartnett did not participate in that costs assessment, claiming that he did not act for Gwendoline's estate."
3. Apart from dealing with the service of process question, Slattery J referred to a number of other issues that had been raised in relation to the proceedings which it was contended by the Appellant made them vulnerable to being struck out. At [19]-[26] of his judgment, Slattery J said: "Attention must indeed be given to the proper parties to these proceedings, and what is the real cause of action, if any, against the defendant solicitor. Now the Court has granted leave under UCPR, r 10.3(4), the Court is required under Civil Procedure Act 2005, s 56 to bring the real issues in these proceedings to resolution and to quell the controversy between these parties which has now gone on for five years. The circumstances raise a number of questions for an objective observer. They may all be readily able to be answered when issue is joined. One of those questions is how the defendant solicitor was able to issue a memorandum of fees, if that is what happened, to authorise the transfer of $288,601.03 out of his client's trust account to his firm on 18 November 2016, so soon after the sale of the Ballina property. So large a bill for about seven months' work from the commencement of the possession proceedings (in March 2016) up to the sale of the Ballina property (in October 2016), calls for explanation. Mabel's estate was prima facie entitled to an account from Gwendoline in relation to the transfer of that sum, which Gwendoline had held on trust for her. It may be that the transfer of this sum by Gwendoline to Mr Hartnett can be readily explained by proper payment authorities and the production of regular bills of costs itemizing what work had been done for Gwendoline in relation to the exercise of the power of sale up to that date. But that will be a matter for later analysis. The Court has an obligation to get these proceedings into order. It will be necessary for the plaintiff to join Gwendoline's estate to these proceedings. It is also necessary for these proceedings to be joined with the possession proceedings brought by Gwendoline and in which Davies J made orders (Order 6) which on the material presently available appear to have not been complied with by Gwendoline's estate, at least in respect of the admitted trust account balance of $33,792.46. The Court will initiate this of its own motion. The Court will adjourn these proceedings for three weeks to allow the plaintiff to bring in an amended process to join the estate of Gwendoline and for the file in the possession proceedings to be retrieved. If Mr Bell wishes to make any application in the possession proceedings, he will first need to substitute himself for the NSW Trustee and Guardian. After his grant of probate, he now fully represents the interests of Mabel's estate. The fact that Gwendoline's estate is unrepresented in the possession proceedings is readily curable by the application of UCPR, r 7.10; the Court can make an order for someone to represent the estate of a deceased person or for the matter to proceed against the estate in the absence of a representative. Thought will also have to be given to how Gwendoline's estate will be represented in the present proceedings and whether or not an order will be made for the appointment of someone to represent that estate as a possible second defendant." (emphasis added)

Proceedings at first instance

1. Both sets of proceedings came on for hearing before the primary judge and were heard on 24-25 August 2022. Some six days prior to the trial, the parties filed a Statement of Real Issues in Dispute. Issue 7, under the heading "The Equity Proceedings", was stated to be "Whether Mr Hartnett is required to disgorge any excessively charged fees?". That was plainly a reference to the relief sought by the Respondent in the Court's inherent supervisory jurisdiction.
2. The position was somewhat confused by a set of supplementary submissions of the Respondent dated 24 August 2022, forwarded to the primary judge some time after Court on that day. In those submissions, the Respondent submitted that the disgorgement could occur "in either the Possession Proceedings in the Court's inherent jurisdiction or it can be done by way of the restitution claim in the Equity Proceedings." It was upon this statement in the Respondent's supplementary submissions that Ms Whittaker SC, who, together with Ms I King, appeared for the Appellant, rested much of her argument on appeal.
3. Peden J delivered judgment on 8 September 2022: Bell v Hartnett Lawyers (No 3) [2022] NSWSC 1204. Her Honour ordered that: "1. In the Possession Proceedings (2014/354291): a. The Court notes the Certificate of Costs Assessment dated 24 May 2016, quantifying costs for the purposes of Davies J's Order 5.2 up to 12 February 2018 is $37,345.50. b. Order that the money in the sum of $33,792.46 held in Court be released to Mr Bell forthwith. 2. In the Equity Proceedings (2020/254590): a. Order that the defendant pay to the plaintiff: i. the sum of $251,255.53; and ii. interest on that sum in Order (2)(a)(ii) in the amount of $50,489.98; and iii. interest on the sum of $33,792.46 in the amount of $9610.96. b. Order that the defendant pay Mr Bell's costs on an indemnity basis."
4. The Appellant did not go into evidence in the proceedings before Peden J.
5. Her Honour considered the inherent jurisdiction of the Court at PJ [99]-[114]. She noted that it was not disputed "that Gwendoline was entitled to retain only those "reasonable" costs which were incurred in the enforcement of the mortgage, including obtaining possession and the proceeds of the sale", referring to Elder's Trustee & Executor Co Ltd v Eagle Star Nominees Ltd (1986) 4 BPR 9205 at 9209 (McLelland J) and Micarone v Perpetual Trustees Australia Ltd (No 2) [1999] SASC 533 at [32]-[34].

Notice of Appeal

1. By Further Amended Notice of Appeal dated 7 March 2023, the Appellant contended that the primary judge erred in finding that the Court's jurisdiction (within the Court's inherent power) extended to ordering him to make any payment to the Respondent. Second, the Appellant contended that, even if there was jurisdiction, the primary judge erred in exercising her discretion to make the orders she did. It was also contended that the making of the orders involved a denial of procedural fairness. Third, the Appellant contended that if the discretion was not wrongly exercised, the quantum was incorrectly assessed, in essence because the primary judge should not have relied on the Wall Assessment to which the Appellant was not a party. Fourth, the Appellant contended that the primary judge erred in finding that the costs of the costs assessment did not fall within the indemnity in the registered mortgage, and that the primary judge ought to have allowed for future costs.

Grounds 1 and 2

1. These grounds can conveniently be considered together. The first ground of appeal was that. "The primary judge erred in holding that the supervisory jurisdiction within the inherent power of the Court extended to empowering the Court to order the appellant, as the interstate solicitor for the mortgagee, to pay to the mortgagor an amount which represented the difference between the undisputed amount paid by the mortgagee to the appellant and the amount of costs assessed between the mortgagee and mortgagor in separate proceedings (being Supreme Court Common Law proceedings 2014/354291 (the Possession Proceedings))." It was made plain in the course of argument that the Appellant did not place any reliance on the fact that he was an interstate solicitor. That concession was well made in light of this Court's decision in Council of New South Wales Bar Association v Siggins [2021] NSWCA 40 at [137]-[138]. This ground thus reduced to an argument that the inherent jurisdiction of the Court did not extend to support the orders made by the primary judge.
2. The second ground of appeal was that, if the supervisory jurisdiction extended to cover exorbitant charging by a solicitor, the primary judge erred in exercising that discretion on the basis that it was not necessary to do so in the interests of justice. This was said to be for reasons including: "a. The respondent did not make out any cause of action against the appellant in the proceedings below requiring the payment of any money to it. b. The respondent did not join the mortgagee to the proceedings below. c. The mortgagee directed the payment of the appellant's invoices. d. The respondent did not avail itself of the benefit of the non-associated third party payer provisions of s 335 of the Legal Profession Act 2007 (QLD). e. The costs assessed in the Possession Proceedings were not binding on the appellant. f. The costs assessed in the Possession Proceedings do not quantify the indemnity granted by the mortgagor to the mortgagee under clause 5 of registered memorandum Q860000 (the Indemnity). g. The primary judge's approach to the analysis of the appellant's charging did not accord with the principles underpinning a "broad brush" assessment such that the judgment does not reveal a sufficient basis for the exercise of the Court's supervisory jurisdiction. h. The parties had previously agreed that the matter could proceed by way of a third party payer costs assessment. i. A third party payer costs assessment remains available to the respondent. j. the respondent did not seek any relief in the Equity Proceeding based on the exercise of the Court's inherent jurisdiction to compel payment to him by the appellant and nor did the respondent open his case on that basis"

Consideration

1. Several statements of authority may be noted at the outset of the consideration in relation to the Court's inherent and supervisory jurisdiction: 1. The Court's inherent jurisdiction "can be exercised in any circumstances where the requirements of justice demand it and thus cannot be restricted to closed and defined categories of cases": McGuirk v University of New South Wales [2010] NSWCA 104 at [178] (McGuirk); Reid v Howard (1995) 184 CLR 1 at 16; [1995] HCA 40 (Reid); Tringali v Stewardson Stubbs & Collett Ltd (1966) 66 SR (NSW) 335 at 344; [1966] 1 NSWR 354 at 360-361; 2. "The juridical basis of [the inherent jurisdiction] is therefore the authority of the judiciary to uphold, to protect and to fulfil the judicial function of administering justice according to law in a regular, orderly and effective manner": IH Jacob, "The Inherent Jurisdiction of the Court" (1970) 23 Current Legal Problems 23 at 27-28, as cited in McGuirk at [185]; 3. "The inherent power of a court to control and supervise proceedings includes the power to take appropriate action to prevent injustice": Hamilton v Oades (1989) 166 CLR 486 at 502; [1989] HCA 21; 4. The inherent jurisdiction "is not confined to a situation in which there is no statute or rule of court that could possibly apply to what is to be done in that regard. The true rule is that a court may exercise its inherent or implied powers in a particular case, even in respect of matters that are regulated by a provision of a statute or rules of court, so long as it can do so without contravening any such provision": Landsal Pty Ltd (in liq) v REI Building Society (1993) 41 FCR 421 at 427; [1993] FCA 171 (Landsal) (with added emphasis), citing Taylor v Attorney-General [1975] 2 NZLR 675 at 680, 687-688 and 692-693; 5. The Court can do whatever "may be necessary to prevent any injustice occurring with respect to matters which come within its cognizance": Ex parte Farren; Re Austin (1960) 77 WN (NSW) 743 at 744, cited in Dwyer v National Companies & Securities Commission (1988) 15 NSWLR 285 at 287; 6. The inherent jurisdiction of the Court overlaps with, but is not displaced by, s 23 of the Supreme Court Act 1970 (NSW): McGuirk at [177]; 7. On the other hand, "the inherent power and the jurisdiction conferred by s 23 of the Supreme Court Act are to be exercised only as necessary for the administration of justice", and "the power is not at large": Reid at 16-17; 8. The inherent jurisdiction cannot authorise the making of orders excusing compliance with statutory obligations or preventing the exercise of authority deriving from statute: Reid at 16; Commonwealth Trading Bank of Australia v Inglis (1974) 131 CLR 311 at 318-319; [1974] HCA 17; Doyle v The Commonwealth (1985) 156 CLR 510 at 518; [1985] HCA 46; 9. The inherent jurisdiction does not extend to making orders simply because the Court believes it would be fair to do so: see, for instance, Moore & Anor v Assignment Courier Ltd [1977] 2 All ER 842 at 846; see also The Siskina [1979] AC 210 at 262; 10. The Court has an inherent or general jurisdiction to regulate the costs, charges and disbursements claimed by officers of the Court, and to prevent exorbitant demands: Woolf at 678; 11. The Court may exercise its inherent jurisdiction in relation to a solicitor's costs "in the way it might think fit": Storer & Co v Johnson (1890) 15 App Cas 203 at 206. 12. This well-established supervisory jurisdiction is designed to impose on solicitors higher standards than the law applies generally. The jurisdiction is disciplinary and compensatory. It is not exercised for the purposes of enforcing legal rights, but for the purpose of ensuring honourable conduct on the part of the Court's own officers. It is distinct from any legal rights or remedies of the parties, it is unaffected by anything which affects the strict legal rights of the parties, and it is not limited to technical principles: Atanaskovic First Instance at [29]-[30], approved in Atanaskovic at [127]; 13. Statutory provisions dealing with the issue of lawyers' costs are complementary to this inherent jurisdiction, and do not oust it: Woolf at 678; Pryles & Defteros (a firm) v Green [1999] 20 WAR 541; [1999] WASC 34 at [24] (Pryles); see also Re Jabe; Kennedy v Schwarcz [2021] VSC 106 at [46] (Re Jabe) and s 264 of the Legal Profession Uniform Law 2014 (NSW). The two jurisdictions are enlivened by different acts and must be analysed separately: Whyked Pty Limited v Yahoo!7 Pty Limited [2008] NSWSC 477 at [18]; 14. Further, "there is an overlap between the Court's general jurisdiction to review solicitors' remuneration and the doctrines of undue influence, unconscionable transaction and fiduciary conflict as they apply to solicitors and clients": Malouf v Constantinou [2017] NSWSC 923 at [136]; see also Kowalski at [25]; 15. More specifically, "there remains an inherent jurisdiction of the Court to make orders that a legal representative personally pay the opposing party's costs directly for unnecessary or wasted costs, that power arising out of the Court's supervisory jurisdiction with respect to legal practitioners admitted by the Court": NHB Enterprises Pty Ltd v Corry (No 5) [2020] NSWSC 1838 at [44], citing Re Felicity; FM v Secretary, Department of Family and Community Services (No 4) [2015] NSWCA 19 at [20]; 16. The purpose of the jurisdiction of the Court with respect to costs charged by its officers is "to secure that the solicitor, as an officer of the court, is remunerated properly, and no more, for work he does as a solicitor" (emphasis added): Electrical Trades Union at 734; see also Re Jabe at [44]; 17. The exercise of supervisory jurisdiction over officers of the Court is not governed by "strict legal rights and duties or matters of technicality." Rather, "in exercising supervisory jurisdiction, the Court does not engage in a final determination of legal rights but determines whether one of its officers should be held to ethical and honourable behaviour": Atanaskovic First Instance at [80]-[81]; 18. The jurisdiction to scrutinise the remuneration of officers of the Court is not limited to cases of exorbitant overcharging: Atanaskovic at [145]. Nor is it limited by any contractual arrangements made between the parties: Pryles at [24], which will engender "jealous" scrutiny by a Court: Clare v Joseph [1907] 2 KB 369 at 376; 19. The inherent jurisdiction extends to making orders for solicitors to repay an amount charged to their own client: see, e.g., Harrison at 538.

Ground 3

1. Ground 3 of the Further Amended Notice of Appeal involved a challenge to the quantification of the amount ordered to be paid to the Respondent. This challenge was made on the following bases: "a. The costs assessed in the Possession Proceedings were not binding on the appellant. b. The costs assessed in the Possession Proceedings do not quantify the Indemnity. c. The primary judge did not undertake any analysis of the appropriate quantification beyond accepting the costs assessed in the Possession Proceedings."
2. One can start with the third of these "particulars". It is not correct to contend that the primary judge simply accepted the Wall Assessment. Far from it. As set out at [106] above, the primary judge gave seven examples involving analysis of the reasonableness or appropriateness of significant components of the Appellant's charging practices. Although they are expressed in compressed form, it is evident that her Honour's consideration involved a good deal of scrutiny of the Appellant's underlying invoices. Moreover, not a word was advanced on appeal in writing or orally attacking this analysis or suggesting that it was wrong or misconceived. It may be added that her Honour's analysis did not but could have added as an eighth example the Appellant's charging of an "uplift fee" of $43,033.34 on 14 November 2016 in circumstances where such a fee could only have been charged pursuant to a conditional costs agreement which would have been required to be signed by Gwendoline: see [21] above. There was no evidence that Gwendoline had ever signed such an agreement, and the agreement in evidence was unsigned.
3. It ill-behoved the Appellant to attack the quantification in circumstances where it was within his power to seek to justify the charges to the primary judge but where he chose not to do so. In these circumstances the primary judge was left with the issues raised in her seven examples, which added up to significant sums; the original costs estimate of $3,900-$6,400; the absence of any written disclosure to Gwendoline of any substantial changes in the fee estimate, as required by s 315 of the LP Act (see [19] above); the absence of any evidentiary assistance from the Appellant and the costs assessment that had been conducted by Mr Wall.
4. It was not, contrary to the Appellant's argument, a question of the Appellant being bound by the Wall Assessment in circumstances where he was not a party to it (because he was not a party to the Possession Proceedings) but, rather, a judge making use of such material as she had in order to undertake a quantification exercise in circumstances where the one party with peculiar and personal knowledge, and the ability, to explain the charges declined to take the few short steps to the witness box in order to do so. It is trite that such a circumstance provides a ready basis for the drawing of a negative inference against that party: Cullen v Welsbach Light Co of Australasia Ltd (1907) 4 CLR 990 at 1002; [1907] HCA 3; Ellor v Selfridge and Co (1930) 46 TLR 236. As Rich J put it in Insurance Commissioner v Joyce (1948) 77 CLR 39 at 49; [1948] HCA 17: "[W]hen circumstances are proved indicating a conclusion and the only party who can give direct evidence of the matter prefers the well of the court to the witness box a court is entitled to be bold." Or, as Lord Diplock said of a defendant who called no evidence in British Railways Board v Herrington [1972] AC 877 at 930: "This is a legitimate tactical move under our adversarial system of litigation. But a defendant who adopts it cannot complain if a court draws from the facts which have been disclosed all reasonable inferences as to what are the facts which the defendant has chosen to withhold."

Ground 4

1. Ground 4 of the Further Amended Notice of Appeal was that the primary judge erred in finding that: "a. the mortgagee's costs of the costs assessment in the Possession Proceedings did not fall within the Indemnity (J[119]); and b. the mortgagee was not entitled [to] recoup her costs incurred after the date of the costs order in the Possession Proceedings by virtue of the Indemnity (J[120])."
2. The primary judge's reasoning in respect of this aspect of the proceedings at first instance was as follows (at [116]-[120]): "Mr Hartnett's counsel submitted that Gwendoline's rights under Davies J's order and the mortgage continue to operate into the future and that the mortgage clause required the mortgagor to "indemnify the mortgagees in respect of any expenditure they may incur in their capacity as mortgagees and in relation to the secured debt": Halsted v Official Trustee in Bankruptcy (No 2) [2012] FCA 66 at [16] (Logan J). However, even that would not extend to "unjustifiable or vexatiously incurred costs": Re Solicitor's Bill of Costs; Re Shanahan (1941) 58 WN (NSW) 132 at 136 (Street J). I was referred by Mr Hartnett's counsel to Australia and New Zealand Banking Group Ltd v Mishra [2012] NSWSC 1333 for the proposition that a mortgagee is entitled to require security for potential future costs of defending a threatened claim against it and where the mortgagor had not provided a release of future claims against the bank. In that case Davies J quoted from Overton Investments Pty Ltd v Cuzeno RVM Pty Ltd [2003] NSWCA 27 at [63] where Hodgson JA (with whom Handley and Stein JJA agreed) stated: Where a dispute has arisen or is reasonably anticipated, a mortgagee is entitled to require not merely payment of the amount secured by the mortgage but also payment or security for the probable costs of any contest … If the mortgagee does not specify a payout figure which bears some reasonable relationship to the amount truly owing and anticipated costs, then this may amount to unreasonable conduct or misconduct which disentitles the mortgagee to costs subsequently incurred in determining the rights of the parties…Furthermore, where the mortgagee does not require payment or security for the probabl[e] costs of any contest, and a question later arises as to whether the mortgagor's tender was sufficient to entitle the mortgagor to redemption, the mortgagee cannot then claim that the tender was insufficient because it did not include provision for those costs: I know of no direct authority for that proposition, but in my opinion it follows from the principles I have discussed. What was necessary was for the mortgagee to stipulate the requirement for an additional payment to what was otherwise needed to redeem the mortgage. Here, there was no redemption of the mortgage; instead, Gwendoline exercised her mortgagee's power of sale. Nevertheless, it can be accepted that it remains open to the mortgagee to seek payment of "whatever is necessary to protect and preserve the mortgagee's rights when their validity is challenged or their exercise is sought to be prevented or impeded": Liberty Funding Pty Ltd v Steele-Smith [2004] NSWSC 1100 at [21] (Palmer J). However, I was not taken to any evidence that Mr Bell was seeking to challenge the exercise of Gwendoline's rights as mortgagee after the Possession Proceedings. I do not consider an application for a costs assessment under the LPA amounted to an attempt to "prevent or impede" the exercise of the mortgagee's rights. I note that in Parramatta River Lodge Pty Ltd v Sunman (1991) 5 BPR 12,038 at 12,048, Young J did not consider that a mortgagor was liable under the same mortgage clause to pay for the costs of preparation of the mortgagee's bill of costs suitable for taxation. I do not consider that Gwendoline had any entitlement to retain sums for likely future costs, where no such order had been sought from Davies J (as was sought in Mishra). I therefore make no allowance for possible future costs in the assessment of quantum here."

Notice of Contention

1. By notice of contention, the Respondent contends that the primary judge erred in finding that the Appellant's retention of legal fees greater than those to which he was entitled "did not fall within the accepted category of unjust factors, namely that the appellant's retention of the benefit was illegal as he had no contractual or statutory right to retain that benefit."
2. It is not necessary to address this ground which was only faintly pressed by Mr Sykes in any event.

Conclusion

1. For all of the foregoing reasons, the appeal should be dismissed with costs.
2. ADAMSON JA: I have had the benefit of reading the reasons of the Chief Justice in draft. I agree with his Honour's reasons and the orders proposed. I wish to add the following reasons of my own.
3. The further amended notice of appeal filed on 7 March 2023 seeks the following orders: 1 Appeal allowed. 2 Set aside orders 1(b) of the orders made on 8 September 2022 in the Possession Proceedings and in lieu thereof make the following orders: a. The respondent have leave under s355(6) of the LPA QLD to file an application for a non-associated third party payer assessment of the costs of the mortgagee as below and determine the payment out of Court at the conclusion of that assessment under part 3.4, division 7 of the Legal Profession Act 2007 (QLD). 3 Set aside orders 2 and 3 of the orders made on 8 September 2022 and in lieu thereof make the following orders: a. Proceedings dismissed b. Order that the respondent pay the appellant's costs of the proceedings below. 3A The appellant was denied procedural fairness below in that orders were made in the inherent jurisdiction of the Court in the Equity Proceedings in circumstances where those orders had not been sought in the Equity Proceedings and the case had not been conducted either by way of written submissions or orally upon that basis. 4 The respondent to pay the appellant's costs of the appeal.
4. Ground 3A was added in the course of the hearing of the appeal. Because ground 3A, if made out, will require the appeal to be allowed and render the consideration of all other grounds moot, I propose to address ground 3A first.

Alleged denial of procedural fairness

1. In the present case, as the Chief Justice has explained, there were two proceedings, which were heard together: 1. proceedings 2014/354291 (the Possession Proceedings) between Gwendoline Bell, the mortgagee of the property, and Anthony Robert Bell, the mortgagor (as executor and beneficiary of the estate of his mother Mabel Deakin-Bell) of the property; and 2. proceedings 2020/254590 (the Equity Proceedings) brought by Anthony Robert Bell against Mr Hartnett for a declaration that Mr Hartnett held the net proceeds of sale (of $287,551) on trust for Mr Bell on the basis that it was money had and received by him for Mr Bell's benefit.
2. The starting point is that, with certain exceptions, a person can only be affected by an order made in proceedings to which that person is a party: John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd; Walker Corporation Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [129] and [131] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ); News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410; [1996] FCA 870 (News Ltd) at 524-525 (Lockhart, Von Doussa and Sackville JJ). Exceptions include a situation where a solicitor acting for a party is bound by findings of fact made in the proceedings for the purposes of an application that the solicitor be liable for the party's costs personally: see Sch 2 of the Legal Profession Uniform Law Application Act 2014 (NSW), cl 6.1. However, absent statutory exceptions, the common law principle is basic to the requirement of procedural fairness: Pegang Mining Company Limited v Choong Sam [1969] 2 MLJ 52 at 55-56 (Diplock LJ), cited with approval in News Ltd at 524; see also State of Victoria v Sutton (1998) 195 CLR 291; [1998] HCA 56 at [76]-[81] (McHugh J).
3. As referred to in the Chief Justice's detailed recitation of the procedural history of the two proceedings, an order was made by Slattery J on 16 December 2021 that the points of claim, points of defence and points of reply were to be taken as the pleadings in both the Equity and Possession Proceedings. While I understood it to have been accepted in this Court that this order neither had the effect of making Mr Hartnett a party to the Possession Proceedings nor of making Gwendoline Bell a party to the Equity Proceedings, the effect of the points of claim filed on 17 November 2021 was to claim the following relief against Mr Hartnett in the Equity Proceedings: "1 Order that the Supreme Court of New South Wales' inherent, supervisory jurisdiction (the Supervisory Jurisdiction) is exercisable against Beau Timothy John Hartnett (Hartnett) in respect of legal services he provided in New South Wales Supreme Court proceedings number 2014/354291 (the Possession Proceedings). 2 Order that the Supervisory Jurisdiction be exercised to reduce Hartnett's fees for acting in the Possession Proceedings on the basis that they were unreasonable and/or improper and/or not related to the mortgage the subject of the Possession Proceedings."

Whether the inherent jurisdiction was available

1. Ms Whittaker SC, who appeared with Ms King on behalf of Mr Hartnett, argued that the inherent jurisdiction could not be exercised in circumstances where conventional avenues were available to Mr Bell (each of which was said to have been sufficient to protect his interests and achieve the desired result of fixing the amount that could be deducted from the proceeds of sale). These avenues included the following: 1. an action against the mortgagee for account (to which Mr Hartnett could have been joined); or 2. a non-associated third party payer costs assessment of the costs for which the mortgagor was liable to the mortgagee, which would bind Mr Hartnett, as Gwendoline Bell's solicitor.
2. The utility of the proceedings described in (1) above was explained by Parker J in Commonwealth Bank of Australia v Pascoe and Scott as trustees of the estate of Usha Wati Charan [2018] NSWSC 1332 at [40]: "… As mortgagors, Mr and Mrs Charan were entitled to bring proceedings for an account from the Bank as a mortgagee which had exercised its power of sale: J D Heydon and M J Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (LexisNexis Butterworths, 5th ed, 2015) 924 [26-140]. Such proceedings for an account would have been appropriately joined to the Bank's interpleader claim with respect to the monies paid into Court. For the purposes of the account the Bank would have been required to put forward a formal statement specifying the amount calculated to be due, and the components of that calculation. On behalf of the borrowers, any alleged overcharges by the Bank ("falsifications") or further credits which should allegedly have been given ("surcharges") would have been identified and the Bank could have been required to produce appropriate evidence ("vouching") in support of any challenged item. Contrary to the suggestion by counsel for Mr Charan's trustee, this process would not necessarily have been cumbersome or protracted; the Court has ample powers under Uniform Civil Procedure Rules 2005 (NSW) Pt 46 to ensure that the process is carried out efficiently. The end result would have been a net figure determined by the Court which would have been final and binding on all parties." [Emphasis added.]
3. The utility of the avenue in (2) above (the non-associated third party costs assessment) was common ground. The parties made a joint submission to the Court below (Slattery J) that an order be made referring the matter for third-party costs assessment, which was rejected on the basis that it "may only generate further disputation between these parties" and would not be the "preferable course": Bell v Hartnett Lawyers (No 2) [2021] NSWSC 1270 at [65]-[78]. The primary judge (Peden J) noted that Slattery J "also did not accept the parties' joint submission that the appropriate way forward was for the costs to be subject to a third-party payer costs assessment": Bell v Hartnett Lawyers (No 3) [2022] NSWSC 1204 at [96]. As it happens, this is the very order which Mr Hartnett has proposed to this Court as a solution to the impasse between the parties and one in respect of which he has given undertakings (see below).

Amendments 10 April 2024 - Revision made to 168 and (2), the word "Anthony" was inserted before "Robert Bell" in each subparagraph.

Revision made to [175], first sentence in parentheses, the word "were" is replaced with "was" so it now reads "(each of which was said ...)" 24 April 2024 - The following revisions have been made:

• at [13], in the quote at 4.4(a), "Aspley Street" changed to "[Apsley] Street". • at [14], in the quote at 6.3 the full stop after "may vary" changed to a comma. • at [30], in the quote at 5.3 "for the period September 2013" changed to "for the period 6 September 2013". • at [85], in the quote at [33], "in this situation and what the appropriate legal standard that the Court uses" changed to "in this situation and … the appropriate legal standard that the Court uses." • at [88], in the quote, "[or]" inserted between "is/are enlivened on" and "before 4.00pm". • at [89], in the quote at 1A, the second "pursuant to" was removed and replaced with "…". • at [91], in the quote at 4b, the space was removed at "$2, 105" so that it reads "$2,105". • at [102], the citation "[1964] 2 WLR 1041" was changed to "[1964] Ch 720". This was replicated on the coversheet also. • at [120], in the quote, "a" between "case of" and "solicitor" was removed. • at [123(1)], "at 360-361" was added after "[1966] 1 NSWR 354" and the citations were swapped in order. • at 123], "[1993] FCA 121" was changed to "[1993] FCA 171". • at [123(15)], "[2015] NSWCA 19 at [15]" was changed to "[2015] NSWCA 19 at [20]". • at [123(160)], "at 1050" was changed to "at 734". • at [127], "Landsal at 476" was changed to "Landsal at 427". • at [145(5)], "see [93]" was changed to "see [92]". • at [152], "Gwendoline or any substantial" was changed to "Gwendoline of any substantial". • at [159], in the quote at b, "not entitled recoup her costs" was changed to read "not entitled [to] recoup her costs". • at [160], in the quote at [117], "payment or security for the probably costs" was changed to read "payment or security for the probabl[e] costs".

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