HER HONOUR: Before the Court is an application for leave to appeal against the decision of a Magistrate of the Local Court refusing an application for a review of the order of a Registrar of the Court requiring a party to comply with a notice to produce.
The application invokes s 40 of the Local Court Act 2007 (NSW). In accordance with s 40(2)(a) of the Act, leave is required to bring the appeal, since the application relates to an interlocutory judgment or order. The application relates to the whole of the judgment of the Magistrate, which included an order for costs. In respect of that aspect of the Magistrate's decision, leave is also required in accordance with s 40(2)(c) of the Act.
The proceedings were commenced by summons seeking leave to appeal, filed on 13 November 2014. The orders made by the Magistrate included a self-executing order that, if the relevant party failed to comply with the Notice to Produce, the defence was struck out and default judgment could be entered.
A Notice of Motion was filed on the same day seeking a stay of the Magistrate's decision. That stay was subsequently extended up to and including today. In those circumstances the application has come before me as Duty Judge on an urgent basis.
The circumstances in which the application arises are as follows. In the proceedings in the Local Court, a barrister, Mr Philip Bates sues a solicitor, Ms Maria Bechara (trading as Bechara and Company) for allegedly outstanding fees issued by the barrister in his capacity as a barrister acting on her instructions in three separate matters. The amount claimed in Mr Bates' statement of claim is $83,178.12. He asserts that interest continues to accrue on that outstanding amount.
By her defence filed 26 June 2014, Ms Bechara denies that she is liable to Mr Bates for the money claimed by him in the relief sought. She admits that she requested him to carry out work but denies that he is entitled to the relief claimed. Paragraph 4 of the defence states, "Further in answer to the matters pleaded in the statement of claim", and there follows a series of contentions which amount in effect to an assertion that Mr Bates agreed to act on a contingency basis and that it was agreed that he would not be paid until Ms Bechara herself was paid by the relevant clients.
Bechara v Bates [2014] NSWSC 1935 | Case summary | Zoe
The Magistrate appears to have understood the defence to mean that it is not disputed that money is owed but that what is disputed is when it will be payable. I am not entirely sure that that is what was intended. It seems to me to amount possibly to a contention that no debt is owed unless money is received from the relevant clients.
Mr Bates filed a reply in which, amongst other things, he asserted that the defendant has previously admitted in writing that she owes him each of the debts claimed and that she is estopped from denying each of those debts. The particulars in support of that contention allege that Ms Bechara has prepared, lodged and sworn one or more verified proofs of debt and has served sworn evidence in the District Court admitting her debt to Mr Bates. The particulars further allege that Ms Bechara obtained judgment in her favour in the District Court for an amount including the amount of Mr Bates' unpaid fees.
In the circumstances, Mr Bates has pleaded that it is unconscionable for her as an officer of the Supreme Court of New South Wales, namely, an admitted solicitor with a current practising certificate, to deny her debts to the plaintiff. After the pleadings closed on 6 August 2014, at a call over before the Registrar, orders were made including an order granting leave to Mr Bates to issue and serve a notice to produce. On their face, those orders were made by consent.
On 15 August 2014, Mr Bates issued a Notice to Produce which, in summary, seeks production of the documents referred to in the pleadings, that is, documents in which he alleges in the pleadings Ms Bechara has admitted the existence of a debt to him. Ms Bechara was, in accordance with the orders of the Registrar made by consent on 6 August 2014, required to produce the documents on or before 10 September 2014. She did not. The proceedings came before the Registrar again on 24 September 2014. The order made on that occasion, which is the order the subject of the application for review, was:
"The defendant is to comply with the notice to produce dated and served on 15 August 2014 by the enlarged time of 4pm on Monday 29 September 2014".
Ms Bechara did not produce the documents within the extended timetable. She was also on that occasion ordered to pay Mr Bates' costs in the sum of $440 within seven days and that also did not occur.
The orders made that date bore an annotation, I think in the handwriting of Mr Bates: "These are case management orders. Any further non-compliance likely to enliven UCPR 12.7". As foreshadowed by that annotation, on 2 October 2014 Mr Bates filed a Notice of Motion seeking default judgment on the grounds of Ms Bechara's failure to comply with, by then, two orders as to compliance with the notice to produce. Ms Bechara responded to that Notice of Motion by serving a Notice of Motion seeking review of the orders of the Registrar made on 24 September 2014. As already noted, the order made that date simply extended the time for compliance with an earlier order entered by consent.
Both motions came before a Magistrate on 6 November 2014. His Honour dismissed Ms Bechara's application for review of the Registrar's decision and, in that circumstance, enetered the self-executing order to which I have referred.
The summons seeking leave to appeal identifies five grounds of appeal as follows:
Failing to have any or any proper regard to the Rules of the Court and the Practice Note;
Failing to afford the plaintiff procedural fairness in proceeding to determine the motion in the absence of evidence from the defendant;
Making orders outside it's [sic] jurisdiction and are ultra vires because it abrogated from the Rules and the Practice Note, which require the party issuing the Notice to Produce to file evidence; there being no evidence before the Court below to establish a departure from the Rules and the Practice Note; in particular Rule 21 [sic] which makes mandatory that the moving party MUST file an affidavit setting out the reasons when the application is made prior to close of evidence;
Failing to apply the Rules of Court and the Practice Note;
Proceeding to determine the matter and make orders in the absence of the required evidence from the defendant.
I have determined that leave to appeal to argue those grounds should be refused, principally on the basis that the appeal enjoys no prospect of success. These are my reasons for reaching that conclusion.
The first ground alleges failure on the part of the Magistrate to have any or any proper regard to the rules of the Court and the Practice Note (LC Civ 1). That is a reference to, in particular, the statement in the Practice Note that the Court will not order disclosure in certain circumstances, as follows:
28. Applications for disclosure of documents
The Court will not make an order for disclosure of documents (disclosure) [e.g. discovery or where there is an assertion that there has been inadequate compliance with a subpoena or a notice to produce] until the parties have served their evidence, unless there are exceptional circumstances necessitating disclosure.
No order for disclosure will be made unless it is necessary for the resolution of the real issues in dispute in the proceedings.
Unless the court otherwise orders, a notice of motion seeking an order for disclosure must be filed and served no later than 14 days after the evidence has been served.
Any application for an order for disclosure, consensual or otherwise, must be supported by an affidavit setting out:
• The reason why disclosure is necessary for the resolution of the real issues in dispute in the proceedings
• The classes of documents in respect of which of which disclosure is sought
• The likely cost of such disclosure.
The court may impose a limit on the amount of recoverable costs in respect of disclosure.
As the argument was developed in the application before me today, three principal issues are taken with the Magistrate's attention to the Practice Note. The first is the question whether there were exceptional circumstances. The second is the fact that the Practice Note contemplates the filing of an affidavit supporting the application for disclosure, even if the order is sought by consent. The third is the fact that the application for disclosure was made before the parties had served their evidence in the proceedings.
The Magistrate noted that the parties had not served their evidence and that the other requirements of paragraph 28 of the Practice Note had not, on the face of it, been satisfied at the time the Registrar made the orders to which I have referred. His Honour said:
"The Practice Notes is not immutable and is subject to the Civil Procedure Act and the Uniform Civil Procedure Rules".
Given the matters referred to in the plaintiff's reply, in my opinion, it was open to the Registrar, if the matter had not been by consent, to consider that the circumstances of the case were exceptional in the sense of not commonly arising in the ordinary course of litigation that comes before the Local Court.
His Honour explained that he had reached that conclusion by reference to the allegation made by Mr Bates that, in proceedings in the District Court and in documents filed with two Trustees in Bankruptcy concerning the proof in those bankrupt estates of the debt claimed by Mr Bates, admissions had been made in relation to the debt which he seeks to recover from Ms Bechara. His Honour continued:
"A mere statement of those facts, in my opinion, establishes that is not a matter that is commonly seen in the course of civil litigation that comes before this Court. I am also satisfied that the notice to produce which has been served in the main complies with the Uniform Civil Procedure Rules 21.10 as it seeks the documentation referred to in the plaintiff's reply and the making of admissions is a matter that clearly goes to a fact in issue in the proceedings."
As had already been observed by the Magistrate when he made those remarks, his review of the Registrar's decision was governed by r 49.19 of the Uniform Civil Procedure Rules 2005 (NSW). His Honour further noted that that rule had been dealt with in the decision of the Court of Appeal in Tomko v Palasty (No 2) [2007] NSWCA 369. In that case, Basten J said at [52] and [53]:
It follows that the proper approach to an application in relation to a decision of the Registrar is as follows:
(1) the application should be treated as a "review", pursuant to s 121(3) of the Supreme Court Act and UCPR r 49.19;
(2) a review, unlike an appeal, does not require demonstration of error, nor is it restricted to a reconsideration of the material before the primary decision-maker;
(3) authorities with respect to the conduct of appeals against the exercise of discretionary powers, such as House v The King, do not in terms apply to a review;
(4) nevertheless, similar policy considerations may arise in relation to a review, including:
(a) a court may be less inclined to intervene in relation to a decision concerned with the management of an on-going proceeding, as opposed to one which terminates the proceeding or prevents its commencement;
(b) different factors may need to be addressed in relation to breach of time limits in relation to the commencement of proceedings, as compared with breach of time limits for steps to be taken in the course of proceedings properly commenced, and
(c) a court may be more inclined to intervene on a review based on fresh evidence, changed circumstances or where error is demonstrated in the decision under review.
Although on review this Court should exercise afresh the power to extend time, it does not follow that the reasoning of the Registrar should be ignored, or that variations in the material presented to him and the evidence adduced in this Court are irrelevant. However because the matter now before this Court must be treated as an original application for an extension of time within which to appeal, arguably those matters should be entirely put to one side. As a result of the reluctance of Mr Palasty to embrace an application in this form, little attention was paid to these issues. The preferable course is to put them to one side and treat the matter as an application for leave to appeal out of time.
As submitted by Mr Bates, it is tolerably clear that, in expressing his reasons for decision, the Magistrate followed the template offered by those remarks for determining an application for review under r 49.9(10). At page 17 of the transcript His Honour recited, in terms, a number of the considerations recited by Basten JA.
In my view, the Magistrate's conclusion that it was open to the Registrar to regard the circumstances as falling within the exception in the Practice Note was clearly open to the Magistrate. It was submitted in the application before me that the facts recited in the part of the judgment where his Honour said that did not provide an adequate reason for determining that a notice to produce could properly be issued in accordance with the Practice Notes.
As I understood the submission it was that the Magistrate could not reach the conclusion that the circumstances recited amounted to exceptional circumstances without having evidence before him as contemplated by the Practice Note in the form of an affidavit filed by the moving party.
I do not think there is any force in that submission. The circumstances recited were to be understood, in my view, as comprehending implicitly the facts recited earlier by the Magistrate - that Ms Bechara is an officer of the Court, being an admitted solicitor holding a practice certificate.
The circumstances of her - according to Mr Bates' allegation at least - denying the existence of a debt she had admitted (in circumstances in which a solicitor would readily be understood to be under an obligation to be honest and frank) were, in my view, capable of being regarded as exceptional circumstances within the meaning of the Practice Note. It may be accepted that neither the Registrar nor the Magistrate had before him an affidavit of the kind contemplated by the Practice Note. However, as the passage I have recited from the Magistrate's decision correctly states, the Practice Note is not immutable: Ada Evans Chambers Pty Ltd v Santisi [2014] NSWSC 538 at [19]. For those reasons, the contention that the Magistrate failed to have any proper regard to the rules of court and the Practice Note is, in my view, manifestly unarguable.
The second ground alleges that the Magistrate fails to afford the plaintiff procedural fairness in proceedings to determine the motion in the absence of evidence from the defendant. As the proposition was expanded in submissions before me today, the reference to an absence of evidence is a reference to the absence of an affidavit of the kind contemplated in the Practice Note. There is no suggestion that the Magistrate otherwise failed to afford Ms Bechara procedural fairness in any respect or in the sense in which that term is ordinarily understood. I was not taken to any aspect of the transcript where it was suggested that the Magistrate refused to allow any opportunity to put evidence on. It is simply said, I think, to follow from the failure to provide an affidavit in accordance with the Practice Note that procedural fairness was denied. In my view, that contention is manifestly unarguable.
The third ground of appeal asserts jurisdictional error. In short, it is asserted, as I understood the submission, that the Local Court lacks power to allow a party to issue a Notice to Produce if an affidavit of the kind contemplated by the Practice Note is not filed to support the application. For the reasons explained by Adamson J in the decision of Ada Evans Chambers P/L v Santisi [2014] NSWSC 538 to which I have referred, that ground must be rejected.
Her Honour said at [19] of the judgment:
The first two grounds of appeal rest, in my view, on a false premise. A Practice Note applies, but only subject to the orders of the Court. It does not have a higher status than the Civil Procedure Act or the Uniform Civil Procedure Rules. It provides for a procedure to be followed in circumstances where a party wants to obtain protection in advance from maximum costs orders. It is not, however, capable of fettering the Magistrate's discretion on costs, which is required to be exercised following judgment on the principal claim and derives from s 98 of the Civil Procedure Act. That Mr Santisi did not follow the procedure in the Practice Note to obtain an exception from the maximum costs order was a matter that could be taken into account by the Magistrate, but not one that could bind him.
To describe the requirement of a Practice Note imposed upon a party as a matter going to the power of the Court that issued the Practice Note, in my view, misconceives the role of a Practice Note. Ground (c) is, in my view, manifestly unarguable.
Ground (d) alleges failure to apply the rules of Court and the Practice Note. For the reasons stated in respect of ground (a), in my view that ground is manifestly unarguable.
Ground (e) repeats, in substance, the assertion of ground (b) and perhaps ground (c) that the Magistrate erred in proceedings to determine the matter and make orders in the absence of the required evidence from the defendant. There are a number of difficulties with that contention, each of which in some respects repeats the determination of the earlier grounds. First, the affidavit was not an indispensable requirement. In my view, that is acknowledged in the decision in Ada Evans Chambers. Secondly, although the Practice Note on its face required the serving of an affidavit, the matters establishing Mr Bates' entitlement to issue the Notices to Produce were not really the kinds of matters amenable to proof on affidavit.
I suppose Mr Bates could have been required to depose to his reasons for seeking the Notice to Produce, but the occasion for that to occur was overtaken, I think, when the Magistrate was asked to review the Registrar's decision and Mr Bates was called upon to explain the relevance of the Notice to Produce.
Further, in my view, it was well open both to the Registrar and the Magistrate to conclude that exceptional circumstances were established by the position apparently taken by the solicitor in resisting the claim in debt. It may be that the documents sought in the Notice to Produce establish no such thing. It may be that her defence is to be understood as saying not that she does not owe Mr Bates money in any circumstances but that her liability to pay him does not arise until she receives or recovers the amount in question from the relevant clients. But that is beside the point. The test for issuing a Notice to Produce the documents referred to in the reply, in my view, was open to be regarded as being met. For those reasons, I consider that leave to appeal should be refused.
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Decision last updated: 10 March 2015