Boensch v Somerville Legal Pty Ltd

Court of Appeal (NSW)|2019-09-02|Before: Macfarlan JA, Meagher JA, MacFarlan JA

Solicitors: Bingham Law (Applicant) Somerville Legal Pty Ltd (First Respondent) Crown Solicitors Office (Second Respondent) File Number(s): 2019/234753 Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Citation: Unreported Date of Decision: 10 July 2019 Before: Balla ADCJ File Number(s): 2017/40506

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Statutory Framework

Section 322 of the Legal Profession Act 2004 (NSW) (the 2004 Act), which was in force at the relevant times, provided that a costs agreement may be made between a client and a law practice retained by the client. A costs agreement must be in writing or evidenced in writing. Under s 326 of the 2004 Act, a costs agreement may be enforced in the same way as any other contract. [2]
Section 350 of the 2004 Act relevantly provided that a client may apply for an assessment of the whole or any part of legal costs. An application for costs assessment may be made even if the legal costs had been wholly or partly paid. Under s 361, a costs assessor was required to assess the amount of any disputed costs that are subject to a costs agreement by reference to the provisions of the costs agreement. Section 384 provided that a party to an application for costs assessment who was dissatisfied with a decision of a costs assessor as to a matter of law arising out of the proceedings to determine the application could appeal to the District Court against the decision. Unless it affirms the costs assessor's decision, the District Court could make such determination as, in its opinion, should have been made by the costs assessor or may remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application.
Clause 12.7 of the Uniform Civil Procedure Rules 2005 (UCPR) relevantly provides that, if a plaintiff does not prosecute proceedings with due despatch, the court may order that the proceedings be dismissed or make such other order as the court thinks fit. UCPR 36.16(3) relevantly provides that the court may set aside or vary any judgment or order except so far as it:

determines any claim for relief, or determines any question, whether of fact or law or both, arising on any claim for relief; or
dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. That power is in addition to the powers conferred on the court to set aside or vary a judgment or order if a notice of motion to that effect is filed before the entry of judgment or order, or within 14 days thereafter. Further, the court has power to set aside or vary a judgment or order after it has been entered if it is a default judgment, if it has been given or made in the absence of a party or in some other circumstances, is given or made in the absence of a person whom the court has ordered to be added as a defendant. None of those powers is invoked in the present case.

UCPR 42.7 relevantly provides that, unless the court orders otherwise, the costs of any application or other step in any proceedings are to be paid and otherwise dealt with in the same way as the general costs of the proceedings and, unless the court orders otherwise, such costs do not become payable until the conclusion of the proceedings. The relevance of that provision will become apparent later.
Finally, s 69 of the Supreme Court Act 1970 (NSW) (Supreme Court Act) relevantly provides that, where the Supreme Court formerly had jurisdiction to grant any relief or remedy by way of writ of prohibition, mandamus, certiorari or of any other description, the Court is to continue to have such jurisdiction to grant that relief or remedy but is not to issue any such writ and must grant the relief or remedy by way of judgment or order under the Supreme Court Act.

Proceedings in the District Court

In the Client's summons commencing an appeal of 8 February 2017, the Client asserted that the decision of the costs assessor should be set aside on the following grounds:

denial of procedural fairness;
misapprehension of the facts and law, which amounted to jurisdictional error; and
failing to take relevant considerations into account and taking irrelevant considerations into account.

On 31 March 2017, Somerville filed a statement of claim in the Equity Division of the Supreme Court seeking judgment in the sum of $99,336.61 for unpaid costs. The Client filed a defence to the statement of claim on 5 May 2017 and filed a cross-claim against Somerville on 9 May 2017. In the cross-claim, the Client complained about the conduct of Somerville in relation to the costs agreement and the provision of legal services by Somerville. Somerville contended that the cross-claim could not proceed because the same fact circumstances have already been determined by the costs review and were presently the subject of the appeal to the District Court. On 30 June 2017, the District Court, in response to an application for a stay by the Client, ordered that the proceedings be adjourned until the determination of the Supreme Court proceedings.
On 30 October 2017, Somerville filed an amended statement of claim. On 8 December 2017, an order was made extending the time for the Client to file and serve a defence to the amended statement of claim to 30 January 2018. No defence was filed by that time. On 9 February 2018, the Supreme Court made orders extending the time for the Client to file and serve a defence. On 13 March 2019, the Supreme Court set aside a deed of mortgage between Somerville and the Client and the proceedings were concluded.
On 12 February 2018, Somerville applied in the District Court to vacate the orders made on 30 June 2017. That application was heard on 30 April 2018 and 11 May 2018, when judgment was reserved. On 14 May 2018, the District Court vacated the orders made on 30 June 2017 and directed the Client to file and serve any further material to be relied upon in support of his summons no later than 8 June 2018. The Client did not file and serve any further material.
The appeal summons was listed for hearing on 22 June 2018. However, on 20 June 2018, that fixture was vacated and the appeal was listed for directions on 23 July 2018. That hearing was vacated and the appeal summons was listed again for mention on 27 July 2018. The Client was ordered to pay Somerville's costs in the sum of $720. On 27 July 2018, the District Court listed the appeal summons for further mention on 7 August 2018 and ordered the Client to pay Somerville's costs of that day in the sum of $720. On 7 August 2018, the District Court made orders requiring the Client either to appoint a tutor to conduct the proceedings on his behalf or show cause why the proceedings should not be struck out. The Client was ordered to pay Somerville's costs of that day of $720. The Client has not paid any of the costs orders referred to above and has not appointed a tutor.
On 15 October 2018, the District Court made orders requiring the Client to file and serve any evidence on which he intended to rely by 7 December 2018 and directed that the hearing of the proceedings was not to be further vacated except upon exceptional circumstances being established. The Client did not file and serve any affidavit evidence by 7 December 2018.
The Client's appeal summons was listed for mention before the District Court on 14 December 2018. On that occasion, Wilson DCJ made the orders that the appeal summons be struck out, that the Client pay Somerville's costs of the proceedings and that the proceedings be removed from the hearing list. Mr Edmund Quinlan, a solicitor employed by Somerville, appeared at the hearing before Wilson DCJ on 14 December 2018 and informed his Honour that, as the Client had not filed any evidence, Somerville had relisted the matter by email of 10 December 2018 for the matter "to be struck out pursuant to [UCPR] 12.7". In response to a question from Wilson DCJ, Mr Quinlan indicated that no notice of motion had been filed. In response to Wilson DCJ pointing out that the Client had done nothing about putting on evidence in relation to the appeal summons, the Client said he understood and agreed that he had not put on anything. The Client denied that he had ignored the order made on 15 October 2018 but said that he was not able to comply. Mr Quinlan made it clear to his Honour that he relied on UCPR 12.7.
On 8 March 2017, the Local Court had stayed the enforcement of the judgments entered against the Client in relation to the costs determination. On 18 December 2018, the Client filed an application in the Local Court seeking an extension of the stay. On 10 January 2019, the Local Court dismissed that application.
Subsequently, a bankruptcy notice, issued on 7 February 2019 requiring payment of the judgments in the Local Court, was served on the Client. On 4 March 2019, the Client applied in the Federal Circuit Court of Australia to have the bankruptcy notice set aside. The Federal Circuit Court dismissed that application on 4 April 2019 on the ground that the application was not brought in time. As a consequence, the Client committed an act of bankruptcy on 1 March 2019.
On 5 April 2019, Somerville filed a creditor's petition in the Federal Circuit Court. On 11 April 2019, the Client applied for a stay of proceedings pending an appeal from the order made dismissing his application to set aside the bankruptcy notice. On 12 April 2019, that application was dismissed by the Federal Court. No application seeking leave to appeal or notice of appeal in respect of the decision of the Federal Circuit Court of 4 April 2019 has been filed.
On 24 April 2019, Somerville served a bill of costs on the Client in respect of the orders made by Wilson DCJ on 14 December 2018, claiming costs in the sum of $37,060.44 plus costs of $2,560. Those costs have not been paid by the Client and the Client has made no offer to provide security for Somerville's costs in the District Court.
By his notice of motion of 20 March 2019 in the District Court, the Client sought leave to file an amended appeal summons under s 89 of the Legal Profession Uniform Application Act 2014 (NSW) in the form attached to an affidavit sworn by the Client's solicitor on 17 March 2019. The proposed amended summons specified grounds as follows: 1. the Review Panel erred in law by failing to make any findings or adequate findings regarding the terms of the Client's costs agreement with Somerville and by failing to reverse the findings made by the costs assessor on that question; 2. the Review Panel erred in law by failing to make any findings or adequate findings regarding the amount that the Client paid to Somerville for legal costs under the costs agreement and by failing to reverse the findings made by the costs assessor on that question; 3. the Review Panel erred in law by permitting Somerville to make an application for assessment of part only of its costs by treating the unassessed part of its costs as having been paid, instead of requiring that the entire amount of costs incurred under the costs agreement be assessed and that credit be given to any money paid by the Client in accordance with the terms of his costs agreement, and by failing to reverse findings made by the costs assessor on those questions; and 4. the Review Panel erred in law by denying the Client procedural fairness in the conduct of the application for review by failing to address or overcome the consequences of denials of procedural fairness to the Client committed by the costs assessor in his conduct of the costs assessment.
Counsel for the Client, on the hearing of the application before this Court, acknowledged that the second prayer in the notice of motion of 20 March 2019 was misconceived. That prayer sought an order that the order made on 14 December 2018 be vacated or set aside. The notice of motion mistakenly referred to that order as having been made by the Registrar and being an order dismissing the appeal summons. Counsel for the Client accepted before this Court that there would be no utility in pursuing that prayer for relief if the primary prayer for relief, granting leave to file an amended appeal summons, were to be granted by the District Court.
The notice of motion of 20 March 2019 was first listed for directions on 29 April 2019, when it was stood over for hearing on 2 May 2019. On 2 May 2019, Norton DCJ directed the Client to file and serve all evidence on which he sought to rely to support the proposed amended summons no later than 30 May 2019. The Client was also directed to file and serve short written submissions outlining the matters to be relied on in the amended summons no later than 30 May 2019. Directions were given for Somerville to file and serve evidence or submissions in reply no later than 6 June 2019. The proceedings were listed for directions on 13 June 2019.
On 30 May 2019, submissions were filed in the District Court on behalf of the Client. The submissions consisted of seven brief paragraphs of background and seven brief contentions that, more or less, restated the grounds in the amended summons. Also filed on 30 May 2019 was an affidavit sworn by Mr John Bingham, the solicitor for the Client, attaching a set of documents put before the Costs Review Panel, referred to as "JB-1". Mr Bingham's affidavit did not provide further elaboration or explanation as to the relevance or use that would be made of this material.
On 11 June 2019, Mr Bingham swore an affidavit in the District Court in which he stated that it was his intention to file and serve detailed written submissions in support of the costs appeal if and when a judge of the District Court, after hearing the motion, set aside "the default order for summary dismissal of the [s]ummons", reinstated the appeal and granted leave to file the proposed amended summons.
In the meantime, on 6 June 2019, submissions were filed on behalf of Somerville, in which complaint was made that the Client had failed to comply with the order made by Norton DCJ. Somerville also complained that the submissions shed no further light on the matter but simply contained a partial restatement of the grounds outlined in the proposed amended summons, with no attempt being made to explain the arguments lying behind those grounds or to establish how the Client had any prospect of success. The submission pointed out that Norton DCJ had notified the Client on 2 May 2019 that the Court will usually refuse to grant an indulgence to reinstate proceedings where there are unpaid specific costs orders. Finally, the submission also contended that the Court should take into account the circumstance that the costs appeal was not the Client's first opportunity to argue his case and that he was seeking to engage the Court's appellate jurisdiction following an initial determination by a costs assessor and a subsequent review by the Costs Review Panel. Thus, it was asserted, the Client had not been deprived of an opportunity to have his objections to the costs assessment determined on the merits.
Submissions in reply on behalf of the Client were dated 11 June 2019, but do not appear to have been filed. Those submissions referred to material that had already been filed on behalf of the Client, pointed out the constraints upon judicial review by the District Court under s 384 of the 2004 Act and asserted that the opposition to the reinstatement of the appeal "speaks for itself".

Reasons of the Primary Judge

After briefly outlining the history of the proceedings, stating the orders sought by the Client and setting out the legal framework, the primary judge rejected a contention advanced on behalf of Somerville that her Honour did not have jurisdiction to deal with the Client's notice of motion under UCPR 12.7, observing that that rule is not confined to dismissing proceedings but authorises the court to make such other order as the court thinks fit. Her Honour then proceeded to make "findings", which may be summarised as follows: 1. As at 14 December 2018, the Client had not filed any evidence in support of the appeal summons despite orders requiring him to do so made on 10 May 2017, 14 May 2018 and 15 October 2018. Her Honour noted that the Client's solicitor conceded that he needed to put on additional evidence but her Honour had difficulty in understanding the nature of the additional evidence and the reasons given for the failure to have attended to it earlier; 2. The matter was struck out or dismissed for want of prosecution and her Honour had no confidence that the Client would, in the future, comply with the directions of the court, having regard to the past failures of the Client to do so; 3. The Client has not complied with the previous costs orders, a matter that is to be taken into account when considering the prejudice to Somerville, in circumstances where Norton DCJ pointed out to the Client on 2 May 2019 that it is a general rule that things will not be reinstated if there are outstanding specific fixed costs orders made by the court; 4. The Client does not have an arguable case: of the seven contentions in the Client's submission, three contentions referred to the fact that the assessment process looked only at part of the dealings between the Client and Somerville, a matter that was not developed further nor was the legal basis upon which it was said to be an error explained, the solicitor for the Client conceded that two of the contentions could not succeed and the final two contentions asserted a denial of procedural fairness without providing any details; 5. The Client has had two previous opportunities to argue his case, at the initial determination and then again when the decision was considered by the Costs Review Panel, with the consequence that the Client has not been completely excluded from having his case heard.

Grounds of Review in this Court

In his written summary of argument, the Client asserted that there were 15 complaints about errors of law on the part of the primary judge, the majority of which related to errors in the "findings" made by her Honour, as referred to above. As referred to in [6] of these reasons, the summary said that most of the grounds of review go directly to conclusionary findings in exercising the discretion to set aside the order made by Wilson DCJ on 14 December 2018. In his written submissions in reply to Somerville's written submissions, the Client makes clear that he contends that there was jurisdictional error on the part of the primary judge. He eschewed, both in his written reply and in oral argument, any reliance upon error on the face of the record as a basis for review of the orders made by the primary judge. Thus, the question is whether any of the complaints now made by the Client amounted to jurisdictional error on the part of the primary judge.

Applicable Test

The Client complains that the primary judge erred in finding that the matter "was struck-out or dismissed for want of prosecution". He points to an obvious distinction between striking out originating process, on the one hand, and dismissing proceedings, on the other. Thus, he says, striking out under UCPR 12.7 would be interlocutory whereas dismissal would be final. However, summary dismissal would not preclude the Client from the commencement of proceedings by filing a further appeal summons, subject, of course, to time limitation questions. Under UCPR 50.3, an appeal summons must be filed within 28 days of the order appealed from. However, there is power to extend that time. Thus, the order striking out the appeal summons was interlocutory. The order removing the proceedings from the hearing list was also clearly interlocutory.
In those circumstances, the Client asserts, the primary judge was required to consider whether there had been a change of circumstances that made it just and proper to set aside the order made by Wilson DCJ on 14 December 2018. He asserts that there had been a change of circumstances because he had complied with the orders made by Norton DCJ on 2 May 2019 for the preparation of the motion, had filed and served the evidence he sought to rely in support of the proposed amended summons and had filed and served short written submissions outlining the matters to be relied on in support of the amended summons. All of those matters had been attended to by 30 May 2019 as required by the direction given by Norton DCJ on 2 May 2019.
Whether or not the primary judge erred in the exercise of her discretion to permit the filing of an amended appeal summons, any error was clearly within the jurisdiction of the District Court. While an administrative tribunal lacks authority either to determine questions of law authoritatively or to make an order or decision otherwise than in accordance with law, the ordinary jurisdiction of a court of law encompasses authority to decide questions of law, as well as questions of fact, involving matters which it has jurisdiction to determine. Thus, the identification of relevant issues, the formulation of relevant questions and the determination of what is and what is not relevant evidence are all routine steps in the discharge of that ordinary jurisdiction. Mistake in the identification of issues or the formulation of questions may involve an error of law. Such an error of law may, if an appeal is available and is pursued, be corrected by an appellate court, which may set aside the order or decision of the inferior court. Such a mistake on the part of an inferior court, however, will not ordinarily constitute jurisdictional error. Further, a failure by an inferior court to take into account some matter that it was, as a matter of law, required to take into account in determining a question within jurisdiction or reliance by such a court upon some irrelevant matter upon which it was, as a matter of law, not entitled to rely in determining such a question, will not ordinarily involve jurisdictional error. [3]

Compliance with Directions

The Client asserts that the primary judge should have asked whether he had filed and served short written submissions outlining the matters to be relied on in the proposed amended summons and should have found that he had done so. Whether or not the submission of 30 May 2019 satisfied the direction made by Norton DCJ, the assessment of that question was clearly a matter within the jurisdiction of the District Court. Even if it is arguable that the Client complied with the direction, as to which there is considerable doubt, an error in concluding that there had not been compliance was not a jurisdictional error on the part of the primary judge. In so far as her Honour had regard to an alleged failure on the part of the Client to file all evidence in time, even if there was a justification for relying on material filed after 30 May 2019, as the Client contends, any error on the part of her Honour was clearly within jurisdiction and did not constitute jurisdictional error.

Costs

The Client relies on two questions in relation to non-payment of costs orders made against him by the District Court. First, he points to UCPR 42.7(2), which provides that, unless the court otherwise orders, costs do not become payable until the conclusion of the proceedings. Clearly, as at 14 December 2018, the proceedings commenced by the appeal summons were not concluded. Accordingly, the costs ordered to be paid were not at that time payable. It is by no means clear that the primary judge had UCPR 42.7(3) in mind. Even if her Honour proceeded on the basis that the costs were then payable by the Client, that was an error within jurisdiction and was not a jurisdictional error.
Secondly, the Client asserts that Somerville would not be entitled to the costs in circumstances where it was in fact appearing for itself in the proceedings. The Client urges that her Honour failed to address the issue of whether the orders made by the District Court were within the relevant principle, which at that time was in question in a reserved decision of the High Court. [4] However, assuming in favour of the Client that the primary judge erred in her approach to the question of costs, that error was within jurisdiction and did not constitute jurisdictional error.

Arguable Case

The Client asserts that the basis upon which he claims that he was denied procedural fairness in the process of the cost assessment was explained in affidavits sworn by him and by his solicitor on 22 June 2017, 17 March 2019 and 30 May 2019 as well as the appeal summons. He contends that the denial of procedural fairness arose from the failure of the costs assessor to send to the Client a copy of his communication to Somerville requesting further details of the costs claimed by Somerville. Once again, if there was an error on the part of the primary judge in assessing whether the Client had demonstrated an arguable case, in either the original appeal summons or the proposed amended appeal summons, any error on the part of her Honour was within jurisdiction and did not constitute jurisdictional error.

Opportunity to be Heard

The Client complains that the primary judge accepted the contention advanced on behalf of Somerville that a refusal to grant leave to file an amended appeal summons and reinstate the proceedings to list for hearing would be appropriate in circumstances where he has already had two hearings on the question of the original costs claimed by Somerville, namely, before the costs assessor and before the Costs Review Panel. Such an approach, of course, ignores the fact that the Client has a statutory right of appeal from the determination of the costs assessor, as confirmed by the Costs Review Panel. If that were the only basis upon which leave were refused, it may well be arguable that it involved a jurisdictional error in failing to exercise jurisdiction. That is to say, an appellate body cannot refuse to exercise jurisdiction simply because the applicant has already had a hearing at earlier levels in an appellate hierarchy. However, in the present circumstances, for the reasons indicated above, the Client is not necessarily precluded, in so far as it would be open to him to seek an extension of time to file a fresh appeal summons. That is to say, it may be doubted whether relief by way of judicial review would ever be available in relation to an interlocutory order that does not finally dispose of a lis. [5]

Discretion

The Client complains that Somerville contends that a factor in the exercise of discretion is the likely outcome if he is permitted to prosecute the appeal to the District Court. The Client asserts that, in the proposed amended appeal summons, he advances five grounds based on what are said to be errors of law on the part of the costs assessor. The complaint under this head appears to repeat the complaint under the rubric "Arguable Case". If the primary judge failed to give appropriate weight to the strength of the Client's appeal, if it is permitted to proceed, that was not jurisdictional error on the part of her Honour.

Conclusion

The Client has not established jurisdictional error on the part of the primary judge in refusing to exercise the discretion to grant leave to file an amended appeal summons. The question is clearly one of practice and procedure in the conduct of the proceedings in the District Court. The order that the Client seeks to have reviewed is an interlocutory order that did not necessarily finally dispose of the lis between the Client and Somerville in relation to the decision of the costs assessor. It follows that the proceedings in this Court should be dismissed with costs.

Endnotes

See Franz Boensch as trustee of the Boensch Trust v Scott Darren Pascoe [2015] NSWSC 1882.
Subject to Division 5 and Division 11 of Part 3.2 of the 2004 Act.
See Craig v South Australia (1995) 184 CLR 163; [1995] HCA 58 at 179-180.
See Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; and also Pentelow v Bell Lawyers Pty Ltd [2018] NSWCA 150.
Latin for "a suit or action at law". DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 October 2019

Legal Profession Act 2004(NSW)

Legal Profession Uniform Application Act 2014(NSW)

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