consideration
38 Having considered the material before us and the parties' submissions, we would allow the applications for an extension of time and leave to appeal and the appeal. Our reasons follow.
39 As to leave to appeal, the primary judge's reasons are attended with sufficient doubt to warrant their reconsideration on appeal. It is apparent that the primary judge's discretion miscarried when, despite C Pty Ltd's concession that there was an error in the costs assessment process and the agreement of the parties to do so, his Honour declined to set aside the Bankruptcy Notice. In those circumstances, substantial injustice would result if leave to appeal was refused. For the same reasons an extension of time should be granted in relation to the Third Judgment.
40 The amended draft notice of appeal seeks to challenge the Third and Fourth Judgments. The error that we have identified concerns the orders made on 7 August 2020 and the Third Judgment in which the primary judge considered whether he should make orders setting aside the Bankruptcy Notice and otherwise dismissing the proceeding. It is convenient to set out the reasoning which led the primary judge to decline to set aside the Bankruptcy Notice.
41 The primary judge set out the events which followed the Second Judgment including the lodgement of the Costs Review Application. His Honour referred to the detail of the Costs Review Application noting at [15] that it rearranged, into positive propositions, the questions that his Honour had framed in the First Judgment. Those questions were directed to whether the costs assessor had undertaken the requisite statutory tasks in making the costs determination and, if not, whether there was a substantial reason for going behind the judgment. The primary judge observed that "at least on the face of the Costs Review Application, therefore, [C Pty Ltd] positively contends the costs assessor erred by failing to undertake the tasks she was required to undertake when assessing the costs identified in [C Pty Ltd's] tax invoice of 15 March 2019".
42 At [24] the primary judge summarised C Pty Ltd's submissions referring first, to the error in the way in which the costs assessor undertook the costs determination and C Pty Ltd's submission that, because of the error, it would be unreasonable for Ms Sommer not to consent to the court terminating the proceeding by making an order setting aside the Bankruptcy Notice; and secondly, the following extract from C Pty Ltd's written submissions:
Both [Ms Sommer] and [C Pty Ltd] are united in their position that the costs assessor failed to properly turn her mind to whether counsel's fees were fair and reasonable (even though [Ms Sommer] does not appear to have precisely understood the relevant legal issue), and as set out above it is plainly the case. There is no relevant controversy.
Once that is accepted, the proceedings are decided - the bankruptcy notice must be set aside, and there is nothing further for the Court to determine. This Court's jurisdiction is to determine questions in bankruptcy, and once that question is determined there is no remit to embark on a further enquiry into collateral issues with no impact upon the bankruptcy question, regardless of the wishes of any party.
Even if that were not the case as a matter of jurisdiction, as a matter of discretion [C Pty Ltd] should not be put to the cost of a full hearing in circumstances where the outcome of the proceedings is already determined, simply because [Ms Sommer] seemingly wishes to have a day in Court to ventilate issues that cannot affect the Court's ultimate orders. That is an obvious abuse of process, in that it will achieve no proper purpose aside from putting [C Pty Ltd] to expense.
43 Based on those submissions, at [25] the primary judge identified the following questions to be addressed:
a) Has [C Pty Ltd] in truth conceded the Costs Determination is affected by jurisdictional error?
b) Assuming [C Pty Ltd] has so conceded, must or ought the Court terminate the proceeding by making an order to set aside the bankruptcy notice without determining the other issues that arise in the proceeding?
44 The primary judge answered the first question in the negative finding (at [31]) that he was not satisfied that C Pty Ltd had in truth conceded that the costs determination was affected by jurisdictional error or, alternatively, that if there had been such a concession, C Pty Ltd's understanding of what it believed it had conceded was not jurisdictional error as understood by the law. Given the basis upon which we have determined the application before us and the appeal, it is not necessary to set out his Honour's reasoning in that regard.
45 In relation to the second question and in particular whether the court had a discretion not to exercise its power given C Pty Ltd's concession about the costs determination, his Honour said (at [44]):
I do not accept that [Ms Sommer's] insisting to proceed with the matter is an abuse of process. In those circumstances, and given that "[o]rdinarily, questions of abuse of process, forum non conveniens and the like aside, jurisdiction conferred upon a court is to be exercised", I do not accept I have any discretion not to exercise jurisdiction in relation to the matter that is before me.
46 It is in reaching that conclusion that his Honour erred.
47 The proceeding before the primary judge was an application to set aside the Bankruptcy Notice. In that context Ms Sommer raised the following issues as bases on which the court would go behind the judgment on which it was based: first, C Pty Ltd had failed to make adequate disclosure in relation to its costs agreement with Ms Sommer rendering that agreement void; secondly, at the time the costs agreement between Ms Sommer and C Pty Ltd was terminated, Ms Sommer's liability to pay the costs had not crystallised; and thirdly, the costs assessor had misconstrued her task as a result of which the costs assessment process had miscarried.
48 The Circuit Court has such original jurisdiction as is conferred on it by laws made by Parliament by express provision or by operation of s 15C of the Acts Interpretation Act 1901 (Cth) to a provision that, whether expressly or by implication, authorises a civil proceeding to be instituted in the Circuit Court in relation to a matter: see s 10 of the Federal Circuit Court of Australia Act 1999 (Cth). Section 27 of the Bankruptcy Act confers exclusive jurisdiction in bankruptcy on the Circuit Court and this Court save as provided for in that section.
49 It follows that the Circuit Court had jurisdiction to consider the issues raised on the application to set aside the Bankruptcy Notice in the context of the Circuit Court exercising its jurisdiction in bankruptcy. Its jurisdiction to do so continued while the application was extant.
50 By the time of the hearing that led to the Third Judgment, C Pty Ltd had conceded that the costs assessor's task had miscarried and that there was a jurisdictional error in the costs determination. That being so, C Pty Ltd submitted that the Circuit Court had a discretion to decline to conduct a hearing on all of the issues raised on the application to set aside the Bankruptcy Notice. That submission should have been accepted. The primary judge had a discretion to decline to exercise his power and thus to decline to entertain a collateral challenge to the validity of the costs determination or to grant any relief in relation to it. There are two reasons why that is so.
51 First, the Uniform Law and Application Act provide a comprehensive process for the assessment of legal costs. That process, put in place by the New South Wales Parliament, provides for specialist tribunals to consider the appropriateness of the costs which the legal practice seeks to recover, having regard to the statutory test to be applied, including associated questions such as the effect of a failure by a law firm to give disclosure in accordance with the requirements of the Uniform Law and the Application Act. The process is one supervised by the Supreme Court through an appeal by way of rehearing.
52 Once the parties sought to have the Bankruptcy Notice set aside because of an admitted error on the part of the costs assessor, the effect of the primary judge's decision to continue with the proceeding and to determine the issues raised in opposition to the Bankruptcy Notice was unnecessary for the resolution of the matter in bankruptcy. To do so would be for a purpose foreign to the bankruptcy relief, being to embark upon a resolution of the question as to whether Ms Sommer owed C Pty Ltd any costs and if so how much. This enquiry would displace the authority of the specialist tribunal established by the statutory scheme to address costs assessment issues, and any appeal from the findings of that tribunal, by a determination of such issues by the Circuit Court in circumstances that were unnecessary for the discharge of its jurisdiction in bankruptcy. In the face of the proposed consent orders, the resolution of those issues was no longer necessary for the exercise by the primary judge of the Circuit Court's bankruptcy jurisdiction. If, however, some aspect of this question as to whether Ms Sommer owed money had been properly live as a reason to go behind the judgment, the Circuit Court may properly have considered the question.
53 Secondly, in Commissioner of Taxation v Futuris Corporation Limited (2008) 237 CLR 146, in considering the appropriateness of reviewing an amended assessment of income tax for jurisdictional error, a majority of the High Court (Gummow, Hayne, Heydon and Crennan JJ) held that the pendency of a proceeding under Pt IVC of the Taxation Administration Act 1953 (Cth) should have led a Full Court of this Court to refuse declaratory relief. At [10] their Honours observed that "as a matter of discretion, relief under s 75(v) [of the Constitution] and s 39B [of the Judiciary Act 1903 (Cth)] may be (and often will be) withheld where there is another remedy", which in that case was provided by Pt IVC. At [48] the majority, referring to the decision of Gaudron J in Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135, observed that "the usual discretionary considerations attending the grant of equitable remedies apply to injunctions and declarations in public law cases" and that in the case before their Honours "the pendency of a proceeding by Futuris under Pt IVC should have led the Full Court to refuse declaratory relief in any event".
54 Like the review process under Pt IVC of the Taxation Administration Act considered by the High Court in Futuris, the process set out in the Uniform Law and the Application Act provides for review of a costs assessment, once made, by a specialist panel followed by an appeal to a court. At each stage there is a forum in which a challenge can be brought.
55 In this case there is, subject to the grant of an extension of time, an extant review of the costs determination. On review, the review panel is able to resolve the issues that arise between C Pty Ltd and Ms Sommer including determining whether there is a valid costs agreement and, as a necessary element of the consideration of that issue, whether C Pty Ltd complied with its disclosure obligations, determining the quantum of fair and reasonable costs for the legal services provided by C Pty Ltd to Ms Sommer and, subject to that determination, determining whether the amount of $100,000 paid to date on account of C Pty Ltd's costs, or any part of it, is to be repaid to Ms Sommer. If either party is dissatisfied with the review panel's determination, an appeal lies to the District Court or Supreme Court, as appropriate. These factors support an exercise of the Circuit Court's discretion to decline to continue the proceeding.
56 It is apparent that, contrary to his finding, the primary judge not only had a discretion to exercise in the context of the case before him but, in light of the concession made and the comprehensive statutory process available for consideration of the costs determination, should have exercised that discretion by setting aside the Bankruptcy Notice, otherwise dismissing the proceeding and thereby declining to embark on any collateral challenge to the costs determination.