This judgment involves a stay of a costs review panel's decision.
There are two notices of motion before the Court. The first one was filed by the first plaintiff, Stephen Robert Carkeek (alone) on 2 June 2023 seeking a stay of "Costs Assessment Review Panel determination and certificates dated 23 September 2022" ('first stay motion') and the second defendant, Sophie Pamela Carkeek (alone) in her notice of motion, filed on 19 July 2023 that seeks a stay in identical terms ('second stay motion').
The first plaintiff is Stephen Robert Carkeek. The second plaintiff is Sophie Pamela Carkeek. The first and second plaintiffs are father and daughter. For convenience and without any disrespect, I shall refer to the father as Robert (his preferred name) and the second plaintiff as Sophie. The first defendant is Christopher William Trading as Aubrey F Crawley & Co ('the law firm'). The second defendant is Stephen Lancken. The third defendant is Christopher Plummer. The second and third defendants constitute the Review Panel. They filed submitting appearances have no further role to play in relation to these proceedings.
Robert relied upon his affidavits dated 1 June 2023 and 3 July 2023. Sophie relied upon her short affidavit dated 24 July 2023. The law firm relied on a Court Book marked as Exhibit A ('Ex A'). As the law firm served its submission on the plaintiffs on the morning of the Court, so as to afford procedural fairness, I granted the plaintiffs leave to file short submissions in reply. I now have those submissions, which appear to be in relation to both plaintiffs. Although the submissions were prepared under the name of Robert only, it is noted that Sophie signed the submissions in reply.
In May 2017, the law practice was instructed by Robert, then a director of Melded Fabrics Australia Pty Limited ('Melded Fabrics'), to act for Melded Fabrics in a Supreme Court case brought against it ('the Melded Fabrics proceedings').
On or about 27 April 2018, Robert and Sophie signed a costs agreement for the law practice to provide legal services by acting for Melded Fabrics in the Melded Fabrics proceedings on the basis that the costs agreement took effect as from February 2016.
On 4 July 2021, the law practice rendered invoice ref: 210349 ('invoice') for acting in the Melded Fabrics proceedings for total costs and disbursements in the sum of $154,753.71 (inc. GST), less a payment received of $23,000.00. The balance due and payable was $131,753.71.
On 22 September 2021, the law practice filed an application for an assessment of the costs and disbursements claimed in the Invoice.
On 5 January 2022 and as amended on 27 January 2022, M. W. Robinson ('Assessor') determined the Uniform Law costs at $154,753.71 and deducted the sum of $23,000 of the billed amount had been paid. In other words, the certificate of costs was issued for the same amount as the invoice.
On 20 April 2022, Robert filed an application for a review of the determination made by the Assessor. While Sophie had been one of the four respondents to the original costs assessment, she was omitted as a party to the review application. Robert did not name Sophie as a defendant in the application for costs review. His explanation is one of oversight.
However, after this issue of absence of parties to the costs assessment application was raised by the review panel, Robert sought to amend the review application to include Sophie. The review panel included Sophie, not as a defendant, but rather as an interested party to the review pursuant to s 69(1) of the Legal Profession Uniform Law Application Act 2014 (NSW). Sophie had confirmed to the review panel in writing that she agreed to be included in the review application.
In the reasons for determination of costs on review, the Review Panel explained at [4] to [7]:
[4] In the original costs assessment, the Review Applicant was one of four joint costs respondents. The other three, Sophie Pamela Carkeek and Jayfield Pty Ltd, in its own right and as trustee for the BNS Trust were not included as parties to the Review Application.
[5] After the Panel raised this issue [Robert] sought to amend the Review Application to include what he referred to as "the second and third costs respondents Sophie Pamela Carkeek and Jayfield Pty Ltd omitted by my error."
[6] On 13 May 2022 the Panel wrote to the Review Respondent [the law firm] in the following terms: "The Review Applicant's request to include Sophie Pamela Carkeek and Jayfield Pty Ltd in this Application could, in theory, require them to seek to be formally included as additional Review Applicants by applying to the Manager Costs Assessment to file an amended application out of time. The Panel is inclined to the view that, as an alternative. It could include Sophie Pamela Carkeek and Jayfield Pty Ltd as interested parties to this review, if they so wish, pursuant to s 69(1) Legal Profession Uniform Law Application Act 2014. This would no doubt save time and costs. If you have any objections to the Panel's proposed approach please provide short submissions by 5pm Tuesday 17 May 2022."
[7] [The law firm] responded on the same day as follows: "In order to ensure that there are no further delays the Review Applicant's description of the corporate entity should be described as "Jayfield Pty Ltd in its own right and as trustee for The BNS Trust", as I note that Mr Carkeek has not referred to the company being the trustee of The BNS Trust. Subject to that correction I agree to your proposed course of action."
Sophie in her affidavit dated 24 July 2023 deposed at [4]-[8]:
4. On 21 April 2023 the First Defendant [the law firm] served on me by email an attached letter dated 21 April 2023 with a copy of a District Court registered certificate judgement dated 30 January 2023 for $111,697.71 obtained without my knowledge, and a Bankruptcy Notice No BN 258737 dated 31 January 2023 naming Stephen Robert Carkeek and myself, Sophie Pamela Carkeek.
5. The 21 April 2023 service of the documents for the first time was made two weeks after the Summons for Appeal case process had commenced with the First Mention of 5 April 2023 with orders made to file an amended Summons to join the second and third defendants.
6. The certificate judgement and Bankruptcy Notice were based on the Review Panel certificates dated 23 September 2022 to which I was named as an interested party and I believe I am not a chargeable party.
7. On the basis that the First Defendant was aware from early November 2022 that a Summons for commencing an appeal of the Review Panel determination was first filed within 28 days of the material date on 31 October 2022, I believe it is reasonable to assume that the First Defendant as a lawyer has wrongly continued with the registration of a certificate judgement and bankruptcy proceedings against me named as an interested party while knowingly being aware that the Review Panel determination and certificate was subject to an Appeal in process.
8. I believe the First Defendant's conduct by wrong proceeding with other actions prior to this matter's Appeal determination has caused me prejudice to my rights in the process of this matter and I seek this honourable Court to grant my Motion to Stay the Review Panel determination dated 23 September 2022.
At the hearing, the following exchange took place at (T9). In answer to my question directed to Sophie as to whether Sophie was a director of Melded Fabrics, Sophie answered:
"SECOND PLAINTIFF: No. I resigned as a director in June 2016, but I never worked in the business, I never took a salary from the business, I had nothing to do with the business. I was simply helping out to be a director while I had my own career and bringing up my own two children, and occasionally was asked to sign meeting notes or documents, occasionally.
FIRST PLAINTIFF: We will be submitting further evidence that Sophie's--
HER HONOUR: Sorry, just a minute - no, Mr Carkeek, just a minute.
FIRST PLAINTIFF: Sorry.
HER HONOUR: Let me work this out. So, you were a director and you resigned in 2016, is that correct?
SECOND PLAINTIFF: Correct, yes, I was appointed as a director because my father couldn't be at that point in time, so to keep the family interest, I said that I would be a director, but, again, I had no interest in the - nothing to do with the business, no - never attended the building, never attended a meeting.
HER HONOUR: Okay.
SECOND PLAINTIFF: Nothing.
HER HONOUR: Did you have any shareholding in the company?
SECOND PLAINTIFF: No."
It should be noted that Robert tries to speak and act for Sophie even though their interests are not necessarily aligned. I accept that so far as a stay of proceedings in concerned, they both have the same interests.
At T13, a further exchange took place:
HER HONOUR: ... the proceedings before the costs assessor and the review panel, did you play any role in those? Did you put in any submissions?
SECOND PLAINTIFF: I, I didn't, but I have - I don't, I don't even know what I've signed, what's been submitted. I've been guided and at the mercy of my father to, to, you know, be involved in this.
HER HONOUR: I don't know. I'm just wondering whether she should have an opportunity to get some pro bono advice. I don't know if you qualify because you've got a job, haven't you?
SECOND PLAINTIFF: Yeah, I do.
Counsel for the law firm asked this Court to reconsider requesting pro bono assistance for Sophie until after I had heard his submissions. In those submissions, he stated that pro bono relief, could only be considered in the appeal.
On 22 September 2022, the review panel gave reasons ('reasons') for its determination that the amount of costs assessed at $134,697.71 (after deducting the paid disbursements of $23,000.00) to $111,697.71.
On 23 September 2023, the review panel issued a certificate of determination of review ('Certificate') setting aside the Assessor's determination and substituting its determination that the amount of costs assessed was $134,697.71 for the determination of the assessor so far as it related to Robert and Sophie and recording its finding that the total amount of assessed costs exceeded the paid amount by $111,697.71.
On 4 October 2022, the certificate was sent by the Manager, Costs Assessment to Robert and Sophie. As a result, the time for filing a summons to commence an appeal under Part 50 of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR') expired on 1 November 2022.
On 30 January 2023, the certificate was filed in the District Court of New South Wales. By reason of s 70(5) of the Legal Profession Uniform Law Application Act 2014 (NSW), on its filing, and with no further action, the certificate was taken to be a judgment of the District Court that Robert and Sophie pay the law practice the sum of $111,697.71 ('judgment'). While Robert complains about the registration of the judgment in the District Court, it was in accordance with the statute. As a courtesy usually parties are notified that the law firm is seeking to register the costs assessment as a judgment.
On 31 January 2023, Robert and Sophie commenced these proceedings outside the time for filing a summons to commence an appeal under Part 50 of the UCPR. In the summons, Robert sought an order for the extension of time under UCPR r 50.3(1)(c).
On 31 January 2023, a bankruptcy notice was issued by the Official Receiver to Robert and Sophie Carkeek ('bankruptcy notice'). On 21 April 2023, the bankruptcy notice was served on Robert and Sophie.
Neither Robert nor Sophie has paid to the law practice the amount of the debt claimed in the bankruptcy notice or made any arrangement to the satisfaction of the law practice for settlement of the debt within 21 days after service of the bankruptcy notice. Nor has Robert or Sophie has made any offer to the law practice to pay the judgment, or any part of the judgment, into court or to secure the judgment, or any part of the judgment, in any way.
[4]
Robert's explanation for delay
This explanation has more to do with the summons being filed out of time, but also explains to some extent the delay in seeking a stay of proceedings. After a protracted exchange regarding the Robert's application to waive the filing fee on the summons before the registry eventually approved the waiver and sealed a copy of the Form 84 Summons on 31 January 2023 instituting this proceeding.
On 31 October 2022 Robert lodged an appeal seeking to discharge the certificate, using an incorrect form of summons, UCPR Form 4 Bv4.
On 9 November 2022, the summons an unsealed copy was served on the law firm.
On 16 November 2022, Robert received advice from the registry that the summons was not the correct summons but rather that UPCR Form 84 should be used.
On 25 November 2022, a UCPR Form 84 was filed seeking to discharge the certificate. This was outside the 28-day time limit for appeal.
On 31 January 2023 a sealed copy of the Form 84 was served upon the law firm.
On 25 November 2023 an unsealed copy of the Form 84 was served on the law firm.
In the period between the issue of the bankruptcy notice on 31 January 2023 to 21 April 2023 and the service of same, numerous steps had been taken in this proceeding including a directions hearing relating to the appeal on 5 April 2023 with the Registrar's orders made for the plaintiff to file an amended summons to join the second and third plaintiffs. Robert says that at no time during those processes did the law firm reveal that it had obtained an order or issued a bankruptcy notice.
On 26 April 2023, after being served with the bankruptcy notice Robert wrote to the law firm enquiring as to whether the law firm intended to withdraw the bankruptcy notice given the existence of these proceedings. No answer was received.
In the absence of a reply Robert wrote again on 4 May 2023 seeking a response. Once again, no reply was received.
Absent of a reply to either of the emails of 26 April 2023 and 4 May 2023, on 8 May 2023, Robert deposes that the plaintiffs applied:
1. To the District Court of New South Wales to set aside the District Court Order, this application Case Number 2023/00030722 was listed for hearing on 26 May 2023, adjourned to 18 July 2023 and again adjourned to 14 September 2023 to allow time for the Court to determine the plaintiffs' application for a stay; and
2. To the Federal Court of Australia to set aside the bankruptcy notice. This application Case No VID362/2023 was adjourned to 28 September 2023 to allow time for this Court to determine the defendant's application for a stay.
This explanation for delay is also relevant in Robert's and maybe Sophie's delay in commencing proceedings. In oral submissions, Robert stated that Melded Fabrics went into liquidation and the liquidator took the records (including computer records). Robert says that he has recently located some documents to support his appeal. This is his explanation for him not being able to put these documents able to put these documents "before the costs assessor and the Review Panel. These documents were not put into evidence before me.
As I alluded to earlier, it is of concern that Robert is controlling the conduct of these proceedings and normally Sophie has acquiesced to his conduct. Sophie was named as an interested party in the review. Sophie may well have a somewhat different interest to her father as she did not receive any benefit from taking on the role of a director while Robert was bankrupt, except that she also has requested a stay of proceedings and that is in her interest.
[5]
The law
Section 90(1) of the Legal Profession Uniform Law Application Act 2014 (NSW) provides that, if an appeal against a decision of a review panel under section 89 is pending in the District Court, then either the review panel or the District Court may suspend the operation of the determination or the decision. No equivalent provision is made in respect of an appeal under section 89 pending in the Supreme Court.
Section 67 of the Civil Procedure Act 2005 (NSW) reads:
67 Stay of proceedings
(cf Act No 9 1973, section 156)
Subject to rules of court, the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day.
UCPR r 51.44 also provides a power for the Supreme Court to order a stay of the proceedings. It reads:
51.44 Appeal proceedings do not operate as stay unless Court or court below directs
(cf SCR Part 51, rule 15)
(1) Subject to the filing of a relevant originating process, the Court may order that the decision below or the proceedings under the decision be stayed.
(2) The filing of a relevant originating process does not -
(a) operate as a stay of proceedings under the decision below, or
(b) invalidate any intermediate act or proceedings.
In Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103, McColl JA stated at [18]-[20]:
"[18] The overriding principle in an application for a stay is to ask what the interests of justice require: New South Wales Bar Association v Stevens [2003] NSWCA 95 at [83] per Spigelman CJ (Meagher JA and Sheller JA agreeing).
[19] The detailed principles concerning the grant of a stay are set out in Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 at 694:
a. Where there is a risk that an appeal will prove abortive if the appellant succeeds and a stay is not granted, the Court will normally exercise its discretion in favour of granting a stay;
b. the onus is upon the applicant to demonstrate a proper basis for a stay;
c. it is a matter of discretion whether the Court grants a stay and if so as to the terms which would be fair as part of the granting of a stay;
d. what is important in considering whether or not a stay ought be granted is the balance of convenience and the competing rights of the parties before it;
e. it is not necessary that special or exceptional circumstances should be made out; it is sufficient for the applicant to demonstrate a reason or an appropriate case to warrant the exercise of discretion in its favour.
[20] Since a stay will prevent the judgments being enforced while the appeal is pending, the Court should endeavour to preserve the status quo by protecting the judgment creditor from the risk of loss. …" (citations omitted)."
[6]
The plaintiffs' submissions - reasons for stay
The purpose of a stay pending an appeal is to ensure that the orders which might ultimately be made on the appeal are fully effective: Cook's Constructions Pty Ltd v Stork Food Systems Australasia Pty Ltd [2008] 2 Qld R 453 at [12].
In the present case the consequences of the stay being refused would be catastrophic for the plaintiffs given the evidence of the law firm pursuing bankruptcy, in circumstances where there is clear evidence:
1. That the quantum of the assessment is simply wrong on an arithmetical basis.
2. To support the claim that the law firm agreed to accept an interest in the business venture (which ultimately failed) in lieu of fees and so is not entitled to any fees whatsoever; and
3. That Sophie was not a director post 16 June 2016 when the bulk of the fees were claimed, nor was Robert a director before that date.
In the anticipated amended grounds of appeal, the plaintiffs will say that there was no evidence before the costs assessor or the Review Panel that the law firm was retained other than by a corporate entity of which the plaintiffs were at different times directors nor that the plaintiffs or either of them gave personal guarantees or did any other thing to render themselves personally liable for any fees that may have been payable by that entity. The costs agreement relied upon by the law firm, which was in any event held to be void by both the costs assessor and the panel did not purport to impose personal liability upon the plaintiffs or either of them by reference to any position or role (such as director).
The amended summons, it will claim that the law firm agreed to take an interest in the business in lieu of fees if accepted would render the plaintiffs entirely free from obligation to pay any amount to the law firm.
In the circumstances, Robert argues that this Court ought to exercise its discretion in favour of granting a stay pending the hearing and determination of this appeal. Sophie appears to have Robert's submissions by way of signature.
[7]
The law firm's submissions
The appeal has been brought without any real prospects of success.
The appeal ground of a GST error (of $4,580.60) is without merit. The review panel calculated its reduction of the fees of $20,306.00 of a GST inclusive basis, using the GST inclusive rate of $660 in lieu of the GST inclusive rate of $770 charged by the law practice. The calculation relied on by the plaintiffs wrongly treats the reduction of $20,306.00 as being exclusive of GST.
The appeal ground for "correction of errors" does not involve any "clear errors of calculation" or any error "on an arithmetical basis", as submitted by the plaintiffs, but is a purported challenge to the approach taken by the review panel in applying a global reduction equivalent to 2% of the amount otherwise found to be fair, reasonable and proportionate to take account of its finding that some of the work carried out would not have consumed 6 minutes of time. The matters raised by the plaintiff raise no error of law or fact in the approach taken by the review panel.
The appeal ground that Robert orally agreed to accept an interest in a business venture in lieu of his fees was rejected by both the Assessor and the review panel. The plaintiffs advanced no evidence from the person alleged to have entered into the purported oral agreement on behalf of Melded Fabrics ('Greg Taylor'), although it was anticipated that Sophie would have some supportive evidence provided by Greg Taylor. The plaintiffs have not provided any documentary evidence recording or referring to the purported agreement. The purported agreement is alleged to have been entered into in early 2016, yet this is prior to the Melded Fabrics proceedings even being commenced (in 2017) and prior to the law practice being retained to act in the Melded Fabrics proceedings (in May 2017). The purported oral agreement is contradicted by the written correspondence and the execution by the plaintiffs of the costs agreement.
The costs agreement did not impose personal liability on the plaintiffs, Robert and Sophie Carkeek were expressly named as parties to the costs agreement and expressly confirmed that they were "each jointly and severally liable" for the costs and disbursements by separately signing the costs agreement in their personal capacities.
On the question of prejudice, the law firm submitted that it is entitled to the fruits of the judgment. There has never been any suggestion that any of the work was not done or that it was not done in a satisfactory manner. Around 95% of the work was undertaken between 2016 and 2018. The judgment amount does not include any interest on the fees prior to the date of issue of the certificate. The plaintiffs have not adduced any evidence to suggest that they are unable to pay the judgment or that their payment of the judgment would stultify the appeal. There is no reason why the law firm should be held out from recovering the judgment.
Robert and Sophie have not demonstrated any prejudice to them if the stay were refused. There is no evidence that the law firm would not be able to make full repayment of the judgment in a timely way if the appeal was upheld. The fact that the law firm was discharged from bankruptcy in November 2017 provides no basis for any finding of any potential prejudice to the plaintiffs on the stay being refused. Even if there were any such evidence, the appropriate course would be to grant a stay on terms that the plaintiffs give security by paying the judgment amount into a joint trust account to be held on trust so as to be available to disposition by order of the Court on the conclusion of the appeal.
In the plaintiffs' submissions in reply, although lengthy and largely repetitive raise two other relevant matters. They are:
1. The costs agreement did not place the reference to joint and several liability at the same place as the signing clause but on another page entirely. At the signing clause/s all the signatories confirm is that they have read and understood the document. In relation to understanding the document that can only be an expression of opinion and there is no suggestion (nor is it the case) that the signatories, were given, advised to take or given the opportunity to take independent legal advice as to the contents thereof. To the contrary it is clear that there was pressure to sign quickly.
2. The first plaintiff has an inability to satisfy the judgment that can be readily deduced form the fact that he is a pensioner (as deposed to in his affidavits) and received fee waivers in this proceeding.
[8]
Resolution
Although the costs agreement was declared void, there is correspondence to support the fact that the costs disclosure agreement (CB74) was between the law firm, Melded Fabrics Australia Pty Ltd, Jayfield Pty Ltd in its own right and as trustee and Robert Carkeek & Sophie Carkeek as individuals. While the costs were assessed on a quantum meruit basis, Robert and Sophie both acknowledged "I have read and understand the Costs Disclosure and the Costs Agreement and General Terms of Business". Gregory Taylor did not sign the costs agreement. In my view, the quantum of costs and disbursements are reasonable. In both written and oral submissions, Robert explained in relation to the so-called shadow agreement:
"FIRST PLAINTIFF: --the business plan that the defendant introduced Mr Greg Taylor who became the director and the finance partner of the business. Mr Taylor was a - and still is a client of Mr Crawley [the law firm], but he's not been named in Mr Crawley's claim, even though he was a senior partner in the business. However, the business - the funding was not forthcoming, it struggled on for a few years, we were unable to execute the business plan due to the funding not coming forth as per an agreement and a deed. Eventually the company couldn't meets its commitments and was placed into voluntary administration and subsequently into liquidation. It was that company and that business plan we say there was a - an agreement that Mr Crawley, for a 5% equity share, would offset his fees.
The first year or 18 months of, of that understanding, Mr Crawley [the law firm] had been in - was in bankruptcy, which I understand was - came out of that in November 17. At a time in 2016, in December 2016 there was discussion and there was back and forth between Mr Taylor and myself. Mr Crawley initiated it with an opening email and a draft shareholders letter or a list of the participating shareholders to participate in the company. That was negotiated further with Mr Taylor and I to a stage where - ".
Even on Robert's own evidence the "shadow agreement" never came to fruition.
Robert's chances of success in this appeal are slim, but I can't say the same for Sophie. Her chances on appeal if she gets her own independent legal advice are better. It does not follow that Sophie was a director up until 16 June 2016, after which she resigned when Robert became the director of Melded Fabrics received any benefit. It appears that both Robert and Sophie signed agreement for costs. I accept that neither Robert nor Sophie have offered to pay any of the outstanding amount of $111,697.71. Robert has deposed that he is a pensioner.
Nevertheless, it is my view that there is a risk that the appeal will prove abortive if both Robert and Sophie succeed and a stay is not granted. On the balance of convenience, I have found this to be a borderline decision. After considering the factors set out above, it is my view that the stay of proceedings should be granted.
I have also decided that it is in the interest of the administration of justice to issue Sophie with a pro bono certificate to seek independent legal advice as to whether she has other grounds of appeal, particularly as she was joined as an interested party to the appeal and the hearing of the appeal. To this end, I attach a certificate pursuant to UCPR r 7.36.
[9]
Costs
Costs are discretionary. Costs normally follow the event. Robert and Sophie have been successful in a stay of proceedings being granted, but they have been granted an indulgence. It is my view that the appropriate order for costs is that each party is to pay its own costs.
[10]
THE COURT ORDERS THAT:
1. The plaintiffs are granted a stay on the execution of the judgment in the District Court dated 30 January 2023 until further order of this Court.
2. Each party is to pay their own costs.
[11]
Amendments
26 October 2023 - Order amendment.
31 October 2023 - Catchword amendment.
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: 31 October 2023