CharterLaw Legal Pty Limited v Maloney

Category: Principal judgment

Parties: CharterLaw Legal Pty Limited (Plaintiff/Respondent)
Diane Marie Maloney (Defendant/Applicant)

Representation: Counsel:
N Simpson (Plaintiff/Respondent)
N Franco (Defendant/Applicant)
Solicitors:
HFK Lawyers (Plaintiff/Respondent)
ITC Law Pty Limited (Defendant/Applicant)

File Number(s): 2026/00073260

JUDGMENT – Ex tempore – Revised

Overview

1. This is an ex tempore decision on the defendant’s Notice of Motion filed 15 June 2026, in which the defendant seeks to set aside judgment entered against her by the plaintiff.

2. The plaintiff is a law firm which formerly acted for the defendant and various companies of which she was a director and shareholder.

3. At some stage, the defendant terminated the plaintiff’s legal services.

4. There were a number of unpaid Tax Invoices for costs and disbursements said to have been owing by the defendant to the plaintiff. The plaintiff applied for a costs assessment under s.68 of the Legal Profession Uniform Law Application Act 2014 (NSW) (‘LPULAA’).

5. The costs assessor appointed to assess the plaintiff’s 12 relevant invoices determined that an amount of $121,748.58 was payable to the plaintiff, representing a reduction of approximately 20% of the amount originally claimed in the invoices. In the costs assessor’s Statement of Reasons for Determination, the defendant was referred to as ‘the client’.

6. The assessor issued his Certificates of Determination of Costs on three dates in February 2026 and, within a few days, the plaintiff filed the said certificates in the Registry of this Court, causing them to crystallise into a judgment of this Court by virtue of s.70(5) of the LPULAA.

7. Within weeks, and reliant on the judgment, the plaintiff caused a Bankruptcy Notice to be served on the defendant, which resulted in the defendant applying to the Federal Court of Australia to set aside the said notice to prevent it from maturing into an act of bankruptcy under s.40(1)(g) of the Bankruptcy Act 1966 (Cth). Those proceedings remain on foot.

8. In or about May 2026, and reliant on the judgment, the plaintiff took further steps to enforce the judgment by issuing garnishee orders on St George Bank, Macquarie Bank and ANZ Bank, pursuant to r.39.34 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’), all of which remain unsatisfied.

9. Pursuant to s.83(1) of the LPULAA, a party to a costs assessment may, within 30 days after the Certificate of Determination of Costs by the costs assessor has been forwarded to the parties in accordance with the regulations or the costs assessment rules, apply for a review of the determination.

10. Pursuant to s.83(1A) of the LPULAA, the Manager, Costs Assessment, may extend the period for lodging an application.

11. The defendant applied for a review approximately three months after the 30-day deadline within which to do so and the Manager, Costs Assessment, extended the period for lodging the review application. The review proceedings are on foot but the review panel has yet to make a decision.

12. The defendant asserts that, although not ventilated at first instance in the costs assessment procedure, where the respective parties are able to make submissions to the costs assessor about quantum and liability, the defendant was not the client in her individual capacity. Rather, the client(s), for most if not all of the 12 relevant invoices, were separate corporate entities in their own corporate name and style, notwithstanding that she may have been a director and shareholder.

13. The defendant seeks to set aside the judgment entered against her pursuant to r.36.15(1) of the UCPR, which provides that a judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith.

14. Alternatively, the defendant seeks to set aside the judgment entered against her pursuant to r.36.16(2)(b) of the UCPR, which provides that the court may set aside or vary a judgment or order after it has been entered if, amongst other things, it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order.

15. Alternatively, the defendant seeks to stay the judgment entered against her pursuant to s.67 of the Civil Procedure Act 2005 (NSW) (‘CPA’), which provides that 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, and pursuant to s.135 of the CPA, which provides that the court may, by order, give directions with respect to the enforcement of its judgments and orders, including, amongst other things, by way of an order prohibiting any other person from taking any further action, either permanently or until a specified day, to enforce a judgment or order of the court. As I understood the submissions in this regard, it is envisaged that the stay would operate until the determination of the review panel regarding the review of the costs assessment.

Defendant’s evidence

16. The defendant relied on the following affidavits in support of its Notice of Motion:

17. Mr James Clancy (the defendant’s solicitor) sworn 15 June 2026.

18. Mr James Clancy (the defendant’s solicitor) sworn 25 June 2026.

19. Mr James Clancy (the defendant’s solicitor) sworn 22 July 2026.

20. Ms Diane Marie Maloney (the defendant) sworn 3 August 2026.

21. Mr James Clancy (the defendant’s solicitor) sworn 3 August 2026.

22. A further affidavit by Ms Diane Marie Maloney (the defendant) sworn 3 August 2026 was not read. A further affidavit by Mr James Clancy (the defendant’s solicitor) sworn 10 August 2026 was not read as it related to a subsequent Notice of Motion filed by the defendant on 10 August 2026, seeking to set aside, or to narrow the scope of, various Notices to Produce served by the plaintiff, or that the defendant be excused from compliance.

23. The various deponents were not required to attend for cross-examination.

24. The salient features of the evidence of Mr James Clancy (the defendant’s solicitor) can be summarised as follows:

25. On 23 February 2026, judgment was entered against the applicant in the sum of $121,748.58 based on Certificates of Determination of Costs issued in 12 costs assessment proceedings.

26. A sealed copy of the judgment was issued on 3 March 2026.

27. On 21 March 2026, the defendant commenced proceedings in the Federal Court of Australia to set aside a Bankruptcy Notice issued to her by the defendant and founded on the judgment debt.

28. On or about 12 June 2026, the defendant filed 12 separate applications for review of the 12 Certificates of Determination of Costs.

29. The key concerns raised in relation to the judgment are that the legal services were provided across multiple related entities, companies and structures associated with the defendant, rather than solely to her in her individual capacity and that the invoices were issued to different named entities during the course of the solicitor-client relationship, including to the ‘Diane Marie Maloney Group’, being a non-existent entity, in circumstances where liability has been attributed to her personally.

30. The challenge to the judgment is principally directed to the question of whether the defendant was the correct costs respondent for all of the monies the subject of the Certificates of Determination of Costs.

31. The Certificates of Determination of Costs upon which judgment was entered were subsequently corrected by the costs assessor in circumstances where the judgment was entered before the costs assessment process had been finalised in light of those corrections, and that the present judgment does not reflect the final position of the costs assessor. (I understood from the submissions that this correction related to the fact that one certificate was missing; one certificate was required to be re-issued; and, in what appears to create some ambiguity, the table of determinations prepared by the costs assessor finds the total amount outstanding to be $121,748.58, although the proper amount to be paid is stipulated as being $119,108.58, this itself creating an, albeit minor, irregularity).

32. The defendant’s challenges to both liability and quantum under the Certificates of Determination of Costs remain alive.

33. The defendant’s position is that there ought be a stay of enforcement of the judgment as it would otherwise cause significant prejudice to the defendant, in circumstances where the plaintiff has already taken steps in the nature of enforcement action, including by issuing a Bankruptcy Notice notwithstanding the existence of asserted errors in the underlying determinations and the pending costs review proceedings.

34. While not the principal argument, the defendant foreshadows making claims against the plaintiff arising out of the matters the subject of the costs assessments, something which she has been unable to properly pursue or particularise, having been impeded by the plaintiff’s retention of its files pursuant to a claim of lien.

35. The Federal Court bankruptcy related proceedings have been adjourned.

36. The plaintiff advised and acted for the defendant and various entities with which she was associated in respect of many matters and proceedings between December 2023 and October 2024.

37. The defendant asserts that the plaintiff’s representation was carried out negligently and/or in breach of the plaintiff’s retainers.

38. On or about 18 February 2026, the plaintiff applied for an assessment of its costs in relation to some of its invoices issued to the defendant, spanning some 13 invoices across 12 matters. (I understood the submission to be that the invoices in all but one of the 12 matters outlined in paragraph 10 of the affidavit of James Clancy sworn 25 June 2026 were issued to the ‘Diane Marie Maloney Group’. The invoice in Costs Assessment No. 2025/0006413 (Matter No. 32273) was issued to the defendant in accordance with a general retainer in which the defendant was listed as the client in her individual capacity).

39. The Certificates of Determination of Costs in each of the 12 costs assessments were issued on or about 13, 15 and 17 February 2026.

40. On or about 17 February 2026, the costs assessor issued a single Statement of Corrected Reasons, the conclusion of which was that the plaintiff claimed $152,731.41 in the disputed invoices; the costs assessor assessed the amount of $121,748.58 as being payable to the plaintiff; and, accordingly, $30,982.83 of the costs (approximately 20%) was disallowed.

41. On 23 February 2026, the plaintiff applied to the District Court of NSW for a judgment to be issued on the basis of the Certificates of Determination of Costs and judgment was entered against the defendant in the sum of $121,748.58.

42. A sealed copy of the 23 February 2026 judgment was issued on 3 March 2026.

43. On 6 March 2026, a Bankruptcy Notice was issued against the defendant.

44. On 25 March 2026, the defendant filed, in the Federal Court of Australia, an application to set aside the Bankruptcy Notice founded on the judgment.

45. On 12 June 2026, the defendant filed 12 review applications with respect to the Certificates of Determination of Costs.

46. On 17 June 2026, the Federal Court granted leave for the defendant to file an amended application to set aside the Bankruptcy Notice.

47. On 22 June 2026, following some administrative issues with respect to the filing (and DropBox and USB related processing) of the applications, requisitions from the Costs Assessment Registry and the payment of the filing fees, all of which were attended to within two days, the review applications were formally accepted by the Registry, and an extension of time within which to file the review applications was granted on or about 30 July 2026, and confirmed in writing by the Manager, Costs Assessment, on 3 August 2026. (I understood from the submissions that the explanation provided for the delay in filing the review applications, and the reason why an extension of time within which to do so was sought and ultimately granted, was appropriate and justified).

48. All review applications raise identical grounds of review.

49. The grounds of review include the fragmentation of the review process across 12 determinations; errors alleged in the plaintiff’s disclosure obligations under s.174 of the Legal Profession Uniform Law (NSW) (‘LPUL’); errors alleged in relation to the costs assessor’s treatment of various, specific categories of charges; relevantly, for the purposes of the present proceedings, the incorrect treatment of the defendant as the proper costs respondent for each of the invoices, in circumstances where the legal services were provided across multiple related entities, companies and structures associated with the defendant, rather than solely to her in her individual capacity; and alleged errors specific to only some of the matters and proceedings the subject of the invoices, including the plaintiff’s conduct of a security of payment litigation, a loan dispute, refinancing arrangements sought by various entities with which the defendant was affiliated and the defendants family law matter.

50. The core issue is that the judgment is premised on the recovery of costs for invoices issued for legal services provided to various entities related to the defendant and which were addressed to the ‘Diane Marie Maloney Group’, which is not a legal entity, and liability for which has been attributed to the defendant personally.

51. The delays in attending to these matters in a more timely manner arose from a combination of factors including the defendant’s excessive loss of legal representation; restricted access to her file due to a lien asserted by the plaintiff; the time required to obtain proper legal advice across multiple proceedings; and the defendant’s personal circumstances.

52. It is asserted that the defendant will suffer significant prejudice if the judgment is not set aside or if a stay of enforcement is not granted.

53. The defendant is required to defend multiple overlapping proceedings arising from the same solicitor-client relationship, including the present proceedings to set aside the judgment; the 12 review applications; and the Federal Court bankruptcy related proceedings, all of which involve significant legal costs, compounded by the complexity introduced by the plaintiff’s lien over the material contained within its files.

54. Any finding by the Federal Court that the defendant has committed an act of bankruptcy will have far-reaching consequences, including her being placed on the National Personal Insolvency Index; her inability to obtain loans and insurance; the requirement to post bonds prior to obtaining utilities; limitations on travel; and an impact to future income or business operations. It is asserted that this would result in severe and potentially irreversible repercussions for the defendant, given that she is currently seeking finance for significant commercial transactions.

55. It is asserted that there is a real risk that the outcome of the review applications and any future damages proceedings will result in inconsistent findings across multiple proceedings.

56. The core disputes as to the identity of the correct costs respondent, the accuracy of the Certificates of Determination of Costs and the existence and quantum of any countervailing claims have not yet been determined on their merits (and, I would add, that the avenue for review of the costs determination has not yet been exhausted).

57. Enforcement of the judgment would give rise to a risk of irreconcilable inconsistency between the judgment and the outcomes of the pending proceedings.

58. The salient features of the evidence of Ms Diane Marie Maloney (the defendant) sworn 3 August 2026 can be summarised as follows:

59. The plaintiff (through its various incorporated legal practice iterations) represented the defendant and multiple companies with which she was associated.

60. She is a director of the nine corporations listed in paragraph 10 of her affidavit, three of which she is also a shareholder.

61. It is difficult for her to respond to her former solicitor’s assertion referring to her ‘controlled entities’ because he and the plaintiff have refused to provide her with copies of documents comprising the file(s), despite multiple requests.

62. She does not accept the assertion that her financial interests were identical to those of any entity, although she accepts that she would have some common financial interests with companies for which she is a shareholder. Similarly, she accepted that she owed duties to the companies of which she was appointed a director.

63. She denies that she terminated the plaintiff’s legal services without cause. She asserts that she did so on the basis of conduct which she believes would give rise to a claim for professional negligence against the plaintiff.

64. She estimated that either she, or the legal entities with which she was associated, had paid approximately $800,000.00 in legal fees to the plaintiff.

65. She disputes the legal fees alleged to be owed to the plaintiff which are now the subject of the costs review proceedings.

66. She denies the assertion made by her former solicitor that she was the ‘alter ego’ of particular companies for which she served or continues to serve as director, or for which she was or continues to be a shareholder.

67. The plaintiff acted for both her and a number of entities.

68. The entities ought to have been properly identified by the plaintiff as the client under the relevant retainers and, correspondingly, as the appropriate costs respondents in the costs assessment process.

69. When providing instructions to the plaintiff on behalf of a company of which she was a director, she was doing so in the capacity of that company’s director, not in her personal capacity.

70. When providing instructions to the plaintiff on behalf of a company of which she was a shareholder, she was doing so as an authorised representative, not in her personal capacity.

71. The provision of instructions did not alter or displace the existence of a separate legal personality of each entity, nor did it make a person synonymous with, or liable for the debts of, those entities.

72. The mere fact that she may have been a director, shareholder, controller and/or the person giving instructions on behalf of a company was not a reason to disregard the fact that a company is a separate legal entity.

73. The defendant provided three examples to illustrate her assertion.

74. 600 George Street Pty Limited, a company of which she was a director, ought to have been the proper costs respondent in the costs assessment process. The company was established as the operating entity to conduct the day-to-day hotel business, including the operation of licensed premises. It was intended to operate the business separately from the ownership of the underlying assets. The entity was directly related to security of payment proceedings on which the plaintiff provided legal advice, including strata and painting claims referred to in the plaintiff’s invoices. It is a company incorporated under the Corporations Act 2001 (Cth). It owns its own assets, has its own liabilities, enters into contracts in its own name and is capable of commencing or defending legal proceedings independently of her. Simply by virtue of her being a director of this entity, which is now in receivership, did not mean that she was its ‘alter ego’ or vice versa. It was her understanding that it was a matter for the costs assessor to determine which invoices related to the appropriate entity.

75. DSR Management Group Pty Limited, a company of which she was a director, ought to have been the proper costs respondent in the costs assessment process. The company was established as the employment and management company. Staff are employed through this corporation rather than personally by her or by other companies, reflecting a deliberate separation of employment obligations from the ownership and operation of the hotel business. It is a company incorporated under the Corporations Act 2001 (Cth). It owns its own assets, has its own liabilities, enters into contracts in its own name and is capable of commencing or defending legal proceedings independently of her. Simply by virtue of her being a director of this entity did not mean that she was its ‘alter ego’ or vice versa. It was her understanding that it was a matter for the costs assessor to determine which invoices related to the appropriate entity.

76. Winchester Finance Pty Limited, a company of which she was a director, ought to have been the proper costs respondent in the costs assessment process. The company was established to deal with financing arrangements associated with the business and was utilised for that distinct commercial purpose. It is a company incorporated under the Corporations Act 2001 (Cth). It owns its own assets, has its own liabilities, enters into contracts in its own name and is capable of commencing or defending legal proceedings independently of her. Simply by virtue of her being a director of this entity did not mean that she was its ‘alter ego’ or vice versa. It was her understanding that it was a matter for the costs assessor to determine which invoices related to the appropriate entity.

77. Her former solicitor informed her that separate retainers would be opened so that each entity would be separately engaged and dealt with in its own appropriate capacity.

78. Any confusion as to the identity of the appropriate entity in the capacity in which instructions were given would have arisen as a result of the plaintiff’s failure to open and maintain separate retainers, including by opening files in the name of a non-existent entity described as the ‘Diane Marie Maloney Group’.

79. She denies that there is a ‘unity of interest’ as asserted by her former solicitor.

80. She concedes that while the plaintiff performed work for her personally, in her individual capacity, there were a number of matters in which the plaintiff’s legal services were engaged in which she provided instructions on behalf of separate entities which required separate, tailored legal advice and action for the relevant entity.

81. She does not dispute that the plaintiff used file references and matter descriptions which she asserts is consistent with her understanding that the plaintiff was engaged across multiple discrete matters, including matters for different corporate entities and matters for her in her individual capacity.

Plaintiff’s evidence

21. The plaintiff relied on the following affidavits in opposition to the defendant’s Notice of Motion:

22. Mr Peter McCrohon (the plaintiff’s solicitor director) sworn 25 June 2026.

23. Mr Peter McCrohon (the plaintiff’s solicitor director) sworn 15 July 2026.

24. Mr Peter McCrohon (the plaintiff’s solicitor director) sworn 7 August 2026.

25. Mr Jarryd Willson (the plaintiff’s solicitor) sworn 10 August 2026.

26. The defendant objected to the late service of the affidavits sworn 7 August 2026 and 10 August 2026. I ultimately decided that the latter affidavit detailed administrative matters and ought not be adduced into evidence. However, the former, despite its lateness, expanded on matters which were directly relevant to the core issue the subject of the defendant’s grievance, namely, that the defendant, as the costs respondent and the one held liable for the costs payable, should not be treated as being synonymous with the corporations of which she was a director. Accordingly, leave was granted to file, and to adduce the evidence contained within, the affidavit of Mr Peter McCrohon (the plaintiff’s solicitor director) sworn 7 August 2026.

27. The various deponents were not required to attend for cross-examination.

28. The salient features of the evidence of Mr Peter McCrohon (the plaintiff’s solicitor director) can be summarised as follows:

29. He was a legal practitioner and director principal of the plaintiff (through its two incorporated legal practice iterations, CharterLaw Pty Limited and, thereafter, CharterLaw Legal Pty Limited).

30. Between December 2023 and mid-October 2024, the plaintiff acted for the defendant and her controlled entities. The legal affairs of the plaintiff and her controlled entities were substantial, varied and often complex.

31. The defendant had informed him that her gross assets and wealth were in the vicinity of $200 million and that the defendant and her controlled assets had borrowed substantial funds from a secured non-bank financial institution in the vicinity of $90 million to $100 million.

32. In respect of her controlled entities, the defendant was the sole director and sole shareholder of each.

33. In circumstances where the shares in such controlled entities were owned or held by another controlled entity, the defendant was the sole director and shareholder of that shareholder entity.

34. The defendant was the sole provider of various unsecured loan facilities advanced by her to her controlled entities.

35. As an unsecured creditor, the defendant ranked behind non-bank financial institutions that had made secured loans to a controlled entity, being loans that were secured by the assets of the relevant controlled entity and by the defendant’s personal guarantee.

36. For all purposes, the financial interests of the defendant and her various controlled entities were identical.

37. In mid-October 2024, the defendant terminated the plaintiff’s services without cause and directed the plaintiff to cease acting for her and her controlled entities, and to transfer all files to her new legal representatives.

38. In October 2024, the defendant was substantially indebted to the plaintiff for unpaid legal fees.

39. In November 2024, the plaintiff wrote to the defendant seeking payment of outstanding legal fees, to which there was no response.

40. In early 2025, the plaintiff lodged an initial consolidated costs assessment application for all 12 matters.

41. The application was rejected by the Manager, Costs Assessment, who directed the plaintiff to prepare and lodge 12 discrete costs applications, one for each individual matter.

42. On 28 January 2026, the costs assessor completed his assessment.

43. On 13, 17 and 19 February 2026, the defendant received costs certificates against the defendant in the sum of $121,748.58.

44. On 20 February 2026, the plaintiff’s lawyers wrote to the defendant’s then lawyers seeking payment of the said amount.

45. On 23 February 2026, judgment was entered in favour of the plaintiff as against the defendant in the sum of $121,748.58.

46. On 6 March 2026, the plaintiff caused a Bankruptcy Notice to be issued in respect of the judgment.

47. On 9 March 2026, the plaintiff served the Bankruptcy Notice on the defendant’s then lawyers.

48. On 25 March 2026, the defendant’s then lawyers commenced proceedings in the Federal Court of Australia.

49. On 27 March 2026, the plaintiff was served with a copy of the defendant’s application to the Federal Court, together with a supporting affidavit sworn by the defendant on 25 March 2026.

50. In or about June 2026, the plaintiff received the defendant’s District Court Notice of Motion and affidavit in support, in respect of which it wrote to the defendant’s new lawyers seeking clarification and particulars of her claim.

51. As at 24 June 2026, the plaintiff was of the view that no costs review application had been lodged by the defendant and that the Manager, Costs Assessment, found the review applications to be technically flawed and consequently rejected them. In any event, any such review application would have been out of time.

52. The assertions in the defendant’s affidavits, to the effect that invoices were issued to different named entities including a non-existent entity, and that liability had been attributed to the defendant personally when she was not the correct costs respondent for all the amounts the subject of the Certificates of Determination of Costs, are completely spurious.

53. All the entities are ‘clearly the alto [sic] ego’ of the defendant because the defendant, during the course of their relationship, ‘completely disregarded their separate existence on the basis that there was a clear unity of interest between her interest as the owner in the interests of the entity.’

54. The assertions in the defendant’s affidavits ‘are flawed at law’ as they had not been previously raised by the defendant in her objections filed in the 12 costs assessments and, alternatively, if they were raised, they were rejected by the costs assessor.

55. There was an exchange of correspondence between the two parties on 7, 8 and 9 July 2026, in which, in part, the plaintiff requested that the defendant’s lawyers explain the reasons why the defendant contends that the judgment should be set aside because it was entered irregularly and because it was entered without notice to her, to which no adequate reply was received.

56. The defendant’s application to the District Court to set aside a judgment based on a costs certificate conflates the option that is available to a legal practitioner to proceed under either the costs assessment regime or the common law with the incorrect view that the client/costs respondent/review applicant has the same or similar option, and therefore, the application by the defendant is misconceived.

57. At all times, separate financial accounts were kept and maintained by the plaintiff in respect of each ‘Diane Maloney matter’.

58. In total, the plaintiff was retained in respect of some 45 discrete matters during the 10 month period between 15 December 2023 and 14 October 2024.

59. On 14 October 2024, the plaintiff received a letter from a law firm on instructions from the defendant, Plaza Hotel Group Holdings Pty Limited, Plaza Hotel Group Operations Pty Limited and Winchester Finance Pty Limited, enclosing letters of uplift and authorities in respect of a number of matters.

60. The plaintiff’s affidavit details a number of legal matters in respect of which the firm was engaged, the file numbers pertaining thereto and a description of the legal services to which each matter related.

61. The asserted fragmentation claim made by the defendant has no substance and should be dismissed.

62. The defendant’s assertion that the costs assessor made disclosure errors is denied, although, it is conceded that if there was an error, then this is a matter for review by the costs review panel.

63. The defendant’s assertion that the costs assessor made errors in respect of specific charges is denied, although, it is conceded that if there was an error, then this is a matter for review by the costs review panel.

64. The defendant’s assertion that the costs assessor made errors in respect of the conclusion that she was the proper costs respondent for each of the invoices is denied and Mr McCrohon asserts that the defendant’s dominant management and financial control of her entities, which she ran and conducted on a full-time basis, were such that the financial interest of the defendant and her various controlled entities were identical. It is conceded, however, that if there was an error with respect to the correct costs respondent, then this is a matter for review by the costs review panel.

65. The defendant has previous experience with the NSW costs assessment regime, in part because she was admitted as a legal practitioner on 10 October 1997 and in part because she was an unsuccessful defendant in a costs dispute with her former lawyers.

66. In one of the affidavits, Mr McCrohon sets out a summary of the 28 new instructions received by the plaintiff from the defendant between December 2023 and June 2024 ‘in respect of her various business interests’, during which 13 instructions resulted in a costs agreement being sent to the defendant (but never signed by her, although the ongoing performance clause remained operative); 15 instructions resulted in no costs agreement being issued; 17 instructions resulted in the issue of 27 invoices to the defendant all of which were paid in full; and 12 instructions resulted in the issue of 25 invoices to the defendant, with an estimated 10 invoices having been paid, the remainder of which resulted in a costs assessment application by the plaintiff.

67. The defendant came to resent the receipt of costs agreements from the plaintiff.

68. Of the nine corporations listed in paragraph 10 of the defendant’s affidavit sworn 3 August 2026, the defendant ultimately controlled all shares and all membership interests; the defendant was the sole director of each; the defendant could ‘co-mingle’ the funds of one entity for the purpose of paying the financial obligations of another entity; the defendant could ‘siphon’ assets from one entity to another; there was no independent oversight by others, who were subject to the defendant’s instructions as sole director and ultimate controller of each entity; and the defendant could ‘allow’ any entity ‘to operate on an undercapitalised basis’ on the basis that she was able to pay active creditors of the entity.

69. The defendant failed to hold required board meetings or pass formal resolutions.

70. The defendant issued instructions on the basis that her accountants, lawyers and financiers knew that she was the absolute controller of each entity and where such entity was indebted to a third party financier, that she was personally liable as the sole guarantor.

71. One of the examples provided by Mr McCrohon was said to be indicative of a ‘typical commercial transaction where all the parties are controlled by the same governing mind’, namely, the defendant, and all have the same financial and commercial interests.

Defendant’s submissions

25. Counsel for the defendant summarised its position as follows:

26. The Motion should be granted.

27. The focus of r.36.15 of the UCPR, so as to found a decision to set aside a judgment, requires sufficient cause being shown that the judgment was entered irregularly, illegally or against good faith, that is, on the steps taken to enter judgment rather than the merits of any decision, or the irregularity of other steps in the proceedings, and the rule applies not only to ordinary judgments or orders but also those made on an ex parte basis: Perpetual Trustees Australia Ltd v Heperu Pty Ltd & Ors (2009) 78 NSWLR 190; [2009] NSWCA 387 at [17] (Allsop P, Campbell JA and Handley AJA); Choi v Commissioner of Police, New South Wales Police (No 2) [2021] NSWCA 290 at [3] (Macfarlan and McCallum JJA).

28. In the context of a judgment arising from a costs determination certificate made in favour of a law firm, the Court of Appeal in Calandra v Murden [2015] NSWCA 231 at [20] (Beazley P, Meagher and Leeming JJA) held that a judgment will be irregular where the judgment would require payment of costs to which the law firm is not entitled. (I would add, parenthetically, that in the present case, this ought be read as ‘not entitled to costs from this costs respondent as opposed to payment of costs to which the law firm might be entitled from the entity the subject of the solicitor-client relationship’).

29. Calandra v Murden was applied by the Court of Appeal in Bingham v Bevan (2023) 111 NSWLR 287; [2023] NSWCA 86 at 302 [69] (Basten AJA with Meagher and White JJA agreeing), which ordered that a judgment be set aside on the basis that it was irregular because the solicitor was not obligated to pay the barrister seeking to recover his fees, in light of their fee agreement.

30. The Court of Appeal in both matters held that r.36.15 of the UCPR applied because s.70(4) and (5) of the LPULAA, which allows a person to register a costs determination certificate with a court and obtain judgment, assumes that there is a legal liability to pay the costs as determined by the costs assessor such that proof to the contrary means the relevant judgment is irregular.

31. A client’s liability to pay legal costs arises from their retainer: Hendriks v McGeoch [2008] NSWCA 53 at [65].

32. Relevantly, where a solicitor acts for a company and receives instructions from a director or shareholder, the solicitor does not necessarily create a retainer with the individual in a personal capacity: Cooper v Winter [2013] NSWCA 261 at [81], [83] (Ward JA with whom McColl and Barrett JJA agreed).

33. The defendant did not retain the plaintiff in her personal capacity for each of the matters in dispute and, therefore, the judgment was entered irregularly because liability for the defendant to pay the plaintiff’s legal costs has not arisen, consistent with Bingham and Calandra.

34. The defendant was not the plaintiff’s client in specific matters the subject of the costs assessment.

35. The liability of a person to pay legal costs will ordinarily be sourced in a contract. No such contract exists in the circumstances. The lack of a valid costs agreement between the plaintiff and the defendant supports a conclusion that the plaintiff did not establish a personal retainer for the matters in question and, therefore, the defendant was not its client.

36. Each of the invoices are addressed to a non-existent entity referred to as the ‘Diane Marie Maloney Group’, even if it be that the covering letter to each invoice refers to the defendant as the client. If one were to conclude that the defendant was not the client for at least some of the matters, the judgment is called into question as having been irregularly entered and should be set aside pursuant to r.36.15.

37. It is not entirely clear what the plaintiff meant by the defendant being the alter ego of certain controlled companies. The fact that the defendant was a sole director, sole shareholder, instructor and/or otherwise involved with the company is not sufficient to make her liable for costs incurred by that company. The evidence does not disclose any basis on which the defendant could otherwise be liable for the plaintiff’s legal costs, for example, by virtue of an agreement stipulating that she would be an associated third party payer under s.171 of the LPUL. (I add, parenthetically, nor is there any document which might suggest that the defendant had guaranteed the payment of costs incurred by the entities which instructed the plaintiff).

38. Sufficient cause, within the meaning ascribed in r.36.15, will be demonstrated where the irregularity causes an injustice, and the injustice would be alleviated by setting aside that irregular judgment: Manhari Recycling Pty Ltd v Compass Global Holdings Pty Ltd [2021] NSWCA 252 at [17] (Payne JA with whom Bell P and Beech-Jones CJ at CL agreed).

39. Sufficient cause is said to have been shown by virtue of the fact that the evidence demonstrates that the defendant bears no liability for paying at least some of the invoices the subject of the judgment and by virtue of the fact that the costs review procedure is now underway, and any substituted costs determination will involve the judgment being set aside as no longer reflecting the revised cost determination. It was submitted that these matters culminate in a conclusion that it would be appropriate and not futile to set aside the judgment: Gleneagle Securities Nominees Pty Ltd v Kirkham International Pte Ltd [2025] NSWSC 934 at [6] (Peden J).

40. Not setting aside the judgment would exacerbate the challenges faced by the defendant including further substantial costs, proceedings in the Federal Court of Australia regarding setting aside the Bankruptcy Notice, reputational injury arising from the proceedings and consequential impact to the defendant’s ability to conduct business and raise capital for her business ventures, not to mention the increased risk of inconsistent judicial determinations, and the impact of the defendant having to progress multiple proceedings at once.

41. It was submitted, in relation to the alternative orders sought in the Notice of Motion, that an order setting aside the judgment under r.36.16(2)(b) of the UCPR and a stay of proceedings and enforcement under ss.67 and 135 of the CPA would be an appropriate alternative remedy, given that the defendant has commenced costs review proceedings which, by virtue of s.86(1) of the LPULAA, have the effect of suspending the operation of the relevant costs determinations pending its outcome; the grounds of review demonstrate a bona fides challenge to the underlying costs assessment; if the review results in the determination being varied or set aside, the foundation and quantum of the judgment will be affected; and setting aside the judgment would limit the prejudice it causes to the defendant in circumstances where the underlying costs determinations have already been suspended pending a costs assessment review.

42. In the context of a judgment obtained by registering a costs determination certificate, as was the case here, courts have explained that it is appropriate to stay a judgment where the underlying costs determination certificates are already stayed. Beech-Jones J, in Aquaqueen International Pty Ltd v Gilles [2014] NSWSC 804 at [31], held that once a costs assessment is suspended, it would have to automatically follow that the relevant court would stay any enforcement action based upon a judgment that gave effect to a certificate that reflected the suspended assessment. (I add, parenthetically, that this view is as apposite to an application to set aside as it is to an application to stay a judgment. A similar situation arose in Palmer v Mohareb [2019] NSWSC 975 where a costs assessment debtor applied for a review of a cost determination and subsequently sought to set aside the judgment based on such determination before the review was complete. In that matter, Fagan J granted a stay on the enforcement of the judgment pending the outcome of the review).

Plaintiff’s submissions

26. Counsel for the plaintiff summarised its position as follows:

27. The Motion should be dismissed.

28. The law of retainers is such that a retainer is a contract between a solicitor and the client for the provision of legal services by the solicitor for a fee and must be proved like any other contract: Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 at [208].

29. Whether a retainer exists depends on whether it was the intention of the parties that it should be created, reflecting basic contractual principle, although retainers may be implied from conduct if the conduct of the parties shows that the relationship of solicitor and client has in fact been established between them: Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq*) (No 2)* [2024] NSWCA 232 at [27] (Stern JA).

30. A summary of the principles relevant to implied retainers was enunciated in Adelaide Concrete Cutting & Drilling Pty Ltd v Marino (No 2) [2024] NSWSC 499 at [365] - [366], in which Meek J held that an implied retainer will only arise where, on an objective consideration of all the circumstances, the parties’ intention to enter into a contractual relationship may be imputed. His Honour set out a number of factors which have in the past been recognised as indicative of the existence of a retainer as between solicitor and client. (I add, parenthetically, that notwithstanding the accuracy of the factors outlined by his Honour, neither of the bullet points outlined at [365] of the judgment imputed liability on a person in her individual capacity in circumstances where the implied retainer pertained to a solicitor acting for an entity. This is not to be understated. So too will be the case with a ‘general retainer’ whereby a solicitor agrees to undertake the conduct of all of a particular client’s legal affairs).

31. Reliant on Choi v Secretary, Department of Communities and Justice (No 2) [2022] NSWCA 264, the plaintiff submits that while the concept of irregularity includes a contravention or non-compliance with specific provisions governing the making or entry of a judgment or order or where the judgment is excessive in the sense that it is entered for more than is due or in reliance on an ambiguous admission or contrary to an agreement between the parties, irregularity does not extend to errors in the merits of the substantive decision or earlier procedural deficiencies: Weber v Aquaqueen International Pty Ltd [2013] NSWSC 1181 at [121] (Garling J).

32. The defendant’s application to set aside judgment is an abuse of process, the categories of which are not closed. Reliant on Rogers v R [1994] HCA 42; (1994) 181 CLR 251, abuses of process generally fall into one of three categories. First, the court’s procedures are invoked for an illegitimate purpose; secondly, the use of the court’s procedures is unjustifiably oppressive to one of the parties; or thirdly, the use of the court’s procedures would bring the administration of justice into disrepute.

33. Section 73 of the LPULAA (which provides that a cost determination is binding on all parties and no appeal or assessment lies in respect of the determination except as provided by this Part (that is, under s.89 of the Act)); s.89 of the LPULAA (which provides a mechanism for a party to a costs assessment that has been the subject of a costs review to appeal against the decision of the review panel to either the District Court or the Supreme Court); and s.93C(3) of the LPULAA (which provides that a costs assessor may determine any anterior or incidental question of fact or law, but not so as to establish an issue estoppel for that question for the purpose of any other proceedings) operate in combination to create an issue estoppel following the costs assessor’s determination, which similarly travels with the entry of judgment.

34. The costs assessor determined the anterior or incidental questions of fact and law, namely, that the defendant was the client of the plaintiff for the purposes of the disputed costs assessment applications.

35. This created an issue estoppel in relation to the question of the retainer which the defendant seeks to impugn and which cannot be the focus of an irregularity.

36. Reliance on Calandra and Bevan by the defendant is misconceived as both decisions turned on special facts that do not apply to the present dispute.

37. The findings of fact of the costs assessor are final and binding determinations on the defendant: Tetbury Pty Ltd v Mahony trading as Mahony Law [2024] NSWSC 446 at [171].

38. The application is more in the nature of an appeal or review of the merits of the decision itself rather than the proof of extant irregularity and, to this end, falls foul of the holding in Orsini v Taouk [2026] NSWSC 621 (Sirtes J).

39. The defendant’s complaints do not properly invoke the jurisdiction of r.36.15 of the UCPR and the application should fail.

40. The defendant is running the same argument before the review panel as it seeks to run in the present proceedings, constituting an abuse of process.

41. The defendant has not demonstrated sufficient cause to set aside the judgment in circumstances where the review panel has been engaged to determine these very issues.

42. The defendant has been granted an extension of time to review the costs assessor’s certificates and ought to avail herself of that opportunity first.

43. The contention that the judgment was entered irregularly must fail.

44. The defendant already has the statutory protection of a suspension under s.86 of the LPULAA.

45. The manner through which judgment was obtained was entirely orthodox and commonplace in this kind of dispute.

46. The alternative ground under r.36.16(2)(b) should also fail.

47. Given that relief in the form of a stay of enforcement of the judgment does not feature in the Notice of Motion, it should not be granted to the defendant. In any event, there is no utility in seeking a stay as the plaintiff is precluded from taking enforcement action pending the review panel’s determination, an understanding which the plaintiff holds and to which it will adhere.

Consideration

27. The discretion under rr.36.15 and 36.16 of the UCPR is of wide import and turns substantially on whether there is a real likelihood of injustice if the judgment remains in place.

28. The starting point is that the judgment in question was not the product of an adjudication by this Court upon the defendant’s liability to the plaintiff. It arose solely by operation of the deeming provision enacted via s.70(5) of the LPULAA, upon the filing of the certificates issued by the costs assessor, and which provides that, upon such filing, an unpaid amount specified in such a certificate is, ‘with no further action’, taken to be a judgment of this Court.

29. This statutory mechanism does not, however, render immune from review a judgment which has been brought into existence upon a certificate which might not have properly been capable of founding a judgment against the particular person named as the judgment debtor. Here, there is a substantial and presently unresolved question about whether the defendant was, in her individual capacity, the client liable for the costs the subject of the certificates at all. The material before the Court suggests that, in respect of most, if not all, of the relevant invoices, a substantial part of the legal services were provided to corporate entities, separate and distinct in law from the defendant, notwithstanding her position as director and shareholder. Such issue attends upon not merely the quantum of the costs but the anterior question of whether the costs were recoverable from this individual defendant as opposed to corporate entities.

30. My reading of the costs assessor’s determination persuades me to the view that he does not appear to have made a formal finding of fact that the defendant was indeed ‘the client’. Rather, he appears to have given her the appellation ‘the client’ under the heading of ‘Background’ on page 2 of his Statement of Reasons. In my view, this routine appellation was not founded on the usual discourse between the parties and the assessor, through submissions or otherwise, which might have been expected to precede its elevation into a finding of fact.

31. To the extent that issue estoppel became a feature of the submissions, this would only arise if the ‘issue’ (that of the defendant being the proper costs respondent and, therefore, ‘the client’) had been ventilated in the costs assessment process. On my reading, it had not.

32. The fact that one might be capable of, have the means to, or might be predisposed to carrying out a fraud on an entity (as was advanced in the plaintiff’s evidence) by siphoning funds from one corporation to another, which was not admitted, does not make such person a ‘client’ with ‘identical interests’ as the entities of which she is a director. These matters cannot be permitted to circumvent the natural order of legal principle, which creates a delineation between a corporation and an individual, except in circumstances where, for example, an interpretative statutory provision defines an individual as including a corporation and a body corporate or politic and vice versa.

33. In my view, this issue alone is sufficient to enliven r.36.15(1) of the UCPR. I have difficulty accepting the plaintiff’s submission to the effect that the final and binding nature of the costs assessor’s determinations preclude the Court from exercising jurisdiction of the kind sought to be invoked by the defendant. This would mean that s.36.15 of the UCPR, in light of its wide breadth, would have no work to do in the present case. In the same vein, I have difficulty accepting the plaintiff’s submission to the effect that the defendant’s advancement of the argument here, which it proposes to similarly pursue in the costs review proceedings, constitutes an abuse of process. The invocation of r.36.15 of the UCPR, based on reasons on which the defendant relies to advance its review applications, operates independently of those proceedings and is directed to a different (in the present case, interim) conclusion.

34. I am bound by the holding in Bingham v Bevan. The parallel to be deduced therefrom is that the outcome in the present case must also involve an analysis of the source documents or arrangements on which the costs assessor’s determination were founded. To the extent that an irregularity manifested itself at that juncture, thereby infecting the judgment, then, to my mind, there is no reason why a conclusion cannot be reached to the effect that the judgment was entered irregularly.

35. Whilst the core functions of the costs assessor pursuant to s.199 of the LPUL, which required the determination of whether or not a valid costs agreement existed and whether the legal costs were fair and reasonable and, to the extent that they were not fair and reasonable, the determination of the amount of legal costs (if any) that were are payable, were the substance of appreciable consideration, the fact remains that the imputation of liability upon the defendant personally for payment of the adjudged fees was not. It is for this reason that the factual matrix in decision of Orsini v Taouk [2026] NSWSC 621 is distinguishable from the present circumstances. In that case, the solicitor, in the costs assessment proceedings, was unsuccessful in seeking to extend liability for the payment of her costs to multiple parties and the issue was comprehensively argued, culminating in the assessor and review panel making substantive (as opposed to ancillary) findings on this issue, the subject of which created an issue estoppel. This did not happen in the costs assessment proceedings the subject of the present Motion.

36. The judgment was entered by the filing of certificates which gave effect to the costs assessor’s determination, but the determination itself is presently the subject of a statutory review which has been accepted out of time by the Manager, Costs Assessment. The review panel is vested with the same functions as a costs assessor in relation to the costs assessment and may affirm the determination or set it aside and substitute the determination which, in its opinion, ought to have been made.

37. The defendant’s contention concerning the identity of the client is therefore not a collateral or fanciful challenge. It is a matter which falls squarely within the statutory costs assessment and review process and, if established, may fundamentally alter the legal liability said to be evidenced by the certificates. In those circumstances, I am satisfied that there is sufficient cause, by a combination of factors, to regard the judgment as having been entered irregularly, or at least in circumstances in which it would be contrary to good faith to permit it to remain operative against the defendant pending an informed resolution of that question. Put another way, there is a real likelihood of injustice if the judgment remains in place in the sense described in Manhari Recycling.

38. This conclusion is reinforced by the statutory architecture governing a review. Section 83 of the LPULAA permits a party to seek review within 30 days, while s.83(1A) expressly empowers the Manager, Costs Assessment, to extend that period. The Manager has exercised that power in the present case, with the consequence that the defendant’s review application is properly on foot.

39. Section 86(1) of the LPULAA then provides that, where an application is made to a review panel, the operation of the determination is suspended.

40. The significance of this provision is not merely procedural. The authorities recognise that the suspension deprives the determination, during the period of suspension, its operative force and may prevent a judgment being obtained by filing the certificate. In Miles v Slack [2022] NSWSC 926, Walton J, considering s.86 in the context of a costs judgment, concluded at [104] that the statutory suspension affected the ability to obtain judgment by filing the certificate. His Honour relied upon and adopted the reasoning in Taouk v Lawyers Pty Ltd trading as Yazbeck Law [2018] FCCA 3390 and the remarks in Mohareb v Palmer [2018] NSWCA 220, concerning the force and effect of the statutory suspension.

41. Although the present judgment was entered before the defendant’s review application was lodged and therefore was not, at the time of filing, caught by an existing s.86 suspension, the statutory scheme nevertheless demonstrates the legislature’s intention that a costs assessor’s determination should not ordinarily be enforced while its correctness is being subjected to the prescribed review process. That consideration materially informs the discretionary question whether this judgment should now be permitted to stand.

42. I am inclined to grant the order to set aside the judgment, given that the prejudicial consequences for the defendant, both personal and financial, if the judgment were allowed to stand, are imminent and multifarious, particularly for a commercially minded individual with numerous business ventures and to whom considerable detriment will flow, and especially from the ongoing presence of Federal Court bankruptcy proceedings. The order is necessary out of an abundance of caution notwithstanding that had she lodged the application for a review of the costs assessor’s determination before the plaintiff entered judgment against her, she would have been entitled to the benefit of a suspension (much like a stay) of the costs assessor’s determination pursuant to s.86(1) of the LPULAA. The consequences of a judgment, however, are starkly different to the consequences arising from a costs assessment determination at first instance.

43. Having come to the view that the judgment should be set aside, I do not intend to consider the relief sought in the alternative, in the nature of a stay.

44. For these reasons, I make the following orders:

45. On the Defendant’s Notice of Motion filed 15 June 2026, pursuant to r.36.15 of the Uniform Civil Procedure Rules 2005 (NSW), the judgment entered in favour of the plaintiff as against the defendant on 23 February 2026 is set aside.

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