Gilmore Finance Pty Ltd v Aesthete No 3 Pty Ltd

Court of Appeal (NSW)|2020-04-30|Before: Macfarlan JA, Meagher JA, White JA, Dawson J, MacFarlan JA

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

Judgment

MACFARLAN JA: I agree with Meagher JA.
MEAGHER JA: The applicant, Gilmore Finance, seeks relief under Supreme Court Act 1970 (NSW), s 69 quashing orders made by the District Court on 18 January 2018. Under Uniform Civil Procedure Rules 2005 (NSW), r 59.10(1) the proceedings for judicial review were to be commenced within three months of that decision, and accordingly by 18 April 2018. The applicant's summons was filed on 21 December 2018, and an amended summons filed on 2 March 2020. Accordingly the applicant seeks an extension of the time for commencing the proceedings of approximately 8 months.

The costs assessment proceedings

Following proceedings commenced in the Supreme Court by the first respondent (Aesthete) in September 2015, and resolved after a contested hearing on 16 September 2015, Gilmore Finance was ordered on 16 October 2015 to pay Aesthete's costs. Those costs were subsequently the subject of a costs assessment under Pt 7 of the Legal Profession Uniform Law Application Act 2014 (NSW). The amount claimed by Aesthete's itemised bill was $147,349 (ignoring cents). On 12 April 2016 a costs assessor certified those costs to be $77,864. Aesthete's application for review of those costs was determined on 18 August 2016. The Review Panel affirmed the determination of the costs assessor. Aesthete then appealed to the District Court under s 89(1)(a). That appeal was to be "by way of a rehearing" at which fresh evidence or evidence in addition to or in substitution for the evidence before the Review Panel or costs assessor might, with leave, be given. On 18 January 2018 the primary judge (Wilson DCJ) allowed that appeal and entered judgment for Aesthete for $141,660.

The application for judicial review

The sole ground for the claim to relief by way of judicial review is that the primary judge committed a jurisdictional error by "failing to conduct an appeal by way of rehearing according to law".

An appeal by way of rehearing under s 89(4)

Section 89 of the Legal Profession Uniform Law Application Act provides: (1) A party to a costs assessment that has been the subject of a review under this Part may appeal against a decision of the review panel concerned to - (a) the District Court, in accordance with the rules of the District Court, but only with the leave of the Court if the amount of costs in dispute is less than $25,000, or (b) the Supreme Court, in accordance with the rules of the Supreme Court, but only with the leave of the Court if the amount of costs in dispute is less than $100,000. (2) The District Court or the Supreme Court (as the case requires) has all the functions of the review panel. … (4) An appeal is to be by way of a rehearing, and fresh evidence or evidence in addition to or in substitution for the evidence before the review panel or costs assessor may, with the leave of the Court, be given on the appeal.
The nature of an appeal by way of rehearing is described in Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40 at [23] (Gaudron, Gummow, McHugh and Hayne JJ) by reference to the characteristics which distinguish it from a hearing de novo and an appeal in the strict sense: For present purposes, the critical difference between an appeal by way of rehearing and a hearing de novo is that, in the former case, the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error, whereas, in the latter case, those powers may be exercised regardless of error. At least that is so unless, in the case of an appeal by way of rehearing, there is some statutory provision which indicates that the powers may be exercised whether or not there was error at first instance. And the critical distinction, for present purposes, between an appeal by way of rehearing and an appeal in the strict sense is that, unless the matter is remitted for rehearing, a court hearing an appeal in the strict sense can only give the decision which should have been given at first instance whereas, on an appeal by way of rehearing, an appellate court can substitute its own decision based on the facts and the law as they then stand.
The following passage from the judgment of Gageler J in Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30 at [31] makes clear that while it remains necessary to identify an error in the decision appealed from, in an appeal by way of rehearing that requirement may be satisfied by reason of further evidence adduced in the appeal or a change in the law which has the result that looked at in retrospect the decision appealed from was in one or more respects incorrect: For practical purposes, the difference between correction of error on an appeal in the strict sense and correction of error on an appeal by way of rehearing lies in the temporal perspective that the appellate court is required to adopt in examining the correctness of the judgment under appeal. An appellate court determining an appeal in the strict sense is required to determine the correctness of the judgment under appeal at the time that judgment was given: in an appeal from a final judgment of a judge sitting without a jury, the correctness of the judgment is to be determined on the evidence adduced at the trial and on the law as it then stood. An appellate court determining an appeal by way of rehearing, in contrast, is required to determine the correctness of the judgment under appeal in retrospect: in an appeal from a final judgment of a judge sitting without a jury, the correctness of the judgment is to be determined on the evidence adduced at the trial supplemented by any further evidence that the appellate court may allow to be adduced on the appeal, and on the law as it stands when the appellate court gives judgment on the appeal.
As Basten JA recently observed in Gazecki v McCabes Lawyers Pty Ltd [2020] NSWCA 98 at [42] by s 89(2) the Court determining the appeal by way of rehearing is said to have "all the functions of the Review Panel". By s 85(2) the Review Panel in turn had "all the functions of a costs assessor in relation to the assessment concerned and is to determine the application, subject to Pt 7 of the Act and the costs assessment rules, in the manner that a costs assessor would be required to determine an application for costs assessment." It was not submitted by either party that the effect of this provision is that the powers of the appellate court may be exercised whether or not there was error (in either of the senses referred to above) on the part of the Review Panel.

The reasoning of the primary judge

Gilmore Finance submits that the primary judge proceeded on the basis that the hearing was a hearing de novo and expressly declined to make findings as to the correctness of the decision under review. Particular reference is made to [39] of his Honour's reasons for judgment (Aesthete No 3 Pty Ltd v Gilmore Finance Pty Ltd [2018] NSWDC 1): As this is a rehearing of the costs assessment, it is not necessary to analyse and make findings as to failures on behalf of the Costs Assessor or the Review Panel, however, it seems to me that as a matter of common practice, enquiries ought to have been made as to the reason the work undertaken before the costs for that work was disallowed.
In response Aesthete submits that this observation and his Honour's reference to "findings as to failures on behalf of the Costs Assessor or the Review Panel" are to be understood as directed to the underlying reasons for the errors of the Review Panel in assessing the fairness and reasonableness of the costs claimed by reference to the three matters identified at [15] and, more particularly, at [34] namely the appropriate hourly rate, the time allowed in performing the work and the justifiable scope of the work performed.
Earlier in his reasons, the primary judge records that the appeal is by way of rehearing ([3]) and sets out the errors contended for in Aesthete's grounds of appeal. Those errors included that in determining the "fair and reasonable costs" the Review Panel had failed correctly to identify the urgency and complexity of the proceedings which required the skill and experience of a senior practitioner, justified the hourly rate of that practitioner, required from time to time the assistance of a second solicitor and required the resources of senior and junior counsel ([17]).
In addressing these questions the assessor and Review Panel did not have the benefit of any affidavit evidence of Mr Amirbeaggi, the sole director of Aesthete and the principal solicitor in the firm Yates Beaggi Lawyers acting on its behalf. In the appeal to the District Court, Mr Amirbeaggi sought to explain and justify each of the costs that it was contended the assessor and Review Panel had incorrectly disallowed or reduced as not being "fair and reasonable in the circumstances" (Legal Profession Uniform Law (NSW), s 172).
For example the assessor rejected claims for the cost of Mr Amirbeaggi reviewing some 63 folders of documents relating to the development financing transaction which had resulted in a contested appointment of a receiver and manager by Gilmore Finance at a time when Aesthete had "approximately 60 pre-sale contracts that were entered into and lease issues" ([9]). The assessor allowed two hours at a reduced hourly rate for that work, noting that on the detail provided to him he was "unable to determine that it was reasonably necessary to review 67 [sic] lever arch folders". The Review Panel, which also did not have the benefit of any evidence from Mr Amirbeaggi, agreed and adopted the reasoning of the assessor.
It is not necessary to engage any further with the primary judge's reasons. It is generally correct to say that his Honour's analysis focussed on the correctness of the submissions of the parties as to whether the incurring of the challenged costs items was fair and reasonable in the circumstances, and addressed that question by reference to the further evidence adduced pursuant to s 89(4). In doing so his Honour made express findings which necessarily involved the rejection of reasoning or observations of the assessor and Review Panel.
However as counsel for Gilmore Finance submits, the primary judge does not engage at all with any particular findings of the Review Panel, or assessor whose reasons the Panel adopted. In considering the application for an extension of time it may therefore be accepted that the applicant's substantive claim for judicial review has arguable prospects of success.

Application for extension of time

UCPR, r 59.10(1) provides that proceedings for judicial review must be commenced within three months of the date of the relevant decision. Rule 59.10(2) confers power to extend that time. Rule 59.10(3) provides: (3) In considering whether to extend time under subrule (2), the court should take account of such factors as are relevant in the circumstances of the particular case, including the following - (a) any particular interest of the plaintiff in challenging the decision, (b) possible prejudice to other persons caused by the passage of time, if the relief were to be granted, including but not limited to prejudice to parties to the proceedings, (c) the time at which the plaintiff became or, by exercising reasonable diligence, should have become aware of the decision, (d) any relevant public interest.
The discretion to extend time is given for the purpose of enabling the Court to do justice between the parties, thereby ensuring that the time limitation does not become an instrument of injustice: per McHugh J in Gallow v The Honourable Justice Dawson [1990] HCA 30; (1990) 64 ALJR 458 at 459. Accordingly as his Honour later observed in Re Commonwealth of Australia; Ex Parte Marks [2000] HCA 67; (2000) 75 ALJR 470 at [15]: An extension of time for seeking relief against a decision or judgment can only be granted if it is necessary to do justice between the parties. That means that it is necessary to have regard to the history of the matter, the conduct of both parties, the nature of the litigation and the consequences for the parties of a grant or refusal of the extension.
In addition to the factors mentioned in r 59.10(3), matters that ordinarily will fall for consideration include the length of any delay, the reason for it and whether the applicant has a fairly arguable case: Dyason v Butterworth [2015] NSWCA 52 at [65] (McColl JA, Barrett and Gleeson JJA agreeing) citing Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 at [55].
Of immediate note in consideration of this application is that, taking the original costs assessment as the "correct" costs assessment contended for by Gilmore Finance, the amount in issue, and accordingly the value of Gilmore Finance's interest in challenging the primary judge's decision, is no more than $65,000.
Four submissions are made in support of the application to extend time. First, it is said that the delay in commencing the proceedings - from April to December 2018 - is adequately explained and that it should not be found that Gilmore Finance made a deliberate decision not to appeal having been given some advice about its prospects of success. Secondly, it is submitted that there is no evidence of any prejudice to Aesthete if the extension of time is granted. Thirdly, it is contended that the prospects of success of the substantive application are good. Finally, it is suggested that the application raises a question of general importance because there is no decision in this Court directly addressing the nature of an appeal to the District Court under s 89(4).
The question of delay and whether any affirmative decision was made not to prosecute a challenge to the decision requires consideration of the evidence before this Court on the application for the extension of time.
Mr Gilmore swore two affidavits. His first includes the following chronology of relevant events. Coleman Greig acted for Gilmore Finance until 15 February 2018 when McKays, a Brisbane firm, was retained. The relevant solicitors at the latter firm included Mr Paul Evans, a partner, and Ms Lauren Joseph, a senior associate. Two days prior to McKays being retained, on 13 February, Aesthete had filed a notice of motion seeking to vary the costs order made by the primary judge in its favour. Eventually McKays instructed Sydney counsel to act for Gilmore Finance in relation to that motion. In or about September 2018 that counsel, although not briefed to do so, recommended that serious consideration be given to an appeal from the primary judge's judgment. Following that advice, McKays obtained further documents from Coleman Greig. Counsel provided an apparently favourable advice on the prospects of such a challenge, and the present application and a notice of appeal, since conceded to be incompetent, were filed in late December 2018.
Mr Gilmore's first affidavit is silent as to whether in February 2018 any decision was made not to prosecute any challenge to the District Court judgment. He maintains however that Gilmore Finance was not given any advice in or before February 2018 by Coleman Greig about its prospects of an appeal or as to the consequences of failing to do so within time.
After that affidavit was served subpoenas were issued at the request of Aesthete for the production of documents by Coleman Greig and McKays. An application to set aside those subpoenas was dismissed: Gilmore Finance Pty Ltd v Aesthete No 3 Pty Ltd [2019] NSWCA 181. The documents produced included itemised cost invoices.
The invoice produced by McKays for the period to 7 February 2018 includes the following details of matters attended to by solicitors of that firm: that on 19 January 2018 a copy of the judgment was sent by Coleman Greig to Ms Joseph at McKays; that on 22 January Ms Joseph was informed by a lawyer at Coleman Greig that "if we were to appeal the timeframe for it to be put on would be 1-3 months"; that on 3 February 2018 Mr Evans recorded an attendance "to review the judgment, relevant cases, material to hand, and consider preliminary view. A list of missing material to be obtained from Coleman Greig was also compiled"; that on 5 February 2018 Mr Evans had a telephone call with Mr Gilmore "to provide a preliminary advice on his prospects of appeal"; that on 6 February 2018 Mr Evans recorded a further attendance "reviewing the last of the material related to the appeal in order to form a final view"; and that on 7 February 2018 Mr Evans had a telephone call "with Mr Gilmore to take instructions not to appeal; and advise of additional costs exposure".
Continuing this chronology by reference to a tax invoice dated 26 February 2018 produced by Coleman Greig: on 8 February 2018 an email was sent by Coleman Greig to Mr Evans "re final instructions and review of email re payment of order"; and on 9 February 2018 a lawyer at Coleman Greig had a telephone call with Mr Evans "receiving instructions and confirming queries". On the same day Gilmore Finance paid the judgment sum of $141,666 into the bank account of Aesthete.
In his further affidavit of 14 April Mr Gilmore sought to explain the entries in the McKays invoice. He recalled asking Mr Evans to review the judgment and provide some "guidance on an informal basis as to how to manage the outcome" of the costs proceedings. In response Mr Evans said that he could not give advice because the matter was too complicated and that should he wish to obtain substantive advice Mr Gilmore should contact Coleman Greig. That being the position, according to Mr Gilmore, McKays "were not being instructed to lodge an appeal as they were not in a position to advise… regarding the prospects of an appeal and therefore could not take instructions from me to lodge an appeal".
Mr Gilmore was not required for cross examination, the parties agreeing that submissions could be made which took issue with his affidavit evidence, including in reliance on these business records, without the need for those matters to be put to him in cross examination to satisfy the fairness rule in Browne v Dunn (1893) 6 R 67.
Having regard to these contemporaneous records I infer that on 7 February 2018 Mr Gilmore gave instructions to Mr Evans that Gilmore Finance was not going to pursue an appeal from the District Court costs judgment and that the amount of that judgment would be paid immediately. I also infer that by this time Mr Gilmore understood that there was a limited timeframe in which any such appeal could be pursued. It is unnecessary to determine whether in that context Mr Evans gave more than "preliminary advice on [the] prospects of success of an appeal", as the entry of 5 February 2018 confirms. What happened subsequently can be dealt with briefly. In September 2018, as a result of an unsolicited recommendation from counsel, further consideration was given to an appeal. That consideration resulted in the receipt of an advice on prospects, which in turn led to the commencement of proceedings in December 2018. That such action was taken in and after September 2018, notwithstanding that he may have been suffering from the effects of ongoing poor health during this period, confirms that Mr Gilmore's health did not prevent him from taking and acting on advice with respect to the commencement of an appeal.
The explanation for the delay in bringing the present application is that at some time after September 2018 Gilmore Finance changed its mind about challenging the District Court judgment. In February 2018 it decided not to do so although it had only received preliminary advice on the prospects of such a challenge. Consistently with that decision, it paid the judgment sum to Aesthete.
Where a party determines not to challenge an otherwise final judgment and has taken legal advice before doing so, the public interest in the finality of litigation and the certainty which it provides to the other party or parties is firmly against the granting of an extension of time in the absence of circumstances which as between the parties justify a different conclusion. Here Gilmore Finance had the opportunity to obtain more complete legal advice on its prospects of successfully challenging the judgment but chose not to do so, appreciating that there was a limited period in which any such challenge had to be made. Permitting Gilmore Finance to depart from the position it took in February 2018 would visit a form of prejudice on Aesthete, to the extent that it is to be taken to have proceeded thereafter on the basis that there would be no challenge to the District Court judgment.
Gilmore Finance's application to extend time must also confront the public interest in parties not incurring costs in litigation that are out of proportion to the amount in dispute and the importance of the claim: Civil Procedure Act 2005 (NSW), s 60. That is especially so where the subject matter of the claim is legal costs incurred in earlier litigation: see Huang v Attapallil [2017] NSWCA 181 at [21] (White JA). The applicant seeks to set aside the District Court judgment making it necessary for Aesthete to pursue a further costs assessment appeal in the District Court. That will involve the parties incurring further legal costs which, combined with the costs of this proceeding, almost certainly will exceed the amount in issue.
Finally while the application to this Court has arguable prospects of success the potential for an outcome more favourable to the applicant on any further appeal to the District Court remains uncertain. Taking all of these circumstances into account, the interests of justice do not require or warrant the extension of time sought.

Conclusion

At the time this proceeding was commenced in December 2018, Gilmore Finance also filed a notice of appeal in proceeding 2018/393204. That appeal has been abandoned and Gilmore Finance should pay Aesthete's costs of that appeal on the ordinary basis.
For these reasons the orders I propose are: 1. Refuse the application to extend time made under UCPR, r 59.10(2). 2. Dismiss the amended summons filed on 2 March 2020. 3. Dismiss the notice of appeal in proceeding 2018/393204. 4. The applicant (and appellant in that appeal) pay the first respondent's costs of the judicial review proceeding and appeal proceeding 2018/393204.
WHITE JA: I agree with Meagher JA.

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: 18 June 2020

Under Uniform Civil Procedure Rules 2005(NSW)

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