Howell v Rose

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11467/2000 - PAUL ROCH HOWELL v JOHN EMMANUEL ROSE

JUDGMENT (Extension of time for application for costs assessment)

1 MASTER: By amended summons filed 3 July 2000 the plaintiff seeks that his application for assessment of the defendant's bill of costs served 4 February 1998 be determined or alternatively, that the plaintiff be granted an extension of time pursuant to s 199(2) of the Legal Profession Act 1987 (the Act) and of Regulation 25 of the Legal Profession Regulations 1994. The plaintiff relied on two affidavits of Bruce Vernon Dennis sworn 13 June 2000 and 3 July 2000. The defendant relied his affidavit sworn 7 August 2000 and the affidavit of Rachel Lee sworn 8 August 2000. 2 The plaintiff is a former client of the defendant, a solicitor. The defendant acted for the plaintiff in a partnership dispute between the plaintiff and Fine Real Estate Network Pty Limited, Mervyn Fine and Patricia Fine in relation to the buying and selling of a number of properties in the Eastern Suburbs which were to be renovated and sold for a profit. The solicitor acted for the plaintiff in proceedings involving an application to the Supreme Court seeking a declaration as to the parties to the partnership and seeking an account upon dissolution of the partnership. The proceedings were referred to be heard by Mr Reynolds QC as a referee. Subsequently the proceedings came before McClelland CJ in Equity concerning the adoption of the referee's report. 3 There has been a long history of proceedings involving the solicitor recovering his outstanding legal fees in the District Court and this court. In the District Court the solicitor sought to enforce a personal covenant to pay the sum of legal costs. The plaintiff mortgaged his shares in his property at Darling Point in favour of the plaintiff. However, shortly after entering into this transaction the plaintiff sold the property. The client has filed three prior applications seeking to have the bill of costs assessed. These files have been closed by the proper officer. 4 A short chronology, which was helpfully set out by the defendant's counsel, is as follows:

(1) On 2 December 1994 the plaintiff and defendant entered into a costs agreement.

(2) On 21 August 1996 the plaintiff provided a mortgage to the defendant to secure costs.

(3) On 11 December 1996 the plaintiff withdrew instructions from the plaintiff.

(4) On 8 October 1997 an itemised bill was sent to the plaintiff's new solicitor.

(5) On 4 February 1998 essentially the same bill was served on the plaintiff. The only difference was that the defendant gave the plaintiff credit for payment of the sum of $86,042.

(6) On 24 November 1998 default judgment was entered for the defendant but was conditionally stayed pending further order.

(7) On 15 January 1999 the plaintiff filed his first application for a costs assessment.

(8) On 5 February 1999 a stay on judgment in the District Court for the defendant was dissolved.

(9) On 8 February 1999 the defendant's solicitor wrote to the proper officer of this court. On 10 February 1999 the proper officer wrote to the plaintiff's solicitor forwarding a copy of a letter from the defendant dated 8 February 1999. It stated: "Attached is a response to the application from the respondent solicitor. As judgment has been entered in the District Court for the outstanding costs, there is no jurisdiction to now have the bill assessed. An assessment application may not proceed until judgment is set aside. Any submissions from you should be received in this office within 14 days of the date of this letter. If we do not hear from you within this time, we intend to close the file."

(10) On 2 March 1999 a further letter was sent by the proper officer to the plaintiff's solicitor referring to her letter of 10 February 1999. It informed the plaintiff that if there was no response within 7 days the file would be closed. The plaintiff's solicitor did not reply to the letters of 8 February 1999 and 2 March 1999.

(11) On 26 March 1999 the first application for costs assessment was closed.

(12) On 30 July 1999 judgment in the District Court for the defendant was set aside on terms of payment.

(13) On 8 October 1999 the District Court re-entered judgment for the defendant.

(14) On 19 October 1999 the plaintiff filed a second application for costs assessment.

(15) On 26 October 1999 bankruptcy proceedings were brought against the plaintiff by Fine Real Estate Pty Limited in the Federal Court.

(16) On 27 October 1999 the defendant's solicitor forwarded the certificate of judgment to the proper officer of this court.

(17) On 18 January 2000 the proper officer wrote to advise that the file relating to the second application for assessment was closed.

(18) On 6 March 2000, by consent, judgment in the District Court was set aside conditionally.

(19) On 4 April 2000 the plaintiff filed a third application for costs assessment.

(20) On 10 May 2000 the defendant's solicitor filed a response to the plaintiff's application for assessment of costs.

(21) On 12 May 2000 judgment in the District Court was re-entered for the defendant against the plaintiff.

(22) On 18 August 2000 the plaintiff's notice of motion to assess the quantum of the certificate of judgment in the District Court was dismissed.

(23) On 26 October 2000 the plaintiff's bankruptcy hearing is set down for directions hearing.

The Law 5 Section 199 of the Act relevantly reads: "(2) An application relating to a bill of costs may be made even if the costs have been wholly or partly paid. If the costs have been wholly or partly paid, the application is to be made within the period prescribed by the regulations for the purposes of this subsection." 6 Regulation 25 of the Legal Profession Regulation 1994 reads as follows: "For the purposes of section 199(2) of the Act, the prescribed period for making an application for an assessment of a bill of costs is the period of 12 months after the bill was given to the client." 7 It is common ground that the first application for costs assessment was made on 15 January 1999 together with the prescribed fee. 8 The defendant's counsel referred to Tsekouras v Xenos (NSWSC, unreported 5 August 1997 Barr J); Hook v Simpsons Solicitors [1999] NSWSC 667; Ryan v Whitten [1999] NSWSC 865 and Brierley v Reeves t/as Kaplan Reeves & Co [2000] NSWSC 305. 9 In Tsekouras, Barr J stated that although the two bills submitted did not comply with the rules in force at the time about what they should contain, one of the bill contained a substantial amount of detail and they did not put the plaintiff in a false position. In Hook, Master Malpass stated that the intention of the legislature was to impose a prescribed period for the making of an application in those cases where payment has been made. If the payment has been made prior to the giving of a bill the prescribed period runs from any request for payment. 10 In October 1997, the defendant's bill of costs was served on the plaintiff's solicitor. In November 1997 a further bill of costs was served. Section 195 refers to service of documents on a person by document exchange. This tends to suggest that documents can be served on a solicitor. It is my view that by November 1997 at the latest the plaintiff would have been appraised of the amount that he was required to pay to the defendant. The 12 month time period runs from November 1997. Thus the plaintiff's application for costs assessment should have been lodged by 30 November 1998. It was not lodged until 15 January 1999. The application for costs assessment was filed outside the time stipulated by Regulation 25. 11 It is not clear whether the court in its inherent jurisdiction, can extend the 12 month period referred to in s 199 - see Selosse v Whitten Graham AJ, unreported, 26 August 1997, Tsekouras and Ryan. 12 Assuming the court has the power to extend time, the plaintiff submitted that the reason for the delay was the concurrent District Court proceedings and complying with orders made in those proceedings. The defendant submitted that the discretion ought to be refused. Firstly, because the detailed bill was calculated at a lower rate per hour than was set out in the costs agreement, thereby constituting a large concession by the defendant to the plaintiff; secondly, the bill was served originally in October 1997; thirdly, the present plaintiff has rendered the security he gave to the defendant worthless (except for his personal covenant) by disposing of his shares in the relevant home unit company (Darling Point Mews Pty Ltd) to his brother; fourthly, the agreed amount in the mortgage was agreed to be the minimum amount recoverable by the defendant; and sixthly, the history of the proceedings in the District Court and the lengthy delays - the judgment has been entered three times against the present plaintiff. 13 In the exercise of my discretion, I refuse to extend time for the reasons given by the defendant. Further, if the plaintiff disagreed with the proper officer's view that these proceedings could not continue in this court while there was a judgment in the District Court, he should have taken up the invitation to reply within 14 days, or answered the further reminder letter. He cannot now complain about it. It is now five years since the defendant commenced legal work for the plaintiff and over three since he ceased to act for the plaintiff. Further, as the plaintiff signed a costs agreement, it is unlikely that the costs assessor would be empowered to assess the bill of costs - see s 208C of the Act. 14 I decline to extend time to the period in which the plaintiff can file his application for costs assessment. The amended summons is dismissed. Costs are discretionary. Costs should follow the event. The plaintiff should pay the defendant's costs. 15 The orders I make are:

(1) The amended summons filed 3 July 2000 is dismissed.

(2) The plaintiff is to pay the defendant's costs. **********

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