Lenin v Coshott

LEGISLATION CITED : Legal Profession Act 2004 (NSW) Limitation Act 1969

Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; 80 ALJR 1100 Commonwealth of Australia v Verwayen (1990) 170 CLR 394 CASES CITED : Currabubula v State Bank NSW [2000] NSWSC 232 Rogers v The Queen (1994) 181 CLR 251 Ryan v Hansen t/as Hansens Solicitors [2000] NSWSC 354; 49 NSWLR 184 Wentworth v Rogers [2006] NSWCA 145

PARTIES : Michael Petrovic Lenin (Plaintiff) Robert Gilbert Coshott (Defendant)

COUNSEL : J W Conomos (Plaintiff) In person (Defendant)

SOLICITORS : Hicksons Solicitors (Plaintiff) In person (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2007/10588 Michael Petrovic Lenin v Robert Gilbert Coshott

JUDGMENT 1 BELL J: The plaintiff, Michael Petrovic Lenin, claims orders against his former solicitor, Robert Coshott, having the effect of restraining Mr Coshott from proceeding with applications that have been filed (and with an application that is proposed to be filed) for the assessment of his professional costs of acting for Mr Lenin. Declaratory and injunctive relief is claimed on the basis that the costs were incurred 14 years ago and that the bringing of applications for assessment under the provisions of the Legal Profession Act 2004 (NSW) (the LPA) after such a length of time constitutes an abuse of process, alternatively, that Mr Coshott is estopped from asserting his claims. 2 The proceedings are brought by further amended summons, which was filed on 7 May 2007 pursuant to leave granted by Harrison AsJ. 3 Mr Conomos appeared for Mr Lenin on the hearing. Mr Coshott appeared in person. Mr Conomos read the affidavit of his solicitor, Thomas Dachs and tendered a number of documents that were exhibited at the time the affidavit was sworn. Mr Coshott tendered a bundle of documents. 4 There does not appear to be any issue concerning the following facts, which form the basis of Mr Lenin's claims for relief. 5 In July 1989 Mr Coshott was practising as a solicitor. On or about 10 July 1989 he commenced acting for Mr Lenin and he continued to act for him until around July 1991. 6 Mr Coshott acted for Mr Lenin in relation to a number of matters, including proceedings brought by Mr Lenin against Seneca Insurance Limited (the Seneca proceedings) and in a variety of other matters of a litigious and non-litigious nature, including the (i) purchase of Matamanoa Island; (ii) proceedings brought by Alex Mildren; (iii) proceedings brought by Johnson; (iv) a matter concerning the Newcastle City Council; (v) a matter concerning a demolition contract; (vi) a matter concerning a proposed purchase; (vii) proceedings brought by Wilkinson and (viii) a matter concerning New Zealand Insurance. 7 The Seneca proceedings are the subject of an application by Mr Coshott for assessment of his professional costs, which was filed on 5 October 2006, case no. 2006/00001614 (the first costs assessment). The eight matters summarised above are the subject of a separate application for the assessment of Mr Coshott's professional costs, which was also filed on 5 October 2006, case no. 2006/0001615 (the second costs assessment). 8 Mr Coshott has notified Mr Lenin of a third application for assessment of his professional costs under cover of a letter dated 28 December 2006. This application relates to Mr Coshott's professional costs of acting for Mr Lenin in connection with proceedings brought by him against the Australian Bank (the proposed costs assessment). 9 Around July 1991 Mr Coshott ceased acting for Mr Lenin in relation to the Seneca proceedings and a solicitor named George Vardas of Gunn Hamilton & Blay, took over the conduct of the proceedings on Mr Lenin's behalf. 10 The Seneca proceedings settled in April 1992. 11 In April 1992 Mr Coshott had a discussion with Mr Vardas in which he was informed that the Seneca proceedings were close to settling. Not later than 4 January 1993 Mr Coshott was aware that the Seneca proceedings had been completed.

12 On 21 September 2005 Mr Coshott commenced proceedings in the District Court against Mr Lenin claiming the sum of $210,256.50 together with interest in the amount of $330,000.00 arising out of his retainer to act for Mr Lenin in the Seneca proceedings (the District Court proceedings). In the District Court proceedings Mr Coshott's case was that George Vardas had taken over the conduct of the Seneca proceedings on Mr Lenin's behalf on the basis that Mr Coshott's costs and disbursements, "as per the bill delivered with the file", would be paid upon completion of the proceedings. He pleaded that he came to learn from documents that were discovered in proceedings brought by him against George Vardas that Mr Lenin had settled the Seneca proceedings on a basis inclusive of costs. It was his claim in the District Court proceedings that Mr Lenin had been unjustly enriched by receipt of settlement monies inclusive of an amount representing professional costs.

13 On 2 November 2006 Neilson DCJ gave judgment for Mr Lenin, holding that the cause of action pleaded by Mr Coshott did not exist and, if it did exist, that it would be caught by s 14(1)(a) of the Limitation Act 1969. 14 Mr Coshott has appealed from the judgment of Neilson DCJ.

15 The orders sought by Mr Lenin in his further amended summons are: 1. That the defendant be restrained from any application for assessment for costs in respect of the account the subject of costs assessment application case no. 2006/00001614; 2. That the defendant be restrained from any application for assessment for costs in respect of each of the eight accounts the subject of costs assessment application case no. 2006/00001615; 3. That the defendant be restrained from any application for assessment for costs in respect of the account the subject of costs assessment application dated 28 December 2006 and signed by the defendant; 4. A declaration that the defendant was not entitled to lodge application for assessment of costs case no. 2006/00001614; 5. A declaration that the defendant was not entitled to lodge application for assessment of costs case no. 2006/00001615; 7. A declaration that the defendant is not entitled to lodge the application for assessment dated 28 December 2006 and signed by the defendant.

16 Associate Justice Harrison directed Mr Lenin to set out the contentions on which he relies in his further amended summons. The same five contentions were relied upon in support of the relief claimed in respect of the two costs assessments and the proposed assessment: 1. The defendant has waived any entitlement to the relief sought in his costs assessment application by reason of his acquiescence, delay and laches in bringing the application; 2. the defendant is estopped from bringing an application for costs assessment; 3. the defendant assigned the further conduct of the proceedings on behalf of the plaintiff to George John Vardas without reservation and notification to the plaintiff as to any claim for costs; 4. the costs assessment proceedings are statute barred by operation of s 14 and s 48 of the Limitations Act 1969 (NSW) and that any right entitling the defendant to bring the application for costs assessment was extinguished by operation of s 63 prior to 5 October 2006; 5. it would be contrary to the interests of justice for a certificate of determination to be issued entitling the defendant to any costs and the filing of the application for assessment is an abuse of process. 17 In the written submissions filed on Mr Lenin's behalf and at the hearing Mr Conomos referred to the decision of Kirby J in Ryan v Hansen t/as Hansens Solicitors [2000] NSWSC 354; 49 NSWLR 184, which he acknowledged is against the contention that the costs assessments are time barred. He did not advance any submissions in support of contention (4), save to reserve the point.

18 The first and the second applications for assessment of costs were filed in accordance with the LPA. The Manager, Costs Assessment, has referred each application to a costs assessor to be dealt with in accordance with the LPA. Peter Scammell has been appointed as the costs assessor for each assessment. The proposed assessment has not been filed.

19 Hicksons Lawyers, the solicitors acting for Mr Lenin, wrote to Mr Scammell in respect of both assessments, submitting that he should decline to proceed with them on the same grounds as are raised by him in these proceedings.

20 Mr Scammell advised the parties with respect to the first costs assessment in a letter dated 9 January 2007: I have made the following decisions -

(a) the assessment is not statute barred, as the Statute of Limitations does not apply to cost assessments,

(b) Mr Coshott was retained by Mr Lenin in the Seneca Insurance matter. The letter dated 10 July 1989 did not apply to that matter and no written retainer related to that matter. Accordingly, Mr Coshott is entitled to reasonable costs for work reasonably done, (c) there is no evidence that Mr Coshott released Mr Lenin from liability for costs when the matter was transferred to Mr Vardas. Mr Lenin remains liable for costs irrespective of whether or not Mr Coshott has a claim on any basis to recover costs not paid by Mr Lenin from Mr Vardas, (d) Mr Coshott is not precluded from bringing this application by reason of any delay laches or waiver. 21 Mr Scammell advised the parties in similar terms of his decision with respect to the second costs assessment.

22 Mr Coshott submitted that the Court should refuse to entertain Mr Lenin's claims for relief because of the effect of s 372 of the LPA, which provides: 372 Determination to be final

A costs assessor's determination of an application is binding on all parties to the application and no appeal or other assessment lies in respect of the determination, except as provided by this Division. 23 Section 372 of the LPA is in the same terms as s 208K of the Legal Profession Act (1987) (NSW) (the former Act). In Currabubula v State Bank NSW [2000] NSWSC 232, Einstein J dealing with an application for declaratory relief in relation to an assessment under the former Act, said : [61] Despite the strength of the presumption against this Court being deprived of its declaratory jurisdiction, I see no escape from the conclusion that this is the effect of s208K. The germane words of the section are simple: "no appeal lies in respect of a determination, except as provided by this Division." In contrast to the situation confronted by their Lordships in Pyx Granite Co Ltd v Ministry of Housing and Local Government , the section unmistakably communicates an intention that the appeal procedure outlined in the Act shall be the exclusive, not an alternative, remedy. The appeal procedures are, to invert Lord Jenkins' words in that case, imperative and not permissive: (supra at 304). In it may be suggested that in view of the distinction drawn by the Act between a "decision" of the costs assessor and the "determination" of the costs assessor, s 208K only affects applications for relief from completed determinations, not anterior decisions reached on the way to a determination. However, s 208K prohibits any appeal other than as provided "in respect of a determination," not "from a determination." The width of the words "with respect to" have been emphasised within the context of the Commonwealth Constitutional: Bank of NSW v Commonwealth (Bank Nationalisation Case) (1948) 76 CLR 1 at 186 per Latham CJ. Here the words must be construed to include decisions come to by a costs assessor in the course of but prior to completing a determination of the assessment. …

[69] However, to my mind, the most significant factor militating against the exercise of the declaratory jurisdiction in the context of the Legal Profession Act is that the Act clearly puts the determination of a costs assessment in the hands of a costs assessor, only permitting the matter to be taken from his hands upon the occurrence of one of two events: a "decision" or a "determination" of the costs assessor. While a declaration will rarely be issued where a matter is hypothetical, it may not always be that prior to a decision being made, a situation will remain, in the relevant sense, hypothetical. If that circumstance obtained, a Court may find itself in the position of issuing a declaration prior to any decision or determination of the costs assessor. If that occurred, the Court would be circumventing the costs assessor's jurisdiction and undermining the costs assessor task. For those reasons, assuming the jurisdiction to issue a declaration exists, in my view, the Court ought not exercise it. 24 It was not submitted that there is any relevant distinction between the scheme of the LPA dealing with costs assessments and the scheme of the former Act in this respect. Section 373 gives a party to a costs assessment who is dissatisfied with the determination of the costs assessor a right to apply to the Manager, Costs Assessment for a review of the determination. The Manager, Costs Assessment is to refer an application to a panel constituted by two costs assessors. The panel may review the determination of the costs assessor and affirm it or set it aside and substitute such determination as, in the panel's opinion, should have been made by the costs assessor. There is a right to appeal to this Court conferred by s 384 from the decision of a costs assessor as to a matter of law. An appeal may be brought by leave against the determination by a costs assessor of a costs assessment relating to a bill (s 385(1)).

25 In Mr Coshott's submission, in the event that the Court considers that the proceedings are not precluded by operation of the privative provision, it would decline to grant injunctive and declaratory relief: Mr Lenin has alternative remedies available to him under the LPA to challenge any adverse determination made by the costs assessor. 26 Orders 1 and 2 claimed in the further amended summons seek to restrain Mr Coshott "from any application for assessment of costs" in respect of the first and second costs assessments respectively. Each application has been made and is presently proceeding. No attention was directed to the form of the orders sought at the hearing. The matter proceeded as if the orders claimed in paragraphs 1 and 2 were that Mr Coshott be restrained from further proceeding with the first and second costs assessments. There was no attention given to the form of the declaratory relief claimed, which is with respect to the first and second costs applications a declaration that Mr Coshott was "not entitled to lodge" the relevant application. Putting the question of the privative clause to one side for the present, there was no examination of the utility of declarations in the terms sought.

27 In Currabubula the declaration that was sought was as to the interpretation of the costs order made by the Court. In this case Mr Lenin contends that the maintenance of the first and the second costs assessments (and proceeding with the proposed costs assessment) constitute an abuse of process. In these circumstances, I propose to deal with the substance of the arguments that advanced on Mr Lenin's behalf, which were common to the three applications.

28 Mr Conomos relied on the decision of the High Court in Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; 80 ALJR 1100 in support of his contention that the maintenance of the first and second costs assessments (and proceeding with the proposed costs assessment) constitutes an abuse of process. In that case the Court dismissed an appeal from an order permanently staying proceedings brought in this Court that were commenced within time (the plaintiff being a disable person) but after a very lengthy interval. The majority considered that the burdensome effect on the defendants of the lapse of 30 years between the plaintiff's accident and the commencement of the proceedings was such that a fair trial was not possible (at [69]). 29 Mr Coshott submitted that the reliance on doctrines of abuse of process was misconceived since the assessment of costs under the LPA does not involve the costs assessor in the exercise of a curial function: Wentworth v Rogers [2006] NSWCA 145 per Santow JA [40] and Basten JA at [181] and [187]. Mr Conomos noted that in Batistatos Gleeson CJ, Gummow, Hayne and Crennan JJ at 1104 - 1106 [2] stated that it appears that the procedures of non-curial bodies may attract the "abuse of process" doctrines. In explaining the abuse that is alleged in the present case Mr Conomos referred to the judgment of McHugh J in Rogers v R (1994) 181 CLR 251 at 286 in which his Honour described three categories of abuse of procedure: (1) the court's procedures are invoked for an illegitimate purpose;

(2) the use of the court's procedures is unjustifiably oppressive to one of the parties;

(3) the use of the procedures would bring the administration of justice into disrepute.

The applications brought (and foreshadowed) by Mr Coshott were submitted to fall within the second and third categories.

30 A discrete ground of abuse relates to the first costs assessment: it is said to be vexatious and/or oppressive to have subjected Mr Lenin to defending the District Court proceedings while also requiring him to respond to the costs assessment relating to the Seneca proceedings. In Oceanic Sun Line Special Shipping Company Inc v Fay (1987-1988) 165 CLR 197 Deane J at 247 suggested that "oppressive" should be understood as meaning seriously and unfairly burdensome, prejudicial or damaging while "vexatious" should be understood as meaning productive of serious and unjustified trouble and harassment. Mr Coshott brought unsuccessful proceedings in the District Court claiming monies from Mr Lenin arising out the work that he had done on his behalf in connection with the Seneca proceedings. His claim failed and he has appealed against that determination. At the same time he has applied under the provisions of the LPA to have his professional costs of acting for Mr Lenin in the Seneca proceedings assessed. In my opinion the pursuit of the application for assessment under the LPA does not amount to oppression or vexation of Mr Lenin. 31 Generally it is submitted that the delay in lodging the applications for assessment is of such a high order as to itself amount to an abuse of process. It is not said that Mr Lenin suffers any prejudice in dealing with the assessments. It is not said that Mr Coshott has brought the applications for a purpose, or to effect an object, outside that which the LPA allows. The abuse that Mr Conomos identifies is that his client is being pressed with the claims after many years when he had assumed that Mr Coshott was not proposing to claim his professional fees. Upon the assumption for present purposes that the Court has power to make orders having the effect of staying the assessment of the costs the subject of the first and second assessments (and restraining Mr Coshott from filing the proposed application), in the absence of any evidence of prejudice, oppression and/or ulterior purpose in bringing the applications no basis has been made out to do so.

32 Mr Conomos' submissions with respect to estoppel by conduct (and waiver) overlapped with the matters that he advanced in support of the abuse of process contention. He put it this way: The way it is pleaded in the further amended summons is that Mr Coshott should be estopped from proceeding with the costs assessment process on the basis that by his conduct, here there is delay, there are the proceedings in the District Court and in the Court of Appeal, he has led Mr Lenin to believe that there would be no further proceedings with respect to any bill of costs. 33 Mr Conomos relied on the decision of the High Court in the Commonwealth of Australia v Verwayen (1990) 170 CLR 394 per Deane J at 440 - 441. The relevance of his Honour's statement of the principles to the facts of this case is not clear. As I understand the contention, it is that Mr Coshott's conduct in failing to assert his claim to payment of his professional fees created a state of affairs in which Mr Lenin assumed that no claim would be pressed. It is not said that Mr Coshott did anything, beyond inaction, to cause Mr Lenin to act upon the assumption that he would not claim his professional fees. It is not said that Mr Lenin altered his position in reliance on an assumed state of affairs such that Mr Coshott should be estopped from pursuing his claims. The contention that Mr Coshott should be restrained from pursuing any rights which he may have to obtain an assessment of his costs under the LPA by recourse to the doctrine of estoppel is without merit. 34 Mr Conomos abandoned contention (3) on the hearing. No additional matter was put in support of contention (5). No matter was identified that would justify granting Mr Lenin the relief that he claims.

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