Liprini v McIntyre

Supreme Court of NSW|2017-12-13|Before: Adamson J, Nicholas J

Solicitors: ITC Law (Plaintiff) Sparke Helmore Lawyers (Defendants) File Number(s): 2013/355003

Introduction

By notice of motion filed on 9 October 2017 Kevin Liprini (the plaintiff) seeks the following orders: "1. If the Court is satisfied that these proceedings could properly have been commenced in the District Court, an order pursuant to s 146 of the Civil Procedure Act 2005 (NSW) that the proceedings be transferred to the District Court. 2. Costs of this motion to be in the cause."
The plaintiff sought the order in prayer 1 to transfer the proceedings to the District Court. The order was not opposed by the defendant. On closer analysis, it emerged that the plaintiff would prefer to remain in this Court but did not want to be at risk of not recovering his costs of the proceedings if he obtained judgment in an amount less than $500,000. At the conclusion of the oral hearing on 13 December 2017 I made orders refusing the transfer and indicated that I would provide reasons for my decision later. The reasons for refusing the application for transfer follow, as well as my reasons for ordering that the costs of the proceedings be costs in the cause.

Factual background to the application for transfer

In order to address the relevant questions it is necessary to set out, in summary form, the factual background to the proceedings. They do not amount to findings of fact since the matters were not tested on the motion. However they were not in dispute for the purposes of the motion.
The plaintiff retained the defendants' firm of solicitors to act on his behalf in proceedings he brought in the Equity Division of this Court under the Family Provision Act 1982 (NSW) with respect to the deceased estates of his parents, of which his brother was executor. The proceedings were ultimately resolved on 6 December 2007 at a mediation ordered by this Court on terms which required the plaintiff's brother to pay $770,000 to the plaintiff, which comprised $750,000 plus $20,000 for the plaintiff's legal costs. The consent orders which were filed to reflect the agreement did not specify a time for payment.
The plaintiff tried to recover the amount from his brother, who refused to pay. The plaintiff filed a motion for contempt in the earlier proceedings (which was dismissed). Eventually, the plaintiff filed a summons in the Equity Division against his brother to compel performance of the settlement. On 11 August 2009 Nicholas J made orders which required the plaintiff's brother to pay $770,000 to the plaintiff together with interest from 3 January 2008 in the sum of $67,500. The plaintiff's brother ultimately became bankrupt.
From time to time the plaintiff received dividends from his brother's bankrupt estate as follows: Date of distribution Amount of distribution 20 May 2011 $94,387 21 December 2012 $155,000 22 January 2013 $127,710 25 January 2013 $83,000 7 April 2013 $2,400 TOTAL $462,497

The plaintiff commenced these proceedings by statement of claim filed on 25 November 2013. The damages were particularised as follows: "(i) the difference between the settlement sum of $770,000 and the amount recovered from the bankrupt estate of A Liprini; (ii) the difference between interest awarded by Nicholas J in the further proceedings and interest that would have been payable if the settlement of the family provision proceedings had included a term for payment of interest pursuant to section 101 of the Civil Procedure Act and the Uniform Civil Procedure Rules; (iii) amounts paid to the first to fifth defendants in payment of their fees in the approximately amount of $140,000 plus interest paid further particulars of which will be provided upon disclosure and amounts paid in payment of the sixth defendant's fees totalling approximately $33,932.50 further particulars of which will be provided upon disclosure, or such portion of the same as the Court deems appropriate; (iv) such further amounts that the first to fifth defendants might otherwise allege that the Plaintiff is liable to pay to them in relation to the costs of enforcement proceedings together with interest, incurred to recover the amount referred to in (iii) above."
On 16 April 2014 the defendants' solicitors wrote to the plaintiff's solicitors informing them that the plaintiff's claim was well within the jurisdictional limit of the District Court and would not exceed $570,000. For some reason this letter did not come to the attention of James Clancy, the plaintiff's present solicitor until 11 January 2017 (see below).
In the amended statement of claim filed on 18 February 2015, the plaintiff's loss and damage were particularised as follows: "(i). The plaintiff should have obtained a legacy from his mother's estate of at least $770,000 payable within 28 days of 6 December 2007 or another reasonable period of time and an order for interest; (ii) The plaintiff has recovered the sum of $462,498.75 from the trustee in bankruptcy of A Liprini; (iii) The plaintiff claims the lost opportunity of recovering the difference between $770,000 and $462,498.75 plus interest from A Liprini; (iv) The plaintiff incurred unrecoverable solicitor/client legal costs in his proceedings seeking to enforce the orders agreed on 6 December 2007 and in the proceedings heard by Nicholas J which he would not have incurred but for the acts and omissions pleaded in paragraphs 37(i)-(iii); (v) In the alternative to (iv) above, the plaintiff incurred unrecoverable solicitor/client legal costs in his proceedings seeking to enforce the orders and in the proceedings heard by Nicholas J which he would not have incurred but for the acts and omissions pleaded in paragraphs 37(iv)-(v)."
Mr Clancy deposed in his affidavit of 22 November 2017 that, at the time of the filing of the amended statement of claim, he calculated that the amount claimed was more than $750,000 and therefore the proceedings ought remain in this Court.
On 1 October 2015 the plaintiff recovered a further $90,654 from the bankrupt estate of his brother.
For the purposes of a mediation in this matter which was to occur on 13 December 2016, Mr Clancy, prepared a schedule of damages which is attached to his affidavit of 22 November 2017. The schedule indicated that the plaintiff claimed the sum of $770,000, to which a deduction of 20% was applied to take account of the chance that, absent negligence, the money would not have been recoverable (this figure is likely to be lower, on the plaintiff's case, in light of expert evidence served since that time). To this amount deductions were made as set out in the table above to reflect receipts from the bankrupt estate of the plaintiff's brother and additions were made to reflect interest at an average rate for pre-judgment interest under the Civil Procedure Act 2005 (NSW). Other enforcement costs were added. The schedule of damages also included provision (unspecified) for "any deduction allowed by the Court for the defendants' proportionate liability and contributory negligence defences". The subtotal, which does not take account of any allowance for deduction for the last-mentioned item was, as at 13 December 2016, $630,190. However, when one deducts distributions from the plaintiff's brother's bankrupt estate since the time of the commencement of the proceedings and interest on those sums from the time of commencement to that date, the amount claimed is within the jurisdiction limit of the District Court ($576,996 plus interest of $24,106).
Following the mediation, the plaintiff's solicitors sent a letter to the defendants' solicitors advising that when the plaintiff commenced the proceedings his claim was "easily" within the jurisdictional limit of this Court but that since that time payments had been made from his brother's bankrupt estate which altered the position and reduced the damages claimed. By letter dated 11 January 2017 the defendants' solicitors responded by reiterating their contention that, when the plaintiff commenced the proceedings on 5 December 2013, his claim was no more than $250,793 plus interest (at best).
The parties agreed at the hearing of the motion on 13 December 2017 that the matter was ready for hearing.

Relevant legislation and rules

Section 44 of the District Court Act 1973 (NSW) provides that the District Court has jurisdiction in actions that could be brought in the Common Law Division of this Court where the amount claimed does not exceed that court's jurisdictional limit, which is defined by s 4(1) of the District Court Act to mean $750,000. The jurisdiction may be increased by consent or if there is no objection by the other party: s 51(2) of the District Court Act. If proceedings are transferred from this Court to the District Court, the District Court is not constrained by its jurisdictional limit: s 44(1)(e) of the District Court Act and s 149 of the Civil Procedure Act.
Section 146 of the Civil Procedure Act relevantly provides: "146 Transfer of proceedings to lower court (1) If the Supreme Court is satisfied, in relation to proceedings before it: (a) that the proceedings could properly have been commenced in the District Court . . . the Supreme Court may order that the proceedings, including any such cross-claim, be transferred to the District Court . . . . . . (3) In determining: (a) whether any proceedings could properly have been commenced in the lower court . . . the higher court must have regard to the current limits of the lower court's jurisdiction as if they had been the limits of that jurisdiction when the proceedings were commenced . . . in the higher court. . . ."
Rule 42.34 of the Uniform Civil Procedure Rules 2005 (NSW) relevantly provides: "42.34 Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court (1) This rule applies if: (a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. (2) An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied that: (a) for proceedings that could have been commenced in the District Court - the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted, . . ."

Consideration

The first question is whether the proceedings "could properly have been commenced" in the District Court. As far as the type of relief claimed, the proceedings could have been commenced in the District Court since the plaintiff claims damages. However the words "could properly have been commenced" do not relate solely to the type of relief, but also extend to the amount of the relief claimed. So much is apparent from the obligation imposed by s 146(3) of the Civil Procedure Act on this Court to have regard to the jurisdictional limits of the lower court when making the determination. Further, the possibility that the other party will consent to unlimited jurisdiction, or not object to increased jurisdiction, is not to be taken into account in determining whether proceedings could properly have been commenced in the District Court: Ge v River Island Clothing Pty Ltd [2001] NSWSC 935 at [26]-[28] (Studdert J); Sheedy v State Asphalt Services Pty Ltd [2015] NSWSC 1532 at [11]-[12] (RS Hulme J).
In the present case, although it is not possible to quantify the plaintiff's claim exactly, it was arguably in excess of the jurisdictional limit of the District Court of $750,000, largely because of the number of years of interest claimed on the amount of the settlement figure of $770,000 before any distributions were made from the plaintiff's brother's estate but also because of the enforcement costs. Further, when the statement of claim was filed, the payment of $90,654 which was made on 1 October 2015 had not been made. For these reasons I am not satisfied that the plaintiff's claim "could properly have been commenced" in the District Court.
Given the form of the first prayer of the notice of motion, it follows from this finding that the plaintiff does not seek transfer to the District Court. However, as the plaintiff's application arises from a concern that he might be deprived of his costs were the transfer to be refused and the amount of any judgment obtained be less than $500,000 it is necessary to consider the further propositions put by Mr Lloyd on behalf of the plaintiff.
Mr Lloyd submitted that if the proceedings were transferred, not only would the District Court have the jurisdiction of this Court to award an amount of damages which could exceed $750,000, but the plaintiff would also be protected against the risk of not been awarded costs if the discretion under UCPR r 42.34 were not exercised in his favour. However, despite these advantages, Mr Lloyd contended that there was much to be said in favour of the proceedings remaining in this Court.
I accept Mr Lloyd's submissions that the following provide reasons why it would be appropriate that this matter be heard and determined in this Court: 1. the subject matter of the dispute occurred in the course of a mediation ordered by this Court to resolve proceedings in this Court; 2. the matter has already been the subject of hearing in this Court (Harrison As J) on the separate issue of advocate's immunity although judgment was not given because of the delivery of Attwells v Jackon Lalic Lawyers Pty Ltd (2016) 259 CLR 1; [2016] HCA 16; 3. as the application of s 30 of the Civil Procedure Act (which creates a privilege associated with mediations) is likely to require determination, it would be in the interests of the administration of justice for the decision to be made in a superior court; and 4. the matter is ready for hearing and can be allocated a hearing date at this Court's convenience (I directed the parties to approach the Listing Manager forthwith for a hearing date to be allocated).
My refusal to make the order transferring the proceedings to the District Court potentially exposes the plaintiff to the risk that the amount obtained will be less than $500,000 and that he will be deprived of his costs unless he persuades the trial judge to exercise the discretion in his favour under UCPR r 42.34(2). For the reasons given above I do not consider that the proceedings could properly have been commenced in the District Court. I regard the maintenance of these proceedings in this Court as warranted, not only because of the amount of damages claimed but also because of the undoubted complexity of the matter and the connection between this matter and this Court. The readiness of the proceedings for hearing and the ability of this Court to allocate a hearing date forthwith is another factor of significance having regard to s 56 of the Civil Procedure Act which provides that "the overriding purpose" of the Act is to "facilitate the just, quick and cheap resolution of the real issues in dispute". By reason of my refusal of the plaintiff's application for transfer, the plaintiff now has no choice (absent a significant future change in circumstances) but to continue these proceedings in this Court. In these circumstances the continuation of these proceedings in this Court ought be regarded as not merely "warranted" for the purposes of UCPR r 42.34(2), but mandated.

Costs

The defendant, for whom Ms Huntington appeared, argued that the plaintiff ought be ordered to pay its costs since the defendant adopted a neutral position but has been put to the cost and expense of the plaintiff's notice of motion.
Where a matter such as the present arises, it is appropriate that a notice of motion be filed, heard and determined in order that at least some of the uncertainty associated with litigation can be diminished. The court in which proceedings ought be heard and determined is one that concerns not only the parties but also the court. It was appropriate for the plaintiff to file the notice of motion in circumstances where, although he preferred to remain in this Court, he was concerned about the correspondence from the defendant's solicitors which foreshadowed that he could be deprived of his costs if he continued to litigate in this Court.
In these circumstances, I consider the appropriate order to be that the costs of the notice of motion be costs in the cause.

Orders

For the reasons set out above, I made the orders set out below at the conclusion of the hearing on 13 December 2017: 1. Refuse to transfer the proceedings to the District Court. 2. Order that the costs of the plaintiff's notice of motion filed on 9 October 2017 be costs in the cause.

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: 14 December 2017

Family Provision Act 1982(NSW)

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