Miles v Slack

Supreme Court of NSW|2021-09-29|Before: Walton J

Principal judgment Parties: Phillip Jacob Miles (Plaintiff) Sharon Christine Slack (Defendant) Representation: Counsel: Plaintiff in person JP Lo Schiavo (Defendant)

Solicitors: Baena Legal (Plaintiff) Rafton Family Lawyers (Defendant) File Number(s): 2020/00344808 2021/00082981 Publication restriction: N/A Decision under appeal Court or tribunal: Local Court of New South Wales Jurisdiction: Civil Citation: Ex tempore judgment delivered with written reasons provided by Milovanovich ALCM; Ex tempore judgment with reasons contained in transcript Date of Decision: 04 December 2020 Before: Milovanovich ALCM; van Zuylen LCM File Number(s): 2020/00297566, 2020/00297573; 2020/00246848, 2020/00346419, 2020/00297573

Introduction

By an amended Summons filed on 5 December 2020 ("the Amended Summons"), the plaintiff, Mr Phillip Jacob Miles, appealed a decision of the Local Court of New South Wales made by Milovanovich ALCM on 4 December 2020 ("the first appeal").
By a Summons filed on 24 March 2021 ("the Summons"), the plaintiff also appealed the decisions and orders made by van Zuylen LCM of 24 March 2021 ("the second appeal").

Factual Background

On 30 November 2017, the defendant, Ms Christine Slack, engaged Mr Thomas (then of Jesse Icao Solicitors) to act for her in family law proceedings. A fixed fee costs agreement was entered into for $35,000 ("the fixed fee agreement").
On 21 August 2019, Mr Baena withdrew as the defendant's solicitor. On 29 August 2019, the plaintiff communicated to the defendant that Mr Baena had exercised a lien over the defendant's legal documents. On 3 September 2019, the plaintiff issued an invoice for solicitor/client fees in the amount of $47,360, exclusive of the $5,000 already provided to Mr Baena on 30 November 2017 ("the fees"). This invoice was issued under the letterhead of Baena Legal, despite the defendant's retainer being with Jesse Icao Solicitors.
On 5 September 2019, the plaintiff became an assignee of the debt of $47,360 purportedly owed by the defendant to Mr Baena.
Mr Baena has at times appeared as the plaintiff's legal representative and then withdrawn. Mr Baena and the plaintiff operate out of the same office. By way of security for the fees, on 6 September 2019, the plaintiff lodged a caveat over the defendant's interest in the real property at 10 Orlenton Place, Warrington County NSW ("the caveat").
On 26 September 2019, the plaintiff advised the defendant that the fixed fee agreement had been superseded. The superseding costs agreement is not in evidence.
In October 2019, the defendant filed a lapsing notice with NSW Land Registry Services.
On 18 November 2019, the plaintiff filed a Statement of Claim seeking an extension of the operation of the caveat.
On 27 November 2019, the plaintiff appeared before Kunc J in ex parte proceedings and obtained an extension of the caveat until 13 December 2019.
On 13 December 2019, Darke J refused the plaintiff's application for an extension of the caveat and ordered that the plaintiff pay the defendant's costs of defending the extension application.
On 14 December 2019, the defendants' solicitors communicated the following tax invoices pursuant to the defence of the extension application to the plaintiff, totalling $11,957: 1. $6,347 from Rafton Family Lawyers, for legal advice and representation in defending the plaintiff's Statement of Claim to extend the caveat; 2. $1,650 from John Shaw of counsel, for advice regarding the plaintiff's caveat, and; 3. $3,960 from John Lo Schiavo of counsel, for appearing in Court on 13 December 2019.
On the same day, the plaintiff refused to pay the costs awarded and stated: It is expected that the respondent's cost will be around $450.00 for you and the 1 hour for Counsel. You will have to file for cost assessment and then I will be able to deduct that cost from my debt.
On 18 March 2020, the defendant filed an application for costs assessment of the costs awarded by Darke J ("the Costs Assessment").
On 9 July 2020, the Costs Assessor issued two certificates: 1. Form C3: Certificate of Determination of Manager's Assessment Costs, in the amount of $2,194.51, payable by the plaintiff to the defendant ("Form C3") (file number 2020/00297573). 2. Form C4A: Certificate of Determination of Costs, in the amount of $11,126.61 for the party/party costs payable by the plaintiff to the defendant ("Form C4A") (file number 2020/00297566).
These amounts have not been paid by the plaintiff.
The plaintiff filed for a review of that assessment on 16 July 2020 ("the Review"). On 14 September 2020, costs assessor, R.G Webley, wrote to the plaintiff on behalf of the Review Panel to inform him that the Review was complete.
The plaintiff did not pay for the release of the reviewed costs certificates between 14 September and 16 October 2020.
On 16 October 2020, the defendant obtained judgments in the Local Court of NSW for the amounts of $2,194.51 (Form C3, 2020/00297573) and $11,126.61 (Form C4A, 2020/00297566).
On 20 October 2020, Rafton Family Lawyers served on the plaintiff Examination Notices inclusive of sealed certificates as to certificates Form C3 (2020/00297573) and Form C4A (2020/00297566) ("the Examination Notices").
On 20 October 2020, the defendant's solicitor received email correspondence from the plaintiff, enclosing sealed Notice of Motions and Affidavits which alleged that the defendant had been "fraudulent… and fraudulently misleading the Court."
On 22 October 2020, the defendant's solicitor received email correspondence from the plaintiff which alleged that the defendant's solicitor: Intentionally misled the Court and has fraudulently obtained judgments for an alleged debt against the Plaintiff which does not exist, for Costs Assessment Certificates, that were automatically stayed at the exact time the review application was lodged…
On 29 October 2020, the plaintiff filed a First Amended Notice of Motion in the Local Court ("the First Amended Motion to set aside Form C3 and Form C4A") to set aside the judgments made by the Court on 16 October 2020, pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), Rule 36.15, which provides: 36.15 General power to set aside judgment or order (1) 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. (2) A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent.
On 5 November 2020 a judgment for $24,255.60 was issued in the Local Court of NSW in favour of the plaintiff, as assignee for Mr Baena (file number 2020/00315254).
On 11 November 2020, the Principal of Rafton Family Lawyers authorised payment to be made for the release of the reviewed certificates from the firm's own funds and billed that amount to the defendant.
Upon Rafton Family Lawyers paying the costs of the Review Panel, the reviewed certificates were released. The certificates provided as follows: 1. Form C7: Certificate of Determination Review, in the amount of $10,557.13, payable by the plaintiff to the defendant ("Form C7") (file number 2020/00346848); 2. Form C8: Certificate of Determination of Review Panel Costs, in the amount of $3,009.60, payable by the plaintiff to the defendant ("Form C8") (file number 2020/00346819).
On 2 December 2020, the defendant filed the Registration of Certificate of Judgment Order for the amount of $3,009.60 (Form C8, 2020/00346819) and a Notice of Motion to substitute Form C4A with Form C7 ("the motion to substitute").
On 4 December 2020, Milovanovich ALCM dismissed both the motion to substitute filed by the defendant and the First Amended Motion to set aside Form C3 and Form C4A, filed by the plaintiff.
Each party was ordered to bear their own costs. His Honour provided written reasons for his decision after the transcript of the proceedings did not become available. I will return to Milovanovich ALCM's reasons below.
As mentioned, on 5 December 2020, the plaintiff filed the Amended Summons.
On 7 December 2020, the Local Court of NSW, by Notices of Orders Made, issued judgments for the amounts of $3009.60 and $10,557.13 in favour of the defendant (Forms C8, 2020/00346819 and Forms C7, 2020/00346848 respectively).
On 17 December 2020 and 4 February 2021 Registrar Jones of this Court directed Mr Baena to obtain written reasoning from Milovanovich ALCM from 4 December 2020.
On 3 February 2021, Rafton Family Lawyers commenced process for the Examination Notices for Forms C3 (2020/00297573), C7 (2020/00346848) and C8 (2020/00346819).
On 4 February 2021, the defendant's solicitor sent email correspondence to Mr Baena, confirming whether Mr Baena had requested written reasons of Milovanovich ALCM. Mr Baena provided the defendant's solicitor with a copy of the letter received from Registrar Gahan of the Local Court, indicating that the courts recording system had failed during these proceedings.
The same day, the defendant's solicitor received email correspondence from the plaintiff's solicitor, Mr Baena, enclosing a sealed copy of the plaintiff's affidavit sworn 4 January 2021 describing the plaintiff's version of what happened in the Local Court on 4 December 2020.
On 5 February 2021, Mr Baena requested written reasonings of Milovanovich ALCM from 4 December 2020.
On 10 February 2021, the Local Court Registry issued Examination Notices for Form C8 (2020/00346819), Form C7 (2020/00346848) and Form C3 (2020/00297573) and ordered that the Examination Notices were to be heard at John Maddison Tower on 25 March 2021, at 9:30am.
On 15 February 2021, the defendant served the plaintiff with the Examination Notices for Form C8 (2020/00346819), Form C7 (2020/00346848) and Form C3 (2020/00297573).
On 19 February 2021, the defendant's solicitor received correspondence from the plaintiff again demanding the withdrawal of the Examination Notices for Form C8 (2020/00346819), Form C7 (2020/00346848) and Form C3 (2020/00297573) filed before the Local Court.
The plaintiff filed two Notices of Motion in the Local Court, the first on 26 February 2021 and the second on 1 March 2021, seeking to have the Examination Notices set aside and that the solicitor (Natasha Speirs) pay the plaintiff's costs. The Notices of Motion sought to set aside the three Examination Notices for Form C8 (2020/00346819), Form C7 (2020/00346848) and Form C3 (2020/00297573) filed before the Local Court ("the Notices of Motion to set aside the Examination Notices").
On 4 March 2021, the defendant's solicitor sent correspondence to Mr Baena seeking to be provided with the plaintiff's evidence, namely Exhibit PJ-1 and the affidavit of Phillip Jacob Miles dated 26 February 2021.
The Examination Notices were listed for 25 March 2021.
On 17 March 2021, the defendant's solicitor sent correspondence to the Civil Registry at Sydney Local Court asking for the Court appearance to be vacated and relisted on or after 15 April 2021 because the defendant had not received the plaintiff's affidavit from 4 December 2020. The plaintiff opposed this request. The court appearance with respect to the Examination Notices was not vacated.
On 24 March 2021, van Zuylen LCM dismissed the Notices of Motion to set aside the Examination Notices and ordered that the plaintiff pay the defendant's costs of that motion heard on 24 March 2021 for a fixed amount of $3,600, rather than the full amount sought by the defendant.
The plaintiff then brought the second appeal by way of summons and both matters were both subsequently listed to be heard together.

The First Appeal

The first appeal relates to a decision by Milovanovich ALCM on 4 December 2020. His Honour considered two Notices of Motion: 1. The motion to substitute and; 2. the First Amended Motion to set aside Form C3 and Form C4A.
The relief sought in the First Amended Motion is as follows (1) Pursuant to Uniform Civil Procedure Rule Regulation 36.15 (NSW), the orders made by the Court on 16/10/2020, be set aside. (2) Order that Sharon Christine Slack pay the defendant / applicant costs on an indemnity basis. (3) Order that, pursuant to section 99 of Civil Procedure Act, (Natasha Speirs) who is the solicitor for the respondent, pay the defendant / applicant costs on an indemnity basis.
Due to a technical problem, there is no transcript of the decision. However, Milovanovich ALCM provided written reasons of his decision to the parties. The plaintiff's recollection of his Honour's reasons is disputed by the defendant and is inconsistent with his Honours written summary. His Honour stated that: While it is almost 3 months from when I handed down my decision, having perused the files and the two Notices of Motion I have relatively good recollection of the matters and the reasons for refusing both Notices of Motion. The First Notice of Motion was filed by the Plaintiff, Sharon Christine Slack, now the applicant on the Notice of Motion. The Notion of Motion was to seek an order from the Court to substitute Form C4A (Certificate of Determination of Costs in an amount of $11,126.61) with Form C7 (Certificate of Determination of Review in the amount of $10,557.13). It is apparent from the Court file, that Certificate C4A was registered as a Judgment Debt in the Local Court Penrith on the 16th October, 2020, under the provisions of the Local Court (Civil Claims) Act, 1970 and thereby becomes an enforceable judgment in the Court. The Defendant Phillip Jacob Miles, now the Applicant in his amended Notice of Motion sought orders pursuant to the Uniform Civil Procedure Rules, Regulation 36.15 that the orders made by the Court on the 16th October, 2020, be set aside. Orders were also sought for indemnity costs. Dealing firstly with Plaintiff/Applicants Notice of Motion the Court was of the view that it did not have the power to substitute Certificate C4A with Certificate Form 7. The Court was of the view that the Form C7, Certificate of Determination of Review was a fresh certificate and the party seeking to register it as a judgment needed to comply with the procedures for lodgement. Accordingly, the Court ruled that the Plaintiff's/Applicants Notice of Motion would be refused. The Court then considered the Defendants/Applicants Notice of Motion which was to set aside the judgment entered on the 16th October on the basis of the C4A Certificate. The Court was of the view that the Judgment entered on the 16th October by virtue of the Regulation 36.15 of the Uniform Civil Procedure Act, 2005, however the Judgment was no longer enforceable by virtue of the fact that the defendant is now seeking to enforce a reviewed certificate of Determination, there is no utility in the Defendant/Applicant's Notice of Motion being approved. Had the Court approved the Plaintiff/Applicant's Notice of Motion to substitute C4A with C7, the Defendant/Applicant's Notice of Motion would still have failed on the basis that his supporting Affidavit makes no mention or addresses the validity or otherwise of the Reviewed Certificate of Determination. The Defendant/Applicant's Notice of Motion alleges fraud in regard to Certificate C4A which the Plaintiff/Applicant sought to replace. In essence, the Defendant/Applicant is seeking to set aside a Judgment that the Plaintiff/Applicant is not seeking to enforce. The Court was also of the view that the Defendant/Applicant was attempting to re-revisit or ventilate issues already determined by other tribunals.
Each Notice of Motion was refused with each party to pay their own costs.
The plaintiff filed affidavits dated 20 October 2020, 9 December 2020, 4 January 2021 and 12 March 2021. All these affidavits relied on s 75A of the Supreme Court Act 1970 (NSW).
The affidavit dated 20 October 2020 was material before the Local Court and as such it was not treated as fresh evidence before the Court. The remaining affidavits were read to the Court, subject to objections.
The plaintiff's affidavit dated 9 December 2020 recounts his version of events of 4 December 2020. Paragraphs 2, 5 and 6 were admitted on the basis that there was no transcript and as such, this was the best alternative evidence available. Paragraphs 3 and 4 were not read. The objection to paragraph 7 was upheld.
The plaintiff's affidavit of 4 January 2021 was prepared in response to the Supreme Court Registrar's direction of 17 December 2020. It is an additional affidavit to that of 9 December 2020, filed following the correspondence which confirmed there was no transcript available of the proceedings of 4 December 2020. It is substantially the same as the affidavit dated 9 December 2020.
The affidavit of 4 January 2021 was taken as read, save for paragraph 2.
The plaintiff's affidavit dated 11 March 2021 was prepared in response to the written reasons of Milovanovich ALCM and was not read.
In substance, the plaintiff indicated the following differences between his version of events on 4 December 2020 and Milovanovich ALCM's written reasons: 1. That the Magistrate wrote "one Motion was filed by the defendant", but in fact he filed two. There are two Notices of Motion in evidence however they are identical and seek orders to dismiss the "judgments", rather than differentiating between Form C3 and Form C4A. 2. That the Magistrate wrote that he "heard submissions and then gave reasons and decision" but the plaintiff stated he did not give any reasons at all.
The defendant submitted that the plaintiff's affidavit of 4 January 2021, which describes the events of 4 December 2020, is at odds with the written reasoning of Milovanovich ALCM. The defendant submitted that the Court should prefer Milovanovich ALCM's own recollection of his reasons to that of the plaintiff.
Whilst there may be a debate as to a possible departure between the reasons given ex tempore and the later written reasons for decision, there appears to be no proper basis to refuse to accept the reasons for decision by written Milovanovich ALCM. There was no transcript and as such his Honour published written reasons. More significantly, this issue is ultimately not necessary to resolve to reach a conclusion on the first appeal.

The Second Appeal

The Second Appeal relates to a decision made by van Zuylen LCM on 24 March 2021.
His Honour was considering Notices of Motion filed by the plaintiff on 26 February 2021 (2020/00346819) and 1 March 2021 (2020/00346848). 1. A Notice of Motion filed 26 February 2021 (file number 2020/00346819) in which the following orders were sought: (1) Order that Examination Orders in matters number 2020/246848, 2020/00297573 and 2020/00346819 be set aside. (2) Order pursuant to sections 99 of the Act, the plaintiff solicitor (Natasha Speirs) pay the defendant/applicant's costs. 1. A Notice of Motion filed 1 March 2021 (file number 2020/00346848) in which the following orders were sought: (1) Order that Examination Orders in matters number 2020/246848, 2020/00297573 and 2020/00346819 be set aside. (2) Order pursuant to sections 99 of the Act, the plaintiff solicitor (Natasha Speirs) pay the defendant/applicant's costs.
The Notices of Motion to set aside the Examination Notices were dismissed. The following are van Zuylen LCM's reasons for that decision: The Court is being asked today on 24 March 2021 to set aside three examination summonses against the applicant Phillip Jacob Miles. They are to be heard before a registrar at John Maddison Tower tomorrow. The application is to set aside those three examination summonses in relation to the debts. Mr Miles, representing himself, takes the Court to rule 36.15, general power to set aside judgment or order. 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. That's the order that Mr Miles seeks to have the Court use to set aside the three examination summonses tomorrow. Mr Lo Schiavo for the respondent in respect to these proceedings has not taken issue that the Court can, if it wishes, set aside those examination summonses. But the Court should stress that Mr Lo Schiavo opposes the Court agreeing or granting the three notices of motion. The background to these proceedings is complicated. The Court has had handed up to it as part of exhibit PJ1 by Mr Miles, at p 27, a judgment debt or judgment order in the sum of $24, 255. First plaintiff, Phillip Jacob Miles, as assignee for Thomas Baena trading as Baena Legal against first defendant, Sharon Christine Slack, also known as Sharon Hal. Further background is that in relation to unpaid debts, or this unpaid debt, a caveat was lodged over some real estate. The issue of the caveat was heard before the Supreme Court on 22 December 2019 before Darke J, and this Local Court has been advised that the Supreme Court allowed the caveat to lapse. In those particular proceedings, Darke J ordered costs to be paid by Mr Miles as the unsuccessful litigant in those proceedings. The costs sum is around $13,000. Lawyers for Ms Slack, who was successful in the costs order when the caveat was allowed to lapse, that was registered as a judgment in the Local Court. Parties are nodding and agreeing. And as the lawyers for Ms Slack sought to enforce that costs sum, $13,000. That order or that decision was the subject of a notice of motion, or notices of motion, in respect of that decision. That was heard at this Local Court on 4 December 2020 before his Honour Acting Magistrate Milovanovich. His Honour made a decision in that case to notice of motion refused. That has been appealed to the Supreme Court by Mr Miles. That is to be mentioned before the registrar of the Supreme Court, coincidentally, tomorrow, 25 March, which is on the same day that there is the examination summons. The examination summons is before John Maddison Tower that Mr Miles is seeking to have the Court today set aside. The Court has heard some submissions, mainly from Mr Miles, as to the circumstances of that decision. The Court is not in any way going to comment on that. It's a matter of the Local Court record and it's the subject of a Supreme Court appeal. In relation to the decision of costs of around the $13,000 amount, the successful parties, that's the lawyers for Ms Slack, are seeking to enforce the payment of those costs against Mr Miles, the unsuccessful litigant in those proceedings. Mr Miles has submitted a number of reasons why, in his view, in his submissions, the Court should grant his notice of motion to set aside the examination summonses tomorrow. He said, "Well, there is a Supreme Court appeal against the decision made in this Local Court on 4 December 2020." He also says, in any event, this sum should be offset against the other claim that he has succeeded in against Sharon Christine Slack, so that at this stage, the $24,000 that he was successful in getting judgment for is greater than the $13,000 costs; they should simply be set off that debt. The Court has not heard any significant argument about this, but as part of the issue, Mr Miles has also submitted that he has lodged complaint against one of the solicitors for the plaintiff. He says that the Court should set this aside, there is legal precedent for doing that and the Court should do so. Mr Lo Schiavo opposes that. He says that it's cherry-picking of the facts, that this examination summons, if the Court can summarise the view, it is just, as set out in writing and as in his oral submissions, that the Supreme Court made the costs order, there has been the ordinary process of costs being made, disputed, made by an assessor and then simply obtaining a judgment for those costs and then seeking to simply enforce them, as is a normal course of events in this type of litigation, against Mr Miles; the examination to occur tomorrow. Mr Miles sees it as an injustice and an abuse of process, that a costs order can be made against him and enforced against him when he's owed substantially more money by the plaintiff, in other words, Ms Miles (as said), in respect to other proceedings. The Court notes that when the Court did ask Mr Miles, "Well, what loss would you suffer if the examination summons does proceed tomorrow?" He points to substantial costs, loss of work, inconvenience. They are not minor things, nor does the Court treat them lightly. But the Court regards these particular issues of the greatest significance in the Court coming to its decision; which is there were unsuccessful Supreme Court proceedings where Darke J made an order for costs. The Supreme Court is a superior court of record with a supervisory jurisdiction. A Costs order was made in that Court by Darke J. The Court does not have that decision, but it is common ground there was a costs order made. It was registered in the Local Court and is sought to be enforced pursuant to that Supreme Court decision. This issue of unsuccessful Supreme Court proceedings and costs orders being made, from what the Court has observed or has observed from the parties, is just proceedings through what seems the usual course of proceedings; dispute over costs, costs assessment, argument over costs. There was a decision made about those proceedings by his Honour Magistrate Milovanovich on 4 December. That is the subject of Supreme Court proceedings. This Local Court is being asked again to intervene again to stop the ordinary process of pursuing costs for unsuccessful litigation. The Court is being asked at this late stage, the day before the examination summons, to, in effect, accept that the $13,000 should, in fairness, be accepted as a debt set off against another judgment debt which this court has no knowledge of other than a copy of the judgment. In the Court's view, it would seem more appropriate that that sort of argument should have occurred before the Supreme Court when the decision was made for costs there, or arguments in that Court. The Court also notes that with the Supreme Court appeal from the decision made on 4 December, that an examination summons proceeding does not jeopardise or in any way impinge upon the decision making or impinge upon whatever the Supreme Court decides is the appropriate course when it determines that appeal in due course; probably sometime around August this year. In summary, it appears to the Court that the Court is being asked to interfere in a procedural issue, which could be more properly claimed as a procedural issue; an examination summons in accordance with an unpaid costs order from the Supreme Court to occur tomorrow by considering all other substantive issues, such as another debt, appropriateness or inappropriateness of solicitor conduct in the matter, and fairness against Mr Miles. The Court is imply not persuaded on the balance of probabilities that this Court should interfere with or set aside the examination summons tomorrow.
Van Zuylen LCM dismissed the Notices of Motion seeking to set aside the Examination Orders and ordered that the plaintiff pay the defendant's costs of the motion heard 24 March 2021 in the fixed amount of $3,600, rather than the full amount sought by the defendant.

The Appeal

The plaintiff appealed the decision of Milovanovich ALCM made on 4 December 2020 pursuant to s 39 of the Local Court Act 2007 NSW ("the Act"). He also contended that, if leave is required under s 40 of the Act leave be granted.
The relief sought in the first appeal is set out as follows: (1) Pursuant to Section 39 of the Local Court Act 2007, the plaintiff appeal as right against the Honourable Magistrate's decision that were made on 4 December 2020. If leave be required under section 40, leave be granted. (2) Order that the plaintiffs First Amended Notice of Motion dated 29 October 2020, succeeds against the defendant. (3) Order that: the Judgements /Orders that were obtained in Local Court Matters Numbers: 2020/00297566 and 2020/00297573, by the defendant in respect of registration of the two Costs Assessment Certificates dated 9 July 2020, be set aside pursuant to Rule 36.15. (4) Order that; the defendant and her solicitor (Natasha Spiers), or the defendant's solicitor (Natasha Spiers) pays the plaintiffs costs on an indemnity basis, in respect to the Local Court Matters Numbers: 2020/00297566 and 2020/00297573. (5) Order that; the defendant and her solicitor (Natasha Spiers), or the defendant's solicitor (Natasha Spiers) pays the plaintiff's costs on an indemnity basis, in respect to the defendant's Notice of Motion that was filed on 2 December 2020 and served on 3 December 2020. (6) Order that, the appeal is allowed, and the defendant and her solicitor (Natasha Spiers) pay the plaintiff's costs for this appeal on an indemnity basis.
The parties in their submissions use the nomenclature, Grounds 1 (a), (b), (c) and (d), Ground 2 and Ground 3 to describe the grounds in the Amended Summons. I will adopt the same approach, notwithstanding the grounds of appeal commencing at paragraph 7.
When adjusted in this fashion, the grounds of the first appeal were: Ground (1): His Honour, Magistrate Milovanovich, manifestly erred in law, in dismissing the plaintiff's two "First Amended Notices of Motions": (a) As a result of His Honour's erring, His Honour failed to understand rule 36.15 of the Rules. And or; (b) His Honour was wrong to dismiss the Plaintiff's Motions, without making the orders sought in the Motions. And or; (c) His Honour failed to give reasons and or decision as to why His Honour dismissed the plaintiff's Motions. And or; (d) His Honour erred in failing to make any order, to set aside the Judgments/Orders, in respect of Matters Numbers: 2020/00297566 and 2020/00297573 of the registered two Costs Assessment Certificates dated 9 July 2020. Ground (2): His Honour manifestly erred in law in falling [sic] to award the plaintiff's costs, pursuant to sections 98 and 99 Civil Procedure Act, and or His Honour erred in failing to exercise his discretion that was warranted in the circumstances of the plaintiff's Motions, and the defendant's Motion. Ground (3): As a result of His Honour's errors referred to in paragraph (8), His Honour manifestly erred in law in ordering that all parties pay their own costs.
The second appeal was brought pursuant to s 30 of the Act. Reliance was not placed upon the provisions of s 40 of the Act.
The relief sought in the second appeal is as follows: (1) Pursuant to Section 39 of the Local Court Act 2007, the plaintiff appeal as a right against the Honourable Magistrate's decision that were made on 24 March 2021. (2) Order that; the plaintiff's Notices of Motion that were filed on 26 February 2021 and 1 March 2021, succeed against the defendant and the orders made by the Magistrate on 24 March 2021 be set aside. (3) Order that; the Examination Orders that were obtained in Local Court Matters Numbers: 2020/00246848, 2020/00346419 and 2020/00297573 by the defendant in respect of the judgment debts that are the subject of the Costs Order made in the Supreme Court Matter 2019/00359564 be set aside pursuant to Rule 36.15 UCPR. (4) Order that; pursuant to Sections 21 and 96 of the Civil Procedure Act (NSW) 2005, the Judgment debts in the amount of $24,255.60 plus interest, that resulted from Supreme Court Matter 2019/00359564, and awarded against the defendant in favour of the plaintiff, be off-set against the defendant's costs, that resulted from Supreme Court Matter Number 2019/00359564, awarded against the plaintiff, which are interrelated with each other. (5) Order that; the defendant and her solicitor (Natasha Spiers), or the defendant's solicitor (Natasha Spiers) pays the plaintiff's costs on an indemnity basis, in respect to the defendant's Notices of Motion that were heard on 24 March 2021, in respect to Local Court Matters: 2020/00246848, 2020/00346419 and 2020/00297573 and the Examination Orders. (6) Order that; the appeal is allowed, and the defendant and her solicitor (Natasha Spiers) pay the plaintiff's costs for this appeal on an indemnity basis or as the Court thinks fit.
The grounds for the second appeal are as follows: Ground (1): His Honour, Magistrate Van Zuylen, manifestly erred in law in dismissing the plaintiff's three Notices of Motions to set aside the three Examination Orders pursuant to rule 36.15. (a) As a result of His Honour's error, His Honour failed to apply rule 36.15 of the Rules. And or; (b) His Honour was wrong to dismiss the plaintiff's Notices of Motions, without making the orders sought in the Motions. And or; (c) His Honour erred in failing to make any order, to set aside the Examination Orders, in respect of Matters Numbers: 2020/00246848, 2020/00346419 and 2020/00297573. Ground (2): His Honour manifestly erred in law in failing to understand or apply Sections 21 and 96 of the Civil Procedure Act (NSW) 2005, to the plaintiff's motions against the defendant. As a consequence, his Honour was wrong in not ordering that the defendant's judgment debts against the plaintiff must be off set against the plaintiff's judgment debts which is in the amount that is much higher amount against the defendant. Ground (3): His Honour manifestly erred in law in failing to award the plaintiff's costs, pursuant to sections 98 and 99 of the Civil Procedure Act, and or his Honour erred in failing to exercise his discretion that was warranted in the circumstances of the plaintiff's Motions. As a result of his Honour's errors, his Honour manifestly erred in law in ordering that the plaintiff should pay the defendant's costs in respect to the plaintiff's three Notices of Motions.

Legal Principles

Section 39(1) of the Act provides an appeal is a right to a party who is dissatisfied with a judgment or order of the Local Court to this Court "on a question of law".
Such an appeal must be predicated upon "an identified question of law" or "an erroneous answer in respect of a question of law": B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; [2008] NSWCA 187 at [75] (Allsop P as his Honour then was) and [150] (Basten JA).
An appeal lies to the Supreme Court against a judgment or order of the Local Court sitting in its General Division, by leave, on a ground which involves a question of mixed law and fact (s 40(1)) or which is an interlocutory judgment or order, a consent judgment or order or an order for costs: s 40(2). That provision is in the following terms: 40 Appeals requiring leave (1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court. (2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court: (a) an interlocutory judgment or order, (b) a judgment or order made with the consent of the parties, (c) an order as to costs.
Pursuant to s 41(1) of the Act, the Supreme Court may determine an appeal made under ss 39(1) or 40 by varying the terms of the judgment or order; setting aside the judgment or order; setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions; or dismissing the appeal.

Submissions for the Plaintiff

The plaintiff submitted that this matter involved a "gross abuse" of the Court's processes by a solicitor and a miscarriage of justice on two occasions, by two Magistrates.
The plaintiff submitted that: 1. On 16 October 2020, the defendant obtained orders with respect to Form C3 and Form C4A, that were the subject of the review panel's jurisdiction. 2. The defendant then obtained the Examination Notice of Form C3 and the Examination Notice of Form C4A and served them on the plaintiff. The defendant enforced these Examination Notices in the amount of $13,418.12, with the full knowledge that the defendant was indebted to the plaintiff in the amount of $24,255.60. 3. The Examination Notices were obtained irregularly because a review had been undertaken by the plaintiff, and the defendant should pay the plaintiff's costs.

The First Appeal

The plaintiff's submissions with respect to Ground 1 were that: 1. As a matter of law and public policy, the Magistrate failed to exercise the power under the UCPR r 36.15, to set aside the Examination Notices that were supported by two Local Court order judgments that were obtained by the defendant's solicitor contrary to law. The plaintiff submitted that this constitutes an error of law. 2. The evidence that was before the Magistrate clearly supported the plaintiff's the First Amended Motion to set aside Form C3 and Form C4A, filed by the plaintiff. 3. His Honour failed to give reasons and or decisions, as to why his Honour dismissed the plaintiffs' motions, which constitutes an error of law. 4. That Magistrate Milovanovich found that the defendant was not seeking to enforce the superseded costs assessment certificates when there was before His Honour an application to set aside two Examination Orders that the defendant obtained under that superseded Costs Assessment Certificates is a serious error of law. The plaintiff stated: My respectful submission is the judge could not have been satisfied on the balance of probability that the defendant was not going to use that judgment.
The plaintiff did not make submissions with respect to grounds 2 and 3.
The plaintiff submitted that the finding that the plaintiff was attempting to re-visit issues already determined by other tribunals in the absence of any evidence, constitutes an error of law.
The plaintiff submitted that there were overwhelming problems with the magistrate's decision and the court should set aside the decision and uphold the appeal.

The Second Appeal

With respect to Ground 1, the plaintiff submitted: 1. His Honour failed to understand rule 36.15 because "there were some misunderstandings on his honour's part, in respect to the court's power and the wrongful action of the defendant and or her solicitor in what they did".
With respect to Ground 2, the plaintiff stated: Your Honour will see there is a judgment in the amount of 24,255, and then it continues, your Honour will see a certificate which is 29, $24,255. Had This is my debt. Is owed to me. On the other hand, the defendant was pursuing me for around 13,000 or something, so if you offset that 13,000 I am still left with substantial amount of money. I could be wrong with the figure the defendant was pursuing me for but certainly it is not more than 15000/16000. [sic].
With respect to Ground 3, the plaintiff submitted that the plaintiff's notices of motion were supported by strong evidence and backed by legislation and authorities. His Honour erred in awarding costs against the plaintiff when the defendant's examination orders were obtained in bad faith; this constitutes an error of law.

Submissions for the Defendant

The defendant seeks the following orders in the first and second appeal: 1. that all the outstanding costs be ordered to be paid forthwith as a total specified amount. 2. that the costs of both appeals be awarded in the defendant's favour on an indemnity basis, also as a fixed amount and to be paid forthwith. 3. that the plaintiff be restrained from filing and further proceedings against her in respect to these proceeding without leave of the Court.

Summary and Background

The defendant submitted that: 1. The costs amounts are not in dispute as they are in the various certificates and nothing in the plaintiff's submissions affects their validity. To the extent that the appeal relates to the Certificates and Examination Orders, it should be dismissed. 2. The plaintiff's appeal grounds rely heavily on two Magistrate's having failed to understand the UCPR r 36.15 or various other sections of the CPA. 3. The plaintiff relies upon an offsetting claim which has to date not been properly pleaded. In any event the Plaintiff's purported offsetting amount has been totally subsumed by the repeated costs orders made against him in these proceedings. 4. The offsetting amount sought comes from a separate proceeding and in the absence of evidence it does not attract the operation of s 21 of the CPA. The plaintiff has not shown sufficient 'interdependence' in the off-set amounts, in that one is not impeached by the other in any way to attract a set-off doctrine approach. 5. The plaintiff was attempting to indefinitely stay enforcement of Darke J's costs against him, by failing to pay for the release of the reviewed certificates. This was in the context that he knew that the defendant could not pay for their release. The plaintiff's personal practices are clearly noted in Miles v Amos [2021] NSWSC 38 at [54] - [61]: [61] The Plaintiff accepted that he "purchased debts and cases from other people" as his business and that he "run[s] those cases in [his] own name for profit."
The defendant submitted that the considering the plaintiff clearly did not intend to seek to rely upon the Review Costs certificate (then unreleased), despite being aware the review had been completed. The defendant had progressed the matter on the Certificates that she had received. On 16 October 2020, the defendant filed and registered the original costs certificates and instructed Rafton Family Lawyers to send to the Plaintiff the Examination Notices.
The defendant submitted that the plaintiff avoids the fact that the new review certificates were available since 16 September 2020 but he did not pay for their release. It is relevant for the Court to note that no steps were taken whilst the review was underway or before the certificates were available to the plaintiff upon payment by him for a review he sought. The defendant took no steps before the completion of the Review.
The plaintiff's affidavit from the 12 March 2021, which includes his versions of what happened in the Local Court on 4 December 2020, is not accepted by the defendant.
The defendant submitted that she has acted in "good faith" as there had been a refusal to pay the assessed amounts at every turn by the plaintiff. The plaintiff holds no discernible assets over which enforcement of a judgment could be made. Examination of the plaintiff is the next necessary step in this circumstance, and this remains relevant today.

Leave to Appeal

The defendant submitted that: 1. The Summons filed in respect to the decision of Milovanovich ALCM of 4 December 2020 does not identify what error of law was in respect Rule 36.15. 2. The Summons does not identify any error of law in respect to the refusal by van Zuylen LCM to set aside the Examination Orders. 3. The set-off claim was not sufficiently evidenced. 4. Pursuant to s 40 of the Act, leave is required to appeal to the Supreme Court on an order as to costs. The leave has not been sought. 5. Leave should be refused as no questions of law are properly raised.

The First Appeal

With respect to ground 1(a), the defendant submitted: 1. There is nothing in his Honour's written reasons which would suggest that his Honour failed to understand r 36.15. The general power to set aside an order is not an obligation to set aside an order. 2. His Honour made no findings that the Orders were obtained illegally or in bad faith. 3. His Honour dismissed the plaintiff's motions not because he was not persuaded that r 36.15 applied, but because he properly applied the rule and determined there was no utility in the motions. The defendants were not pressing enforcement of the amount of $11,223.61 but seeking to substitute this amount with the reviewed amount of $10,557.13. This reduction should not be confused with the overall increase in costs owed by the plaintiff. The costs of the conduct of the review, whilst paid by Rafton Family Lawyers, have been determined to be owed by the plaintiff and as such, his Honour found there to be no utility in setting aside a judgment that was not sought to be enforced. 4. In oral submissions, the counsel for the defendant submitted: I am sure your Honour knows that an examination notice, and you fill them out, and my understanding, you fill them out and you can then send them to the other person with the table of information which you require they pull out. There is no evidence that an examination notice was filed with the Court… There is nothing before this Court which was sent by letter before the review certificates were released… [T44.6 - 10]. … So, Mr Miles has been at pains to say that if something is being reviewed, that steps should not be undertaken in respect of an amount, which is being reviewed. That's clearly been his position. However, when he came before the Court on 25, correction, 24 March, before Magistrate Van Zuylen he was on notice that the review of the $24,000 amount that he was claiming should be offset was, in fact, under review. So, it is respectfully inconsistent to come before this Court and say that steps wrongfully, in bad faith have occurred where at the time he is before Magistrate Van Zuylen there is clearly a review on foot. [T46.19-29]. … because of some correspondence, my instructor's principal paid for the release of the certificate from Mr Webberly. Having received those there was no intent clearly to enforce the now defunct $11,000 certificate. In fact, there was a notice of motion to substitute it for the $10,000 one, which is only to Mr Miles's benefit… [T48.41-50]. 1. There is no basis for the plaintiff's submission that this finding was a serious error in law.
With respect to Ground 1(b), the defendant submitted: 1. Simply stating that the Magistrate was "wrong" to dismiss the Notices of Motion is insufficient and there is no substance to this ground of appeal to which the defendant can respond. 2. There is no demonstrable merit to the request by the plaintiff that the defendant and her solicitor pay his costs on an indemnity basis.
With respect to Ground 1(c), the defendant submitted: 1. His Honour's reasons were delivered ex tempore. While there is no transcript of this decision, his Honour provided a written summary of his reasons. 2. The plaintiff's recollection of His Honour's reasons given in discussions between the bench and the Bar table in court on the day are disputed by the defendant and are inconsistent with his honour's written summary. The court should prefer his Honour's own recollection of his reasons to that of the plaintiff.
Ground 1(d) effectively restates ground 1(b) and the same opposition is made.
With respect to ground 2, the defendant submitted that given that his Honour dismissed both parties' motions, the defendant submitted that it is the ordinary practice of costs that each party to bear their own costs and his Honour did not err in law in failing to award the plaintiffs costs.
With respect to ground 3, the defendant submitted that this ground is a restating of ground 2 and is again opposed as above for ground 2.

The Second Appeal

The Summons sought to appeal the decision of van Zuylen LCM on 24 March 2021 pursuant to s 39 of the Act.
The defendant submitted that it is clear from the transcript of the proceedings that the Magistrate found there was insufficient evidence that the reviewed amounts in from the cost assessment should be set-off against the solicitor/client costs. There was a lack of evidence to show the "link" referred to in Grant v NZMC Ltd [1989]: The defendant may set-off a cross claim which so affects the plaintiff's claim that it would be unjust to allow the plaintiff to have judgment without brining the cross-claim to account. The link must be such that the two are in effect interdependent: judgment on one cannot fairly be given without regard to the other; the defendant's claim calls into question or impeaches the plaintiff's demand.
In oral submissions, the defendant submitted that: It is not a case of having been finalised and no‑one was, in effect, paying for it, but rather that this was, rather this was a case of there was a review and at the same time there was a review and Mr Miles said you shouldn't match the certificate that he was seeking to rely on it for the purposes of the offset. I say that that is clearly inconsistent with the position that the plaintiff takes, and the Court wouldn't accept that a set‑off could have been made at that time as the orders being sought because the review was underway and that would not be a basis upon which Mr Miles could have sought to settle.
With respect to grounds 1(a), (b) and (c) the defendant submitted: 1. His Honour was taken to UCPR r 36.15 during the course of the heading and expressly referred to the rule in his ex-tempore reasons. His Honour did not fail to apply r 36.15 and appropriately dismissed the plaintiff's notices of motion. 2. His Honour's ex tempore reasons indicate that he dismissed the notices of motion because: 1. The complexity of the matter meant that the procedural issue of whether to proceed with the examination summons could not be separated from the substantive issues which were already the subject of a Supreme Court appeal; 2. For the examination summons to proceed would not jeopardise or impinge upon this Court's decision making; 3. In the circumstances, it was inappropriate for a lower Court to interfere. 1. It cannot be demonstrated that his Honour failed to apply r 36.15 of the UCPR. The Notices of Motion would still have been properly dismissed as the Examination Orders were not obtained in bad faith, irregularly, or contrary to law.
With respect to ground 2 the defendant submitted: 1. The defendant submitted that there is nothing in the transcript that would suggest that His Honour failed to understand ss 21 and 96 of the CPA. 2. The defendant submitted that the plaintiff's claim for setoff lacked sufficient evidence. Even if it had been properly pleaded, the defendant submitted that the setoff claim would have failed for the following reasons: 1. The $24, 255.60 was subject of review and enforcement at the time the Examination Orders were sought. 2. The two debts are not interdependent and are not sufficiently linked to be setoff against each other. One relates to solicitor/client costs for Family Law proceedings and the other relates primarily to party/party costs of separate proceedings relating to the caveat. 1. The defendant submitted that it is not the case that the solicitor/client costs owing to the Plaintiff are greater than the costs owing to the defendant. The defendant submitted that the following are the costs in question: 1. $15,858.24 plus $3,600 is being enforced under EO, awarded on 24 March 2021 (and various interest amounts). 2. Form C3: The Certificate of Determination of Manager's Assessment Costs, $2,291.51 (inclusive of a fee of $97.00). 3. Form C8: Certificate of Determination of Review Panel Costs, $3009.60. 4. Form C7: Certificate of Determination Review, $10,557.13. 1. The defendant submitted that after totalling these amounts, the plaintiff would owe the defendant monies if a setoff approach was taken. Hence, His Honour was correct in declining to set-off the debts.
With respect to ground 3 the defendant submitted: 1. The defendant submitted that in dismissing the plaintiffs Notices of Motion His Honour did not err in awarding costs of the motions to the defendant. His Honour exercised his discretion in the plaintiff's favour by limited the award to the costs. The defendant sought $7,040 being the total costs of that day in respect to the three Notices of Motion which had not succeeded.
Finally, the defendant submitted that the Examination Orders required to find assets able to meet all the unpaid cost have been stayed pending the Appeal determination by this Court and dates for these orders should now be set. The defendant seeks all outstanding costs be ordered to be paid forthwith. The defendant seeks that the plaintiff be restrained from filing further proceedings against her in respect to these proceedings without leave of the court.
The plaintiff filed a reply to the defendant's written submissions which largely repeats his original written submissions.

The First Appeal

It is necessary to begin by outlining the costs assessment regime under the Legal Profession Uniform Law (NSW) ("LPUL") and Legal Profession Uniform Law Application Act 2014 ("LPULA Act").
Applications may be made for an assessment of legal costs payable to a law practice: LPUL s 198(1). On a costs assessment, the costs assessor must determine whether or not a valid costs agreement exists and determine whether legal costs are fair and reasonable and, to the extent they are not fair and reasonable, determine the amount of legal costs (if any) that are to be payable: LPUL s 199(2).
On making a determination of costs, a Costs Assessor is to issue a certificate that sets out the determination: LPULA Act s 70(1). Section 70(5) relevantly provides: In the case of an amount of money specified in a certificate that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid money.
Thus, when Form C3 and Form C4A were filed in the Local Court, the defendant obtained judgments of that Court for the "amount of unpaid money" by the force of the statute.
As part of the costs assessment regime, a party to a costs assessment may apply for a review of the costs assessor's determination: LPULA Act s 83(1). The review is conducted by a Review Panel, which is constituted by two Costs Assessors: LPULA Act s 82. The Review Panel is tasked with the function of reviewing the determination of the costs assessor and may affirm the Costs Assessor's determination or set aside that determination and substitute a determination that should have been made by the Costs Assessor: LPULA Act s 85(1). If the Review Panel sets aside the Costs Assessor's determination and substitutes the determination, the Panel is to issue a certificate that sets out its determination: LPULA Act s 87(1). S 70(5) of the LPULA Act applies to the certificate issued by a Review Panel in the same way that that provision applies for a certificate issued by a Costs Assessor: LPULA Act s 87(2).
Section 86 of the LPULA Act relevantly deals with the operation of the Costs Assessor's determination if an application is made to a Review Panel. That section provides: 86 Effect of review on costs assessor's determination (1) If an application is made to a review panel to review a costs assessor's determination under section 83 or 84, the operation of the determination is suspended. (2) The review panel may end a suspension - (a) if it affirms the determination of the costs assessor, or (b) in such other circumstances as it considers appropriate.
The effect of s 86(1) was considered by Dowdy FCCJ in Taouk v Lawyers Pty Ltd (2018) 342 FLR 121; [2018] FCCA 3390. Although his Honour's views do not bind me, I respectfully agree with his Honour's observations at [17] - [19] as follows: [17] In my view, s 86 of the 2014 Act in the circumstances of this case meant that as and from the lodging of the application for review on 8 January 2018 the force and effect and "operation" of the Certificate of Determination was temporarily suspended. [18] The word "operation" found in s 86 is a plain English word and, according to the Oxford English Dictionary (2nd Ed, online), means: (1)(a) The exertion of force or influence … the way in which a thing works … (3)(a) Power to operate or produce effects; efficacy, force. [19] Suspension is also a plain English word and means temporarily being kept from doing something or deprived of something.
Thus, the effect of the plaintiff's application for review of the Costs Assessor's determination was that, on 16 July 2020, the force and effect and "operation" of Form C3 and Form C4A were suspended. The Review Panel may end that suspension if the panel either affirmed the determination of the Costs Assessor or determines that it is appropriate in the circumstances. In this case, the review panel did not, and has not, ended that suspension. Therefore, the suspension began on 16 July 2020 and is ongoing.
In Mohareb v Palmer [2018] NSWCA 220, Beazley P (as Her Excellency then was) and Macfarlan JA stated at [9] that: [9] A fortnight later, on 15 November 2107 [sic], District Registrar Wall of the Federal Court set aside Mr Palmer's bankruptcy notice on the basis that the judgment said to found it was subject to a statutory suspension by reason of s 86 of the Legal Profession Uniform Law Application Act 2014 (NSW) (the "LPULA" Act), which it undoubtedly was.
In my view, this passage confirms that the statutory suspension of the Costs Assessor's determination affects the ability to obtain a judgment of a Court by the filing of a costs certificate.
It follows that there was an inability of the defendant to obtain judgment once the suspension began on 16 July 2020 by force of s 86 of the LPULA Act.
In the matter before Milovanovich ALCM, the principal contention of the plaintiff is that the judgments made pursuant to Form C3 and Form C4A should be set aside pursuant to r 36.15 of the UCPR. Rule 36.15 gives the Court the power to set aside an order or judgment "if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith". A party seeking relief under r 36.15 must show "sufficient cause".
In Calandra v Murden [2015] NSWCA 231, it was stated that a judgment may be entered irregularly if "there was no amount of unpaid costs in respect of which the respondent was entitled to judgment": at [20]. The Court in Calandra cited Hughes v Justin [1894] 1 QB 667 in which Lopes LJ described as "irregular" a default judgment signed for an amount to which the plaintiff was not entitled: at 670.
In my view, the circumstances in this case demonstrate that the judgments given or entered in the Local Court on 16 October 2020, pursuant to Form C3 and Form C4A were filed irregularly. At the time that the judgments were given or entered, the force and effect and "operation" of Form C3 and Form C4A were suspended. Therefore, the defendant was not entitled to judgment.
When the plaintiff sought relief to have the judgments that were entered pursuant to Form C3 and Form C4A set aside in the First Amended Notice of Motion, the Magistrate was obliged to consider whether the judgment obtained by registration of the certificates should be set aside.
As noted above, the written reasons of the Magistrate stated: The Court was of the view that the Judgment entered on the 16th October by virtue of the C4A Certificate could be set aside by virtue of Regulation 36.15 of the Uniform Civil Procedure Act, 2005.
The Magistrate did not elaborate further and explain whether he meant by "could be set aside" a general reference to the scope of r 36.15 or that in the circumstances before him, the criterion for the operation of the rule had been met, namely, the "judgment" was irregular, illegal or against good faith. In any event, the Magistrate did not explain the basis for why the judgment could be set aside. Thus, if his Honour was attending upon the criteria for the operation of r 36.15, he did not explain whether the judgment was entered irregularly, illegally or against good faith (or a combination of these grounds). His Honour did not articulate the facts or circumstances that gave rise to the irregularity, illegality or acting against good faith. Although it is conceivable that his Honour likely believed that one of these three grounds were made out on the evidence, a bald conclusion in that respect does not satisfy the duty to give adequate reasons.
In reaching this conclusion, I am mindful that the Magistrate had made an ex tempore judgment in a busy list. In that context, I respectfully agree with the observations of Johnson J in Director of Public Prosecutions (NSW) v Illawarra Cashmart Pty Limited (2006) 67 NSWLR 402; [2006] NSWSC 343 at [15] in relation to an appeal under the Crimes (Appeal and Review) Act 2001 (NSW): [I]t is appropriate to bear in mind that his Honour's reasons constitute an unedited and unpunctuated record of ex tempore remarks in a busy Magistrate's Court: Acuthan v Coates (1986) 6 NSWLR 472 at 479A, 485C-D. Such a judgment should not be picked over and appropriate allowance should be given to the pressures under which Magistrates are placed by the volume of cases coming before them: Neighbourhood Association DP295386 v Forgeron (2005) NSWCA 150 at paragraph 15; Colosimo v Director of Public Prosecutions (2005) 155 A Crim R 573 at 583 (paragraph 36).
However, in this case, the written reasons were written by Milovanovich ALCM months after the judgment. In circumstances where the learned Magistrate became aware that no transcript was available and the parties would likely have to rely on his written reasons, it can be expected that his Honour's reasons would identify the basis and facts leading to his decision.
The fact that my view may accord with the view of the Magistrate - that the judgment could be set aside - does not mean that the failure to give adequate reasons is not made out or should be blindsided. This is because, as Mason P stated in Beale v Government Insurance Office (NSW) (1997) 48 NSWLR 430 at 431, there is a principle that: [T]here is a miscarriage where what is and is not disclosed involves a breach of the principle that justice must not only be done but must be seen to be done.
The judicial obligation to provide reasons was also considered in Young v Cesta-Incani [2007] NSWCA 229, at [54], where Tobias JA (with whom Hoeben and Ipp JJA agreed) cited with approval what had been said in Wiki v Atlantis Relocations (NSW) Pty Ltd [2004] NSWCA 174; [2004] 60 NSWLR 127: The proper administration of justice requires reasons to be given in a form, firstly, that will enable the losing party to understand properly the grounds upon which the case was lost, and, secondly, that will not, effectively, frustrate the losing party's right to appeal.
In Stoker v Adecco Gemvale Constructions Pty Ltd [2004] NSWCA 449, Santow JA (Mason P and Sheller JA agreeing) observed, at [41], after referring to a number of authorities, that the failure to give adequate reasons may be an error of law. His Honour referred to Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430, in which Meagher JA (at 444) had observed that, in most cases where the provision of inadequate reasons is asserted as constituting an error, it is assumed that such an error is an error of law.
In my view, the inadequacy of the Magistrate's reasons, in circumstances where the issue as to whether the judgments should be set aside, was real and live resulted in an error of law.
It is true that the power to set aside a judgment or order is not an obligation to exercise that power. Rule 36.15 states that the "judgment or order…may…be set aside if" made irregularly, illegally or against good faith (emphasis added). This language demonstrates that, once it is shown that the judgment or order is irregular, illegal or made against good faith, the power to set aside the judgment or order is discretionary.
In this respect, consideration as to the utility of making the order, as Milovanovich ALCM did, was available. Utility is one of many factors that should be considered when the Court exercises its discretion to set aside a judgment or order.
An example would illustrate when utility can favour the exercise of the discretion not to set aside a judgment, notwithstanding irregularity in the giving of the judgment. Suppose, as is the case here, that the costs assessor's certificates were filed after an application for review was made but before the determination of the review panel was known. During that period, the operation of the costs assessor's determination would be suspended by virtue of s 86 of the LPULA Act. Later, it was discovered that the Review Panel affirmed the Costs Assessor's determination: LPULA s 85(1)(a). Despite the irregularity in obtaining judgment because, at the time of the filing, the person filing the certificate was not entitled to the amount, there would be no utility in setting aside the judgment only for the same person to file the identical certificate (for the identical amount) later.
However, those are not the circumstances of this case. The distinguishing feature is that the Review Panel had set aside the Costs Assessor's determination and substituted their determination. In circumstances where the amount owed is different, the proper course is to set aside the irregular judgment and allow the parties to seek a judgment that reflects the correct amount owed.
The exercise of a discretion under r 36.15 may evoke a question of law if the exercise of the discretion is produced upon incorrect jurisdictional foundation (Collier v Director of Public Prosecutions [1994] NSWCA 54) or a failure to take into account a relevant consideration (El-Hadi v Australian Timbers (NSW) Pty Ltd [2021] NSWSC 501 at [19] (Rothman J)). However, it is unnecessary to consider that issue. Even if the exercise of the Magistrate's discretion involved mixed questions of fact and law, it is appropriate to grant leave to bring the appeal under s 40 of the Act. This is so because the Magistrate, by eliding over the criteria in r 36.15, appears to have failed to have regard to the significance of the irregularity in the judgment entered which, by virtue of his decision, remained extant.
In that respect, I respectfully do not agree with the learned Magistrate that there was no utility in setting aside the judgment on the basis that the plaintiff was now seeking to enforce a different certificate. If a new judgment is going to be entered for the certificates of the Review Panel, there is, in my view, strong utility to setting aside the judgment given from the Costs Assessor's certificates, particularly when entered irregularly. This is because a judgment of the Court, until set aside, has legal consequences. A judgment allows the party in whose favour the judgment has been given to take advantage of various legal provisions. For example, the party can serve an examination notice to require the person bound by the judgment to provide answers or produce specified documents for inspection: UCPR r 38.1(1).
Further to my earlier finding of legal error, I conclude the Magistrate erred in his exercise of discretion in refusing to set aside the judgment obtained by the defendant with respect to Form C3 and Form C4A.
A conclusion of this character might typically result in a remittal to the Local Court. However, given the expenditure of time and resources on this question and that each party sought a resolution of the r 36.15 issue in this Court, it is appropriate for the Court to resolve the substantive issue. In all the circumstances it is appropriate for an order to be made varying the decision below so as to set aside the judgments entered on 16 October 2020.

The Second Appeal

Putting aside a contention in relation to the award of costs in the proceeding before van Zuylen LCM, the plaintiff relied upon two substantive grounds to challenge the decision of the Magistrate. Both of those grounds were pursued under s 39(1) of the Act. First, it was submitted that the Magistrate had misapplied r 36.15 of the UCPR in rejecting the motion to set aside the examination notices. Secondly, it was contended that the Magistrate had failed to understand or apply the provisions of ss 21 and 96 of the CPA in refusing to award a set-off against any costs awarded by Darke J.
Both of those propositions raise questions of law as to the proper operation of the rule or statutory provisions in the circumstances of this case. Unlike the first appeal, no part of the second appeal involves a challenge based upon the giving of inadequate reasons.
As the first ground was developed before van Zuylen LCM, the plaintiff relied upon two separate pathways under r 36.15 as the threshold propositions in that rule to set aside the examination notices. As to the motion to set aside the examination notices under Form C3, the plaintiff relied upon the existence of an irregularity, namely, that the examination notice was directed to a judgment which was irregular and was the subject of appeal to this Court. He also relied in that respect upon an abuse of process although it is not entirely clear what was the foundation for that proposition. In substance, the plaintiff contended that the defendant was estopped from obtaining the examination orders because "an appeal was on foot" (that, according to him, relates to 2020/00297573).
In the challenge to the remaining two examination notices concerning Form C7 and C8 (2020/00346848 and 2020/00346819 respectively), the plaintiff took a different tact, no doubt in recognition of the fact that the examination orders sought in those respects derived from judgments entered from the review panel's certificates. In that case, it was submitted that the examination orders were sought in bad faith because they constituted an abuse of process. The abuse of process was said to derive from the fact that the plaintiff was owed a debt identified through a "Certificate of Determination" which could be set-off having regard to the provisions of s 21 of the CPA. Here it was suggested that the bad faith arose because the defendant owed the plaintiff "a large sum of money" and was seeking the examination orders because she was impoverished. Reliance was placed in the proceedings below upon Chand v Zurich Australian Insurance Limited [2013] NSWSC 102; Perpetual Trustees Australia Ltd v Heperu Pty Ltd (No 2) (2009) 78 NSWLR 190; [2009] NSWCA 387 at [16]; Slater & Gordon Ltd v Sellars [2020] NSWSC 1793 at [30].
As to the first of those bases to set aside the examination notices, van Zuylen LCM essentially concluded that the issue was caught by the appeal and should be determined in this Court. Whatever the merits of that conclusion, the plaintiff was ultimately correct in his contention that one of the examination orders was not available because the judgment with respect to Form C3 had been entered irregularly. That conclusion derives from the conclusions that I have reached as to the first appeal.
As to the remaining basis for the challenge to the application for examination orders, van Zuylen LCM in substance concluded that the process adopted by the defendant in seeking the examination orders was available to the defendant, there was no prejudice to the plaintiff in the examination proceedings continuing and there was an absence of proof before the Court as to the nature of the judgment debt asserted by the plaintiff. The Magistrate also referred to the giving of examination notices as a procedural step and that the actual hearing of the examination notices was the next day.
On the earlier factual background set out in this judgment, it is clear in my view that the defendant had available the procedural step of seeking examination notices in the context of Form C7 and Form C8. There is no evidence that the judgment obtained as a result of filing those certificates were irregular or against good faith. There was an entitlement to file the Review Panel's certificates in the Local Court to obtain judgment for the amount payable: LPULA Act ss 70(5), 87(2). The Review Panel's certificates did not confront the same difficulties as Form C3 and Form C4A, which had been suspended under s 86 of the LPULA Act. There is nothing irregular in filing certificates certifying costs that are payable to the person: Bevan v Bingham [2022] NSWSC 863 at [115] and [118]. Once that conclusion is reached then it follows that examination notices may be issued against a judgment by the defendant.
Similarly, I do not consider that the initiation of process available by statute can properly give rise to a conclusion that the defendant is engaged in an abuse of process or, to use the expression within r 36.15, "against good faith".
The application for a set-off arises through a different procedural course under ss 21 and 96 of the CPA. Nothing in those provisions is suggestive of them acting as a stay or limitation upon any of the processes under the LPUL or LPULA. Rather, the opposite is the case. The provisions appear to act in relation to proceedings where there is an action upon a debt as indicated by the text in s 21(1) of the CPA, which states: If there are mutual debts between a plaintiff and a defendant in any proceedings, the defendant may, by way of defence, set off against the plaintiff's claim any debt that is owed by the plaintiff to the defendant and that was due and payable at the time the defence of set-off was filed, whether or not the mutual debts are different in nature.
It may be noted that, in this case, the defendant contends that the plaintiff did not file a defence which adequately sought a set-off as contemplates by s 21(1) of the CPA.
In these circumstances, I do not consider that the plaintiff has demonstrated legal error in van Zuylen LCM refusing to set aside the examination notices. There was no proper basis, in my view, as a matter of law, for the examination notices to be set aside as an abuse of process or against good faith pursuant to r 36.15 of the UCPR.
One further observation may be made. Neither party addressed the question of whether the provisions of r 36.15 were available to set aside examination notices, as distinct from examination orders. It is sufficient for me to observe, having regard to the above conclusion, that I have considerable doubts that r 36.15 may be employed to that end. This is because an examination notice is merely a "notice in writing" that one person ("the person in whose favour a judgment or order has been given or made") has served on another person ("the person bound by the judgment or order") requiring them to do certain things within a specified period: UCPR r 38.1. It is not a step taken by a Court, let alone a "judgment or order of the court" that was "given", "entered" or "made" as described in r 36.15 of the UCPR. I note, in contrast, that an order for examination is properly an order that "[t]he court may…make" (CPA s 108(1); see also UCPR r 38.3) and one that is capable of being set aside under the provisions of r 36.15 of the UCPR.
The second basis for the challenge to van Zuylen LCM's decision was his failure to order a set-off against the defendant's claim for a debt owed to the defendant in consequence of the costs orders made by Darke J. I have earlier mentioned that it was intended that the set-off was the costs for the fees as assessed from the family law proceedings.
At the outset, I recap by noting that the fees in question were assigned to the plaintiff from Mr Baena. The plaintiff had lodged in that respect a caveat over the defendant's property. The defendant had issued a lapsing notice and the plaintiff had then sought to extend the operation of the caveat pursuant to the Real Property Act 1900 (NSW). Ultimately, Darke J dismissed that application and ordered the plaintiff to pay the defendant's costs which were initially assessed under Form C3 and Form C4A, and ultimately in the form of the Review Panel's certificates.
In rejecting this aspect of the plaintiff's case, van Zuylen LCM stated: The [Local] Court is being asked at this late stage, the day before the examination summons, to, in effect, accept that the $13,000 should, in fairness, be accepted as a debt set off against another judgment debt which this court has no knowledge of other than the copy of the judgment. In the Court's view, it would seem more appropriate that that sort of argument should have occurred before the Supreme Court when the decision was made for costs there, or arguments in that Court.
A good deal of the defendant's submissions on this issue were devoted to propositions relevant to the notion of an equitable set-off. Thus, reliance was placed upon considerations as to the relevant connection between proceedings or, more generally, notions of interconnectedness.
There is a requirement in equitable set-off that the claims be connected in some manner although the case law is yet to develop a consistent, clear test by which that connection can be tested: AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 at 710-714 (Giles JA). Generally, this requires consideration of facts including, amongst other things, the nature of the connection between the claims, how close they are and whether set-off would be unjust: Signature Resorts Pty Ltd v DHD Constructions Pty Ltd (1995) 18 ACSR 627 at 635 (Bryson J).
However, the plaintiff's contentions in this respect were not directed to the notion of an equitable set-off, which as Ward J (as her Honour then was) found in Lahoud v Lahoud [2012] NSWSC 284 at [75] arose in this Court's inherent jurisdiction. Instead, the plaintiff relied upon ss 21 and 96 of the CPA.
Section 96 allows orders to be made setting off costs ordered in the same or separate set of proceedings: Ryan v South Sydney Junior Rugby League Club Ltd [1975] 2 NSWLR 660, especially 664D (Bowen CJ in Eq). However, it is clear that s 96 of the CPA is not applicable between a judgment by Darke J of this Court and judgments entered into the Local Court. That is because s 96(1) makes clear that the section applies to "two or more judgments of the same court".
I turn next to consider s 21 of the CPA. In Jim's Group Pty Ltd v Quindar Pty Ltd [2014] NSWSC 647, Beech-Jones J (as his Honour then was) makes clear debts may be "mutual" when they are between the same parties: at [66]. Therefore, statutory set-off, as distinct from equitable set-off, can operate in circumstances where judgments sought to be set-off are from different courts provided that they are between the same parties: at [66] - [68].
In Ritchie's Uniform Civil Procedure New South Wales, the authors cited Beech-Jones J's judgment for the proposition that "[t]his comparatively undemanding criterion of 'mutuality' permits a defendant to set off against the plaintiff's claim any judgment debt, including a debt arising from a judgment in another court or jurisdiction".
I am satisfied that there is mutuality because the proceedings involve the same parties. However, there are three difficulties with obtaining relief under s 21 of CPA.
First, it is doubtful from the evidence before me that there is a "debt" within the meaning of s 21(6) of the CPA. Sections 70(4) and (5) of the LPULA Act make clear that there is a difference between recovering a debt, which arises when the amount paid exceeds the amount specified in the certificate, and a judgment, which arises when the amount specified in the certificate has not been fully paid. This demonstrates that the legislature clearly intended that a judgment obtained under s 70(5) of the LPULA Act is distinct from a debt.
Secondly, there is no evidence of the plaintiff (the defendant in the proceedings before Darke J) making a defence to set off the defendant's (the plaintiff in the Darke J proceedings) claim as required by the plain terms in s 21(1) of the CPA.
Lastly, it is difficult to understand how the plaintiff's arguments, if made out, would affect the examination notices. There remains, as I have explained above, valid judgments in the Local Court from the filing of Form C7 and Form C8. Even if the Local Court had the power to set aside the examination notices, I see no reason why it should exercise that power given that they were made pursuant to proper judgments of that Court.
For these reasons, the plaintiff has not demonstrated an error of law on the part of van Zuylen LCM's decision and the second appeal should be dismissed.

Conclusion

In the circumstances, I have concluded that the plaintiff should be granted leave to appeal with respect to the first appeal and the appeal allowed with respect to the decision Milovanovich ALCM. It is appropriate that the decision below be varied pursuant to s 41(1)(a) of the Act so as to set aside the judgments entered with respect to Forms C3 and C4A.
The defendant has been successful in resisting the second appeal which will result in orders being made dismissing the appeal. It should be noted in that respect, that the second appeal overlapped with the first appeal so far as the examination orders were issued with respect to Form C3. The orders made with respect to the first appeal should be sufficient to extinguish the examination notice issued in that respect. However, if there be any doubt about that matter, I will contemplate the making of a declaration.
In the respective appeals, the plaintiff sought costs in various forms which preceded upon the basis of the success of the appeal in this Court. Various submissions were also made about costs in the Local Court. Given that the plaintiff has not been successful with respect to the second appeal, then the question of costs will need to be reserved so that the parties submissions with respect to costs may be developed in the light of this judgment. I therefore propose to reserve the question of costs.
The Court will hereunder propose various orders for the final disposition of the appeals and then direct the parties to make submissions about the form of the orders and costs within the time specified in those orders.
In relation to the first appeal, the proposed orders are as follows: 1. Grant leave to appeal. 2. Appeal allowed with respect to the First Amended Notice of Motion dated 29 October 2020 for setting aside the judgments entered upon the filing of Form C3 and Form C4A (as defined by this judgment) and costs of that motion. 3. Pursuant to s 41(1)(a) of the Act, vary the order of the Local Court to the effect that the judgments entered upon the filing of Form C3 and Form C4A are set aside pursuant to r 36.15(1) of the Uniform Civil Procedure Rules 2005 (NSW). 4. Pursuant to s 41(1)(a) of the Act, vary the order as to costs after the further disposition of the question of costs, as reserved. 5. Costs reserved.
In relation to the second appeal, the proposed orders are as follows: 1. Appeal dismissed. 2. Costs reserved.

Orders

The Court makes the following orders: 1. The defendant is to file and serve, by 3:00pm on Monday 18 July 2022, written submissions, not exceeding three pages, on the form of the proposed orders and costs. 2. The plaintiff is to file and serve, by 3:00pm on Monday 25 July 2022, written submissions, not exceeding three pages, on the form of the proposed orders and costs.
It is proposed that the final orders and costs are to be determined on the papers unless an application is received for a further hearing.

Amendments 11 July 2022 - Amendments to coversheet 11 July 2022 - Correction of "van Zuylen ALCM" to "van Zuylen LCM" 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: 11 July 2022

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