Mohareb v Palmer

Supreme Court of NSW|2017-11-01|Before: Adamson J, Schmidt J

Solicitors: GP Legal (Defendant) File Number(s): 2017/189114 Decision under appeal Court or tribunal: Local Court of New South Wales Jurisdiction: Civil Date of Decision: 26 May 2017 Before: Robinson LCM File Number(s): 2017/135977

Introduction

By summons filed on 23 June 2017, Nader Mohareb, the plaintiff, appeals against the decision of Robinson LCM on 26 May 2017 to decline his application for costs and/or disbursements following the making of an order to stay the judgment of the Local Court of New South Wales at Manly dated 5 May 2017.
All references to legislation in these reasons are references to the Legal Profession Uniform Law Application Act 2014 (NSW) unless otherwise stated.

Legal Profession Uniform Law Application Act 2014 (NSW)

Section 70 provides for the issue of certificates as to the determination of costs. Section 70(5) 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. The rate of any interest payable in respect of that amount of money is the rate of interest in the court in which the certificate is filed."
Section 71 provides: "Certificate as to determination of costs of costs assessor and Manager, Costs Assessment (1) On making a determination of costs, a costs assessor is to separately determine: (a) the amount of the costs incurred by the costs assessor and the Manager, Costs Assessment, and (b) the costs related to the remuneration of the costs assessor, and (c) by whom those costs are payable and the extent to which they are so payable. (2) On making a determination under this section, a costs assessor is to issue a certificate that sets out the determined costs. (3) 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 against the party to the assessment by whom the costs are payable in favour of: (a) a party to the assessment that has paid some or all of the amount to the Manager, Costs Assessment - for that amount, and (b) the Manager, Costs Assessment - for any amount of unpaid money."
Section 83(1) provides that a party to a costs assessment may, within 30 days after the certificate of determination by the costs assessor has been forwarded to the parties, apply for a review of the determination. Section 83(1A) provides that the Manager, Costs Assessment, may extend the period for lodging an application.
Section 86 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."

Civil Procedure Act 2005 (NSW)

Section 98 of the Civil Procedure Act 2005 (NSW) relevantly provides that costs are in the discretion of the court.

The Local Court judgment

Matthew Palmer, the defendant, obtained costs orders in his favour in various proceedings brought against him by Mr Mohareb. Those costs were assessed and the following three certificates were issued: 1. Certificate relating to costs order made in the District Court in the sum of $5,629.66; 2. Certificate relating to a costs order made by the Court of Appeal in the sum of $5,754.85; and 3. Certificate of costs of the costs assessment in the sum of $1,520.75.
These certificates and the determinations, which were dated 31 January 2017, were not sent to the parties until 28 February 2017.
By email dated 3 March 2017 Mr Palmer's solicitors demanded payment of the amount of costs assessed by 9 March 2017. In response, on 7 March 2017, Mr Mohareb foreshadowed that he would make an application for review of the determination of the costs assessment pursuant to s 373 of the Legal Profession Act 2004 (NSW) (the 2004 Act). By that time the 2004 Act had been repealed and replaced by the Legal Profession Uniform Law Application Act 2014 (NSW). Mr Palmer's solicitors wrote in response, also on 7 March 2017, to say that they were instructed to proceed to "commence immediate enforcement proceedings". Mr Mohareb, in turn, responded and alleged that Mr Palmer's course of action would amount to an "abuse of process". Mr Palmer's solicitors maintained in their reply that Mr Palmer was "entitled to enforce the court's judgment". At 8.13pm on 7 March 2017 Mr Mohareb sent an email which included the following: "Only after my application has been filed and served and after the review process is completed and the review panel has handed its decision, will your client be entitled to proceed to enforcement."
By email sent at 8.36pm on 7 March 2017 Mr Palmer's solicitors said in part: "My client is entitled to enforce the judgment. You pay my client what you owe him. If your review results in a lesser amount then my client will have to reimburse you. Meanwhile Bankruptcy proceedings will commence on Friday 10 March 2017 in the absence of payment of my client's costs."
On 29 March 2017 Mr Mohareb sent his application for review as an attachment to an email to Mr Palmer's solicitors. The actual application, dated 30 March 2017 and received by the Manager, Costs Assessment on 30 March 2017, sought a review of the determinations pursuant to s 83(1). It was apparently within time (being within 30 days of the service of the determinations). Section 86 applied to suspend the determinations.
It was common ground that the three certificates were filed in the Local Court on 5 May 2017, which resulted in a judgment in that court in the sum of $12,905.26 (being the sum of the amounts of the three certificates) in favour of Mr Palmer against Mr Mohareb.
On 9 May 2017 Mr Palmer served a bankruptcy notice in the sum of $12,905.26 which relied on the judgment in the Local Court. The bankruptcy notice required this amount to be paid within 21 days of service and foreshadowed the commencement of bankruptcy proceedings in the event of non-compliance.
Mr Mohareb filed a notice of motion dated 18 May 2017 in the Local Court at Manly in which he sought the following orders: "1. Judgment/Order made in favour of the Plaintiff on 5 May 2017 is to be set aside. 2. Bankruptcy Notice issued against the Defendant on 9 May [2017] is to be set aside. 3. Plaintiff to pay the Defendant's costs of this motion."

The hearing of Mr Mohareb's application to set aside the Local Court judgment

The motion was listed for hearing before Robinson LCM on 26 May 2017. Mr Mohareb appeared for himself. Mr Palmer was represented by Mr Gelonesi, a solicitor. Mr Mohareb submitted that the "enforcement" should not be proceeded with because he had told Mr Palmer's solicitors that he was applying for a review of the costs determination. Partway through his submissions, Mr Mohareb said, at tr. 3.44: "[I]n lieu of this notice of motion, I, you know, in the alternative, I would be seeking that the enforcement be stayed."
There was some discussion between her Honour and the parties about the applicable legislation. Once the effect of s 86 was appreciated, her Honour said, at tr. 10.18: "I don't propose to set aside judgment. What I propose to do is put a stay on the enforcement of the judgment pending the outcome of the review, just to be thorough, just to be cautious."
Her Honour heard from the parties on the proposal. Neither sought to be heard against it. Accordingly her Honour ordered, as recorded in the transcript at tr. 10.33-.36: "I ORDER THERE BE A STAY ON THE ENFORCEMENT OF JUDGMENT PENDING THE OUTCOME OF THE APPLICATION FOR REVIEW OF THE DECISION OF THE COSTS ASSESSOR PURSUANT TO SS 83 AND 86 OF THE LEGAL PROFESSION UNIFORM LAW APPLICATION ACT OF 2014."
In light of the matters raised, I propose to set out the transcript relating to Mr Mohareb's application for costs, which includes her Honour's reasons for declining to make an order in his favour: "DEFENDANT: I'm seeking costs, your Honour, for - in - on, on, on the indemnity basis and, and if, if acceptable to your Honour, I..(not transcribable)..forthwith. HER HONOUR: Mr Mohareb, I decline to make any costs order today. In my view it's not appropriate. Costs on the entirety of this proceedings can be determined at a later time, so I reserve the issue of costs. DEFENDANT: So costs are reserved? HER HONOUR: Costs are reserved. DEFENDANT: So we come back to, to your Honour for - but - HER HONOUR: Just excuse me. GELONESI: Your Honour, given that Mr Mohareb isn't legally represented, given that the matter hasn't been completely resolved on his side, my submission to the Court is that a costs order should not be made at all. HER HONOUR: I don't know if I have power to make a costs order in the absence of representation. DEFENDANT: Disbursements, your Honour. It doesn't have to be - you know, when I say costs I say disbursements, my disbursements for - HER HONOUR: Mr Mohareb, I decline to make costs order today. The application was flawed and was opposed legitimately on that basis. It's being resolved once the appropriate legislation has been ascertained but it's not appropriate, in my view, to make a costs order on your application. I decline to make an order for costs. DEFENDANT: If I may ask why is not - is it not appropriate to make costs order, sorry? HER HONOUR: In my view, I've made my decision, Mr Mohareb, I don't propose to make an order in relation to costs regarding this motion. DEFENDANT: Aren't there supposed to be reasons for the decision? HER HONOUR: My reasons for making my decision are that the motion was premised - I haven't granted your notice of motion. I haven't set aside judgment. DEFENDANT: I've asked - HER HONOUR: Just excuse me. You asked for my reasons. Let me finish my reasons. Your motion has not been granted today. Your motion rested on a piece of legislation that is now repealed. DEFENDANT" Yeah. HER HONOUR: I have made a different decision regarding the application before the Court to stay the proceedings. Accordingly, your application or your motion has not been successful. In those circumstances, costs do not follow the event - DEFENDANT: If I may. HER HONOUR: --and I decline to make a costs order. I have made my decision. DEFENDANT: If I may, your Honour. HER HONOUR: I do not propose to change my mind. DEFENDANT: If I may, your Honour. Your Honour, I, I said in the alternative I'm seeking a stay so, so in this respect I have, I have - your Honour has found in my favour. I did say before your Honour made, made your decision that, that in the alternative to the notice, to, to the orders set..(not transcribable)..in my submission, I'm seeking a stay, so your Honour have found in my favour and my motion, my motion was successful today. HER HONOUR: The motion did not refer to a stay of proceedings. DEFENDANT: Well, I, I verbally - HER HONOUR: Excuse me, please. The other side has come to Court prepared to meet the motion and I've indicated to you what the outcome is. Mr Mohareb, I am not going to argue with you. My decision is final. I have other matters to deal with. You're excused. Thank you. GELONESI: Please the Court."

The appeal

Mr Mohareb argued that the refusal to make the costs order ought be set aside because it was erroneous. It emerged from his submissions and as a result of oral argument that he made three complaints about the exercise of the costs discretion: 1. that her Honour had made the decision based on the misapprehension that she did not have power to make a costs order in favour of a litigant in person; 2. that her Honour failed to take into account Mr Mohareb's imperative need to make the application in light of the bankruptcy notice and the alleged abuse of process in seeking to enforce a judgment when there had been an application for review of the costs determinations; and 3. that her Honour's reasons for refusing to make a costs order in favour of Mr Mohareb were insufficient.
These matters will be addressed in turn on the question whether leave to appeal ought be granted under s 40(2)(c) of the Local Court Act.

Alleged misapprehension about the power to make a costs order in favour of a self-represented litigant

Mr Mohareb argued that her Honour's decision was based on a misapprehension that she did not have power to order disbursements in his favour because he was a litigant in person. He also alleged that her Honour regarded him as having a lesser status by reason of his not being an officer of the Court and that the "real reason" she did not want to make a costs order in Mr Mohareb's favour was because he was a litigant in person.
As set out in the passage extracted above, her Honour expressed doubt about the power to make an order for "costs" and was then corrected by Mr Mohareb, who confirmed that what he sought were "disbursements". I understand Mr Mohareb to be drawing the distinction in by the authorities between legal costs (which are recoverable where a party is represented) and out-of-pocket expenses such as filing fees and other disbursements, which a self-represented litigant is entitled to recover. It is well established that the costs recoverable by a party appearing in person will be limited to disbursements and witnesses' expenses (if any), reasonably incurred: see Cachia v Hanes (1994) 179 CLR 403; [1994] HCA 14 at 410 (Mason CJ, Brennan, Deane, Dawson and McHugh JJ).
I do not discern in her Honour's approach, either in the course of the hearing of the notice of motion or in her Honour's reasons, any indication that her Honour failed to treat Mr Mohareb fairly by reason of his representing himself. Nor do I discern any indication that her Honour would not have been disposed to make an order for costs (limited to disbursements) in Mr Mohareb's favour had he been successful in obtaining the order he sought in the notice of motion that the judgment be set aside.
My reading of the transcript and her Honour's reasons leads me to consider that her Honour, although expressing initial doubt, was satisfied that she had the power to order Mr Palmer to pay Mr Mohareb's disbursements. Exchanges between the bench and those at the bar table ought not be construed as reasons for decision. Rather, they provide an opportunity for enlightenment through debate, as well as procedural fairness: Dang v R [2014] NSWCCA 47 at [32]. Accordingly the first ground does not warrant a grant of leave.

Alleged failure to take into account the surrounding circumstances of the application

Mr Mohareb argued that he was entitled to his disbursements as he was, in effect, required to bring the application for a stay since Mr Palmer did not accept that his application for review suspended the costs determinations. Mr Mohareb submitted that Mr Palmer, by filing the costs determinations was guilty of abuse of process.
The difficulty with this argument is that Mr Mohareb's principal application was to set aside the judgment effected by the filing of the costs determinations in the Local Court. He was found not to be entitled to have the judgment set aside. Rather, her Honour was persuaded that a stay would give effect to the suspension imposed by s 86. Mr Palmer did not make submissions against a stay. It appeared from the transcript that Mr Palmer's prime concern was to minimise further costs (which would have been required to be expended if the judgment had been set aside) and ensure that his position on interest was protected (which it was by the judgment). While Mr Mohareb changed his course in the hearing of his motion to include an alternative application for relief (the application for a stay) which corresponded with the order actually made, this was not foreshadowed prior to the hearing of the application and was only proposed in the course of it. Accordingly, Mr Gelonesi, who appeared for Mr Palmer, was prevented from acceding to the application in advance of the hearing of the motion.
Thus, her Honour was, in my view, entitled to make a decision on the basis that what was ordered was not what was initially sought. A party who changes course in the midst of an application and seeks, in the alternative, what the court ultimately orders is not necessarily to be regarded as having "succeeded" and thereby entitled, absent any reason to the contrary, to the benefit of the general rule that costs follow the event.
The further argument raised by Mr Mohareb, that Mr Palmer ought not to have filed the costs determinations when there was an outstanding application for review, did not need to be determined since the existence of the judgment of itself does not amount to enforcement of the judgment. Section 86 would appear to prevent enforcement of a judgment created by s 70, but not otherwise to affect it, unless the review process results in a different costs determination. For these reasons I am not persuaded that her Honour's discretion as to costs miscarried by reason of any alleged failure to have regard to a matter which she was obliged to take into account. This ground does not warrant a grant of leave.

Alleged insufficiency of reasons

Mr Mohareb argued that her Honour's reasons were insufficient to explain her refusal to make an order in his favour. Her Honour's reasons were brief, but to the point. In effect, her Honour considered that Mr Mohareb had not succeeded in obtaining what he had come to court to obtain: namely, the setting aside of the judgment. That the court ultimately ordered what he sought belatedly in the alternative, was insufficient to persuade her Honour that there should be an order in his favour. Her Honour's decision was, in my view, adequately explained by the reasons given ex tempore and set out in the transcript: Newton v R [2014] NSWCCA 41 at [41]. I am not satisfied that leave is warranted having regard to the sufficiency of her Honour's reasons for declining the costs order sought by Mr Mohareb.

Conclusion

None of the matters raised by Mr Mohareb warrant a grant of leave to appeal, which will, accordingly, be refused.

Costs

It was common ground that the costs of the proceedings in this Court ought follow the event in accordance with Uniform Civil Procedure Rules 2005 (NSW), r 42.1.

Orders

For the reasons set out above, I make the following orders: 1. Leave to appeal refused. 2. Order the plaintiff to pay the defendant's costs of the proceedings.

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: 22 March 2018

Legal Profession Act 2004(NSW)

(Schmidt J). Legal Profession Uniform Law Application Act 2014(NSW)

At a glance

Court

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Judgment (15 paragraphs)

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Legislation Cited (6)

Cases Cited (5)

Cited By (7)