McColl JA, Macfarlan JA, Emmett JA, Coll JA, MacFarlan JA
Catchwords
76 NSWLR 405
Lemoto v Able Technical Pty Ltd [2005] NSWCA 153
63 NSWLR 300
Myers v Elman [1940] AC 282
Nadarajapillai v Naderasa [2015] NSWCA 109
Re Felicity
Source
Original judgment source is linked above.
Catchwords
76 NSWLR 405
Lemoto v Able Technical Pty Ltd [2005] NSWCA 15363 NSWLR 300
Myers v Elman [1940] AC 282
Nadarajapillai v Naderasa [2015] NSWCA 109
Re Felicity
Judgment (5 paragraphs)
[1]
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
Judgment
McCOLL JA: I agree with Emmett JA.
MACFARLAN JA: I agree with Emmett JA.
EMMETT JA: On 27 April 2015, for reasons published on that day (the Principal Reasons), [1] the Court ordered that an appeal instituted by Notice of Appeal filed on 23 June 2014 be dismissed with costs. Terms used in these reasons have the same meanings as terms used in the Principal Reasons. By notice of motion filed on 8 May 2015, the Lender seeks an order that Mr Jagdish Patel, the solicitor for the Borrower, who appeared for the Borrower on the hearing of the appeal, pay to the Lender the amount of the costs that the Borrower was ordered to pay. The basis upon which the Lender seeks that order depends upon comments made by the Court concerning the Borrower's grounds of appeal.
When the appeal was called on for hearing, Mr Patel sought leave to rely on amended grounds of appeal in substitution for the grounds in the Notice of Appeal. No satisfactory explanation was proffered for the lateness of the application for leave to amend the Notice of Appeal and no written submissions were provided in support of the amended grounds. The Court characterised as "quite incomprehensible" the oral submissions made by Mr Patel in support of the new grounds. [2] One of the complaints made by Mr Patel behalf of the Borrower concerned the representation of the Borrower before the primary judge. The Court considered that the complaint was entirely without substance. Indeed, the Court concluded that there was no substance in any of the amended grounds relied on by the Borrower, which were considered to be "quite unarguable". [3]
An affidavit filed on behalf of the Lender in support of the notice of motion of 8 May 2015 recounts the history of a creditor's petition filed in the Federal Circuit Court by the Lender seeking a sequestration order in respect of the Borrower. The creditor's petition is based on the Borrower's failure to comply with a bankruptcy notice served on him. The bankruptcy notice was based on the judgment of the District Court that was the subject of the Borrower's appeal to this Court. The affidavit deposed to a number of adjournments of the hearing of the petition on the basis that the appeal to this Court was on foot. The making of a sequestration order was opposed on the ground that the Borrower denied and disputed that he owed the amount referred to in the judgment of the District Court.
It is difficult to see the relevance of the creditor's petition. Its history indicates that the Borrower had succeeded in having the hearing of the petition adjourned on a number of occasions pending the outcome of the appeal in this Court. The only possible relevance that those circumstances could have to the present application is to suggest that the Borrower may not be in a position to meet the order for costs made by this Court. That may be a relevant consideration in the exercise of the discretion that the Lender now asks this Court to exercise. However, it is by no means self-evident from the material in the affidavit that the Borrower will not be able to pay the costs and there is no other evidence as to the financial circumstances of the Borrower that might indicate that he will not be in a position to meet the order for costs.
[3]
Application for Costs against Legal Representative
The Lender, in his written submissions, asserts that the basis of the orders sought (which basis is not identified in the notice of motion itself) is s 99(2)(b)(ii) of the Civil Procedure Act 2005 (NSW) (the Civil Procedure Act), which provides as follows:
99 Liability of legal practitioner for unnecessary costs
[…]
(2) After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following:
[…]
(b) it may, by order, direct the legal practitioner:
(ii) in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs[.]
That provision contemplates an order that a legal representative pay to his or her own client the costs that the client has been ordered to pay to another party. It does not permit, contrary to the relief sought in the notice of motion, an order that the practitioner pay, to the party entitled to costs, the costs ordered against the practitioner's client. [4]
However, this Court has a general power to make orders that a legal representative personally pay the opposing party's costs directly. That power arises out of the supervisory jurisdiction of the Court with respect to legal practitioners admitted by the Court. That jurisdiction is not to be read down by reason of the provisions of the Civil Procedure Act. [5] The jurisdiction is exercised where it is demonstrated that a legal representative has failed to fulfil his or her duty to the Court and to realise his or her duty to aid in promoting, in his or her own sphere, the cause of justice. [6]
In considering whether to order costs against a legal representative, it is necessary to balance carefully two different interests. The first is the public interest in maintaining and nurturing a legal profession that provides vigorous representation to litigants in court, uncompromised by a fear of personal sanctions for failure. The other is the public interest in the efficient administration of justice. The latter finds express recognition, in mandatory terms, in the overriding purpose provisions (ss 55-60) of the Civil Procedure Act. [7]
Where, as here, the power sought to be invoked is that contained in s 99 of the Civil Procedure Act, the voluminous case law relating to the making of costs orders against legal practitioners in different statutory contexts is of less assistance than where, for example, an application is made solely on the basis of the Court's supervisory jurisdiction. [8] Section 99 is described as applying where costs have been incurred "by the serious neglect, serious incompetence or serious misconduct of a legal practitioner", or "improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible". [9] The (undefined) concepts in that subsection may be given meaning in the light of the discussion of the terms "improper", "unreasonable" and "negligent" in Ridehalgh v Horsefield [1994] Ch 205, [10] as well as the principles collected in Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; 63 NSWLR 300. [11] The power conferred in s 99 must also be understood in the context of the obligations contained in ss 56-60 of the Civil Procedure Act: for example, a solicitor must not, by his or her conduct, cause a party to breach the duty to assist the court to further the "overriding purpose", [12] and the court may take into account a failure to do so in exercising a discretion with respect to costs. [13]
In the present proceedings, the Lender's Statement of Claim alleged that the Borrower was in default of his repayment obligations pursuant to a loan agreement and had ignored the Lender's demands for repayment. As a result of admissions made in the Borrower's Defence, the principal material fact in issue before the primary judge was whether the Lender had given the Borrower 90 days' notice before demanding repayment, as required by the loan agreement. The primary judge concluded on the evidence that the requisite notice had been given and that the Lender was entitled to verdict and judgment in an amount of $128,471.72.
The Notice of Appeal, filed on 23 June 2014, states that it was filed by the Borrower personally, and does not mention a legal representative. Mr Patel did not represent the Borrower before the District Court. However, Mr Patel told this Court that he believed that he prepared the grounds stated in the Notice of Appeal. [14] The original appeal grounds included contentions that the primary judge had denied the Borrower natural justice and had failed to take into account all relevant facts and matters. The original written submissions filed in support of the Notice of Appeal, which were signed by Mr Patel, primarily criticised a perceived lack of particulars in the original pleadings, notwithstanding that that argument had not been raised before the primary judge, and notwithstanding that the Borrower's Defence admitted virtually all of the allegations made by the Lender in his Statement of Claim. The Borrower filed further written submissions dated 26 March 2015, also signed by Mr Patel, that canvassed similar arguments.
As I have said above, when the appeal was called on for hearing, Mr Patel sought to rely on amended grounds of appeal without supporting written submissions and without a satisfactory explanation for his application to rely on them. There was no substance to any of those new grounds of appeal, and Mr Patel's oral submissions in support of them were characterised by a persistent reticence to answer the Court's questions directly. The oral submissions were, as I have said, quite incomprehensible.
In his written submissions in opposition to the notice of motion, Mr Patel refers to his duty to present any argument that he believes is reasonably arguable in the best interests of his client, and states that it is not always easy to decide what is reasonably arguable and what is not. Mr Patel does not submit that he had advised the Borrower that the appeal to this Court had no prospects of success but that he had nevertheless been instructed to pursue the appeal.
If that were the case, different considerations may have arisen. However, even in that situation, the conduct of a legal practitioner in putting another party to expense unnecessarily and inappropriately may have constituted a breach of the practitioner's obligations under s 56 of the Civil Procedure Act. [15] It may be that, in such circumstances, both the practitioner and the client would be liable for the costs thus incurred. [16]
I consider that the conduct of Mr Patel, in instituting and maintaining an appeal that had no prospects of success, and no merit, constituted serious incompetence on his part as a legal practitioner and that costs have been incurred improperly and without reasonable cause, in circumstances for which he is responsible. Mr Patel should bear the costs that the Borrower was ordered to pay to the Lender.
On 28 May 2015, Mr Patel filed an application to the High Court on behalf of the Borrower seeking special leave to appeal from the orders made by this Court on 27 April 2015. The Lender asked that this Court take into account the terms of that application, along with a supporting affidavit of the Borrower, in dealing with the notice of motion. The proposed grounds of appeal to the High Court appear to re-agitate the grounds argued in this Court. The affidavit recounts the chronology of the Borrower's seeking the representation of Mr Patel for the purpose of an appeal to the High Court, and deposes that Mr Patel advised him that he has "an arguable case which involves a question of law of substantial public importance". To the extent that those two documents have any impact on the conclusion that I have reached, they support it.
I propose the following orders:
1. Order that Jagdish Patel, the solicitor for the appellant in the proceedings in this Court, pay to the respondent the amount of the costs that the appellant was ordered to pay the respondent on 27 April 2015.
2. Order that Jagdish Patel pay the respondent's costs of the notice of motion filed on 8 May 2015.
[4]
Endnotes
Nadarajapillai v Naderasa [2015] NSWCA 109.
Principal Reasons, [21].
Principal Reasons, [22].
See Re Felicity; FM v Secretary, Department of Family and Community Services (No 4) [2015] NSWCA 19 at [16].
See ibid at [20].
Myers v Elman [1940] AC 282; see also Kelly v Jowett [2009] NSWCA 278; 76 NSWLR 405 at [61].
See Re Felicity (No 4) at [14].
See ibid at [10]-[13].
Section 99(1).
See Re Felicity (No 4) at [24].
At [83]-[93], but especially at [92].
Section 56(4)(a).
Section 56(5).
Transcript, 30/03/2015, pp 9(46)-10(1).
See Re Felicity (No 4) at [38].
Ibid.
[5]
Amendments
28 July 2015 - formatting amended in coversheet
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Decision last updated: 28 July 2015