RPS Freightways Pty Ltd v Singh

District Court of NSW|2018-09-26|Before: McCallum J

Introduction

The events leading to the application made before me in court today happen far too often in this court. First, proceedings are conducted diligently by one side, whereas the opponent fails to comply. Next, the solicitor for the non-compliant party withdraws from the case in less than the time allotted under r 7.29 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), but fails to appear in court to seek leave to withdraw.
On 25 June 2018, these proceedings were fixed for hearing for three days, commencing today. The plaintiff, represented by Mr Cheema of counsel, tells me his client is ready to proceed. However, the defendant, Mr Singh, appearing for himself with the assistance of his wife, tells me he is in difficulties, for two reasons. The first is that, although he and his wife gave all relevant information to his solicitor and paid $32,000 on account of legal costs (for which they had to sell their house), no affidavits have been prepared or served. The second is that, on or about 31 August 2018, their solicitor filed a Notice of Intention of Ceasing to Act, apparently in response to the defendant's inability to provide his solicitors with a further $40,000. He is not ready to proceed and seeks an adjournment.
While it is uncertain whether this Notice of Intention of Ceasing to Act was served on Mr Singh or about 31 August 2018 or sometime in early September, on any test, it was not filed 28 days before the hearing, contrary to UCPR r 7.29 which provides: "7.29 Withdrawal of solicitor (1) A solicitor who ceases to act for a party in any proceedings may file notice of the change and serve the notice on the parties. (2) Except by leave of the court, a solicitor may not file or serve notice of the change unless he or she has filed and served on the client a notice of intention to file and serve the notice of change: (a) in the case of proceedings for which a date for trial has been fixed, at least 28 days before doing so, or (b) in any other case, at least 7 days before doing so. (3) Unless notice of the change is filed with the leave of the court, a solicitor filing such a notice must include in the notice a statement as to the date on which service of the notice of intention required by subrule (2) was effected. (4) A solicitor may serve a notice of change or notice of intention under this rule on the former client by posting it to the former client at the residential or business address of the former client last known to the solicitor."

The circumstances leading to the filing of the Notice

As noted above, Mr and Mrs Singh told the court they paid the solicitors $32,000, for which they sold the family home. Then, "last month" (i.e. August) they were asked for a further $40,000. They told the court they were attempting to put this sum together, or at least to pay by instalments, when the solicitor acting for them said, on or about 12 September, that the firm was no longer acting. He and his secretary then refused to take Mr Singh's calls.
Mr Cheema, counsel for the plaintiff, informed the court that his client only received a copy of the Notice of Ceasing to Act only on 12 September 2018. The document was sent to his solicitor by email and was a surprise to them as there had been no prior warning.
Mr Cheema handed up a copy of this Notice to me, I note that has a typed date of 30 August on the Notice, and is stamped in a different position to the document on the court file, which has a handwritten date on the front page of 31 August 2018. The reason for this difference is unexplained. However, the date of the email enclosing this Notice appears to corroborate Mr and Mrs Singh's statements from the bar table that they only found out their legal advisers were not acting on or about 12 September 2018. Whether or not this is the case, Mr and Mrs Singh were certain that they had not been told about the application before Gibb DCJ on 20 September 2018 to strike out Mr Singh's defence.
Then there is the question of why, if Mr and Mrs Singh put their solicitors in funds to do so, no affidavits were prepared. I asked Mrs and Mrs Singh why no affidavits had been prepared. Mrs Singh told me that she and her husband had "answered all questions" asked by the solicitors about the issues in the case.
The response of Mr Cheema's solicitors to the cessation of representation and the imminent hearing date was to bring an immediate application to strike out the defence on the basis that no evidence had been served. That application was served on the solicitors for the defendant and came before Gibb DCJ on 20 September 2018.
Although the solicitors for the defendant were still technically "on the record", they did not attend court that day. As noted above, Mr and Mrs Singh told me they knew nothing about this application. Only the plaintiff was represented.
According to the chronology prepared by the plaintiff, Gibb DCJ made the following orders: 1. Plaintiff to file Notice of Change of Address for Service. 2. Dismiss motion with no order as to costs. 3. Confirm matter is listed for hearing on 26 September 2018. 4. Confirm plaintiff has served evidence on 21 June 2018 and to make a list of affidavits served in matter. 5. Plaintiff to notify defendant of above orders.
However, according to the relevant entry on JusticeLink, the following orders and notes were recorded on 20 September 2018: "NOTES: 1. Statement of claim filed 29 August 2017. Defence filed 14 November 2017. 2. Amended statement of claim filed 4 June 2018. Amended defence (i.e., defence to amended statement of claim) filed 10 July 2018. 3. Plaintiff says the last of the plaintiff's evidence was served on 21 June 2018. 4. The plaintiff says that no further evidence will be served or relied upon by the plaintiff. 5. Matter listed for hearing on 25 June 2018 (before defence to amended statement of claim due) with the hearing date fixed for 26 September 2018. 6. The defendant's legal representative filed notice of intention to file a notice of ceasing to act on 31 August 2018. 7. Uniform Civil Procedure Rule 7.29 applies in respect of any notice of ceasing to act. 8. The plaintiff says it is ready for hearing on 26 September 2018. 9. Plaintiff's notice of motion filed 14 September 2018. 10. The plaintiff says that the defendant has served no evidence but is not in default of any orders/directions. 11. Plaintiff filed a Notice of Change of Address for Service on 20 September 2018. ORDERS AND DIRECTIONS: Thursday, 20 September 2018: 1. Dismiss the plaintiff's notice of motion filed 14 September 2018. 2. Order that the plaintiff serve on defendant: 1. Notice of the plaintiff's address for service; 2. Notice that all the plaintiff's evidence was served as at 21 June 2018 (with list of documents); and 3. Confirmation that the matter is listed for hearing in Sydney on 26 September 2018. 3. No order as to costs in respect of today's hearing or the plaintiff's motion filed 14 September 2018, with the intention that such costs lie where they fall. Orders entered forthwith."
The requirement for the plaintiff to file a notice of change of address puzzled me, but Mr Cheema informed me that Gibb DCJ considered that his client's address for service was unclear because at one stage there had been a Sydney agent, as Mr Cheema's instructing solicitors are a Queensland firm.
Whatever uncertainty there may have been about the plaintiff's address for service (about which, Mr Cheema told me, there had been no complaints), it is clear the court was apprised of the failure to comply with UCPR r 7.29, a rather more important issue, given the absence of any appearance on behalf of the defendant. The result has been that the defendant's unreadiness for the 3-day hearing fixed to start today was not able to be resolved when the plaintiff's application was before Gibb DCJ.

The relevant principles of law

The circumstances in which a solicitor may cease to act are well established: Plenty v Goodwin (1986) 67 ALR 26. Failure to provide funds is a generally recognised ground upon which a solicitor may rely to withdraw representation.
However, the question of entitlement to withdraw less than 28 days prior to the hearing requires something more than mere failure to put the lawyer in funds.
In In the matter of S M Project Developments Pty Ltd (in liquidation) [2017] NSWSC 1010, Black J noted that leave to withdraw on the day of the hearing had been granted in Super 1000 Pty Ltd v Pacific General Securities Pty Ltd [2007] NSWSC 171 where a client had failed to provide funds for the trail, despite the comparatively late seeking of such costs. However, Black J commented: "However, it does not seem to me that that case establishes any general proposition that, however late the application, however longstanding the problem, however significant the potential adverse implications for the administration of justice, and whatever other rights the solicitor may have, a solicitor will always be granted leave to cease to act, when an application is made for such leave shortly before a hearing where the client has not placed that solicitor in funds. Any such general proposition would, it seems to me, be inconsistent with the Court's obligations under s 56 of the Civil Procedure Act 2005 (NSW) to exercise its discretion in the particular circumstances in order to promote the just, quick and cheap resolution of the real issues in dispute in the proceedings." (at [3])
I note leave was refused in Cha v Oh (No 21) [2009] NSWDC 130 and in Nuclear Utility Technology and Environmental Corporation Inc v Australian Broadcasting Corporation (New South Wales Supreme Court, McCallum J, 28 April 2008), both of which are referred to with approval in Battersby v McIvor [2012] NSWSC 1137, where similar application was made.
Applications to withdraw seem to be made in the District Court with increasing frequency. One recent example is Bendigo and Adelaide Bank Limited v Jaeger (District Court of New South Wales, Letherbarrow SC DCJ, 23 August 2017), where an application was made to the court on the day of the hearing so late that it was made without even the benefit of affidavit evidence. Letherbarrow SC DCJ made the following observations: "The purpose of r 7.29 is clear. It exists for the purpose of addressing a risk that a solicitor ceases to act after a hearing date has been set, which may cause significant prejudice to the client and also to the community. In argument I directed Ms McEvoy to the recent decision of Black J in the matter of SM Project Developments Pty Limited (In Liqudiation) [2017] NSWSC 1010, a decision with which she was not familiar. It would seem to me that this application has been left to the last possible moment and the result of it being granted will undoubtedly prejudice the defendant and in fact the plaintiff. This should not have occurred and there was no explanation in the evidence before me as to why it did occur."
At least the solicitor in question attended, and made the application. The solicitor in these proceedings did not even attend court. Both Mr Cheema and Mr Singh attempted to contact the solicitor by telephone, without success.
These applications, if successful, may have significant costs consequences. The application before Letherbarrow SC DCJ suffered from the same problem that I have here, namely that the application by the defendant for an adjournment is unlikely to be solved by forcing the lawyers in question to continue to act because the party in question had lost confidence in the solicitors by reason of their conduct, conduct which Letherbarrow SC DCJ described as "not that surprising" and because these proceedings are, unsatisfactorily, simply not ready for hearing because the relevant affidavits have not been prepared.
The degree of delay in relation to the defendant's filing of evidence may be seen from the following orders: 1. 19 December 2017: Defendant to serve its evidence in reply by 27 April 2018. 2. 28 May 2018: Defendant to serve its evidence by 27 July 2018. 3. 25 June 2018: Defendant to serve its evidence on or by 3 August 2018.
Both parties were in default of the first order, but on 21 June 2018 the plaintiff's evidence was served. The defendant then failed to serve its evidence by 27 July 2018. Despite reminders from the solicitors for the plaintiff on 16 August 2018 and 6 September 2018, which included a Notice of Intention to File a Notice of Motion for Default Judgment, the correspondence went unanswered.
The case management principles set out in ss 56 - 62 Civil Procedure Act 2005 (NSW) require parties to comply with timetables for the filing of evidence. That has not occurred, and this issue will be the next for determination after the application for leave to withdraw is determined.

The orders to be made

It is too soon for me to determine what course this 3-day hearing should take. The principal issue before me is what steps should be taken in relation to the legal representation of the defendant. It is regrettable that the defendant's legal representatives did not attend today, not only because of their obligation to the court to do so for the purpose of compliance with UCPR r 7.29, but also because of the material set out in the defence concerning the vulnerabilities which led to the bringing of a defence pursuant to s 7 Contracts Review Act 1980 (NSW).
This brings me to the question of the orders I should make today.
With the exception of the legal representation of the plaintiff, which has been of the highest order, the plaintiff and defendant in these proceedings have not been well served by the legal system. Solicitors who seek leave to withdraw less than 28 days before the hearing are not entitled to fail to attend court to seek leave, or to fail to tell their clients about applications served while they remain on the record. The court additionally owes the parties the obligation to take a proactive stance in case management and to make orders which identify and address the real difficulties in the case, as opposed to merely noting them in the orders for the benefit of the trial judge, as occurred here. The costs thrown away by reason of these actions (or, more accurately, inactions) may be considerable.
Additionally, how the hearing is supposed to proceed where the defendant's affidavits have not been prepared is a difficult issue to determine. Mr Cheema told me that Gibb DCJ, on 20 September 2018, told him that the defendant was entitled to rely upon his defence pursuant to s 7 Contracts Review Act 1980 (NSW). However, defences of this nature invariably require evidence, and case management principles should be applied to ensure that these issues are not dealt with on the run.
I am of the view that the matter cannot proceed further today, I have stood the proceedings over part heard to midday tomorrow to enable the solicitors for the defendant to make an application for leave to withdraw. I have reserved the issue of costs.
I am troubled about the significant costs to the plaintiff, as I understand there are country witnesses as well as interstate solicitors. I have told counsel for the plaintiff that if the hearing does proceed tomorrow, his witnesses can be cross-examined by AVL or telephone.

Orders 1. These proceedings stood over part-heard to 12:00pm 27 September 2018 before Gibson DCJ. 2. Costs of today reserved. 3. The solicitors for the defendant, De Marco Lawyers of 794A Pascoe Vale Rd, Glenroy VIC 3046, are to attend court at midday 27 September 2018 to seek leave to withdraw from the proceedings pursuant to UCPR r 7.29 and to show cause why they should not pay the costs of today and such other costs as may be occasioned by their purported withdrawal from acting made on or after 31 August 2018. If there is no appearance, orders will be made in their absence. 4. A copy of these orders is to be provided by the court to the solicitors for the defendant, together with a copy of the reasons for decision of Gibson DCJ.

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: 29 October 2018

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