Simms v Gallande Pty Ltd

The evidence before the court

1. A court book was filed in these proceedings. In addition to the summons and written submissions filed on behalf of both Ms Simms and ERA Legal, six affidavits were filed. It became evident during the hearing of this matter that only four of those affidavits were in fact relied upon.
2. Mr Pesman initially objected to any material beyond the reasons of the costs assessor being before the court on the basis that neither the summons nor the plaintiff's written submissions identify any jurisdictional error. He ultimately accepted that both of the grounds asserting a failure to provide reasons and a denial of procedural fairness constitute jurisdictional error. On this basis I indicated that it was appropriate that the following material be before me on this application: 1. An affidavit of Sonia Simms dated 31 July 2017 (excluding paragraphs objected to and not pressed); 2. An affidavit of the plaintiff's solicitor, George Mavrakis, dated 10 March 2017; 3. Two affidavits of Simon Gallant, solicitor with ERA Legal, dated 1 June 2017 and 20 November 2017; and 4. Correspondence between Sonia Simms and ERA Legal, dated 31 October 2013 and 11 October 2013.
3. The affidavits annexed the reasons of the costs assessor and all of the material provided to the costs assessor, as well as other correspondence and documents relevant to the history of the proceedings. The affidavit of Ms Simms sworn on 31 July 2017 and that of Mr Mavrakis sworn on 10 March 2017 were relevant solely to the issue of the exercise of this Court's discretion and the question of delay. So too was the correspondence between Ms Simms and Mr Russell on 31 October 2013 and 11 October 2013.
4. Regrettably, given the nature of the complaints made by Ms Simms, it is necessary to set out the factual background to this application in some detail.

Background

1. In 2013, Ms Simms was a practising solicitor. She was also the sole director of Clear Position. The only shareholder of Clear Position was her husband, Mr Tom Simms. He was an undischarged bankrupt until 26 March 2013. The company address for Clear Position was 26/25 Tryon Road, Lindfield ("the Lindfield address"). Ms Simms was also the sole director of Sonia Simms Pty Ltd ("SSPL"). SSPL in turn owned half of the shares in Kisimul Holdings Pty Ltd ("Kisimul"); the other half being owned by Mr Adam McNeill. Mr Simms provided certain professional services to Kisimul, as an employee of Clear Position, for which he provided invoices payable to Clear Position. Although those invoices were initially paid, Kisimul stopped paying those invoices in July 2013.
2. On 11 September 2013 and 2 October 2013, Clear Position issued statutory demands on Kisimul. Those statutory demands were drafted by Ms Simms. The first statutory demand dated 11 September 2013 was in the amount of $58,579.87 and the second statutory demand dated 2 October 2013 was in the amount of $36,300.00. The total amount said to be owed was thus $94,879.87.
3. On 14 October 2013, Ms Simms met with Mr Thomas Russell, who was a partner at ERA Legal. She sought the legal services of Mr Russell to commence winding up proceedings in relation to Kisimul following the issue of the statutory demands. Following that meeting, Mr Russell prepared an engagement letter which was addressed to Ms Simms and SSPL. The engagement letter contemplated a possible application by SSPL for the winding up of Kisimul and for the urgent appointment of a liquidator pending the hearing of the winding up application. The letter included a "Matter Information Schedule", a "Client Information Schedule" and a "Costs Information Schedule". Although the letter is dated 27 October 2011, there was no dispute that it was in fact prepared on or around 14 October 2013.
4. Part A of the Matter Information Schedule is headed "Engagement details" and provides: "You have engaged us to act on behalf of your company, Sonia Simms Pty. Limited, for the purpose of making an application for the winding up of Kisimul Holdings Pty. Limited, and for the urgent appointment of a liquidator provisionally pending the hearing of the winding up application. Our engagement commenced on 14 October 2013."
5. Part B of the Matter Information Schedule is headed "scope of work" and in part provides (in italics): "Please note: Our costs agreement with you will apply to all work we do for you, unless we agree otherwise. The description of your matter and the scope of work summarised above do not confine the matters this costs agreement applies to."
6. Part H is located in the Client Information Schedule and is headed "Responsibility for legal costs". It provides: "Your company Sonia Simms Pty. Limited (A.C.N. 142 390 298), and you (Sonia Simms personally) will be jointly and severally liable for our fees and costs, including any costs incurred in providing legal services to third parties (for example a spouse or related company) during the course of our engagement. Further information is set out in the accompanying terms and conditions booklet." (emphasis added)
7. Ms Simms signed the engagement letter on 17 October 2013 in two places: in her capacity as the sole director and secretary of SSPL and also in her own individual capacity. Subsequent correspondence that day and on 27 October 2011 was addressed to Ms Simms and SSPL. She deposited $15,000.00 into ERA Legal's trust account shortly thereafter.
8. It was common ground that the work specifically contemplated by the engagement letter was not undertaken. Before any winding up proceedings could be commenced against Kisimul, Kisimul made application to this Court to set aside the two statutory demands served by Clear Position upon it ("the Kisimul proceedings").
9. On 11 November 2013, there was email correspondence between Ms Simms and Mr Russell disclosing that it was agreed that the $15,000.00 held in trust by ERA Legal was to be used to fund the Kisimul proceedings. That correspondence also shows that Mr Russell was obtaining instructions from Ms Simms in relation to the litigation. The invoice issued on 31 October 2013 was addressed to Ms Simms and SSPL at the Lindfield address. On 13 December 2013, the next tax invoice rendered by ERA Legal in relation to the Kisimul proceedings was sent to "Secretary, Clear Position Pty Ltd" at the Lindfield address. Ms Simms was the Secretary of Clear Position at that time.
10. On 19 February 2014, Mr Russell emailed Ms Simms and copied in her husband Mr Simms. Annexed to the email was a request for further funds in the amount of $26,894.95 to be deposited. That letter was addressed to "Clear Position Pty Limited" at the Lindfield address. All subsequent invoices for legal services rendered were addressed to "Secretary, Clear Position Pty Ltd" at the Lindfield address.
11. On 26 March 2014, Stevenson J refused to set aside the statutory demands (see Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWSC 338). Kisimul sought leave to appeal to the Court of Appeal.
12. On 11 August 2014, the Court of Appeal set aside the statutory demands (see Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262). The Court was satisfied that there was a defect in the statutory demands drafted by Ms Simms in that she had failed to depose in her affidavit as sole director of Clear Position that she believed that there was no genuine dispute about the existence or amount of the debt. Clear Position filed a submitting appearance in the Court of Appeal save as for costs. It was ordered to pay Kisimul's costs of the Court of Appeal proceedings.
13. Ms Simms subsequently paid some but not all of the outstanding legal costs of the litigation. I have been provided with some email correspondence concerning the ongoing dispute as to the outstanding amount. For reasons that will become clear, I consider the following exchanges to be of some significance to the complaints now made by Ms Simms.
14. On Tuesday, 17 February 2015, Mr Russell emailed Mr and Mrs Simms in these terms: "Dear Sonia and Tom, I hope you are both well. I refer to my email of 3 November, below. Since that email was sent, there have been promises of a lump sum sufficient to pay Mr Dawson by the end of January (not paid), and numerous promises of a payment plan (none proposed). Worryingly, I have not had any real contact from you over the last couple of months, despite neither the lump sum being paid no[r] the payment plan being proposed. My partners have been putting increasing pressure on me to recover this account. I have tried working with you [o]n this, but I do not appear to have had any success at all. In the circumstances, unless something comes through within the next couple of days, I am going to have to hand the file over to my partner to handle - it has become embarrassing for me to continue to decline his request to do this, in circumstances where my own efforts have been wholly ineffective. I hope you are able to come up with something workable. I am keen to work with you on this. However, something will have to happen soon. Regards,".
15. Mr Simms replied to this email at 5:44pm that same day in these terms: "Jesus Thomas, We are flat fucking broke here all the payments, feel free to sue the fucking bank. I make a lousy 800 per week pushing coffe[e] because I can't get a job in the shit hole country we live in worse I start at fucking 0500. If that is not good enough than just sue Just piss off Tomm".
16. At 5:45pm Mr Simms forwarded the above email he had sent on to Ms Simms. At 6:04pm that same day she sent an email back to Mr Russell (hereinafter referred to as the "17 February 2015 email"). It is in these terms: "Hi Thomas. I'm not going to apologise for Tom's explosion. We are flat broke and despite this payments have been made to ERA to attempt to settle the bill. Those payment advices were attached to Tom's email. I would appreciate an acknowledgement of those payments. Since you find yourself in such a difficult position then so am I. I put faith in you and your firm to provide me with legal services proportionate to the action. To charge us more than the original debt owed by Kisimul Holdings somehow does not make any sense whatsoever. Further, that it was up to the plaintiff to point out that there was a fatal flaw in the demand that none of your team detected which meant that there was no prospect of success is rather hard to accept. That is not the service I must say I was anticipating. Once again after promising to pay Tom's July 2004 invoice by today Rural Bank have again failed to do so. You have an enforceable signed cost disclosure agreement. That I acknowledge. If you honestly believe that ERA are justified in charging so much in light of my commentary above and seeking to enforce same then that is your prerogative. Regards, Sonia Simms". (emphasis added)
17. At 6:18pm on the same evening, Mr Russell responded by email in the following terms: "Sonia, I am not going to argue with you. You engaged us to provide legal services, we disclosed our fees, we kept you updated about costs and you permitted us to continue acting. All I want is to be paid for the work we did for you, and to cover our costs of the barrister we engaged for you - not a cent more. Given Tom's inflammatory and grateful response, and your less inflammatory but equally unsatisfactory response, we will issue a bill of costs for the WIP that is currently unbilled and take things from there. Regards, Thomas Russell…" (emphasis added)
18. At 7:26pm, Ms Simms emailed Mr Russell in these terms: "Thomas, I asked that you acknowledge the payments that have been made to you in the last few months. The payment receipts were attached to the email, it should be easy for your bookkeeper to cross reference. Given the latest case commentary that the stat demand should be (sic) been withdrawn and reissued, I can imagine that it does not reflect well upon ERA so I feel your pain. We have made a genuine attempt to repay the debt given our financial circumstances. Thanks, Sonia."
19. At 7:31pm that evening, Mr Russell emailed a reply to Ms Simms in these terms: "Sonia, Thank you for your further email. ERA Legal has nothing to be abashed about. You drew and served the statutory demands before engaging us and, despite your recent view that we were doomed to fail from the outset, in fact, we won at first instance. We only lost on appeal, which is precisely what we said would happen when asked to advise on the prospects of success of the appeal proceedings. I will have our accounts person look into the instalment payments as you have requested. Regards,".
20. At 7:46pm, Ms Simms replied by email to Mr Russell as follows: "Thanks Thomas, look forward to that trust account statement. Can you please also clarify the estimate of your legal fees in your letter to me of 19 February 2014 (TR130554/130537) an 'additional $3,000 - $5,000' (but asked for $4,000, which was paid) and then where you inform me that in fact the estimate came to $55,000, including that the barrister's bill was not $11,000 but $22,815? Cheers, Sonia."
21. I interpolate here that the letter to Ms Simms of 19 February 2014 was addressed to "Secretary, Clear Position Pty Ltd" at the Lindfield address.
22. At 11:01am on Wednesday, 18 February 2015, Mr Russell emailed Ms Simms back in these terms: "Good morning Sonia, I have looked into those eight payments and confirm that we received all eight. I assume you just stopped making them unilaterally following the 13 January payment, which appears to be the last one we received. If not, and there are some that we are meant to have received after that date, please let me know. As for the future conduct of the matter, I think the best way to progress from here is for us to issue our final itemised bills. You can then look at them and form a view as to whether our claimed costs are reasonable. If you think they are reasonable you can make a sensible proposal to pay them. If you do not think they are reasonable, you can discuss any concerns with us. If we are unable to reach agreement, you can apply for costs assessment (or we can). If you make such an application, this will eventually result in costs determination in some amount. If it results in costs payable to us, we will register it and enforce it, probably by way of garnishee notice served on Perpetual. As for the issue of estimates, we can address that issue as part of the assessment. You are probably aware that the ramification of failure to update estimates (if this happened, which I do not admit) is that the law practice has to refer costs to assessment before enforcing them. We're cool with that; we are going to do it anyway. So this part of the matter seems to me to be a non-issue and I do not propose to address it at this stage. I will address it during assessment so that the costs of doing so can be included in the costs of assessment." Regards, Thomas Russell…"
23. Shortly after this email exchange, on 25 February 2015, Mrs Simms resigned as director and secretary of Clear Position and her husband, Mr Simms, become a director instead.
24. The next correspondence in evidence was a tax invoice on ERA Legal letterhead setting out an itemised statement of professional fees dated 24 July 2015. It was addressed to "Secretary, Clear Position Pty Ltd" at the Lindfield address. It is to be inferred that this document was created following the correspondence between Ms Simms and Mr Russell on 17-18 February 2015 extracted above. Although reference was made in submissions to a letter of demand being sent on that same day to Clear Position at the Lindfield address by Mr Gallant, legal practitioner and director of ERA Legal, that letter was not included in the material before me. As noted above, Ms Simms was the Secretary of Clear Position as at the time of the February 2015 email exchange with Mr Russell.
25. The evidence of Ms Simms is that in July 2015, at a time when the legal costs to ERA Legal had still not been resolved, she moved with her children to Jersey in the Channel Islands. She did not make any arrangements for her mail to be re-directed. She did not provide any forwarding address to ERA Legal. She stated that she was last at the Lindfield address on 12 July 2015 when she attended "the final inspection of the property with the letting agent".
26. On 25 November 2015, ERA Legal filed an application under the Legal Profession Act for assessment of its unpaid costs by a cost assessor. It named both Ms Simms and Clear Position as the cost respondents. It listed the address for service for both of those cost respondents as the Lindfield address. That application includes the following: "There is a costs agreement between the law practice and the client, the named parties to which are the Second Costs Respondent (Sonia Simms) and another company, Sonia Simms Pty Limited (copy attached). The First Costs Respondent (Clear Position Pty Limited) is not identified as a party to the costs agreement. However, the costs applicant contends that, by its conduct and having regard to the fact that its sole director and secretary is the Second Costs Respondent, the First Costs Respondent should be taken to have accepted the terms of engagement (in particular the hourly rates and method of calculation of fees) set out in a costs agreement."
27. Notice of this assessment was then sent to Clear Position and Ms Simms at the Lindfield address.
28. On 14 December 2015, Mr Simms, as director for Clear Position, lodged objections with respect to the application which commenced with the words, "We wish to make the following objections with respect to the application referred to above". Mr Simms states that ERA Legal was retained by "Clear Position" to defend the statutory notice applications. A number of complaints are made about overcharging with the conclusion that "when it is considered that the original statutory demands were for an amount owed to [Clear Position] of just over $98,000 it seems neither fair, reasonable nor proportional to have legal costs in the amount of $83,074.25."
29. On 7 June 2016, Mr McGruther issued a costs certificate in relation to the application.

The reasons of the cost assessor

1. Mr McGruther issued the cost certificate on 7 June 2016. The "cost respondents" are listed as "Clear Position Pty Ltd & Sonia Simms". The outstanding amount in dispute was $38,985.65. Mr McGruther found that the net amount payable by the cost respondents was $32,231.65. A statement of reasons accompanies the cost certificate.
2. The materials used by Mr McGruther to assess the costs were as follows: 1. The application by ERA Legal; 2. "Letter of Objections (and bundle) dated 14 December 2015 (from Clear Position Pty Ltd and Tom Simms) for the Costs Respondents ('CR')" (emphasis added) 3. An assessor letter of requisitions and requirements of 1 February 2016; and 4. Two letters dated 9 February 2016 from ERA Legal with attachments.
3. Mr McGruther noted that the "Cost Respondents" disputed the bills on the basis that they were excessive.
4. Mr McGruther referred to the engagement letter dated 27 October 2013 and stated the following: "Affirms (clause G) - under reference "Main client details" that [ERA Legal] "…will be providing legal services to your company, Sonia Simms Pty ltd… also … certain legal services to you personally"; Affirms under reference (clause H) "Responsibility for legal costs" in terms: 'Your company Sonia Simms Pty Ltd… and you (Sonia Simms personally) will be jointly and severally liable for our fees and costs, including any costs incurred in providing legal services to third parties (for example a spouse or a related company)'; Makes a reference (clause I) under "Authorised persons" that an "Authorised instructor" is Sonia Elizabeth Simms, with "Authorised contacts" being "Michael Jones… and … Your husband, Thomas Simms"; … A "Credit Card Authority" is attached under reference of "Client name", once again, as "Sonia Simms and Sonia Simms Pty Limited". An "Individual" confirmation of engagement is singularly addressed (separate page) to "Sonia Elizabeth Simms". A "Company" engagement Confirmation is, similarly, singularly directed to "Sonia Simms Pty Limited" (with Sonia Simms there as the "Sole director and secretary"); There is an ERA July 2013 "Standard Terms and Conditions" booklet which I have fully read (and do not traverse it all here), some content including as follows: "Clause 6 as to "Multiple clients" asserts: "If we are acting for more than one client in this matter then each of you authorises us to accept and act on instructions from any one of you". I interpose here with the observation that the reference "you" in context can only be to either of Sonia Simms or Sonia Simms Pty limited; Clause 7 as to "joint and several liability" asserts: "Where more than one party is liable to us for payment of our fees and costs, the liability of the parties shall be joint and several"; Clause 10 refers to "Termination by you" - interposing again with the observation that "you" can be applicable only to Sonia Simms or to Sonia Simms or to Sonia Simms Pty Limited; I note that the Engagement Confirmation pages are both apparently signed by "Sonia Sims" (sic) in the context of the specifically identified clients being herself individually, or the company Sonia Simms Pty Limited."
5. Mr McGruther noted: "I interpose here with some brief immediate observations. As earlier pointed out, none of the bills here was issued to the specifically identified clients of Sonia Simms and/or Sonia Simms Pty Limited. They were all issued to "Clear Position Pty Ltd". That is, the retainer does not reflect the ultimate billing."
6. Mr McGruther then went on to discuss the lack of a costs disclosure letter to Clear Position by ERA Legal: "[ERA Legal] contended that it was "not obliged" as to disclosure to Ms Simms as she is a lawyer (by reference to s 312(1)(c)(i) of the Act). Again, I would here observe that while this is true, it does not obviate from requisite statutory disclosure being made to the Sonia Simms company, Sonia Simms Pty Limited. And, it appears respectfully to me, it does not obviate from disclosure to the party which was actually, and singularly, billed, and to which no disclosure (within the above material) was made at all, namely to Clear Position Pty Ltd. That is, the billing singularly to "Clear Position Pty Ltd" does not reconcile with the disclosures (on the above material) and, at the least, the disclosures in that important billing context (particularly on assessment) are unclear and confusing, and where there is no reconciling nexus."
7. Mr McGruther noted that, in the letter of objections dated 14 December 2015 from Clear Position and Mr Simms, it was asserted that ERA Legal "… was retained by Clear Position Pty Ltd… to defend two applications… (etc)". He stated that, as the letter specifically referred to SSPL and Sonia Simms as the clients, he could not find that Clear Position was provided with proper disclosure as to costs. As a result, Mr McGruther stated (in consideration of s 317 of the Legal Profession Act) that: "The consequences of a failure to disclose determined in an assessment includes that the practitioner is to meet the costs of the assessment; and further, that I may confirm the costs, or substitute for them such sum as I otherwise might regard as fair and reasonable…"
8. In the same vein, Mr McGruther's later stated that: "I have determined, for reasons given earlier, that there has been inadequacy in statutory disclosure by CA relative to its costs. One implication from that is that costs of this assessment are to be met by CA. Another is that I may consequently reduce costs and disbursements, or adjust them, to such sums, and overall, as I regard as fair and reasonable in the individual presentation. I have extremely closely considered that exercise…"
9. Mr McGruther's position was therefore that, while Clear Position was liable to ERA Legal for legal costs for services rendered with respect to the Kisimul proceedings, cost disclosure required by the Legal Profession Act had not been provided. It is noted that Mr McGruther did not refer to any objection as to the naming of Ms Simms as a cost respondent nor did he specifically comment about her being so named. His consideration was confined to whether relevant disclosures had been made to Clear Position.

Events after the assessment

1. ERA Legal subsequently made an application to the Local Court to enter judgment against Clear Position and Ms Simms based upon the costs certificate. That judgment was entered on 6 July 2016.
2. On 10 August 2016, ERA Legal obtained a bankruptcy notice against Mrs Simms. It was initially sent to the Lindfield address. In her affidavit, Ms Simms stated that the first time she received it was by email on 13 December 2016, it being sent by a solicitor at ERA Legal. It is the same email address that ERA Legal provided with the application for the costs assessment. Ms Simms stated that this was the first time she became aware of the Local Court judgment entered against her by ERA Legal. Ms Simms subsequently applied to the Federal Circuit Court for an order setting aside the Bankruptcy Notice. That order was made on 31 January 2017.
3. On 25 January 2017, Mr Mavrakis, acting as Ms Simms' solicitor, sent a letter to the manager of Cost Assessment at the Supreme Court seeking a correction of the costs certificate pursuant to s 371 of the Legal Profession Act. In that letter, Mr Mavrakis stated, inter alia, that Ms Simms had ceased being a director of Clear Position on 25 February 2015, that the submissions made to Mr McGruther were prepared by Mr Simms, that there was nothing in the reasons to suggest Ms Simms was served with the application to determine costs, that Ms Simms did not make any submissions to Mr McGruther on her own behalf and that the material before Mr McGruther did not show any agreement on behalf of Ms Simms to be personally liable to the costs incurred by Clear Position in the Kisimul proceedings. Ultimately, the letter sought to have Ms Simms' name removed from the certificate on the basis that she was not liable for the costs. The letter contains the following assertion: "Mrs Simms did not make any submissions to the costs assessor on her own behalf. The matter was left in the hands of Mr Simms."
4. On 1 February 2017, Senior Deputy Registrar and Manager of Costs Assessment, Brendan Bellach, sent an email to George Mavrakis stating that: "As the determination appears to have been issued in the same names as the parties listed in the application, I do not believe an error has occurred. Ms Simms appears to have been aware of this application and been afforded the opportunity to provide objections or other material for the costs assessor's consideration. It was a matter for her to not provide a reply and leave it in the hands of Mr Simms."

Ms Simms's evidence

1. In addition to her affidavit, Ms Simms provided further oral evidence and was cross-examined. I have already included some of her evidence in the summary above. Although the evidence she gave in these proceedings was not before the decision maker (that being Mr McGruther), I was satisfied that it was relevant to the questions of procedural fairness, delay and the discretion as to whether to grant the relief sought.
2. Ms Simms' central complaint is that she did not receive a separate costs disclosure or estimate of costs from ERA Legal with respect to the Kisimul proceedings (as opposed to the proposed winding up of Kisimul). She asserts that she is not liable to pay the costs incurred in the Kisimul proceedings because they were different proceedings to those initially envisaged. Her secondary complaint is that she was denied procedural fairness because she never personally received a copy of the application for a costs assessment and thus was not provided with an opportunity to make this submission to the costs assessor.
3. Ms Simms relied upon the fact that Clear Position had no significant funds of its own to pay for ERA Legal's fees so she funded the Kisimul proceedings by way of loans to Clear Position. She stated that she informed Mr Russell at the time that Clear Position had no funds of its own.
4. In her affidavit she stated: "My husband Tom Simms prepared the submissions in opposition to the cost assessment. He did not discuss his submissions with me nor did I see that submission. At the time he was the sole director of Clear Position. I was not aware that ERA legal had named me as a cost respondent. I do not regard myself as personally liable to pay monies owed by Clear Position. I believe that the last time I had contact with ERA Legal was just after the applicant (Kisimul) filed its appeal in the Statutory Demand Proceedings…."
5. She goes on to state: "If I had been aware of the claim by ERA Legal that I was jointly liable with Clear Position to ERA Legal for Clear Position's costs in the Statutory Demand Proceedings then I would have taken steps to prevent judgment being entered against me by defending the matter in the costs assessment or in separate proceedings."
6. Her evidence in court was that she did not receive the application for a costs assessment and first saw it in February 2017.
7. In cross-examination, Ms Simms agreed that, during the time she was a practising solicitor between 2010 and 2017, she become familiar with cost agreements and cost disclosures. She agreed that, at the commencement of the Kisimul proceedings, she was acting for Clear Position and was involved in the underlying dispute in the Kisimul proceedings. She agreed that she provided the funds to ERA Legal for the Kisimul proceedings. She agreed that no amounts were ever paid by Clear Position because it had no money and she made that known to Mr Russell at the time of his engagement.
8. She denied that she was providing "most of" the instructions during the Kisimul proceedings. She agreed that she was the only witness for Clear Position in those proceedings. She accepted when shown an invoice that she was providing instructions in those proceedings as was her husband.
9. She agreed that nowhere in her affidavit evidence did she ever directly suggest that she did not receive notice of the costs assessment. It was put to her that she did receive it but she denied this. She was referred to the letter from her solicitors to the Manager, Costs Assessment on 25 January 2017 and agreed that it was sent on her instructions. That letter contains the following: "Mrs Simms did not make any submissions to the costs assessor on her own behalf. The matter was left in the hands of Mr Simms". She denied that she had left it to her husband to deal with. She denied that Mr Simms could not have prepared the objections document without assistance from her.
10. Ms Simms was taken to the 17 February 2015 email quoted above at [32]. For convenience, the last paragraph of that email is as follows: "You have an enforceable signed cost disclosure agreement. That I acknowledge. If you honestly believe that ERA are justified in charging so much in light of my commentary above and seeking to enforce same then that is your prerogative." (emphasis added)
11. She explained this paragraph to mean that she thought her husband had signed another cost agreement (which she had never seen) and stated "ERA was doing more work for Tom Simms that had nothing to do with me". That document was called for but not produced. She agreed that all of the paragraphs in the 17 February 2015 email referred to the Kisimul proceedings except for the last one which she explained related to other possible unrelated fees incurred by her husband for other work. She asserted that what appears in the fifth paragraph of that email has no relationship to the first four paragraphs. It was put to her she was been deliberately dishonest but she denied this.
12. In re-examination, Ms Simms stated that she had assumed her husband had separately retained ERA Legal for other matters and that there would have been a cost agreement that he would have signed.

The Legal Profession Act 2004

1. It was common ground that Ms Simms had statutory review and appeal rights under the Legal Profession Act.
2. On 1 July 2015, the Legal Profession Act 2004 (NSW) was repealed and the operative provisions of the Legal Profession Uniform Law Application Act 2014 (NSW) commenced. Section 4 of the Legal Profession Uniform Law Application Act applies the Legal Profession Uniform Law set out in Schedule 1 of the Legal Profession Uniform Application Act 2014 (Vic) ("the Legal Profession Uniform Law (NSW)"). Clause 18 of Schedule 4 of the Legal Profession Uniform Law (NSW) provides that Part 4.3 (the new regime for costs and costs assessment) applies only if the client has instructed the law firm after 1 July 2015. Clear Position instructed ERA Legal prior to 1 July 2015. There was no issue as to the application of the Legal Profession Act to the assessment of costs in this matter.
3. ERA Legal filed the application for cost assessment on 25 November 2015 under s 352(1) of the Legal Profession Act which provides that a law practice that has issued a bill may apply to the Manager, Costs Assessment for an assessment of the whole or any part of the legal costs to which the bill relates. The cost assessor, Mr McGruther, determined the costs under s 367 of the Legal Profession Act and issued a certificate as to the determination of costs in accordance with s 368(1). Section 368(5A) of the Legal Profession Act provides that the cost assessor must forward the certificate of cost determination to each party of the assessment.
4. Section 368(5) of the Legal Profession Act provides that, if the assessed costs nominated in the certificate have not been paid, upon filing the certificate in the registry of a court with relevant jurisdiction, it is taken to be a judgment of that court for the amount of the unpaid costs.
5. Section 370(1) of the Legal Profession Act provides that a costs certificate is to be accompanied by a "statement of the reasons for the costs assessor's determination." Section 372 of the Legal Profession Act states that a cost assessor's determination is binding and that no appeal or other assessment lies except as provided in Division 11 (specifically relevant are subdivision 5 which is headed "Review of determination by panel" (ss 373 to 383) and subdivision 6 which is headed "Appeals" (ss 384 to 389)).
6. Section 373 of the Legal Profession Act allows a party to a cost assessment to bring an application to a panel, constituted by two cost assessors, to review the determination. The application must be brought within 30 days after the certificate has been forwarded to the party, or within such other further time as the Manager of Cost Assessment may allow.
7. Section 384 of the Legal Profession Act provides that, if a party is dissatisfied with the review panel's determination, it may bring an appeal to the District Court regarding a point of law as a matter of right. Section 385 provides that, if a party is dissatisfied with the review panel's determination, it may seek leave to bring a de novo appeal to the District Court.
8. There is no dispute in this matter that Ms Simms did not seek a review of the costs assessment by a review panel despite the fact that s 373 provides that the Manager of Cost Assessment may extend time for bringing such a review beyond the 30 days provided in that section.

The plaintiff's submissions

1. The first error relied upon by Ms Simms arises from the fact that the costs assessor raised concerns about the costs disclosure letter being between Ms Simms and SSPL whereas ERA Legal charged Clear Position directly for the fees incurred. It was submitted that the costs assessor erred in not going on to find that this meant that Ms Simms was not liable for the outstanding fees. It was submitted that Ms Simms was never a party to the Kisimul proceedings.
2. It was conceded on behalf of Ms Simms that she was the sole director of both Clear Position and SSPL and that she signed the relevant costs disclosure certificate. It was not conceded that SSPL and Clear Position were related companies on the basis that she was not a shareholder of Clear Position; her husband was the sole shareholder. In relation to SSPL, she was the sole director and the sole shareholder. Thus, it was submitted that SSPL and Clear Position were not related companies as would normally be understood for the purposes of construing the costs agreement.
3. Reliance was placed on that part of the reasons at 5.21 where the assessor noted that "upon my closest deliberation, I cannot be satisfied here that the retainer, particularly as to client identification… is in the clear and plain terms as mandated by the Act in s 309 and in its related sections." The costs assessor concluded that the consequence of this failure was that ERA Legal had to meet the costs of the assessment and that the bill should be discounted. It was submitted on behalf of the plaintiff that this was insufficient and that the assessor should have found that Ms Simms and SSPL were not liable at all. Instead, after raising these concerns, the assessor did not return to this question and its implication for whether proper disclosure had in fact been made to Ms Simms. This issue was said to give rise to a dispute as to the relevant parties to the contract and it was argued that the assessor had to be satisfied that he had jurisdiction to order Ms Simms to pay costs; it was necessary for the costs assessor to look at the contract and identify the client. It was submitted that, at the time that the submissions objecting to the costs were before the costs assessor, Ms Simms was no longer the sole director of Clear Position, her husband was. In this way, she was not liable for the costs.
4. Reliance was placed on the fact that the costs assessor had indicated that he had read both the decisions of Stevenson J and the subsequent Court of Appeal decision. It was submitted that he was thus aware that the legal proceedings that were subject of the dispute did not involve an application to wind up Kisimul as the cost disclosure letter indicates. The error of law relied upon is that the assessor should have found that Ms Simms was not liable for anything.
5. As for the second error relied upon, it was submitted that the reasons for finding that Ms Simms was liable for the costs were inadequate. That is, after the concern outlined above was raised the issue was left "hanging" and no reasons were provided for not taking the next step which was, on the plaintiff's submission, to find that Ms Simms was not liable for anything.
6. The third error alleged was a denial of procedural fairness. It was submitted that Ms Simms did not receive notice of the costs assessment and thus was denied the opportunity to argue that she was not liable for the disputed costs under the costs agreement.

The defendant's submissions

1. Counsel for the defendant submitted that I would refuse leave to bring the proceedings out of time without proceeding to determine the merits of the matter. He also relied upon the fact that Ms Simms had a statutory right of review available to her that she did not avail itself of. It was submitted that, just because Ms Simms had abrogated her right to be heard on the costs assessment to her husband, it did not follow that she can now complain that she was not separately heard in relation to that matter.
2. As for the first complaint regarding the appropriate parties to the contract, it was submitted that there has been no attack on the identities of the contracting parties in the costs agreement. It was submitted that the assessment proceeded on a particular basis because that is the way the parties chose to conduct the assessment.
3. With reference to the reasons of the assessor, it was submitted that the concern raised by the assessor was as to the position of Clear Position not the position of either Ms Simms or SSPL. His Honour set out the terms of the costs agreement which clearly shows why Ms Simms was bound by it. She was clearly a party to it. What the cost assessor was addressing was the position of Clear Position.
4. As for the reference to "related company" at Part H of that agreement (see above at [22]), it was submitted that, whereas the term "related company" has a particular meaning for the purposes of s 50 of the Corporation Act 2001 (Cth), it does not have that same meaning for the purpose of the construction of this contract. This is particularly so in the circumstances where Ms Simms is the director of both companies and gave instructions in relation to the proceedings. She owned half the shares of Kisimul and was, for a time, a director of that company. It was submitted that, as a matter of ordinary construction, SSPL and Clear Position are related companies as would be understood by the parties.
5. It was submitted that no argument was raised by Mr Simms before the assessor on this issue.
6. It was noted that s 317 of the Legal Profession Act provides for the consequences of this failure. No error is disclosed in the reasons thus there is no inadequacy in the reasons.
7. With respect to the discretionary considerations, it was submitted that the evidence discloses that Ms Simms "washed her hands" of the exercise and left it to her husband. On that basis, it is unfair to now criticise the assessor. It was conceded that the evidence of Ms Simms is that she left the marital home in July 2015, moved overseas and she states she did not receive any correspondence. It was conceded that ERA Legal had no direct evidence to contradict this and thus it could not be put to her that this was not true. However, it was submitted that prior to July 2015, she was aware of the ongoing dispute.

Consideration

1. I turn first to consider the question of whether an extension of time to bring these proceedings out of time should be granted. Rule 59.10(1) of the UCPR provides that proceedings for judicial review must be commenced within three months of the date of the decision. Rule 59.10(2) provides that the Court may "at any time" extend that time. Rule 59.10(3) is in these terms: "(3) In considering whether to extend time under subrule (2), the court should take account of such factors as are relevant in the circumstances of the particular case, including the following: (a) any particular interest of the plaintiff in challenging the decision, (b) possible prejudice to other persons caused by the passage of time, if the relief were to be granted, including but not limited to prejudice to parties to the proceedings, (c) the time at which the plaintiff became or, by exercising reasonable diligence, should have become aware of the decision, (d) any relevant public interest."
2. Considering factors (a), (b) and (d): there was no issue taken as to the plaintiff having an interest in challenging the decision; ERA Legal conceded that no prejudice was caused to it by the delay; and no particular public interest concerning the matters raised this matter were identified by the parties.
3. As for (c), there was a significant factual dispute as to when Ms Simms "by exercising reasonable diligence" should have become aware of the decision of the costs assessor. This issue raises the same factual considerations as go to considering the third ground of review, namely, whether a denial of procedural fairness has occurred in this matter due to a lack of notice of the assessment being provided to Ms Simms.
4. In addition to the discretionary factors set out in UCPR r 59.10(3), in Dyason v Butterworth [2015] NSWCA 52, McColl JA (with whom Barrett and Gleeson JJA agreed) identified (at [65]) two further relevant factors to which it is necessary to have regard on this question: the length of the delay and whether the plaintiff has a "fairly arguable case". The length of the delay is not significant in this matter thus the remaining question is whether the plaintiff has a "fairly arguable case." The question of whether Ms Simms had an arguable case for relief in this matter was not argued separately before me. Rather, it formed part of the substantive arguments put before the Court at the hearing of the summons in this matter. Having regard to the arguments considered below, I am prepared to grant an extension of time to bring these proceedings.
5. I turn now to consider the three grounds of review. The first ground is the purported legal error on the face of the record disclosed in the costs assessor's failure to find that Ms Simms was not liable to pay the disputed legal costs. It is to be accepted that, in his reasons, the costs assessor raised some concern about the fact that the invoices were sent to Clear Position whereas the costs agreement was with Ms Simms and SSPL. This was not a matter raised or relied upon by Clear Position. Rather, the costs assessor raised this of his own volition. It seems to me that the relevance of these observations is that the costs assessor was concerned as to whether Clear Position had been provided adequate disclosure, not as to whether there was any contractual relationship in existence between Ms Simms and ERA Legal. There was no signed costs agreement between ERA Legal and Clear Position but there was such a signed agreement between ERA Legal and Ms Simms. The concern expressed by the costs assessor and relied upon by Ms Simms pertained to the amount of the costs charged and not to whether Ms Simms was liable in the first place. The costs assessor was aware of the terms of that agreement as the extracted passages of his reasons at [49] above make clear.
6. I do not accept the submission advanced on behalf of Ms Simms that the costs assessor should have found that neither Clear Position nor Mr Simms were third parties within the meaning of the costs agreement (see above at [22]). Although it was submitted on behalf of Ms Simms that the meaning of "related companies" in the cost disclosure agreement was confined to the statutory meaning of that term in s 50 of the Corporations Act, the wording of the agreement is not so limited. When she signed the costs agreement, she agreed to be personally liable for "costs incurred in providing legal services to third parties (for example a spouse or related company)."
7. The undisputed facts are that Ms Simms was the director of both SSPL and Clear Position (and owned half the shares in Kisimul). The anticipated proceedings brought by SSPL and those defended by Clear Position were both proceedings against Kisimul in relation to the same debt: moneys owed for work undertaken by Ms Simms' husband for Clear Position. Ms Simms agreed to use the money held on trust originally allocated for SSPL's litigation against Kisimul to pay for Clear Position's litigation against Kisimul. Ms Simms owned SSPL whereas her husband owned Clear Position. The two persons who stood to ultimately benefit financially from any successful proceedings against Kisimul, whether brought by SSPL or Clear Position, were Mr and Ms Simms.
8. Although it is to be accepted that the precise nature of the legal proceedings differed from when Ms Simms first engaged ERA Legal, the litigation arose from the same factual matrix. That is, Ms Simms engaged ERA Legal in order to wind up Kisimul following the issuing of statutory demands. When the Kisimul proceedings were commenced, the question of the validity of the statutory demands had to be addressed before any winding up proceedings could be commenced. I do not accept the submission put on behalf of Ms Simms that the costs assessor, having acknowledged that he had read the decision of Stevenson J, should have realised the proceedings were separate, which meant that Ms Simms was not liable for costs incurred in the Kisimul proceedings.
9. The costs assessor was aware that Ms Simms was at the time a practising solicitor. Ms Simms has been a solicitor since 2010 and agreed in her evidence that she was familiar with costs agreements and disclosure requirements. As noted by ERA Legal in its application for the costs assessment, s 312(1)(c)(i) of the Legal Profession Act provides that ERA Legal was not obliged to make disclosure of costs to Ms Simms but did so for abundant caution. The costs assessor accepted this but noted that the same argument did not apply to SSPL or Clear Position. In any event, it is not asserted under this ground that Ms Simms is not liable for the costs because of a lack of disclosure as to the amount of costs anticipated; it is contended that she is not liable at all under the terms of the costs agreement she signed because the agreement does not extend to the Kisimul proceedings.
10. In light of these matters, although the costs assessor did not squarely address the third party issue, I am not satisfied that he erred in finding Ms Simms to be liable under the costs agreement for the work done for Clear Position. The work was done for a related company and/or a spouse. Overall, I am satisfied that no error is disclosed by reason of the costs assessor's conclusion that Ms Simms was liable for the relevant costs despite the fact that the disclosure was to her and SSPL and not to Clear Position.
11. The second ground, which asserts a failure to give reasons, relies on the argument that, after identifying the fact that the costs agreement was signed by Ms Simms and SSPL (whereas the invoices were sent to Clear Position), the assessor failed to give adequate reasons for not going on to find that this meant that Ms Simms could not be personally liable for the costs. In circumstances where I am not satisfied that such a conclusion should have been made in any event, this second ground would also fail.
12. The third and final ground for review was that there has been a denial of procedural fairness in this matter because Ms Simms did not receive any notice of the costs assessment. This was not a ground of review articulated in the Summons or written submissions. It arose during the hearing and I granted Ms Simms leave to rely upon it as the third ground of review. ERA Legal met this fresh ground without any adjournment to obtain further material upon which to cross-examine Ms Simms. Ms Simms bore the evidentiary onus of establishing lack of notice. The evidence on this issue can be summarised as follows: 1. As at 18 February 2015, Ms Simms was aware that fees were still outstanding and an arrangement was made as to how to settle the ongoing costs dispute. This is clear from the 17 February 2015 email and those that followed it. 2. Following the arrangement with Mr Russell on 18 February 2015, Ms Simms left the country with her two young children in July 2015 without re-directing her mail or providing a forwarding address to ERA Legal. No evidence from her estranged husband was put before the court on this issue. It was not suggested by Ms Simms that the notice was not sent to the Lindfield address. The question is whether Ms Simms took reasonable steps to become aware of the notice sent to her last known address. Ms Simms did not suggest that she had had no contact with her husband from July 2015 until the present. Rather, she simply asserted that she was not aware of the costs assessment. 3. It is to be noted that Ms Simms did not expressly assert in her affidavit evidence that she had not received notice of the assessment. It was only after she was permitted to give supplementary evidence on this issue at the hearing before me that she denied ever receiving the notice. 4. Prior to the costs assessment, all correspondence had been sent to Ms Simms at the Lindfield address since late 2013. Although Ms Simms' reference to an inspection by the letting agent suggests that the Lindfield premises were vacated sometime in July 2015, this does not explain how Mr Simms continued to receive correspondence sent to the Lindfield address after July 2015. Mr Simms filed an objection to the costs assessment on behalf of Clear Position sent to the Lindfield address thus it is to be inferred that he received notice of the assessment. 5. In his response to the notice of assessment sent to Ms Simms and Clear Position, Mr Simms commenced by stating that "we object". There was nothing before the costs assessor to suggest that Mr and Ms Simms were no longer residing together. I am satisfied that the reference to "we" in that objection was sufficient to enable the costs assessor to infer that the objection was in fact filed on behalf of both of Clear Position and Ms Simms. I note, however, that is not the complaint made by Ms Simms; her complaint is that she did not in fact receive such notice. 6. In the letter from Mr Mavrakis to the Manager, Costs Assessment, dated 25 January 2017, it is noted that "Mrs Simms did not make any submissions to the Costs Assessor on her own behalf. The matter was left in the hands of Mr Simms who dealt with that as the sole director of Clear Position Pty limited."
13. The requirement for notice under s 356(1) of the Legal Profession Act is that a copy of an application for costs assessment is to be given to the client concerned. Notice was sent to Ms Simms at her last known address where she had resided with her husband. Her husband responded on behalf of both of them. Ms Simms' lawyer sent a letter, presumably on instructions, suggesting that she had left the matter in the hands of her husband but she gave evidence on oath before me that she had not left the matter in the hands of Mr Simms. The person who could reasonably be expected to have given evidence on this issue, Mr Simms, did not give evidence at the hearing. There was no explanation as to why he was not available to do so.
14. In order to accept Ms Simms' assertion that she was unaware of the costs assessment, it is necessary for me to consider the reliability of her recollection of this period in her life. Her recollection of events at the relevant time was inconsistent with other evidence in two other significant respects.
15. First, the 17 February 2015 email clearly establishes that, as at that date, Ms Simms accepted that she was liable for the amount owed to ERA Legal because of the costs agreement. The evidence given by Ms Simms before me to the contrary was highly unsatisfactory. Her attempts to explain that damaging email in a way that supported her current position were wholly unpersuasive and I am unable to accept her evidence on this issue. The 17 February 2015 email records that she is annoyed that she was charged an amount for the unsuccessful litigation disproportionate to the amount owed by Kisimul and that she felt it unfair she has to keep paying the outstanding fees in those circumstances (I note that this is the same position taken in the objection submitted by the cost respondents to the costs assessor). Despite this, she accepts in that email that she has a legal obligation to pay the costs under the costs agreement. The second aspect of Ms Simms' evidence I am unable to accept is her affidavit evidence that she did not have any further contact with ERA Legal after the Kisimul proceedings, which was in 2014. This evidence is also contradicted by the 17 February 2015 email and related emails.
16. I have considered Ms Simms' evidence carefully and I am unable to conclude that she was being untruthful in her evidence on these two issues. Despite this, it is clear that her memory of events at that time is unreliable.
17. I note that the address for notice to be sent to the costs respondents (Clear Position and Ms Simms) included an email address. The email address for Ms Simms was the same email address from which she sent the 17 February 2015 email and the same email address where she was subsequently sent the bankruptcy notice. It is to be inferred that she was contactable on that email address throughout the period between these dates. There was no evidence before the court as to whether any attempts were made to serve the notice of assessment by way of email. I make the observation that it would be preferable that, wherever possible, any notice requirements under legislation such as the Legal Profession Act should be served additionally by email so as to remove any doubt that the recipient has been notified. Despite this, it is to be noted that there is no statutory obligation under the Legal Profession Act to provide notice by way of email.
18. Another relevant factor is whether Ms Simms deliberately left the jurisdiction to evade service of any further correspondence pertaining to the outstanding dispute. There is authority for the proposition that a failure to notify a person may not be unfair if that person is evading receiving that notice: see Minister for Immigration and Multicultural Affairs v George (2004) 139 FCR 127; [2004] FCAFC 276 (at 145). The position of ERA Legal was that the costs assessor could not be held responsible for the fact that Ms Simms had left the jurisdiction with no forwarding address. I note it was not squarely put to Ms Simms in cross-examination that the reason she left the country was to evade receiving such a notice. Despite this, implicit in her evidence that she did not consider herself liable for the debt, is a denial that she left the country to evade the debt.
19. Ms Simms bears the onus of establishing that she was denied procedural fairness in this matter because she was denied the opportunity to put a particular submission to the costs assessor. As the High Court held in Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54, albeit in the context of an appeal following a trial, not every departure from the rules of procedural fairness will entitle an aggrieved party to a new trial. If Ms Simms was denied the opportunity to make a submission on a question of law which would clearly be answered unfavourably to her, there is no point in quashing the decision and remitting it in any event. On the other hand, if she sought to put submissions on a question of fact, such as to whether a particular witness is to be accepted, it would be more difficult to conclude that it could have made no difference (see Stead). This issue was discussed recently by Basten JA in in Boyce v Allianz Australia Insurance Ltd and Another [2018] NSWCA 22 at [67]-[95].
20. In the circumstances, it is not necessary for me to make any finding as to whether it would be futile to quash the decision and remit it for further consideration as, having regard to all of the evidence going to this issue, I am not satisfied that Ms Simms has discharged her onus of establishing on the balance of probabilities that she did not receive notice of the assessment.
21. It seems to me that the real nub of Ms Simms' complaint is that she was overcharged and that, had she been properly advised about the defect in the statutory demand, she would not have proceeded with the litigation. She may well be justified in feeling disappointed that the litigation was unsuccessful and that she incurred a significant legal bill. But the present proceedings concern whether this Court should exercise its supervisory jurisdiction to declare the relevant costs certificate invalid and set aside the judgment entered against her. I am not satisfied that grounds to do so have been established.
22. In circumstances where I have not found that any of the grounds for review have been made out, it is not necessary for me to consider any remaining discretionary factors militating against the relief sought raised by ERA Legal.

ORDERS

1. I make the following orders: 1. Leave is granted to extend the time to commence these proceedings under UCPR r 59.10(2). 2. The summons is dismissed. 3. The plaintiff is to pay the defendant's costs of these 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: 18 May 2018