Sturesteps v Khoury

Solicitors: Plaintiffs: William Musgrave, W M Lawyers Defendants: Benjamin & Khoury Solicitors File Number(s): 2014/24406 Publication restriction: No

Judgment

1. The first plaintiff in these proceedings, George Sturesteps is a former senior employee and director of HIH Casualty and General Limited ("HIH"). The HIH corporate group collapsed in March 2001. Mr Sturesteps then commenced what became extensive litigation against the liquidators of the HIH group, in which he claimed entitlements as a consequence of the termination of his employment, when HIH was placed into liquidation ("the HIH proceedings").
2. The first defendant, Dieb Khoury, is a solicitor who practised and practises under the business name of Benjamin & Khoury Solicitors ("Benjamin & Khoury"). Mr Sturesteps and his wife, Beryl Sturesteps, the second plaintiff in these proceedings, retained Mr Khoury ("the retainer") to act for them in the HIH proceedings.
3. The Sturesteps now bring these proceedings against Mr Khoury and the second defendant, Benjamin & Khoury Pty Limited ("the Company"), an incorporated legal practice, whose director is Mr Khoury. During the course of the retainer between 2003 and 2008, the Sturesteps paid approximately $2.5 million in legal fees and disbursements. In these proceedings they claim that they overpaid their solicitors by about $750,000 and seek the recovery of that sum and other related relief.
4. The plaintiffs apply for leave to amend their pleadings. The defendants have applied for the summary dismissal of the plaintiffs' proceedings. Mr C.J. Bevan of counsel appeared for the plaintiffs. Mr K Connor SC appeared for the defendants on these applications.

Procedural History

1. The plaintiffs filed their first statement of claim on 24 January 2014 and sought an expedited hearing. On 7 February 2014 Stevenson J in the Expedition List ordered that the plaintiffs serve all evidence on which they proposed to rely by 13 March 2014.
2. The plaintiffs filed an amended statement of claim on 19 February 2014 ("the ASOC"), pursuant to Uniform Civil Procedure Rules ("UCPR"), r 19.1. On 14 March 2014 counsel for the plaintiffs informed the Court that the plaintiffs had served all the evidence upon which they wished to rely.
3. On 11 April 2014 the defendants sought an order under UCPR, r 13.4 dismissing the proceedings or, alternatively, an order under UCPR, r 14.28 striking out the ASOC. Stevenson J heard that application on 8 May 2014 in the Equity Division Expedition List. In an ex tempore judgment, his Honour granted the alternative order only: he struck out the ASOC, directed the Sturesteps to serve a proposed further amended statement of claim, and stood the notice of motion over for further directions: Sturesteps v Khoury (Supreme Court (NSW), Stevenson J, 8 May 2014, unrep).
4. On 6 June 2014 Stevenson J removed the matter from the Expedition List, and on 8 September 2014 the Equity Registrar allocated the hearing of the parties' applications to me.
5. Both sides have put on applications. The Sturesteps by notice of motion dated 16 June 2014 seek the Court's leave to amend their pleadings pursuant to Civil Procedure Act 2005, s 64 by filing a document titled "Further Amended Statement of Claim", including annexures A to E thereto ("FASC"). The FASC has itself been updated over time. The FASC considered in these reasons became Exhibit 3 in the proceedings. The defendants oppose the Sturesteps' motion. The defendants also move on their 11 April 2014 motion, again seeking summary dismissal of the FASC pursuant to r 13.4 or orders pursuant to r 14.28 striking out the FASC.
6. The proceedings were heard on 17, 18 and 19 November 2014. Judgment was reserved on 1 December 2014.

Substantive History

1. By a written retainer agreement dated 11 April 2003 ("the costs agreement"), Mr Sturesteps retained Mr Khoury, practising as Benjamin & Khoury Solicitors, to sue HIH's liquidators for entitlements relating to his former employment. On the same date Mrs Sturesteps retained Mr Khoury to act for her to defend an action brought by the liquidators of HIH Overseas Holdings Ltd, who sought to recover a loan in the nature of an alleged fringe benefit made to her as the nominee of her husband.
2. The costs agreement contained express terms relevant to the issues arising in this proceeding which were to the following effect: 1. Work performed under the retainer agreement would be charged out at the hourly rates specified in clause 8(b); 2. When costs incurred reach $10,000 notice of the costs incurred would be given under clause 8(d); 3. If Mr Sturesteps was successful in Mr Sturesteps' proceeding he was, according to Mr Khoury, likely to recover party-party costs which would go some way to meeting his liability to Mr Khoury for solicitor-client costs: clause 8(e); 4. Mr Khoury would issue interim bills of costs and statements of account showing how monies paid had been applied to costs billed under clause 9; 5. Mr Khoury would endeavour to give bills of costs and statements of account on a monthly basis and on completion of the matter under clause 9; 6. Mr Sturesteps would pay Mr Khoury's bills of costs within 14 days of receipt under clause 9; 7. Mr Sturesteps consented to Mr Khoury lodging a caveat on land owned by Mr Sturesteps and to charge the proceeds of sale of the land to secure the payment of Mr Khoury's costs under clause 10; 8. If Mr Sturesteps did not raise any query or objection to Mr Khoury's bills of costs within 30 days of receipt, he would be deemed to have confirmed that the bill of costs was correct under clause 11; 9. Mr Sturesteps' right of review of his bills of costs lapsed 30 days after his receipt of the bill, following which Mr Khoury would have an absolute discretion whether to consider any query or objection to the bill under clause 11; 10. Mr Sturesteps would pay interest on unpaid costs at the rate specified in the Supreme Court Act 1970 if any bills of costs remained unpaid 30 days after its delivery to him under clause 12; 11. Mr Khoury had the right to stop performing further work under the retainer agreement under clause 12, if either: 1. Mr Sturesteps failed to make a requested payment on account of anticipated expenses or disbursements; 2. Mr Sturesteps failed to provide adequate instructions; or 3. Mr Sturesteps indicated that he had lost confidence in Mr Khoury as his solicitor; 1. Mr Khoury had the right to pay out of his trust or controlled money accounts any monies received on behalf of Mr Sturesteps to meet any expenses or disbursements due to Mr Khoury under clause 13; 2. Mr Khoury would pay to Mr Sturesteps any money received by him and not required to pay costs and disbursements due to Mr Khoury under clause 13; 3. All bills of costs would be prepared on a GST inclusive basis and any variation in the rate of GST would be reflected in the amount of GST included in each bill of costs under clause 14; 4. Although the Legal Profession Act 1987 provided for the review and assessment of his legal costs for their fairness and reasonableness by a costs assessor appointed by the Supreme Court, that right was expressed not to be available where there is a costs agreement that complies with the Act, unless the costs assessor determines the agreement to be unjust pursuant to clause.15; 5. Mr Sturesteps was to make any complaints about Mr Khoury's costs or services under the retainer agreement to Mr Khoury personally in writing under clause 16; 6. Mr Sturesteps acknowledged that he had been offered the opportunity to seek, and was advised by Mr Khoury to seek independent legal advice regarding the costs agreement pursuant to clause 17; 7. Mr Khoury agreed pursuant to clause 19 that Mr Sturesteps could terminate the costs agreement at any time by written notice; 8. The costs agreement was enforceable as a costs agreement under the Legal Profession Act and in any proceedings for recovery of costs, Mr Sturesteps would be liable for unpaid costs on an "account stated" basis under clause19; 9. The terms of the costs agreement would continue to apply notwithstanding the subsequent incorporation of Benjamin & Khoury as a solicitor corporation pursuant to clause 21(c); and 10. The invalidity or unenforceability of any provision of the costs agreement would not affect the enforceability of any other provision pursuant to clause 22.
3. On 1 July 2003, Mr Khoury established the Company as a trading practice. Benjamin & Khoury sent a letter dated 30 June 2003 to Mr Sturesteps advising him of the incorporation of the Company. Mr Sturesteps received this letter about a week later. The parties dispute the legal effect of the letter. It stated: "We wish to advise that as of 1 July 2003 Benjamin & Khoury Solicitors will be an Incorporated Legal practice under the name of Benjamin Khoury Pty Ltd. We Confirm that the provision of legal services of Benjamin Khoury Pty Ltd as an incorporated legal practice, including by any officer or employee of the corporation who is a solicitor, is regulated by the Legal Profession Act 1987 ("The Act"). The Act does not regulate the provision of non-legal services provided by this firm. We Confirm that Mr. Dieb Peter Khoury will be the Solicitor Director the Incorporated Legal practice. All terms and conditions will remain the same as stated in our costs agreement with you."
4. Following the receipt of the letter, the retainer continued. Mr Sturesteps continued to instruct Benjamin & Khoury, and Benjamin & Khoury continued to provide legal services to the Sturesteps, sending them letters and issuing bills using stationery that occasionally, but not always, included words referring to the company, "Benjamin & Khoury Pty Limited ABN No 64 104 057 043". The Sturesteps claim that Mr Sturesteps complained about the costs that Benjamin & Khoury billed them, but they say that at no point did he seek an assessment of those costs because of misconceptions as to his rights to costs assessment under the Legal Profession Act. The Sturesteps allege that Mr Khoury is responsible for Mr Sturesteps' misconceptions.
5. The HIH proceedings were heard in 2010 before Brereton J. The two proceedings were heard together on 15-18 February 2010, 21 May 2010 and 3 June 2010. Brereton J gave three ex tempore judgments in the proceedings: Sturesteps v McGrath [2010] NSWSC 169; Sturesteps v McGrath (2010) 242 FLR 122; [2010] NSWSC 896; and Sturesteps v McGrath [2010] NSWSC 903.
6. Appeals were commenced from Brereton J's decisions in both proceedings. The appeals were to be heard together in August 2011. Around this time, the Sturesteps were behind in payment of Benjamin & Khoury's bills of costs. On 6 May 2011, Mr Khoury told Mr Sturesteps that he would terminate his retainer agreements with them and terminate the services of their counsel unless they made "satisfactory arrangements" to pay all outstanding and future legal costs under the retainers before their pending appeals were heard. In May 2011 Mr Sturesteps signed a Deed of Agreement to enter into such an arrangement.
7. The Court of Appeal heard the appeals on 8 August 2011, and gave judgment on 30 September 2011: Sturesteps v HIH Overseas Holdings Ltd (In Liq) (2011) 81 NSWLR 690. On 11 May 2012 the High Court refused Mr Sturesteps' application for special leave to appeal from the Court of Appeal's decision.
8. On 8 December 2011 Mr Sturesteps terminated the retainer agreement and the costs agreement. Throughout the retainer, Mr Sturesteps paid a total of $2,770,578.08 that had been billed in bills of costs. He now alleges that, had he applied for assessment and review, Mr Khoury (or alternatively, the Company) could only have recovered $2,048,662.72. The plaintiffs now seek the repayment of the difference between those two figures, namely $721,915.36, together with interest.

The Relief the Sturesteps Seek

1. By the proposed FASC (Exhibit 3), the first plaintiff, Mr Sturesteps, seeks the following relief: "1. A declaration that clauses 8(b), 9, 10, 11, 12, 13, 15, 17, 19 and 21(c) of the costs agreement between the first plaintiff and first defendant dated 11 April 2003 are unjust. 1A. A declaration that clauses 9, 11, 15 and 19 of the costs agreement between the first plaintiff and the first defendant dated 11 April 2003 are unenforceable pursuant to s. 182 of the Legal Profession Act 1987 or, alternatively, void pursuant to s.189 of the Act. 2. An order that clauses 8(b), 9, 10, 11, 12, 13, 15, 17, 19 & 21(c) of the costs agreement between the first plaintiff and first defendant dated 11 April 2003 be set aside. 3. An order that the first defendant pay to the first plaintiff $721,915.36, together with interest thereon under s.100 of the Civil Procedure Act 2005 from the dates of payment of costs found to be unrecoverable under Part 11 of the Legal Profession Act, 1987 up to judgment as restitution for unjust enrichment or equitable compensation. 4. Alternatively, an order that the second defendant pay to the first plaintiff $721,915.36, together with interest thereon under s.100 of the Civil Procedure Act 2005 from dates of payment of costs found to be unrecoverable under Part 11 of the Legal Profession Act 1987 up to judgment as restitution for unjust enrichment or equitable compensation. 5. In the alternative, an order that the first defendant and/or the second defendant deliver to the plaintiff a bill of costs for legal services provided pursuant to his retainer from the first plaintiff dated 11 April 2003 which complies with the requirements of Division 4 of Part 11 of the [Legal Profession Act] 1987 and reg. 45 of the Legal Profession Regulation 2002. 6. An order that the first defendant or the second defendant lodge the bill of costs referred to in paragraph 1 for assessment under Division 6 of Part 11 of the [Legal Profession Act] with the Manager, Costs Assessment. 7. Alternatively, an order that the Court assess, by a referee appointed under the UCP Rules, the costs properly payable to the first defendant or the second defendant by the plaintiff in respect of his retainer of the first defendant. 8. An order that the first defendant pay to the first plaintiff the amount found to be unrecoverable under Part 11 of the Legal Profession Act, 1987 (NSW) pursuant to paragraphs 6 or 7 above together with interest thereon under s.100 of the Civil Procedure Act 2005 from the dates of payment of costs up to the date of judgment by way of restitution. 9. Alternatively, an order that the second defendant pay to the first plaintiff the amount found to be unrecoverable under Part 11 of the Legal Profession Act, 1987 (NSW) pursuant to paragraphs 6 or 7 above together with interest thereon under s.100 of the Civil Procedure Act 2005 from the dates of payment of costs up to the date of judgment by way of restitution."
2. The FASC also seeks the following relief for both plaintiffs jointly: "10. A declaration that the Deed of Agreement and Deed of Equitable Charge on Land dated 27 June 2011 made between the plaintiffs of the one part and the second defendant of the other part is void and of no effect, or alternatively, is voidable at the election of the plaintiffs on the grounds of undue influence or, alternatively, duress, or in the further alternative, for mistake. 11. Alternatively, a declaration that the Deed of Agreement and Deed of Equitable Charge on Land dated 27 June 2011 made between the plaintiffs of the one part and the second defendant of the other part is unjust within the meaning of s. 7 of the Contracts Review Act, 1980 (NSW) or s. 71 of the Fair Trading Act, 1987 (NSW). 12. An order that the Deed of Agreement and Deed of Equitable Charge of Land each dated 27 June 2011 which are referred to in the preceding paragraph be set aside. 13. An order for costs on the indemnity basis. 14. Alternatively, an order for costs on the usual basis."

Applicable Legal Principles

1. The defendants' application can conveniently be split into two parts, which at points overlap. Firstly, the defendants move for summary dismissal of the plaintiffs' case on the basis that it cannot possibly succeed. Secondly, the defendants claim that parts of the plaintiffs' pleadings must be struck out on the basis that they are imprecise, immaterial or embarrassing and contradict the rules for pleadings in UCPR, Part 14.

Summary Dismissal

1. The defendants move under UCPR, r 13.4 for summary dismissal of the proceedings. Rule 13.4 states as follows: "(1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings: (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1)."
2. The legal principles that apply to the defendants' motion for summary dismissal may be shortly stated. Only in "plain and obvious" cases, where the plaintiff's case is "so clearly untenable that it cannot possibly succeed" should the Court exercise its power to strike out pleadings or dismiss proceedings without a substantive hearing: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 ("General Steel") at 129-130 per Barwick CJ. The Court cannot dismiss an action "once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it": Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 per Dixon J (as his Honour then was). The Court of Appeal has recently reiterated the test in Ren v Jiang [2014] NSWCA 388 at [49]: "The test to be applied before entering summary judgment has been variously stated, and little is to be gained by reiterating those formulations; cf General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. There is no controversy that the power must be exercised with "great care" and "exceptional caution": Spencer v Commonwealth [2010] HCA 28; 241 CLR 118 at [24] and [55] (noting that this was said of the lesser standard made applicable by s 31A of the Federal Court of Australia Act 1976 (Cth)). In Spencer, Hayne, Crennan, Kiefel and Bell JJ referred to the (unamended) test as "requiring formation of a certain and concluded determination that a proceeding would necessarily fail": at [53]. Repeatedly, it has been said that the court must be so certain of the outcome that to permit the proceeding to go forward would amount to an abuse of process: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 90; Spencer at [54]; O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71; 16 BPR 31,705 at [3] and [67]."
3. The Court is entitled to consider evidence on any application under the rule and is not confined to dealing with the matter solely by reference to the pleadings: Wenlock v Moloney [1965] 2 All ER 871; Howden v Truth & Sportsman Ltd (1937) 58 CLR 416 at 419. Subrule 13.4(2) makes this clear. That is necessary because on a summary judgment application, "the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded": O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71; 16 BPR 31,705 at [3] per Macfarlan JA. However, where "the ultimate outcome of the case turns upon the resolution of some disputed issue or issues of fact", the Court ought to take great caution before exercising the power to terminate an action summarily: Webster v Lampard (1993) 177 CLR 598 at 603 per Mason CJ, Deane and Dawson JJ; see also Spellson v George (1992) 26 NSWLR 666. The requirement that claims requiring resolution of disputes as to fact are not to be summarily dismissed can be expressed in terms of "taking the plaintiff's case at the highest" in the sense that Leeming JA explained that expression in Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405 at [200]: "that assessment is to be made taking the plaintiff's case at its highest. The party applying for summary dismissal must accept the truth of all allegations in the statement of claim, and the ranges of meaning which the assertions of fact in the statement of claim are capable of bearing: Penthouse Publications Ltd v McWilliam (Court of Appeal (NSW), Priestley and Meagher JJA and Wardell AJA, 15 March 1991, unrep); Agius v New South Wales [2001] NSWCA 371 at [24]."
4. The Court may hear argument "even of an extensive kind" in determining whether or not the plaintiff's case is untenable: General Steel at 130 per Barwick CJ.
5. In Spencer v The Commonwealth (2010) 241 CLR 118 at 131 [24] French CJ and Gummow J said: "The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said: 'The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried'." [Citations omitted]
6. The Court will not necessarily dismiss all claims apparently filed outside the relevant limitation period. In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 ("Wardley") at 533 [31] Mason CJ, Dawson, Gaudron and McHugh JJ stated the following: "We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question. Magman International [v Westpac Banking Corporation (1991) 104 ALR 575] illustrates the problems which can arise, particularly in a case involving foreign loans."
7. However, if the limitation period has obviously expired and the plaintiff knew the relevant facts at the time the cause of action accrued but made no claim for an extension of the limitation period, it may be entirely appropriate to summarily dismiss a claim: see for example Gillies v Eastlake [2014] NSWSC 611 at [110] - [117] per Garling J.

Strike Out

1. The defendants rely upon UCPR, r 14.28 in their application to strike out the plaintiffs' claim: "(1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading: (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or (c) is otherwise an abuse of the process of the court. (2) The court may receive evidence on the hearing of an application for an order under subrule (1)."
2. In relation to the requirement for a pleading to state material facts found in the precursor rules to the UCPR, in Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135 ("Kirby") Hodgson JA (Mason P and Handley JA agreeing) said at [20] - [21]: "[20] It might appear that these rules [the Supreme Court Rules] do not require that causes of action be stated in pleadings: the requirement is to have a statement of material facts, and indeed to have only such a statement. However, in my opinion - (1) "Material" means material to the claim, that is, to the cause or causes of action which are relied on. (2) The requirement of a statement of material facts does not exclude the allegation of legal categories, such as duty of care, fiduciary duty, trust and contract. (3) The general requirement to avoid surprise means that material facts must be stated in such a way that the defendant can understand the materiality of the facts, that is, how they are material to a cause of action. [21] Accordingly, even on the basis of these rules which are common to the District Court and the Supreme Court, I do not take cases such as Konskier as establishing that there is never any requirement to do more than set out facts. Where there is a danger of surprise, which arises particularly where there is lack of precision and clarity in the pleading, it may well be appropriate to require a Plaintiff, either in a statement of claim or in particulars, to explicitly relate the facts it pleads to specific causes of action."
3. Johnson J in McGuirk v The University of New South Wales [2009] NSWSC 1424 ("McGuirk") also set out the following principles with regards to the requirement of pleading the material facts of a claim, and noted in particular the intersection between the requirements of pleadings in the UCPR and the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings of Civil Procedure Act, s 56: "[21] The function of pleadings is to state with sufficient clarity the case that must be met by a defendant. In this way, pleadings serve to define the issues for decision and ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her: Banque Commerciale SA En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279 at 286, 296, 302-3. The issues defined in the pleadings provide the basis upon which evidence may be ruled admissible or inadmissible at trial upon the ground of relevance: Dare v Pulham [1982] 148 CLR 658 at 664; Banque Commerciale at 296. … [24] Proper pleading is of fundamental importance in assisting Courts to achieve the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings: s.56 Civil Procedure Act 2005. [25] Where application is made by a party for leave to amend pleadings, the Court should have regard to considerations of case management, cost and delay: Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 at [111]-[112]; (2009) 83 ALJR 951. Of course, the present application is made by the Plaintiff at an early stage in the proceedings. A hearing is not imminent. Nevertheless, the orderly progress of litigation requires the Court to apply the letter and spirit of the Civil Procedure Act 2005, in accordance with contemporary principles identified in Aon, in determining an application such as this. [26] The need for clarity, precision and openness in the conduct of litigation and the responsibility of parties and their legal representatives therefore flows most clearly from the statutory duty of a party and the duty in civil proceedings to assist the Court to further the overriding purpose to facilitate the just, quick and cheap resolution of the real issues in dispute: Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited & Ors [2008] NSWCA 243 at 161. The need for clarity, precision and openness as part of this co-operation has been emphasised in the context of ambush or surprise: White v Overland [2001] FCA 1333 at [4]."
4. His Honour also considered when the Court will strike out pleadings on the basis that they are embarrassing, at [35]: "[35] It is not the function of the court to draw or settle a party's pleading. The court is confined to the function of ensuring that pleadings are within the rules and fulfil the functions for which they exist. Objectionable matter that is so mingled with other matter may lead to the conclusion that the pleading as a whole would tend to embarrass the fair trial of the action and ought to be struck out."
5. Similarly, Flick J in Takemoto v Moody's Investors Service Pty Ltd (in liq) [2014] FCA 1081 ("Takemoto") at [23] - [24] considered when pleadings will be struck out for a want of particularity in the following terms: "[23] As a very general proposition, the function of pleadings is to state with sufficient clarity the case that must be met: Banque Commerciale S.A., en liquidation v Akhil Holdings Limited (1990) 169 CLR 279 at 286 to 287 per Mason CJ and Gaudron J. A practice of leaving a "footprint in correspondence" as a means of identifying matters in issue is to be "firmly discouraged": White v Overland [2001] FCA 1333 at [4] per Allsop J (as his Honour then was). See also: Moss v Lowe Hunt & Partners Pty Ltd (No 2) [2011] FCA 18 at [33] per Katzmann J; SMEC Australia Pty Ltd v McConnell Dowell Constructors (Australia) Pty Ltd (No 2) [2011] VSC 492 at [9] per Vickery J. Rule 16.02(1)(b) requires a pleading to "be as brief as the nature of the case permits" and must "state the material facts on which the party relies". A pleading which sets forth mere assertions or mere conclusions may be struck out. A pleading which sets out facts at too great a level of generality - or, conversely, with insufficient particularity - may also be struck out: Australian Wool Innovation Ltd v Newkirk [2005] FCA 290 at [24] per Hely J; Australian Competition and Consumer Commission v Australia and New Zealand Banking Group Ltd [2008] FCA 1623 at [2] per Greenwood J. [24] It is nevertheless the case that a "pleading is but a means to the achievement of procedural fairness and of the efficient use of judicial resources and those of the parties by the identification of what is truly at issue": Australian Competition and Consumer Commission v Craftmatic Australia Pty Ltd [2009] FCA 972 at [14] per Logan J. A failure to properly identify the issues to be resolved with the requisite degree of clarity, however, only occasions confusion and is productive of a waste of the time of the parties and the court, and is a waste of private and public resources: Radisich v McDonald [2010] FCA 762 per Gilmour J; Nazdall Pty Ltd, in the matter of Yowdall Pty Ltd (as trustee for the Yowdall Unit Trust) v Herrmann [2013] FCA 94 at [33], (2013) 210 FCR 264 at 273 to 274 per Reeves J."
6. Generally, having regard to the overriding purpose set out in Civil Procedure Act, s 56, leave to amend a pleading should be granted if the application is made in a timely manner and for a proper purpose: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [98]; Ritchie's Uniform Civil Procedure NSW at [s 64.5]. The relevant principles applying to the Sturesteps' motion seeking leave to amend their FASC complement those applying to the strike out motion in that leave to amend will not be given where the proposed amendments would be liable to be struck out. In Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 310, Jordan CJ held that leave to amend would generally be given "unless the proposed amendment is so obviously futile that it would be struck out if it appeared in an original pleading …". See also Commonwealth v Verwayen (1990) 170 CLR 456 at 456, where Dawson J said: "In granting leave to amend, a court is concerned with the raising of issues and not with their merits. Of course, an amendment which is futile because it is obviously bad in law will not be allowed. But it is no ground for refusing an amendment that it raises a claim or defence which ought not to succeed. That will be an issue upon trial."

The Defendants' Issues

1. The FASC is an extensive and elaborate document. The vast submissions of both parties in relation to the motions for and against the FASC could be characterised as Byzantine. In a pre-trial directions hearing held on 10 November 2014, the defendants' counsel agreed to provide a list of issues arising on the motions. The hearing proceeded on the basis that both sides would address their arguments organised under those issues. This judgment addresses the same issues. In summary, they are as follows: 1. Issue 1: whether the Court has jurisdiction to grant the relief sought in prayers 1 and 2 of the FASC to declare as unjust and set aside certain provisions of the 11 April 2003 costs agreement. 2. Issue 2: whether Mr Sturesteps may bring his restitution claim, including as sub-issues: 1. whether Mr Khoury, as opposed to the Company, received money from the plaintiffs and if not, whether the Sturesteps' claim for restitution of those payments is maintainable against Mr Khoury; 2. whether the Sturesteps may plead a claim for restitution for restitution of an overall amount allegedly overpaid without pleading (i) the individual amounts of each alleged overpayment and, relatedly, (ii) the state of mind of Mr Sturesteps at the time of each alleged overpayment; 3. whether Mr Sturesteps can allege a mistake as to his rights to assessment for the purposes of restitution where he was given notice of those rights in accordance with the statutory requirements in Legal Profession Act 1987, s 193(1); 4. whether the Sturesteps may now amend their pleadings and rely on further evidence when they have already confirmed on 14 March 2014 that they have served all the evidence on which they intend to rely; 5. whether the matters pleaded in FASC paragraphs 48(a), (b) and (c) are relevant "qualifying or vitiating factors" to make retention of the costs payments by the defendants unjust in the sense that French CJ, Crennan and Kiefel JJ used in Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 516 [30]; and 6. whether the law of restitution will allow recovery from the defendants of amounts that Mr Sturesteps paid directly to counsel. 1. Issue 3: whether certain matters pleaded are connected with the relief the plaintiffs claim. 2. Issue 4: whether the Sturesteps' claims concerning two alleged agreements dated 27 June 2011: a Deed of Agreement and a Deed of Equitable Charge on Land are maintainable, including as sub-issues: 1. whether the claim for relief may be made jointly given that Mrs Sturesteps is not a signatory to the Deed of Agreement; 2. whether there is a basis to claim relief upon the Deed of Equitable Charge on Land, given that no such document has been produced; 3. whether the plaintiffs may claim relief on the basis that the Deed or Deeds were: 1. procured by presumed or actual undue influence; 2. procured under duress; 3. unjust within the terms of Contracts Review Act, s 7 or 9(2); 4. procured by misleading or deceptive conduct within the meaning of Australian Consumer Law, s 18 or Fair Trading Act 1987, s 42; or 5. vitiated by mistake; 1. whether the plaintiffs can maintain that either of the defendants is liable to repay the $300,000.00 paid under the Deed in restitution; 1. Issue 5: whether Mr Sturesteps can seek the relief in prayers 5, 6 and 7 of the FASC, including: 1. whether the orders sought can be made; 2. if so, whether those orders can be made against Mr Khoury when, the defendant alleges, he ceased practising on his own account; and 3. whether the plaintiffs must identify the Court's power to make such orders and the relevant matters justifying such orders. 1. Issue 6: whether the allegations of GST overpayments can be made. 2. Issue 7: whether claims struck out by Stevenson J and not re-pleaded in the FASC now require formal dismissal.

Issue 1: The Court's Power To Declare Clauses Of The 11 April 2003 Costs Agreement Unjust And To Set Those Clauses Aside

1. By the end of the interlocutory hearing, the version of the FASC which the plaintiffs sought leave to file had evolved. The plaintiffs had originally expressed prayers 1 and 2 of the FASC as follows, with underlining to show the phrases that eventually were deleted: "1. A declaration that clauses 8(b), 9, 10, 11, 12, 13, 15, 17, 19 and 21(c) of the costs agreement between the first plaintiff and first defendant dated 11 April 2003 are unjust within the meaning of s 208D(1) of the Legal Profession Act 1987. 2. An order that clauses 8(b), 9, 10, 11, 12, 13, 15, 17, 19 & 21(c) of the costs agreement between the first plaintiff and first defendant dated 11 April 2003 be set aside pursuant to s 208D(1) of the Legal Profession Act."
2. The parties agreed that the present applications should be determined on the basis that the Legal Profession Act 1987 is applicable, rather than the Legal Profession Act 2004 or the Legal Profession Uniform Law, which came into effect on 1 July 2015. The defendants argued that the Court does not have jurisdiction to grant relief based upon Legal Profession Act 1987, s 208D(1) because that section granted jurisdiction to a costs assessor rather than the Court. Subsection 208D(1) provides as follows: "(1) A costs assessor may determine whether a term of a particular costs agreement entered into by a barrister or solicitor and a client is unjust in the circumstances relating to it at the time it was made."
3. The defendants contrasted this provision with the grant of power made under Contracts Review Act 1980, s 7, authorising "the Court" to, for example, make an order declaring a contract void, in whole or in part, where it finds a contract or a provision of a contract to be unjust. The defendants submit that provisions similar to s 208D, giving power to an administrative officer but not to a court, are common: see for example, Strata Schemes Management Act 1996, s 140, which grants power to an adjudicator to make certain orders relating to repairs to and alterations of strata property but does not give such powers to a court, the court's role being limited in that legislation to the exercise of supervisory, appellate jurisdiction.
4. The defendants argue that the decision of Einstein J in Currabubula Holdings Pty Ltd v State Bank of New South Wales [2000] NSWSC 232 ("Currabubula") supports by analogy their approach to the limits of the Court's s 208D(1) jurisdiction. In Currabubula Einstein J considered whether s 208K of the Legal Profession Act excluded the Court's jurisdiction to give declaratory relief as to the proper interpretation of its costs orders, following the decision of a costs assessor. Legal Profession Act 1987, ss 208L and 208M provided for the Court to hear appeals from a costs assessor's decision. Section 208K, however, stated: "A costs assessor's determination of an application is binding on all parties to the application and no appeal lies in respect of the determination except as provided by this Division."
5. Einstein J found at [60] - [61] that "despite the strength of the presumption against this Court being deprived of its declaratory jurisdiction", he could find no escape from the conclusion that "the effect of s208K is to make [ss 208L and 208M] the exclusive means of pursuing an appeal from the costs assessor and to exclude the Court's declaratory jurisdiction 'in respect of a determination.'". In the alternative, Einstein J found at [69] that if the Act did not exclude the Court's jurisdiction to give declaratory relief, he ought not to exercise the power to do so, because thereby "the Court would be circumventing the costs assessor's jurisdiction and undermining the costs assessor task".
6. The defendants also submit that the prayer for a declaration that the costs agreement clauses are "unjust" should also be summarily dismissed in so far as the substantive relief to which it is linked fails because of the present argument. They refer to In Sidameneo (No 456) Pty Ltd v Alexander (No 2) [2012] NSWCA 87, in which Young JA (with whom Beazley and Basten JJA agreed) identified "one of the principal guidelines on the utility of declarations" laid down by the English Court of Appeal in Dysart (Earl) v Hammerton & Co [1914] 1 Ch 822 at 834, per Cozens-Hardy MR, as: "The rule enabling the Court to make a declaratory decree ought not to be applied where a declaration is merely asked as a foundation for substantive relief which fails."
7. The Sturesteps have amended the FASC so that they no longer base their relief on s 208D(1) of the Legal Profession Act. Instead they rely upon the Court's inherent jurisdiction to regulate the behaviour of its own officers, including solicitors. They rely upon several judgments of this court, the most recent of which is Mathews AJ's decision in Estate of Allwood v Benjafield [2009] NSWSC 1383 ("Benjafield"). Mathews AJ in Benjafield at [38] referred to the "abundant and consistent authority" consistent with the proposition that the Court's inherent jurisdiction allows it to order a solicitor to render a bill of costs. That common law power was, Mathews AJ said, consistent with the power contained in Legal Profession Act, s 209C. Mathews AJ relied upon the statement of Young J (as he then was) in Parramatta River Lodge Pty Ltd v Sunman (1991) 5 BPR 12,038 that: "… a solicitor is the officer of the court and, no matter how inconvenient it might be, the court expects that in accordance with the highest standard of the profession the solicitor will give a fully detailed list of charges to the person liable to pay the bill and if asked will submit the bill for moderation by an officer of the court. That is the price of being a member of an honourable profession: that is the price of being admitted by this Court to practise law in this State."
8. The Sturesteps also referred the Court to Re Morris Fletcher & Cross' Bill of Costs [1997] 2 Qd R 228, where Freyberg J held that the court has an inherent power to order taxation before a bill is delivered.
9. These cases each refer to the Court's power to order the delivery of a bill of costs. These cases do not deal with the Court having the power to declare a costs agreement to be "unjust" and to set it aside on that basis.
10. The Sturesteps also rely upon Wentworth v Rogers (2006) 66 NSWLR 474 and Griffith v Australian Broadcasting Corp [2013] NSWSC 750 ("Griffith") at [35]-[52]; and Wende v Horwath (NSW) Pty Ltd (2014) NSWLR 674; [2014] NSWCA 170 at [21]-[26] to support their contention. But those decisions show that the power under the Legal Profession Act 1987 to assess bills of costs and costs agreements lies first with the costs assessor, subject always to the court's supervisory jurisdiction under ss 208L and 208M. Thus, when performing a costs assessment "it is the cost assessor's duty and function to determine as best he or she can such issues of fact and law as arise on the cost assessment in order to discharge their function under s 367 of the Act", and it is not for the Court to pre-empt the cost assessor's role in doing so, because "the starting position is that it is Parliament's assessment that the appropriate forum to decide these issues is via the statutory mechanisms it created": Griffith at [46] and [53].
11. In my view it is well arguable that the same logic applies to the cost assessor's function of determining whether a term of a costs agreement is unjust under s 208D: Parliament decided that that function is the cost assessor's to perform at first instance, not the Court's. Once a costs assessor has made the s 208D determination that a term of a costs agreement is unjust, the costs assessor may then proceed to assess a bill of costs made under that agreement, even if that costs agreement would otherwise not have been assessable under s 208C. Section 208C provides as follows: "(1) A costs assessor is to decline to assess a bill of costs if: (a) the disputed costs are subject to a costs agreement that complies with Division 3, and (b) the costs agreement specifies the amount of the costs or the dispute relates only to the rate specified in the agreement for calculating the costs. (2) If the dispute relates to any other matter, costs are to be assessed on the basis of that specified rate despite section 208A. The costs assessor is bound by a provision for the payment of a premium that is not determined to be unjust under section 208D. (3) This section does not apply to any provision of a costs agreement that the costs assessor determines to be unjust under section 208D. (4) This section does not apply to a costs agreement applicable to the costs of legal services if a barrister or solicitor failed to make a disclosure in accordance with Division 2 of the matters required to be disclosed by section 175 or 176 in relation to those costs."
12. But the Sturesteps submit that the Court's inherent power with respect to the discipline of legal practitioners, which is preserved by Legal Profession Act, s 171M (see Law Society of NSW v Foreman (1994) 34 NSWLR 408 at 419F and Barwick v Law Society of New South Wales (2000) 169 ALR 236 at [118]) is a source of power for the Court to declare the costs agreement unjust and subsequently to set it aside. But even if the power to discipline legal practitioners, empowers the Court to make a declaration that the costs agreement is unjust or indeed just to set it aside, that would probably not be the Court's first choice where the statutory framework clearly gives the costs assessor, not the Court, that role.
13. However the Sturesteps case is not unarguable on this issue and is not destined to fail so far as that can be ascertained at this interlocutory hearing. Much will depend upon the full circumstances that emerge at hearing.
14. Then the defendants further contend that the Sturesteps can no longer recover the costs of legal services, because their claim will be statute barred, as Limitation Act 1969, s 14 precludes any such entitlement. The defendants' contention is that Symonds v Raphael (1998) 148 FLR 171 stands for the proposition that, in the context of the fiduciary relationship as between solicitor and client, the limitation period under the Limitation Act for any claim by a client seeking to set aside a costs agreement runs from when the client first receives a bill of costs from the solicitor. In this case the first bill of costs issued was dated 31 May 2003. The defendants point out that over 12 years has passed since the date of that bill of costs.
15. But this is not a case where the plaintiffs' action should be struck out on Limitation Act grounds. Wardley considerations are applicable. Here the plaintiffs say they were under a misconception as to their rights that was induced by the solicitor who now seeks to mount a limitation argument against them. The full pleading and evidence picture may raise issues as to whether the limitation period was suspended for a time. The plaintiffs' claim should not be struck out now on this ground.
16. The defendants finally contend that given Mr Sturesteps' payment of monies under the costs agreement, together with his failure to avail himself of the review regime set out in Legal Profession Act, s 199, a claim now setting aside the costs that had been agreed would cause irremediable prejudice to the defendants. The submission appears to be in substance that it is an abuse of process to allow Mr Sturesteps to continue to challenge the costs agreement's validity because he has been guilty of laches, and by standing back and taking no steps in relation to the agreement he has acquiesced as to its validity: Nocton v Lord Ashburton (1914) AC 932; Symonds v Raphael (1998) 148 FLR 171.
17. But this too is a matter for evidence at a trial. Issues of irremediable prejudice due to delay and laches can only be determined when the full facts are known. This part of the FASC will not be struck out.

Issue 2: Mr Sturesteps' Restitution Claim

1. Within issue 2 the defendants have raised a number of issues about Mr Sturesteps' restitution claim, which are considered below under subheadings (a) to (f).
2. Mr Sturesteps' restitution claim is for money that Mr Sturesteps allegedly overpaid to the defendants under a claimed mistake as to his rights to assessment of legal costs. Mr Sturesteps submits that he paid more for the costs claimed by Mr Khoury in the bills of costs than would have been assessed as the amount of recoverable costs upon assessment of the bills of costs under Part 11 of the Legal Profession Act. Alternatively, Mr Sturesteps submits that he lost the opportunity to have the costs claimed in the bills of costs assessed by a costs assessor and thereby reduced to a significantly lower amount, that was either objectively reasonable or otherwise a recoverable amount of costs for the purposes of Part 11 of the 1987 Act. Mr Sturesteps claims he is owed $721,915.36 on this restitutionary basis, being the difference between the $2,770,578.08 he paid for costs billed and $2,048,662.72, the amount that allegedly would be recoverable for costs billed upon assessment and review under Part 11 of the Legal Profession Act, had Mr Sturesteps applied for such assessment and review.
3. The restitution claim relies upon pleaded mistakes of both of fact and law. The pleaded mistakes are that Mr Sturesteps took no steps to seek an assessment of the costs claimed in the bills of costs within the time permitted under the 1987 Act, and paid the costs claimed in the bills of costs without seeking an assessment of them. The pleadings set out the reasons given for these mistakes at FASC, para 36 as follows: "(a) Mr Sturesteps considered himself bound by the terms of the costs agreement referred to in paragraph 6 above, which made the costs due and payable within 14 days of receipt of bills (cl. 9), which limited his rights of objection to a 30 day period if the objection was made to Mr Khoury personally (cl. 11) and that, as he believed he had a costs agreement which was compliant with the Act, he believed that he had no right to an assessment or review of the costs claimed in the bills of costs that was otherwise available under the Act (cl. 15); (b) Mr Sturesteps understood the costs assessment notifications, which were in much smaller type than the rest of the type contained in each bill, were a pro forma notice contained in all bills of costs issued to all clients irrespective of whether they had a costs agreement which was compliant with the Act or not, and that it only had effect where there was a non-compliant costs agreement; … (f) Mr Sturesteps believed that, unless Mr Khoury withdrew his claim for costs or compromised the costs he was claiming in the bills of costs, consistently with the terms of clauses 9, 11 and 15 of the costs agreement, in response to the costs complaints, Mr Sturesteps was liable to pay the costs in the amounts claimed, and believed that, if he did not pay them within 30 days of delivery of the bills of costs, he would become liable to pay interest on them under the Supreme Court Act, 1970, consistently with cl. 12 of the costs agreement; (g) Mr Sturesteps believed that he had no right of assessment or review of the costs claimed in the bills of costs and, accordingly, he took no steps to seek an independent assessment of the costs claimed, or to pursue the costs complaints, or to pursue the other objections he had made to Mr Khoury about the costs he was claiming with a costs assessor under Part 11 of the Act; (h) Mr Sturesteps believed that the costs billed were due and payable as a debt within 14 days of receipt of each bill under cl. 9 of the costs agreement, relevantly unaware that none of the costs could ever have become payable as a debt due to Mr Khoury, or alternatively, to the Company, by virtue of the operation of s. 182(1) of the 1987 Act; (i) Mr Sturesteps believed that Mr Khoury, or alternatively, the Company, was entitled to sue for recovery of the costs as billed after 30 days had elapsed after delivery of each bill, relevantly unaware that Mr Khoury (or the Company) had no such right, by virtue of the operation of s. 192(1) of the 1987 Act; and (j) Mr Sturesteps paid the costs billed to him relevantly unaware that they were assessable without regard to the costs agreement by virtue sections 208C(3) and 208C(4) of the 1987 Act".

Issue 2(a): Whether The Claim For Restitution Against Mr Khoury, As Opposed To The Company, Is Maintainable

1. The first sub-issue is that the defendants claim that Mr Khoury never received money from the plaintiffs. They claim that the incorporated legal practice, the company received the plaintiffs' money for the payment of its bills. They submit that a condition of any claim by a person against a second person for restitution by way of unjust enrichment for money paid under mistake of fact, is that the second person actually received the payment. Therefore, the defendants argue, no claim for restitution against Mr Khoury is maintainable.
2. The plaintiffs plead that: "32. At all material times as from 11 April 2003 Mr Sturesteps made payments to Mr Khoury, in satisfaction of one of more of the bills of costs for each payment, either by: (a) sending to him cheques drawn in favour of "Benjamin & Khoury"; (b) making credit card payments to the "Benjamin & Khoury" credit card merchant number; or (c) making payments directly to Senior Counsel or to various Counsel who had been retained by Mr Khoury for the benefit of Mr Sturesteps under Mr Khoury's own costs agreements with Counsel, being payments made at the direction of Mr Khoury after he had sent a copy of Counsels' memoranda of fees to Mr Sturesteps and requested that Mr Sturesteps pay Counsel directly, on the dates, by the payment methods and in the amounts set forth in the schedule which is Annexure B hereto (Annexure B) (the payments of costs)."
3. Annexure B to the FASC records some 32 payments that Mr Sturesteps made to 'B&K', Benjamin & Khoury, and a further 22 payments that he made directly to counsel, between 1 November 2003 and 5 January 2012. The defendants do not fundamentally disagree with the amounts that Mr Sturesteps says he paid. At issue, however, is whether the named payee, Benjamin & Khoury is a business name. The defendants claim that by paying Benjamin & Khoury, Mr Sturesteps was in fact paying the Company. Mr Sturesteps says that Mr Khoury was the payee.
4. In support of the defendants' argument that the payments were made to, and received by, the Company, the defendants note that all of the payments Mr Sturesteps made, excluding those made to counsel and one relating to a deed of settlement executed in November 2011, were made into the Company's trust account. Additionally, the defendants caused bills of costs to be sent to Mr Sturesteps that generally came under cover of letters at the bottom of which was printed the words "Benjamin & Khoury Pty Limited ABN No. 64 104 057 043". The defendants also point to notations in the same form that often appear at the bottom of the issued bills of costs. The cumulative effect of the evidence is, the defendants argue, that leave should not be granted to amend the pleadings to allow Mr Khoury to be joined as a defendant.
5. But the plaintiffs disagree. Firstly, they say that at this stage, in the context of a strike out application, the truth of their case as pleaded must be accepted.
6. Secondly, they say that contractually Mr Khoury must be the recipient of the payments made under the retainer agreement pleaded in the FASC. That is an agreement was made between Mr Sturesteps and Mr Khoury personally. And they contend that the 30 June 2003 letter referred to at [13] above could not have unilaterally achieved the novation of that agreement to the Company or the assignment of the benefits of the retainer agreement to the Company. For such a consequence, Mr Sturesteps' consent would be necessary, particularly given the terms of the Costs Agreement, c 21(c), which stated that "The terms of this Agreement will continue to apply, notwithstanding … incorporation of the legal practice as a solicitor corporation". But the plaintiffs point out Mr Sturesteps did not consent. Novation of the retainer agreement could only occur if the parties "agreed that a new contract is to be substituted for the old and the obligations of the parties under the old agreement are to be discharged": ALH Group Property Holdings Pty Limited v Chief Commissioner of State Revenue (2012) 245 CLR 338 at [12].
7. Thirdly, the plaintiffs characterise their case as one of constructive receipt. They say that once Mr Sturesteps paid Mr Khoury in return for the services that he (as opposed to the Company) provided, it does not matter where Mr Khoury chose to bank Mr Sturesteps' payments. Mr Khoury had constructive receipt of Mr Sturesteps' payment notwithstanding his depositing of it to the bank account of another entity: Federal Commissioner of Taxation v White [2010] FCA 730 at [25], [28] per Gordon J; Sent v Federal Commissioner of Taxation [2012] FCA 382 at [50], [63]-[82] per Murphy J; aff. [2012] FCAFC 187 at [31]; Income Tax Assessment Act 1997 (Cth), ss 6-5(4); 6-10(3).
8. Finally, the plaintiffs argue that, on a policy basis, a solicitor should not be able to prevent his or her client from claiming funds in restitution from that solicitor by device of depositing the client's cheques to the bank account of a company without assets. In circumstances where the client never retained the company as solicitor, which is the plaintiffs' submission in this case, an injustice would otherwise be perpetrated on the client.
9. The plaintiffs' contentions are the more persuasive. Although the presently available evidence seems to show that Mr Sturesteps' payments of his legal fees were banked by the Company, his restitutionary claim against Mr Khoury is not so clearly untenable that it cannot possibly succeed. The Sturesteps contention that the novation to the company was not effective is certainly arguable on the materials presently available and could only be determined on all the evidence at trial. Without deciding the issue, the evidence does not discount the possibility that Mr Khoury did himself receive the amounts from Mr Sturesteps, in that Mr Khoury may have provided the legal services and thus may be taken to be the one who received the funds. Where Mr Khoury chose to bank the funds is not determinative of the identity of the recipient of the funds. And where some of the bills of costs and covering letters provided to Mr Sturesteps were endorsed with the name and Australian business number of the Company, others were not. Even on the present evidence those invoices are not decisive of the issue. This issues partly involves questions of agency and characterisation and can only really be decided at a trial. So it not appropriate now to order summary dismissal on that ground, or to preclude the amendment of the plaintiffs' pleadings to include this restitutioners claim.

Issue 2(b): Whether Mr Sturesteps Must Plead Each Alleged Overpayment In Respect Of The 53 Claims For Restitution And His State Of Mind In Relation To Each Overpayment

1. By paragraph 37 of the FASC, the Sturesteps plead the payments that Mr Shuresteps made to Benjamin & Khoury pursuant to various bills of costs. It is from these payments that the first plaintiff claims his entitlement to restitution arises. Paragraph 37 appears in the following terms: "Mr Sturesteps paid the costs claimed in the bills of costs listed in Annexure A hereto, by the payments listed in Annexure B hereto, without seeking an assessment of those costs by a costs assessor under Part 11 of the Act, in consequence of the failure to seek assessment mistakes and payment mistakes referred to in paragraph 36 above."
2. As noted above, annexure B to the FASC consists of two pages listing individual payments by Mr Sturesteps to Benjamin & Khoury and to counsel. The amounts paid total over $2.7 million. The annexure also identifies an amount that the plaintiffs allege constitutes an overpayment by the plaintiff: $721,915.36. However, Annexure B does not identify, with respect to each individual payment by Mr Sturesteps, what proportion of that payment was an overpayment.
3. The defendants submit that the plaintiffs cannot plead the overpayments in the way that they have. They say that it is fundamental to pleading such a claim for restitution of an amount overpaid that, in relation to each payment alleged to have been made under a mistake, the plaintiff pleads: the payor, the payee, the date of the alleged payment, the amount alleged to have been paid by mistake, and the mistake alleged to have caused the payment.
4. The defendants say several issues are created, due to the global way in which the plaintiffs plead the overpayment. The defendants submit that because the plaintiffs have made their allegations of overpayment globally, the FASC's claims concerning payments alleged to have been made are confusing and inconsistent. The defendants also say that once payments are treated individually, limitation defences may apply to many of the overpayment amounts: that possibility is obscured if one considers the overpayment globally. Stevenson J made a similar observation in his earlier judgment in these proceedings at [13]-[14]: "The individual payments said to have been made under mistake are not identified. As Mr Connor submitted, each allegedly mistaken payment constitutes a separate restitutionary claim and should be so pleaded. One issue in the dispute is that defences may arise under the Limitation Act 1969 in relation to some, but perhaps not all, of the claims. The pleading does not, but should, identify with precision what payments were made and what mistake of the payer is alleged to have been operative at the time of each of the payment[s]."
5. The defendants also submit there is a need to plead the particular state of mind of the plaintiff at each point that he made an alleged overpayment, that being a requirement for success of a claim in restitution. The defendants cite Australian Financial Services and Leasing Pty Ltd v Hills Industries [2014] HCA 14 at [118] ("Hills") to support this contention. In Hills Gageler J relies upon the following statement of Hamilton J in Baker v Courage & Co [1910] 1 KB 56 at 64-65 as stating the applicable law: "The question whether money can be recovered as having been paid under a mistake of fact depends upon the state of mind of the plaintiff at the time when the money was paid, just as in an action of deceit the liability of the defendant depends upon the untruth of the representation having been present to his mind at the time that the representation was made. You may be slow to believe the plaintiff if he says he had known the true facts but had forgotten them, but if you once arrive at the conclusion that he had in fact forgotten them and had paid the money under a misapprehension as to those facts, then he is entitled to recover the money unless he is already barred by the Statute of Limitations." Gageler J noted in Hills that, the cause of action to recover money paid under a mistake of fact was held to accrue at the date of payment, the applicable limitation period being six years.
6. The Sturesteps explain that particular amounts said to be overpaid are identified in an annexure to the affidavit of Michael John Dudman dated 12 March 2014. Mr Dudman is a specialist costs consultant. The annexure is a notice of objection which comprehensively identifies the profit costs and disbursements for Mr Sturesteps' retainer of Mr Khoury that Mr Dudman believes were fair and reasonable within the meaning of the legislation. The plaintiffs submit that the defendant can already understand the overpayment alleged with respect to each bill by cross-referencing Annexure B and the annexure to Mr Dudman's affidavit.
7. Moreover the plaintiffs submit that they are not in a position to plead the precise amount constituting an overpayment in relation to each payment the plaintiffs have made, as opposed to the overpaid amount in relation to each bill. This is because the plaintiffs did not send Benjamin & Khoury discrete payments for each invoice. Instead, they say that as is the case with many clients who have litigation on foot over a long period, in effect the plaintiffs paid successive lump sum instalments of the total amount said to be owing. The plaintiffs have no knowledge of how the defendants allocated those amounts to outstanding bills. Besides, under the legislation the plaintiff submits it is the overall costs billed that are assessed and determined to be unreasonable, rather than particular payments, and so if the plaintiffs successfully seek an assessment, their entitlement will be determined with the whole amount that is determined to be an overpayment.
8. And, the plaintiffs submit that it is neither necessary nor desirable to plead each instance of overpayment. This is because, they say, the Legal Profession Act 1987 does not task the costs assessor to assess each individual entry discretely, but rather a global assessment of the costs of a particular retainer must be undertaken. This global approach, the plaintiffs say, is necessary properly to assess components of the work performed, such as inter alia the practitioner's skill, labour and responsibility, the complexity, novelty or difficulty of the matter, and the quality of the work done: Legal Profession Act, s 208B. Therefore, treating each payment as an individual cause of action does not mesh with the global rationale of the statutory regime for assessing costs.
9. The plaintiffs also submit that, as the defendants would have them plead the matter, the logical result in terms of relief would be a specific order for repayment of a specific proportion of each payment listed in FASC annexure B, of which there are 42 payments over an eight year period. A claim for such relief would be unusual, to say the least, and not consistent with authority.
10. The plaintiffs' submissions are the more persuasive. The plaintiffs are under an obligation to plead specifically any matter that otherwise might take the defendants by surprise: UCPR, r 14.14. That general requirement means that the plaintiffs must state material facts in such a way that a defendant can "understand the materiality of the facts, that is, how they are material to a cause of action": Kirby at [20] per Hodgson JA. But this can be done in a number of ways provided the case is clear. It does not all have to be in the pleadings. Some of the material the plaintiff relies on is already now in Mr Dodman's expert evidence. Moreover the actual dates of payment do not seem to be in dispute and the pleading is clear enough that the plaintiffs allege they made the same mistake and had the same state of mind for each payment. Directions will be given before trial, when evidence is complete, to agree on dates and amounts of payments. Isolating the precise amount of overpayment in each payment should ultimately only be a matter of mathematics that will be clear enough to all sides before trial. There seems to be no point in making it a pleading issue.

Issue 2(c): Whether The First Plaintiff May Allege A Mistake For The Purpose Of Founding His Claims For Restitution Where He Was Informed Of His Rights In Accordance With The Statutory Requirements In Legal Profession Act, s 193 And Legal Profession Regulations 2002, r 45(1)(d)

1. Mr Sturesteps' claim for restitution is based upon an alleged mistake as to his rights to assessment of Benjamin & Khoury's bills of costs. The defendants say that attached to the bills of costs issued to Mr Sturesteps were statements required by the statute and its regulations which notified Mr Sturesteps that he was entitled to apply to have the costs assessed under Part 11 of the Legal Profession Act within 12 months after being given the bill. The plaintiffs agree that some of the bills of costs did give the relevant notification. But they say that there are special reasons why that notification was not sufficient to put Mr Sturesteps on notice of his rights to an assessment. They say therefore that that notification was insufficient to cure Mr Sturesteps of the operative mistake relevant to his claim for restitution.
2. Legal Profession Act 1987, s 193(1) states that the regulations may make provision for or with respect to the form of, and the particulars to be included in, bills of costs. Legal Profession Regulations 2002, reg 45 provides for such particulars and states relevantly as follows: 45 Particulars in bill of costs (1) For the purposes of section 193 (1) of the Act, the following particulars are to be included in a bill of costs: (d) a statement: (i) in a case where the bill of costs is given to a client - that the client may apply to have the costs assessed under Part 11 of the Act, but that if the costs have been wholly or partly paid, the application must be made within 12 months after the client is given the bill of costs, or
3. The plaintiffs agree that some 30 of the 71 bills of costs that were given to Mr Sturesteps did include the statutory notification required by r 45(d)(i). An example of that notice, from the first bill dated 30 June 2003, is as follows: "You may apply to have the costs assessed under Part 11 of the Legal Profession Act, But that [sic] if costs have been wholly or partly paid, the application must be made within 12 months after you are given the bill of costs".
4. However the Sturesteps' case is that Mr Sturesteps did not understand the notice and that he nevertheless was mistaken as to whether he had a right to assessment. That is due to a term in the costs agreement with Benjamin & Khoury. The costs agreement dated 11 April 2003 stated, in clause 15, that: "15 YOUR RIGHT OF REVIEW OF COSTS The Act provides for the review and assessment of your legal costs for their fairness and reasonableness by a Costs Assessor appointed by the Supreme Court. That right is not available to you in certain circumstances where there is a costs agreement which complies with the Act, unless the agreement is determined by a Costs Assessor to be unjust. …"
5. The Sturesteps' submission is that costs agreement, clause 15, nullifies the effect of the statutory notice displayed on the bills of costs. Due to that clause, Mr Sturesteps says that he believed that he was precluded from having his costs assessed under the Legal Profession Act, because he believed the costs agreement did comply with the Act and that the agreement had never been set aside as unjust. In light of that, Mr Sturesteps says that he believed that the costs assessment notification in the statutory form displayed in the bills of costs were pro forma notifications which had no application to him because, as far as he was aware, he had a compliant costs agreement.
6. The plaintiffs answer to this is persuasive. The Sturesteps submit that in this application for summary dismissal, the defendants may not challenge Mr Sturesteps' pleaded mental state. The defendants' issue is with the mistake that Mr Sturesteps pleads he was operating under at the time that he made the payments to Benjamin & Khoury. Mr Sturesteps' mental state is a disputed question of fact whose resolution at trial is pivotal to the ultimate success of this part of the claim. The Court ought to exercise great caution before exercising the power to terminate an action summarily: Webster v Lampard (1993) 177 CLR 598 at 603 per Mason CJ, Deane and Dawson JJ. The question must go to trial.
7. The defendants seek to outflank this response. They argue that as a matter of law, Mr Sturesteps could not possibly have operated under the claimed mistake necessary to his claim for restitution. They submit that the inclusion of the statutory notice together with the bills of costs had the effect, as a matter of law, of notifying Mr Sturesteps as to his rights to assessment and thereby curing any mistake that he alleges. The reason why the statutory notice must operate in law to make Mr Sturesteps aware of his rights to assessment, the defendants contend, is that any other result would not achieve the objectives of certainty and finality found in Part 11 of the Legal Profession Act. Section 99 of that Act and Legal Profession Regulation, reg 53 together require any application for costs assessment to be made within 12 months after the relevant bill is given to the client. The defendants point to those provisions as showing that the legislature intends the Act's assessment process to be certain and final.
8. Whether the inclusion of the r 45(d)(i) notice does, as a matter of law, mean that the recipient of the notice is deemed to have knowledge of the statutory scheme for costs assessment under Legal Profession Act, Division 6, is a question of law that remains to be determined, and upon which the rights of the parties depend. The Court gave the parties almost two weeks after the hearing of these applications to find relevant authorities on this issue. Neither party could identify authority for the proposition that the statutory notice, once included in a bill of costs, had that deeming effect for which the defendants contend. If the statutory notice does not have the effect of deeming Mr Sturesteps as the notice's recipient to have a particular belief as a matter of law, it remains a question of fact to be determined at trial what belief Mr Sturesteps actually held. Real questions of fact and law therefore remain to be determined, so it is not competent for the Court to dismiss this part of the action now on this ground: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.

Issue 2(d): Having Confirmed Service Of All Evidence On Which They Intend To Rely, Whether The Sturesteps May Amend Their Pleadings And Rely On Further Evidence

1. In the Expedition List before Stevenson J, the Sturesteps agreed to file their evidence in support of their statement of claim by 13 March 2014. On 14 March 2014 counsel for the Sturesteps informed the Court that the Sturesteps had served all the evidence upon which they wished to rely. The defendants now submit that, final evidence having been filed, the Sturesteps' pleadings have closed, and they may not rely on any cause of action in addition to those identified within the ASOC, nor rely on any further evidence beyond that which has been filed in this motion for summary dismissal.
2. The Sturesteps submit that the FASC should not be confined to pleading issues which were raised in the original statement of claim. This is so they submit for several reasons. First, their evidence was put on for the purposes of expediting pre-trial processes in the Expedition List. Following Stevenson J's orders on 6 June 2014, the proceeding is no longer in that list. The Sturesteps say therefore that they ought not to be restricted in pursuing a meritorious case now because of orders made for procedural expediency in a different list. Secondly, the Sturesteps submit that their case at trial will rely upon the receipt of documents from the defendants, which documents are the subject of notices to produce, with which at the time of the hearing the defendants had not complied. Until receipt of those documents, the Sturesteps say that they will not know the full scope of their case against the defendants. Thirdly, it is relevant that the Stevenson J struck out the pleadings in relation to which the Sturesteps filed their evidence. The FASC is a new pleading, and so merits the consideration of new evidence. Counsel for the Sturesteps submits that to hold his clients to the old pleadings and body of evidence filed in materially different circumstances would constitute a denial of procedural fairness.
3. The Sturesteps may no longer amend their statement of claim as of right under UCPR, r 19.1. But under Civil Procedure Act, s 64 the Court may, at any stage of the proceedings, order that leave be granted to a party to amend any document in the proceedings.
4. In deciding whether to make such an order, the Court must seek to act in accordance with the dictates of justice: Civil Procedure Act, s 58. The content of that phrase is provided in s 58(2).
5. Under s 58(2)(a), the Court must have regard to the provisions of s 56 and s 57 of the Act in determining what are the "dictates of justice" under s 58(1). The requirement to have regard to those sections means in substance that the Court must give those sections "weight as a fundamental element in the decision-making process", or equivalently that those matters "must be the focal point of the decision-making process": Commissioner of Police for New South Wales v Industrial Commission of New South Wales & Raymond Sewell [2009] NSWCA 198 at [73]. Regard to the (sometimes competing) considerations in both sections is mandatory: Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 at [38] and [46].
6. Sections 56 and 57 of the Civil Procedure Act provide as follows: "56 Overriding purpose (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. (3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court. (4) Each of the following persons must not, by their conduct, cause a party to civil proceedings to be put in breach of a duty identified in subsection (3): (a) any solicitor or barrister representing the party in the proceedings, (b) any person with a relevant interest in the proceedings commenced by the party. (5) The court may take into account any failure to comply with subsection (3) or (4) in exercising a discretion with respect to costs. (6) For the purposes of this section, a person has a relevant interest in civil proceedings if the person: (a) provides financial assistance or other assistance to any party to the proceedings, and (b) exercises any direct or indirect control, or any influence, over the conduct of the proceedings or the conduct of a party in respect of the proceedings. 57 Objects of case management (1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects: (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. (2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1)."
7. Further non-mandatory considerations are provided in s 58(2)(b), to the extent that the Court considers them relevant: "(i) the degree of difficulty or complexity to which the issues in the proceedings give rise, (ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56 (3), (v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case."
8. Permitting the FASC's amendments and the filing of further evidence relevant to the FASC will not necessarily prejudice the timely disposal of the proceedings. The FASC provides greater clarity in what the plaintiffs allege than the ASOC. But the stronger competing consideration is the just, quick and cheap determination of the real issues in the proceeding. While mindful of the important case management considerations for the efficient disposal of this proceeding, the ground has shifted beneath the parties since the Sturesteps filed their first statement of claim. The proceedings have been taken out of the Expedition List, and it was for the purposes of expedition in such list that the Sturesteps agreed to serve their evidence so quickly. Since then, Stevenson J has struck out the ASOC and the defendants have not yet produced various payment and banking records and trust and office account ledgers recording payments for costs. A finding that the evidence, filed under the defective ASOC, is final is likely to preclude the opportunity for the real issues in the dispute to be heard. And there is still some time to go before a trial hearing date is appointed after issues about the extent of the defendants' production of documents are resolved. The amendments contained in the FASC will not be disallowed on this basis.

Issue 2(e): Whether Matters Pleaded With Respect To Unjust Enrichment Are Relevant "Qualifying Or Vitiating Factors"

1. The defendants submit that the circumstances that the plaintiffs advance to claim that it would be unconscionable for Mr Khoury to retain the alleged costs overpayments do not constitute sufficient "qualifying or vitiating factors" such that the relevant retention does amount to an unjust enrichment of Mr Khoury. They rely upon the decision of French CJ, Crennan and Kiefel JJ in Equuscorp Pty Ltd v Haxton Equuscorp Pty Ltd (2012) 246 CLR 498 at [30], where their Honours stated the correct approach for determining a claim of unjust enrichment in terms of a claim for money had and received in the following way: "In David Securities Pty Ltd v Commonwealth Bank of Australia [(1992) 175 CLR 353], this Court explained the part played by unjust enrichment in a claim for money had and received (in that case for recovery of a payment made under mistake of law). That explanation may be expressed, at a fairly high level of abstraction, as an approach to determining such claims. In summary: • recovery depends upon enrichment of the defendant by reason of one or more recognised classes of "qualifying or vitiating" factors; • the category of case must involve a qualifying or vitiating factor such as mistake, duress, illegality or failure of consideration, by reason of which the enrichment of the defendant is treated by the law as unjust; • unjust enrichment so identified gives rise to a prima facie obligation to make restitution; • the prima facie liability can be displaced by circumstances which the law recognises would make an order for restitution unjust."
2. But their Honours noted in the same paragraph that the factors that will be considered "qualifying or vitiating" so that retention of money becomes unjust have not been exhaustively defined: "It does not, however, exclude the emergence of novel occasions of unjust enrichment supporting claims for restitutionary relief. It has been said of Lord Mansfield's judgment in Moses v Macferlan that it was his view that "the grounds for obtaining relief in money had and received were not to be considered static and the remedy could be made available in any case in which money had been paid in circumstances where it was unjust for the defendant to retain it." Nor is the emergence of general principle precluded when "derived from judicial decisions upon particular instances". These appeals, however, focus upon the particular category of case involving "failure of consideration"." (Citations omitted).
3. The relevant circumstances that Mr Sturesteps pleads are stated in FASC, para 48. They are that Mr Sturesteps: "(a) relied upon Mr Khoury from 11 April 2003 until 8 December 2011, when Mr Khoury's retainer was terminated, as the sole or principal source of Mr Sturesteps' awareness of his rights to apply to have costs claimed by Mr Khoury assessed and reviewed by an independent costs assessor and review panel under the 1987 Act in a timely manner in accordance with the statutory criteria specified in Part 11 of the Act for such assessment and review; (b) relied upon Mr Khoury's advice about the terms of the 1987 Act and purported disclosures of matters relating to costs under Part 11 of the Act to pay the costs claimed in the bills of costs in an amount well exceeding the amount or amounts which would have been recoverable by Mr Khoury under Part 11 of the Act upon assessment and review of the costs had Mr Sturesteps exercised his rights under Part 11 to assessment and review in a timely manner is accordance with the time limitations specified in the Act and regulations made thereunder; (c) was only disabused as to his true rights under Part 11 of the Act long after the statutory time allowed for seeking such assessment and review, namely, 12 months after delivery of each bills of costs (see reg. 45(1)(d)), in consequence of the fact that Mr Khoury's retainer subsisted for a period of 7 ½ years, Mr Sturesteps relied on Mr Khoury relevantly as referred to in subparagraphs (a) and (b) above, and Mr Sturesteps had to wait another 12 month period after the termination of Mr Sturesteps' retainer of Mr Khoury to recover his files from Mr Khoury and provide it to his new lawyers to obtain advice about his true rights; (d) cannot now exercise any rights of assessment and review of the costs paid to Mr Khoury under the mistakes referred to in paragraphs 36-38 because he is out of time to do so under the 1987 and regulations thereunder (particularly reg. 45(1)(d)) unless the Court grants relief being restitution for unjust enrichment".
4. Whether there are relevant qualifying or vitiating factors here is a matter for trial. The circumstances set out in FASC paragraph 48 could arguably qualify as "qualifying or vitiating" so that retention of the allegedly overpaid amounts by Mr Khoury, or in the alternative by the Company, could be considered unjust. The pleaded circumstances go to showing that the plaintiffs made the overpayments and failed to seek an assessment while operating under a mistake, a mistake under which it can be said the defendants ought reasonably to have known that the plaintiffs were operating. The defendants' submission for summary dismissal or strike out on this basis fails. The defendants will be able to pursue these arguments at trial.

Issue 2(f): Whether The Sturesteps May Seek Restitution From The Defendants Of Amounts That Mr Sturesteps Paid Directly To Counsel

1. The defendants submit that any claim by Mr Sturesteps in restitution in respect of payments made directly to counsel lies against those counsel as payees, and cannot in law be made against Mr Khoury or the Company, as they were not the payees. Mr Sturesteps has identified 21 payments that he made between 15 May 2008 to 12 December 2012 directly to counsel. Those payments amount to $719,720.84. On this basis the defendants submit that the total amount Mr Sturesteps seeks relief for in equitable compensation cannot amount to $2,770,578.08, but should at least be reduced to $2,050,857.24. In its current form, the defendants submit, the FASC is fundamentally flawed.
2. The plaintiffs' response to this persuasive, and should be dealt with at trial. The plaintiffs submit that their constructive receipt case, noted in relation to Issue 2(a) above, applies with equal force to payments made directly to counsel. Mr Sturesteps had no retainer agreement or contractual relationship with counsel, and owed them no costs. The amounts paid directly to counsel were to offset amounts (at least alleged to be) owed by the Sturesteps to one or other of the defendants. The plaintiffs draw the analogy between payments made directly to counsel and payments made by the principal (A) on a construction contract paying a subcontractor (C) directly what A in fact owes to the head-contractor (B) in order that the subcontractor be paid. A's payment has the effect of extinguishing its debt owed B, by directly extinguishing the matching debt that B owes to C. In that circumstance, although B never receives money it does receive the benefit of the extinguishment of its debt to C. It is the Sturesteps' case that a benefit B indirectly derives from A, if accrued unjustly, can be the subject of an unjust enrichment claim by A against B.
3. In argument the defendants limited the scope of their attack upon the Sturesteps' restitutionary claim to deny restitution of any payments made to counsel pursuant to bills of costs given to the plaintiffs after 8 December 2010. That date is a year prior to the date of a letter sent by Mr Sturesteps to Benjamin & Khoury in 2011 in which he states that he was terminating the firm's retainer. That letter stated in part as follows: "I hereby dispute the efficiency [sic] of the deed dated 20th June 2011 and reserve my legal rights to have all the legal costs, disbursements, expenses and Counsel fees that I Have been charged since your firm was retained assessed through the Supreme Court of New South Whales [sic]". That letter, the defendants submit, indicates that the Sturesteps were in fact aware of their rights to obtain a costs assessment at least as at 8 December 2011. That being so, the defendants submit that they must have known that they could apply for an assessment of any bills of costs given to them within the previous 12 month period that they had paid, pursuant to Legal Profession Regulations, reg 52. Thus the defendants put that as a matter of law Mr Sturesteps may not claim restitution on the basis of a mistake of fact or law in relation to payments made of bills given after 8 December 2010, the latest date which is 12 months before he was manifestly aware of his rights to assessment.
4. But the Sturesteps' answer to this is persuasive. This is a matter for trial. The Sturesteps submit that the defendants' actions meant that it was not possible as at 8 December 2011 even to begin the assessment process, because that would have required Benjamin & Khoury to have lodged bills in assessable form. Mr Sturesteps only ever possessed bills in summary form, which would not be assessable. The plaintiffs point to the letter that their new solicitor, Shana Radnan, sent to Benjamin & Khoury on 8 December 2011 which stated that: "Our clients dispute the efficacy of the [20th June 2011] deed and claim that you are inter alia in breach of your continuing disclosure obligations under the LPA 2004 Part 3.2 Division 3 as well as responsible for gross overcharging. As such our clients expect that you immediately submit all the bills for both of their matters in for assessment with the Supreme Court of New South Wales."
5. The Sturesteps claim that they only received their file from Benjamin & Khoury, which would be necessary for an assessment, in December 2012, and the parties agree that the complete bills were never lodged for assessment. So despite having become disabused of their pleaded belief, that they did not have a right to assessment, the defendants' actions in failing to lodge bills in assessable form put the Sturesteps in a position where they could not rectify their situation.
6. I accept the plaintiffs' contention that it is arguable for these reasons that they should not be barred from having restitution of the amounts paid to counsel after 8 December 2010. Issues of both fact and law remain in contention in relation to this issue. It is not appropriate for this part of the pleading to be summarily dismissed.

Issue 3: Whether Certain Allegations Have Any Connection With The Relief Sought

1. The defendants submit that the Sturesteps' pleadings generally are framed inappropriately, without adequately linking the relief they claim to the material facts that they plead. In particular, they allege the following deficiencies in the FASC: 1. Paragraphs 6 and 7 plead 21 express terms and an implied term of which no breach is pleaded; 2. Paragraphs 8 to 13 plead that provisions of the costs agreement are void by operation of Legal Profession Act, s 189(2). But no relief is claimed with respect to this. 3. Paragraphs 14 to 21 plead that the costs agreement is non-compliant with the Legal Profession Act. Paragraphs 20 and 22 assert (incorrectly, in the defendants' submission) that Legal Profession Act, s 182(2) renders certain provisions of the costs agreement unenforceable. But no relief is claimed with respect to this. 4. Paragraphs 23 to 29 plead that Mr Khoury invalidly assigned the costs agreement to the Company. In their submissions the plaintiffs stated that their case against the Company is only maintained "if the Court finds a novation or assignment of the benefit of the retainer agreement": but this consequence is not pleaded in the FASC.

Issue 3(1): Failure To Plead Breaches Of Alleged Contractual Terms

1. In relation to the first issue, the Sturesteps have chosen not to plead breaches of all the terms of the costs agreement. Of the 13 clauses and one implied term that the Sturesteps have pleaded in paragraphs 6 and 7, they have claimed relief to declare all but four of those clauses unjust, unenforceable and to have them set aside: the exceptions being clauses: clauses 14, 16, 22 and the pleaded implied term. Those clauses that are connected to the relief claimed, despite no breach being pleaded, need not be struck out as they are pleaded as relevant material facts.
2. Clause 14 is relevant to the GST issue, Issue 6 in these reasons. Clauses 16 and 22 relate to the making of complaints and the severability of the costs agreement. The implied term is to the effect that Mr Khoury would only perform and charge for reasonably necessary work. The relevance of the other clauses has not been established but they can be left in the pleading as background to the content of the costs agreement.

Issue 3(2): Pleadings of Avoidance Due to s 189(2) of the Legal Profession Act

1. It is true that no relief is sought in the FASC which specifically refers to avoidance of the costs agreement under Legal Profession Act, s 189. But the relief claimed does refer to avoidance of the costs agreement. That is sufficient.

Issue 3(2) and 3(3): Pleadings of Unenforceability Due To s 189 of the Legal Profession Act

1. Legal Profession Act, s 182 provides for the consequences of a failure by a barrister or solicitor to make a costs disclosure to a client of the type required by Part 11 Division 2 of the Act, "Legal Fees and Other Costs - Disclosure of Matters Relating to Costs". The section provides as follows: "182 Effect of non-disclosure of matters related to basis of costs (1) If a barrister or solicitor fails to make a disclosure to a client in accordance with this Division of the matters required to be disclosed by section 175 in relation to costs, the client need not pay the costs of the legal services unless the costs have been assessed under Division 6. (2) A barrister or solicitor who fails to make a disclosure in accordance with this Division of the matters required to be disclosed by section 175 or 176 in relation to costs may not maintain proceedings for the recovery of the costs unless the costs have been assessed under Division 6. (3) The costs of any assessment referred to in this section (including the costs of the costs assessor) are payable by the barrister or solicitor seeking to recover costs. (4) Any failure referred to in this section does not of itself amount to a breach of this Act. However, the failure is capable of being unsatisfactory professional conduct or professional misconduct."
2. The Sturesteps allege at FASC, paragraphs 15 to 21 that the costs agreement Mr Khoury provided failed to disclose to the Sturesteps various matters required under Part 11, Division 2. The pleading claims, as a consequence of those alleged disclosure failures, that by reason of s 182(1) Mr Sturesteps was never obliged to pay Mr Khoury costs, as the costs had not been assessed, and that provisions of the costs agreement were arguably contrary to the Division 2 disclosure requirements and were therefore unenforceable under s 182(2). The paragraphs of the FASC that plead this claim provide as follows: "15 The costs agreement, insofar as it purported to make disclosure, failed to make disclosure of the matters relating to costs required to be disclosed under Division 2 of Part 11 of the 1987 Act in the following respects, namely; (a) Mr Sturesteps' rights under Division 6 in relation to an assessment and review of costs, as required by s.175(2)(d) of the Act, and in contravention of that provision, on the grounds that: (i) clause 11 of the costs agreement, by deeming bills of costs to be correct for the purposes of the Act if not queried or objected to within 30 days of receipt, as referred to in paragraph 6(h) above, is contrary to s. 199 of the Act and reg. 52; (ii) clause 11 of the costs agreement, insofar as it provides that the only right of review available after 30 days has elapsed after delivery of a bill is by Mr Khoury and is only available in his absolute discretion, as referred to in paragraph 6(i) above, it is contrary to s. 199 of the Act and reg. 52; (iii) insofar as clause 15 of the costs agreement provides that there is no right of assessment or review of costs in certain circumstances where there is a compliant costs agreement, it is contrary to ss. 199 and 208C of the Act and reg. 52; (b) Mr Sturesteps' rights under Division 4 of Part 11 of the Act in relation to his receipt of bills of costs, as required by s.175(2)(e) of the Act, and in contravention of that provision, on the grounds that: (i) clause 9 of the costs agreement, making the issue of bills of costs at the discretion of Mr Khoury prior to, and upon, completion of the retainer, and giving only a right to receive interim bills of costs as the basis for creating a liability for costs, as referred to in paragraphs 6(d) and 6(e) above, is contrary to sections 192 and 193, making liability for costs conditional upon the issue of bills of costs in a form approved by reg. 45; (ii) clause 9 of the costs agreement, insofar as it makes costs payable 14 days after delivery of the bills of costs, as referred to in paragraph 6(f) above, is contrary to s. 192 of the Act, precluding costs from becoming payable until at least 30 days has elapsed since delivery of the bills of costs to the client. 16. Section 177(1) of the 1987 Act required Mr Khoury to disclose to Mr Sturesteps, in accordance with Part 11 Division 2, an estimate of the likely amount of costs of the legal services to be provided under the retainer agreement, because the total amount of costs was not disclosed under s.175 of the Act. 17. Mr Khoury made no disclosure of estimated costs as required by s. 177(1) of the Act, and in cl. 8(d) of the costs agreement he sought to justify such non-disclosure on the ground that, "due to the uncertainty as to the scope of the future work, renders an estimate of dubious value [sic]", and promised to give advice as to when the past costs incurred had reached $10,000 but declined to give any costs estimate at all. 18. Mr Khoury's failure to give an estimate of the costs of performing the retainer before he undertook the provision of legal services to Mr Sturesteps under the retainer agreement constituted a contravention of s.177(1) of the 1987 Act. 19. Mr Khoury was obliged to give disclosure of the matters specified in ss.175 and 177 of the Act before he was retained to provide legal services, that is, before the retainer agreement was made on 11 April 2003, because it was reasonably practical to do so, and alternatively, if not so reasonably practical, then as soon as practical thereafter, and at the very latest, that same day, pursuant to s.178 of the 1987 Act. 20. Mr Khoury's contraventions of sections 175, 177 and 178 of the 1987 Act referred to in paragraphs 15-19 above had the effect of excusing Mr Sturesteps from his obligation under the costs agreement to pay costs claimed from him in Mr Khoury's bills of costs unless and until those costs have been assessed by a costs assessor under Part 11, Division 6, in consequence of the operation of s. 182(1), of the Act. 21. Mr Khoury's contraventions of sections 175, 177 and 178 of the 1987 Act, referred to in paragraphs 15-19 above, also precluded Mr Khoury from having a right to maintain any proceedings for the recovery of his costs unless the costs have been assessed under Part 11, Division 6, in consequence of the operation of s. 182(2), of the Act. 22. The consequences of the non-disclosures referred to in paragraphs 20 and 21 above, being consequences which arise pursuant to s. 182(2) of the 1987 Act have the effect of rendering unenforceable the following provisions of the costs agreement, namely: (a) clause 9 making costs payable within 14 days of delivery of bills of costs, as referred to in paragraph 6(f) above; (b) clause 11 making the amount of costs billed correct, in the sense of being conclusive, if not objected to within 30 days of delivery as referred to in paragraph 6(h) above; (c) clause 11 making review of the costs billed within the absolute discretion of Mr Khoury unless objected to within 30 days of delivery as referred to in paragraph 6(i) above; (d) clause 15 providing for no right of assessment or review of costs in certain circumstances where there is a compliant costs agreement, as referred to in paragraph 6(o) above; and (e) clause 19 providing for Mr Sturesteps to be liable for costs if sued for them on an "account stated" basis, as referred to in paragraph 6(s) above."
3. The relevant costs disclosure provisions of the Legal Profession Act 1987 that the Sturesteps plead that the costs agreement contravened, are as follows: "175 Obligation to disclose to clients basis of costs (1) A barrister or solicitor must disclose to a client in accordance with this Division the basis of the costs of legal services to be provided to the client by the barrister or solicitor. (2) The following matters are to be disclosed to the client: (a) the amount of the costs, if known, (b) if the amount of the costs is not known, the basis of calculating the costs, (c) the billing arrangements, (d) the client's rights under Division 6 in relation to a review of costs, (e) the client's rights under Division 4 to receive a bill of costs, (f) any other matter required to be disclosed by the regulations. (3) The disclosure to a client is not required to be made by a barrister or solicitor who is retained on behalf of the client by another barrister or solicitor. However, the disclosure to the client is to include the costs of the barrister or solicitor so retained. 177 Obligation to disclose estimated costs (1) A barrister or solicitor must disclose to a client in accordance with this Division an estimate of the likely amount of the costs of legal services to be provided to the client by the barrister or solicitor, if the amount of the costs is not disclosed under section 175. (2) A barrister or solicitor who is retained on behalf of a client by another barrister or solicitor must disclose to that other barrister or solicitor in accordance with this Division an estimate of the likely amount of the costs of legal services to be provided to the client by the barrister or solicitor, if the amount of the costs is not disclosed under section 176. (3) A barrister or solicitor who has disclosed to a person an estimate of the likely amount of the costs of legal services is to disclose to that person any significant increase in that estimate. 178 When disclosure to be made (1) A disclosure under this Division is to be made before the barrister or solicitor is retained to provide the legal services concerned, unless this section otherwise provides. (2) If it is not reasonably practicable to make the disclosure before the barrister or solicitor is retained, the disclosure is to be made as soon as practicable after the barrister or solicitor is so retained. (3) A disclosure under this Division to a client as to the costs of a barrister or solicitor who is retained on behalf of the client by another barrister or solicitor is to be made as soon as practicable after the other barrister or solicitor becomes aware of the costs. (4) A disclosure under this Division as to any significant increase in the estimated costs of legal services is to be made as soon as practicable after the barrister or solicitor becomes aware of the likely increase in costs. 192 Bill of costs to be given before costs can be recovered from client (1) Proceedings for the recovery of costs by a barrister or solicitor for providing legal services must not be commenced or maintained against any person unless at least 30 days have passed since a bill for those costs was given to the person in accordance with this Division. (2) The Supreme Court may make an order authorising a barrister or solicitor to commence or maintain proceedings against a person sooner, if the Supreme Court is satisfied that the person is about to leave New South Wales. 193 Form of bill of costs (1) The regulations may make provision for or with respect to the form of, and the particulars to be included in, bills of costs. (2) A bill of costs may be described as a memorandum of fees or in any other way authorised by the regulations. 199 Applications by clients for assessment of costs in bills (1) A client who is given a bill of costs may apply to the Manager, Costs Assessment for an assessment of the whole of, or any part of, those costs. (2) An application relating to a bill of costs may be made even if the costs have been wholly or partly paid. If the costs have been wholly or partly paid, the application is to be made within the period prescribed by the regulations for the purposes of this subsection. (3) If any costs have been paid without a bill of costs, the client may nevertheless apply for an assessment. For that purpose the request for payment by the barrister or solicitor is taken to be the bill of costs. (4) In this section, client includes: (a) any person who is a party to a costs agreement relating to legal services for which the bill of costs is given (other than the barrister or solicitor who gave the bill or provided the services), and (b) any person, being a lessee under a lease, who is given a bill of costs, concerning legal services relating to the preparation of that lease, by a barrister or solicitor acting on behalf of the lessor, and (c) any person, being a mortgagor under a mortgage, who is given a bill of costs, concerning legal services relating to the preparation of that mortgage, by a barrister or solicitor acting on behalf of the mortgagee. 208C Costs agreements not subject to assessment (1) A costs assessor is to decline to assess a bill of costs if: (a) the disputed costs are subject to a costs agreement that complies with Division 3, and (b) the costs agreement specifies the amount of the costs or the dispute relates only to the rate specified in the agreement for calculating the costs. (2) If the dispute relates to any other matter, costs are to be assessed on the basis of that specified rate despite section 208A. The costs assessor is bound by a provision for the payment of a premium that is not determined to be unjust under section 208D. (3) This section does not apply to any provision of a costs agreement that the costs assessor determines to be unjust under section 208D. (4) This section does not apply to a costs agreement applicable to the costs of legal services if a barrister or solicitor failed to make a disclosure in accordance with Division 2 of the matters required to be disclosed by section 175 or 176 in relation to those costs."
4. The Sturesteps also plead that certain provisions in the costs agreement breached Legal Profession Regulations, reg 53, which provides: 53 Form of, and fee for, application for assessment of bill of costs (1) For the purposes of section 203 (1) of the Act, an application for assessment (other than an application for assessment of party/party costs under section 202 of the Act) by the client is to be made in the approved form. (1A) For the purposes of section 203 (1) of the Act, an application for assessment (other than an application for assessment of party/party costs under section 202 of the Act) by a person other than the client is to be made in the approved form. (1B) The application is to be made to the Manager, Costs Assessment in triplicate. (2) For the purposes of section 203 (1) of the Act, the prescribed fee that is to accompany such an application is the greatest of the following amounts: (a) $100, (b) 1 per cent of the amount remaining unpaid on the bill of costs at the time the application is made, (c) 1 per cent of the amount of costs in dispute at the time the application is made. (3) For the purposes of this clause, the amount of costs in dispute is the total amount of costs for those legal services in respect of which the costs claimed are disputed by the person liable to pay them."
5. In my view the plaintiffs' pleading of this part of their case is quite adequate and should enable the defendants to understand the case against them. And Exhibit 3, the final version of the FASC does include a claim for a declaration that certain clauses of the costs agreement were unenforceable under Legal Profession Act, s 182(2).

Issue 3(4): Pleadings as to the Validity of the Assignment of the Costs Agreement

1. Mr Sturesteps seeks in prayer 4 as an alternative to the relief sought from Mr Khoury in prayer 3, that the Company pay to him $721,915.36. The Sturesteps put this alternative claim on the sole basis that the costs agreement between the plaintiffs and Mr Khoury was validly assigned or novated to the Company, contrary to their main contentions. Those contentions regarding the validity of the assignment or novation of the Costs Agreement by Mr Khoury's 30 June 2003 letter are set out above. But the defendants complain that the Sturesteps have not pleaded the consequence that the alternative claim against the Company is only made, if the assignment or novation is found to be valid.
2. The relevant pleadings are at paragraphs 23 to 29 of the FASC. Those paragraphs plead three alternative allegations: (1) that the 30 June 2003 letter operated to inform Mr Sturesteps that his retainer with Mr Khoury would continue, but that Mr Khoury would delegate the task of performing legal services for Mr Sturesteps to the Company; (2) that if the 30 June 2003 letter did bind Mr Sturesteps to deal with the Company, that it is unjust within the meaning of the Legal Profession Act, s 208D or Contracts Review Act, s 7; or (3) that the 30 June 2003 letter failed to effect the novation or assignment of the Retainer and Costs Agreements, or the new creation of such agreements.
3. But it is quite sufficient that these claims be pleaded "in the alternative". And the present argument on these motions makes very clear that the relief sought against the Company is only sought in the alternative to the principal claim that is made.

Issue 4: Claims Concerning Deeds

1. In May 2011, Benjamin & Khoury was still providing legal services to the Sturesteps in respect of the HIH proceedings. The litigation had by then been the subject of three judgments of Brereton J, and was in the process of being appealed. But the Sturesteps were behind in their payments of the law firm's invoices.
2. On 6 May 2011, Mr Khoury required that the Sturesteps make "satisfactory arrangements" to pay all outstanding and future legal costs before their pending appeals to the Court of Appeal were heard. Mr Khoury informed the Sturesteps that otherwise, Benjamin & Khoury would terminate both their retainer agreements with the Sturesteps and the briefs of the Sturesteps' counsel.
3. Subsequently, Mr Khoury specified that the Sturesteps would have to execute a deed of agreement with the Company. Under the deed, the Sturesteps would firstly acknowledge their indebtedness to the Company for outstanding legal costs incurred under the Legal Profession Act 2004 ("the 2004 Act") in an amount of $424,835.28. Secondly, they would acknowledge that they were "sophisticated clients" for costs disclosure purposes under the 2004 Act, disentitling them to receive any disclosure of the costs of the Company's future services. Thirdly, they would agree to make a lump sum costs arrangement with the Company for all future legal services. Fourthly, they would to agree to waive all their rights to disclosure of costs as clients under the 2004 Act, s 333, including rights to assessment of any costs payable to Benjamin & Khoury under the 2004 Act. Finally, the couple would agree to grant an equitable charge over a Melbourne property owned by Mrs Sturesteps by a collateral deed securing their indebtedness under the proposed agreement.
4. On 20 June 2011, the Sturesteps allege that they and the Company entered into a deed of agreement on Mr Khoury's required terms ("the Deed of Agreement") and a collateral deed of equitable charge over land securing their consequent debt to the Company ("the Deed of Equitable Charge") (collectively "the Deeds"). It is alleged the Sturesteps received independent legal advice from their own solicitor in Melbourne before signing the Deed of Agreement.
5. The defendants raise several issues with the plaintiffs' pleadings in relation to the Deeds: 1. the Sturesteps plead relief in relation to the Deed of Equitable Charge, a document which the defendants say does not exist; 2. Mrs Sturesteps seeks relief concerning the Deed of Agreement, but on the face of the deed she is not a party to it; 3. The Sturesteps are beyond the statutory time limit contained within the Contracts Review Act 1980 to make a claim under that Act in relation to the Deed of Agreement; and 4. The Sturesteps' pleading that the Deed of Agreement was entered into under duress is not maintainable because it cannot succeed in law, is embarrassing as a pleading and cannot succeed on the filed evidence; 5. The Sturesteps' pleading that the Deed of Agreement was entered into under undue influence or actual undue influence cannot succeed on the evidence; 6. The Sturesteps' claims under Australian Consumer Law (NSW), s 18 that the defendants engaged in misleading or deceptive conduct when negotiating the Deeds is insufficiently pleaded; 7. The Sturesteps' pleading of mistake in relation to the Deeds is not pleaded properly; and 8. The Sturesteps' pleadings that Mr Sturestep paid Mr Khoury $300,000 under the Deed, and that Mr Khoury must give restitution of such amount, are not maintainable.
6. These reasons will now deal with each of these issues in turn.

Issue 4(a): Whether The Plaintiffs May Plead Relief In Relation To The Deed Of Equitable Charge

1. Under the Deed of Agreement, cl 9 Mr Sturesteps agreed to grant a mortgage over his wife's Melbourne property in favour of the Company to secure the amounts payable under the Deed of Arrangement. Clause 10 of the Deed of Agreement stated that a copy of the Deed of Equitable Charge was annexed at "C".
2. The defendants say that it is common ground between the parties that the Deed of Equitable Charge does not exist. They say therefore that any claims for relief should be struck out to the extent that they are made in relation to the non-existent Deed. Mr Sturesteps in his affidavit of 1 September 2014 states that as far as he is aware, no Deed of Equitable Charge was ever annexed to the Deed of Agreement, and he never executed such a deed. But the non-existence of the Deed of Equitable Charge is not firmly established and the Sturesteps claim that the defendants relied upon the Deed of Equitable Charge to support a caveat over the Sturesteps' Melbourne property. Neither party appears now to possess the Deed of Equitable Charge.
3. The plaintiffs seek relief in relation to the Deeds, including the Deed of Equitable Charge: a declaration that the Deeds are void or voidable, alternatively that they are unjust under the Contracts Review Act or Fair Trading Act, and additionally an order setting aside the Deeds.
4. The possible existence of the Deed of Equitable Charge may be inferred from the Deed of Agreement, which the defendants themselves authored and executed. As the defendants' own Deed of Agreement refers to the Deed of Equitable Charge, whilst the parties are at issue as to the possibility of the existence of the latter Deed, it is premature to strike out the claims for relief in relation to that Deed on the basis that it does not exist. This is a matter for trial. The defendants may conduct their defence at trial on the basis that the Deed of Equitable Charge does not exist and was never executed, but that should not preclude the plaintiffs from alleging the existence of that document based on the defendants' own document and claiming relief in relation to it, should it be found to exist. The issue is one that can only be resolved at trial.

Issue 4(b): Whether Mrs Sturesteps may seek relief concerning the Deeds

1. Although Mrs Sturesteps is a party to these proceedings, the only claims for relief which she personally seeks are those in relation to the Deeds. The defendants claim that Mrs Sturesteps is not a party to the Deed of Agreement and so, as a matter of privity of contract, has no basis to seek relief concerning the Deed. Moreover, they claim that the plaintiffs have pleaded no material facts which bring Mrs Sturesteps into the case in any way.
2. The plaintiffs say in response that Mrs Sturesteps has a right to claim relief concerning that Deeds firstly because the Deeds were for the mutual benefit of both Mr and Mrs Sturesteps, and secondly because Mr Sturesteps executed the Deed of Agreement on behalf of both himself and his wife.
3. In relation to the first point, the plaintiffs submit that the money paid to the Company under the Deed of Agreement came from funds jointly held by Mr and Mrs Sturesteps, and that the property in Victoria secured by the alleged Deed of Equitable Charge was owned by Mrs Sturesteps, not Mr Sturesteps.
4. In relation to the second point, Mr Bevan of Counsel for the Sturesteps explained that Mrs Sturesteps had given her husband a power of attorney over her affairs prior to April 2003, when he entered the costs agreement between Mr Khoury and Mrs Sturesteps on his wife's behalf. Since then, Mr Sturesteps had given on her behalf Benjamin & Khoury instructions in relation to her litigation. When Mr Sturesteps signed the Deed of Agreement, he did so on his wife's behalf as well as his own, as this was how he had conducted the retainer with Benjamin & Khoury, over some eight and a half years.
5. The material facts that the plaintiffs rely upon as the basis for Mrs Sturesteps' entitlement to make her claims for relief are not currently clear in the FASC. It sounds from the way that argument is put that some kind of agency based on the power of attorney is relied on: if so that can and should be pleaded. And such agency may arguably be inferred in relation to the Deed of Equitable Charge (if it is found to exist) in relation to the property allegedly being charged that was in Mrs Sturesteps' name.
6. The FASC is currently inadequate in that respect. The Sturesteps should redraft their pleadings to make clear the material facts that have now been identified in submissions and that will allow Mrs Sturesteps to claim relief in relation to the Deed of Agreement, an agreement to which, on its face, she is not a party.

Issue 4(c): Whether the Claims For Relief Under the Contracts Review Act Are Out Of Time

1. The Sturesteps seek a declaration that the Deeds are unjust within the meaning of the Contracts Review Act, and ask the Court to exercise its discretion to set aside the Deeds on that basis. The Court may declare an agreement unjust after having regard to the public interest and to all the circumstances of the case, including such consequences or results that would arise in the event of compliance or non-compliance with the agreement: Contracts Review Act, s 9(1). The Court must also have regard to various particular circumstances to the extent that they apply in the given case: Contracts Review Act, s 9(2). Where the Court finds an agreement to have been unjust in its original circumstances, the Court has discretion to declare the agreement void, among other powers: Contracts Review Act, s 7.
2. The defendants submit that the Sturesteps' Contract Review Act claims should be struck out on two bases: (1) the pleading is wholly inadequate to found a claim for relief under that Act; and (2) the Court no longer has jurisdiction to entertain any claim under the Act in relation to either Deed due to the plaintiffs' delay in commencing proceedings, beyond the time period that s 16 of the Act, limits for making applications for relief.
3. (1) Adequacy of the Contracts Review Act pleading. The defendants submit that the Sturesteps' pleading is inadequate because it fails sufficiently to identify the facts that are said to make the Deeds unjust. The defendants complain that the FASC does not specify how the circumstances relating to the Deeds at the time they were made join with each of the grounds listed in subparagraphs (a) to (l) of Contracts Review Act, s 9(2). But FASC, para 56 does sufficiently plead grounds upon which the plaintiffs say the Deeds were unjust. Those grounds are: (1) that the Deeds were founded upon two false premises, the first that the Legal Profession Act 2004 rather than the Legal Profession Act 1987 determined the parties' rights and obligations, and the second that the plaintiffs had now retained the Company rather than Mr Khoury to provide legal services; (2) that the Deeds were the product of undue influence by Mr Khoury because he was in a presumed relationship of undue influence with the Sturesteps as their solicitor; (3) that the Deeds were the product of duress because the Sturesteps had no real alternative to entering into the Deeds due to Mr Khoury's threat to withdraw the support of Benjamin & Khoury and the support of counsel in the circumstances of the Sturesteps' closely impending appeals; and (5) that the Deeds were the product of Mr Khoury's misleading and deceptive conduct acting as the solicitor director of the Company. Paragraph 56(e) also asserts that the Deeds were unjust under the Contracts Review Act, but does not itself provide basis to a material explain why the Deeds are alleged to be unjust.
4. Paragraph 56 does plead material facts. These are sufficiently identified for the Court to take them into consideration when assessing whether the Deeds were unjust. Those facts have superadded to them some conclusions of law. But the underlying material facts are there in the text of the paragraph. They may be the subject of a request for further particulars should the defendants choose to issue such a request. But such requests are not to be encouraged in a case with the procedural history of this one. Moreover, the pleaded facts are not so inadequate as to require that the pleading should be struck out on that basis. Having pleaded the material facts upon which they will rely, the plaintiffs are not obliged to specify the particular subparagraphs of Contract Review Act, s 9(2) which they say the Court must consider in coming to that determination. The precise categorisation of the pleaded material facts within s 9(2) is a matter for submissions at trial.
5. (2) Contracts Review Act pleading out of time. The defendants' second submission is: that the Sturesteps are out of time to bring the Contract Review Act claim under s 16(b); that the Court therefore has no jurisdiction to hear the claim; and that the claim must be struck out. Section 16 provides as follows: "16 Time for making applications for relief An application for relief under this Act in relation to a contract may be made only during any of the following periods: (a) the period of 2 years after the date on which the contract was made, (b) the period of 3 months before or 2 years after the time for the exercise or performance of any power or obligation under, or the occurrence of any activity contemplated by, the contract, and (c) the period of the pendency of maintainable proceedings arising out of or in relation to the contract, being proceedings (including cross-claims, whether in the nature of set-off, cross-action or otherwise) that are pending against the party seeking relief under this Act."
6. The Deed of Agreement contemplates that Mr Sturesteps would pay the Company two sums: the first sum of $400,000 for past professional costs due and owing and the second a sum of $125,000 as a further retainer. Those amounts were said to be due and owing 14 days after the completion of the hearing of the Sturesteps' appeal proceedings on 9 August 2011. The exercise of the obligation to pay would therefore be due on 23 August 2011. In fact, Mr Sturesteps made a payment of $300,000 to the Company in November 2011. The Sturesteps brought these proceedings in January 2014. The defendants therefore argue that the proceedings were brought two months after the two year Contracts Review Act period from the exercise of the Deed had expired in November 2013, and so the Court has no jurisdiction to hear the Contracts Review Act claim.
7. The Sturesteps' submission is that the Contracts Review Act, s 16(b) limitation period did not close in November 2013, but rather runs much longer. The Deed of Agreement created an obligation to pay $525.000. The plaintiff's response to the list of issues says that obligation is to pay $424,835.28 but that contention does not take into account the discount of $24,835.28 and retainer amount of $125,000, provided for in the Deed of Agreement. Mr Sturesteps paid $300,000 under the Deed. Therefore $125,000 remains outstanding as a debt to the Company. Because the parties' agreement takes the form of a deed, the Company retains the right to sue for the debt for 12 years from the date that right first accrued: Limitation Act 1969, s 16. The time for payment under the Deed, as noted above, was 23 June 2009: 14 days after the hearing of the Sturesteps' appeal proceedings. The Company therefore retains a right to sue for 12 years from that date upon which its cause of action accrued, that is, until 23 June 2021. The Sturesteps submit that the Contracts Review Act, s 16(b) limitation period would only expire two years after the last day upon which Mr Sturesteps' obligation to pay could be exercised, in the sense of being required to be exercised at the suit of the Company. The relevant date would therefore be 23 June 2023, making the Sturesteps plainly within time for bringing the claim.
8. Additionally, the Sturesteps rely upon Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533 [31] ("Wardley") for the proposition that the Court should not strike out the claim based upon a limitation point, this not being in the class of "the clearest of cases" which would merit summary disposal.
9. In rejoinder to this the defendants refer the Court to an extract of the late Professor John Peden's work, J Peden, The Law of Unjust Contracts (1982, Butterworths), which weighs against the Sturesteps' argued operation of Contracts Review Act, s 16(b). As enacted, the Contracts Review Act is close in form to the original draft text that the late Professor John Peden recommended to the New South Wales Government in 1976, but with a narrower scope: J Goldring, JL Pratt & DEJ Ryan "The Contracts Review Act (NSW)" (1980) 4 UNSWLJ 1 at 3. The defendants submit that Professor Peden explained the operation of the Act's limitation provision, s 16, The Law of Unjust Contracts as imposing a much shorter period of operation than the Limitation Act, because of the drastic effects of avoiding agreements, on third parties, especially in the context of land transactions. Professor Peden explains the operation of s 16(b), at pages 148 - 149: "The time span in period (b) applies whether or not the power has actually been exercised or the obligation performed. For example, where a contract stipulates for payment on a particular date, but default occurs, it would seem that time would run from the due date rather than a subsequent date on which payment was actually made. Conversely, the phrase "occurrence of any activity" may not be qualified by the word "time" and therefore the time would run from the actual occurrence of the activity."
10. Professor Peden's explanation for the structure of the legislation is compelling. The Sturesteps' construction of s 16(b) to allow the avoidance of the Deed of Agreement 14 years after its execution may be difficult to maintain. But in construing the section, the Court must be mindful that "a restrictive interpretation of a remedial statute of this kind, which produces anomalous and capricious results, should not be adopted, if another and wider meaning is fairly open on the language": Murphy v Overton Investments Pty Limited [2002] FCAFC 129, citing Baltic Shipping Co v Merchant "Mikhail Lermontov" (1994) 36 NSWLR 361 at 364-365 per Handley JA (with whom Kirby P and Mahoney JA agreed). But s 16(b) does express its two year time limitation to run from "the time for the exercise or performance of any power or obligation under, or the occurrence of any activity contemplated by, the contract".
11. The Sturesteps' construction of the section might perhaps require a gloss that the limitation period runs from the later of the time contemplated for or the actual occurrence of contractual activity, and a further gloss that the "time for the exercise or performance of any power or obligation" under the contract means "the latest possible time" including the time when performance is compelled by one or other party within the limitation period otherwise applicable under the Limitation Act.
12. But the limitation legal issues with the plaintiffs' Contracts Review Act claim do not fall into the Wardley category of "clearest of cases". Moreover there is material before the Court that suggests that the plaintiffs had available to them such from their solicitors less than full information, as may found an argument on the evidence for the postponing of the bar. These claims will stand.

Issue 4(d): Whether The Sturesteps' Duress Pleading May Be Maintained

1. The Sturesteps claim that the Deed of Agreement was vitiated by duress, because Mr Khoury's threat to withdraw the support of Benjamin & Khoury and counsel in the face of the Sturesteps' impending appeals left the Sturesteps with no real alternative to entering into the Deeds.
2. The only evidence filed in relation to this matter is the affidavit of Mr Sturesteps dated 13 March 2014. In the context of a summary dismissal proceeding, that evidence is to the effect that Mr Sturesteps met Mr Khoury alone in his Sydney offices in June 2011 following the 6 May 2011 letter, which stated that Benjamin & Khoury were "unable to continue to represent you in the current proceedings before the Supreme Court of Appeal unless proper and acceptable arrangements are entered into […] immediately". Mr Khoury told Mr Sturesteps at this meeting that he required a written commitment to an arrangement to satisfy his debts. Mr Khoury prepared the Deed of Agreement over the next few hours and gave it to Mr Sturesteps to sign. Mr Sturesteps read the Deed on his flight home to Melbourne. The next day, Mr Sturesteps called Mr Khoury and noted that the Deed was incorrect, as, he explained, the property to be mortgaged was registered in his wife's name only. Mr Khoury responded that this would not matter, and told Mr Sturesteps to sign the document. Without having actually received independent legal advice, Mr Sturesteps then signed the Deed according to Mr Khoury's instructions and sent Mr Khoury a copy of it by fax.
3. On 27 June 2011 Mr Khoury sent a letter to Mr Sturesteps enclosing the executed deed. That 27 June letter states, "We confirm that, in accordance with our discussions with you last week you had sought and obtained independent legal advice from your solicitor in Melbourne prior to executing the […] Deed of Agreement". The Sturesteps contend that this is a self-serving fabrication on Mr Khoury's part, designed to raise a possible defence to a future claim of undue influence, such as the one that they now bring. At this stage of summary consideration, it is not appropriate to seek to conclude whether that is the case: the testing of such a serious allegation of fabrication is clearly a matter for a full contest of evidence at a trial.
4. The defendants claim that the Sturesteps should not have leave to include their duress claim in the FASC for several reasons. First, the FASC does not plead the material facts that would support such a claim, only the bare assertion that the Sturesteps agreed to the Deed of Agreement under duress. Secondly, the duress claim is not properly maintainable on the facts, because the 6 May 2011 letter, upon which the Sturesteps rely, was delivered about 8 weeks before the hearing of the Sturesteps' appeals, and because the Company was merely relying upon its legal rights in requiring Mr Sturesteps to enter satisfactory arrangements with regard to his debt to the Company immediately. The defendants say in those circumstances, that the pleaded duress claim is not maintainable on the evidence.
5. The Sturesteps' reply on the issue of whether they have sufficiently pleaded the material facts for the claim. They submit: that the defendants have not requested any further particulars from them in relation to the claim; and, that the strike out application on the basis of the form of the Sturesteps' pleading is not the correct vehicle for challenging the pleading, when further particulars could have been requested.
6. The Sturesteps also rely upon the principles of summary dismissal recently reiterated in Ren v Jiang [2014] NSWCA 388 and submit that the defendants have been unable to demonstrate that the duress pleading would necessarily fail. In my view the plaintiffs are clearly right on the issue of the summary dismissal of this claim. The available evidence to sustain the pleading is that Mr Sturesteps acquiesced in executing the defendants' Deed because he believed he had no choice. Faced with the possibility of either making a new costs arrangement with Mr Khoury or risking an unrepresented appearance in a complex appeal on issues of corporate insolvency, Mr Sturesteps advances evidence that he felt compelled to sign the Deed. The Sturesteps correctly submit that this suffices to meet the standard of evidence to make out duress.
7. But some duress pleading issues remain. The Sturesteps plead their duress claim in the following way at FASC, para 56(d): "The Deeds are void and of no effect, or alternatively, are voidable at the election of the Sturesteps, on the following grounds: … (d) The Deeds are the product of duress in that the Sturesteps were given no real alternative to entering into the Deeds because Mr Khoury had threatened to withdraw his legal services and those of Counsel before the pending hearing of the Sturesteps' appeals from judgments of Brereton J in their proceedings against the liquidators of HIH C/G and HIH O/S leaving them with inadequate time to retain new solicitors and Counsel to properly conduct the appeals if the Sturesteps refused to enter into the Deeds as drafted by Mr Khoury".
8. Mr Bevan's argument for the Sturesteps that, because the defendants have not requested further particulars of the duress claim, they cannot now say that it is insufficiently pleaded, is not persuasive. A party's pleadings and particulars serve different purposes. Where a pleading lacks the requisite material facts, the appropriate response is not to cure that deficiency through the provision of particulars, but rather to amend the pleading itself. As Johnson J put it in McGuirk at [33]: "Although the pleading of a conclusion may, in some circumstances constitute a material fact, nevertheless, the pleading will be embarrassing if allegations are made at such a level of generality that the defendant does not know in advance the case it has to meet. In such a case, the appropriate remedy is to strike out the pleading rather than to order the provision of particulars, as it is not the function of particulars to take the place of the necessary averments in a pleading." (Citations omitted).
9. A party's failure to request further particulars of a pleading does not preclude that party from applying to strike out that pleading on the basis that it does not state the material facts. But that just sends the analysis back to the pleading.
10. The Sturesteps' pleading identifies the relevant alleged threat by Mr Khoury: the threat to withdraw legal services. But, it does not clearly identify the basis upon which that threat is said to be illegitimate, a necessary element of a claim in duress. Although the pleading does not expressly plead the necessary causative element - that Mr Khoury's alleged threats induced the Sturesteps to enter the Deeds - the pleading must be read at a level of ordinary common sense. Causation is clearly to be inferred. The pleading alleges that the Deeds "are the product of duress". That is sufficient.
11. The proper approach to the question of duress is to consider first whether the defendants applied pressure that induced the victim to enter into the contract, and secondly whether that pressure went beyond what the law is prepared to countenance as legitimate: Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 46. But the courts have only relatively recently recognised that the concept of duress extends to contracts entered into as a result of threats, to a party's economic wellbeing, the boundaries of the law of economic duress have not been precisely determined: JW Carter, Carter on Contract (looseleaf, LexisNexis) at [23-100]. Given the fluidity of the concept of economic duress, it could not be said without further argument and consideration, that the Sturesteps' duress argument is so clearly untenable that it cannot possibly succeed. But the plaintiffs must re-plead with greater precision what conduct of the defendants is said to go beyond what the law will countenance as legitimate. This should not be difficult. But for this minor change, the Court will not dismiss this claim summarily.

Issue 4(e): Whether The Sturesteps' Undue Influence Pleading Can Succeed on the Evidence

1. The Sturesteps contend that the Deed of Agreement is vitiated by both presumed and actual undue influence. The presumed undue influence is alleged to arise from the relationship of solicitor and client, between Mr Khoury and the Sturesteps, one of a category of relationships in which equity will presume that the former party exercises dominion over the latter: Johnson v Buttress (1936) 56 CLR 113 at 119 per Latham CJ, at 134 per Dixon J (Evatt J agreeing) and at 143 per McTiernan J. The Sturesteps plead their actual undue influence claim in the FASC in a way, which mirrors their duress claim, as follows: "The Deeds are also the product of actual undue influence, in addition to the solicitor-client relationship between the parties and presumption of undue influence arising therefrom, because the Sturesteps were given no alternative to entering the Deeds in consequence of Mr Khoury's threat to terminate his retainers from them if the Deeds were not entered into, a state of affairs, if fulfilled as threatened, which would have left the Sturesteps without senior and Junior Counsel and a solicitor to conduct their forthcoming appeals from the judgments of Brereton J to the Court of Appeal and the inevitable loss of their respective appeals with significant costs orders made against them for lack of competent legal representation at the hearing of each appeal."
2. The defendants claim that Mr Sturesteps was in a position to receive advice in relation to the Deed of Agreement from his independent solicitor before signing the Deed, but did not avail himself of that possibility, and so may not now claim that Mr Khoury exercised undue influence over him and his wife.
3. The Sturesteps' presumed or actual undue influence claim should not be struck out. Whether or not such influence is either presumed or was exercised is a matter for consideration of the evidence at the trial of these proceedings. And what opportunities for independent advice the Sturesteps had and whether they were availed of, are all matters of nuance and degree that can only be judged in the light of all the evidence at trial.

Issue 4(f): Whether The Sturesteps' Misleading Or Deceptive Conduct Claim Is Sustainable

1. The Sturesteps have pleaded that the conduct of Mr Khoury, and through him the Company, was "misleading and deceptive". The pleading seems to intend the statutory term "misleading or deceptive", within the meaning of Australian Consumer Law (NSW), s 18, and Fair Trading Act 1987, s 42 (at FASC para 56(g) and 60). The Sturesteps also seek a declaration that the Deeds are 'unjust' under Fair Trading Act, s 71.
2. The Sturesteps' reliance upon those provisions of the Fair Trading Act are clearly in error, and are to be struck out from the pleading.
3. The Sturesteps' misleading or deceptive conduct Australian Consumer Law pleading takes the following form in FASC paras 56(f): "The Deeds are void and of no effect, or alternatively, are voidable at the election of the Sturesteps, on the following grounds: … (f) the Deeds are the product of misleading and deceptive conduct by Mr Khoury and, insofar as he was acting as the solicitor director of the Company, by the Company, within the meaning of s. 18 of the Australian Consumer Law (NSW); …"
4. Stevenson J's earlier decision Sturesteps v Khoury (Supreme Court (NSW), Stevenson J, 8 May 2014, unrep) stated in relation to the Sturesteps' misleading or deceptive conduct claim, which at that point was in substantially the above form: "Finally Mr and Mrs Sturesteps seek to set aside deeds that were evidently entered into with the defendants to compromise what was then a dispute as to payment of outstanding costs. The pleading simply asserts that the Deeds "were the produce of undue influence" of Mr Khoury and "misleading and [sic] deceptive conduct" (presumably allegedly engaged in by Mr Khoury). This is not an appropriate way to plead such matters. If those claims are to be persisted with, they should be pleaded fully and properly."
5. Since Stevenson J gave judgment, the Sturesteps have amended their pleadings in the form of the FASC. FASC, para 60 sets out the following additional pleading in relation to the misleading or deceptive conduct claim: "The Deeds are the product of misleading and [sic] deceptive conduct by Mr Khoury and, insofar as he was acting as the solicitor director of the Company, by the Company, within the meaning of s.18 of the Australian Consumer Law and s.42 of the Fair Trading Act, 1987, because the Sturesteps were led to believe that Mr Khoury, or alternatively, the Company, were entitled to refuse to provide them with any further legal services unless the Deeds were entered into and to leave them with inadequate time to retain new solicitors and Counsel to conduct their forthcoming appeals."
6. The defendants take two issues with this part of the pleading. The defendants say: first, that no relief is claimed in respect of the alleged breach of s 18; and secondly, that despite clarification since Stevenson J's judgment the pleading still does not identify with sufficient particularity the factual basis upon which the Sturesteps allege the breach and particularly as it involves Mr Khoury and the Company.
7. The defendant's first point is not persuasive. It is clear from the chapeau to FASC, para 56 what relief the Sturesteps intend to seek by way of their misleading or deceptive conduct claim: a declaration that the Deeds are void or voidable at their election. The Sturesteps should be given an opportunity if they wish to amend the FASC in order to better specify the relief they seek.
8. The defendants' second point has more substance. FASC, para 60 alleges that misleading or deceptive conduct was engaged in by both Mr Khoury personally and, through him, the Company. If the purpose of that pleading is to establish that Mr Khoury is personally liable for the actions of the Company due to his knowing involvement, pursuant to the principle in Yorke v Lucas (1985) 158 CLR 661, it is less than clear. The Sturesteps must decide on what basis their s 18 claim is put against the defendants, and plead it appropriately. In its current form, the material facts necessary to allege a contravention of s 18 by Mr Khoury personally are not pleaded. The plaintiffs must either allege the circumstances of Mr Khoury's knowing involvement or drop the pleading against him. But the allegations of misleading and deceptive conduct are otherwise sufficient.

Issue 4(g): Whether The Sturesteps' Mistake Claim Is Properly Pleaded

1. The Sturesteps pleading claims that the Deeds are voidable on the basis of mistake at FASC, para 62, in the following terms: "Alternatively, the Deeds are voidable at the election of the Sturesteps because their entry into them was vitiated by the mistakes referred to in paragraph 38 above, which were made by Mr Sturesteps in respect of his payment of costs to Mr Khoury or to the Company, which they both acted in reliance upon in their entry into the two Deeds."
2. The mistakes referred to are those set out above at [55], and refer to the Sturesteps' various forms of ignorance as to their rights to an assessment of their solicitors' costs.
3. The defendants contend that the pleading represents a conflation of two doctrines: the first, the doctrine of restitution for unjust enrichment on the basis of mistake; and the second, mistake in the law of contract, which renders a contract voidable. The defendants' contention in this respect draws to a degree upon Stevenson J's first judgment in the proceedings, where his Honour stated at [12]: "Further, of the three "mistakes" pleaded, two are said to be "mutual" mistakes that are said to "vitiate" the costs agreements between the plaintiffs and the defendants. A mistake founding a claim for restitution must, of course, be that of the allegedly mistaken payer. Any mistake by the recipient is irrelevant to the payer. The pleading thus elides a mistake as relevant to the law of contract with one relevant to the law of restitution."
4. The new pleading, the FASC, has largely overcome the problem that was present to Stevenson J's analysis. It is clear enough from paragraph 62 that the mistake relied upon is not one founding a claim in restitution for mistake but rather a form of mistake that results in avoidance of the Deeds. Whilst it is a little unclear whether the plaintiffs rely upon doctrines of common, mutual or unilateral mistake, the mistakes being relied upon are pleaded clearly enough so as to limit the nature of any case that the plaintiffs can argue and thereby prevent the defendants being taken by surprise. This part of the FASC can stand and will not be struck out.

Issue 4(h): Whether the Sturesteps May Seek Restitution For Payment Under The Deed From Mr Khoury

1. This issue seems to be the same as issue 2(a), which has already been dealt with above. The issue does not need to be reconsidered.

Issue 5: Claims Concerning Relief Sought under the Legal Profession Act

1. The defendants take issue with the plaintiffs' prayers 5, 6 and 7 of the FASC. Prayer 5 seeks an order that Mr Khoury or the Company, or both, deliver to Mr Sturesteps a bill of costs for legal services provided that is compliant with the Legal Profession Act and the Legal Profession Regulations. Prayer 6 seeks an order that Mr Khoury or the Company, or both, lodge such a bill of costs for costs assessment. Prayer 7 seeks an order that the Court appoint a referee under the UCPR to assess "the costs properly payable to the first defendant or the second defendant by the plaintiff in respect of his retainer of the first defendant". The plaintiffs principally seek such relief if the Court finds that Mr Sturesteps is liable to Mr Khoury for the costs of legal services. But if in the alternative to the plaintiffs' principal case (that Mr Sturesteps never had a contractual or a statutory relationship with the Company) Mr Sturesteps is found to have retained the Company, then the plaintiffs seek the same relief against the Company.
2. The defendants put in issue: whether the plaintiffs can seek such orders against Mr Khoury, given that he ceased practising on his own account in July 2003; and, whether the claims for relief against him may be advanced without identifying the relevant powers of the Court and the matters allegedly justifying the orders sought against Mr Khoury.
3. On the first issue raised, the defendants claim that Mr Khoury was not practising on his own account, did not send any bills and did not receive any payments after 1 July 2003, when the Company purportedly began to provide legal services to Mr Sturesteps. On the second issue raised, the defendants say that the pleading in its current form is unfair in that it does not identify the Court's power to make the orders sought, nor the facts material to the exercise of that power.
4. Both issues are readily resolved. The first issue is a matter of evidence for trial. Whether or not Mr Khoury had ceased practising on his own account is a factual question that cannot be determined on an application such as this. And assuming he did only purport to practise through the Company from 1 July 2003, that does not take him beyond the Court's inherent jurisdiction over its own legal practitioners.
5. The misconception behind the defendant's second issue is that a plaintiff must plead each source of power for the relief sought. No doubt a Court at trial will ask for such powers to be fully explained in submissions. But before that, the Court's inherent jurisdiction over its own legal practitioners is a sufficient starting point to justify the maintainability of this pleaded form of relief. This part of the pleading is allowed and will be determined at trial.

Issue 6: Whether the Plaintiffs May Make Allegations Of GST Overpayments

1. The Sturesteps' claim involves two assertions of overpayment of GST pursuant to the costs agreement, should the Court find that agreement is valid and enforceable. Clause 14 of the costs agreement provided for GST to be included in all costs charged by Mr Khoury, stating "The hourly rates provided herein are inclusive of GST".
2. Mr Sturesteps alleges firstly that, contrary to cl 14, Mr Khoury billed for GST in addition to the agreed hourly rates and that as a result Mr Sturesteps paid an additional $160,878.39, in the belief that the charges had been correctly calculated. Secondly, Mr Sturesteps alleges in relation to particular payments that Mr Khoury billed twice for GST in addition to the agreed hourly rates, so that Mr Sturesteps paid $5,784.26 believing the charges to have been correctly made.
3. In answer to the first of these contentions, the defendants claim that the bills of costs that were issued to Mr Sturesteps were made on a GST-inclusive basis, but that after 31 May 2007 the way that the amounts were invoiced changed so that the rates were shown excluding GST. A GST component was then set out separately at the bottom of such bills, which component amounts to an additional 10% of the professional costs stated to be due, or the total disbursements stated to be outstanding. The defendants explain this further: comparing the difference between, for example, an invoice from 31 October 2006 and another from 31 May 2007, the amount said to be charged for a billable unit of time for the same fee earner is 10 per cent higher in the former than the latter; this amount accounts for GST being calculated inclusively rather than exclusively.
4. In answer to the second point, the defendants' expert has reviewed the relevant bills, and the defendants are content to concede that they have double-charged Mr Sturesteps for GST up to an amount of $743.90. But they do not concede the full $5,784.26 claimed as an overcharge.
5. The plaintiffs' response to both GST points is that the matters alleged are matters for trial, and so it would be premature now to strike the pleading out. The plaintiffs and the defendants have each prepared expert accounting evidence based upon the costs agreement and the invoices. That evidence has not been tendered to the Court on this interlocutory application. The plaintiffs say that the issue will eventually be determined through consideration of each side's expert evidence.
6. The plaintiffs' argument is the more persuasive. The GST structure of each of the defendant's bills and how Mr Sturesteps interpreted each of them over time, so as to cause him to pay the various amounts of GST claimed, is a matter for the contest of lay and expert evidence at trial. And the dispute about whether overpaid GST in the sum of $743.90, or the greater sum of $5,784.26, or some amount in between these figures, is a matter for expert analysis at trial. This part of the pleading is allowed and will be determined at trial.

Issue 7: The Dismissal Of Claims No Longer Pressed by the Sturesteps

1. Mrs Sturesteps pressed 14 claims in the amended statement of claim (ASOC) filed on 19 February 2014 which do not appear in the FASC. Those were prayers 10, 10A, 10B, 10C, 11, 12, 13, 14, 14A, 15, 15A, 16, 17 and 18 in the ASOC and were for relief that Mrs Sturesteps had brought personally, not jointly with her husband. Similarly, there are 7 claims for relief in the earlier ASOC that Mr Sturesteps no longer presses: prayers 1, 1B, 3, 4, 5, 5B and 8A in the ASOC. Finally, the defendants allege that in the FASC the Sturesteps have abandoned their claim in prayer 21 of the ASOC that the defendants "give restitution" to them of "$566,786.38 paid by them on 27 November 2011, or alternatively, the sum of $300,000 paid by them on 27 November 2011". But the Sturesteps have not sought to discontinue the proceedings in relation to these claims for relief under UCPR, r 12.1.
2. The defendants seek judgment under Civil Procedure Act, s 90 formally dismissing those claims that are no longer pressed. If such an order for dismissal were made, the defendants seek their costs thrown away (under UCPR, r 42.20) to the extent to which the proceedings have been so dismissed. The defendants also seek orders precluding the plaintiffs from commencing further proceedings against either of the defendants on the same or substantially the same claims until they have paid such costs under Civil Procedure Act, ss 91 and 98. The defendants submit that such orders would provide them with immediate protection in the same form as may be ordered under UCPR, r 12.10, which provides that if a party is liable to pay costs as a consequence of its proceedings being dismissed and the party commences further sufficiently similar proceedings, the Court may order a stay of the further proceedings until the party has satisfied its existing costs liability.
3. But the Sturesteps' response to these submissions is persuasive. They say that a further order dismissing Mrs Sturesteps' claims is unnecessary. In Stevenson J's 8 May 2014 judgment his Honour struck out the whole of the plaintiffs' pleadings and prayers for relief and awarded the defendants their costs. Those parts of the pleading before Stevenson J that the plaintiffs have not sought leave to replead in the FASC now being advanced cannot be struck out again: they are already gone.
4. The defendants also seek Civil Procedure Act, s 91(2) and UCPR 12.10 protection from the Sturesteps bringing further claims in the nature of these struck out claims. But neither power provides a persuasive basis to make orders now. First, s 91(2) contemplates a plaintiff being precluded from claiming relief if the Court has dismissed the claim but it only allows the making of a stay order "following a determination on the merits": and that is not the case here. The Court has not determined any of these struck out claims "on the merits". So there is no basis for protection for the defendants through the making of a s 91(2) order.
5. And even if the Court were prepared to make a further dismissal and costs order in respect of these claims, it is now wholly premature to consider making a UCPR 12.10 order, which assumes that the party whose claim has been dismissed "commences further proceedings". That has not happened yet. Nor is there any threat of that happening.
6. But there is another point to be made. The claims that the Sturesteps have decided not to include in the FASC are closely related to the subject matter of their present action. It would be unreasonable for them to rely upon those claims in later proceedings if they were not advanced now. It would not be reasonable for the Sturesteps to seek later to bring these claims that they have now decided not to press. Doing so later would likely amount to an abuse of the Court's process, and such claims would be liable to be stayed at general law: Port Of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

Issue 8: The Plaintiffs' Newly Expressed Fiduciary Duties Claim

1. In the ASOC analysed before Stevenson J, the Sturesteps had included claims for breaches of fiduciary duties owed by Mr Khoury to the Sturesteps. The claims were based upon the retainer agreement and Mr Khoury's statutory obligations to satisfy costs disclosure and costs billing requirements. The Sturesteps pleaded in the ASOC that Mr Khoury had a duty not to allow Mr Khoury's own pecuniary interests to conflict with those of the Sturesteps. The pleading, located in paragraphs 35, 36, 37 and 38 of the former ASOC, stated that Mr Khoury had breached his fiduciary duties because: "Mr Khoury preferred his own common law, equitable and statutory rights … and the rights of the Company, of which he was solicitor director and a shareholder, over the contractual, equitable and statutory rights of [the] Sturesteps arising under the 1987 Act and under the general law."
2. Stevenson J at [19] of his judgment, rejected the pleading in that form for the following reasons: "Further, a claim is made that Mr Khoury has acted in breach of his fiduciary duty to the plaintiffs by allowing his pecuniary interests to conflict with those of the plaintiffs. That is a very serious claim to make against anyone, let alone a solicitor. The breach is alleged to have occurred by Mr Khoury by "allowing" Mr Sturesteps to conduct himself as set out in numerous earlier paragraphs of the pleading. In my opinion, that is not an appropriate way to plead such a grave matter. If that claim is to be persisted with, the pleading must state with precision what Mr Khoury did and failed to do, and how precisely any conflict of interest is said to have arisen."
3. On 14 November 2014, the Sturesteps served the FASC in its current form, which became Exhibit 3 in the proceeding. The Sturesteps have amended their fiduciary duty claim in the FASC, so that it now seeks equitable compensation in the alternative in relation to the restitution claims, and now sets out the fiduciary claims as follows: "7A. Mr Khoury owed Mr Sturesteps a fiduciary duty in respect of the negotiation, drafting, the explanation of the terms of, execution and performance of the retainer agreement and the costs agreement (the retainer and costs agreements fiduciary duty). … 45A. In consequence of the matters pleaded in paragraphs 8-35, 36A and 44-45 above, and by preferring his own interests, or those of the Company, as a solicitor to the interests of his client, Mr Sturesteps, in that manner, in respect of the question of costs incurred under his retainer from Mr Sturesteps, Mr Khoury breached the retainer and costs agreements fiduciary duty he owed to Mr Sturesteps (the breach of fiduciary duty).
4. In the defendants' submission, the Sturesteps have ignored Stevenson J's statement concerning the requirements for proper pleading of such serious allegations. Paragraph 7A is now a claim to the existence of a wider duty than previously alleged, and lacks any precision. The defendants also submit that the paragraph treats a fiduciary duty as being prescriptive, rather than proscriptive, contrary to the fundamental nature of fiduciary duties identified in cases such as Howard v Commissioner of Taxation [2014] HCA 21 (11 June 2014), per French CJ and Keane J at [31] and Hayne and Crennan JJ at [56].
5. The Sturesteps contend that the content of the pleaded fiduciary duty is that Mr Khoury was obliged not to put his own interests ahead of those of his client. Such a fiduciary duty arises in the circumstances of a solicitor drafting a retainer agreement or costs agreement for a client: Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 ("Foreman") at 435E-436C per Mahoney JA. The Sturesteps claim that a solicitor who misleads a client about the client's rights when drafting the retainer agreement breaches that fiduciary duty by preferring his own interests over those of the client.
6. The Sturesteps argue that the breach of this duty pleaded at FASC, paragraph 45A shows that the duty owed is to refrain from doing something, rather than to take an action, and thus is proscriptive, not prescriptive. The alleged breach is thus that Mr Khoury failed to refrain from preferring his own interests: "[Mr Khoury] preferr[ed] his own interests, or those of the Company, to the interests of his client, Mr Sturesteps, in respect of … costs incurred under his retainer from Mr Sturesteps …".
7. In relation to new paragraph 45A, the defendants complain that the breaches of duty alleged are contained in 34 separate paragraphs that are incorporated by reference into paragraph 45A, and the Sturesteps have therefore not described the case against them with adequate precision. The pleading, the defendants submit, is contrary to UCPR, r 14.7, which requires that "a party's pleading must contain only a summary of the material facts on which the party relies, and not the evidence by which those facts are to be proved" (emphasis added). The repetition by cross-reference of facts that are material to other claims does not constitute the pleading of only the material facts relevant to the breach of fiduciary duty claim.
8. The Sturesteps' reply to this in turn is that the form of pleading conforms with UCPR, r 14.8, which requires that a "pleading must be as brief as the nature of the case allows. They claim that the same facts support both a case of breach of fiduciary duty and restitution for unjust enrichment (FASC [8]-[36A]; [44]-[45]) and undue influence, duress, misleading and deceptive conduct (FASOC [53]-[55]), so that there is no reason to repeat the facts each time they are relied on for a separate cause of action.
9. But in my view the Sturesteps' repleaded fiduciary duty claim is really no more precise now than it was before Stevenson J. The duty itself requires no further material facts to be pleaded in order to be understood, as the type of fiduciary duty pleaded is one well recognised in cases such as Foreman. But the defendants' actions by which Mr Khoury is alleged to have breached that duty require greater precision than is evident in the present pleading. Simply stating that a breach has occurred "in consequence of" other material facts is insufficient, nor is merely stating that a person is guilty of "preferring his own interests … as a solicitor to the interests of his client … in respect of the question of costs incurred under his retainer". The former method of pleading breaches is too broad: the precise acts by which the solicitor's duty to his client was in conflict with his self-interest and the acts that constitute the preferring of self-interest all need to be identified with precision. And the cross-referenced paragraphs contain many facts and allegations relating to other causes of action, whose materiality to the fiduciary claim is not obvious, The latter method states a conclusion, that Mr Khoury has preferred his interests over Mr Sturesteps, without pleading what Stevenson J required in his judgment: a statement of "how precisely any conflict of interest is said to have arisen". The claim must therefore be repleaded if the Sturesteps are going to rely upon it.
10. The defendants make a supplementary point in relation to one of the paragraphs that the Sturesteps have relied upon as a breach of fiduciary duty, FASC paragraph 36A. The defendants submit that the Sturesteps have inappropriately pleaded certain representations that Mr Khoury allegedly made to Mr Sturesteps. Paragraph 36A of the FASC refers to "the substance" of what was "represented" or "assured" by Mr Khoury in a way that the defendants say is inappropriate. FASC, paragraph 36A provides as follows: "36A. In consequence of the following conduct on the part of Mr Khoury the Sturesteps did not discover that they had made the mistakes until shortly after, or alternatively, shortly before, they had terminated Mr Khoury's retainer on 8 December 2011, namely: (a) Mr Khoury never drew attention to Mr Sturesteps' rights of assessment and review of costs under the Act in the responses and assurances he gave in response to the costs complaints, as described in the substance of what was represented or assured by Mr Khoury in the schedule which is Annexure E; (b) Mr Khoury never drew attention to the costs assessment notification in each bill of costs when dealing with the costs complaints, as described in the substance of what was represented in the schedule which is Annexure E; and (c) Mr Khoury gave assurances to Mr Sturesteps, the substance of which are in Annexure E, in response to Mr Sturesteps' complaints about bills of costs, that if Mr Sturesteps paid the costs in the amounts as billed to him, Mr Khoury would recover, or would do his level best to recover, most of the costs he was claiming in his bills of costs as party/party costs from the liquidators of HIH C/G at the conclusion of Mr Sturesteps' proceeding against the liquidators, conducted under the retainer agreement, and Mr Sturesteps relied on those assurances."
11. Annexure E is a document titled "Schedule of a representative sample of assurances given to George Sturesteps by Dieb Khoury in response to complaints about costs claimed in bills of costs from 11 April 2003 until 8 December 2011". It sets out by date "Verbatim terms of the assurances given by Mr Khoury", in the form of 10 extracts from various communications sent by Mr Khoury to Mr Sturesteps over this period. Setting out one extract as an example will suffice to show the nature of Annexure E: "There has been substantial costs and expense incurred by you to date in attending to and appropriately defending these proceedings commenced by HIH (Liquidators). It is anticipated that, in due course, we will be seeking an order for costs against the other side to pay for all the expenses incurred by you to date, regarding these proceedings either on a party/party basis or on a full indemnity basis. We will seek to place you in a position where you may claim full indemnity costs rather than party/party costs from the other side. In the alternative, we will be seeking an interpretation that the total of your case preparation and defence is encompassed within the definition and principles of party/party costs."
12. This form of pleading is sufficient. I do not accept the defendants' submission that this is a wholly inappropriate way of pleading a case. The case the Sturesteps put against them is put with sufficient precision. When pleading that representations were made by one party to another, it may sometimes be permissible to set out verbatim the communications made, even though strictly that approach draws upon evidence rather than material facts, provided that the material relied upon is not too voluminous. In my view the FASC keeps this material within reasonable bounds of economy. Paragraph 36A of the FASC and Annexure E should not be struck out on this ground.

The Assessment of Costs pursuant to Stevenson J's 8 May 2014 orders

1. After striking out the ASOC on 8 May 2014, Stevenson J ordered that the Sturesteps were to pay the defendants the costs of their notice of motion of 11 April 2014 up to that date. On 8 August 2014, the Equity Registrar listed the defendants' strike out motion and the Sturesteps' leave to amend motions before this Court and ordered the Sturesteps to pay the costs of that date. On 4 May 2015 the defendants served a bill of costs relating to those orders on Mr Sturesteps. On 17 May 2015 they served the same bill on Mrs Sturesteps. On 25 May 2015, without intervention, the defendants would be entitled to send the bill of costs in relation to Mr Sturesteps to costs assessment.
2. On 22 May 2015, the Sturesteps sought the Court's leave to file a notice of motion seeking an interim injunction to prevent that from occurring. The Sturesteps argued that the costs should be assessed at the end of the proceedings. But once the costs were sent for assessment, the Sturesteps argued, an automatic process would begin which could result in a certificate of determination being issued, which would operate as a judgment of the Court and which the defendants could execute immediately.
3. The defendants argued that the application was futile as the Court did not have the power to enjoin the essentially administrative statutory process of costs assessment under the Legal Profession Act 2004. Furthermore, the defendants stress the distinction between the two steps a party makes in the costs assessment process: first, applying for an assessment, and secondly, lodging the certificate of determination that the costs assessor produces. It is only upon the second step that a party becomes entitled to receive the assessed costs. The defendants offered an undertaking that they would not proceed to that second step until further order.
4. The Court reserved its decision on the matter, noting an undertaking from the defendants not to lodge with the Manager, Costs Assessment, an application for assessment of costs in respect of the bills served upon the Sturesteps under the orders of Stevenson J.
5. At the time the motion was heard, the statutory framework under which a party would apply to have their costs assessed was as relevantly as follows:

• A person who is entitled to receive costs as a result of a court order for the payment of an unspecified amount of costs may apply to the Manager, Costs Assessment in the Attorney General's Department for an assessment of those costs: Legal Profession Act 2004, s 353(1).
• The applicant must first send a copy of the application to the person liable to pay the costs with a notice advising the person that any objection to the application must be lodged with the applicant in writing within 21 days; after 21 days (or upon an objection being received) the application may be sent to the Manager: Legal Profession Regulations 2005, reg 125(1).
• A costs assessor is to determine the application by making a determination of the fair and reasonable amount of those costs: Legal Profession Act 2004, s 367A.
• On making a determination of costs referred to in Subdivision 2 or 3 of this Division, a costs assessor is to issue a certificate that sets out the determination. Once the applicant files that certificate in the registry of a court having jurisdiction to order payment of any amount of money outstanding to the applicant, the certificate is taken to be a judgment of that court for the amount of unpaid costs with no further action", and the court's rate of interest begins to accrue in respect of the amount: Legal Profession Act 2004, s 368. The determination of the application, and therefore the issued certificate, is binding on all parties to the application: Legal Profession Act 2004, s 372.

1. When the parties argued the motion, the Legal Profession Act 2004 was in force. As noted above, the Legal Profession Uniform Law came into effect on 1 July 2015. However, as the same basic framework remains in place in the current legislation (see Legal Profession Uniform Law Application Act 2014, Part 7), these reasons will refer to the law as it stood when the motion was argued. The parties will be given liberty to apply if they wish to submit that a different result would be reached under the new legislation.
2. Under Legal Profession Act 2004, s 353, the above process may be initiated once a party becomes "entitled to receive costs as a result of a court order". That conforms with Civil Procedure Act, s 98(2), which states that a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court, subject to rules of court and to the legislation or any other Act.
3. The costs orders of Stevenson J related to the defendant's strike out application. Under UCPR, r 42.7(1), such costs, being of "any application or other step in any proceedings" would generally be paid and otherwise dealt with in the same way as the general costs of the proceedings; that is to say, they would be dealt with at the end of the proceedings. The effect of Stevenson J's orders is to vary that state of affairs: the Sturesteps are to pay the costs of the application. However, Stevenson J did not order that those costs were to be payable forthwith. Under UCPR, r 42.7(2), unless the Court orders otherwise, the costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.
4. The Sturesteps' central argument was that if the defendants were permitted to send their bill of costs to a costs assessor for assessment, that would initiate an automatic process that would conclude in the issue of a s 368 certificate which would then be enforceable as a judgment debt. Thus, assuming that the conclusion of the assessment process before the conclusion of the court proceedings, r 42.7(2) would be contravened: the interlocutory costs would become payable before the conclusion of the proceedings. They argued on the basis of r 42.7(2) that the defendants were not "entitled to receive costs" under s 353 at this stage, and so were not entitled to initiate the statutory costs assessment process.
5. The Sturesteps relied upon Wende v Horwath (NSW) Pty Ltd (2014) NSWLR 674; [2014] NSWCA 170 for the proposition that only once a final order for costs is made can a party proceed to assessment. But that decision involved only costs orders made at the end of proceedings in the Local Court, Supreme Court and Court of Appeal: its ratio decidendi, contrary to what Mr Bevan of counsel for the Sturesteps contended, does not stand for the corollary that there is no entitlement to assessment without a final costs order. Indeed, Beazley P (at [5]) identified that very possibility: "Costs orders may be made during the course of proceedings in respect of interlocutory matters. Costs of interlocutory applications may also be "reserved" for later determination whether or not as part of the final costs order made in the matter. Costs orders are also made at the conclusion of the proceedings. Pursuant to UCPR, r 42.7 costs orders made in respect of interlocutory applications during the course of proceedings do not become payable until the conclusion of proceedings unless the Court otherwise orders. That does not, however, preclude a party from applying for the assessment of costs prior to the conclusion 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: 04 August 2015