Turvey To v AR Conolly & Co Solicitors & 2 Ors

Supreme Court of NSW|2007-05-09|Before: Mr J, Harrison J

CITATION : Turvey To v AR Conolly & Co Solicitors & 2 Ors [2007] NSWSC 482

DECISION : (1) Leave is granted to the plaintiff to file and serve an ASC within seven days; (2) This matter is to be heard together with proceedings 20369/2006; (3) The balance of the notice of motion filed 16 November 2006 is dismissed; (4) Costs of the motion are reserved except the plaintiff is to pay the defendants' costs thrown away by the amendment to the statement of claim.

Civil Procedure Act 2005 (NSW) - s 56 LEGISLATION CITED : Legal Profession Act 1987 (NSW) Uniform Civil Procedure Rules 2005 (NSW) - Rule 28.2

ABB Engineering Construction Pty Limited v Freight Rail Corp [1999] NSWSC 1037 Admiral 1 Pty Ltd v Leighton Contractors Pty Ltd [2005] NSWSC 1105 Dunstan v Simmie Co Pty Ltd [1978] VR 669 Idoport Pty Limited v National Australia Bank Ltd [2000] NSWSC 1215 CASES CITED : Muriniti v Lyons [2004] NSWSC 135 Perre v Apand Pty Limited (1999) 198 CLR 180 Pioneer Park Pty Limited v ANZ Banking Group Limited [2005] NSWSC 832 Tallglen Pty Limited v Pay TV Holdings Pty Limited (1996) 22 ACSR 130 Tepko Pty Limited v Water Board (2001) 206 CLR 1 Wentworth v Rogers [2006] NSWCA 145

Turvey To - Plaintiff Alan Robert Conolly t/as AR Conolly & Co Solicitors - First Defendant PARTIES : Elizabeth Ramsay t/as AR Conolly & Co Solicitors - Second Defendant Lara Mynott t/as AR Conolly & Co Solicitors - Third Defendant Walter Turnbull Pty Ltd - Cross Defendant

Mr G Inatey SC with Mr J T Johnson - Plaintiff COUNSEL : Mr A P Quinlivan - Defendants Mr Elliott - Cross Defendant

Sally Nash & Co - Plaintiff SOLICITORS : AR Conolly & Co Solicitors - Defendants Horton Rhodes - Cross Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

14621/2006 - TURVEY TO v ALAN ROBERT CONOLLY t/as AR CONOLLY & CO SOLICITORS & 2 ORS

JUDGMENT (Amend Statement of Claim - separate determination of issues) 1 HER HONOUR: By notice of motion filed 16 November 2006, the plaintiff seeks orders that firstly, he have leave to file an amended statement of claim (ASC); secondly, that the Court hear the matter pleaded in paragraphs 1-18 of the ASC; and thirdly that after determination of paragraph 1-18 of the ASC, the Court give directions to Alec Goldman to proceed with the costs assessment of the plaintiff's bills of costs in Supreme Court proceedings 90377/2006 commenced under the Legal Profession Act 1987 (NSW) (LPA). This judgment is similar to my judgment in proceedings 20369/2006 Glen Miller QC v Alan Robert Conolly t/as AR Conolly & Co Solicitors & 2 Ors [2007] NSWSC 483. Glen Miller QC and Turvey To are barristers. 2 The plaintiff is Turvey To. The first defendant in both matters is Alan Robert Conolly t/as AR Conolly & Co Solicitors (Conolly). The second defendant in both matters is Elizabeth Ramsay t/as AR Conolly & Co Solicitors. The third defendant in both matters is Lara Mynott t/as AR Connolly & Co Solicitors. The defendants have filed a cross claim. The cross defendant in both matters is Walter Turnbull Pty Ltd. Mr Elliott appeared for the cross defendants and supports the plaintiff's application provided the issues raised in the cross claim are determined at the same time. 3 Mr To pleaded that on 29 September 2004, he wrote to the first AR Conolly & Co setting out his fee disclosure and costs agreement in the matter of Hypec Electronics Pty Limited (in liq). The written agreement is between himself and Conolly. 4 On 25 October 2004, Mr To sent a tax invoice to the defendants for $9,597.50, on which the following endorsements were noted: "Interest may be charged on costs which remain unpaid 30 days after the date of this account, at the rate prescribed under the Supreme Court Act 1970 in respect of unpaid judgments of the Supreme Court of New South Wales. If this Bill is given directly to the client, the client may apply to have the costs assessed under Part 11 of the Legal Profession Act, but if the costs have been wholly or partly paid the application must be made within 12 months after the client is given the Bill. If this Bill is given to an instructing Solicitor or Barrister, the application must be made within 30 days of the Bill being given. This Bill is given pursuant to a Costs Agreement dated 29 September 2004." 5 Mr To claims that in October 2004, Mr David Watson of Walter Turnbull, the liquidator of the defendant's client, requested the plaintiff to provide a memorandum of fees directly to him. On 1 November 2004, the plaintiff provided Mr Watson with a tax invoice in the amount of $31,625.00. On 3 November 2004, he received a response from the defendants who requested a statement as to the work that was performed by him in relation to his tax invoice. Mr To pleaded that on 12 November 2004, he provided this invoice. 6 On 14 December 2004, Mr To wrote to the defendants to the attention of Elizabeth Ramsay requesting payment of his tax invoices dated 25 October 2004 and 1 November 2004. He received no response. A similar letter was sent again on 3 February 2005, again with no response. On 4 March 2005, Mr To issued the defendants with a tax invoice of $31,625.00. That tax invoice, Mr To claims, was materially the same as the invoice of 1 November 2004. In the original statement of claim, Mr To pleaded that the defendants have not paid either tax invoice rendered to them. 7 By amended defence, the defendants put in issue the question of whether or not in retaining the plaintiff as a barrister the defendants did so as agents for their disclosed principal Walter Turnbull Pty Limited. Mr David Watson, the liquidator of Hypec Electronics Pty Limited (in Liq), was the person who was seeking that advice as a relevant party, not the firm of Walter Turnbull Pty Limited. 8 It is common ground that Hypec Electronics Pty Limited was a company being wound up by the Court and that Mr Watson, not Walter Turnbull Pty Limited, was its liquidator and that the services were provided in fact to Mr Watson in his capacity as liquidator and not in any other capacity. 9 The plaintiff applied to the Manager Costs Assessment under the LPA for assessment of the costs. On 15 May 2006 the costs assessor Mr Alec Goldman raised the question of his lack of jurisdiction to make any determination as to the question of liability as against calculation/assessment of costs referring to the judgment of Muriniti v Lyons [2004] NSWSC 135. In Muriniti, Dunford J at [56]-[57] stated: "56 Having regard to the status and powers of Costs Assessors and the ordinary meaning of the word "assessor", I am satisfied that the powers of Costs Assessors are limited to determining the value of the work done or services rendered in circumstances where there is no dispute that costs are payable and the only issue is as to the amount. It is no part of their function to determine whether or when such costs are payable. The matters set out in s 208A which they must, and in s 208B which they may, take into account are all matters relevant to putting a value on the work done or services rendered and the fairness or justice of the amount claimed; but are not matters which relate to the terms of a costs agreement (particularly if oral) and whether any conditions precedent to payment have been fulfilled. The determination of such questions requires the reception of sworn evidence, which can be tested by cross-examination, and an assessment of such evidence. Costs Assessors do not have the power to deal with such matters.

57 For similar reasons it has been held that a Costs Assessor has no power to hear a cross-claim by a client against a solicitor based on negligence, nor to award damages: Ryan v Hansen , supra per Kirby J; or to make an assessment when no costs are presently due and payable: Lace v Yonan [1999] NSWSC 1072 per Master Harrison (no bill of costs rendered); Baker v Kearney [2002] NSWSC 746 per Master Malpass (judgment in District Court that applicant for assessment not entitled to costs). I am therefore satisfied that on being notified of the dispute as to the plaintiff's liability to pay the costs, the Costs Assessor should have declined to make a determination or issued a certificate unless and until such issue was resolved." 10 The costs assessor has rightly declined to proceed to assessment. 11 As a result of the issues raised in the amended defence the plaintiff has refined his claim and seeks to file an ASC. The ASC relies on the same factual matrix but seeks declarations in relation to parties to the retainer, and the terms of that retainer. The defendants do not consent to the filing of the ASC on the basis that the ASC is in effect a discontinuance of the proceedings currently on foot. The defendants seek their costs payable on an indemnity basis and payable forthwith. 12 It is my view that the ASC refines the issues which have emerged from the matters raised in the defence and the stance of the costs assessor. Therefore, leave should be granted to the plaintiff to file an ASC. The factual matrix remains the same. The new pleadings do not amount to a discontinuance of proceedings currently on foot. Only the relief sought has changed. The usual costs order should apply. That is, the plaintiff is to pay the defendants' costs thrown away by the amendments made. I make such an order. There is no reason why the costs should be payable on an indemnity basis nor should they be orders to be payable forthwith.

Whether there should be a trial on separate issues 13 The plaintiff seeks a separate trial on the following claims.

(1) A declaration that the plaintiff was retained by the defendants to act as Counsel in various matters concerning Hypec Electronics Pty Ltd (in liquidation) and Mr David Watson, in litigation in which the firm AR Conolly &Co were the solicitors on the record and the plaintiff was briefed as Counsel by the defendants, who were the partners in that law firm.

(2) A declaration that the plaintiff was retained by the defendants to act as Counsel in various matters concerning Hypec Electronics Pty Ltd (in liquidation) and Mr David Watson, litigation in which the firm AR Conolly & Co were the solicitors on the record and the Plaintiff was briefed as Counsel by the defendants who were the partners in that law firm, the terms of which are set out in the plaintiff's retainer to the defendants dated 29 September 2004.

(3) A declaration that the terms of the retainer between the plaintiff and the defendants are the terms set out in the written retainer dated 29 September 2004 issued by the plaintiff to the defendants.

(4) In the alternative, a declaration as to the terms of the retainer between the plaintiff and the defendants wherein the plaintiff was briefed by the defendants to act as Counsel in various matters concerning Hypec Electronics Pty Ltd (in liquidation) and Mr David Watson, in litigation in which the defendants were the solicitors on the record and the plaintiff was briefed as Counsel by the defendants.

(5) A declaration that each of the defendants is joint and severally liable to pay the plaintiff's fees as assessed by the Supreme Court Costs Assessor or agreed between the parties.

(6) That costs rendered by the plaintiff to the defendants are costs to be paid by the defendants. 14 The plaintiff referred to Wentworth v Rogers [2006] NSWCA 145 where Santow J at [36] stated: "I consider that this question in the present case is only able to be determined definitively by a court, upon oral evidence from the principals, able to be tested in cross-examination, for reasons elaborated later." 15 Basten J at [159] stated: "...An alternative construction, which would not have so radical a result, would be that the costs assessor is not entitled to determine the extent of the contractual obligation; if there is a dispute in that regard, it must be determined elsewhere, presumably by a court." 16 This is the same view expressed in Muriniti. A declaration cannot be determined by the costs assessor but rather by the court in circumstances where it is "upon oral evidence from the principals, able to be tested in cross-examination". 17 The plaintiff also referred to s 56 of the Civil Procedure Act 2005 (NSW) (CPA) which imposes upon not only the Court but also all parties and legal representatives an obligation and in the case of parties and practitioners a duty to assist in the facilitation of the just, quick and cheap resolution of the real issues in the proceedings. 18 Rule 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) states: "Order for decision

The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings." 19 The plaintiff submitted that no procedural or substantive difficulties arise from such a separation. 20 In Tepko Pty Limited v Water Board (2001) 206 CLR 1; Perre v Apand Pty Limited (1999) 198 CLR 180 at [436]; State of New South Wales v Lepore (2003) 212 CLR 511 at [187]; Dunstan v Simmie Co Pty Ltd [1978] VR 669 at 671.30; and per Rolfe J in ABB Engineering Construction Pty Limited v Freight Rail Corp [1999] NSWSC 1037. In Idoport Pty Limited v National Australia Bank Ltd [2000] NSWSC 1215, Einstein J at [7]-[8] helpfully provides a compendium of cases upon this topic which I need not reproduce here. 21 In Tepko Callinan and Kirby JJ cautioned against the severing of issues by the court. Their Honours stated (at [168] - [171]): "…we should not leave this case without making four comments. Both Mason P and Fitzgerald JA were critical of the course of limiting the issues to be tried that the primary judge adopted. In Perre v Apand Pty Ltd attention was drawn to difficulties that can be caused when that course is adopted. In light of the experience in this case, what was there said should be restated with emphasis. The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap.

The second and related comment is this. A party whose whole case is knocked out on a trial of a preliminary or single issue, may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the court's, rather than the parties', interests.

Thirdly, there is an additional potential for further appeals to which the course of the trial on separate issues may give rise. Indeed, that could occur here were this appeal to be allowed and a retrial had in which the remaining issues of causation and damages were decided. Single-issue trials should, in our opinion, only be embarked upon when their utility, economy, and fairness to the parties are beyond question.

The fourth of our comments is related to evidence compiled, committed to writing and filed in advance of the hearing. Parties frequently, either together or separately, compile "books of documents". Although most of these have the potential to be admitted in evidence, often they are defective in form. Many of them are often irrelevant, or their significance is either not recognised or adverted to during the hearing. Their status, as in the case of the letter written by Mr Rhodes, can be ambiguous. Discrimination and economy should be exercised by those who prepare cases in which documentary evidence is likely to be extensive and important. Those who conduct such cases should ensure that what is actually in evidence, and its relevance and significance, are clearly identified." [Footnotes omitted] 22 In Pioneer Park Pty Limited v ANZ Banking Group Limited [2005] NSWSC 832 (cited in Admiral 1 Pty Ltd v Leighton Contractors Pty Ltd [2005] NSWSC 1105 at [19] per Barrett J), Einstein J rejected an application for separation of liability and quantum. His Honour's reasons cited (at [7]) as "far and away the most significant factor" the fact that the evidence of a plaintiff was likely to be critical both as to liability and as to damages/quantum in a number of ways. Additionally, expert evidence which both parties anticipated putting on in relation to liability was also material to any assessment of loss or damage: "It is envisaged that the same experts would be used relating to those issues both as to liability and as to quantum. Certainly, the same or very similar expertise is required and there is obviously a substantial overlap in the … [material] … the experts will need to review for the purpose of addressing the liability issues on the one hand, and the quantification issues on the other. It is obviously illogical and inefficient for the experts to engage in that exercise on two different occasions." [8] 23 In Tallglen Pty Limited v Pay TV Holdings Pty Limited (1996) 22 ACSR 130, Giles CJ in Commercial Division (as he then was) explained at 141-2: "In the ordinary course all issues in proceedings should be decided at the one time, but separate decision of a question may be appropriate where, for example, the decision of the question is critical to the outcome of the proceedings and (at least if decided in one way) will bring the proceedings to an end. In particular circumstances the separate decision of a question may be appropriate even if it will not bring the proceedings to an end, such as where there is a strong prospect that the parties will agree upon the result when the core of their dispute is decided or where the decision will obviate unnecessary and expensive hearing of other questions, but such occasions must be carefully controlled lest fragmentation of the proceedings (particularly when the exercise of rights of appeal is borne in mind) brings delay, expense and hardship greater than that which the making of an order was intended to avoid. It is often the case that the need to make findings of fact for a decision of the separate question, especially findings which may involve issues of credit, tells strongly against the making of an order because related facts, and renewed issues of credit, will or may arise at a later stage in the proceedings. Experience teaches that it should be able to be seen with clarity that decision of a separate question will be beneficial in the conduct of the proceedings and the resolution of the parties' dispute." 24 While I agree that the real issue as between the plaintiff and the defendants, and also for that matter the defendant and the "third party/cross defendant" is the question of liability, it is my view that there is no clear delineation or "bright line" between the issues of liability and quantum. The credit of the parties will be in issue. The defendants assert that the work done by the plaintiff is of no value and he is not entitled to any remuneration [paras 21, 22]. It is my view that it is only when the issues raised in the statement of claim and defence are determined, and depending on the outcome, it may then be appropriate to refer the bills of costs to a costs assessor for determination. 25 Leave is granted to the plaintiff to file and serve an ASC within seven days. This matter is to be heard together with proceedings 20369/2006. The balance of the notice of motion filed 16 November 2006 is dismissed. Costs of the motion are reserved except the plaintiff is to pay the defendants' costs thrown away by the amendment to the statement of claim.

(1) Leave is granted to the plaintiff to file and serve an ASC within seven days.

(2) This matter is to be heard together with proceedings 20369/2006.

(3) The balance of the notice of motion filed 16 November 2006 is dismissed.

(4) Costs of the motion are reserved except the plaintiff is to pay the defendants' costs thrown away by the amendment to the statement of claim. **********

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Legal Profession Act 1987(NSW)

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