Young v Annis-Brown t/as Lincoln Smith & Co & Anor

Mr Annis Brown's motion 3I should first deal with a Notice of Motion filed on 11 April 2011, by which Mr Annis-Brown sought an order that these proceedings be permanently stayed or, alternatively, struck out as being an abuse of the Court's process or, alternatively, an order that paragraphs 5(a)-(c) of the Summons be struck out. Mr Annis-Brown also sought orders that Ms Young pay his costs of these proceedings and of proceedings No 2010/100783 on an indemnity basis. 4Evidence of the matters raised in previous proceedings between Ms Young and Mr Annis-Brown is before me in respect of the motion but not in respect of the appeal under section 208L of the Legal Profession Act . In proceedings No 2010/100783 which were originally commenced by Mr Annis-Brown in the District Court and subsequently transferred to this Court, Mr Annis-Brown sought payment by Ms Young of $85,420.02 for legal costs and disbursements alleged to be owing to him under a conditional costs agreement dated 14 March 2001 ("CCA"). In proceedings No 2010/214241, Ms Young sought (as against Mr Annis-Brown) an order that a Tripartite Agreement dated 26 July 2007 between Ms Young, Mr Annis-Brown and her new solicitor ("Tripartite Agreement") be set aside on the basis that Mr Annis-Brown had failed to give consideration for that agreement and a declaration that there were no moneys owing to Mr Annis-Brown under the CCA on the grounds that the conditional event entitling him to payment had not occurred (Summons paragraphs 3-4.) On 7 October 2010, the Court made consent orders ("Consent Orders") which provided, relevantly, for the dismissal of proceedings Nos 2010/100783 and 2010/214241; that Mr Annis-Brown would submit a bill dated 26 April 2005 and a bill for fees owing to Counsel for assessment by a costs assessor; and that the costs of both proceedings be reserved pending the outcome of the costs assessment. 5First, Mr Annis-Brown contends that the ground of appeal raised in paragraph 5(a) of Ms Young's Summons relating to the costs assessor's finding that the CCA had been mutually terminated should be struck out on the basis that, even assuming that it involves a matter of law, it cannot succeed. Mr Annis-Brown contends that it is clear from the express terms of clause 10 of the CCA that it was capable of being terminated by either party; that neither party argued to the contrary in their respective submissions to the costs assessor; and the fact that the costs assessor was of the view that the retainer had been terminated by mutual agreement ultimately had no bearing on the outcome of the costs assessment. The power to strike-out part of a pleading should only be exercised in obvious cases: see the cases cited in Ritchie's Uniform Civil Procedure NSW [14.28.5]. Although Mr Annis Brown's contentions have substance, I do not consider that the matters raised in paragraph 5(a) of Ms Young's Summons could not succeed or is so untenable that it should be struck out under UCPR r 14.28. I deal with that matter on its merits in paragraphs 27-35 below. 6Second, Mr Annis-Brown contends that the grounds of appeal raised in paragraphs 5(b)-(c) of Ms Young's Summons seek to reagitate a contention raised by Ms Young in proceedings No 2010/214241, namely that the event described in the CCA that entitled him to payment for his legal services had not occurred. Mr Annis-Brown submits that Ms Young is prevented from raising that issue under principles of res judicata and, further or alternatively, issue estoppel. 7The principle of res judicata applies where a party attempts to litigate a cause of action in further proceedings which has already merged into judgment in prior proceedings and that principle applies even where judgment has been entered by consent: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 597; Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 508. Ritchie's Uniform Civil Procedure NSW at [14.28.15] summarises that principle as follows: "Proceedings will be struck out if the cause of action sought to be raised has actually been determined in earlier proceedings and is "res judicata" [authorities cited]. This principle applies even if the prior judgment was made by consent: Palmer v Dunford Ford (a firm) [1992] 1 QB 483 at 489; [1992] 2 All ER 122." 8Ms Young's Summons filed in proceedings 2010/214241 sought a declaration that no moneys were due by Ms Young to Mr Annis-Brown pursuant to the CCA on the express ground: "[t]hat the conditional event entitling [Mr Annis-Brown] to moneys pursuant to the Agreement has not occurred." In my view, the dismissal of those proceedings by consent necessarily determined that Ms Young was not entitled to such a declaration and this is sufficient to establish a res judicata which prevents Ms Young reagitating the matters now sought to be raised in paragraphs 5(b)-(c) of the Summons. Ms Young accepts that the Court has no discretion to permit proceedings to continue once a res judicata is established. This finding is sufficient to require that these grounds of appeal be struck out. 9I would have reached the same result by reference to principles of issue estoppel. The relevant principles are summarised in Ritchie's Uniform Civil Procedure NSW at [14.28.17] as follows: "Proceedings will also be regarded as an abuse of process to the extent that they involve an attempt to relitigate particular issues that were determined either explicitly or necessarily, in earlier judicial proceedings (including proceedings determined by consent). Such a determination gives rise to "issue estoppel": Blair & Perpetual Trustee Co Ltd v Curran (Adam's Will) (1939) 62 CLR 464; Noall v Middleton [1961] VR 285; Commissioner for Railways v Bielewicz [1963] NSWR 482 at 486; [1963] SR (NSW) 466 at 468; Carl Ziess Stiftung v Rayner (No 3) [1970] Ch 506; [1969] 3 WLR 991 ... The scope of the estoppel is confined to those issues that were directly involved in the actual decision made in the previous proceedings (and does not include every finding that was made): Murphy v Abbi-Saab (1995) 37 NSWLR 280; BC 9505070. Where the basis for "issue estoppel" has been made out, the Court retains an overriding discretion to permit the proceedings to continue, although this discretion is likely to be exercised only in exceptional circumstances: Arnold v National Westminster Bank plc [1991] 2 AC 93; [1991] 3 All ER 41; Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 at 30; [2001] 1 All ER 481 at 498 per Bingham LJ." 10In proceedings No 2010/100783, Mr Annis-Brown had alleged that Ms Young had "settled the [NSW Maritime] Proceedings" and in late December 2009 or early January 2010 her then solicitors received the proceeds of that settlement to their trust account on behalf of Ms Young. Ms Young had admitted that allegation in her Defence filed in those proceedings. The evidence before me does not suggest that Ms Young sought, or the Court granted, leave to withdraw that admission prior to the dismissal of the proceedings by consent. In my view, that issue was necessarily determined in accordance with the admission made by Ms Young when the proceedings were determined; the dismissal of those proceedings was a final judgment; and the parties to both proceedings were the same: Kuligowski v Metrobus (2004) 220 CLR 363 at [21]; Oates v Hawkins [2010] NSWSC 491 at [75]. 11Ms Young submits that no issue estoppel operates since the Consent Orders disposing of the earlier proceedings were premised on a proper assessment taking place. I accept, of course, that the Consent Orders contemplated that the matter be referred to a costs assessment, as in fact occurred. I do not accept that the final effect of those orders was in some way conditional upon the subsequent assessment process. 12Ms Young also submits that the Court has and should exercise a discretion not to apply issue estoppel principles in the present circumstances. In O'Toole v Charles David Pty Ltd [1991] HCA 14; (1991) 171 CLR 232 at 258, Brennan J characterised the decision in Arnold v National Westminster Bank plc [1991] 2 AC 93; [1991] 3 All ER 41 which identified such a discretion as resting on "uncertain foundations". However, the Court of Appeal has arguably left the existence of such a discretion open in subsequent decisions: Tiufino v Warland [2000] NSWCA 110; (2000) 50 NSWLR 104 at [418]ff; Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322 at [26]. I will proceed on the basis that the discretion identified in Arnold v National Westminster Bank plc above is available to me, in the absence of any appellate decision to the contrary. However, I have reached the view that I would not exercise the discretion not to apply such principles in the relevant circumstances for the reasons set out below. 13Ms Young submits that special circumstances exist in the present circumstances because an issue as to the form of consent obtained from NSW Maritime only came to light during the costs assessment process as a result of her application for information to NSW Maritime and the costs assessor had a power and, she submits, a duty to call for the production of further documents or give the parties an opportunity to put further matters and submissions to him. 14I am not satisfied that these matters support the exercise of any such discretion in Ms Young's favour. So far as the question when any issue as to the form of consent came to light, the evidence before me indicates that Ms Young had already raised issues as to adequacy of the description of the licensed area in the Lease at the time the Consent Orders were made. By at least June 2010, when her solicitors wrote to NSW Maritime suggesting that the description of the licensed area was inaccurate and needed to extend to the area north of the houseboat site main structure in which mooring chains, mooring ropes and mooring blocks were positioned. By 30 July 2010, Ms Young had requested access to information held by NSW Maritime, apparently in relation to the scope of the Consent, and that information was provided by NSW Maritime by letter dated 18 November 2010. Ms Young was therefore aware of this issue, and of the information which she had and did not have concerning it, by the date on which she consented to the Consent Orders on 7 October 2010. So far as the process before the costs assessor is concerned, he allowed Ms Young the opportunity to put submissions as to this matter and called for the production of further documents in response to those submissions. 15Ms Young also contends that she would be disadvantaged and Mr Annis-Brown would be advantaged if he received payment of his fees from a "settlement" in circumstances that Ms Young has not received what she bargained for and would face the risk of having to repay the "settlement" if she agitates the issue. I do not see any unfair advantage to Mr Annis-Brown or unfair disadvantage to Ms Young in payment of his fees, where this is the consequence of the Consent Orders and the costs assessment process to which Ms Young committed herself. Ms Young can take that consequence into account in determining whether to reagitate issues with NSW Maritime in a way that may give rise to an obligation on her part to repay the amount she previously received from NSW Maritime and her former solicitors. 16On the other hand, it seems to me that there are compelling factors indicating that I should not exercise any such discretion in Ms Young's favour. It is now over six years since Mr Annis-Brown's retainer was terminated. The matters the subject of the proceedings brought by Mr Annis-Brown and Ms Young respectively were resolved by the Consent Orders on a basis that contemplated a reference of matters in dispute to the costs assessor, which occurred. As noted above, the costs assessor permitted Ms Young a further opportunity to agitate those issues before him over Mr Annis-Brown's objection and despite the Consent Orders. There seems to me to be a compelling basis to decline to exercise any discretion which would be available to me not to apply issue estoppel principles in these circumstances, and strong reasons to apply those principles, both to deliver justice between the parties and to avoid the parties and the community devoting further resources to the reagitation of matters which were the subject of the earlier proceedings, the Consent Orders and the costs assessment.

The alleged error of law in respect of settlement 36Ms Young's second and third bases for challenging the settlement, raised in paragraphs 5(b)-(c) of the Summons, relate to the question whether she had received a "settlement" as envisaged by paragraph 2 of the CCA. I have held above that these paragraphs should be struck out by reason of a res judicata or issue estoppel arising from the Consent Orders. However, I address these grounds of appeal on their merits against the contingency that I am in error in that respect. 37On 23 December 2010, Ms Young's solicitors advised the costs assessor of a further challenge to Mr Annis-Brown's claim to be paid his fees as follows: "... [Mr Annis-Brown's] entitlement to costs and disbursements arise on a successful outcome of the proceedings in which [Mr Annis-Brown] was retained. On 18 September 2009, [Ms Young] entered into a Deed with NSW Maritime and the other defendants which purported to resolve the [NSW Maritime proceedings]. That Deed, the terms of which are confidential, was itself a conditional agreement. Information and documentation which have only come to light in the last few weeks clearly suggest that the conditions set out in the Deed had not been fulfilled and that the Deed is void ab initio. If so, no successful outcome has been achieved." This submissions did not squarely reflect the terms of paragraph 2 of the CCA which provided that Mr Annis-Brown was entitled to payment of his fees where a "settlement" was reached with the defendant, which one might expect would involve an element of compromise, rather than requiring a "successful outcome" in the sense of complete success by Ms Young. 38The costs assessor sought and received further information as to this submission from Ms Young's solicitors. The costs assessor's reasons for his determination dealt with that contention as follows: (xxv) In relation to [Ms Young's] submission that the Deed of Release between [Ms Young] and Maritime Authority of NSW is void ab initio, I consider that in the absence of evidence of [Ms Young] returning the moneys received by [Ms Young's] representatives pursuant to the Deed that [Mr Annis-Brown] [sic] has received a settlement as envisaged by paragraph numbered 2 of the letter of [Mr Annis-Brown] of 14 March 2001 and that fair and reasonable costs and disbursements are payable by [Ms Young] to [Mr Annis-Brown] in respect to the work carried out by [Mr Annis-Brown] on behalf of [Ms Young] pursuant to the Retainer. 39Ms Young contended, in her appeal before me, that the costs assessor erred in law in this regard in the manner set out in paragraph 5(b)-(c) of her grounds of appeal as set out in paragraph 2 above. I am satisfied that the costs assessor did not commit any error of law in respect of his finding in this regard. I do not consider that the materials on which the costs assessor arrived at his decision were either inconsistent with or contradictory to his decision or that there was a "true and only reasonable conclusion" contradictory of the opinion which he formed. 40Ms Young submits before me that a "settlement" would be established only if there was first, a payment of money by the other parties to Ms Young and, second, an agreement with the other parties to the litigation which continued to have legal effect. The argument put by Ms Young before the costs assessor and before me assumes that the fact of a "settlement" for the purposes of paragraph 2 of the CCA can only be established if the Deed of Release with NSW Maritime not only came into effect but did not later cease to have effect in accordance with its terms. Although the costs assessor's reasoning is in somewhat abbreviated terms, it seems to me that he has adopted a common sense reading of the term "settlement" and found that the fact that Ms Young had, at least to the date of the costs assessment, retained the moneys paid by NSW Maritime and her former solicitors under the Deed of Release was a strong factual indication that a settlement had occurred. 41I do not consider that the material before the costs assessor required him to reach a different result. The Macquarie Dictionary defines the term "settlement" as, in general usage, "the satisfying of a claim or demand; a coming to terms" and, in legal usage, "the compromise of a dispute by the parties own agreement before or during the course of a hearing". The Oxford English Dictionary has a similar definition of "the act of satisfying a claim or demand, of coming to terms (with a person)". In my view, the phrase "any settlement which might be reached with the defendant" in paragraph 2 of the CCA is satisfied by a compromise which is in fact reached, even if that compromise is recorded in a document where some or all of that document later ceases to have effect in accordance with its terms. 42In my view, it can fairly be said that a settlement was reached between Ms Young and NSW Maritime which required the payment of a sum of money by NSW Maritime and Ms Young's former solicitor to Ms Young and which imposed certain obligations on NSW Maritime in respect of the obtaining of the requisite Consent, the waiver of rent owing by Ms Young and the dismissal of the specified proceedings. That statement is, in my view, no less correct if the Deed of Release later ceased to have legal effect in accordance with its terms, even if this occurred ab initio. The "settlement" had delivered to Ms Young the benefits of (1) receipt of a substantial payment and the opportunity to retain that payment over a considerable period; (2) the prospect that the Consent would be obtained by NSW Maritime in satisfactory terms, even if it were ultimately the case that the Consent obtained was not (as Ms Young now contends) satisfactory and the Deed later ceased to have effect in accordance with its terms; (3) the waiver of NSW Maritime's claim for rent in arrears in respect of the houseboat site over a lengthy period; and (4) the dismissal of proceedings which may now be unable to be recommenced even if the Deed has now ceased to have legal effect. 43Ms Young contended before me that the Consent obtained by NSW Maritime did not extend to the subdivision defined in the Lease, because certain mooring ropes and chains which should have been included were not included. However, Ms Young did not put substantive submissions before the costs assessor as to the range of issues which would need to be determined to establish the absence of the requisite Consent, which include at least the following:

Since the term "Consent" is defined in the Deed of Release as " any requisite consent under the Environmental Planning and Assessment Act 1979 to the subdivision proposed by the Lease ", what was the "subdivision proposed by the Lease" and what consent was required under the Environmental Planning and Assessment Act for it.
Whether the requirement for consent under the Environmental Planning and Assessment Act extended to the Licence under which Ms Young occupied the area in which mooring ropes and chains were situated. This in turn depends on questions of fact and law as to the application of the Environmental Planning and Assessment Act and relevant planning instruments, to which I refer below.
The extent of application of Environmental Planning and Assessment Act s 76 which required development consent to the development of land (defined in Environmental Planning and Assessment Act s 4 to include the subdivision of land) if a planning instrument that applied to the land required such consent. The term "subdivision of land" was in turn defined in Environmental Planning and Assessment Act s 4B as "the division of land into two or more parts that, after the division, would be obviously adapted for separate occupation, use or disposition".
Whether the grant of the Licence over the area containing the mooring chains and mooring ropes, the boundaries of which are now questioned by Ms Young, constituted a division of the land into a part adopted for "separate occupation, use or disposition" (notwithstanding that it did not confer a proprietary interest in that area on Ms Young and clause 2.1 of the Lease made clear that the Licence did not confer an exclusive right on Ms Young to occupy or use the relevant area or to dispose of it other than to an assignee of her interest in the Leased Area who was approved by NSW Maritime) so as to constitute a subdivision of the relevant land and require consent under the Environmental Planning and Assessment Act . If it did not, there would be no failure to obtain a requisite consent under the Environmental Planning and Assessment Act and no breach of the Condition in the Deed of Release.
Whether the result of this analysis would differ because, as Ms Young contends, the definition of "Licensed Area" in the Lease provided that the provisions relating to the Lease and Leased Land also applied to the Licence and Licensed Area unless otherwise stated, or because the details of the proposed development set out in NSW Maritime's Development Application provided for a subdivision of Lot 2 from Lot 3 "via licence for the anchor chains". 44In these circumstances, I do not consider the costs assessor was bound to find that the Condition to the Deed of Release was not satisfied or that that Deed was void ab initio. In my view, the materials which were before the costs assessor were not inconsistent with or contradictory of his opinion that a settlement had occurred, nor was there a "true and only reasonable conclusion" contradictory of the opinion which he formed, and the costs assessor therefore did not make an error of law in this regard. 45Ms Young's grounds of appeal also included a further submission, relying on Doyle v Hall Chadwick [2007] NSWCA 159, that the costs assessor should not have completed the assessment if it was necessary to embark upon a curial inquiry in order to do so. I do not consider that the costs assessor committed any error of law in that regard. The question before him was whether a settlement had been reached and, even if Ms Young was correct in identifying the matters relevant to answering that question, it could be answered by reference to the submissions and evidence placed before him by Ms Young and Mr Annis-Brown and did not require a curial inquiry.

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