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La Spina v Macdonnells Law

 

[2014] QCA 44

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO/S:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

DELIVERED ON:

11 March 2014

DELIVERED AT:

Brisbane 

HEARING DATE:

19 February 2014

JUDGES:

Holmes and Muir JJA and Mullins J

Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS:

1.The appeal be allowed.

2.The orders of the primary judge made on 17 May 2013 be set aside.

3.The judgment entered on 17 May 2013 be set aside.

4.The respondent pay the appellant’s costs of the appeal on the standard basis.

CATCHWORDS:

APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – WHAT IS – GENERALLY – where the appellant appeals against an order of the primary judge – where the primary judge ordered the appellant to pay to the respondent $168,067.84, the sum certified by a costs assessor as being his assessment of the costs payable by the appellant to the respondent pursuant to an itemised tax invoice – where the appellant engaged the respondent to carry out legal services in relation to a matrimonial dispute – where the respondent claimed $202,843.44 for legal services provided to the appellant pursuant to a costs agreement – where the appellant objected to the respondent’s statement of costs – where the appellant requested that a costs assessor assess the costs statement – where the appellant applied to the Court to review the decision in the costs assessor’s certificate of assessment of costs – where the review of the costs assessor’s assessment was dismissed – where the respondent filed an application in the proceedings seeking judgment in its favour for the sum of $168,067.84 and a lifting of a stay on the respondent’s obtaining judgment – where the appellant was unable to attend the hearing of the application – where the primary judge ordered that the stay be lifted and that the respondent be entitled to judgment on the cost assessor’s certificate – where the appellant did not receive two days notice of the application filed in the proceeding as required by r 31 of the Uniform Civil Procedure Rules 1999 (Qld) – whether the primary judge erred in not affording the appellant an opportunity to be heard in respect to the respondent’s application – whether the appellant was denied natural justice

Legal Profession Act 2007 (Qld), s 315, s 316, s 316(4), s 317, s 341

Uniform Civil Procedure Rules 1999 (Qld), r 31, r 742, r 743B(1), r 743B(3), r 743H, r 743H(4), r 743I

Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502; [1988] HCA 21, considered

COUNSEL:

The appellant appeared on her own behalf

M A Jonsson for the respondent

SOLICITORS:

The appellant appeared on her own behalf

Macdonnells Law for the respondent

[1] HOLMES JA:  I agree with the reasons of Muir JA and the orders he proposes.

[2] MUIR JA: Introduction The appellant appeals against an order of the primary judge made on 17 May 2013 ordering the appellant to pay to the respondent $168,067.84, the sum certified by a costs assessor in a certificate filed on 3 December 2012 as being his assessment of the costs payable by the appellant to the respondent pursuant to an itemised tax invoice dated 28 September 2011.  The invoice was in respect of costs incurred by the respondent in representing the appellant in matrimonial litigation in the Federal Magistrates Court between 11 November 2010 and 23 September 2011.

[3] The costs assessor was requested by the appellant to provide written reasons for the decisions included in the certificate.  The reasons, which addressed the appellant’s 341 objections to the respondent’s costs statement, were filed on 18 January 2013.

[4] On 23 January 2013, the appellant filed her defence to the respondent’s statement of claim in District Court proceedings 47 of 2012 commenced on 7 March 2012 by the respondent against the appellant.  In the proceedings, the respondent claimed $202,843.44 for legal services provided by the respondent to the appellant pursuant to a costs agreement entered into between them, together with interest.

[5] Under r 742 and r 743I of the Uniform Civil Procedure Rules 1999 (Qld) (the UCPR), a party dissatisfied with a decision included in the costs assessors’ certificate of assessment of costs under the Legal Profession Act 2007 (Qld) (the Act) may apply to the Court to review the decision.  This Court was not referred to any such application but it would seem from the primary judge’s order of 24 January 2013 and from the reasons of Andrews DCJ, delivered on 9 April 2013, that the parties proceeded on the assumption that there was an application under r 742 and r 743I.

[6] After a hearing, Andrews DCJ ordered, on 9 April 2013, that the appellant’s application for a review of the costs assessor’s assessment be dismissed.  His Honour observed in his ex tempore reasons that the review was conducted by him pursuant to r 742 of the UCPR.  The accuracy of the observation was not disputed[1] and there was no appeal from Andrews DCJ’s decision.

[7] On 15 May 2013, the respondent filed an application in the proceedings seeking judgment in its favour in the sum of $168,067.84 and a lifting of a stay on the respondent’s obtaining judgment ordered on 24 January 2013.

[8] On 16 May 2013, the appellant filed an amended defence in the proceedings.  She also sent an email to the respondent and the primary judge’s associate notifying her inability to attend a hearing on 17 May and complaining about the short notice.

[9] The respondent’s application was heard on 17 May 2013.  The appellant did not appear.  The primary judge observed that the appellant had emailed the registry and “said she won’t be here”.  Counsel for the respondent provided the primary judge with a two page outline of submissions.  Whether a copy of the outline had been provided to the appellant prior to the hearing of the application is not apparent from the record.

[10] Neither the transcript of the hearing on 17 May nor the outline of submissions provided by the respondent’s counsel to the primary judge contains any reference to the material, if any, relied on by the respondent in support of its application.  In particular, there was no reference to an affidavit of service.

[11] On 17 May, the primary judge ordered:

“1.The original order for stay made on 14 December 2012 be dismissed.

2.The [respondent] be entitled to judgment on the cost assessor’s certificate filed on 3 December 2012.

3.Otherwise the claim be dismissed.

4.No order made as to costs in relation to the original matter.”

[12] There is a document on the Court file headed “Judgment” which contains the primary judge’s name, the date 17 May 2013, and the words and figures, “THE JUDGMENT OF THE COURT IS THAT the [appellant] pay to the [respondent] the amount of $168,067.84”.

Grounds of appeal

[13] The grounds listed in the Notice of Appeal are:

“(a)The [primary judge] erred in not granting the appellant an adjournment in the original proceedings; and

(b) The [primary judge] erred in granting Judgment to the [respondent] under Rule 743H of the Uniform Civil Procedure Rules 1999 (Qld) when there were still issues to be determined between the parties.”

Failure to grant an adjournment and other denials of natural justice

[14] The primary judge erred in not affording the appellant an opportunity to be heard and, in this respect and others, the appellant was denied natural justice.

[15] The appellant received notice of the application on 15 May 2013.

[16] Rule 31 of the UCPR requires that at least two business days notice be given of applications in a proceeding.  Such notice was not given.

[17] The appellant pointed out in her 16 May email that she was self-represented.  She stated that she was unwell, her mother whom she needed to assist was also unwell, she had “sole parental responsibility for two children”, she had been unsuccessful in obtaining legal representation and that she would be filing an amended defence the next day.  She stated that she had appointments the following morning with the school dentist for her two children, one of whom had major dental problems and was in need of immediate referral to an orthodontist.  She asserted that she had waited weeks for the appointment.

[18] The appellant also stated in the email that she had not obtained any written reasons in respect of Andrews DCJ’s decision.  It was apparent from the email that the appellant was intimating that she wanted the respondent’s application adjourned to enable her to properly consider and respond to it.

[19] Although the primary judge mentioned the email during the hearing on 17 May, its content was not referred to by him beyond his making the remark quoted earlier.  Nor does it appear that any consideration was given to the non-compliance with r 31 or whether the hearing of the application should be adjourned.  The primary judge and the respondent were on notice that the appellant intended to file an amended defence.  That also signalled the appellant’s resolve to resist the application.

[20] In these circumstances, proceeding with the hearing in the absence of the appellant and before the time for service prescribed in the rules had elapsed constituted a denial of natural justice.  There was no suggestion at first instance or on appeal that there was any need for the subject application to be determined urgently.  As the respondent was seeking a substantial judgment against the appellant, she should have been given a reasonable time within which to consider the application and prepare for a hearing.  Moreover, the orders made on 17 May exceeded the relief sought in the respondent’s application and concluded the entire proceedings.

[21] The above findings make in unnecessary to rule on the other issues raised on the appeal but, as they were argued at some length and, if I may say so, with skill and tenacity by counsel for the respondent, I propose to address them.

The entitlement of the respondent to judgment

[22] The assessment of costs under the Act is dealt with in Part 4 of Chapter 17A of the UCPR.  Where a certificate of assessment is relied on by a party to a costs assessment r 743H applies.  It provides:

743HApplication to court for directions after certificate of assessment filed

(1) This rule applies if a certificate of assessment is filed in the relevant court.

(2) The court or any party may, on notice to all parties who participated in the assessment, have the application relisted before the court.

(3) In relation to any issue in dispute between the parties, the court may give directions or decide the issue.

(4) If there are no issues in dispute, the court may give the judgment it considers appropriate having regard to the certificate.

(5) The court may delay giving a judgment, or stay the enforcement of a judgment given, pending a review by the court of a decision of the costs assessor.”

[23] The application referred to in sub-rule (2), where, as is the case here, “a law practice has started a proceeding in a court to recover costs from any person”, is the application for assessment of “all or part of those costs”.[2]  That application “must be made by application in the proceeding”.[3]  Where no application for assessment has been made in a proceeding, the Court may, nevertheless, order that any such costs be assessed by a costs assessor.[4]  The appellant does not argue that the application was not, in effect, relisted pursuant to sub-rule (2) but contends that there were issues in dispute between the parties and that the effect of sub-rules (3) and (4) was that the Court had no power to give “judgment … having regard to the certificate”.

[24] The respondent submitted that, irrespective of the content of the amended defence, the primary judge was entitled to determine that there were no “triable issues requiring determination in the action”.

[25] Counsel for the respondent further submitted that the fresh allegations of unconscionability and breach of fiduciary duty were unsustainable because of Andrews DCJ’s findings that the appellant was not coerced into continuing to engage the respondent and suffered no detriment as a result of the continued engagement.

[26] The respondent construed “no issues in dispute” in r 743H(4) as meaning no triable issues.  That construction places a gloss on or qualification of the plain words of sub-rule (4).  In any event, the point is academic as the primary judge did not consider the issues raised on the pleadings.

[27] The reasons for the primary judge’s orders may be extracted, to some extent, from the exchanges between himself and the respondent’s legal representative.  His Honour concluded that the dismissal of the appellant’s application by Andrews DCJ entitled the respondent to the vacation of the stay order and that this, in turn, entitled the respondent to “enter judgment on the certificate of costs”.  The primary judge then considered the question of costs.  His Honour then concluded that “probably the most sensible thing to do [was] to strike out the action”.  That conclusion may be explained by the view expressed by him in argument that the proceedings were effectively determined by the review of the costs assessor’s certificate.  That view was erroneous.

[28] The costs assessed by the costs assessor were the costs of the matrimonial proceedings.  The assessment may have fixed the quantity of those costs but it did not determine the appellant’s liability to pay them.  Such liability was disputed in the District Court proceedings commenced by the respondent.  If the claim was to be struck out, so as to conclude the proceedings, the appellant was entitled to proper notice of any strike out application and of the grounds on which it was based.

[29] The amended defence, although defective in a number of substantial respects, alleges unconscionable conduct; breach of fiduciary duty; breach of contract; and breach of a tortious duty of care.  Broadly speaking, in relation to the unconscionability and fiduciary claims, it is claimed that the appellant was at a position of disadvantage in relation to the respondent having regard to her modest financial circumstances, stress and depression, all of which were known to the respondent.  It is alleged that the respondent took advantage of the appellant’s vulnerability and acted in its own financial interest rather than in the interests of the appellant.

[30] Although many matters were argued by the appellant before Andrews DCJ, the most substantial issue was the extent, if at all, to which the respondent’s costs should have been reduced on assessment as a result of the failure by the respondent to revise its initial fee estimate of $52,300 ­– $60,000 and notify the appellant of the revision in a timely way.  Under s 315 of the Act, a “law practice” is required to disclose in writing any substantial change to anything included in an existing disclosure made under Division 3 of Part 3.4 in Chapter 3 of the Act “as soon as is reasonably practicable after the law practice becomes aware of that change”.

[31] The cost assessor’s role was to conduct a costs assessment having regard to the criteria in s 341 of the Act.  In so doing, he was entitled to take into account the provisions of s 316 and s 317 of the Act.  Under s 316(4) of the Act, failure on the part of the respondent to make a disclosure required under the Act could result on the amount of the respondent’s costs being reduced on assessment “by an amount considered by the costs assessor to be proportionate to the seriousness of the failure to disclose”.

[32] The appellant relied on breaches of s 316 of the Act in her notice of objection in a number of ways.  In respect of each such objection, the costs assessor’s response was, “I have considered all of this which I took into account during the course of the assessment”.  The extent and manner to which the objections were taken into account is nowhere revealed except in as much as no reduction in the costs appears to have been thought warranted.

[33] Andrews DCJ found that the initial costs estimate amounted to an existing disclosure and that there was an arguable breach of the respondent’s “ongoing obligation to disclose”.  He concluded, in effect, that the appellant had not established that she would have “done anything differently” had there been due and timely disclosure.  His Honour also found, in effect, that had such disclosure been made, it was not shown that the appellant “would then have been in a position to do anything more cheaply if she continued to engage solicitors and a barrister”.

[34] Another issue debated before Andrews DCJ was whether the respondent knew that the appellant “had a particular vulnerability”.  The solicitor with the conduct of the appellant’s matrimonial proceeding accepted that the appellant “had been given a sample prescription of a particular medication” and it was found that she had been told that the appellant “had some mild depression at the time”.  The reasons note that the solicitor accepted the appellant’s “suggestion in cross-examination that [the appellant] did not have a clinical mental disorder”.

[35] Although Andrews DCJ accepted that the appellant was able to give clear instructions, he made no express findings as to the appellant’s vulnerability or the respondent’s knowledge or beliefs in that regard.

[36] It was argued by counsel for the respondent that, given Andrews DCJ’s findings, the primary judge was entitled to determine that there were no triable issues requiring determination in the action notwithstanding the allegations raised in the appellant’s amended defence.  The contention cannot be accepted.  The primary judge gave no consideration at all to the allegations in the amended pleading.  He was not invited to do so.

[37] The costs assessor, relevantly, exercised a discretion under the Act.  The rehearing before Andrews DCJ involved a consideration of whether the costs assessor’s determinations were “clearly wrong”.  Andrews DCJ held that the costs assessor had properly taken the objections into account and that his decisions were within the proper exercise of his discretion.

[38] Plainly, the issues raised on the pleading of unconscionable conduct and breach of fiduciary duty, not to mention breach of contractual duties and breach of a duty of care, were different in nature to those relevant on the costs assessment and the review of the costs assessor’s decision.

[39] Even if some of Andrews DCJ’s findings of fact are capable of giving rise to issue estoppels on the trial of the District Court proceedings on the basis that such facts alleged or denied on the trial were “necessarily decided” in the costs review proceedings,[5] such estoppels would be limited in number and extent and could not extinguish the appellant’s defences or any counterclaim made in reliance on such defences.

[40] Andrews DCJ made few findings of fact that could cause difficulty for the appellant if they gave rise to issue estoppels.  For example, when considering what options were available to the appellant when she was belatedly informed of the costs blow out, Andrews DCJ implicitly accepted that the disclosure had an enormous effect on her state of mind.  His Honour then put this implicit finding to one side and considered what “a sensible, reasonable litigant” whose state of mind was not so affected would have done in the circumstances.  In a number of significant respects, Andrews DCJ found merely that there was an absence of evidentiary support for the appellant’s case: a difficulty capable of being cured on any trial of the District Court proceedings.

[41] For the above reasons, I would order that:

1. The appeal be allowed.

2. The orders of the primary judge made on 17 May 2013 be set aside.

3. The judgment entered on 17 May 2013 be set aside.

4. The respondent pay the appellant’s costs of the appeal on the standard basis.

[42] The appellant, being self-represented, is unlikely to have any recoverable costs apart from filing fees but she is entitled to recover those.  I would make no order as to the respondent’s costs at first instance of and incidental to its application filed on 17 May 2013 as that application comprehensively miscarried.

[43] MULLINS J:  I agree with Muir JA.

Footnotes

[1] Rule 742 is in Part 3 of Chapter 17A of the Uniform Civil Procedure Rules which is not generally applicable to assessment of costs under the Legal Profession Act 2007. However, r 743I specifically applies r 742 to such assessments.

[2] Uniform Civil Procedure Rules 1999 (Qld), r 743B(1).

[3] Uniform Civil Procedure Rules 1999 (Qld), r 743B(1).

[4] Uniform Civil Procedure Rules 1999 (Qld), r 743B(3).

[5] Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 507–508.

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Editorial Notes

  • Published Case Name:

    La Spina v Macdonnells Law

  • Shortened Case Name:

    La Spina v Macdonnells Law

  • MNC:

    [2014] QCA 44

  • Court:

    QCA

  • Judge(s):

    Holmes JA, Muir JA, Mullins J

  • Date:

    11 Mar 2014

Litigation History

Event Citation or File Date Notes
Primary Judgment - - QDC
Appeal Determined (QCA) [2014] QCA 44 11 Mar 2014 -

Appeal Status

{solid} Appeal Determined (QCA)