Goldberg v Beckett

HIS HONOUR: On 23 November 2016, I published my reasons for judgment in a dispute between the parties about how certain funds in court should be treated pending final assessment of Turner Freeman’s costs of acting as Ms Beckett’s solicitor in the principal litigation between her and the State of New South Wales: see Goldberg v Beckett [2016] NSWSC 1646. I directed that the parties bring in short minutes of order to reflect my conclusions.

Short minutes of order dated 12 December 2016, signed by the legal representatives of the parties, were subsequently agreed to in the following terms:

In accordance with those short minutes, an account with Westpac was established. It is convenient to refer to that account simply as the Westpac Controlled Account. The monies in question were credited to that account on 21 February 2017.

On 5 April 2017, Ms Beckett filed a notice of motion seeking the following orders:

In essence, by her latest notice of motion, Ms Beckett seeks to achieve a result or outcome that is different to that which flowed from my 23 November 2016 judgment. It will be recalled that Ms Beckett made the earlier application to remedy what she considered to be the prejudice to which she was exposed by “her money” (to the extent that it would be returned to her) being held in Court earning a mere one percent interest. It is clear that even though I did not grant her the full gamut of the relief that she sought, I made an order that, in accordance with Ms Beckett’s clear wishes, was intended “to eliminate or reduce the loss to either party”. Obviously, whatever the outcome, neither party was interested in the monies achieving anything less than the most favourable available return.

In support of her latest notice of motion, Ms Beckett relies upon the affidavit of her (now former) solicitor Kerrie-Ann Rosati sworn 30 March 2017 and her own affidavit sworn the following day. Ms Beckett’s concerns are articulated in her affidavit in the following terms:

Ms Rosati’s affidavit reveals that following the orders made by me, there was some delay in effecting the transfer of the funds out of court and into what became the Westpac Controlled Account. Ms Rosati’s affidavit deposes in some considerable detail to the clearly unfortunate state of affairs that existed or developed between her on Ms Beckett’s behalf and the plaintiffs with respect to this deceptively simple but apparently somewhat difficult exercise. The position has been further complicated by the fact that when the account was established, and the funds transferred, Westpac paid no interest on the monies, contrary to everyone’s expectation and in complete derogation of the intended purpose of my orders. That last issue would appear now to have been resolved.

Turner Freeman’s bill of costs for acting for Ms Beckett in the principal proceedings has been with a costs assessor for some time. I am now informed that he will require a further two months to complete that exercise. Meanwhile, Turner Freeman’s bill of costs for acting for Ms Beckett in the High Court proceedings has been assessed but has been referred to a review panel on Ms Beckett’s application. The dispute that is the principal issue in the present proceedings was recently unsuccessfully mediated before The Hon Michael McHugh QC. It seems that the parties are content (if that word could ever be used to describe any emotions generated by this vitriolic litigation) to await the outcome of the costs assessor’s deliberations before dealing further with it. Presumably that anticipation incorporates the possibility, not to say the likelihood, that even that determination may find its way to an appeal panel as well.

Ms Beckett contends that her current prayers for relief are available in accordance with the Court’s statutory and inherent powers to make orders in aid of enforcement of the orders made by me on 15 December 2016. Ms Beckett does not accept that she is seeking a variation of those orders. She maintains that s 23 of the Supreme Court Act 1970, s 86(3) of the Civil Procedure Act 2005 and UCPR 36.1 provide ample power for the Court to make the orders that she seeks. Ms Beckett also refers to the inherent jurisdiction to make the orders as part of the Court’s power to control its own process: Grassby v R (1989) 168 CLR 1; [1989] HCA 45.

Turner Freeman opposes the making of the orders that are sought. They do so on several grounds.

First, Turner Freeman contends that there is no head of power nominated in the notice of motion and submits that none is readily apparent. Save for her right to receive any surplus funds after payment of Turner Freeman’s costs and disbursements, Turner Freeman argues that there is no right at law or in equity that Ms Beckett can promote to support her claim to the relief that she seeks. Order 4 is said to be in the nature of an appeal from my 23 November 2016 judgment, which in the present context of an application before me is afflicted with obvious difficulties.

Secondly, an account in the names of Turner Freeman, Ms Beckett and her solicitors, with each being a signatory, is not only inappropriate in the circumstances of this case, but would have the result that the account could not be a controlled monies account. According to Turner Freeman, it would be inappropriate having regard to Ms Beckett’s earlier attempt to direct the judgment monies to a bank account other than one maintained by her then solicitors (Turner Freeman) in breach of the terms of the conditional costs agreement that then governed the disposition of those funds. Turner Freeman opposes the payment of the disputed funds into any account upon which Ms Beckett is a signatory. Additionally, Ms Beckett’s proposal would fall foul of s 128 of the Legal Profession Uniform Law (NSW) concerning controlled money.

Thirdly, Turner Freeman maintains that the whole exercise contemplated by the notice of motion is simply not cost effective. I take that to be another way of saying that Ms Beckett’s proposal is a complete waste of time and money. The increased interest rate available on, say, a three month term deposit would generate about $1,615 per month on a capital sum of $1,656,089.93. That is calculated upon a comparison between interest at call at the rate of 0.88 percent compared to interest on a three month term deposit at the rate of 2.05 percent. The difference would be a function of the capital sum at 1.17 percent divided by twelve.

Turner Freeman contend that by comparison to that relatively insignificant amount, they have generated or incurred costs amounting to more than $50,000 in dealing with Ms Beckett’s representatives and Westpac in an attempt to secure an optimum destination for the funds. That was the estimate in mid-April this year. Presumably, Ms Beckett has herself incurred significant costs, certainly in excess of $1,615 per month, in the prosecution of this present issue. I am led to understand that the execution of documents that are even now necessary to satisfy the bank’s currently outstanding requirements has not yet occurred.

Fourthly, it is probable that not all of the monies in question will be paid to Ms Beckett. A sum of $2.5M has already been released to Turner Freeman from the original judgment sum that was the subject of the solicitor’s lien. Turner Freeman’s bill of costs in the High Court litigation was assessed at 98.7 percent of the bill as originally itemised. Even though no definite conclusions can be drawn from that fact, the indications are that Turner Freeman will become entitled at least to some as yet unspecified portion of the remaining monies. Concerns expressed by Ms Beckett about the interest rate have therefore to be considered having regard to these prospects.

In my opinion, Ms Beckett’s notice of motion was premature at best and entirely unnecessary at worst. It is the manifestation of a tendency all too readily to resort to the litigated outcome when other, less expensive and more reasonable strategies could have been employed. It is not difficult to find an example.

For instance, Ms Beckett anticipated that there would be some delay before Turner Freeman’s entitlement to costs had been finally determined following the assessment process. She was not unreasonably concerned that her judgment monies should earn interest at the most favourable rate available while the assessment process took its course. When her attempts to have that money diverted to an account controlled by her, or by her associate, were foiled, Ms Beckett instituted action that resulted in my judgment of 23 November 2016. If she thereafter retained concerns about the treatment of the monies following my orders, it would have been a simple matter for her to have put Turner Freeman on notice of those concerns in correspondence, accompanied by an assurance of ongoing co-operation with them to achieve the best result. To the extent that Turner Freeman thereafter resisted Ms Beckett’s attempts to ensure that the money was advantageously invested, it would have become difficult for Turner Freeman to argue that they would not be liable for any “losses” that resulted.

In the events that occurred, Ms Beckett’s solicitor did adopt this course, but for some reason did not maintain it. Ms Beckett and Turner Freeman certainly engaged in relatively lengthy correspondence commencing on 28 November 2016, ultimately culminating in the notice of motion that I am now required to determine. In my opinion, the tone and content of that correspondence provided Ms Beckett with all of the protection that she required. Apparently either Ms Beckett or her solicitors were not similarly convinced. This is revealed in the correspondence, to which it becomes necessary to refer in order to assess whether or not Ms Beckett’s resort to the Court is reasonable or warranted.

On 28 November 2016, Turner Freeman wrote to DGT Costs Lawyers in these relevant terms:

Ms Rosati at DGT Costs Lawyers replied the next day in terms that included the following:

A letter from Ms Rosati dated 21 December 2016 suggested to Turner Freeman that they should “arrange payment of all funds held in Court including any interest to be paid into our firm’s trust account in order that we can arrange for the funds to be placed in a controlled money account”. Turner Freeman disagreed with that proposal by their letter dated 3 January 2017.

On 9 January 2017, Ms Rosati wrote asking Turner Freeman to “advise what course of action you will agree to in order that the funds held in Court might be moved to a controlled monies account”. She wrote to Turner Freeman again on 1 February 2017 confirming that she had met with Westpac that day and signed the account opening forms as required. She continued saying “will you now agree that we write jointly to the finance department at the Court to arrange the release of the funds held in Court into the controlled monies account”. That was followed by another letter from Ms Rosati the following day in these relevant terms:

Further correspondence occurred before Turner Freeman wrote on 16 February 2017 as follows:

DGT Costs Lawyers gave that consent the next day.

On 21 February 2017, Westpac advised that the funds had been credited to the Westpac Controlled Account as a three-month Term Deposit at an indicative rate of 2.45 percent per annum.

On 7 March 2017, Turner Freeman wrote to Ms Rosati confirming that the monies had been paid into the Westpac Controlled Account. The letter concluded somewhat hopefully by observing “that would appear to be the finality of that aspect of the matter”. It was not.

Ms Rosati wrote to Turner Freeman on 8 March 2017, as follows:

Turner Freeman relevantly responded the next day:

On 14 March 2017, Ms Rosati wrote to Turner Freeman at some length, summarising the state of the debate in correspondence to that time. Her letter concluded:

Ms Rosati wrote again a week later in the following relevant terms:

On 28 March 2017, Ms Rosati wrote to Turner Freeman again, including the following paragraphs:

Turner Freeman replied on 29 March 2017, in these relevant terms:

That letter went on to indicate that Westpac had advised that arrears of interest would be credited to the account from the date of the deposit of the funds from the Court.

Ms Rosati replied by letter dated 30 March 2017 as follows:

The italicised portion of Ms Rosati’s 28 March 2017 letter quoted above should have been the end of the matter, at least until the costs assessment process had concluded. Ms Beckett’s dissatisfaction with the then state of affairs was apparent from the correspondence and her reservation of rights had properly put Turner Freeman on notice that she remained concerned that the best interest rate was not being achieved.

Section 56 of the Civil Procedure Act 2005 is as follows:

Section 60 of that Act provides as follows:

I am unable to accept in the particular circumstances of this case that there was following Ms Rosati’s letter of 28 March 2017 any need for Ms Beckett to do anything further to advance or to protect her stated position. Turner Freeman had been put on notice. Despite a faltering start, the orders made by me on 23 November 2016 were being obeyed. The difference between the interest rates at the high and low ends of achievability is small, and not something that should have provoked a contested dispute before me, or certainly not yet. In this respect I consider that it will be instructive to discover in due course what Ms Beckett says is the loss to her in money terms, when the costs are finally assessed, that will have resulted from a less than optimum investment of the balance of the judgment monies since, say, 1 January 2017.

The costs generated by this dispute seem likely to be disproportionate to that loss. The accuracy of that observation remains to be seen. I am not prepared to determine the issues raised by Ms Beckett’s latest notice of motion until that loss (if any) is known. The most obvious reason for that is that if it transpires that Turner Freeman’s lien extends to the whole of the remaining balance of the disputed funds in the Westpac Controlled Account, Ms Beckett will have suffered no loss as any interest deficiency will fall to Turner Freeman’s account. Ms Beckett’s position can be considered further following the completion of the costs assessment process, whether by the costs assessor or a review panel, whenever that finally occurs.

In these circumstances I propose to make the following orders: