Bechara v Bates (No 3)

By summons filed on 17 April 2014, the plaintiff, Maria Bechara, sought leave to appeal against two decisions of Magistrate Keogh of the Local Court at the Downing Centre made on 18 March 2015 and 2 April 2015 respectively. Leave to appeal was granted by McCallum J on 1 May 2015.

I shall refer to Ms Bechara, who was the defendant in the Local Court proceedings and the plaintiff in these proceedings as “the solicitor”. I shall refer to Mr Bates, who was the plaintiff in the Local Court proceedings and the defendant in these proceedings, as “the barrister”.

The grounds of appeal, as set out in the summons, are:

Because the orders ultimately made by Magistrate Keogh resulted, in part, from the procedural history which was known to her Honour (through the Court file and the circumstance that she had presided over the hearings on 17 February 2015, 12 March 2015, 18 March 2015 and 2 April 2015), it is necessary to set it out in some detail in order to appreciate the context in which the orders were made.

The following procedural history is taken from the Court book as well as from the evidence of the barrister (which was given in the Local Court but which the solicitor did not include in the Court book) and the transcripts of the proceedings in the Local Court on 6 November 2014, 17 February 2015, 12 March 2015, 18 March 2015 and 2 April 2015.

The barrister commenced proceedings against the solicitor in the Local Court by statement of claim filed on 27 May 2014 for fees said to be outstanding in various matters in which the solicitor had instructed the barrister. In her defence filed on 27 June 2014 the solicitor alleged that the barrister would be entitled to be paid his fees only if she was paid by the clients. The solicitor further alleged that the barrister failed to make the requisite costs disclosure, as required by ss 311, 315, 316 and 317 of the Legal Profession Act 2004 (NSW) (now repealed).

On 6 August 2014 the barrister filed in Court, with leave of Registrar McTegg, a reply to the defence in which he alleged that he had made sufficient disclosures to the solicitor in her capacity as a “sophisticated client” (within the meaning of ss 302, 310(2) and 312(c)(i) of the Legal Profession Act). The barrister further alleged that the solicitor was estopped from denying that she was obliged to pay his fees because she had admitted that she owed the monies and further that she had obtained judgment in the District Court against a client which included monies due to the barrister. Paragraph [5] of the reply, which is of present relevance, alleged:

On 6 August 2014 (the day the reply was filed) consent orders were made in the Local Court granting leave to the barrister to issue and serve a notice to produce addressed to the solicitor, which was made returnable on 10 September 2014.

On 15 August 2014 a notice to produce was issued, which sought production of the following documents from the solicitor:

No documents were produced in answer to the notice to produce on the return date of 10 September 2014. On 11 September 2014 the barrister sent emails to the solicitor regarding the notice to produce. At a call-over of the matter on 24 September 2014 before the Registrar, Mr Hiramanek, who appeared as agent on behalf of the solicitor, sought an extension of ten days of the order that she comply with the notice to produce. The Registrar ordered the solicitor to comply with the notice to produce by 29 September 2014 and ordered her to pay the barrister’s costs of $440 within seven days. On 29 September 2014 the solicitor, once again, failed to comply with the notice to produce. The Local Court ordered that she pay the costs of that day.

On 2 October 2014 the barrister filed a notice of motion seeking default judgment against the solicitor on the grounds that she had twice failed to comply with the notice to produce. On 13 October 2014 the solicitor filed a notice of motion seeking review of the Registrar’s orders made on 24 September 2014 (to extend the time for compliance with the notice to produce to 29 September 2014). Both notices of motion were listed for hearing before the Local Court on 30 October 2014 but, as they were not reached, they were stood over to 6 November 2014 for hearing.

On 6 November 2014 Magistrate Buscombe heard both notices of motion. The solicitor was represented at the hearing by Mr McCrudden of counsel; the barrister appeared in person. The barrister drew the Magistrate’s attention to the fact that what he sought in the notice to produce corresponded with the allegations in paragraph [5] of the reply (set out above) which specifically referred to documents which had been created by the solicitor or which she had relied upon in other proceedings or by way of proofs of debt. The barrister referred the Magistrate to Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 21.10(1)(a) which provides that documents referred to in a pleading may be the subject of a notice to produce. The barrister also relied on the definition of the term “pleading” in the Dictionary to the UCPR, which includes a reply.

The barrister referred Magistrate Buscombe to Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 200 on the question of what orders ought be made if the defence were struck out. The barrister accepted that, if the solicitor’s defence were struck out, the appropriate course would be for the Court to give the solicitor a further limited time to produce the documents, with provision for default judgment if she did not comply within that time. In the following exchange the Magistrate invited Mr McCrudden to respond to the barrister’s submissions:

In ex tempore reasons given later that day (6 November 2014) Magistrate Buscombe said:

The Magistrate assessed the costs in the sum of $2,178 including GST.

On 13 November 2014 the solicitor filed a summons in this Court seeking leave to appeal against the orders made by Magistrate Buscombe on 6 November 2014. The solicitor also applied to this Court for a stay of the Magistrate’s orders, which was granted by Button J on 26 November 2014. When the matter was mentioned in the Local Court on 9 December 2014, it was stood over pending determination of the solicitor’s application for leave to appeal to this Court.

On 10 December 2014 the solicitor’s application for leave to appeal from Magistrate Buscombe’s orders was heard by McCallum J. Mr McCrudden appeared on behalf of the solicitor; the barrister appeared in person. Her Honour, in an ex tempore judgment, refused leave to the solicitor to appeal from Magistrate Buscombe’s orders and dismissed the summons: Bechara v Bates [2014] NSWSC 1935. Her Honour ordered that the stay granted by Button J on 26 November 2014 of the Magistrate’s orders made on 6 November 2014 be extended until 4pm on 15 December 2014.

The solicitor did not produce documents on 15 December 2014.

On 17 December 2014 the solicitor paid the amount of $2,178 as required by the costs order made on 18 November 2014. She also produced some documents to the Court on that date (under cover of a letter dated 16 December 2014) which were said to be an answer to the notice to produce. The barrister (by his solicitors) acknowledged receipt of the payment and reiterated his request for payment of $440, being the costs of 24 September 2014 which were ordered to be paid by 1 October 2014.

The documents produced included:

The Taperell report was a report by Mr Taperell to Levy DCJ following a reference ordered in proceedings in the District Court which the solicitor had brought against former clients, Rosabelle and Gabriel Cross. Pursuant to the reference, Mr Taperell was required to assess the fair and reasonable amount of costs for the work the subject of the bills referred to in the pleading. The barrister had been instructed by the solicitor to perform work for the Cross clients. The proceedings brought by the solicitor against Rosabelle and Gabriel Cross are expressly referred to in paragraphs 5(iii)(bb) and (cc) of the reply, which is set out above. The barrister’s fees for that work were included in the amounts he claimed in the Local Court proceedings.

In her letter dated 28 February 2014 to Mr Reidy, the solicitor said:

The document marked “Annexure ‘A’” to the proof of debt included the following item (as item 4):

Documents annexed to the proof of debt included the solicitor’s party/party bill of costs against Theodoros and Denise Haratsaris for assessment in this Court. The bill of costs included an itemised list of disbursements which indicated the figures that comprised the total of $38,363.31. Item 10 was:

Also annexed to the proof of debt was a memorandum of fees from the barrister dated 14 January 2014 in the sum of $3,300. The memorandum of fees also included the following:

On 6 January 2015 the barrister attended the Local Court Registry with Isabelle Dufour, a paralegal employed by his solicitors, and inspected the documents that the solicitor had produced to the Court on 17 December 2014. The barrister made a detailed file note of what had been produced.

As a result of his inspection, the barrister considered that two categories of documents had not been produced. Later that day the barrister’s solicitor emailed the solicitor to notify her of the documents said to be missing. The email read in part:

No response to the email of 6 January 2015 was forthcoming, notwithstanding that the request was repeated by emails sent on 15 and 22 January 2015.

On 30 January 2015 the solicitor was served with a letter from the barrister of the same date in which he informed her that she had not complied with the notice to produce and notified her that if she did not comply with the notice to produce by 3 February 2015 he would apply for default judgment without further notice. Because of the importance of the letter to later events, I propose to set it out in full:

No answer having been received to the letter of 30 January 2015, the barrister, on 4 February 2015, filed a notice of motion in which he sought the following orders:

The barrister’s notice of motion dated 4 February 2015 was supported by an affidavit of his solicitor, Charles Bannister, sworn 4 February 2015. The documents which were annexed to the affidavit included a full print out of all the orders made to that date by the Local Court and this Court, including the orders made by McCallum J on 10 December 2014 extending the stay until 15 December 2014. An affidavit of a process server, Joseph Khoury, (who had served the solicitor with the letter dated 2 February 2015) was also filed in support of the notice of motion.

On 17 February 2015 the matter was listed for directions before Magistrate Keogh of the Local Court. The barrister and solicitor both appeared in person. The barrister informed the Court that no documents had been produced on 15 December 2014, as provided for in the orders made by McCallum J but that documents had been produced to the Registry on 17 December 2014, by which time the self-executing order (to strike out the defence) had already taken effect. The barrister also informed the Court that he and his solicitor had inspected the documents produced and considered that there were “some critical documents that had not been produced [which] went to the heart of the notice to produce”. The solicitor told the Court that she had complied with the notice to produce.

The barrister referred to a notice of motion and affidavit in support which he had filed on 4 February 2015 (referred to above) and provided a copy to the Magistrate and to the solicitor on that day, 17 February 2015 (although he also referred to an affidavit of service which related to earlier service on the solicitor of those documents).

Magistrate Keogh informed the solicitor that, since she had not, on her own admission, produced documents by the deadline of 4pm on 15 December 2014, she would need to put on evidence in support of her application for an indulgence from the Court to reinstate her defence that had been struck out by the operation of the self-executing order. The solicitor explained that she had been on leave for the whole of January 2015 and had returned to work in the first week in February. She informed the Court that, as she understood that she had complied with the order for production, she had not been aware that there was any urgency associated with the matter. The solicitor reiterated her position that she had complied with the notice to produce in the following terms:

There being a dispute about whether the solicitor had complied with the notice, the Magistrate indicated that the solicitor would have to apply by notice of motion supported by an affidavit for an order to prevent the barrister applying for a default judgment on the basis of the operation of the earlier orders made. The barrister then foreshadowed the three contentions he proposed to make at the hearing of the motion as follows:

The Magistrate confirmed that the matters the barrister was relying on were to be answered by the solicitor in an affidavit to be sworn by her and read at the hearing of the motion on the next occasion the matter was before the Court. The solicitor sought 14 days to put on such an affidavit; the barrister contended that 7 days would be sufficient. Ultimately, as reflected in order 2 below, the solicitor was allowed 10 days to put on such an affidavit.

Magistrate Keogh made the following directions:

Following the making of directions, the following exchange took place between Magistrate Keogh and the solicitor:

On 27 February 2015 the solicitor filed a notice of motion in the Local Court seeking an injunction to restrain the barrister from filing any application for default judgment and served an unsealed copy on the barrister. She swore an affidavit on 26 February 2015 in which she asserted that she had produced all documents required to be produced in answer to the notice to produce (notwithstanding that, as the evidence disclosed, she had not attended the Registry as at that date to ascertain what, if any, documents were missing and whether the barrister’s contention that she had not fully complied was correct). She annexed to her affidavit a letter from Mr McCrudden dated 10 December 2014 in which he reported to her that McCallum J had extended the stay “until Wednesday next by [sic] 5.00pm”. The following Wednesday was, in fact, 17 December 2014.

The copy of the letter from Mr McCrudden which was annexed was an expurgated copy in that certain parts were missing and different paragraphs were in different typefaces, a matter which Magistrate Keogh drew to the solicitor’s attention at the hearing on 12 March 2015 (see further below).

The barrister’s solicitor served a letter on the solicitor dated 27 February 2015 responding to the matters raised and correcting factual errors. Of present relevance, the letter said:

On 9 March 2015 the barrister swore an affidavit in opposition to the solicitor’s notice of motion. Much of what was contained in that affidavit was a recitation of the procedural history of the matter as well as an outline of the submissions the barrister proposed to make at the hearing on 12 March 2015.

Notwithstanding the emails sent by the barrister to the solicitor (on 6 January 2015, 15 January 2015, 22 January 2015, 22 January 2015 and 30 January 2015), and what transpired at the hearing on 17 February 2015 (which is set out above), the solicitor did not visit the Registry to check what she had produced until 10 March 2015 (she having kept no record of what she had produced). Nor did she respond to any of the barrister’s emails sent in January 2015 until 11 March 2015.

On 11 March 2015, the written form of the judgment which McCallum J had delivered ex tempore on 10 December 2014 was published. It was apparent from the terms of her Honour’s orders that the date for production and for payment of the costs was 15 December 2014, rather than, as had been reported to the solicitor by Mr McCrudden, 17 December 2014. However, as is apparent from what transpired before Magistrate Keogh on 17 February 2015, the solicitor was aware on 17 February 2015 of her non-compliance by the time specified by McCallum J.

On 11 March 2015 the solicitor sent a letter attached to an email to the barrister’s solicitor in which she asserted that she had complied with the notice to produce and proposed that she pay the outstanding $440 on the following day when the matter was before the Court. She informed the barrister in the letter that she had, the previous day, inspected the documents she had produced. She also annexed a complete copy of the Taperell report which she asserted had been produced to the Local Court on 17 December 2014 (the barrister contended that only four pages of the report had been produced on that day). She also contended:

The barrister disputed the allegations made by the solicitor in this letter and said that: production was not complete; and the referee’s report had not been produced to the Court when he attended the Registry with Ms Dufour on 6 January 2015 (and therefore had not been produced when other documents were produced on 17 December 2014). The barrister continued to maintain that the “Reidy documents” fell within the notice to produce.

On 12 March 2015, at the hearing in the Local Court of the solicitor’s notice of motion filed on 27 February 2015, the solicitor and barrister both appeared in person.

At the commencement of the hearing the solicitor sought leave to file an amended motion with a lengthy affidavit in support which she had sworn on 12 March 2015 and not previously served on the barrister. The amendment proposed to the motion (which in its original form had been filed on 27 February 2015) was the addition of prayers for an order that her defence be reinstated and an order that the barrister’s motion filed on 4 February 2015 be dismissed with costs.

In her affidavit sworn on 12 March 2015 the solicitor annexed:

In that affidavit (sworn 12 March 2015) the solicitor deposed:

She also deposed (in part):

The Magistrate heard from the parties about the additional matters that were contained in the amended motion and the affidavit of 12 March 2015. The barrister addressed the Magistrate about the matters raised by the solicitor in her letter of 11 March 2015 and submitted that the solicitor had agreed that she had not supplied documents relating to the Haratsaris bankruptcy but had, as of 11 March 2015, contended that they did not fall within the notice to produce. In answers to the Magistrate’s questions, the barrister informed the Court that he knew that the solicitor had lodged proofs of debt in the Haratsaris bankruptcy because, when inspected the documents that had been produced, he found other letters that referred to the fact that she had lodged the documents. The barrister confirmed, in response to the Magistrate’s enquiry, that the proof of debt included monies that the solicitor owed the barrister.

The barrister then outlined what had occurred. He told the Magistrate that, before the formal point was taken about the late production of the documents (17 December 2014 rather than 15 December 2014), he inspected the documents and found that there were two categories of documents missing: the complete referee’s report in the Cross matter, which was subsequently provided on 11 March 2015; and proofs of debt in the Haratsaris bankruptcy. He also referred to the fact that the letter of 11 March 2015 was the first response she had made to the correspondence which commenced on 6 January 2015 regarding deficiencies in her production of documents. The barrister concluded this aspect of his submission by saying:

Magistrate Keogh then heard from the solicitor as to why she should allow her to amend her notice of motion and rely on the additional affidavit. The solicitor’s immediate response was that it was only on 11 March 2015 that she had received McCallum J’s written judgment. Magistrate Keogh raised the form of the letter from Mr McCrudden dated 10 December 2014 which was annexed to her affidavit of 26 February 2015, including the different typefaces; the blank spaces; and the fact that it was not signed. In answer to a specific question from the bench, the solicitor said that McCallum J’s judgment was the first time she became aware of the relevance of 15 December 2014 and that this was why she needed to amend her notice of motion and rely on the further affidavit. Magistrate Keogh reminded her that on “the last occasion”, being 17 February 2015, the solicitor had informed the Court that she had believed the due date was 17 December 2014, not 15 December 2014. There was also a lengthy discussion about the fact that the print-out of the orders of this Court that was attached to Mr Bannister’s affidavit of 4 February 2015 also included the correct date of 15 December 2014.

Because of the time taken by the matter and the other matters in the list, the matter was stood in Magistrate Keogh’s list. When it was called again, the Magistrate heard further from the solicitor as to why she should be permitted to amend her notice of motion and rely on the further affidavit of 12 March 2015. After hearing from the solicitor, the Magistrate asked her whether she continued to believe, until 11 March 2015 when she received McCallum J’s judgment, that the due date was 17 December 2014, notwithstanding the following:

The solicitor’s response was that she did not understand (possibly until 11 March 2015) that her defence had actually been struck out. The Magistrate then heard from the barrister, who made submissions about why the solicitor ought not be granted a further indulgence. He referred to the Civil Procedure Act 2005 (NSW) and, in particular, ss 56, 57, 58, 59, 60 and 61, as well as UCPR 12.7(2), 16.2(1)(c) and 16.3. He submitted that, whatever the position prior to 17 February 2015, the solicitor realised when she left the court room on that day that she needed to address, in her affidavit which was to be filed by 27 February 2015, the matters raised by the barrister to that date. He concluded by submitting:

Her Honour refused the solicitor leave to rely on the amended notice of motion and her affidavit of 12 March 2015 and informed the parties that the matter would be determined on the basis of the motion as filed and the evidence that was filed in accordance with the timetable.

At the conclusion of the hearing Magistrate Keogh reserved her decision, ordered a transcript of the hearing on 12 March 2015 and listed the matter for delivery of reasons on 18 March 2015.

When the matter came before Magistrate Keogh on 18 March 2015 for delivery of reasons, the solicitor and the barrister both appeared in person. The solicitor inquired of her Honour whether she had seen two emails that the solicitor had sent to the Registry, including one that was sent that morning, to which an unsworn affidavit of Mr McCrudden (who had appeared on her behalf before McCallum J on 10 December 2014) was attached in pdf form. His unsworn affidavit contained statements that he had informed the solicitor that she had until 4 pm on 17 December 2014 (instead of 15 December 2014 as her Honour had ordered) to produce the documents and to pay costs. He accepted that this was an error on his part.

Magistrate Keogh asked the solicitor what application she was making. The solicitor asked for leave to re-open to adduce evidence from Mr McCrudden to explain her non-production of documents on 15 December 2014. The Magistrate confirmed the nature of the application in the following exchange:

The barrister handed up written submissions to the Magistrate in which he set out the history of the matter; the solicitor’s knowledge of the correct date in McCallum J’s orders; the issues raised by him about non-compliance; and her failure to deal with the allegations of non-compliance. He also relied on the solicitor’s admissions made in Court on 12 March 2015 that she was aware that she had read the correspondence sent by him in January 2015; that she had returned to work in early February 2015; that she had not attended the Registry to inspect the documents she had produced until 10 March 2015; and that she had not produced the proofs of debt in the Haratsaris bankruptcy. The barrister contended that judgment ought be given in his favour on the notice of motion for default judgment filed on 4 February 2015; that the solicitor’s notice of motion filed on 27 February 2015 should be dismissed; and that he should have costs on the ordinary basis to 16 February 2015 and on an indemnity basis thereafter.

Magistrate Keogh delivered her decision orally in open Court. Her Honour dismissed the solicitor’s notice of motion; decided that the barrister was entitled to apply for default judgment on the ground that the solicitor had not complied with the notice to produce; and ordered that the barrister was at liberty to apply for default judgment. In the judgment, the Magistrate also gave her reasons for refusing the solicitor’s application for leave to amend the notice of motion ([14]- [17] of the judgment).

The Magistrate also ordered that the solicitor pay the barrister’s costs on an indemnity basis as agreed or assessed. The operative reasons for decision appear from the following paragraphs of the reasons:

After the delivery of reasons, the solicitor applied for a stay of the decision to permit her to “either proceed in this [the Local] Court to reinstate [her] defence or to appeal [the] order in the Supreme Court”. She relied on “rule 36”. The barrister opposed the stay. The Magistrate refused the stay. The barrister also asked the Court to deal with the outstanding default judgment rather than have it done in the Registry. Her Honour declined the barrister’s application and said:

On 19 March 2015 the barrister applied for default judgment by notice of motion supported by an affidavit of Mr Bannister, the barrister’s solicitor. On 20 March 2015 default judgment against the solicitor was entered in the Local Court registry for $87,628.38 plus costs.

On 23 March 2015 the solicitor filed at the Registry of the Local Court a notice of motion for a stay of the default judgment together with an affidavit sworn that day in which she alleged bad faith and a denial of procedural fairness. She deposed that she intended to appeal the Magistrate’s decision of 18 March 2015. She also filed a sworn version of the affidavit of Mr McCrudden sworn 17 March 2015 referred to above.

By letter dated 24 March 2015 the solicitor wrote to the Duty Registrar of the Local Court at the Downing Centre in the following terms:

On 26 March 2015 the barrister’s solicitors wrote to the solicitor contending that the notice of motion she had filed on 23 March 2015 was an abuse of process. They proposed that the motion be dismissed by consent with no order as to costs and stated that the offer remained open for acceptance up to 5pm on 27 March 2015. The letter also said:

On 30 March 2015 the barrister’s solicitors wrote to the solicitor informing her that they had become aware that she had applied ex parte for a stay of the default judgment on 23 March 2015 but that the stay had been refused. They noted that they should have been served with the application.

On 31 March 2015 the barrister filed an affidavit sworn by him on that date to which he annexed various documents relating to the proceedings as well as correspondence between the parties. He also set out, in the form of submissions, his response to the orders sought by the solicitor in her notice of motion filed on 23 March 2015. He said, in part:

The motion was ultimately referred to Magistrate Keogh for hearing on 2 April 2015. On that date, the solicitor and the barrister both appeared in person. The solicitor sought an order that the default judgment that had been entered be set aside.

The solicitor submitted that the orders could be set aside as the barrister had misled the Court and that the orders had been made “in circumstances of bad faith”; she also contended that the Local Court had power to set aside a default judgment pursuant to UCPR 36.16 on the basis that her motion (being the one filed on 23 March 2015) had been filed within 14 days after the judgment or order had been entered, and that, accordingly, the Court could determine the matter as if it had not been entered: UCPR 36.16(3A).

The barrister filed written submissions and contended that the matter was res judicata.

Magistrate Keogh stood the matter in the list to deal with other matters. When she returned to it, the solicitor addressed the Court on UCPR 36.16. She confirmed that her submission was that it provided an independent jurisdiction to set aside the default judgment. The solicitor said:

The solicitor contended further, before Magistrate Keogh, that her Honour had denied her procedural fairness by deciding that she ought to have known that the stay only extended to 15 December 2014. She also submitted that there was no evidence before her, other than the barrister’s assertion about the documents that were in fact produced in answer to the notice to produce and no consideration of the terms of the notice to produce. The solicitor referred to the fact that there was no reference to Mr Reidy in the notice to produce.

The barrister submitted that the solicitor’s application was not one that could be heard in the Local Court since it amounted to an appeal from the Magistrate’s decision. He contended that UCPR 36.16 did not apply as the basis for the order permitting him to apply for default judgment was a decision following a contested hearing in open court and therefore, although the default judgment was entered in the Registry, it may as well have been made in open court. The barrister reminded the Magistrate that, on 17 February 2015, directions were made to give the solicitor an opportunity to file her motion and evidence in opposition to his application for default judgment. The barrister also submitted that, although the default judgment was ultimately applied for and entered in the Registry rather than made in open Court, he asked that it be ordered at the conclusion of the hearing on 18 March 2015 but, for administrative reasons, the Magistrate determined that it occur in the Registry. He submitted that, for those reasons, the judgment was a final judgment of the Local Court pursuant to s 38 of the Local Court Act 2007 (NSW) and that the Magistrate did not have jurisdiction to set it aside.

Magistrate Keogh asked the solicitor whether she wanted to say anything in response to the barrister’s submissions. Her response was as follows:

On 2 April 2015, after hearing from the barrister and the solicitor, Magistrate Keogh dismissed the notice of motion and gave oral reasons which were recorded in the transcript as follows:

Following delivery of the reasons, the barrister applied for costs which were ordered on an indemnity basis and set at $1,808.40 inclusive of GST to be paid within seven days.

On 14 April 2015 the barrister applied for a bankruptcy notice to be issued against the solicitor on the basis of the judgment.

On 17 April 2015 the solicitor filed in Court the summons by which the present proceedings were commenced in which she sought leave to appeal the orders made by Magistrate Keogh on 18 March 2015 and 2 April 2015. On that day, 17 April 2015, she also applied, ex parte, for a stay of the default judgment. Justice Bellew, who was the duty judge, granted the stay.

On 17 April 2015 the Local Court issued the judgment regarding costs.

On 23 April 2015 McCallum J ordered that the stay be continued on condition that the solicitor prosecute the appeal with expedition. On 1 May 2015 McCallum J granted leave to the solicitor to appeal to this Court pursuant to s 40 of the Local Court Act.

Directions were made by consent by the Registrar on 11 June 2015 which provided for the filing of evidence and submissions.

The matter was listed for hearing before me on 29 September 2015. At 6.05am on that day the solicitor sent an email to my Associate and to Ms Dufour informing them that her mother had just been admitted to hospital and that she intended to have an agent appear for her at 10am to have the matter “stood in the list”. Mr Hiramanek appeared as agent on behalf of the solicitor at 10am and sought an adjournment of the hearing. After consulting the parties, I granted an adjournment and listed the matter for hearing on 6 October 2015.

During the hearing on 29 September 2015 the barrister sought photocopy access to certain documents which had been produced by the solicitor and tagged by the barrister during his earlier inspection of those documents. Rather than have the documents uplifted, I arranged for my tipstaff to copy the tagged documents and provided the barrister with a photocopy. The document copied was a letter dated 28 February 2014 from the solicitor to Mr Reidy and annexures, which together comprised 38 pages.

Although the barrister had asked the solicitor to include in the Court Book the transcript of all relevant hearings in the Local Court, the solicitor refused to do so. It was her obligation, as plaintiff, to include such transcripts in the material provided to this Court: UCPR 50.14(1)(b). Ultimately, the barrister, over the solicitor’s objection, tendered the transcripts of the hearings in the Local Court on 6 November 2014; 17 February 2015; 12 March 2015; 18 March 2015; and 2 April 2015. The transcripts of proceedings on each of those days were germane to the appeal as, apart from other considerations, the solicitor had alleged that she had been denied a fair hearing before the order for default judgment was made.

At the hearing before me both the barrister and solicitor adduced evidence which went beyond the material usually before this Court in proceedings of this nature since it went to the issue whether the solicitor’s production in response to the notice to produce had been complete (an issue of fact that was determined by the Magistrate against the solicitor) and included some material which was not before the Magistrate. The barrister pressed the evidence on the footing that the power under s 41 of the Local Court Act was discretionary and that, if I was satisfied that the solicitor was otherwise entitled to relief, the evidence ought incline me to exercise my discretion against the grant of relief. He sought (and was granted) leave to cross-examine the solicitor, who, in turn, cross-examined him in this Court.

For the reasons given below, I am not satisfied that the solicitor is entitled to relief since I am not satisfied that there was any error such as would warrant the orders challenged being set aside, or varied. However, I am obliged to make all relevant findings. Accordingly I propose to address the additional evidence adduced before me (which was not before the Magistrate) and make findings accordingly.

The additional evidence was largely relevant to the ambit of the notice to produce and the documents produced by the plaintiff to the Local Court on 17 December 2014. It was ultimately conceded by the solicitor that she may not have produced a complete version of the Taperell report on 17 December 2014 because she printed out her own copy for the purposes of providing a complete version under cover of her letter dated 11 March 2015. However, she maintained that she believed that she had produced a complete copy to the Local Court.

The solicitor’s letter to Mr Reidy dated 28 February 2014 was also tendered (extracts of which are set out above). I am satisfied that this is the letter to which the barrister referred on 12 March 2015 (and which had been referred to in correspondence, commencing with the email sent to the solicitor on 6 January 2015) when he was addressing the Magistrate about his knowledge that the plaintiff had lodged proofs of debt which included his outstanding fees in the Haratsaris bankruptcy.

The barrister annexed to his affidavit of 16 July 2015 (which was read in this Court) the notes he had taken when he inspected the documents with Ms Dufour on 6 January 2015. On page 5 of the notes, the barrister recorded notes made of the four pages only of the incomplete Taperell report that had been produced on 17 December 2014. These four pages were tendered as evidence before me.

On page 14 of the barrister’s handwritten notes, he recorded that the letter dated 28 February 2014 (which was in evidence before me but not before the Magistrate as photocopy access had not been granted) comprised two pages and referred to a proof of debt that was lodged on 22 November 2013 with a statement of claim and itemised bill of costs. He noted and recorded on page 15 of his handwritten notes that the solicitor had made a declaration on the proof of debt attached to the letter of 28 February 2014 as follows:

The barrister noted in his handwritten notes that an itemised bill of costs dated 19 August 2013 had not been produced.

The wording of the letter of 28 February 2014 corresponds with the description of its contents in the email dated 6 January 2015 to the solicitor drawing her attention to the deficiencies in production.

For the reasons given above, I am satisfied that the solicitor produced the letter dated 28 February 2014 and its attachments to the Local Court on 17 December 2014 when she produced the other documents.

The barrister also tendered before me the National Personal Insolvency Index which was extracted on 10 July 2015 in respect of Theodoros Haratsaris which records that the date of bankruptcy was 21 August 2013 and the trustees were Antony De Vries and David Solomons. There is no record that the trustees changed at any time over that period or any suggestion from the solicitor that Mr De Vries had not been the trustee throughout.

Ms Dufour, who was not required for cross-examination, deposed that she and the barrister had inspected the documents produced to the Local Court Registry in answer to the notice to produce. She had observed the barrister making a file note in the course of the inspection. She deposed that the referee’s report was incomplete and that no proofs of debt lodged by the solicitor in the Haratsaris bankruptcy dated 19 August 2013 or 22 November 2013 were produced.

The barrister largely deposed to the procedural matters set out above. He also deposed that only an incomplete copy of the referee’s report had been produced and that the letter of 28 February 2014 with attachments had been produced.

The solicitor conceded in cross-examination that she had lodged proofs of debt in both the Cross and the Haratsaris bankruptcies. She admitted that the proofs of debt lodged in the Haratsaris bankruptcy related to her fees for acting as the solicitor for Mr and Ms Haratsaris, as well as associated disbursements, including counsel’s fees.

In the course of her cross-examination the solicitor accepted that:

The solicitor alleged that she was not obliged to produce the earlier proof of debt (lodged on or about 22 November 2013) because:

She did not advance any reason which I regard to be rational as to the basis of the first assertion. As to the second assertion, it is not to the point as the notice to produce required production of proofs of debt.

There was no evidence adduced in the cross-examination of the barrister that was germane to the exercise of my discretion or any matter that called for my determination.

For completeness I record that the solicitor placed substantial reliance in her submissions on the reasons given by McCallum J on 23 April 2015 for granting a stay of the judgment pending determination of this appeal. Her Honour’s reasons, which I apprehend were given in the course of a busy duty list immediately following argument, are detailed and considered. However, her Honour was hearing an application for a stay and was not hearing the matter finally. Moreover, the evidence that was before me was not before her Honour. Accordingly, her Honour’s reasons are to be read in that context. In so far as her Honour could be regarded as expressing a view, it was not a final view; nor do her Honour’s reasons bind me in the determination of the appeal.

This Court’s jurisdiction to determine the appeal is relevantly provided for by ss 40 and 41 of the Local Court Act 2007 (NSW). Section 40 makes provision for appeals by leave (which was granted by McCallum J on 1 May 2015). Section 41(1) provides:

The provisions which are relevant to the proceedings and orders made in the Local Court are contained in Part 6 of the Civil Procedure Act, which is entitled “Case management and Interlocutory matters” and the UCPR. So far as is relevant for present purposes they provide as follows.

The UCPR relevantly provides:

In the Dictionary to the UCPR, “pleading” includes a reply.

The grounds of appeal are set out at the commencement of these reasons. The solicitor refined her submissions orally before me and contended that, in substance, she was entitled to have the Magistrate’s orders and the default judgment set aside for the following reasons:

The barrister contended that default judgment had been entered as a result of the solicitor’s failure to produce documents on 15 December 2014. He accepted that, if she had produced documents by 17 December 2014 in compliance with the notice to produce, he would not take any point about compliance and would not rely on the self-executing order to support the default judgment. However he contended that, by the time the matter was heard on 12 March 2015, the solicitor had still not produced the documents he had identified as missing and, in those circumstances, the Magistrate was correct to find that she had not complied with the notice to produce and correct to permit him to apply for default judgment.

As ground 2 relates to the decision made on 18 March 2015, I propose to address it before addressing ground 1, which relates to the decision made on 2 April 2015. In ground 2, the solicitor makes a general allegation that the notices of motion were not determined on their merits and specific allegations that certain matters were not taken into account.

The question for the Magistrate on 12 March 2015 was whether the solicitor’s defence, which had been struck out by operation of the orders made by McCallum J on 10 December 2014, ought be reinstated, or whether the barrister ought be permitted to apply for default judgment on the basis that the solicitor’s defence had been struck out. In this context, the solicitor was seeking an indulgence; the onus was on her to persuade the Court that the discretion ought be exercised in her favour.

The question whether the solicitor had an arguable defence was not the subject of express reasons. The reason for this is that the solicitor’s defence had been struck out because she had failed to comply with the notice to produce, not because of any judicial determination that her defence was unarguable or should be summarily dismissed on that basis. Accordingly, the Magistrate was not in error in not specifically addressing whether the solicitor had an arguable defence since this was not a matter that her Honour was required to take into account.

Nonetheless, the barrister’s submissions made clear that the question whether the solicitor had included his fees in her proof of debt in the Haratsaris bankruptcy was highly relevant to whether her defence was arguable. There is a prima facie inconsistency between, on the one hand, her defence (that she had no obligation to pay the barrister) and her conduct in proving for his fees in the bankruptcy of the relevant client, Haratsaris (which required her to declare that the sums, including disbursements owing to the barrister were owed by the debtor). In the email of 6 January 2015 the barrister had raised the letter of 28 February 2014 with the solicitor and referred to her having proved (by way of supplementary proof of debt) in the Haratsaris bankruptcy.

The solicitor did not address the substantive point raised at all; she did not take the point that the documents were not covered by the notice to produce until 11 March 2015 (the day before the hearing); and at no time did she provide to the Magistrate (or indeed, to this Court) any rational reason why she produced the letter of 28 February 2014 and not the proof of debt of 22 November 2013.

The Magistrate’s reasons, though adequate, contain a summary of the procedural events which is necessarily shorter than the extensive summary set out above. However, it was not necessary for the Magistrate to spell out all that had gone before as long as her reasons were sufficient to explain the basis for her orders. Having regard to the background of the matter, including the previous hearings in the Local Court (which, in the case of the hearings on 17 February 2015, 12 March 2015, 18 March 2015 and 2 April 2015, all took place in front of Magistrate Keogh) and in this Court, the Magistrate’s decision is, in my view, to be understood on the following bases: the solicitor was in default in several respects; had not explained the various defaults (except as to production on 17 December 2014 rather than 15 December 2014); and had not rectified at least one of the defaults identified.

There were two relevant categories of default:

The Magistrate did not have evidence of the reasons for the defaults prior to 15 December 2014; accordingly, they were unexplained. It was open to the Magistrate to find that solicitor was aware, at least by 17 February 2015, at the review hearing, that the due date for production (without which the defence would automatically be struck out) was 15 December 2014 and not 17 December 2014, since this matter had been amply raised and addressed at the hearing on 17 February 2015. Indeed, any finding that she was not aware of the default at least by 17 February 2015 would not have been reasonably open in light of her admissions and the correspondence that she admitted that she had received which addressed the question and attached the relevant Court orders. Accordingly, it was incumbent on the solicitor to provide evidence of, and reasons for, that default by the hearing on 12 March 2015 if she wanted the Magistrate to rely on her explanation and take it into account in her favour at the hearing as a reason to permit her to rely on a defence in the proceedings.

Moreover, the barrister had raised in correspondence throughout January 2015, two substantial deficiencies in the solicitor’s compliance with the notice to produce. The solicitor had rectified one default by providing the complete copy of the Taperell report under cover of letter dated 11 March 2015 but had given no explanation as to why a complete copy had not been produced when the other documents were produced on 17 December 2014, or at any time prior to 11 March 2015.

Her answer to the second matter was to assert merely that “the Reidy documents” did not, in her view, fall within the notice to produce. This assertion was made for the first time on 11 March 2015. The solicitor did not explain why, as alleged by the barrister in his email of 6 January 2015, she had produced a supplementary proof of debt in the Haratsaris matter dated 28 February 2014 but had not produced the proof dated 22 November 2013 referred to in the letter. The documents were, as the barrister had explained to the Magistrate, plainly relevant to the reply and accordingly, whether the solicitor had any defence to the barrister’s claim.

The Magistrate’s conclusion was influenced, if not determined, by the solicitor’s failure to explain these various matters as appears from the conclusion of her reasons in which she said:

For the reasons given above, there was evidence to permit the Magistrate to draw the following inferences:

I consider this allegation to be without foundation. The detailed exposition of the various stages of the proceedings and the opportunities given to the solicitor to obtain the Court’s indulgence to protect her from the consequences of her defaults is sufficient to show that the Magistrate, on 12 March 2015, heard and determined the notices of motion “on their merits”. What the Magistrate was not required to do, and what she did not do, was determine the case on its merits. It was not a final hearing on the merits; it was an interlocutory application, the result of which had the potential to dispose of the proceedings.

On 2 April 2015 the Magistrate heard from the parties and considered the solicitor’s application. Her Honour had, and exercised, jurisdiction to determine whether she had jurisdiction. Her Honour determined that, in substance, the solicitor sought to re-agitate matters that were determined against her on 18 March 2015. Her Honour referred to Autodesk Inc v Dyason (No. 2) 176 CLR 300 and found that the solicitor was effectively requiring her to deal with issues that had been determined.

As the narrative set out above indicates, the Magistrate heard and considered the solicitor’s application and, before determining the matter, heard from the solicitor and the barrister as to what jurisdiction, if any, she had to determine the matter. I discern no error in her Honour’s approach. It was open to her Honour to dismiss the solicitor’s notice of motion. In all the circumstances it was a proper exercise of her Honour’s discretion. I am not persuaded that the discretion miscarried in any way, or involved a wrongful refusal to exercise jurisdiction.

The first ground has not been made out.

The solicitor failed to comply with the notice to produce as directed. Accordingly, a self-executing order was made which resulted in her defence being struck out by operation of that order on 15 December 2014. Thus, the solicitor was in default pursuant to UCPR 16.2 and the barrister was entitled to apply for default judgment under UCPR 16.3. Because of the Court’s orders, the barrister was not entitled to apply for default judgment in the absence of the solicitor prior to the orders made by Magistrate Keogh in his favour to that effect on 18 March 2015: UCPR 16.3(1A). However, once the orders were made by Magistrate Keogh on 18 March 2015, the barrister was entitled to apply for default judgment in the Registry. It was open to Magistrate Keogh to refuse to allow the solicitor to re-open her case on 18 March 2015 to adduce further evidence of issues relating to her non-compliance, the matter having been dealt with on 12 March 2015 and having been listed for decision and publication of reasons on 18 March 2015.

Although UCPR 36.16(2)(a) did not strictly apply because the default judgment was not “given” in open court, it is apparent from the narrative set out above, that all relevant arguments about whether default judgment ought be given were canvassed in open court. The Magistrate did not “give” or enter judgment in open court because her Honour preferred that it be done in the Registry. However, for the reasons given by her Honour on 2 April 2015, it was open to her Honour to refuse to set aside the default judgment, when the solicitor applied for that to be done.

The present appeal demonstrates that, as the High Court found in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175, and as is apparent from the terms of Part 6 of the Civil Procedure Act and the UCPR referred to in these reasons, no party has, irrespective of the nature and extent of that party’s procedural defaults, an indefeasible right to a final hearing on the merits. The interests of justice require weight to be given to the administration of justice, compliance with court orders and the importance of sanctions against non-compliance, particularly where ample opportunity has been given to the defaulting party to rectify earlier defaults. No error such as would warrant relief in this Court has been demonstrated in the orders of the Local Court which are sought to be set aside; in the approach taken by Magistrate Keogh; or in her Honour’s reasons.

As I have not found any of the grounds relied upon to have been made out, it is not necessary to consider either whether relief ought be granted (if the grounds were made out) or the ambit of any discretion in that regard. However, for completeness, I should record that the additional evidence relied upon before me weighed heavily against the grant of any relief. It showed that the solicitor had proved in the Haratsaris bankruptcy for all the barrister’s fees, which were included in her claim for costs against the client. In these circumstances there would appear to be no real basis for her allegation that she did not owe the barrister the fees he had charged for work conducted in the matter.

I make the following orders: