Goldberg v Beckett

HIS HONOUR: By her notice of motion filed in court on 16 August 2016, Ms Beckett seeks the following orders:

The background to this application has to some extent been summarised by me in Goldberg v Beckett [2015] NSWSC 1966 which I published on 18 December 2015. In that case I dismissed Turner Freeman’s application for an order that the funds in Court, representing the judgment sum paid by the State of New South Wales, be paid to them pending ascertainment of their entitlement to costs by assessment or otherwise. Since that time, on 14 June 2016, $2.5M has been released from the funds in Court to Turner Freeman by agreement between the parties in recognition of the uncontroversial likelihood that Turner Freeman’s entitlement to solicitor client costs will be not less than that amount. The present dispute therefore concerns how the balance of the funds in Court should be treated pending final assessment of Turner Freeman’s costs for acting as Ms Beckett’s solicitor in the principal litigation: see Beckett v State of New South Wales [2015] NSWSC 1017 and Beckett v State of New South Wales [2015] NSWSC 1500.

Ms Beckett contends that her motion enlivens consideration of the principles that should guide this Court in exercising its power to retain monies in Court, or alternatively to order that they be paid out, pending final determination of the parties’ competing claims. She submits that those powers should be exercised conformably with the principles that would apply if Turner Freeman had sought an interlocutory injunction to freeze the monies in the hands of a third party. On that approach, Turner Freeman would need to establish both a prima facie case and that the balance of convenience favoured them in order to have the monies retained in Court.

The parties’ respective positions were exposed in correspondence passing between them earlier this year. On 1 June 2016, Autore & Associates, who then acted for Ms Beckett, wrote to Turner Freeman on the topic of entitlement to monies in Court in the following relevant terms:

Turner Freeman’s attitude to this contest is best seen in the terms of their reply dated 10 June 2016. It is relevantly as follows:

This letter was responded to by letter dated 28 July 2016 in these relevant terms:

Turner Freeman’s letter of 9 August 2016 effectively ended this exchange with the following response:

My reasons for judgment delivered on 18 December 2015 are presently relevant. It is timely to recall at least the following paragraphs:

The not unreasonable inspiration for Ms Beckett’s present application comes from the fact that the interest rate currently being paid on funds in Court is one percent. That is considerably less than the current Court interest rate applicable to a judgment, which is 7.5 percent. It is also significantly less than the prescribed 3.5 percent maximum rate for interest on bills under the Legal Profession Uniform Law 2014 (NSW) which Turner Freeman is claiming in the assessment proceedings. Ms Beckett maintains that this situation is seriously unfair to her. Turner Freeman’s lien over the funds in Court has effectively frozen a portion of Ms Beckett’s judgment monies, being the balance of the funds in Court after calculation and deduction of whatever may be Turner Freeman’s entitlement to those funds. Ms Beckett emphasises that to the extent that Turner Freeman succeed in their claim to that balance, the monies will be retained in Court until paid out together with interest at the rate claimed under the Legal Profession Uniform Law. Alternatively, as the matter now stands, Turner Freeman will not be liable to her for interest on any surplus that may become payable to Ms Beckett after Turner Freeman’s costs have been finally assessed.

One of the difficulties associated with Ms Beckett’s current claim for relief is that it requires me to make a determination of the worth of significant portions of Turner Freeman’s claim for costs. Shortly stated, Ms Beckett contends that on no proper analysis of Turner Freeman’s bill of costs could they be entitled to significant portions of the costs claimed. Ms Beckett’s best calculation of those allegedly unsustainable claims is $675,000. She reasons that Turner Freeman’s lien could never secure the several categories of costs claimed that together roughly amount to that sum, and that it should be released to her forthwith as her reasonable estimate of the likely surplus. Ms Beckett has provided detailed written submissions in support of the argument that Turner Freeman will never be able to justify these claims, so that the security provided by their lien extends well beyond the funds in Court and also beyond any sum to which they might ultimately become entitled.

I do not consider that the material available to me permits me to make a reliable assessment of either the value or the worth of the disputed claims. I am satisfied that Ms Beckett has clearly adumbrated her challenge to these items, but they ought in my view to be determined as part of the costs assessment procedure in the normal course. It goes without saying that Turner Freeman have been put on notice that these items are in dispute and that Ms Beckett is dissatisfied with the continued embargo upon the surplus funds in Court to which these items notionally correspond.

Although it is Ms Beckett’s preference to have this disputed surplus released immediately, I consider that her particular concerns could be adequately addressed and with equal force, as well as the added certainty of hindsight, by treating her present claim as one for interest, at an advantageous rate, upon the surplus funds in Court, if any, to which she is ultimately found to be entitled. That is to some extent the approach that underpins her second claim for relief in the notice of motion. I accept that it would not satisfy the first claim to which, for the reasons I have attempted to identify, I am not presently prepared to accede. However, an order for interest of the type I consider is appropriate, or its equivalent, would necessarily compensate Ms Beckett in full for her anticipated losses. Such an approach would also obviate the need to embark upon a speculative calculation or assessment of the contested items, which calculation may in due course prove to be unsupported by the facts.

It will also be apparent that to do otherwise would to a considerable extent undermine the approach that I took with respect to the Turner Freeman application to be paid the funds in Court. That approach is exemplified in the paragraphs from my judgment on 18 December 2015 that are extracted above at [8] of these reasons.

However, Turner Freeman have indicated that they are not prepared to undertake to pay interest in this way. It is not suggested that I have power to require them to give such an undertaking. I am also in doubt about my power to make an order for interest in the way I have described.

It will be apparent that as things presently stand, Ms Beckett is at the greater risk of disadvantage. On the one hand she faces the prospect of being out of pocket to the extent of the difference between interest that may be earned on any of the funds in Court to which Turner Freeman are ultimately found not to be entitled, and the interest that may be earned on that amount at some other notionally available commercial rate. On the other hand, Turner Freeman are not obviously liable for that difference having regard to the fact that the funds in Court are there pursuant to an order made by me which they did not seek. Indeed, Ms Beckett would in fact have been better off, all other things being equal, if the judgment monies had in fact been paid to Turner Freeman in accordance with the costs agreement that Ms Beckett maintains is void or has no operation. That is because Turner Freeman would presumably have been obliged, or could have been required, to deposit the funds into a controlled monies account or its equivalent attracting reasonable interest.

In my opinion, the funds in Court should be utilised or applied in such a way as best to eliminate or reduce the prospect of any loss to either party. I consider that the funds in Court should be paid into a controlled monies account in the joint names of the solicitors for Ms Beckett and Turner Freeman to abide the outcome of the assessment of Turner Freeman’s costs in due course. Interest earned on the fund so invested should be applied and paid to each of the parties in direct proportion to their respective entitlements when that is ultimately determined by agreement or assessment.

I will direct the parties within seven days to bring in short minutes of order to reflect my conclusions.