Citilawyers PTY Ltd trading as Citilawyers v Tomaras

1. [1]

   This judgment involves an appeal from the Local Court where a law firm sought payment of legal fees from its former client.

2. [2]

   The plaintiff is Citilawyers Pty Ltd trading as Citilawyers (“Citilawyers”) and was represented by B Williams of counsel. The defendant is Con Tomaras (Mr Tomaras). He appeared self-represented at the hearing as he did in the Local Court. The parties relied on a court book comprising of two volumes (Exhibit’s A1 and A2). Both Citilawyers and Mr Tomaras relied upon written submissions. In short, Mr Tomaras’ submissions agreed with Magistrate Towney’s (“the Magistrate”) verdict. In essence he sought that the Magistrate’s decision be affirmed.

3. [3]

   At the hearing before me, Mr Tomaras made wide-ranging submissions. He reiterated what he had submitted before the Local Court Magistrate, that Mr Hector Ekes (Mr Ekes) was an agent of Citilawyers. He also stated that in his trial in the District Court before P. Hock DCJ, he told both his counsel D Brezniak and his solicitor Mr Ekes that he did not want to use them at his appeal on the basis that:

4. [4]

   Before me, Mr Tomaras initially alleged that it was Mr Ekes who spoke to a juror, but then changed it to a junior lawyer named Chelsea, who’s surname he had forgotten. Mr Tomaras claimed that it was she who was in communication with one of the jurors.

5. [5]

   As this is an extremely serious allegation to make, I read the decision of Papanikolaou v R; Tomaras v R [2021] NSWCCA 135. There was no mention made of it in the Court of Criminal Appeal’s (“CCA”) judgment.

6. [6]

   Mr Tomaras also alleged that T Woods (“Mr Woods”) of counsel did “none of the work”, however, Mr Woods is recorded on the CCA judgment as representing Mr Tomaras.

7. [7]

   In this Court I reminded Mr Tomaras that his statements were not evidence, for example, in this exchange,

8. [8]

   On 6 September 2023 after the Local Court hearing concluded, the Magistrate delivered an ex-tempore judgment. Her Honour concluded at [128]

9. [9]

   Her Honour entered judgment in favour of the defendant Mr Tomaras.

The amended summons

1. [10]

   By way of amended summons filed 26 September 2024, Citilawyers appeals from the whole decision of her Honour, the Magistrate in Local Court proceedings 2022/00085893 delivered on 6 September 2023 seeking orders that,

   1. (1)

      Appeal be allowed.

   2. (2)

      Judgment of the court below be set aside.

   3. (3)

      In substitution of the orders made by the Magistrate on 6 September 2023, the Court make the following orders:

Issues that arise on this appeal

1. [11]

   Citilawyers submitted that the issues that arise on this appeal are:

2. [12]

   Whether the Magistrate erred

   1. (1)

      by holding that the costs agreement imposed a positive obligation upon the plaintiff to inform the defendant if Legal Aid would not cover his professional fees, failing which the plaintiff could not recover its legal fees from the defendant;

   2. (2)

      by failing to advert with the plaintiff's argument in relation to whether application of section 72A of the Legal Profession Uniform General Rules 2015 (NSW) (“LPUGR”) meant that section 178(1) of the Legal Profession Uniform Law 2014 (NSW) ("LPUL")

   3. (3)

      by failing to engage with the plaintiff's argument that the plaintiff had a quantum meruit claim for the reasonable value of the legal services it performed for the defendant.

   4. (4)

      by failing to provide the plaintiff with procedural fairness at the hearing of the Local Court proceedings at first instance;

   5. (5)

      by impermissibly taking into account oral evidence from the defendant in reaching her Honour's decision.

3. [13]

   In oral submissions, counsel for the plaintiff stated that appeal grounds 3 and 4 overlap and should be dealt with together then appeal ground 1 followed by appeal ground 2.

The costs agreement dated 12 March 2021

1. [14]

   On 12 March 2021 the costs agreement between Citilawyers and Mr. Tomaras was signed by Mr. Tomaras. On 10 April 2021, Mr Tomaras deposed that he received a copy of the costs agreement.

2. [15]

   It is common ground that Mr Tomaras signed the costs agreement and that on 10 April 2021 Citilawyers sent Mr Tomaras a copy of its cost’s agreement by email. The costs agreement provides,

The Proceedings in the Local Court

1. [16]

   By statement of claim filed 25 March 2022 in the local Court, Citilawyers sued Mr Tomaras to recover unpaid legal fees and disbursements, as set out in its tax invoice dated 30 June 2021. (CB 261)

2. [17]

   Citilawyers alleged that they had represented Mr Tomaras in his appeal before the CCA, pursuant to the costs agreement and disclosure dated 10 April 2021 between the plaintiff and the defendant.

3. [18]

   On 3 May 2022, in the Local Court, default judgment was entered in favour of Citilawyers in the sum of $28,178.05 against Mr Tomaras. Mr Tomaras had not filed a defence in the requisite time.

4. [19]

   No enforcement action has been taken as at 9 September 2022.

Notice of motion to set aside default judgment

1. [20]

   On 9 September 2022, Mr Tomaras filed a notice of motion seeking to set aside the default judgment entered on 3 May 2023. He relied upon his supporting affidavit also sworn on 9 September 2022 where he deposed,

2. [21]

   I accept that Mr Tomaras deposed of a conversation that took place mid to late March 2021 between Mr Janoyan, Mathew Hoskin (“Mr Hoskin”) and Mr Ekes of Citilawyers where he asked can you run this with legal aid and Mr Janoyan said that Mathew will organise everything and not to worry.

3. [22]

   Mr Tomaras attached a draft notice of defence to his motion. The Local Court set the default judgment aside.

4. [23]

   The affidavit is the only one that Mr Tomaras filed in the entire Local Court proceedings. Mr Tomaras failed to comply with directions to file and serve affidavits prior to the hearing. Therefore, the only evidence that Mr Tomaras could rely upon as evidence, was the contents of his affidavit sworn on 9 September 2022.

Mr Tomaras' Defence

1. [24]

   In his defence Mr Tomaras pleaded

   1. (1)

      I deny paragraph 1 of the statement of claim and say I am not in indebted to the plaintiff at all.

2. [25]

   Particulars

3. [26]

   Mr Janoyan’s invoice for Citilawyers’ legal costs was in the sum of $15,090.68. To that amount was added Mr Woods’ counsel fee in the sum of $11,000.00. Mr Woods acted for Mr Tomaras during the appeal in the CCA.

The hearing in the Local Court

1. [27]

   During the hearing in the Local Court, Citilawyers relied upon the affidavits of Mr Janoyan, the principal solicitor of Citilawyers, and Mr Hoskins a solicitor employed by Citilawyers, affirmed on 5 October 2022. Mr Jonoyan gave evidence and was cross examined. By the time of the hearing, Mr Hoskin had left the firm and Mr Janoyan’s evidence is that Mr Hoskin’s laptop became unavailable, so he was unable to obtain copies of documents that were stored on Mr Hoskin’s laptop.

2. [28]

   The hearing in the Local Court took place on 6 September 2023. Mr Tomaras was self-represented in the proceedings, Citilawyers was represented by T. Woods of counsel.

3. [29]

   Mr Janoyan relied upon his affidavit dated 5 October 2022. He gave evidence and was cross examined. At [2]-[9], he deposed,

4. [30]

   On or about 30 June 2021 Citilawyers generated an invoice in the amount of $15,090.68, which does not include Mr Woods’ fees in the amount of $11,000.00. Mr Janoyan believed that Mr Woods’ fees had already been paid by Mr Ekes, on behalf of Mr Tomaras.

5. [31]

   On or about 2 December 2021, Mr Janoyan become aware that Mr Woods’ fees in the amount of $11,000.00 had not been paid.

6. [32]

   The following exchange took place when Mr Tomaras cross examined Mr Janoyan:

7. [33]

   And

8. [34]

   During the re-examination, Mr Janoyan was asked and answered the following questions:

9. [35]

   In the Local Court at the end of the hearing, Citilawyers’ counsel S Thomson handed up his written submissions. He also made oral submissions. They are as follows,

   1. (1)

      Mr Hector Ekes was the defendant's agent pursuant to the principle raised in Sargent v ASL Developments Limited [1974] HCA 40. It was the defendant's agent and previous solicitor, Mr. Hector Ekes who acted in relation to the grant of Legal Aid and told the plaintiff that Legal Aid had already been granted on 22 March 2021.

   2. (2)

      The defendant was aware that his grant of Legal Aid had been rejected.

   3. (3)

      The onus is on Mr Tomaras to establish that on the balance of probabilities that the plaintiff contravened its disclosure obligations under section 174(1) and 178 of the LPUL.

   4. (4)

      Citilawyers has fulfilled its obligation under LPUL regarding the disclosure of its costs estimate and even if the Court were to accept that the defendant has established on the balance of probabilities that one of the disclosure requirements of the LPUL hadn't been met, section 72A of the LPUGR shall apply, which allows Citilawyers to commence proceedings against the defendant to recover its unpaid costs.

   5. (5)

      Citilawyers issued a bill of costs to Mr Tomaras, which provided a rectification of any failing to give costs estimate insofar as that's practicable.

   6. (6)

      Even if the Court found that the cost agreement was invalid, the Court still ought to award equitable compensation to the plaintiff in the amount of the invoice and counsel's disbursement as the work has, in fact, been performed for the defendant and he's taken the benefit of that work. The defendant would be unjustly enriched and so equity would intervene to require the payment of counsel's and the plaintiff's fees on a quantum meruit basis.

10. [36]

    Mr Tomaras also provided oral submissions at the end of the hearing. Citilawyer’s submitted that,

    1. (1)

       It cannot be verified whether the emails or things were sent to him Citilawyers employee's laptop is not present;

    2. (2)

       He admitted that he received an original email giving him the "quote".

    3. (3)

       He only received a hard copy of Citilawyers’ statement of claim when he was at Mary Wade Correction Centre.

    4. (4)

       Mr Ekes was not his agent as Citilawyers did not provide email correspondence showing somewhere the defendant was communicating with Mr Ekes with respect to his appeal.

    5. (5)

       Citilawyers did not provide Mr Tomaras with tax invoice straight after the appeal.

11. [37]

    The Magistrate ex-tempore Judgment dated 6 September 2023, reads as follows:

12. [38]

    As stated by her Honour, Mr Ekes was not called to give evidence in the Local Court by either party. Since the hearing in the Local Court Mr Ekes has subsequently passed away.

13. [39]

    I will refer to appeal grounds 3 and 4 together then ground 1 followed by ground 2 together.

Appeal Grounds 3 and 4 – was procedural fairness afforded?

1. [40]

   Appeal grounds 3 and 4 of read as follows,

2. [41]

   Appeal Ground 3

   1. (1)

      The Magistrate erred on a question of law by failing to provide the plaintiff with procedural fairness.

   2. (1)

      Her Honour allowed the defendant to give oral evidence in the hearing, without the defendant having produced any evidence prior to the hearing.

   3. (2)

      During the final hearing in the Local Court, the plaintiff was not provided with an opportunity to cross-examine the defendant in relation to the evidence produced by him during the final hearing.

3. [42]

   That the Magistrate erred on a question of law by impermissibly taking the defendant's oral evidence into account in reaching her Honour's decision.

   1. (1)

      The defendant did not file or serve any evidence in compliance with the case management orders and/or directions of the Court.

   2. (2)

      The Court did not give the defendant leave to rely on any evidence that was non-complaint with case management orders.

   3. (3)

      No evidence from the defendant was formally admitted into evidence at the final hearing.

   4. (4)

      Despite sub-paragraphs a,b,c and d above, the defendant was permitted to give, and in fact gave, oral evidence from the bar table.

   5. (5)

      The defendant's oral evidence from the bar table, was taken into account by the Court in reaching its decision.

The Law- Procedural fairness

1. [43]

   In Kioa v West (1985)159 CLR 550 at 587; [1985] HCA 81 at [33]

2. [44]

   And

3. [45]

   In AAI Limited trading as GIO v Amos [2024] NSWCA 65, Adamson JA, at [53], had the following to say about the scope of procedural fairness:

4. [46]

   In the appeal hearing before me, Counsel for Citilawyers referred to portions of the transcript in the Local Court where the following exchanges took place between the parties and the Magistrate at [5]-[10].

5. [47]

   Counsel for Citilawyers submitted that in the Local Court, Citilawyers was denied the right to cross-examine Mr Tomaras, and referred to the following exchanges:

6. [48]

   So, at the hearing when I asked,

7. [49]

   Mr Williams answered for Citilawyers,

Citilawyer's submissions

1. [50]

   Her Honour erred by failing to provide the plaintiff with procedural fairness in the Local Court, this denial of procedural fairness occurred as Mr Tomaras was permitted to give evidence from the bar table despite having neither filed nor served any evidence in the substantive proceeding, which subsequently took it by surprise and deprived it of an opportunity to test Mr Tomaras’ evidence in the cross-examination.

2. [51]

   The plaintiff further submitted that her Honour erred by impermissibly taking the defendant's oral evidence into account in reaching her decision. This submission is made noting again that Mr Tomaras did not file nor serve any evidence in the substantive proceeding, was not administered an oath or affirmation, and was not subject to the cross-examination.

3. [52]

   Her Honour’s reasons for the decision and the findings of fact she has made raises the inference has to be that that finding of fact that the contradictory sides of the conversation could not have occurred but for what was said by Mr Tomaras from the bar table in the Local Court.

4. [53]

   In Mr Tomaras’ only evidence he could rely upon his affidavit, I have reproduced its contents earlier in this Judgment.

5. [54]

   The evidence of Mr Janoyan as per his affidavit dated 5 October 2022, who was subject to the cross-examination by Mr Tomaras was as follow:

6. [55]

   Citilawyers denied that Mr Ekes was its agent. The principal of Citilawyers gave evidence to this effect. Her Honour in her ex-tempore judgment made the following findings,

7. [56]

   The defendant submitted that Mr Ekes was his initial solicitor in his criminal trial, but he was not his solicitor nor agent at the time when the defendant engaged the plaintiff. The defendant relies heavily on the cost agreement dated 10 April 21.

8. [57]

   Mr Tomaras submitted that Mr Ekes actually worked as an agent for the plaintiff during this period in that he was employed to do paid work for the plaintiff. The use of the word "agent" appears to have arisen only at the final hearing. However, the Court will deal with this matter for the sake of completion. The Court notes that the plaintiff filed a notice of change of solicitor with the Supreme Court of New South Wales on 18 March 2021.

9. [58]

   The notice listed Mr Janoyan of Citilawyers and is signed by Mr Hoskin. There is no mention of Mr Ekes being the defendant's solicitor or agent.

Resolution

1. [59]

   It is my view that Mr Tomaras’ submissions from the bar table were at times treated as evidence by the Magistrate, especially his evidence concerning that Mr Ekes was acting as Citilawyer’s agent. The evidence between the plaintiff’s principal lawyer and Mr Tomaras were as the Magistrate correctly stated at [50] of her judgment, “in direct contradiction of each other”. The Magistrate also correctly stated that Mr Tomaras for the first time made mention when speaking from the bar table, that Mr Ekes was an agent of Citilawyers. It is only in his affidavit filed in support of his notice of motion to set aside default judgment, that he made a reference to Mr Ekes, by referring to “Mr Ekes of Citilawyers”.

2. [60]

   While her Honour stated to Mr Tomaras,

3. [61]

   Mr Thomson then stated,

4. [62]

   Mr Tomaras replied,

5. [63]

   Her Honour then asked him some questions which Mr Tomaras answered. After Mr Tomaras said,

6. [64]

   Then the following exchange took place,

7. [65]

   After this exchange concluded, her Honour asked Mr Tomaras more questions, in my view, even though counsel for Citilawyers specifically said to the Magistrate, “This is all new evidence” and “You’re not proving anything, this is not evidence’ and “You’re not under oath”. The Magistrate interrupted counsel and said, “Would you think I can run the hearing?” by doing so her Honour shut down Citilawyers’ counsel and did not give him the oppurtunity to cross-examine Mr Tomaras. The evidence of Mr Janoyan and Mr Tomaras was in direct contradiction to each other, it was necessary that counsel for Citilawyers was afforded the opportunity to test Mr Tomaras’ evidence and credibility by cross-examining him. By denying counsel that opportunity the Magistrate did not afford Citilawyers with procedural fairness.

8. [66]

   I now turn to consider appeal grounds 1 and 2 together.

Appeal ground 1

1. [67]

   So far as appeal ground 1 is concerned that the ground of appeal are that the Magistrate in her ex-tempore reasons stated.

   1. (1)

      It is not disputed that the services were, in fact, performed by Citilawyers to the defendant, and it is not disputed that Mr Thomas Wood appeared for the defendant in the hearing before the Court of Criminal Appeal.

   2. (2)

      Citilawyers did not suggest on any occasions that its legal services and work would be performed on a pro bono basis.

   3. (3)

      The Court can take into account how Legal Aid works when construing the costs agreement, which is that if Legal Aid is to be granted, the work is performed at Legal Aid rates.

   4. (4)

      The only commercially reasonable and available interpretation of the costs agreement is that the parties were proceeding on the basis that the costs would be paid by Legal Aid at the first instance, if no Legal Aid fundings were ultimately granted, then the professional fees set out in clause 2 of the costs agreement would apply.

   5. (5)

      The costs agreement does not create an obligation for the plaintiff to inform the defendant about the progress of the Legal Aid grant.

2. [68]

   That the Magistrate erred on a question of law in her construction of the costs agreement dated 10 April 2021.

   1. (1)

      The Magistrate held that the costs agreement imposed a positive obligation upon the plaintiff to inform the defendant if Legal Aid would not cover his professional fees, failing which the plaintiff could not recover its legal fees from the plaintiff.

   2. (2)

      That construction is inconsistent with an objective interpretation of the costs agreement, taking into account its text, context and purpose, on the assumption that the parties intended to produce a commercial result.

   3. (3)

      On a proper construction of the costs agreement, if Legal Aid did not cover the defendant's professional fees, the costs agreement entitles the plaintiff to recover its professional fees and disbursements from the defendant directly.

3. [69]

   Section 178 of the Legal Profession Uniform Law 2014 (NSW) reads

4. [70]

   Section 72A of the Legal Profession Uniform General Rules 2015 (NSW) states as follows:

The relevant law

1. [71]

   The rights and liabilities of parties under the terms of the costs agreement are determined objectively by reference to the language of the contract and, in limited circumstances, admissible evidence of objective external matters.

2. [72]

   Citilawyers relied on Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, where the plurality (French CJ, Nettle and Gordon JJ) said at [116] – [117]:

3. [73]

   It also relied on Rialto Sports Pty Limited v Cancer Care Associates Pty Limited [2022] NSWCA 146 at [63], Gleeson JA (Bell CJ and Macfarlan JA agreeing) held that:

Citilawyer's submissions

1. [74]

   Citilawyers submitted that the terms of the costs agreement, were unambiguous and susceptible of only one meaning, which is sufficient for objectively determining the parties' right and liabilities under the costs agreement. On the proper construction of the costs agreement, a positive obligation is never imposed on the plaintiff to inform the defendant if Legal Aid would not cover his professional fees, nor can any clause and/or language included in the terms of the costs agreement be interpreted in a way, which provides that if the plaintiff fails to inform the defendant that Legal Aid would not cover his professional fees, the plaintiff could not recover its legal fees from the plaintiff.

2. [75]

   Even if the Court considers necessary to take "the recourse to events, circumstances, and things externals to the contract" into consideration when determining the rights and liabilities under the costs agreement, Citilawyers contends that it would defy commercial and common sense for a party in the plaintiff's position to agree to provide legal service to Mr Tomaras, upon merely being informed that there was a possibility that Legal Aid would fund the defendant's appeal.

3. [76]

   This is particularly so in circumstances where the costs agreement sets out the hourly rates for Citilawyers’ professional staff. Where Legal Aid funds a criminal matter, a costs disclosure from the firm to the Client will be unnecessary as Legal Aid will set up a fixed rate for all the professional service(s) that are to be provided by the practice, which is usually less than the ordinary professional hourly rates.

4. [77]

   In any case, Mr Tomaras understood that the defendant himself applied for a Legal Aid grant, and the application was granted.

5. [78]

   Citilawyers submitted that that the Magistrate erred in finding that the costs agreement imposed a positive obligation upon the plaintiff to inform Mr Tomaras if Legal Aid would not cover his professional fees, failing which Citilawyers could not recover its legal fees from the plaintiff.

6. [79]

   Citilawyers submitted that the Magistrate erred by failing to advert to and deal with substantial, clearly articulated arguments relying upon established facts, both of which were raised in its written submissions dated 6 September 2023 and in oral submissions:

   1. (1)

      Whether the application of section 72A of the LPUGR meant that section 178(1) of the LPUL did not relevantly apply to the plaintiff’s case; and

   2. (2)

      Whether Citilawyers had a quantum meruit claim for the reasonable value of the legal services it performed for Mr Tomaras.

Appeal Ground 2

1. [80]

   That the Magistrate erred on a question of law by failing to advert to and deal with substantial, clearly articulated arguments relying upon established facts.

2. [81]

   The Magistrate did not advert to or deal with the following arguments, both of which were raised in the plaintiff's written submissions dated 6 September 2023 and in oral submissions:

   1. (1)

      Whether the application of s 72A of the Legal Profession Uniform Law (NSW) (Uniform Law) meant that section 178(1) of the Uniform Law did not relevantly apply to the plaintiff.

   2. (2)

      That the plaintiff had a quantum meruit claim for the reasonable value of the legal services it performed for the defendant.

Resolution

1. [82]

   The main issue raised in appeal grounds 1 and 2 are that the Magistrate did not deal with substantial, clearly articulated arguments relying on established facts. They are

   1. (1)

      Whether the application of s 72A of the LPUL meant that section 178(1) of the LPUL did not relevantly apply to the plaintiff.

   2. (2)

      That the plaintiff had a quantum meruit claim for the reasonable value of the legal services it performed for the defendant.

2. [83]

   I agree both these issues were raised by Citilawyers. They were clearly articulated arguments and they were not addressed by her Honour. So, I note that the Court had power pursuant to r 72A (2) of the LPUGR to not apply s 178(1) of the LPUL. It may be that Citilawyers should seek to have its costs assessed by a costs assessor. It is my view that as credibility of both parties are in dispute the proceedings should be remitted to the Local Court to be determined.

Costs

1. [84]

   Costs are discretionary. Normally costs follow the event. It is appropriate that the defendant pay the plaintiff’s costs on an ordinary basis.

   1. (1)

      The appeal is upheld

   2. (2)

      The decision of the Magistrate dated 6 September 2023 is set aside.

   3. (3)

      The proceedings are remitted to the Local Court to be determined according to Law.

   4. (4)

      Defendant is to pay the plaintiff’s costs on an ordinary basis.