Sturesteps v Khoury

1. [1]

   The first plaintiff in these proceedings, George Sturesteps is a former senior employee and director of HIH Casualty and General Limited (“HIH”). The HIH corporate group collapsed in March 2001. Mr Sturesteps then commenced what became extensive litigation against the liquidators of the HIH group, in which he claimed entitlements as a consequence of the termination of his employment, when HIH was placed into liquidation (“the HIH proceedings”).

2. [2]

   The first defendant, Dieb Khoury, is a solicitor who practised and practises under the business name of Benjamin & Khoury Solicitors (“Benjamin & Khoury”). Mr Sturesteps and his wife, Beryl Sturesteps, the second plaintiff in these proceedings, retained Mr Khoury (“the retainer”) to act for them in the HIH proceedings.

3. [3]

   The Sturesteps now bring these proceedings against Mr Khoury and the second defendant, Benjamin & Khoury Pty Limited (“the Company”), an incorporated legal practice, whose director is Mr Khoury. During the course of the retainer between 2003 and 2008, the Sturesteps paid approximately $2.5 million in legal fees and disbursements. In these proceedings they claim that they overpaid their solicitors by about $750,000 and seek the recovery of that sum and other related relief.

4. [4]

   The plaintiffs apply for leave to amend their pleadings. The defendants have applied for the summary dismissal of the plaintiffs’ proceedings. Mr C.J. Bevan of counsel appeared for the plaintiffs. Mr K Connor SC appeared for the defendants on these applications.

Procedural History

1. [5]

   The plaintiffs filed their first statement of claim on 24 January 2014 and sought an expedited hearing. On 7 February 2014 Stevenson J in the Expedition List ordered that the plaintiffs serve all evidence on which they proposed to rely by 13 March 2014.

2. [6]

   The plaintiffs filed an amended statement of claim on 19 February 2014 (“the ASOC”), pursuant to Uniform Civil Procedure Rules (“UCPR”), r 19.1. On 14 March 2014 counsel for the plaintiffs informed the Court that the plaintiffs had served all the evidence upon which they wished to rely.

3. [7]

   On 11 April 2014 the defendants sought an order under UCPR, r 13.4 dismissing the proceedings or, alternatively, an order under UCPR, r 14.28 striking out the ASOC. Stevenson J heard that application on 8 May 2014 in the Equity Division Expedition List. In an ex tempore judgment, his Honour granted the alternative order only: he struck out the ASOC, directed the Sturesteps to serve a proposed further amended statement of claim, and stood the notice of motion over for further directions: Sturesteps v Khoury (Supreme Court (NSW), Stevenson J, 8 May 2014, unrep).

4. [8]

   On 6 June 2014 Stevenson J removed the matter from the Expedition List, and on 8 September 2014 the Equity Registrar allocated the hearing of the parties’ applications to me.

5. [9]

   Both sides have put on applications. The Sturesteps by notice of motion dated 16 June 2014 seek the Court’s leave to amend their pleadings pursuant to Civil Procedure Act 2005, s 64 by filing a document titled “Further Amended Statement of Claim”, including annexures A to E thereto (“FASC”). The FASC has itself been updated over time. The FASC considered in these reasons became Exhibit 3 in the proceedings. The defendants oppose the Sturesteps’ motion. The defendants also move on their 11 April 2014 motion, again seeking summary dismissal of the FASC pursuant to r 13.4 or orders pursuant to r 14.28 striking out the FASC.

6. [10]

   The proceedings were heard on 17, 18 and 19 November 2014. Judgment was reserved on 1 December 2014.

Substantive History

1. [11]

   By a written retainer agreement dated 11 April 2003 (“the costs agreement”), Mr Sturesteps retained Mr Khoury, practising as Benjamin & Khoury Solicitors, to sue HIH’s liquidators for entitlements relating to his former employment. On the same date Mrs Sturesteps retained Mr Khoury to act for her to defend an action brought by the liquidators of HIH Overseas Holdings Ltd, who sought to recover a loan in the nature of an alleged fringe benefit made to her as the nominee of her husband.

2. [12]

   The costs agreement contained express terms relevant to the issues arising in this proceeding which were to the following effect:

3. [13]

   On 1 July 2003, Mr Khoury established the Company as a trading practice. Benjamin & Khoury sent a letter dated 30 June 2003 to Mr Sturesteps advising him of the incorporation of the Company. Mr Sturesteps received this letter about a week later. The parties dispute the legal effect of the letter. It stated:

4. [14]

   Following the receipt of the letter, the retainer continued. Mr Sturesteps continued to instruct Benjamin & Khoury, and Benjamin & Khoury continued to provide legal services to the Sturesteps, sending them letters and issuing bills using stationery that occasionally, but not always, included words referring to the company, “Benjamin & Khoury Pty Limited ABN No 64 104 057 043”. The Sturesteps claim that Mr Sturesteps complained about the costs that Benjamin & Khoury billed them, but they say that at no point did he seek an assessment of those costs because of misconceptions as to his rights to costs assessment under the Legal Profession Act. The Sturesteps allege that Mr Khoury is responsible for Mr Sturesteps’ misconceptions.

5. [15]

   The HIH proceedings were heard in 2010 before Brereton J. The two proceedings were heard together on 15–18 February 2010, 21 May 2010 and 3 June 2010. Brereton J gave three ex tempore judgments in the proceedings: Sturesteps v McGrath [2010] NSWSC 169; Sturesteps v McGrath (2010) 242 FLR 122; [2010] NSWSC 896; and Sturesteps v McGrath [2010] NSWSC 903.

6. [16]

   Appeals were commenced from Brereton J’s decisions in both proceedings. The appeals were to be heard together in August 2011. Around this time, the Sturesteps were behind in payment of Benjamin & Khoury’s bills of costs. On 6 May 2011, Mr Khoury told Mr Sturesteps that he would terminate his retainer agreements with them and terminate the services of their counsel unless they made “satisfactory arrangements” to pay all outstanding and future legal costs under the retainers before their pending appeals were heard. In May 2011 Mr Sturesteps signed a Deed of Agreement to enter into such an arrangement.

7. [17]

   The Court of Appeal heard the appeals on 8 August 2011, and gave judgment on 30 September 2011: Sturesteps v HIH Overseas Holdings Ltd (In Liq) (2011) 81 NSWLR 690. On 11 May 2012 the High Court refused Mr Sturesteps’ application for special leave to appeal from the Court of Appeal’s decision.

8. [18]

   On 8 December 2011 Mr Sturesteps terminated the retainer agreement and the costs agreement. Throughout the retainer, Mr Sturesteps paid a total of $2,770,578.08 that had been billed in bills of costs. He now alleges that, had he applied for assessment and review, Mr Khoury (or alternatively, the Company) could only have recovered $2,048,662.72. The plaintiffs now seek the repayment of the difference between those two figures, namely $721,915.36, together with interest.

The Relief the Sturesteps Seek

1. [19]

   By the proposed FASC (Exhibit 3), the first plaintiff, Mr Sturesteps, seeks the following relief:

2. [20]

   The FASC also seeks the following relief for both plaintiffs jointly:

Applicable Legal Principles

1. [21]

   The defendants’ application can conveniently be split into two parts, which at points overlap. Firstly, the defendants move for summary dismissal of the plaintiffs’ case on the basis that it cannot possibly succeed. Secondly, the defendants claim that parts of the plaintiffs’ pleadings must be struck out on the basis that they are imprecise, immaterial or embarrassing and contradict the rules for pleadings in UCPR, Part 14.

2. [22]

   The defendants move under UCPR, r 13.4 for summary dismissal of the proceedings. Rule 13.4 states as follows:

3. [23]

   The legal principles that apply to the defendants’ motion for summary dismissal may be shortly stated. Only in “plain and obvious” cases, where the plaintiff’s case is “so clearly untenable that it cannot possibly succeed” should the Court exercise its power to strike out pleadings or dismiss proceedings without a substantive hearing: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 (“General Steel”) at 129-130 per Barwick CJ. The Court cannot dismiss an action “once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it”: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 per Dixon J (as his Honour then was). The Court of Appeal has recently reiterated the test in Ren v Jiang [2014] NSWCA 388 at [49]:

4. [24]

   The Court is entitled to consider evidence on any application under the rule and is not confined to dealing with the matter solely by reference to the pleadings: Wenlock v Moloney [1965] 2 All ER 871; Howden v Truth & Sportsman Ltd (1937) 58 CLR 416 at 419. Subrule 13.4(2) makes this clear. That is necessary because on a summary judgment application, “the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded”: O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71; 16 BPR 31,705 at [3] per Macfarlan JA. However, where “the ultimate outcome of the case turns upon the resolution of some disputed issue or issues of fact”, the Court ought to take great caution before exercising the power to terminate an action summarily: Webster v Lampard (1993) 177 CLR 598 at 603 per Mason CJ, Deane and Dawson JJ; see also Spellson v George (1992) 26 NSWLR 666. The requirement that claims requiring resolution of disputes as to fact are not to be summarily dismissed can be expressed in terms of “taking the plaintiff’s case at the highest” in the sense that Leeming JA explained that expression in Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405 at [200]:

5. [25]

   The Court may hear argument “even of an extensive kind” in determining whether or not the plaintiff’s case is untenable: General Steel at 130 per Barwick CJ.

6. [26]

   In Spencer v The Commonwealth (2010) 241 CLR 118 at 131 [24] French CJ and Gummow J said:

7. [27]

   The Court will not necessarily dismiss all claims apparently filed outside the relevant limitation period. In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 (“Wardley”) at 533 [31] Mason CJ, Dawson, Gaudron and McHugh JJ stated the following:

8. [28]

   However, if the limitation period has obviously expired and the plaintiff knew the relevant facts at the time the cause of action accrued but made no claim for an extension of the limitation period, it may be entirely appropriate to summarily dismiss a claim: see for example Gillies v Eastlake [2014] NSWSC 611 at [110] – [117] per Garling J.

9. [29]

   The defendants rely upon UCPR, r 14.28 in their application to strike out the plaintiffs’ claim:

10. [30]

    In relation to the requirement for a pleading to state material facts found in the precursor rules to the UCPR, in Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135 (“Kirby”) Hodgson JA (Mason P and Handley JA agreeing) said at [20] – [21]:

11. [31]

    Johnson J in McGuirk v The University of New South Wales [2009] NSWSC 1424 (“McGuirk”) also set out the following principles with regards to the requirement of pleading the material facts of a claim, and noted in particular the intersection between the requirements of pleadings in the UCPR and the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings of Civil Procedure Act, s 56:

12. [32]

    His Honour also considered when the Court will strike out pleadings on the basis that they are embarrassing, at [35]:

13. [33]

    Similarly, Flick J in Takemoto v Moody’s Investors Service Pty Ltd (in liq) [2014] FCA 1081 (“Takemoto”) at [23] – [24] considered when pleadings will be struck out for a want of particularity in the following terms:

14. [34]

    Generally, having regard to the overriding purpose set out in Civil Procedure Act, s 56, leave to amend a pleading should be granted if the application is made in a timely manner and for a proper purpose: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [98]; Ritchie's Uniform Civil Procedure NSW at [s 64.5]. The relevant principles applying to the Sturesteps’ motion seeking leave to amend their FASC complement those applying to the strike out motion in that leave to amend will not be given where the proposed amendments would be liable to be struck out. In Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 310, Jordan CJ held that leave to amend would generally be given “unless the proposed amendment is so obviously futile that it would be struck out if it appeared in an original pleading …”. See also Commonwealth v Verwayen (1990) 170 CLR 456 at 456, where Dawson J said:

15. [35]

    The FASC is an extensive and elaborate document. The vast submissions of both parties in relation to the motions for and against the FASC could be characterised as Byzantine. In a pre-trial directions hearing held on 10 November 2014, the defendants’ counsel agreed to provide a list of issues arising on the motions. The hearing proceeded on the basis that both sides would address their arguments organised under those issues. This judgment addresses the same issues. In summary, they are as follows:

    1. (1)

       Issue 1: whether the Court has jurisdiction to grant the relief sought in prayers 1 and 2 of the FASC to declare as unjust and set aside certain provisions of the 11 April 2003 costs agreement.

    2. (2)

       Issue 2: whether Mr Sturesteps may bring his restitution claim, including as sub-issues:

    3. (3)

       Issue 3: whether certain matters pleaded are connected with the relief the plaintiffs claim.

    4. (4)

       Issue 4: whether the Sturesteps’ claims concerning two alleged agreements dated 27 June 2011: a Deed of Agreement and a Deed of Equitable Charge on Land are maintainable, including as sub-issues:

    5. (5)

       Issue 5: whether Mr Sturesteps can seek the relief in prayers 5, 6 and 7 of the FASC, including:

    6. (6)

       Issue 6: whether the allegations of GST overpayments can be made.

    7. (7)

       Issue 7: whether claims struck out by Stevenson J and not re-pleaded in the FASC now require formal dismissal.

Issue 1: The Court’s Power To Declare Clauses Of The 11 April 2003 Costs Agreement Unjust And To Set Those Clauses Aside

1. [36]

   By the end of the interlocutory hearing, the version of the FASC which the plaintiffs sought leave to file had evolved. The plaintiffs had originally expressed prayers 1 and 2 of the FASC as follows, with underlining to show the phrases that eventually were deleted:

2. [37]

   The parties agreed that the present applications should be determined on the basis that the Legal Profession Act 1987 is applicable, rather than the Legal Profession Act 2004 or the Legal Profession Uniform Law, which came into effect on 1 July 2015. The defendants argued that the Court does not have jurisdiction to grant relief based upon Legal Profession Act 1987, s 208D(1) because that section granted jurisdiction to a costs assessor rather than the Court. Subsection 208D(1) provides as follows:

3. [38]

   The defendants contrasted this provision with the grant of power made under Contracts Review Act 1980, s 7, authorising “the Court” to, for example, make an order declaring a contract void, in whole or in part, where it finds a contract or a provision of a contract to be unjust. The defendants submit that provisions similar to s 208D, giving power to an administrative officer but not to a court, are common: see for example, Strata Schemes Management Act 1996, s 140, which grants power to an adjudicator to make certain orders relating to repairs to and alterations of strata property but does not give such powers to a court, the court’s role being limited in that legislation to the exercise of supervisory, appellate jurisdiction.

4. [39]

   The defendants argue that the decision of Einstein J in Currabubula Holdings Pty Ltd v State Bank of New South Wales [2000] NSWSC 232 (“Currabubula”) supports by analogy their approach to the limits of the Court’s s 208D(1) jurisdiction. In Currabubula Einstein J considered whether s 208K of the Legal Profession Act excluded the Court’s jurisdiction to give declaratory relief as to the proper interpretation of its costs orders, following the decision of a costs assessor. Legal Profession Act 1987, ss 208L and 208M provided for the Court to hear appeals from a costs assessor’s decision. Section 208K, however, stated:

5. [40]

   Einstein J found at [60] – [61] that “despite the strength of the presumption against this Court being deprived of its declaratory jurisdiction”, he could find no escape from the conclusion that “the effect of s208K is to make [ss 208L and 208M] the exclusive means of pursuing an appeal from the costs assessor and to exclude the Court’s declaratory jurisdiction ‘in respect of a determination.’”. In the alternative, Einstein J found at [69] that if the Act did not exclude the Court’s jurisdiction to give declaratory relief, he ought not to exercise the power to do so, because thereby “the Court would be circumventing the costs assessor’s jurisdiction and undermining the costs assessor task”.

6. [41]

   The defendants also submit that the prayer for a declaration that the costs agreement clauses are “unjust” should also be summarily dismissed in so far as the substantive relief to which it is linked fails because of the present argument. They refer to In Sidameneo (No 456) Pty Ltd v Alexander (No 2) [2012] NSWCA 87, in which Young JA (with whom Beazley and Basten JJA agreed) identified “one of the principal guidelines on the utility of declarations” laid down by the English Court of Appeal in Dysart (Earl) v Hammerton & Co [1914] 1 Ch 822 at 834, per Cozens-Hardy MR, as:

7. [42]

   The Sturesteps have amended the FASC so that they no longer base their relief on s 208D(1) of the Legal Profession Act. Instead they rely upon the Court’s inherent jurisdiction to regulate the behaviour of its own officers, including solicitors. They rely upon several judgments of this court, the most recent of which is Mathews AJ’s decision in Estate of Allwood v Benjafield [2009] NSWSC 1383 (“Benjafield”). Mathews AJ in Benjafield at [38] referred to the “abundant and consistent authority” consistent with the proposition that the Court’s inherent jurisdiction allows it to order a solicitor to render a bill of costs. That common law power was, Mathews AJ said, consistent with the power contained in Legal Profession Act, s 209C. Mathews AJ relied upon the statement of Young J (as he then was) in Parramatta River Lodge Pty Ltd v Sunman (1991) 5 BPR 12,038 that:

8. [43]

   The Sturesteps also referred the Court to Re Morris Fletcher & Cross’ Bill of Costs [1997] 2 Qd R 228, where Freyberg J held that the court has an inherent power to order taxation before a bill is delivered.

9. [44]

   These cases each refer to the Court’s power to order the delivery of a bill of costs. These cases do not deal with the Court having the power to declare a costs agreement to be “unjust” and to set it aside on that basis.

10. [45]

    The Sturesteps also rely upon Wentworth v Rogers (2006) 66 NSWLR 474 and Griffith v Australian Broadcasting Corp [2013] NSWSC 750 (“Griffith”) at [35]-[52]; and Wende v Horwath (NSW) Pty Ltd (2014) NSWLR 674; [2014] NSWCA 170 at [21]-[26] to support their contention. But those decisions show that the power under the Legal Profession Act 1987 to assess bills of costs and costs agreements lies first with the costs assessor, subject always to the court’s supervisory jurisdiction under ss 208L and 208M. Thus, when performing a costs assessment “it is the cost assessor's duty and function to determine as best he or she can such issues of fact and law as arise on the cost assessment in order to discharge their function under s 367 of the Act”, and it is not for the Court to pre-empt the cost assessor’s role in doing so, because “the starting position is that it is Parliament's assessment that the appropriate forum to decide these issues is via the statutory mechanisms it created”: Griffith at [46] and [53].

11. [46]

    In my view it is well arguable that the same logic applies to the cost assessor’s function of determining whether a term of a costs agreement is unjust under s 208D: Parliament decided that that function is the cost assessor’s to perform at first instance, not the Court’s. Once a costs assessor has made the s 208D determination that a term of a costs agreement is unjust, the costs assessor may then proceed to assess a bill of costs made under that agreement, even if that costs agreement would otherwise not have been assessable under s 208C. Section 208C provides as follows:

12. [47]

    But the Sturesteps submit that the Court’s inherent power with respect to the discipline of legal practitioners, which is preserved by Legal Profession Act, s 171M (see Law Society of NSW v Foreman (1994) 34 NSWLR 408 at 419F and Barwick v Law Society of New South Wales (2000) 169 ALR 236 at [118]) is a source of power for the Court to declare the costs agreement unjust and subsequently to set it aside. But even if the power to discipline legal practitioners, empowers the Court to make a declaration that the costs agreement is unjust or indeed just to set it aside, that would probably not be the Court’s first choice where the statutory framework clearly gives the costs assessor, not the Court, that role.

13. [48]

    However the Sturesteps case is not unarguable on this issue and is not destined to fail so far as that can be ascertained at this interlocutory hearing. Much will depend upon the full circumstances that emerge at hearing.

14. [49]

    Then the defendants further contend that the Sturesteps can no longer recover the costs of legal services, because their claim will be statute barred, as Limitation Act 1969, s 14 precludes any such entitlement. The defendants’ contention is that Symonds v Raphael (1998) 148 FLR 171 stands for the proposition that, in the context of the fiduciary relationship as between solicitor and client, the limitation period under the Limitation Act for any claim by a client seeking to set aside a costs agreement runs from when the client first receives a bill of costs from the solicitor. In this case the first bill of costs issued was dated 31 May 2003. The defendants point out that over 12 years has passed since the date of that bill of costs.

15. [50]

    But this is not a case where the plaintiffs’ action should be struck out on Limitation Act grounds. Wardley considerations are applicable. Here the plaintiffs say they were under a misconception as to their rights that was induced by the solicitor who now seeks to mount a limitation argument against them. The full pleading and evidence picture may raise issues as to whether the limitation period was suspended for a time. The plaintiffs’ claim should not be struck out now on this ground.

16. [51]

    The defendants finally contend that given Mr Sturesteps’ payment of monies under the costs agreement, together with his failure to avail himself of the review regime set out in Legal Profession Act, s 199, a claim now setting aside the costs that had been agreed would cause irremediable prejudice to the defendants. The submission appears to be in substance that it is an abuse of process to allow Mr Sturesteps to continue to challenge the costs agreement’s validity because he has been guilty of laches, and by standing back and taking no steps in relation to the agreement he has acquiesced as to its validity: Nocton v Lord Ashburton (1914) AC 932; Symonds v Raphael (1998) 148 FLR 171.

17. [52]

    But this too is a matter for evidence at a trial. Issues of irremediable prejudice due to delay and laches can only be determined when the full facts are known. This part of the FASC will not be struck out.

Issue 2: Mr Sturesteps’ Restitution Claim

1. [53]

   Within issue 2 the defendants have raised a number of issues about Mr Sturesteps’ restitution claim, which are considered below under subheadings (a) to (f).

2. [54]

   Mr Sturesteps’ restitution claim is for money that Mr Sturesteps allegedly overpaid to the defendants under a claimed mistake as to his rights to assessment of legal costs. Mr Sturesteps submits that he paid more for the costs claimed by Mr Khoury in the bills of costs than would have been assessed as the amount of recoverable costs upon assessment of the bills of costs under Part 11 of the Legal Profession Act. Alternatively, Mr Sturesteps submits that he lost the opportunity to have the costs claimed in the bills of costs assessed by a costs assessor and thereby reduced to a significantly lower amount, that was either objectively reasonable or otherwise a recoverable amount of costs for the purposes of Part 11 of the 1987 Act. Mr Sturesteps claims he is owed $721,915.36 on this restitutionary basis, being the difference between the $2,770,578.08 he paid for costs billed and $2,048,662.72, the amount that allegedly would be recoverable for costs billed upon assessment and review under Part 11 of the Legal Profession Act, had Mr Sturesteps applied for such assessment and review.

3. [55]

   The restitution claim relies upon pleaded mistakes of both of fact and law. The pleaded mistakes are that Mr Sturesteps took no steps to seek an assessment of the costs claimed in the bills of costs within the time permitted under the 1987 Act, and paid the costs claimed in the bills of costs without seeking an assessment of them. The pleadings set out the reasons given for these mistakes at FASC, para 36 as follows:

4. [56]

   The first sub-issue is that the defendants claim that Mr Khoury never received money from the plaintiffs. They claim that the incorporated legal practice, the company received the plaintiffs’ money for the payment of its bills. They submit that a condition of any claim by a person against a second person for restitution by way of unjust enrichment for money paid under mistake of fact, is that the second person actually received the payment. Therefore, the defendants argue, no claim for restitution against Mr Khoury is maintainable.

5. [57]

   The plaintiffs plead that:

6. [58]

   Annexure B to the FASC records some 32 payments that Mr Sturesteps made to ‘B&K’, Benjamin & Khoury, and a further 22 payments that he made directly to counsel, between 1 November 2003 and 5 January 2012. The defendants do not fundamentally disagree with the amounts that Mr Sturesteps says he paid. At issue, however, is whether the named payee, Benjamin & Khoury is a business name. The defendants claim that by paying Benjamin & Khoury, Mr Sturesteps was in fact paying the Company. Mr Sturesteps says that Mr Khoury was the payee.

7. [59]

   In support of the defendants’ argument that the payments were made to, and received by, the Company, the defendants note that all of the payments Mr Sturesteps made, excluding those made to counsel and one relating to a deed of settlement executed in November 2011, were made into the Company’s trust account. Additionally, the defendants caused bills of costs to be sent to Mr Sturesteps that generally came under cover of letters at the bottom of which was printed the words “Benjamin & Khoury Pty Limited ABN No. 64 104 057 043”. The defendants also point to notations in the same form that often appear at the bottom of the issued bills of costs. The cumulative effect of the evidence is, the defendants argue, that leave should not be granted to amend the pleadings to allow Mr Khoury to be joined as a defendant.

8. [60]

   But the plaintiffs disagree. Firstly, they say that at this stage, in the context of a strike out application, the truth of their case as pleaded must be accepted.

9. [61]

   Secondly, they say that contractually Mr Khoury must be the recipient of the payments made under the retainer agreement pleaded in the FASC. That is an agreement was made between Mr Sturesteps and Mr Khoury personally. And they contend that the 30 June 2003 letter referred to at [13] above could not have unilaterally achieved the novation of that agreement to the Company or the assignment of the benefits of the retainer agreement to the Company. For such a consequence, Mr Sturesteps’ consent would be necessary, particularly given the terms of the Costs Agreement, c 21(c), which stated that “The terms of this Agreement will continue to apply, notwithstanding … incorporation of the legal practice as a solicitor corporation”. But the plaintiffs point out Mr Sturesteps did not consent. Novation of the retainer agreement could only occur if the parties “agreed that a new contract is to be substituted for the old and the obligations of the parties under the old agreement are to be discharged”: ALH Group Property Holdings Pty Limited v Chief Commissioner of State Revenue (2012) 245 CLR 338 at [12].

10. [62]

    Thirdly, the plaintiffs characterise their case as one of constructive receipt. They say that once Mr Sturesteps paid Mr Khoury in return for the services that he (as opposed to the Company) provided, it does not matter where Mr Khoury chose to bank Mr Sturesteps’ payments. Mr Khoury had constructive receipt of Mr Sturesteps’ payment notwithstanding his depositing of it to the bank account of another entity: Federal Commissioner of Taxation v White [2010] FCA 730 at [25], [28] per Gordon J; Sent v Federal Commissioner of Taxation [2012] FCA 382 at [50], [63]-[82] per Murphy J; aff. [2012] FCAFC 187 at [31]; Income Tax Assessment Act 1997 (Cth), ss 6-5(4); 6-10(3).

11. [63]

    Finally, the plaintiffs argue that, on a policy basis, a solicitor should not be able to prevent his or her client from claiming funds in restitution from that solicitor by device of depositing the client’s cheques to the bank account of a company without assets. In circumstances where the client never retained the company as solicitor, which is the plaintiffs’ submission in this case, an injustice would otherwise be perpetrated on the client.

12. [64]

    The plaintiffs’ contentions are the more persuasive. Although the presently available evidence seems to show that Mr Sturesteps’ payments of his legal fees were banked by the Company, his restitutionary claim against Mr Khoury is not so clearly untenable that it cannot possibly succeed. The Sturesteps contention that the novation to the company was not effective is certainly arguable on the materials presently available and could only be determined on all the evidence at trial. Without deciding the issue, the evidence does not discount the possibility that Mr Khoury did himself receive the amounts from Mr Sturesteps, in that Mr Khoury may have provided the legal services and thus may be taken to be the one who received the funds. Where Mr Khoury chose to bank the funds is not determinative of the identity of the recipient of the funds. And where some of the bills of costs and covering letters provided to Mr Sturesteps were endorsed with the name and Australian business number of the Company, others were not. Even on the present evidence those invoices are not decisive of the issue. This issues partly involves questions of agency and characterisation and can only really be decided at a trial. So it not appropriate now to order summary dismissal on that ground, or to preclude the amendment of the plaintiffs’ pleadings to include this restitutioners claim.

13. [65]

    By paragraph 37 of the FASC, the Sturesteps plead the payments that Mr Shuresteps made to Benjamin & Khoury pursuant to various bills of costs. It is from these payments that the first plaintiff claims his entitlement to restitution arises. Paragraph 37 appears in the following terms:

14. [66]

    As noted above, annexure B to the FASC consists of two pages listing individual payments by Mr Sturesteps to Benjamin & Khoury and to counsel. The amounts paid total over $2.7 million. The annexure also identifies an amount that the plaintiffs allege constitutes an overpayment by the plaintiff: $721,915.36. However, Annexure B does not identify, with respect to each individual payment by Mr Sturesteps, what proportion of that payment was an overpayment.

15. [67]

    The defendants submit that the plaintiffs cannot plead the overpayments in the way that they have. They say that it is fundamental to pleading such a claim for restitution of an amount overpaid that, in relation to each payment alleged to have been made under a mistake, the plaintiff pleads: the payor, the payee, the date of the alleged payment, the amount alleged to have been paid by mistake, and the mistake alleged to have caused the payment.

16. [68]

    The defendants say several issues are created, due to the global way in which the plaintiffs plead the overpayment. The defendants submit that because the plaintiffs have made their allegations of overpayment globally, the FASC’s claims concerning payments alleged to have been made are confusing and inconsistent. The defendants also say that once payments are treated individually, limitation defences may apply to many of the overpayment amounts: that possibility is obscured if one considers the overpayment globally. Stevenson J made a similar observation in his earlier judgment in these proceedings at [13]-[14]:

17. [69]

    The defendants also submit there is a need to plead the particular state of mind of the plaintiff at each point that he made an alleged overpayment, that being a requirement for success of a claim in restitution. The defendants cite Australian Financial Services and Leasing Pty Ltd v Hills Industries [2014] HCA 14 at [118] (“Hills”) to support this contention. In Hills Gageler J relies upon the following statement of Hamilton J in Baker v Courage & Co [1910] 1 KB 56 at 64-65 as stating the applicable law:

18. [70]

    The Sturesteps explain that particular amounts said to be overpaid are identified in an annexure to the affidavit of Michael John Dudman dated 12 March 2014. Mr Dudman is a specialist costs consultant. The annexure is a notice of objection which comprehensively identifies the profit costs and disbursements for Mr Sturesteps’ retainer of Mr Khoury that Mr Dudman believes were fair and reasonable within the meaning of the legislation. The plaintiffs submit that the defendant can already understand the overpayment alleged with respect to each bill by cross-referencing Annexure B and the annexure to Mr Dudman’s affidavit.

19. [71]

    Moreover the plaintiffs submit that they are not in a position to plead the precise amount constituting an overpayment in relation to each payment the plaintiffs have made, as opposed to the overpaid amount in relation to each bill. This is because the plaintiffs did not send Benjamin & Khoury discrete payments for each invoice. Instead, they say that as is the case with many clients who have litigation on foot over a long period, in effect the plaintiffs paid successive lump sum instalments of the total amount said to be owing. The plaintiffs have no knowledge of how the defendants allocated those amounts to outstanding bills. Besides, under the legislation the plaintiff submits it is the overall costs billed that are assessed and determined to be unreasonable, rather than particular payments, and so if the plaintiffs successfully seek an assessment, their entitlement will be determined with the whole amount that is determined to be an overpayment.

20. [72]

    And, the plaintiffs submit that it is neither necessary nor desirable to plead each instance of overpayment. This is because, they say, the Legal Profession Act 1987 does not task the costs assessor to assess each individual entry discretely, but rather a global assessment of the costs of a particular retainer must be undertaken. This global approach, the plaintiffs say, is necessary properly to assess components of the work performed, such as inter alia the practitioner’s skill, labour and responsibility, the complexity, novelty or difficulty of the matter, and the quality of the work done: Legal Profession Act, s 208B. Therefore, treating each payment as an individual cause of action does not mesh with the global rationale of the statutory regime for assessing costs.

21. [73]

    The plaintiffs also submit that, as the defendants would have them plead the matter, the logical result in terms of relief would be a specific order for repayment of a specific proportion of each payment listed in FASC annexure B, of which there are 42 payments over an eight year period. A claim for such relief would be unusual, to say the least, and not consistent with authority.

22. [74]

    The plaintiffs’ submissions are the more persuasive. The plaintiffs are under an obligation to plead specifically any matter that otherwise might take the defendants by surprise: UCPR, r 14.14. That general requirement means that the plaintiffs must state material facts in such a way that a defendant can “understand the materiality of the facts, that is, how they are material to a cause of action”: Kirby at [20] per Hodgson JA. But this can be done in a number of ways provided the case is clear. It does not all have to be in the pleadings. Some of the material the plaintiff relies on is already now in Mr Dodman’s expert evidence. Moreover the actual dates of payment do not seem to be in dispute and the pleading is clear enough that the plaintiffs allege they made the same mistake and had the same state of mind for each payment. Directions will be given before trial, when evidence is complete, to agree on dates and amounts of payments. Isolating the precise amount of overpayment in each payment should ultimately only be a matter of mathematics that will be clear enough to all sides before trial. There seems to be no point in making it a pleading issue.

23. [75]

    Mr Sturesteps’ claim for restitution is based upon an alleged mistake as to his rights to assessment of Benjamin & Khoury’s bills of costs. The defendants say that attached to the bills of costs issued to Mr Sturesteps were statements required by the statute and its regulations which notified Mr Sturesteps that he was entitled to apply to have the costs assessed under Part 11 of the Legal Profession Act within 12 months after being given the bill. The plaintiffs agree that some of the bills of costs did give the relevant notification. But they say that there are special reasons why that notification was not sufficient to put Mr Sturesteps on notice of his rights to an assessment. They say therefore that that notification was insufficient to cure Mr Sturesteps of the operative mistake relevant to his claim for restitution.

24. [76]

    Legal Profession Act 1987, s 193(1) states that the regulations may make provision for or with respect to the form of, and the particulars to be included in, bills of costs. Legal Profession Regulations 2002, reg 45 provides for such particulars and states relevantly as follows:

25. [77]

    The plaintiffs agree that some 30 of the 71 bills of costs that were given to Mr Sturesteps did include the statutory notification required by r 45(d)(i). An example of that notice, from the first bill dated 30 June 2003, is as follows:

26. [78]

    However the Sturesteps’ case is that Mr Sturesteps did not understand the notice and that he nevertheless was mistaken as to whether he had a right to assessment. That is due to a term in the costs agreement with Benjamin & Khoury. The costs agreement dated 11 April 2003 stated, in clause 15, that:

27. [79]

    The Sturesteps’ submission is that costs agreement, clause 15, nullifies the effect of the statutory notice displayed on the bills of costs. Due to that clause, Mr Sturesteps says that he believed that he was precluded from having his costs assessed under the Legal Profession Act, because he believed the costs agreement did comply with the Act and that the agreement had never been set aside as unjust. In light of that, Mr Sturesteps says that he believed that the costs assessment notification in the statutory form displayed in the bills of costs were pro forma notifications which had no application to him because, as far as he was aware, he had a compliant costs agreement.

28. [80]

    The plaintiffs answer to this is persuasive. The Sturesteps submit that in this application for summary dismissal, the defendants may not challenge Mr Sturesteps’ pleaded mental state. The defendants’ issue is with the mistake that Mr Sturesteps pleads he was operating under at the time that he made the payments to Benjamin & Khoury. Mr Sturesteps’ mental state is a disputed question of fact whose resolution at trial is pivotal to the ultimate success of this part of the claim. The Court ought to exercise great caution before exercising the power to terminate an action summarily: Webster v Lampard (1993) 177 CLR 598 at 603 per Mason CJ, Deane and Dawson JJ. The question must go to trial.

29. [81]

    The defendants seek to outflank this response. They argue that as a matter of law, Mr Sturesteps could not possibly have operated under the claimed mistake necessary to his claim for restitution. They submit that the inclusion of the statutory notice together with the bills of costs had the effect, as a matter of law, of notifying Mr Sturesteps as to his rights to assessment and thereby curing any mistake that he alleges. The reason why the statutory notice must operate in law to make Mr Sturesteps aware of his rights to assessment, the defendants contend, is that any other result would not achieve the objectives of certainty and finality found in Part 11 of the Legal Profession Act. Section 99 of that Act and Legal Profession Regulation, reg 53 together require any application for costs assessment to be made within 12 months after the relevant bill is given to the client. The defendants point to those provisions as showing that the legislature intends the Act’s assessment process to be certain and final.

30. [82]

    Whether the inclusion of the r 45(d)(i) notice does, as a matter of law, mean that the recipient of the notice is deemed to have knowledge of the statutory scheme for costs assessment under Legal Profession Act, Division 6, is a question of law that remains to be determined, and upon which the rights of the parties depend. The Court gave the parties almost two weeks after the hearing of these applications to find relevant authorities on this issue. Neither party could identify authority for the proposition that the statutory notice, once included in a bill of costs, had that deeming effect for which the defendants contend. If the statutory notice does not have the effect of deeming Mr Sturesteps as the notice’s recipient to have a particular belief as a matter of law, it remains a question of fact to be determined at trial what belief Mr Sturesteps actually held. Real questions of fact and law therefore remain to be determined, so it is not competent for the Court to dismiss this part of the action now on this ground: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.

31. [83]

    In the Expedition List before Stevenson J, the Sturesteps agreed to file their evidence in support of their statement of claim by 13 March 2014. On 14 March 2014 counsel for the Sturesteps informed the Court that the Sturesteps had served all the evidence upon which they wished to rely. The defendants now submit that, final evidence having been filed, the Sturesteps’ pleadings have closed, and they may not rely on any cause of action in addition to those identified within the ASOC, nor rely on any further evidence beyond that which has been filed in this motion for summary dismissal.

32. [84]

    The Sturesteps submit that the FASC should not be confined to pleading issues which were raised in the original statement of claim. This is so they submit for several reasons. First, their evidence was put on for the purposes of expediting pre-trial processes in the Expedition List. Following Stevenson J’s orders on 6 June 2014, the proceeding is no longer in that list. The Sturesteps say therefore that they ought not to be restricted in pursuing a meritorious case now because of orders made for procedural expediency in a different list. Secondly, the Sturesteps submit that their case at trial will rely upon the receipt of documents from the defendants, which documents are the subject of notices to produce, with which at the time of the hearing the defendants had not complied. Until receipt of those documents, the Sturesteps say that they will not know the full scope of their case against the defendants. Thirdly, it is relevant that the Stevenson J struck out the pleadings in relation to which the Sturesteps filed their evidence. The FASC is a new pleading, and so merits the consideration of new evidence. Counsel for the Sturesteps submits that to hold his clients to the old pleadings and body of evidence filed in materially different circumstances would constitute a denial of procedural fairness.

33. [85]

    The Sturesteps may no longer amend their statement of claim as of right under UCPR, r 19.1. But under Civil Procedure Act, s 64 the Court may, at any stage of the proceedings, order that leave be granted to a party to amend any document in the proceedings.

34. [86]

    In deciding whether to make such an order, the Court must seek to act in accordance with the dictates of justice: Civil Procedure Act, s 58. The content of that phrase is provided in s 58(2).

35. [87]

    Under s 58(2)(a), the Court must have regard to the provisions of s 56 and s 57 of the Act in determining what are the “dictates of justice” under s 58(1). The requirement to have regard to those sections means in substance that the Court must give those sections “weight as a fundamental element in the decision-making process”, or equivalently that those matters “must be the focal point of the decision-making process”: Commissioner of Police for New South Wales v Industrial Commission of New South Wales & Raymond Sewell [2009] NSWCA 198 at [73]. Regard to the (sometimes competing) considerations in both sections is mandatory: Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 at [38] and [46].

36. [88]

    Sections 56 and 57 of the Civil Procedure Act provide as follows:

37. [89]

    Further non-mandatory considerations are provided in s 58(2)(b), to the extent that the Court considers them relevant:

38. [90]

    Permitting the FASC’s amendments and the filing of further evidence relevant to the FASC will not necessarily prejudice the timely disposal of the proceedings. The FASC provides greater clarity in what the plaintiffs allege than the ASOC. But the stronger competing consideration is the just, quick and cheap determination of the real issues in the proceeding. While mindful of the important case management considerations for the efficient disposal of this proceeding, the ground has shifted beneath the parties since the Sturesteps filed their first statement of claim. The proceedings have been taken out of the Expedition List, and it was for the purposes of expedition in such list that the Sturesteps agreed to serve their evidence so quickly. Since then, Stevenson J has struck out the ASOC and the defendants have not yet produced various payment and banking records and trust and office account ledgers recording payments for costs. A finding that the evidence, filed under the defective ASOC, is final is likely to preclude the opportunity for the real issues in the dispute to be heard. And there is still some time to go before a trial hearing date is appointed after issues about the extent of the defendants’ production of documents are resolved. The amendments contained in the FASC will not be disallowed on this basis.

39. [91]

    The defendants submit that the circumstances that the plaintiffs advance to claim that it would be unconscionable for Mr Khoury to retain the alleged costs overpayments do not constitute sufficient “qualifying or vitiating factors” such that the relevant retention does amount to an unjust enrichment of Mr Khoury. They rely upon the decision of French CJ, Crennan and Kiefel JJ in Equuscorp Pty Ltd v Haxton Equuscorp Pty Ltd (2012) 246 CLR 498 at [30], where their Honours stated the correct approach for determining a claim of unjust enrichment in terms of a claim for money had and received in the following way:

40. [92]

    But their Honours noted in the same paragraph that the factors that will be considered “qualifying or vitiating” so that retention of money becomes unjust have not been exhaustively defined:

41. [93]

    The relevant circumstances that Mr Sturesteps pleads are stated in FASC, para 48. They are that Mr Sturesteps:

42. [94]

    Whether there are relevant qualifying or vitiating factors here is a matter for trial. The circumstances set out in FASC paragraph 48 could arguably qualify as “qualifying or vitiating” so that retention of the allegedly overpaid amounts by Mr Khoury, or in the alternative by the Company, could be considered unjust. The pleaded circumstances go to showing that the plaintiffs made the overpayments and failed to seek an assessment while operating under a mistake, a mistake under which it can be said the defendants ought reasonably to have known that the plaintiffs were operating. The defendants’ submission for summary dismissal or strike out on this basis fails. The defendants will be able to pursue these arguments at trial.

43. [95]

    The defendants submit that any claim by Mr Sturesteps in restitution in respect of payments made directly to counsel lies against those counsel as payees, and cannot in law be made against Mr Khoury or the Company, as they were not the payees. Mr Sturesteps has identified 21 payments that he made between 15 May 2008 to 12 December 2012 directly to counsel. Those payments amount to $719,720.84. On this basis the defendants submit that the total amount Mr Sturesteps seeks relief for in equitable compensation cannot amount to $2,770,578.08, but should at least be reduced to $2,050,857.24. In its current form, the defendants submit, the FASC is fundamentally flawed.

44. [96]

    The plaintiffs’ response to this persuasive, and should be dealt with at trial. The plaintiffs submit that their constructive receipt case, noted in relation to Issue 2(a) above, applies with equal force to payments made directly to counsel. Mr Sturesteps had no retainer agreement or contractual relationship with counsel, and owed them no costs. The amounts paid directly to counsel were to offset amounts (at least alleged to be) owed by the Sturesteps to one or other of the defendants. The plaintiffs draw the analogy between payments made directly to counsel and payments made by the principal (A) on a construction contract paying a subcontractor (C) directly what A in fact owes to the head-contractor (B) in order that the subcontractor be paid. A’s payment has the effect of extinguishing its debt owed B, by directly extinguishing the matching debt that B owes to C. In that circumstance, although B never receives money it does receive the benefit of the extinguishment of its debt to C. It is the Sturesteps’ case that a benefit B indirectly derives from A, if accrued unjustly, can be the subject of an unjust enrichment claim by A against B.

45. [97]

    In argument the defendants limited the scope of their attack upon the Sturesteps’ restitutionary claim to deny restitution of any payments made to counsel pursuant to bills of costs given to the plaintiffs after 8 December 2010. That date is a year prior to the date of a letter sent by Mr Sturesteps to Benjamin & Khoury in 2011 in which he states that he was terminating the firm’s retainer. That letter stated in part as follows:

46. [98]

    But the Sturesteps’ answer to this is persuasive. This is a matter for trial. The Sturesteps submit that the defendants’ actions meant that it was not possible as at 8 December 2011 even to begin the assessment process, because that would have required Benjamin & Khoury to have lodged bills in assessable form. Mr Sturesteps only ever possessed bills in summary form, which would not be assessable. The plaintiffs point to the letter that their new solicitor, Shana Radnan, sent to Benjamin & Khoury on 8 December 2011 which stated that:

47. [99]

    The Sturesteps claim that they only received their file from Benjamin & Khoury, which would be necessary for an assessment, in December 2012, and the parties agree that the complete bills were never lodged for assessment. So despite having become disabused of their pleaded belief, that they did not have a right to assessment, the defendants’ actions in failing to lodge bills in assessable form put the Sturesteps in a position where they could not rectify their situation.

48. [100]

    I accept the plaintiffs’ contention that it is arguable for these reasons that they should not be barred from having restitution of the amounts paid to counsel after 8 December 2010. Issues of both fact and law remain in contention in relation to this issue. It is not appropriate for this part of the pleading to be summarily dismissed.

Issue 3: Whether Certain Allegations Have Any Connection With The Relief Sought

1. [101]

   The defendants submit that the Sturesteps’ pleadings generally are framed inappropriately, without adequately linking the relief they claim to the material facts that they plead. In particular, they allege the following deficiencies in the FASC:

   1. (1)

      Paragraphs 6 and 7 plead 21 express terms and an implied term of which no breach is pleaded;

   2. (2)

      Paragraphs 8 to 13 plead that provisions of the costs agreement are void by operation of Legal Profession Act, s 189(2). But no relief is claimed with respect to this.

   3. (3)

      Paragraphs 14 to 21 plead that the costs agreement is non-compliant with the Legal Profession Act. Paragraphs 20 and 22 assert (incorrectly, in the defendants’ submission) that Legal Profession Act, s 182(2) renders certain provisions of the costs agreement unenforceable. But no relief is claimed with respect to this.

   4. (4)

      Paragraphs 23 to 29 plead that Mr Khoury invalidly assigned the costs agreement to the Company. In their submissions the plaintiffs stated that their case against the Company is only maintained “if the Court finds a novation or assignment of the benefit of the retainer agreement”: but this consequence is not pleaded in the FASC.

2. [102]

   In relation to the first issue, the Sturesteps have chosen not to plead breaches of all the terms of the costs agreement. Of the 13 clauses and one implied term that the Sturesteps have pleaded in paragraphs 6 and 7, they have claimed relief to declare all but four of those clauses unjust, unenforceable and to have them set aside: the exceptions being clauses: clauses 14, 16, 22 and the pleaded implied term. Those clauses that are connected to the relief claimed, despite no breach being pleaded, need not be struck out as they are pleaded as relevant material facts.

3. [103]

   Clause 14 is relevant to the GST issue, Issue 6 in these reasons. Clauses 16 and 22 relate to the making of complaints and the severability of the costs agreement. The implied term is to the effect that Mr Khoury would only perform and charge for reasonably necessary work. The relevance of the other clauses has not been established but they can be left in the pleading as background to the content of the costs agreement.

4. [104]

   It is true that no relief is sought in the FASC which specifically refers to avoidance of the costs agreement under Legal Profession Act, s 189. But the relief claimed does refer to avoidance of the costs agreement. That is sufficient.

5. [105]

   Legal Profession Act, s 182 provides for the consequences of a failure by a barrister or solicitor to make a costs disclosure to a client of the type required by Part 11 Division 2 of the Act, “Legal Fees and Other Costs – Disclosure of Matters Relating to Costs”. The section provides as follows:

6. [106]

   The Sturesteps allege at FASC, paragraphs 15 to 21 that the costs agreement Mr Khoury provided failed to disclose to the Sturesteps various matters required under Part 11, Division 2. The pleading claims, as a consequence of those alleged disclosure failures, that by reason of s 182(1) Mr Sturesteps was never obliged to pay Mr Khoury costs, as the costs had not been assessed, and that provisions of the costs agreement were arguably contrary to the Division 2 disclosure requirements and were therefore unenforceable under s 182(2). The paragraphs of the FASC that plead this claim provide as follows:

7. [107]

   The relevant costs disclosure provisions of the Legal Profession Act 1987 that the Sturesteps plead that the costs agreement contravened, are as follows:

8. [108]

   The Sturesteps also plead that certain provisions in the costs agreement breached Legal Profession Regulations, reg 53, which provides:

9. [109]

   In my view the plaintiffs’ pleading of this part of their case is quite adequate and should enable the defendants to understand the case against them. And Exhibit 3, the final version of the FASC does include a claim for a declaration that certain clauses of the costs agreement were unenforceable under Legal Profession Act, s 182(2).

10. [110]

    Mr Sturesteps seeks in prayer 4 as an alternative to the relief sought from Mr Khoury in prayer 3, that the Company pay to him $721,915.36. The Sturesteps put this alternative claim on the sole basis that the costs agreement between the plaintiffs and Mr Khoury was validly assigned or novated to the Company, contrary to their main contentions. Those contentions regarding the validity of the assignment or novation of the Costs Agreement by Mr Khoury’s 30 June 2003 letter are set out above. But the defendants complain that the Sturesteps have not pleaded the consequence that the alternative claim against the Company is only made, if the assignment or novation is found to be valid.

11. [111]

    The relevant pleadings are at paragraphs 23 to 29 of the FASC. Those paragraphs plead three alternative allegations: (1) that the 30 June 2003 letter operated to inform Mr Sturesteps that his retainer with Mr Khoury would continue, but that Mr Khoury would delegate the task of performing legal services for Mr Sturesteps to the Company; (2) that if the 30 June 2003 letter did bind Mr Sturesteps to deal with the Company, that it is unjust within the meaning of the Legal Profession Act, s 208D or Contracts Review Act, s 7; or (3) that the 30 June 2003 letter failed to effect the novation or assignment of the Retainer and Costs Agreements, or the new creation of such agreements.

12. [112]

    But it is quite sufficient that these claims be pleaded “in the alternative”. And the present argument on these motions makes very clear that the relief sought against the Company is only sought in the alternative to the principal claim that is made.

Issue 4: Claims Concerning Deeds

1. [113]

   In May 2011, Benjamin & Khoury was still providing legal services to the Sturesteps in respect of the HIH proceedings. The litigation had by then been the subject of three judgments of Brereton J, and was in the process of being appealed. But the Sturesteps were behind in their payments of the law firm’s invoices.

2. [114]

   On 6 May 2011, Mr Khoury required that the Sturesteps make “satisfactory arrangements” to pay all outstanding and future legal costs before their pending appeals to the Court of Appeal were heard. Mr Khoury informed the Sturesteps that otherwise, Benjamin & Khoury would terminate both their retainer agreements with the Sturesteps and the briefs of the Sturesteps’ counsel.

3. [115]

   Subsequently, Mr Khoury specified that the Sturesteps would have to execute a deed of agreement with the Company. Under the deed, the Sturesteps would firstly acknowledge their indebtedness to the Company for outstanding legal costs incurred under the Legal Profession Act 2004 (“the 2004 Act”) in an amount of $424,835.28. Secondly, they would acknowledge that they were “sophisticated clients” for costs disclosure purposes under the 2004 Act, disentitling them to receive any disclosure of the costs of the Company’s future services. Thirdly, they would agree to make a lump sum costs arrangement with the Company for all future legal services. Fourthly, they would to agree to waive all their rights to disclosure of costs as clients under the 2004 Act, s 333, including rights to assessment of any costs payable to Benjamin & Khoury under the 2004 Act. Finally, the couple would agree to grant an equitable charge over a Melbourne property owned by Mrs Sturesteps by a collateral deed securing their indebtedness under the proposed agreement.

4. [116]

   On 20 June 2011, the Sturesteps allege that they and the Company entered into a deed of agreement on Mr Khoury’s required terms (“the Deed of Agreement”) and a collateral deed of equitable charge over land securing their consequent debt to the Company (“the Deed of Equitable Charge”) (collectively “the Deeds”). It is alleged the Sturesteps received independent legal advice from their own solicitor in Melbourne before signing the Deed of Agreement.

5. [117]

   The defendants raise several issues with the plaintiffs’ pleadings in relation to the Deeds:

6. [118]

   These reasons will now deal with each of these issues in turn.

7. [119]

   Under the Deed of Agreement, cl 9 Mr Sturesteps agreed to grant a mortgage over his wife’s Melbourne property in favour of the Company to secure the amounts payable under the Deed of Arrangement. Clause 10 of the Deed of Agreement stated that a copy of the Deed of Equitable Charge was annexed at “C”.

8. [120]

   The defendants say that it is common ground between the parties that the Deed of Equitable Charge does not exist. They say therefore that any claims for relief should be struck out to the extent that they are made in relation to the non-existent Deed. Mr Sturesteps in his affidavit of 1 September 2014 states that as far as he is aware, no Deed of Equitable Charge was ever annexed to the Deed of Agreement, and he never executed such a deed. But the non-existence of the Deed of Equitable Charge is not firmly established and the Sturesteps claim that the defendants relied upon the Deed of Equitable Charge to support a caveat over the Sturesteps’ Melbourne property. Neither party appears now to possess the Deed of Equitable Charge.

9. [121]

   The plaintiffs seek relief in relation to the Deeds, including the Deed of Equitable Charge: a declaration that the Deeds are void or voidable, alternatively that they are unjust under the Contracts Review Act or Fair Trading Act, and additionally an order setting aside the Deeds.

10. [122]

    The possible existence of the Deed of Equitable Charge may be inferred from the Deed of Agreement, which the defendants themselves authored and executed. As the defendants’ own Deed of Agreement refers to the Deed of Equitable Charge, whilst the parties are at issue as to the possibility of the existence of the latter Deed, it is premature to strike out the claims for relief in relation to that Deed on the basis that it does not exist. This is a matter for trial. The defendants may conduct their defence at trial on the basis that the Deed of Equitable Charge does not exist and was never executed, but that should not preclude the plaintiffs from alleging the existence of that document based on the defendants’ own document and claiming relief in relation to it, should it be found to exist. The issue is one that can only be resolved at trial.

11. [123]

    Although Mrs Sturesteps is a party to these proceedings, the only claims for relief which she personally seeks are those in relation to the Deeds. The defendants claim that Mrs Sturesteps is not a party to the Deed of Agreement and so, as a matter of privity of contract, has no basis to seek relief concerning the Deed. Moreover, they claim that the plaintiffs have pleaded no material facts which bring Mrs Sturesteps into the case in any way.

12. [124]

    The plaintiffs say in response that Mrs Sturesteps has a right to claim relief concerning that Deeds firstly because the Deeds were for the mutual benefit of both Mr and Mrs Sturesteps, and secondly because Mr Sturesteps executed the Deed of Agreement on behalf of both himself and his wife.

13. [125]

    In relation to the first point, the plaintiffs submit that the money paid to the Company under the Deed of Agreement came from funds jointly held by Mr and Mrs Sturesteps, and that the property in Victoria secured by the alleged Deed of Equitable Charge was owned by Mrs Sturesteps, not Mr Sturesteps.

14. [126]

    In relation to the second point, Mr Bevan of Counsel for the Sturesteps explained that Mrs Sturesteps had given her husband a power of attorney over her affairs prior to April 2003, when he entered the costs agreement between Mr Khoury and Mrs Sturesteps on his wife’s behalf. Since then, Mr Sturesteps had given on her behalf Benjamin & Khoury instructions in relation to her litigation. When Mr Sturesteps signed the Deed of Agreement, he did so on his wife’s behalf as well as his own, as this was how he had conducted the retainer with Benjamin & Khoury, over some eight and a half years.

15. [127]

    The material facts that the plaintiffs rely upon as the basis for Mrs Sturesteps’ entitlement to make her claims for relief are not currently clear in the FASC. It sounds from the way that argument is put that some kind of agency based on the power of attorney is relied on: if so that can and should be pleaded. And such agency may arguably be inferred in relation to the Deed of Equitable Charge (if it is found to exist) in relation to the property allegedly being charged that was in Mrs Sturesteps’ name.

16. [128]

    The FASC is currently inadequate in that respect. The Sturesteps should redraft their pleadings to make clear the material facts that have now been identified in submissions and that will allow Mrs Sturesteps to claim relief in relation to the Deed of Agreement, an agreement to which, on its face, she is not a party.

17. [129]

    The Sturesteps seek a declaration that the Deeds are unjust within the meaning of the Contracts Review Act, and ask the Court to exercise its discretion to set aside the Deeds on that basis. The Court may declare an agreement unjust after having regard to the public interest and to all the circumstances of the case, including such consequences or results that would arise in the event of compliance or non-compliance with the agreement: Contracts Review Act, s 9(1). The Court must also have regard to various particular circumstances to the extent that they apply in the given case: Contracts Review Act, s 9(2). Where the Court finds an agreement to have been unjust in its original circumstances, the Court has discretion to declare the agreement void, among other powers: Contracts Review Act, s 7.

18. [130]

    The defendants submit that the Sturesteps’ Contract Review Act claims should be struck out on two bases: (1) the pleading is wholly inadequate to found a claim for relief under that Act; and (2) the Court no longer has jurisdiction to entertain any claim under the Act in relation to either Deed due to the plaintiffs’ delay in commencing proceedings, beyond the time period that s 16 of the Act, limits for making applications for relief.

19. [131]

    (1) Adequacy of the Contracts Review Act pleading. The defendants submit that the Sturesteps’ pleading is inadequate because it fails sufficiently to identify the facts that are said to make the Deeds unjust. The defendants complain that the FASC does not specify how the circumstances relating to the Deeds at the time they were made join with each of the grounds listed in subparagraphs (a) to (l) of Contracts Review Act, s 9(2). But FASC, para 56 does sufficiently plead grounds upon which the plaintiffs say the Deeds were unjust. Those grounds are: (1) that the Deeds were founded upon two false premises, the first that the Legal Profession Act 2004 rather than the Legal Profession Act 1987 determined the parties’ rights and obligations, and the second that the plaintiffs had now retained the Company rather than Mr Khoury to provide legal services; (2) that the Deeds were the product of undue influence by Mr Khoury because he was in a presumed relationship of undue influence with the Sturesteps as their solicitor; (3) that the Deeds were the product of duress because the Sturesteps had no real alternative to entering into the Deeds due to Mr Khoury’s threat to withdraw the support of Benjamin & Khoury and the support of counsel in the circumstances of the Sturesteps’ closely impending appeals; and (5) that the Deeds were the product of Mr Khoury’s misleading and deceptive conduct acting as the solicitor director of the Company. Paragraph 56(e) also asserts that the Deeds were unjust under the Contracts Review Act, but does not itself provide basis to a material explain why the Deeds are alleged to be unjust.

20. [132]

    Paragraph 56 does plead material facts. These are sufficiently identified for the Court to take them into consideration when assessing whether the Deeds were unjust. Those facts have superadded to them some conclusions of law. But the underlying material facts are there in the text of the paragraph. They may be the subject of a request for further particulars should the defendants choose to issue such a request. But such requests are not to be encouraged in a case with the procedural history of this one. Moreover, the pleaded facts are not so inadequate as to require that the pleading should be struck out on that basis. Having pleaded the material facts upon which they will rely, the plaintiffs are not obliged to specify the particular subparagraphs of Contract Review Act, s 9(2) which they say the Court must consider in coming to that determination. The precise categorisation of the pleaded material facts within s 9(2) is a matter for submissions at trial.

21. [133]

    (2) Contracts Review Act pleading out of time. The defendants’ second submission is: that the Sturesteps are out of time to bring the Contract Review Act claim under s 16(b); that the Court therefore has no jurisdiction to hear the claim; and that the claim must be struck out. Section 16 provides as follows:

22. [134]

    The Deed of Agreement contemplates that Mr Sturesteps would pay the Company two sums: the first sum of $400,000 for past professional costs due and owing and the second a sum of $125,000 as a further retainer. Those amounts were said to be due and owing 14 days after the completion of the hearing of the Sturesteps’ appeal proceedings on 9 August 2011. The exercise of the obligation to pay would therefore be due on 23 August 2011. In fact, Mr Sturesteps made a payment of $300,000 to the Company in November 2011. The Sturesteps brought these proceedings in January 2014. The defendants therefore argue that the proceedings were brought two months after the two year Contracts Review Act period from the exercise of the Deed had expired in November 2013, and so the Court has no jurisdiction to hear the Contracts Review Act claim.

23. [135]

    The Sturesteps’ submission is that the Contracts Review Act, s 16(b) limitation period did not close in November 2013, but rather runs much longer. The Deed of Agreement created an obligation to pay $525.000. The plaintiff’s response to the list of issues says that obligation is to pay $424,835.28 but that contention does not take into account the discount of $24,835.28 and retainer amount of $125,000, provided for in the Deed of Agreement. Mr Sturesteps paid $300,000 under the Deed. Therefore $125,000 remains outstanding as a debt to the Company. Because the parties’ agreement takes the form of a deed, the Company retains the right to sue for the debt for 12 years from the date that right first accrued: Limitation Act 1969, s 16. The time for payment under the Deed, as noted above, was 23 June 2009: 14 days after the hearing of the Sturesteps’ appeal proceedings. The Company therefore retains a right to sue for 12 years from that date upon which its cause of action accrued, that is, until 23 June 2021. The Sturesteps submit that the Contracts Review Act, s 16(b) limitation period would only expire two years after the last day upon which Mr Sturesteps’ obligation to pay could be exercised, in the sense of being required to be exercised at the suit of the Company. The relevant date would therefore be 23 June 2023, making the Sturesteps plainly within time for bringing the claim.

24. [136]

    Additionally, the Sturesteps rely upon Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533 [31] (“Wardley”) for the proposition that the Court should not strike out the claim based upon a limitation point, this not being in the class of “the clearest of cases” which would merit summary disposal.

25. [137]

    In rejoinder to this the defendants refer the Court to an extract of the late Professor John Peden’s work, J Peden, The Law of Unjust Contracts (1982, Butterworths), which weighs against the Sturesteps’ argued operation of Contracts Review Act, s 16(b). As enacted, the Contracts Review Act is close in form to the original draft text that the late Professor John Peden recommended to the New South Wales Government in 1976, but with a narrower scope: J Goldring, JL Pratt & DEJ Ryan “The Contracts Review Act (NSW)” (1980) 4 UNSWLJ 1 at 3. The defendants submit that Professor Peden explained the operation of the Act’s limitation provision, s 16, The Law of Unjust Contracts as imposing a much shorter period of operation than the Limitation Act, because of the drastic effects of avoiding agreements, on third parties, especially in the context of land transactions. Professor Peden explains the operation of s 16(b), at pages 148 – 149:

26. [138]

    Professor Peden’s explanation for the structure of the legislation is compelling. The Sturesteps’ construction of s 16(b) to allow the avoidance of the Deed of Agreement 14 years after its execution may be difficult to maintain. But in construing the section, the Court must be mindful that “a restrictive interpretation of a remedial statute of this kind, which produces anomalous and capricious results, should not be adopted, if another and wider meaning is fairly open on the language”: Murphy v Overton Investments Pty Limited [2002] FCAFC 129, citing Baltic Shipping Co v Merchant “Mikhail Lermontov” (1994) 36 NSWLR 361 at 364-365 per Handley JA (with whom Kirby P and Mahoney JA agreed). But s 16(b) does express its two year time limitation to run from “the time for the exercise or performance of any power or obligation under, or the occurrence of any activity contemplated by, the contract”.

27. [139]

    The Sturesteps’ construction of the section might perhaps require a gloss that the limitation period runs from the later of the time contemplated for or the actual occurrence of contractual activity, and a further gloss that the “time for the exercise or performance of any power or obligation” under the contract means “the latest possible time” including the time when performance is compelled by one or other party within the limitation period otherwise applicable under the Limitation Act.

28. [140]

    But the limitation legal issues with the plaintiffs’ Contracts Review Act claim do not fall into the Wardley category of “clearest of cases”. Moreover there is material before the Court that suggests that the plaintiffs had available to them such from their solicitors less than full information, as may found an argument on the evidence for the postponing of the bar. These claims will stand.

29. [141]

    The Sturesteps claim that the Deed of Agreement was vitiated by duress, because Mr Khoury’s threat to withdraw the support of Benjamin & Khoury and counsel in the face of the Sturesteps’ impending appeals left the Sturesteps with no real alternative to entering into the Deeds.

30. [142]

    The only evidence filed in relation to this matter is the affidavit of Mr Sturesteps dated 13 March 2014. In the context of a summary dismissal proceeding, that evidence is to the effect that Mr Sturesteps met Mr Khoury alone in his Sydney offices in June 2011 following the 6 May 2011 letter, which stated that Benjamin & Khoury were “unable to continue to represent you in the current proceedings before the Supreme Court of Appeal unless proper and acceptable arrangements are entered into […] immediately”. Mr Khoury told Mr Sturesteps at this meeting that he required a written commitment to an arrangement to satisfy his debts. Mr Khoury prepared the Deed of Agreement over the next few hours and gave it to Mr Sturesteps to sign. Mr Sturesteps read the Deed on his flight home to Melbourne. The next day, Mr Sturesteps called Mr Khoury and noted that the Deed was incorrect, as, he explained, the property to be mortgaged was registered in his wife’s name only. Mr Khoury responded that this would not matter, and told Mr Sturesteps to sign the document. Without having actually received independent legal advice, Mr Sturesteps then signed the Deed according to Mr Khoury’s instructions and sent Mr Khoury a copy of it by fax.

31. [143]

    On 27 June 2011 Mr Khoury sent a letter to Mr Sturesteps enclosing the executed deed. That 27 June letter states, “We confirm that, in accordance with our discussions with you last week you had sought and obtained independent legal advice from your solicitor in Melbourne prior to executing the […] Deed of Agreement”. The Sturesteps contend that this is a self-serving fabrication on Mr Khoury’s part, designed to raise a possible defence to a future claim of undue influence, such as the one that they now bring. At this stage of summary consideration, it is not appropriate to seek to conclude whether that is the case: the testing of such a serious allegation of fabrication is clearly a matter for a full contest of evidence at a trial.

32. [144]

    The defendants claim that the Sturesteps should not have leave to include their duress claim in the FASC for several reasons. First, the FASC does not plead the material facts that would support such a claim, only the bare assertion that the Sturesteps agreed to the Deed of Agreement under duress. Secondly, the duress claim is not properly maintainable on the facts, because the 6 May 2011 letter, upon which the Sturesteps rely, was delivered about 8 weeks before the hearing of the Sturesteps’ appeals, and because the Company was merely relying upon its legal rights in requiring Mr Sturesteps to enter satisfactory arrangements with regard to his debt to the Company immediately. The defendants say in those circumstances, that the pleaded duress claim is not maintainable on the evidence.

33. [145]

    The Sturesteps’ reply on the issue of whether they have sufficiently pleaded the material facts for the claim. They submit: that the defendants have not requested any further particulars from them in relation to the claim; and, that the strike out application on the basis of the form of the Sturesteps’ pleading is not the correct vehicle for challenging the pleading, when further particulars could have been requested.

34. [146]

    The Sturesteps also rely upon the principles of summary dismissal recently reiterated in Ren v Jiang [2014] NSWCA 388 and submit that the defendants have been unable to demonstrate that the duress pleading would necessarily fail. In my view the plaintiffs are clearly right on the issue of the summary dismissal of this claim. The available evidence to sustain the pleading is that Mr Sturesteps acquiesced in executing the defendants’ Deed because he believed he had no choice. Faced with the possibility of either making a new costs arrangement with Mr Khoury or risking an unrepresented appearance in a complex appeal on issues of corporate insolvency, Mr Sturesteps advances evidence that he felt compelled to sign the Deed. The Sturesteps correctly submit that this suffices to meet the standard of evidence to make out duress.

35. [147]

    But some duress pleading issues remain. The Sturesteps plead their duress claim in the following way at FASC, para 56(d):

36. [148]

    Mr Bevan’s argument for the Sturesteps that, because the defendants have not requested further particulars of the duress claim, they cannot now say that it is insufficiently pleaded, is not persuasive. A party’s pleadings and particulars serve different purposes. Where a pleading lacks the requisite material facts, the appropriate response is not to cure that deficiency through the provision of particulars, but rather to amend the pleading itself. As Johnson J put it in McGuirk at [33]:

37. [149]

    A party’s failure to request further particulars of a pleading does not preclude that party from applying to strike out that pleading on the basis that it does not state the material facts. But that just sends the analysis back to the pleading.

38. [150]

    The Sturesteps’ pleading identifies the relevant alleged threat by Mr Khoury: the threat to withdraw legal services. But, it does not clearly identify the basis upon which that threat is said to be illegitimate, a necessary element of a claim in duress. Although the pleading does not expressly plead the necessary causative element - that Mr Khoury’s alleged threats induced the Sturesteps to enter the Deeds - the pleading must be read at a level of ordinary common sense. Causation is clearly to be inferred. The pleading alleges that the Deeds “are the product of duress”. That is sufficient.

39. [151]

    The proper approach to the question of duress is to consider first whether the defendants applied pressure that induced the victim to enter into the contract, and secondly whether that pressure went beyond what the law is prepared to countenance as legitimate: Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 46. But the courts have only relatively recently recognised that the concept of duress extends to contracts entered into as a result of threats, to a party's economic wellbeing, the boundaries of the law of economic duress have not been precisely determined: JW Carter, Carter on Contract (looseleaf, LexisNexis) at [23-100]. Given the fluidity of the concept of economic duress, it could not be said without further argument and consideration, that the Sturesteps’ duress argument is so clearly untenable that it cannot possibly succeed. But the plaintiffs must re-plead with greater precision what conduct of the defendants is said to go beyond what the law will countenance as legitimate. This should not be difficult. But for this minor change, the Court will not dismiss this claim summarily.

40. [152]

    The Sturesteps contend that the Deed of Agreement is vitiated by both presumed and actual undue influence. The presumed undue influence is alleged to arise from the relationship of solicitor and client, between Mr Khoury and the Sturesteps, one of a category of relationships in which equity will presume that the former party exercises dominion over the latter: Johnson v Buttress (1936) 56 CLR 113 at 119 per Latham CJ, at 134 per Dixon J (Evatt J agreeing) and at 143 per McTiernan J. The Sturesteps plead their actual undue influence claim in the FASC in a way, which mirrors their duress claim, as follows:

41. [153]

    The defendants claim that Mr Sturesteps was in a position to receive advice in relation to the Deed of Agreement from his independent solicitor before signing the Deed, but did not avail himself of that possibility, and so may not now claim that Mr Khoury exercised undue influence over him and his wife.

42. [154]

    The Sturesteps’ presumed or actual undue influence claim should not be struck out. Whether or not such influence is either presumed or was exercised is a matter for consideration of the evidence at the trial of these proceedings. And what opportunities for independent advice the Sturesteps had and whether they were availed of, are all matters of nuance and degree that can only be judged in the light of all the evidence at trial.

43. [155]

    The Sturesteps have pleaded that the conduct of Mr Khoury, and through him the Company, was “misleading and deceptive”. The pleading seems to intend the statutory term “misleading or deceptive”, within the meaning of Australian Consumer Law (NSW), s 18, and Fair Trading Act 1987, s 42 (at FASC para 56(g) and 60). The Sturesteps also seek a declaration that the Deeds are ‘unjust’ under Fair Trading Act, s 71.

44. [156]

    The Sturesteps’ reliance upon those provisions of the Fair Trading Act are clearly in error, and are to be struck out from the pleading.

45. [157]

    The Sturesteps’ misleading or deceptive conduct Australian Consumer Law pleading takes the following form in FASC paras 56(f):

46. [158]

    Stevenson J’s earlier decision Sturesteps v Khoury (Supreme Court (NSW), Stevenson J, 8 May 2014, unrep) stated in relation to the Sturesteps’ misleading or deceptive conduct claim, which at that point was in substantially the above form:

47. [159]

    Since Stevenson J gave judgment, the Sturesteps have amended their pleadings in the form of the FASC. FASC, para 60 sets out the following additional pleading in relation to the misleading or deceptive conduct claim:

48. [160]

    The defendants take two issues with this part of the pleading. The defendants say: first, that no relief is claimed in respect of the alleged breach of s 18; and secondly, that despite clarification since Stevenson J’s judgment the pleading still does not identify with sufficient particularity the factual basis upon which the Sturesteps allege the breach and particularly as it involves Mr Khoury and the Company.

49. [161]

    The defendant’s first point is not persuasive. It is clear from the chapeau to FASC, para 56 what relief the Sturesteps intend to seek by way of their misleading or deceptive conduct claim: a declaration that the Deeds are void or voidable at their election. The Sturesteps should be given an opportunity if they wish to amend the FASC in order to better specify the relief they seek.

50. [162]

    The defendants’ second point has more substance. FASC, para 60 alleges that misleading or deceptive conduct was engaged in by both Mr Khoury personally and, through him, the Company. If the purpose of that pleading is to establish that Mr Khoury is personally liable for the actions of the Company due to his knowing involvement, pursuant to the principle in Yorke v Lucas (1985) 158 CLR 661, it is less than clear. The Sturesteps must decide on what basis their s 18 claim is put against the defendants, and plead it appropriately. In its current form, the material facts necessary to allege a contravention of s 18 by Mr Khoury personally are not pleaded. The plaintiffs must either allege the circumstances of Mr Khoury’s knowing involvement or drop the pleading against him. But the allegations of misleading and deceptive conduct are otherwise sufficient.

51. [163]

    The Sturesteps pleading claims that the Deeds are voidable on the basis of mistake at FASC, para 62, in the following terms:

52. [164]

    The mistakes referred to are those set out above at [55], and refer to the Sturesteps’ various forms of ignorance as to their rights to an assessment of their solicitors’ costs.

53. [165]

    The defendants contend that the pleading represents a conflation of two doctrines: the first, the doctrine of restitution for unjust enrichment on the basis of mistake; and the second, mistake in the law of contract, which renders a contract voidable. The defendants’ contention in this respect draws to a degree upon Stevenson J’s first judgment in the proceedings, where his Honour stated at [12]:

54. [166]

    The new pleading, the FASC, has largely overcome the problem that was present to Stevenson J’s analysis. It is clear enough from paragraph 62 that the mistake relied upon is not one founding a claim in restitution for mistake but rather a form of mistake that results in avoidance of the Deeds. Whilst it is a little unclear whether the plaintiffs rely upon doctrines of common, mutual or unilateral mistake, the mistakes being relied upon are pleaded clearly enough so as to limit the nature of any case that the plaintiffs can argue and thereby prevent the defendants being taken by surprise. This part of the FASC can stand and will not be struck out.

55. [167]

    This issue seems to be the same as issue 2(a), which has already been dealt with above. The issue does not need to be reconsidered.

Issue 5: Claims Concerning Relief Sought under the Legal Profession Act

1. [168]

   The defendants take issue with the plaintiffs’ prayers 5, 6 and 7 of the FASC. Prayer 5 seeks an order that Mr Khoury or the Company, or both, deliver to Mr Sturesteps a bill of costs for legal services provided that is compliant with the Legal Profession Act and the Legal Profession Regulations. Prayer 6 seeks an order that Mr Khoury or the Company, or both, lodge such a bill of costs for costs assessment. Prayer 7 seeks an order that the Court appoint a referee under the UCPR to assess “the costs properly payable to the first defendant or the second defendant by the plaintiff in respect of his retainer of the first defendant”. The plaintiffs principally seek such relief if the Court finds that Mr Sturesteps is liable to Mr Khoury for the costs of legal services. But if in the alternative to the plaintiffs’ principal case (that Mr Sturesteps never had a contractual or a statutory relationship with the Company) Mr Sturesteps is found to have retained the Company, then the plaintiffs seek the same relief against the Company.

2. [169]

   The defendants put in issue: whether the plaintiffs can seek such orders against Mr Khoury, given that he ceased practising on his own account in July 2003; and, whether the claims for relief against him may be advanced without identifying the relevant powers of the Court and the matters allegedly justifying the orders sought against Mr Khoury.

3. [170]

   On the first issue raised, the defendants claim that Mr Khoury was not practising on his own account, did not send any bills and did not receive any payments after 1 July 2003, when the Company purportedly began to provide legal services to Mr Sturesteps. On the second issue raised, the defendants say that the pleading in its current form is unfair in that it does not identify the Court’s power to make the orders sought, nor the facts material to the exercise of that power.

4. [171]

   Both issues are readily resolved. The first issue is a matter of evidence for trial. Whether or not Mr Khoury had ceased practising on his own account is a factual question that cannot be determined on an application such as this. And assuming he did only purport to practise through the Company from 1 July 2003, that does not take him beyond the Court’s inherent jurisdiction over its own legal practitioners.

5. [172]

   The misconception behind the defendant’s second issue is that a plaintiff must plead each source of power for the relief sought. No doubt a Court at trial will ask for such powers to be fully explained in submissions. But before that, the Court’s inherent jurisdiction over its own legal practitioners is a sufficient starting point to justify the maintainability of this pleaded form of relief. This part of the pleading is allowed and will be determined at trial.

Issue 6: Whether the Plaintiffs May Make Allegations Of GST Overpayments

1. [173]

   The Sturesteps’ claim involves two assertions of overpayment of GST pursuant to the costs agreement, should the Court find that agreement is valid and enforceable. Clause 14 of the costs agreement provided for GST to be included in all costs charged by Mr Khoury, stating “The hourly rates provided herein are inclusive of GST”.

2. [174]

   Mr Sturesteps alleges firstly that, contrary to cl 14, Mr Khoury billed for GST in addition to the agreed hourly rates and that as a result Mr Sturesteps paid an additional $160,878.39, in the belief that the charges had been correctly calculated. Secondly, Mr Sturesteps alleges in relation to particular payments that Mr Khoury billed twice for GST in addition to the agreed hourly rates, so that Mr Sturesteps paid $5,784.26 believing the charges to have been correctly made.

3. [175]

   In answer to the first of these contentions, the defendants claim that the bills of costs that were issued to Mr Sturesteps were made on a GST-inclusive basis, but that after 31 May 2007 the way that the amounts were invoiced changed so that the rates were shown excluding GST. A GST component was then set out separately at the bottom of such bills, which component amounts to an additional 10% of the professional costs stated to be due, or the total disbursements stated to be outstanding. The defendants explain this further: comparing the difference between, for example, an invoice from 31 October 2006 and another from 31 May 2007, the amount said to be charged for a billable unit of time for the same fee earner is 10 per cent higher in the former than the latter; this amount accounts for GST being calculated inclusively rather than exclusively.

4. [176]

   In answer to the second point, the defendants’ expert has reviewed the relevant bills, and the defendants are content to concede that they have double-charged Mr Sturesteps for GST up to an amount of $743.90. But they do not concede the full $5,784.26 claimed as an overcharge.

5. [177]

   The plaintiffs’ response to both GST points is that the matters alleged are matters for trial, and so it would be premature now to strike the pleading out. The plaintiffs and the defendants have each prepared expert accounting evidence based upon the costs agreement and the invoices. That evidence has not been tendered to the Court on this interlocutory application. The plaintiffs say that the issue will eventually be determined through consideration of each side’s expert evidence.

6. [178]

   The plaintiffs’ argument is the more persuasive. The GST structure of each of the defendant’s bills and how Mr Sturesteps interpreted each of them over time, so as to cause him to pay the various amounts of GST claimed, is a matter for the contest of lay and expert evidence at trial. And the dispute about whether overpaid GST in the sum of $743.90, or the greater sum of $5,784.26, or some amount in between these figures, is a matter for expert analysis at trial. This part of the pleading is allowed and will be determined at trial.

Issue 7: The Dismissal Of Claims No Longer Pressed by the Sturesteps

1. [179]

   Mrs Sturesteps pressed 14 claims in the amended statement of claim (ASOC) filed on 19 February 2014 which do not appear in the FASC. Those were prayers 10, 10A, 10B, 10C, 11, 12, 13, 14, 14A, 15, 15A, 16, 17 and 18 in the ASOC and were for relief that Mrs Sturesteps had brought personally, not jointly with her husband. Similarly, there are 7 claims for relief in the earlier ASOC that Mr Sturesteps no longer presses: prayers 1, 1B, 3, 4, 5, 5B and 8A in the ASOC. Finally, the defendants allege that in the FASC the Sturesteps have abandoned their claim in prayer 21 of the ASOC that the defendants “give restitution” to them of “$566,786.38 paid by them on 27 November 2011, or alternatively, the sum of $300,000 paid by them on 27 November 2011”. But the Sturesteps have not sought to discontinue the proceedings in relation to these claims for relief under UCPR, r 12.1.

2. [180]

   The defendants seek judgment under Civil Procedure Act, s 90 formally dismissing those claims that are no longer pressed. If such an order for dismissal were made, the defendants seek their costs thrown away (under UCPR, r 42.20) to the extent to which the proceedings have been so dismissed. The defendants also seek orders precluding the plaintiffs from commencing further proceedings against either of the defendants on the same or substantially the same claims until they have paid such costs under Civil Procedure Act, ss 91 and 98. The defendants submit that such orders would provide them with immediate protection in the same form as may be ordered under UCPR, r 12.10, which provides that if a party is liable to pay costs as a consequence of its proceedings being dismissed and the party commences further sufficiently similar proceedings, the Court may order a stay of the further proceedings until the party has satisfied its existing costs liability.

3. [181]

   But the Sturesteps’ response to these submissions is persuasive. They say that a further order dismissing Mrs Sturesteps’ claims is unnecessary. In Stevenson J’s 8 May 2014 judgment his Honour struck out the whole of the plaintiffs’ pleadings and prayers for relief and awarded the defendants their costs. Those parts of the pleading before Stevenson J that the plaintiffs have not sought leave to replead in the FASC now being advanced cannot be struck out again: they are already gone.

4. [182]

   The defendants also seek Civil Procedure Act, s 91(2) and UCPR 12.10 protection from the Sturesteps bringing further claims in the nature of these struck out claims. But neither power provides a persuasive basis to make orders now. First, s 91(2) contemplates a plaintiff being precluded from claiming relief if the Court has dismissed the claim but it only allows the making of a stay order “following a determination on the merits”: and that is not the case here. The Court has not determined any of these struck out claims “on the merits”. So there is no basis for protection for the defendants through the making of a s 91(2) order.

5. [183]

   And even if the Court were prepared to make a further dismissal and costs order in respect of these claims, it is now wholly premature to consider making a UCPR 12.10 order, which assumes that the party whose claim has been dismissed “commences further proceedings”. That has not happened yet. Nor is there any threat of that happening.

6. [184]

   But there is another point to be made. The claims that the Sturesteps have decided not to include in the FASC are closely related to the subject matter of their present action. It would be unreasonable for them to rely upon those claims in later proceedings if they were not advanced now. It would not be reasonable for the Sturesteps to seek later to bring these claims that they have now decided not to press. Doing so later would likely amount to an abuse of the Court’s process, and such claims would be liable to be stayed at general law: Port Of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

Issue 8: The Plaintiffs’ Newly Expressed Fiduciary Duties Claim

1. [185]

   In the ASOC analysed before Stevenson J, the Sturesteps had included claims for breaches of fiduciary duties owed by Mr Khoury to the Sturesteps. The claims were based upon the retainer agreement and Mr Khoury’s statutory obligations to satisfy costs disclosure and costs billing requirements. The Sturesteps pleaded in the ASOC that Mr Khoury had a duty not to allow Mr Khoury’s own pecuniary interests to conflict with those of the Sturesteps. The pleading, located in paragraphs 35, 36, 37 and 38 of the former ASOC, stated that Mr Khoury had breached his fiduciary duties because:

2. [186]

   Stevenson J at [19] of his judgment, rejected the pleading in that form for the following reasons:

3. [187]

   On 14 November 2014, the Sturesteps served the FASC in its current form, which became Exhibit 3 in the proceeding. The Sturesteps have amended their fiduciary duty claim in the FASC, so that it now seeks equitable compensation in the alternative in relation to the restitution claims, and now sets out the fiduciary claims as follows:

4. [188]

   In the defendants’ submission, the Sturesteps have ignored Stevenson J’s statement concerning the requirements for proper pleading of such serious allegations. Paragraph 7A is now a claim to the existence of a wider duty than previously alleged, and lacks any precision. The defendants also submit that the paragraph treats a fiduciary duty as being prescriptive, rather than proscriptive, contrary to the fundamental nature of fiduciary duties identified in cases such as Howard v Commissioner of Taxation [2014] HCA 21 (11 June 2014), per French CJ and Keane J at [31] and Hayne and Crennan JJ at [56].

5. [189]

   The Sturesteps contend that the content of the pleaded fiduciary duty is that Mr Khoury was obliged not to put his own interests ahead of those of his client. Such a fiduciary duty arises in the circumstances of a solicitor drafting a retainer agreement or costs agreement for a client: Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 (“Foreman”) at 435E-436C per Mahoney JA. The Sturesteps claim that a solicitor who misleads a client about the client’s rights when drafting the retainer agreement breaches that fiduciary duty by preferring his own interests over those of the client.

6. [190]

   The Sturesteps argue that the breach of this duty pleaded at FASC, paragraph 45A shows that the duty owed is to refrain from doing something, rather than to take an action, and thus is proscriptive, not prescriptive. The alleged breach is thus that Mr Khoury failed to refrain from preferring his own interests: “[Mr Khoury] preferr[ed] his own interests, or those of the Company, to the interests of his client, Mr Sturesteps, in respect of … costs incurred under his retainer from Mr Sturesteps …”.

7. [191]

   In relation to new paragraph 45A, the defendants complain that the breaches of duty alleged are contained in 34 separate paragraphs that are incorporated by reference into paragraph 45A, and the Sturesteps have therefore not described the case against them with adequate precision. The pleading, the defendants submit, is contrary to UCPR, r 14.7, which requires that “a party’s pleading must contain only a summary of the material facts on which the party relies, and not the evidence by which those facts are to be proved” (emphasis added). The repetition by cross-reference of facts that are material to other claims does not constitute the pleading of only the material facts relevant to the breach of fiduciary duty claim.

8. [192]

   The Sturesteps’ reply to this in turn is that the form of pleading conforms with UCPR, r 14.8, which requires that a “pleading must be as brief as the nature of the case allows. They claim that the same facts support both a case of breach of fiduciary duty and restitution for unjust enrichment (FASC [8]-[36A]; [44]-[45]) and undue influence, duress, misleading and deceptive conduct (FASOC [53]-[55]), so that there is no reason to repeat the facts each time they are relied on for a separate cause of action.

9. [193]

   But in my view the Sturesteps’ repleaded fiduciary duty claim is really no more precise now than it was before Stevenson J. The duty itself requires no further material facts to be pleaded in order to be understood, as the type of fiduciary duty pleaded is one well recognised in cases such as Foreman. But the defendants’ actions by which Mr Khoury is alleged to have breached that duty require greater precision than is evident in the present pleading. Simply stating that a breach has occurred “in consequence of” other material facts is insufficient, nor is merely stating that a person is guilty of “preferring his own interests … as a solicitor to the interests of his client … in respect of the question of costs incurred under his retainer”. The former method of pleading breaches is too broad: the precise acts by which the solicitor’s duty to his client was in conflict with his self-interest and the acts that constitute the preferring of self-interest all need to be identified with precision. And the cross-referenced paragraphs contain many facts and allegations relating to other causes of action, whose materiality to the fiduciary claim is not obvious, The latter method states a conclusion, that Mr Khoury has preferred his interests over Mr Sturesteps, without pleading what Stevenson J required in his judgment: a statement of “how precisely any conflict of interest is said to have arisen”. The claim must therefore be repleaded if the Sturesteps are going to rely upon it.

10. [194]

    The defendants make a supplementary point in relation to one of the paragraphs that the Sturesteps have relied upon as a breach of fiduciary duty, FASC paragraph 36A. The defendants submit that the Sturesteps have inappropriately pleaded certain representations that Mr Khoury allegedly made to Mr Sturesteps. Paragraph 36A of the FASC refers to “the substance” of what was “represented” or “assured” by Mr Khoury in a way that the defendants say is inappropriate. FASC, paragraph 36A provides as follows:

11. [195]

    Annexure E is a document titled “Schedule of a representative sample of assurances given to George Sturesteps by Dieb Khoury in response to complaints about costs claimed in bills of costs from 11 April 2003 until 8 December 2011”. It sets out by date “Verbatim terms of the assurances given by Mr Khoury”, in the form of 10 extracts from various communications sent by Mr Khoury to Mr Sturesteps over this period. Setting out one extract as an example will suffice to show the nature of Annexure E:

12. [196]

    This form of pleading is sufficient. I do not accept the defendants’ submission that this is a wholly inappropriate way of pleading a case. The case the Sturesteps put against them is put with sufficient precision. When pleading that representations were made by one party to another, it may sometimes be permissible to set out verbatim the communications made, even though strictly that approach draws upon evidence rather than material facts, provided that the material relied upon is not too voluminous. In my view the FASC keeps this material within reasonable bounds of economy. Paragraph 36A of the FASC and Annexure E should not be struck out on this ground.

The Assessment of Costs pursuant to Stevenson J’s 8 May 2014 orders

1. [197]

   After striking out the ASOC on 8 May 2014, Stevenson J ordered that the Sturesteps were to pay the defendants the costs of their notice of motion of 11 April 2014 up to that date. On 8 August 2014, the Equity Registrar listed the defendants’ strike out motion and the Sturesteps’ leave to amend motions before this Court and ordered the Sturesteps to pay the costs of that date. On 4 May 2015 the defendants served a bill of costs relating to those orders on Mr Sturesteps. On 17 May 2015 they served the same bill on Mrs Sturesteps. On 25 May 2015, without intervention, the defendants would be entitled to send the bill of costs in relation to Mr Sturesteps to costs assessment.

2. [198]

   On 22 May 2015, the Sturesteps sought the Court’s leave to file a notice of motion seeking an interim injunction to prevent that from occurring. The Sturesteps argued that the costs should be assessed at the end of the proceedings. But once the costs were sent for assessment, the Sturesteps argued, an automatic process would begin which could result in a certificate of determination being issued, which would operate as a judgment of the Court and which the defendants could execute immediately.

3. [199]

   The defendants argued that the application was futile as the Court did not have the power to enjoin the essentially administrative statutory process of costs assessment under the Legal Profession Act 2004. Furthermore, the defendants stress the distinction between the two steps a party makes in the costs assessment process: first, applying for an assessment, and secondly, lodging the certificate of determination that the costs assessor produces. It is only upon the second step that a party becomes entitled to receive the assessed costs. The defendants offered an undertaking that they would not proceed to that second step until further order.

4. [200]

   The Court reserved its decision on the matter, noting an undertaking from the defendants not to lodge with the Manager, Costs Assessment, an application for assessment of costs in respect of the bills served upon the Sturesteps under the orders of Stevenson J.

5. [201]

   At the time the motion was heard, the statutory framework under which a party would apply to have their costs assessed was as relevantly as follows:

6. [202]

   When the parties argued the motion, the Legal Profession Act 2004 was in force. As noted above, the Legal Profession Uniform Law came into effect on 1 July 2015. However, as the same basic framework remains in place in the current legislation (see Legal Profession Uniform Law Application Act 2014, Part 7), these reasons will refer to the law as it stood when the motion was argued. The parties will be given liberty to apply if they wish to submit that a different result would be reached under the new legislation.

7. [203]

   Under Legal Profession Act 2004, s 353, the above process may be initiated once a party becomes “entitled to receive costs as a result of a court order”. That conforms with Civil Procedure Act, s 98(2), which states that a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court, subject to rules of court and to the legislation or any other Act.

8. [204]

   The costs orders of Stevenson J related to the defendant’s strike out application. Under UCPR, r 42.7(1), such costs, being of “any application or other step in any proceedings” would generally be paid and otherwise dealt with in the same way as the general costs of the proceedings; that is to say, they would be dealt with at the end of the proceedings. The effect of Stevenson J’s orders is to vary that state of affairs: the Sturesteps are to pay the costs of the application. However, Stevenson J did not order that those costs were to be payable forthwith. Under UCPR, r 42.7(2), unless the Court orders otherwise, the costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.

9. [205]

   The Sturesteps’ central argument was that if the defendants were permitted to send their bill of costs to a costs assessor for assessment, that would initiate an automatic process that would conclude in the issue of a s 368 certificate which would then be enforceable as a judgment debt. Thus, assuming that the conclusion of the assessment process before the conclusion of the court proceedings, r 42.7(2) would be contravened: the interlocutory costs would become payable before the conclusion of the proceedings. They argued on the basis of r 42.7(2) that the defendants were not “entitled to receive costs” under s 353 at this stage, and so were not entitled to initiate the statutory costs assessment process.

10. [206]

    The Sturesteps relied upon Wende v Horwath (NSW) Pty Ltd (2014) NSWLR 674; [2014] NSWCA 170 for the proposition that only once a final order for costs is made can a party proceed to assessment. But that decision involved only costs orders made at the end of proceedings in the Local Court, Supreme Court and Court of Appeal: its ratio decidendi, contrary to what Mr Bevan of counsel for the Sturesteps contended, does not stand for the corollary that there is no entitlement to assessment without a final costs order. Indeed, Beazley P (at [5]) identified that very possibility:

11. [207]

    The defendants persuasively cited authority for the distinction between an application for an assessment of costs and lodging the resulting certificate of determination with the Court to render a judgment debt. In Welzel v Francis (2010) 77 NSWLR 92 (“Welzel”) Einstein J dealt with the apparent tension between UCPR, r 42.7 and Practice Note SC Eq 3 , which at clause 57 states:

12. [208]

    The defendants also referred to a recent decision of Black J in JR Consulting & Drafting Pty Ltd v Cummings [2015] NSWSC 552. In that case a notice of motion had been filed seeking an order that a costs order be stayed pending hearing of an appeal. The defendants there, as here, proffered an undertaking that they would not lodge a s 358 certificate following assessment (in that case, without giving 14 days’ notice to allow for an application for a wider stay). Before refusing to stay the costs orders, his Honour made the following observations:

13. [209]

    Thus the law is that when a court makes an order for costs in favour of a party in respect of an interlocutory application, the order will suffice to make that party immediately “entitled to receive costs” under Legal Profession Act 2004, s 353, even while UCPR, r 42.7 prevents that party from lodging the application with the court to render it a judgment debt under s 368(5).

14. [210]

    The proper course to be taken here is to recognise this law and to give clear effect to the decision of Stevenson J. His Honour did not “otherwise order” under UCPR r42.7, so that whatever now happens with the progress of the costs assessment based on Stevenson J’s orders, the defendants should not at the end of that process be permitted to lodge a s358 certificate. And for greater clarity, following Einstein J’s approach did in Welzel, I will order that the defendants take no step to enforce any assessment of the costs Stevenson J ordered, until further order. But short of such enforcement there is no reason why the defendants cannot lodge and then progress their claim for costs assessment as it will mean that this aspect of their costs assessment will thereby be further advanced by the end of the proceedings, although the motivation for doing so will be lower now that no enforcement steps can be taken as a result of the assessment until the end of the proceedings.

15. [211]

    Both parties advanced arguments regarding the power of this Court to enjoin the statutory costs assessment process. The arguments were similar to those invoked in relation to Issue 1 above. In short, the Sturesteps claimed that the Court enjoyed the inherent power to control the assessment process as an aspect of its jurisdiction to control the affairs of solicitors, being officers of the Court: Kallinicos v Hunt (2005) 54 NSWLR 561 at [76]; Estate of Allwood v Benjafield [2009] NSWSC 1383. The defendants submitted that because the cost assessor undertaking the assessment process carried out an administrative function under the Act (see Minerals Corporation Ltd v Abbot [2004] NSWSC 246 at [39]-[40]), which did not provide a mechanism for the Court’s interference in the manner sought, the Court did not have jurisdiction to interfere with that process. The parties also advanced arguments as to whether the Court ought to exercise a power to restrain the costs assessment process, if such a power does exist. Given the conclusion already reached above, it is not necessary to express any opinions as to these points.

16. [212]

    The Sturesteps also sought by their notice of motion a declaration as to the proper interpretation of Stevenson J’s 8 May 2014 orders as to costs. The Sturesteps claim that the defendants’ bill seeks recovery of costs incurred by the defendants in their defence of the proceedings generally, but that Stevenson J’s order is limited to the awarding of costs related to the motion and incurred from 11 April 2014 (the date of the defendants’ motion to dismiss the proceedings summarily or strike out the pleadings) up to 8 May 2014.

17. [213]

    Prima facie the proper scope of Stevenson J’s order for costs on the motion should be as the Sturesteps contend. But any contest as to the proper interpretation of Stevenson J’s orders should be brought back before Stevenson J. Otherwise whether the defendants’ bill of costs fits within the scope of Stevenson J’s costs order will be a question for the costs assessor upon an assessment. The assessor can disallow costs that fall outside of the proper interpretation of the costs order. If the Sturesteps disagree with the costs assessor’s conclusion, they can apply for review of that decision through the statutory framework.

18. [214]

    Conclusions and Orders

19. [215]

    In the result the plaintiffs have been able to resist most, but not all, of the defendants’ attempts to strike out the Further Amended Statement of Claim. It is highly desirable that the result of this motion should now provide a platform for the parties to bring on the final hearing of these proceedings. Far too much time has been spent in these proceedings on unproductive interlocutory pleading skirmishes in relation to a plaintiffs’ pleading that is on the whole now reasonably informative and workable. Such skirmishes must now come to an end and the parties should focus on the final resolution of the real questions in dispute between them in accordance with the dictates of Civil Procedure Act s56. For that reason the Court will make the orders below to give the parties an opportunity to examine a fresh pleading and have it filed or alternatively for them to submit in short compass any final but short argument about such differences as may remain between them in relation to this pleading.

20. [216]

    Finally there is the question of costs to be considered. Both parties had a measure of success. The costs order that commends itself to the Court in the circumstances is an order that each party’s costs of this motion will be that party’s costs in the cause. But one or other party may wish to contend for different costs order and the parties are of course free to do so. But I have foreshadowed this costs order now to try and save the parties unnecessary expenditure on further argument about costs. If any party wishes to contend for a different costs order, such party must file a motion within 14 days to that effect. Any party filing such a motion and being unsuccessful should recognise the risk of an adverse costs order, because of the extra Court time that will be taken by such argument. In a case that is fundamentally about the validity and enforceability of bills of costs, one of the Court’s objectives is to avoid unnecessary argument about interlocutory costs orders.

21. [217]

    The Court’s orders therefore are:

    1. (1)

       Direct that within 21 days the plaintiffs shall file with my Associate a form of Further Amended Statement of Claim that conforms with the leave granted by these reasons;

    2. (2)

       After the plaintiffs comply with order (1), direct he parties over the course of the following 14 days to confer, with a view to resolving any remaining disputes about the form of the pleading upon which the plaintiffs will rely at trial.

    3. (3)

       If the parties are able to agree as a result of the conferral provided for in order (2) then they shall submit the agreed form of Further Amended Statement of Claim to my Associate with their proposed consent orders that should provide for it to be filed in chambers.

    4. (4)

       If the parties are unable to agree as a result of the conferral provided for in order (2), then the parties are at liberty to relist the matter before me on three days notice with a view to resolving any final differences about the pleading.

    5. (5)

       The costs of this motion will be each party’s costs in the cause.

    6. (6)

       Order (5) will be stayed if either party files a motion for a different costs order within 14 days of these orders;

    7. (7)

       Note that the defendants are now absolved from their undertaking not to lodge with the Manager, Costs Assessment, an application for assessment of costs in respect of the bills served upon the Sturesteps in pursuance of Stevenson J’s costs orders.

    8. (8)

       Order that until further order the defendants shall take no step to enforce any assessment of the costs Stevenson J ordered in their favour.

    9. (9)

       Order that these orders may be taken out forthwith.