Ahern v Aon Risk Services Australia Limited

1. [1]

   WARD P: I agree with Brereton JA.

2. [2]

   GLEESON JA: I agree with Brereton JA.

3. [3]

   BRERETON JA: Many years ago, in 2006, the plaintiffs Marshall Ahern and Therese Estelle Clancy lost their home and its contents in a fire. In 2012, they sued their insurance broker, the first respondent Aon Risk Services Australia Limited, for damages for professional negligence in under-insuring their property. Those proceedings were settled on 10 February 2015, after the hearing had proceeded for a week, on terms which included the payment to Mr Ahern and Ms Clancy of $1,375,000 within 21 days, and the payment by Aon of their costs of the proceedings. The settlement sum was paid, but the assessment of Mr Ahern and Ms Clancy’s costs has since given rise to a litigious saga of its own.

4. [4]

   On 6 October 2016, Mr Ahern and Ms Clancy applied under Legal Profession Act 2004 (NSW) (“LPA”), s 353, for assessment of their costs, claiming $1,748,077. [1] On 17 May 2017, costs assessor Mr Connery issued a final certificate for $1,280,079, plus his own costs of $21,040. On 16 June 2017, both Mr Ahern and Ms Clancy, and Aon, filed applications for review of the assessor’s determination. On 27 September 2018, a Review Panel, constituted by costs assessors Messrs Wall and Sharpe, issued a certificate of determination for $1,178,551 (a reduction of $101,527), plus their own costs at $14,238. Mr Ahern and Ms Clancy paid the costs of the Review Panel on 22 November 2018 and received notice of the determination that day, but it erroneously stated that those costs had been paid by Aon, so an amended certificate was issued on 28 November 2018 and ultimately provided to the parties on 8 January 2019.

5. [5]

   On 19 December 2018, Mr Ahern and Ms Clancy filed in the District Court a summons by way of appeal on a question of law from the decision of the Review Panel. Such an appeal lay as of right under LPA s 384, which provided as follows:

6. [6]

   They did not, at that stage, pursue the alterative avenue of seeking leave to appeal from the determination on matters of fact or mixed fact and law under s 385, which relevantly provided as follows: [2]

7. [7]

   The original summons was not served, and an amended summons was filed and served on 4 April 2019. The grounds of appeal were, in substance, that the panel failed to give adequate reasons for affirming the assessor’s decision to reduce hourly rates, erroneously adopted an approach whereby it reassessed completely the costs rather than substituting the determination that the costs assessor should have made, and failed to give reasons for deciding the issue of costs of the assessment as it did by erroneously adopting a global approach. After a hearing of three days commencing on 22 April 2020, Abadee DCJ dismissed the appeal. [3]

8. [8]

   Mr Ahern and Ms Clancy sought judicial review of the decision of the District Court, in the Court of Appeal. That application was dismissed on 6 August 2021. [4] In rejecting the complaint that the District Court had erred in evaluating the adequacy of the panel’s reasons, Meagher JA (with whom White JA and I relevantly agreed) said:

9. [9]

   Mr Ahern and Ms Clancy sought special leave to appeal to the High Court, which was refused with costs on 10 February 2022.

10. [10]

    The next chapter of the saga commenced with the filing by Mr Ahern and Ms Clancy on 21 September 2021 in the Common Law Division of a summons instituting an application under LPA s 385 for leave to appeal from the determination of the Review Panel. By Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 50.12, the summons for leave to appeal was required to be filed within 28 days after the date on which notice of the Review Panel’s decision was given to Mr Ahern and Ms Clancy which, as explained above, was not later than 8 January 2019, so that time had expired not later than 5 February 2019. The summons was therefore filed more than two years and seven months out of time. When filed, the summons did not claim an extension of time as it ought to have, [5] and was therefore liable to be dismissed as incompetent. [6]

11. [11]

    By notice of motion filed in the Common Law Division proceedings on 25 October 2021, Aon moved for orders setting aside the summons as having been filed out of time (Order 1), and summarily dismissing or striking out the summons (Orders 2 and 3). On 17 November 2021, that motion was set down for hearing on 11 May 2022.

12. [12]

    At the request of Mr Ahern and Ms Clancy, Aon on 25 February 2022 gave consent to the amendment of the summons, adding a claim for an extension of time (Order 1A). However, they did not attempt to file an amended until 3 May 2022, when it was rejected, because leave to amend had not been granted. [7] The hearing of the motion nonetheless proceeded on the basis that Mr Ahern and Ms Clancy were claiming an extension of time.

13. [13]

    In a judgment delivered on 30 May 2022, [8] the primary judge:

    1. (1)

       rejected the application of Mr Ahern and Ms Clancy to have Aon’s motion adjourned to be heard with the final hearing of the summons; [9]

    2. (2)

       concluded that the delay of Mr Ahern and Ms Clancy in filing the summons was not satisfactorily explained, excused or justified, and had placed Aon in a position where it would suffer considerable prejudice by the prolongation of the dispute if leave to appeal were now granted, and that the case for a grant of leave was extremely weak, and so refused the plaintiffs’ application for an extension of time, and therefore dismissed the summons as having been filed out of time; [10]

    3. (3)

       while observing that the refusal of an extension of time and the consequent dismissal of the s 385 leave application made it unnecessary to consider whether that application ought to be struck out as manifestly unsustainable or bad in form, was not disposed to strike it out although the application was “extremely weak”, because of the very wide discretion exercised by the Court upon the final determination of such an application, and noting that determination of the first defendant’s notice of motion does not involve a decision on the s 385 leave question on a final basis; [11]

    4. (4)

       indicated that if the summons had not been dismissed on other grounds, he would have ordered that the proceedings be stayed until the costs ordered by the Court of Appeal had been paid; [12]

    5. (5)

       dismissed a claim by the plaintiffs under Civil Procedure Act 2005 (NSW), s 101, for interest on costs as not maintainable; [13] and

    6. (6)

       assessed Aon’s costs of the proceedings in the gross sum of $80,000. [14]

14. [14]

    His Honour made the following orders: [15]

15. [15]

    The draft notice of appeal complains, in substance, that:

    1. (1)

       there was a denial of procedural fairness in the primary judge determining and dismissing the amended summons, when the only matter before the Court on 11 May 2022 was Aon’s motion (Ground 1);

    2. (2)

       the primary judge wrongly imposed a legal requirement that the appellant must establish a “strongly arguable case for leave” (Ground 3);

    3. (3)

       the primary judge wrongly determined that Mr Ahern and Ms Clancy should pay Aon’s costs (Ground 4); and

    4. (4)

       the primary judge wrongly made a gross sum costs order for $80,000 inclusive of GST when they had been claimed exclusive of GST (Ground 5).

16. [16]

    In their submissions, Mr Ahern and Ms Clancy pressed the following grounds:

    1. (1)

       denial of procedural fairness, by hearing and determining their applications for an extension of time and for leave to appeal without warning when the only matter before the Court was Aon’s notice of motion;

    2. (2)

       application of an incorrect test for leave and erroneous conclusion on evaluation of the case for a grant of leave, in requiring that the applicants demonstrate “a strongly arguable case” for leave, rather than merely “a fairly arguable case” and concluding that their case was “extremely weak”;

    3. (3)

       ordering Mr Ahern and Ms Clancy to pay the costs of the motion when Aon had withdrawn part of it and was unsuccessful on the remainder, and also making a gross sum costs order inclusive of GST.

No denial of procedural fairness

1. [17]

   For Mr Ahern and Ms Clancy, it was submitted that the primary judge denied them procedural fairness by hearing their applications for an extension of time and for leave to appeal in the amended summons without warning to them, in circumstances where the only matter before the Court was Aon’s motion. It was contended that they had not adduced evidence on the matters arising on the amended summons, were not ready to argue those issues, were unaware that that course was to be taken, and were not afforded a reasonable opportunity to present evidence and to make submissions on their applications for an extension of time and for leave to appeal, and had no warning that those issues would be determined at the same time as the determination of the motion. The situation was, they argued, analogous to that in Nobarani v Mariconte. [16]

2. [18]

   These submissions involve an entirely unrealistic interpretation of the situation and proceedings before the primary judge, quite divorced from the reality of the situation. The formal status of the record when the hearing commenced was that there was an incompetent summons (filed out of time without an application for an extension of time), and in those circumstances Aon’s motion for its dismissal as incompetent, or alternatively on the basis that it disclosed no reasonable cause of action or was doomed to fail, was irresistible. The only basis for resisting it was the proposed but not yet formally filed amended summons, claiming an extension of time. Rather than opposing leave to amend to claim an extension of time, Aon instead consented to the amendment, but opposed the extension of time. This position was articulated by his Honour when stating to Aon’s counsel in argument: [17]

3. [19]

   His Honour added that he would treat the first two paragraphs of the proposed amended summons as “telescoped into the issues to be determined on a preliminary basis”. [18] Those statements made manifest that his Honour intended to consider whether an extension of time should be granted.

4. [20]

   Contrary to the submissions made on behalf of Mr Ahern and Ms Clancy, the primary judge did not hear and determine on a final basis the application for leave to appeal from the Review Panel. What his Honour did was to consider the prospects of success of the application for leave to appeal, which he concluded were poor, as a relevant consideration on the question of whether an extension of time to file the summons should be granted. Thus his Honour observed that the considerations relevant to an extension of time included the length of the delay, the reason for the delay, whether the applicant has a fairly arguable case, and the extent of any prejudice to the respondent. [19] Then, under the heading “Lack of substance in the s 385 leave application in this case”, his Honour reviewed the various proposed grounds of appeal, observing in respect of Ground 1(i) (the panel’s item-by-item re-assessment) that “it is highly unlikely that the Court would grant leave in respect of a ground for which the amount in issue is presently unknowable and that would require the Court substantially to undertake a reassessment, by a methodology different from that followed by the panel but so far undefined by the plaintiffs”; [20] as to Ground 1(ii) (inadequate hourly rates) that “it is most unlikely that the Court would grant leave to appeal on Ground 1(ii) where the plaintiffs’ only particularised argument for overturning the hourly rates adopted by the panel comes down to reliance upon opinion evidence of costs consultants”; [21] as to Ground 1(iii) (costs of the cost assessment) that “bearing in mind the superior position of the panel in making the assessment in this respect and taking into account the principles upon which a leave application under s 385 is to be determined, I considered most unlikely that leave would be granted for appeal on Ground 1(iii)”; [22] and that Grounds 2 and 3 did no more than restate matters sought to be agitated under Grounds 1(i) – (iii). [23] His Honour then concluded: [24]

5. [21]

   Those passages make it patently clear that his Honour correctly considered the strength of the applicants’ case for leave to appeal as a factor relevant to whether an extension of time should be given, and did not purport to determine the application for leave on the merits. Indeed, his Honour plainly stated as much, observing that “As noted earlier in these reasons, determination of the first defendant’s notice of motion does not involve a decision on the s 385 leave question on a final basis.” [25] It is also patently clear, [26] that the summons was dismissed because and only because it was out of time and therefore incompetent, the application for an extension of time having been refused. That outcome was inevitable if an extension of time were refused, as it was.

6. [22]

   Accordingly, the only real issue is whether his Honour was entitled to determine the application for an extension of time as he did and when he did.

7. [23]

   First, the context is significant. Mr Ahern and Ms Clancy salvaged an opportunity to resist the otherwise irresistible argument that the summons was incompetent only at the last moment, by seeking leave to file an application for an extension of time. In consenting to such leave being granted, Aon stipulated that it opposed the extension of time. Aon could have opposed leave being granted at all. In those circumstances, it would have been inconsistent with the just, quick and cheap disposition of the proceedings to permit Mr Ahern and Ms Clancy to defeat, by action taken at the eleventh hour, a motion for dismissal that was otherwise destined to succeed, and to secure an adjournment, without having to address whether the extension should be granted.

8. [24]

   Secondly, his Honour made abundantly clear that this was his view and that he intended to deal with the question of an extension of time, stating to the Aherns’ counsel: [27]

9. [25]

   Thirdly, the question of an extension of time was addressed in the written submissions of the parties which had been exchanged before the hearing. In Aon’s submissions (filed 11 February 2022), under the heading “Extension of time and delay”, [28] addressed whether Mr Ahern and Ms Clancy should be granted an extension of time. That passage commenced:

10. [26]

    Then, under the heading “The summons should be set aside as out of time”, [29] Aon’s submissions included:

11. [27]

    A memorandum of issues and key facts filed on behalf of Aon on 29 April 2022 identified as one of the “issues for determination”:

12. [28]

    Next, the submissions of Mr Ahern and Ms Clancy (filed on 4 May 2022) – which proceeded on the incorrect assumption that the amended summons claiming an extension of time was already on foot – addressed the topic of “Explanation for Delay”. [30] That part of the submissions responded to Aon’s complaints about delay. Those complaints and the response to them were relevant only to the question of an extension of time.

13. [29]

    Then, in the course of oral argument, the following transpired. Counsel for Mr Ahern and Ms Clancy submitted (emphasis added): [31]

14. [30]

    One of the authorities handed up was Renshaw v New South Wales Lotteries, [32] which was relevant and relevant only to the considerations on an extension of time, counsel for Mr Ahern and Ms Clancy observing: [33]

15. [31]

    Subsequently, counsel said: [34]

16. [32]

    After the luncheon adjournment, his Honour put to counsel: [35]

17. [33]

    A little later, counsel said: [36]

18. [34]

    After some further discussion, his Honour said: [37]

19. [35]

    A substantial part of counsel’s argument before his Honour dealt with the “bifurcation” argument – namely, that the “bifurcated” rights of appeal under s 384 and s 385 meant that Mr Ahern and Ms Clancy either could not, or were justified in not, bringing an application for leave to appeal under s 385, while their appeal under s 384 was outstanding. That argument was proffered as an explanation for the delay in filing the summons, and was relevant and relevant only to whether an extension of time should be granted.

20. [36]

    On the question of extension of time, the matter culminated as follows: [38]

21. [37]

    On the face of that material, any suggestion that those representing Mr Ahern and Ms Clancy did not understand that the question of an extension of time was being dealt with is untenable. Moreover, at no point did counsel complain that she was taken by surprise by the requirement to address the question of an extension of time. Although an adjournment had been sought at the outset, there is no evidence to support any contention that it was sought on the basis of inability to deal with the question of an extension of time; rather, the argument was that the question of an extension of time should be deferred until the final hearing. At no point was there any objection that Mr Ahern and Ms Clancy were not ready or had been denied an opportunity to adduce relevant evidence. No hint of a protest at the question of an extension of time being dealt with emerges from the transcript.

22. [38]

    Before us, an affidavit of Mr Clancy, the solicitor acting for Mr Ahern and Ms Clancy, is relied on as supporting the proposition that “if I had known it was going to be heard and determined, our amended summons, I would have put on evidence, I would have put on submissions, I would have got a couple of experts”. [39] It is true that Mr Clancy deposed:

23. [39]

    However, as the above examination of the written submissions exchanged prior to trial demonstrates, the submissions already addressed the objection made by Aon that no extension of time should be granted. The mere identification of witnesses from whom affidavits would have been sourced says nothing about what evidence they could have given on the question of any explanation for delay. Before us, counsel could give no satisfactory answer as to what such evidence might be given. I accept that the inability to point to precise evidence that could have been given might not be fatal to a complaint of a denial of procedural fairness, but where leave to appeal is required, it is a relevant consideration, because it goes to whether there has been a practical miscarriage of justice warranting a grant of leave.

24. [40]

    By email to the Registrar on 27 March 2023 – nearly two months after the hearing on 3 February 2023, and without the consent of the respondents – the applicants’ solicitor sought “the Court’s leave to file some additional short submissions on matters raised by the Court at the hearing of the application for leave to appeal”. On 18 April 2023, the Registrar informed the applicants’ solicitor: “The Court has considered and declined your request to lodge further submissions, for reasons which will be included in the Court’s judgment.”

25. [41]

    The applicants sought to address two issues in these proposed further submissions: first, whether it was open to the primary judge to dismiss the summons on the basis that there was no extension of time; and secondly, to answer the question as to what more could have been said on the question of explanation for delay. The first issue was fully argued at the hearing; there is no reason why the applicants should have a further opportunity to reiterate their contention, advanced at the hearing and addressed above, that the procedure adopted by the primary judge was inappropriate. On the second issue, the applicants were afforded ample opportunity at the hearing to respond to the question they now wish to answer. [40]

26. [42]

    This is not the first occasion on which such an application has been made in the course of this litigation. In the judicial review application, Meagher JA recorded: [41]

27. [43]

    It perhaps needs to be understood that when the hearing of an appeal is concluded and judgment reserved, it is exceptional for a party to be permitted to make further submissions (unless leave is granted at the time when judgment is reserved). It may be appropriate to grant leave where there has been some new development since the hearing. However, the fact that a party later thinks of an argument or answer that it did not advance when it had ample opportunity to do so at the hearing does not warrant granting leave.

No incorrect legal test

1. [44]

   Insofar as his Honour referred to a need for “a strongly arguable case” for leave, that did no more than reflect the application to the circumstances of the case of the well-established position that there is a relationship between the delay involved, the prejudice to the respondent, and the arguability of the case – where the delay is short and the prejudice slight, a barely arguable case may suffice; but where the delay is lengthy and the prejudice considerable, a strongly arguable case may be required to justify an extension of time. As has been noted, here the delay was prolonged, and the prejudice substantial.

Costs

1. [45]

   That leaves the application for leave to appeal from the costs order. In respect of it, counsel for Mr Ahern and Ms Clancy submitted to us: [42]

2. [46]

   Insofar as the costs order itself was impugned, the argument was that the motion was unsuccessful in that Claim 1 was not pressed (because the amended summons was filed), and his Honour indicated that he would not have summarily dismissed the application for leave. With respect, this too is an entirely unrealistic interpretation of events. The motion sought to have the summons disposed of summarily on various grounds. One of those grounds was incompetence due to its being out of time. Although it was saved from that fate by a belated application for an extension of time at the last minute, when an extension of time was refused it remained incompetent. It was summarily dismissed on that basis. The judge was plainly right to order that Mr Ahern and Ms Clancy pay Aon’s costs of the motion, and of the proceedings that were so dismissed.

3. [47]

   As to the inclusion of GST, without descending into detail, it suffices to say that this Court would not grant leave to appeal on a question of costs alone in the context of a gross sum order of $80,000 over a component of $8,000 within it.

4. [48]

   Finally, there is also before the Court a motion filed by Aon in proceedings 2022/184703, which was a purported appeal brought by Mr Ahern and Ms Clancy from the primary judgment as of right, without leave, which Aon sought to have dismissed as incompetent. The question became moot when Mr Ahern and Ms Clancy accepted that leave to appeal was required and filed their summons for leave to appeal. Aon seeks its costs of its competency motion.

5. [49]

   Although apparently accepting that leave was required, counsel for Mr Ahern and Ms Clancy appeared to contend that it was at least not clearly so. However, it is well established that an order summarily dismissing proceedings is an interlocutory order for the purposes of the question of whether leave to appeal is required under Supreme Court Act 1970 (NSW), s 102(2)(e). [43]

6. [50]

   In effect, Mr Ahern and Ms Clancy capitulated to Aon’s competency motion. Had they not done so, it would have succeeded. Aon is entitled to costs of that motion.

Conclusion

1. [51]

   In all the circumstances described above, I am quite unable to accept that Mr Ahern and Ms Clancy were taken by surprise and unprepared to deal with the question of an extension of time at the hearing, that if they were it was reasonably so, or that there was anything more that could have been said on the question; it is not reasonably arguable that there was any denial of procedural fairness. An appeal from the refusal of an extension of time, and consequent dismissal of the summons, would have no prospects of success. That being so, it is unnecessary to consider the other questions which arise on an application for leave to appeal.

2. [52]

   In my opinion, therefore, the following orders should be made:

   1. (1)

      The appeal is dismissed as incompetent.

   2. (2)

      The appellants pay the respondents costs of the appeal, including of the appellants’ motion filed on 5 August 2022.

   3. (1)

      Leave to appeal is refused, with costs.