Bingham v Boensch

1. [1]

   The plaintiff, John David Bingham, is a solicitor. In 2019, he provided legal services to the defendant, Franz Boensch.

2. [2]

   On 12 June 2023 Mr Bingham registered caveat AP338562 (Caveat) over the defendant’s property in Rydalmere, New South Wales (Property).

3. [3]

   The Caveat secures an alleged equitable interest over the Property pursuant to an unregistered mortgage executed by Mr Boensch on 8 March 2019 and dated 12 March 2019. The mortgage was granted by Mr Boensch to Mr Bingham as security for the continuing provision of legal services.

4. [4]

   On 27 October 2021, Mr Bingham received a lapsing notice and on 8 November 2021 commenced these proceedings by way of Summons, which was amended in minor ways on 10 November 2021. In substance, Mr Bingham seeks a declaration that the Caveat is valid and ought remain on title and that the mortgage binds the parties.

5. [5]

   On 7 December 2021, the Court made orders that the Caveat be extended until further order. The Court also ordered that the proceedings continue on pleadings.

6. [6]

   On 22 February 2022, Mr Boensch filed a cross-claim which sought the following relief:

7. [7]

   “Attachment A” is the annexure to the mortgage, which sets out the negotiated terms of the mortgage. The “costs agreement” is an unexecuted costs agreement provided by Mr Bingham to Mr Boensch prior to the mortgage being executed.

8. [8]

   On 21 March 2022, Mr Bingham filed a statement of claim. During the hearing, Mr Bingham sought leave to file an amended statement of claim, which substantially sought the same relief, but included facts about the costs assessment process which had advanced since the earlier pleadings.

Background

1. [9]

   These proceedings are one chapter in extensive litigation between the parties in various courts over many years. There is other litigation on foot.

2. [10]

   In other proceedings, Richmond J has recently provided a useful summary of the history of litigation between the parties in Boensch v Bingham [2023] NSWSC 1152 at [5]-[43]. That judgment concerned Mr Bingham’s motion to strike out Mr Boensch’s statement of claim that broadly sought relief about the manner in which Mr Bingham conducted Mr Boensch’s litigation, including allegations of misleading and unconscionable conduct and professional negligence.

3. [11]

   The following is a shorter background.

4. [12]

   In 2005, Mr Boensch was declared bankrupt because of an unpaid debt. Various litigation ensued. Mr Bingham represented Mr Boensch in his appeal to the High Court in relation to that bankruptcy: Boensch v Pascoe (2019) 268 CLR 593.

5. [13]

   In 2019, Mr Bingham also provided legal services to Mr Boensch in his claim that sought to set aside a decision of the Costs Review Panel that was determined in favour of his previous solicitors, Somerville Legal: see eg Boensch v Somerville Legal Pty Ltd [2019] NSWCA 249.

6. [14]

   On 15 October 2020, Mr Bingham applied for an assessment of his costs of legal services provided to Mr Boensch, including those of barrister, Christopher Bevan.

7. [15]

   On 12 May 2021, a Certificate of Determination in the sum of $358,234.71 was emailed to Mr Bingham and Mr Boensch.

8. [16]

   On 4 June 2021, Mr Bingham registered the Certificate of Determination as a judgment of the District Court (District Court Judgment).

9. [17]

   On 23 June 2021, the District Court Judgment was issued in a total sum of $372,674.84, including interest and costs.

10. [18]

    On 6 September 2021, a bankruptcy notice was served on Mr Boensch by Mr Bingham.

11. [19]

    On 4 February 2022, Judge Manousardis set aside the bankruptcy notice for various reasons, to which it will be necessary to return: Boensch v Bingham (No 2) [2022] FedCFamC2G 47. Mr Bingham’s appeal from that decision was dismissed: Bingham v Boensch [2023] FCA 117 (Abrahams J). Mr Boensch’s submissions in both matters were summarised by Abrahams J at [7] as:

12. [20]

    On 21 October 2022, the Certificate of Determination was referred to a Costs Review Panel: [2022] NSWSC 1432.

13. [21]

    On 29 March 2023, the Costs Review Panel issued two new certificates, together with its reasons. The certificate of costs was issued in a $nil amount with reasons, including the following:

14. [22]

    In these proceedings, Mr Bingham seeks an extension of the Caveat and a declaration that the Mortgage is security for costs to be assessed and payable “on 1 March 2024”.

Defence and cross-claim

1. [23]

   Mr Boensch represented himself at all times in these proceedings. He prepared his own defence, cross-claim, written submissions and made oral submissions at the hearing.

2. [24]

   While some of his documentation employed language alleging deceit, fraud and professional negligence of Mr Bingham, those issues were abandoned orally. Mr Boensch stated:

3. [25]

   Mr Boensch did not seek any finding in these proceedings that Mr Bingham had been professionally negligent or fraudulent. He has commenced other proceedings in this Court seeking relief in relation to those allegations: see Boensch v Bingham [2023] NSWSC 1152.

4. [26]

   In his written submissions, Mr Boensch provided eight reasons why the Caveat ought to be removed from title and why the mortgage had no work to do. Each are dealt with in turn.

5. [27]

   Mr Boensch submitted that the mortgage only secured the costs agreement, which Judge Manousardis and Abrahams J had been determined to be void.

6. [28]

   It is correct that Mr Bingham’s alleged costs agreements have not been accepted in the Federal Court as an agreement that binds the parties. However, instead, Judge Manousardis and Abrahams J have determined that the mortgage is the binding costs agreement between the parties. In Boensch v Bingham (No 2) [2022] FedCFamC2G 47, Judge Manousardis stated:

7. [29]

   Dismissing the appeal, in Bingham v Boensch [2023] FCA 117, Abrahams J stated at [85]-[86]:

8. [30]

   Mr Boensch accepted that those judgments bind him and that he has always asserted that the mortgage was the binding agreement between him and Mr Bingham. Further, after having had the opportunity over the luncheon adjournment to revisit those paragraphs of the judgments, Mr Boensch orally accepted that he no longer agitated for a finding that the mortgage was not the binding agreement between the parties.

9. [31]

   For completeness, I also consider that in circumstances where the costs agreement were determined to be void, Mr Bingham would not be barred from the opportunity to claim his fees on a quantum meruit basis: see e.g. Wentworth v Rogers; Wentworth and Rogers (2006) 66 NSWLR 474 at [55]-[56] (Santow JA).

10. [32]

    Mr Boensch submitted that because Mr Bingham did not adhere to the mortgage terms and conditions, the mortgage can no longer operate, either because it is void or has terminated.

11. [33]

    Mr Boensch identified the breaches, upon which he relied, as the following conduct by Mr Bingham:

    1. (1)

       Suing Mr Boensch for more than $100,000, contrary to the mortgage cap;

    2. (2)

       Seeking payment before the obligation had crystallised on 1 March 2024; and

    3. (3)

       Seeking payment other than by way of sale proceeds of the Property.

12. [34]

    Mr Boensch submitted that, had he been aware that Mr Bingham would breach the mortgage terms, then he never would have signed that document and never would have engaged Mr Bingham to provide legal services.

13. [35]

    I do not accept that the mortgage agreement has been validly avoided or terminated. I do not accept that when a contractual party asserts a right wrongly, such as suing for more than a sum identified in a contract, the party has necessarily repudiated the contract. Even if Mr Bingham did repudiate the mortgage, Mr Boensch never notified Mr Bingham that he was accepting that repudiation and terminating the mortgage agreement. Further, even if he had, when a contract is terminated for breach, including repudiation, all unconditionally accrued rights, including as to payment, remain on foot: McDonald v Denny Lascelles Ltd (1993) 48 CLR 457 (at 477 per Dixon J). Mr Boensch has not demonstrated why Mr Bingham’s entitlement to payment for legal services performed at the request of Mr Boensch would cease to be enforceable by reason of any breach or termination.

14. [36]

    As already noted, Mr Boensch has repeatedly informed various courts that he considers the mortgage agreement binding, as has been found in the Federal Court, and has never asserted that he has terminated it.

15. [37]

    I note that Mr Boensch’s submissions also referred to relief pursuant to the Contracts Review Act 1980 (NSW). However, no relief pursuant to that legislation was pleaded. Mr Boensch clarified orally that the conduct, upon which he relied to avoid the operation of the mortgage agreement, was only the breaches he had identified. He did not submit that there was any conduct at the time of formation that would give rise to any remedy under that legislation. Therefore, the same reasoning as above applies.

16. [38]

    The same matters canvassed in Reasons 1 and 2 were repeated, namely that Mr Bingham has no valid costs agreement and he has breached the mortgage terms.

17. [39]

    Further, Mr Boensch submitted that because in August 2023 the Costs Review Panel provided an assessment of “$Nil”, it is no longer possible for there to be another costs assessment because the costs agreement is invalid. I do not accept that submission for the following reasons.

18. [40]

    First, as set out above, the costs assessment process was determined to be invalid because there were no costs “payable” at the time of the assessment; there was a jurisdictional error. However, Mr Boensch did not provide any clear reason why another application for assessment would not be available to Mr Bingham after 1 March 2024 as noted by the Costs Review Panel. There is nothing to suggest the entitlement to have costs assessed and enforced has been lost forever.

19. [41]

    Secondly, Mr Boensch now accepts that the mortgage agreement has been found to be the binding costs agreement between the parties, without the costs agreement, upon which Mr Bingham previously relied.

20. [42]

    This was also numbered “Reason 3” in Mr Boensch’s written submissions.

21. [43]

    Mr Boensch submitted that the judgment certificate had no effect and could not support the Caveat. Mr Bingham does not rely on that judgment certificate, and it is not necessary to consider this further.

22. [44]

    This was numbered “Reason 4” in Mr Boensch’s written submissions.

23. [45]

    Mr Boensch submits that Mr Bingham cannot rely upon the Caveat and mortgage in circumstances where he issued a bankruptcy notice. To support this submission he relies upon the fact that Somerville Legal withdrew a caveat it had lodged to protect payment of legal fees, where it had issued a bankruptcy notice: see Somerville Legal Pty Limited and v Franz Boensch; Franz Boensch v Somerville Legal Pty Limited [2019] NSWSC 267.

24. [46]

    Somerville Legal withdrew its caveat and discontinued the proceedings after Mr Bingham sent a letter on 18 February 2019 to Somerville Legal on his behalf alleging Somerville Legal’s conduct was a “statutory election” under s 41 Bankruptcy Act 1966 (Cth):

25. [47]

    None of the detail concerning Somerville Legal’s claim against Mr Boensch was in evidence and no submissions were made by Mr Boensch explaining how the facts in that litigation were as he submitted “almost mirror like” to those here. It is not possible to make a finding to that effect.

26. [48]

    Further, the alleged abuse of process and election or waiver asserted in the letter concerned concurrent proceedings for legal costs. That is not the situation here. When Mr Bingham caused the bankruptcy notice to be issued following the original costs assessment determination and District Court judgment, he did not, at the same time, commence proceedings seeking to enforce the costs agreements and mortgage. Mr Bingham no longer relies on the District Court judgment. Instead, he is seeking to protect the rights provided in the mortgage agreement, including indefinitely extending the operation of the Caveat.

27. [49]

    This was numbered “Reason 5” in Mr Boensch’s written submissions and was abandoned orally.

28. [50]

    This was numbered “Reason 6” in Mr Boensch’s written submissions.

29. [51]

    Mr Boensch submits that because he has other proceedings on foot against Mr Bingham alleging “professional misconduct, negligence, deception and unjust enrichment due to fraud”, which could lead to a damages award in his favour, and because currently there is not a valid costs assessment, and the terms of the mortgage were breached, the mortgage secures a speculative claim to fees and the Caveat ought to be removed.

30. [52]

    In support of this submission, Mr Boensch referred to Boensch v Pascoe (2019) 268 CLR 593 at [90]-[91] (citations omitted):

31. [53]

    Mr Boensch also relied on a decision of Parker J who refused leave to Mr Boensch’s trustee in bankruptcy to discontinue proceedings: Bailey v Boensch [2020] NSWSC 1391. At [39]-[44] Parker J stated:

32. [54]

    I do not accept that a trustee in bankruptcy’s entitlement to lodge a caveat over trust property is equivalent to Mr Bingham’s situation. Neither do I accept that Mr Bingham’s interest is merely contingent or a “forensic possibility”.

33. [55]

    Here, Mr Boensch accepted that when the mortgage was executed it was open to Mr Bingham to lodge a caveat, even though the amount of legal fees secured was not known. Merely because the quantum of legal fees has not been finally determined does not mean the mortgage agreement does not secure fees yet to become payable. It is a common situation that lawyers and others obtain a mortgage or other security from clients before commencing to provide legal services. The purpose is to ensure security for the payment of fees once the quantum is known and demanded, if not paid. Here, there is no dispute that Mr Bingham provided legal services to Mr Boensch and therefore it cannot be said that no fees at all would be payable. Even if there is an offsetting claim, that does not avoid Mr Bingham’s prima facie entitlement to some payment.

34. [56]

    While not advanced in writing, Mr Boensch orally submitted that Mr Bingham had not demonstrated that the mortgage agreement was valid, because there was some uncertainty around the witnessing of Mr Bingham’s signature.

35. [57]

    The witness to Mr Bingham’s signature was Mr Michael Birrell, who described himself as a chartered accountant and registered justice of the peace. His unchallenged affidavit evidence was that he witnessed Mr Bingham’s signature and wrote his JP number next to his signature. However, the JP number he provided in his affidavit is not the same as that written onto the mortgage. Further, his evidence is a little confusing in terms of where he signed the mortgage and annexure to the mortgage. However, read in context of the whole mortgage document, it is apparent that his evidence was that he signed at each of the places where his signature appears.

36. [58]

    While Mr Hazan conceded that there was an anomaly in the JP number provided, I am not prepared to make a finding that Mr Birrell’s evidence was either false or incorrect. He was not cross-examined and Mr Boensch did not rely upon any evidence to suggest Mr Birrell did not hold the qualifications, to which he deposed.

37. [59]

    Further, Mr Boensch has previously positively asserted that the mortgage is binding between the parties and the Federal Court has so found.

38. [60]

    Mr Boensch did not otherwise suggest that the mortgage did not provide Mr Bingham with a caveatable interest.

39. [61]

    For the reasons above, the mortgage agreement binds the parties. No sum of money for fees is yet payable by Mr Boensch. Nevertheless, it is appropriate to make declarations resolving the dispute between the parties and extend the Caveat.

40. [62]

    I do not accept that Mr Boensch is entitled to any of the relief sought in his cross-claim.

41. [63]

    Mr Bingham did not make any submissions as to the particular form of any costs order, nor seek to be heard later about costs. I consider it appropriate that Mr Boensch pay Mr Bingham’s costs on the ordinary basis as agreed or assessed.

Orders

1. [64]

   For the reasons above the appropriate orders are:

   1. (1)

      Declaration that the unregistered mortgage dated 12 March 2019 between John David Bingham and Franz Boensch secures costs incurred for the provision of legal services provided to Franz Boensch between February and December 2019, the quantum of which is currently unknown.

   2. (2)

      Declaration that John Bingham is entitled to enforce the terms of the mortgage in relation to payment of fees, if they have been finally quantified by the assessment process pursuant to the Legal Profession Uniform Law, after 1 March 2024, and only from the proceeds of sale of the property in folio identifier Lots 37-38 in DP14244, having Land Title Reference Auto Consol 7366-5.

   3. (3)

      The Cross-Claim is dismissed.

   4. (4)

      Franz Boensch to pay John Bingham’s costs of the Amended Statement of Claim and Cross-claim on the ordinary basis as agreed or assessed.