Bevan v Bingham

1. [1]

   This matter concerns a dispute between a solicitor and a barrister. It arises in very unfortunate circumstances. The barrister, Mr Christopher Bevan, was engaged by the solicitor, Mr John David Bingham. The barrister represented Mr Franz Boensch in proceedings in the High Court of Australia upon instructions given by the solicitor. There were costs agreements providing that the solicitor would pay the costs of the barrister. But that obligation was contingent on Mr Boensch paying the solicitor first.

2. [2]

   Mr Boensch has since been declared bankrupt. The solicitor has not recovered any of his own fees or the barrister’s fees from Mr Boensch. The barrister has not been paid.

3. [3]

   The barrister sought a costs assessment. A Costs Assessor issued a certificate for “fair and reasonable costs” in the amount of $323,715.10 (including interest and filing fee) to be paid to the barrister for his legal work. The barrister filed the certificate in the Registry, which became a judgment of this Court. A garnishee order was made. The barrister was the plaintiff in these proceedings and the solicitor the defendant.

4. [4]

   The solicitor brought a Notice of Motion filed 30 March 2021 (“the Notice of Motion”) to stay enforcement of the judgment, suspend the garnishee order and to set aside the judgment (the latter being the third prayer of relief). As I will explain in the proceedings to which this judgment relates concerns only the third prayer for relief, which was expressed thus the judgment entered in favour of the plaintiff be set aside pursuant to r 36.15 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”).

5. [5]

   For the remainder of the judgment, the solicitor, who is the defendant in the proceedings and applicant on the Notice of Motion, is referred to as the defendant. The barrister, who is the plaintiff in the proceedings and respondent on the Notice of Motion, is referred to as the plaintiff.

Background

1. [6]

   The contested factual background underpinning the proceedings may be briefly stated as follows.

2. [7]

   On 2 February 2019, the defendant retained the plaintiff to conduct Mr Bonensch’s application for special leave to appeal and, if granted, Mr Bonensch’s appeal to the High Court of Australia in what became High Court proceeding number S29/2019 (“High Court proceedings”). On the same date the plaintiff sent the defendant a costs agreement (“First Costs Agreement”). The plaintiff estimated his fees to be $63,000-$75,000 + GST.

3. [8]

   On 6 February 2019, the parties entered another costs agreement in relation to the same matter and on the substantially the same terms as the first, however the plaintiff revised his estimation of fees to be $60,000 + GST.

4. [9]

   On about 7 February 2019, the defendant entered into a costs agreement with Mr Boensch in relation to the High Court proceedings (“Boensch Costs Agreement”).

5. [10]

   On 8 March 2019, Mr Boensch granted a mortgage to the defendant over a property in Rydalmere in the sum of $100,000 (payable in 2024) (“the mortgage”). The purpose of the mortgage was to secure legal costs for both the plaintiff and the defendant in connection with the High Court proceedings.

6. [11]

   On 3 October 2019, following the grant of special leave, the plaintiff sent an email to the defendant giving an updated estimate of his fees to conduct the High Court appeal and enclosing an updated costs agreement (“Second Costs Agreement”). The plaintiff estimated his fees to be $31,000 + GST for completion of the Brief from 4 October 2019 to 12 October 2019. The defendant accepted that agreement and continued instructing the plaintiff to appear.

7. [12]

   On 12 December 2019, Mr Boensch was made bankrupt on a creditor’s petition in the Federal Circuit Court of Australia: Somerville Legal v Boensch [2019] FCCA 3637.

8. [13]

   On 13 December 2019, the High Court delivered its final judgment dismissing the High Court appeal with costs: Boensch Trust v Scott Darren Pascoe (2019) 268 CLR 593; [2019] HCA 49.

9. [14]

   On about 1 April 2020, the defendant proved Mr Boensch’s bankruptcy for the balance of debts owed to the defendant and plaintiff less the value of the fees secured under the mortgage.

10. [15]

    On 29 July 2020, the plaintiff applied to have his fees in the High Court proceeding assessed by way of an application for a practitioner/practitioner costs assessment. On 24 August 2020, the Manager, Costs Assessment wrote to the parties informing them that Mr Michael Eagle had been allocated the application for assessment (“Costs Assessor”).

11. [16]

    On 15 October 2020, the defendant lodged an application for assessment of costs from Mr Boensch.

12. [17]

    On 12 February 2021, the Manager, Costs Assessment issued a letter to the plaintiff and defendant enclosing the Costs Assessor’s Certificate of Determination of costs in the amount of $323,715.10 and statement of reasons dated 9 December 2020 (“the Barrister-Solicitor Certificate” or “the certificate”). Also enclosed with this letter was a subsidiary certificate listing the Costs Assessor’s fees as $2413.95. The plaintiff was directed to pay and did in fact pay these fees.

13. [18]

    A Certificate of Determination was also issued for costs claimed by the defendant from Mr Boensch (“the Solicitor-Client Certificate”). The Costs Assessor allowed $26,694 for legal fees the defendant claimed, $334,795.39 that the plaintiff claimed and $10,575 that Mr Wells claimed.

14. [19]

    On 15 February 2021, the plaintiff filed an application to register the Barrister-Solicitor as a judgment under r 36.10 of the UCPR.

15. [20]

    On 19 February 2021, the Barrister-Solicitor Certificate was registered as a judgment in this Court.

16. [21]

    On 4 March 2021, this Court issued a garnishee order to Mrs Beryl Sturesteps ordering her to pay a debt she owed to the defendant for professional costs for another matter to the plaintiff.

17. [22]

    On 22 March 2021, the defendant lodged an application for review of the Costs Assessor’s Determination to the Manager of Costs Assessment and requested an extension of the period in which to apply for that review.

18. [23]

    On 30 March 2021, the defendant filed the Notice of Motion, which was dated 26 March 2021, in this Court, relevantly seeking:

19. [24]

    On 29 March 2021, Davies J granted the interlocutory relief to the defendant and made the following orders:

20. [25]

    As mentioned, when the matter reached the Court as presently constituted, the only issue for determination was the third prayer of relief in the Notice of Motion.

21. [26]

    On 9 April 2021, the Manager of Costs Assessment refused the defendant’s application for extension of time to seek review of the Costs Assessor’s Determination. The Manager of Costs Assessment gave reasons for that decision dated 12 April 2021.

22. [27]

    On 12 May 2021, the defendant filed the Solicitor-Client Certificate for registration in the District Court and, on the same day, judgment was entered by that Court. A subsequent Notice of Motion filed by Mr Boensch to set aside that judgment was heard and dismissed on 22 November 2021.

23. [28]

    On 26 May 2021, the Full Court of the Federal Court of Australia allowed Mr Boensch’s appeal from the Federal Circuit Court of Australia: Boensch v Somerville Legal [2021] FCAFC 79. Orders 2 and 3 relevantly stated:

24. [29]

    It appears that some steps have been taken to recover funds from Mr Boensch. Earlier this year, a bankruptcy notice issued on the application of the defendant was, on the application of Mr Boensch, set aside: see Boensch v Bingham (No 2) [2022] FedCFamC2G 47.

Evidence before the Court

1. [30]

   The plaintiff relied on the following affidavits:

   1. (1)

      Affidavit of Christopher John Bevan sworn on 19 April 2021 (“Aff Bevan 19/4/21”), together with exhibit CJB-1.

2. [31]

   The defendant relied on the following affidavits:

   1. (1)

      Affidavit of John David Bingham, sworn on 19 March 2021 (“Aff Bingham 19/3/2021”), together with exhibit JDB-1;

   2. (2)

      Affidavit in reply of John David Bingham, sworn on 27 April 2021 (“Aff Bingham 27/4/2021”), together with exhibit JDB-3; and

   3. (3)

      Affidavit of John David Bingham, sworn on 9 July 2021 (“Aff Bingham 9/7/2021”).

Issues

1. [32]

   At the outset, the defendant noted:

   1. (1)

      The defendant does not agitate that the certificate of the Costs Assessor is binding between the plaintiff and defendant as to the quantum of fair and reasonable costs that are payable in respect of the legal services;

   2. (2)

      The defendant does not argue that the Manager of Costs Assessment was in error in not granting an extension of time; and

   3. (3)

      It is not necessary to resort to any motion or legal doctrine, such as merger of judgment, which was discussed in the written submissions.

2. [33]

   According to the defendant, there are five issues which required this Court’s determination:

   1. (1)

      The proper construction of clauses 4 and 7 of the First and Second Costs Agreements and how they interact;

   2. (2)

      The jurisdiction of the Costs Assessor, that is, whether it is within the remit of a Costs Assessor to determine whether costs are currently payable;

   3. (3)

      Whether the defendant made a binding election to acquiesce in the costs assessment process and to engage on its merits;

   4. (4)

      Whether the defendant has failed to use his best endeavours to recover the money payable to the plaintiff in accordance with cl 7; and

   5. (5)

      What remedy should be given in this case, including any remedy under r 36.15 of the UCPR or this Court’s inherent jurisdiction. I note on the outset that counsel for the defendant conceded in oral submissions, properly in my view, that if the judgment of 19 February 2021 is set aside, then the garnishee order should be suspended.

3. [34]

   The plaintiff submitted that there are three additional issues to be determined:

   1. (1)

      Whether, on a proper determination of the legislation, the assessor had determined the question of liability in arriving at his decision and in issuing the certificates of determination;

   2. (2)

      Whether that determination was on a quantum meruit basis or a contract basis; and

   3. (3)

      Whether it is appropriate that a determination of liability as well as quantum is to be found.

4. [35]

   In my view, there is some overlap in the issues raised by the parties.

5. [36]

   I also note that the plaintiff initially raised arguments dealing with the jurisdiction of the Court. Whilst this issue appeared to disappear, it is appropriate that I deal with this question briefly at the outset.

Jurisdiction of this Court

1. [37]

   This Court has the power to set aside a judgment pursuant to r 36.15(1) of the UCPR. That rule relevantly reads:

2. [38]

   This Court has the power to suspend a garnishee order pursuant to s 124A of the Civil Procedure Act 2005 (NSW) (“Civil Procedure Act”). Section 124A relevantly reads:

3. [39]

   The plaintiff submitted that s 73 of the Legal Profession Uniform Application Act 2014 (NSW) (“LPULA Act”) is a privative clause which serves to limit the jurisdiction of the Court. Section 73 provides:

4. [40]

   The written submissions of the defendant stated that Brezniak v Habib [2014] NSWSC 1730 (“Brezniak”) is authority for the principle that “there is no basis for setting aside a judgment based on a Certificate of Determination by reliance on the jurisdiction of rule 36.15 to set aside irregular judgments because of the principle of finality”.

5. [41]

   In Brezniak, Schmidt J stated in obiter that r 36.15 of the UCPR is not intended to provide a mechanism whereby costs assessor’s certificates which have been filed in accordance with s 368 of the Legal Profession Act 2004 (NSW) (“the 2004 Act”). Her Honour stated at [66]:

6. [42]

   In the following year, the Court of Appeal decided Calandra v Murden [2015] NSWCA 231 (“Calandra”). In that case, the respondent, Mr Murden, filed in the Local Court a form which was headed “Filing of Certificate of Order” to which was attached two costs assessor’s certificates. On the same day, judgment was entered in the Local Court in favour of the respondent against the two applicants: at [2]. The Local Court set aside the judgment under r 36.15 of the UCPR on the basis that it had not been entered in good faith. On appeal to the Supreme Court, the primary judge concluded that the magistrate did not have power to set aside the judgment because the effect of doing so was to set aside the costs assessor’s determinations and the Local Court had no power to do that: Murden v Calandra [2015] NSWSC 424.

7. [43]

   The issue in the appeal before the Court of Appeal was “whether the learned magistrate had power to set aside a Local Court judgment entered on the filing of two costs assessor’s certificates issued under Ch 3, Pt 3.2, Div 11 of the Legal Profession Act 2004 (NSW)”: at [1]. Those provisions are substantially similar to the framework set out in the Legal Profession Uniform Law (NSW) (“LPUL”) and LPULA Act. Relevantly, s 75 of the LPULA Act corresponds with s 368 of the 2004 Act.

8. [44]

   The Court of Appeal disagreed with the analysis of the primary judge. The Court stated at [20]-[21] (Beazley P, Meagher and Leeming JJA):

9. [45]

   It was emphasised at [18] of the Court of Appeal’s reasons that orders setting aside the judgment and the Filing of Certificate of Order form did not affect the binding nature of the assessor’s determination as to the fair and reasonable amount of the relevant costs.

10. [46]

    The effect of setting aside a judgment under r 36.15 of the UCPR may deprive the certificate of a “legal foundation”: Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172 at [44] (Handley AJA; Macfarlan JA agreeing). However, it does not amount to an “appeal” or “other assessment” as described in s 73 of the LPULA Act.

11. [47]

    In my view, Calandra supports the proposition that this Court has power to set aside judgment under r 36.15 of the UCPR and pursuant to the inherent powers of this Court. This is because, although Calandra dealt with powers of the Local Court, the reasoning may be applied by analogy with respect to the powers of this Court under r 36.15 of the UCPR and its inherent jurisdiction. To the extent that there is any conflict between Brezniak and Colandra, I am bound to follow Calandra.

12. [48]

    The plaintiff accepted, in his further written submissions, that “[u]nless there [is] a positive finding of “irregularity”…or of “against good faith”…there can be no jurisdiction to exercise discretion to set aside a judgment under rule 36.15”. I agree that this is consistent with the ordinary and natural reading of r 36.15 and with [20]-[21] of Calandra. It was implicit in the submissions of the plaintiff that other jurisdictional issues raised by him had fallen away.

The Proper Construction of Clauses 4 and 7

1. [49]

   An issue which occupied significant attention of the parties’ submissions was the construction of two clauses in the First and Second Costs Agreements. Clause 4 reads:

2. [50]

   Clause 7 reads:

3. [51]

   Furthermore, cl 2 of the First and Second Costs Agreements provides that “The Solicitor shall pay the Barrister: …” and sets out rates.

4. [52]

   According to the further written submissions of the defendant, this issue is not now in dispute and there is common ground that cl 4 contains the contingency that the defendant will only be liable to pay the plaintiff’s fees if the solicitor has been put in funds. Given the submissions of the parties on this issue, I make some general observations about the interaction between cll 4 and 7.

5. [53]

   The Costs Agreements should be read as a whole. It is evident that, insofar that the Agreements relate to the payment of barrister’s fees, the Agreements envisage a chain of events and obligations.

6. [54]

   The first chain is between the solicitor and barrister. The barrister is to provide legal services in relation to the application for special leave to appeal and appeal in the High Court proceedings. From time to time, the barrister “shall” send invoices for the payment of fees: cl 6. Clause 2, which opens with the words “The Solicitor shall pay the Barrister…”, imposes an obligation on the solicitor to pay the barrister his fees at the rates set out in that provision. However, cl 4 qualifies that obligation by making the solicitor being liable “only…to the extent that one or more of those parties have put him into the necessary funds to pay the Barrister’s fees” (emphasis added).

7. [55]

   The second chain is between the solicitor and either the client (who was the appellant to the appeal) or respondent to the appeal (or both). The client or respondent to the appeal, who are not parties to the agreement, are clearly envisaged by the agreement as to put the “necessary funds” into the solicitor. To ensure that this occurs, cl 7 places the solicitor under an obligation to use his best endeavours to recover the barrister’s fees from either the client or respondent to the appeal. This is to be done expeditiously and at the solicitor’s expense.

8. [56]

   In my view, the proper construction of the phrase “Subject to paragraph 4 above” is to alter the circumstances under which the solicitor’s personal obligation to pay the barrister’s fees is enlivened. The requirements of cl 7 are conditional on those in cl 4. The effect is that the solicitor’s obligation begins “only” when funds have been paid to the solicitor to pay the barrister’s fees. It does not have the effect of exempting the solicitor’s obligation to pay the barrister’s fees from being a personal obligation. This is because the obligation to pay the fees is derived from cl 2, not cl 4, and the subsequent sentence – “The Solicitor is liable to the Barrister for his fees rather than the Client being liable” – reinforces that it is the solicitor who bears the liability of paying the barrister’s fees.

9. [57]

   On the other hand, the opening words of cl 4 do not limit the first sentence of cl 7, which places an obligation on the solicitor to use his best endeavours and act expeditiously to recover the barrister’s fees is personal to the solicitor. Nothing in cl 4 varies or alters this.

10. [58]

    When understood in this context, it is clear that the plaintiff’s entitlement to receive funds is not conditional on the defendant fulfilling their best endeavour promise. I agree with the defendant that, if the plaintiff establishes the defendant has not fulfilled the defendant’s obligation under cl 7, there may be a breach of contract. Without expressing any concluded view, there is merit to the defendant’s submission that, if the breach is made out, damages would be assessed as a loss of chance to recover the fees from the client. There may also be issues arising as to repudiation.

11. [59]

    I emphasise that these observations are dependent on there being a valid costs agreement, not one that is void, and subject to statutory provisions contained in the LPUL that prevent the recovery of legal costs in certain circumstances (see, eg, LPUL ss 194, 198(7)(b)).

The Legal Profession Uniform Law

1. [60]

   A costs agreement is governed by the LPUL. Relevantly, as is the case here, a costs agreement may be made “between a law practice and another law practice that retained that law practice on behalf of a client”: LPUL s 180(1)(c). The costs agreement “may be enforced in the same way as any other contract” but this, importantly, is “[s]ubject to [the LPUL]”: LPUL s 184.

2. [61]

   It is relevant to note the disclosure requirements imposed by the LPUL. Section 174 of the LPUL imposes disclosure obligations on law practices to clients. However, where a law practice retains or intends to retain another law practice on behalf of a client, the latter law practice is not required to make a disclosure to the client under s 174 of the LPUL but must disclose certain information to the former law practice: LPUL s 175(2).

3. [62]

   Section 178(1) of the LPUL relevantly provides:

4. [63]

   Part 4.3 div 7 of the LPUL provides a regime for costs assessments. Section 198(1)(d) relevantly provides for applications for costs assessments between two law practices as follows:

5. [64]

   Section 199(2) of the LPUL provides the mandatory determinations to be made by a costs assessor when conducting a costs assessment as follows:

6. [65]

   In my view, s 199(2)(a) makes clear that a costs assessor has an obligation to form a view about the existence of a valid costs agreement. This language emphasises that the effect of ss 178(1)(a) and 185(1) of the LPUL is to make a costs agreement that contravenes the specified provisions or obligations void by the force of the statute rather than being voidable upon any declaration or order of a costs assessor.

7. [66]

   In determining whether legal costs are fair and reasonable under s 199(2)(b), the costs assessor “must” apply the principles in s 172 of the LPUL: LPUL s 200(1). The costs assessor “may” have regard to further matters provided in s 200(2) of the LPUL.

8. [67]

   Section 172 of the LPUL provides detailed considerations in determining whether legal costs charged are “no more than fair and reasonable in all the circumstances”.

9. [68]

   Relevantly, s 172(4) of the LPUL provides that a costs agreement is “prima facie evidence that legal costs disclosed in the agreement are fair and reasonable” if the provisions in divs 3 and 4 of pt 4.3 of the LPUL have been complied with or not contravened. It appears to me to be clear that, if the provisions in divs 3 and 4 of pt 4.3 of the LPUL are not complied with, the costs agreement is not prima facie evidence of fair and reasonable costs.

10. [69]

    On making a determination of costs, a costs assessor is to issue a certificate that sets out the determination (LPULA Act s 70(1)) and give reasons for the costs assessment (LPUL s 201).

11. [70]

    Section 70(5) of the LPUL provides:

The Determination by the Costs Assessor

1. [71]

   As noted above, the plaintiff applied for a costs assessment on 29 July 2020.

2. [72]

   In relation to the First Costs Agreement, the Costs Assessor found “this agreement to satisfy the requirements of s 175 of the LPUL in so far as it gave the Costs Applicant sufficient information to make the requisite disclosure to the client”.

3. [73]

   In relation to the Second Costs Agreement, the Costs Assessor found that the adding of a further $31,000 plus GST for estimated costs were “grossly exceeded in the Costs Applicant’s invoices so that neither cost agreement could be said to properly inform the Costs Respondent of the potential liability for costs which the Costs Applicant seeks to have assessed”. The Costs Assessor concluded that the Second Costs Agreement was “in breach” of s 175 of the LPUL “as the estimate given was inadequate for the Costs Applicant to give to the Costs Respondent an estimate of what the Counsel’s costs would be”. The parties before me did not take issue with this finding.

4. [74]

   I agree with the submission of counsel for the plaintiff that the consequence of the Costs Assessor’s finding that the Second Costs Agreement contravened a disclosure obligation is that the Second Costs Agreement is void (LPUL s 178(1)(a)). The words of that provision are plain in their effect of rendering the costs agreement void,

5. [75]

   The Costs Assessor then proceeded to determine the amount of legal costs that are to be payable on the basis that the Second Costs Agreement was not a valid costs agreement.

Did the Costs Assessor have Jurisdiction to Determine Whether the Costs are Payable?

1. [76]

   The defendant submitted, in their pre-hearing written submissions, that the Costs Assessor should not have completed the assessment by issuing a certificate unless satisfied that the costs were, in fact, payable. The defendant submitted that cl 4 of the Costs Agreement meant that the defendant’s liability for the plaintiff’s fees was conditional upon the defendant recovering those fees from Mr Boesnch. The defendant submitted that legal costs were not payable, and, at the time, the plaintiff was not entitled to receive payment.

2. [77]

   In oral submissions, the defendant appears to have modified his position. Counsel for the defendant submitted that the Costs Assessor has no jurisdiction to determine whether the costs are presently payable. This is, in the defendant’s submission, because s 6 of the LPUL defines the term “legal costs” as follows:

3. [78]

   The plaintiff submitted:

   1. (1)

      The costs assessor was under a statutory duty to determine whether legal costs were payable;

   2. (2)

      Sections 198(1) and 199(2) of the LPUL concern the determination of the costs that are “payable”. The definition of “payable” in the Macquarie Dictionary (3rd ed) is “owed; to be paid; due”; and

   3. (3)

      The definition of “legal costs” in s 6 of the LPUL cannot override the operative provisions of the statute: Stevens v Colonial Sugar Refining Co Ltd (1920) 28 CLR 330 at 340D; Brown v Brook (1971) 125 CLR 275 at 282B.

4. [79]

   In my view, the ordinary and natural meaning of the text, as well as the structure and context, of the LPUL and LPULA Act favours the interpretation advanced by the plaintiff.

5. [80]

   The references in ss 198(1) and 199(2)(b) to legal costs that are “payable” has the effect of referring to only those amounts within the meaning of “legal costs” that, at the time of the assessment, are liable to be paid. I agree with the plaintiff that the ordinary and natural meaning of “payable” is a reference to amounts that are owed and due but have not yet been paid.

6. [81]

   Although the term “legal costs” is defined to include amounts that “may be charged” or “may become liable to [be paid]”, the meaning of those expressions need to be considered in the light of the surrounding provisions. Relevantly, s 198(1) refers to “an assessment of the whole or any part of the legal costs payable” (emphasis added). And s 199(2)(b) states that the costs assessor must “determine the amount of legal costs (if any) that are to be payable” (emphasis added). The emphasised words by italics demonstrate that the word “payable” has the effect of referring to the class of “legal costs” that are due and owed. The proper construction of the role of the costs assessor is not to determine all the legal costs (including those that may potentially be owed at some point in time after the assessment) but rather only those legal costs that are owed at the time of assessment.

7. [82]

   I recognise that that the words “are to be payable” in s 199(2)(b) have two competing constructions. One construction is that they refer to amounts that are not owed and due at the time of assessment, but will be owed and due in the future. Another construction is that they refer to amounts that are owed and due at the time of the assessment and are to be paid after the assessment.

8. [83]

   The structure of the costs assessment regime in the LPUL and LPULA Act supports the second construction and the proposition that a costs assessor is inquiring into amounts of legal costs that are owed and payable at the time of the assessment. As I noted above, after a costs assessment is completed, a certificate is issued. The amount of money stated in the certificate (which under s 70(1) of the LPULA Act, includes the amount of costs determined, the amount of any costs of the costs assessment and any interest on those amounts) is significant because it may either be recovered as a debt in a Court or, on filing of the Certificate, becomes a judgment of the Court. The fact that the costs determination would have that effect emphasises that the costs assessment is only concerned with costs which are, at the time of the assessment, payable.

9. [84]

   This is made clear by the use of the word “payable” in s 70(1)(a) of the LPULA Act, which states:

10. [85]

    The term “payable” in that provision is clearly referable to GST amounts that are owed and due to be paid immediately. This is because, by including the amount on the certificate, the amount becomes recoverable in a court upon the filing of the certificate. I see no reason why the term “payable” in s 70(1)(a) of the LPULA Act should take on a different meaning from that same term in the LPUL. Although they are separate statutes, it is evident from Parliament’s intent that their operation, at least insofar that they concern costs assessments, are complementary.

11. [86]

    This construction is consistent with the judgment of Hodgson JA in Doyle v Hall Chadwick [2007] NSWCA 159 at [61], which states:

12. [87]

    I acknowledge that there is an alternative construction that the term “payable” has a wider meaning, namely, that it means able or capable to be paid, not merely owed or due.

13. [88]

    The dictionary definitions are consistent with both the above construction and the alternative view. In the Shorter Oxford Dictionary (Oxford University Press, 6th ed, 2007) which defines “payable” as:

14. [89]

    In the Macquarie Dictionary (Macquarie Dictionary Publishers, 8th ed, 2020), “payable” is defined as:

15. [90]

    However, for the reasons I have given, I prefer the construction that “payable” in the LPUL and LPULA Act means “owed; to be paid; due”. Even if a wider meaning is given, for the reasons stated below, I am satisfied that the Costs Assessor had determined the legal costs that were owed and due at the time of the costs assessment.

What was the effect of the Costs Assessor’s Determination?

1. [91]

   The conclusion of the Costs Assessor that the Second Costs Agreement was not a valid costs agreement was not contested by the parties. It is not necessary for me to determine whether this was conclusion was correctly reached although there would seem to be an adequate basis for the common ground based upon alleged contravention of disclosure obligations.

2. [92]

   The result is that the whole of the Second Costs Agreement was void pursuant to s 178(1)(a) of the LPUL.

3. [93]

   I note that a different result could be reached if the “costs agreement” in the LPUL referred to only a part of the Second Costs Agreement but neither party argued for that construction, which in any event would potentially require a reading down of the provision.

4. [94]

   Neither the LPUL or LPULA Act defines the expression “costs agreement” in contrast to s 302 of the 2004 Act, which had defined “cost agreement” as “an agreement about the payment of legal costs”. In Anderson v Hill [2017] NSWSC 1149, Hallen J said at [35] that a “costs agreement” in the LPUL “simply means an agreement about the payment of legal costs”.

5. [95]

   In my view, the text “the costs agreement concerned” (s 178(1)(a)) and “[a] cost agreement that contravenes” (s 185(1)) is a reference to the entirety of the costs agreement that deals with the setting of legal costs for legal work and matters connected to or incidental to the setting of legal costs for legal work. Nothing suggests that costs agreement should be read down to exclude clauses providing for a contingency of payment.

6. [96]

   It might be noted that a former provision, s 184(5) of the Legal Profession Act 1984 (NSW), stated that “[a] costs agreement may form part of a contract for the provision of legal services”. No such identical or substantially similar provision exists in the LPUL or LPULA Act. But even under the former provision, there does not seem anything to suggest that a contingency clause can be treated separately to a costs agreement.

7. [97]

   The effect of a costs agreement being “void” through the operation a statute was explained by Barrett J (as his Honour then was) in Wentworth v Rogers [2002] NSWSC 709. That matter concerned an unwritten costs agreement. Section 184(4) of the Legal Profession Act 1987 (NSW) provided that “[a] costs agreement is void if it is not in writing or evidenced in writing”. His Honour stated at [29]:

8. [98]

   On appeal, Santow JA agreed with the observations of Barrett J that the effect of providing that a costs agreement is void is that “any agreement should be treated as non-existent and rights and obligations on the subject of the lawyer's remuneration should be determined without regard to the supposed agreement”: Wentworth v Rogers (2006) 66 NSWLR 474; [2006] NSWCA 145 at 484 [33] (Santow JA, Hislop J agreeing at 522 [215]).

9. [99]

   Consistently with the Costs Assessor’s determination that the Second Costs Agreement was not a valid costs agreement, the agreement must be treated as non-existent. The rights and obligations of the plaintiff and defendant in the costs agreement, including the contingency clause, were to be treated as non-existent as a matter of law.

10. [100]

    In determining that the costs were now “payable”, the Costs Assessor was, in effect, creating new rights and obligations between the parties.

11. [101]

    The reasons of the Costs Assessor acknowledged that the contingency clauses in the Costs Agreements but then expressed in the certificate that the amount was “payable”. That is because he considered the failure to meet the disclosure obligations make the Second Costs Agreement invalid.

12. [102]

    In my view, the Costs Assessor was not merely quantifying the amount that may fall due at some point in the future subject to some contingency of a Costs Agreement that the Costs Assessor found was not valid. Rather, the Costs Assessor, in issuing the certificate, made a positive finding that the amount was payable and could be recovered.

13. [103]

    The defendant submitted, in his written submissions that the “costs assessment mechanism is a means of quantification only. It … does not alter the nature of the contractual rights to payment for legal services rendered and billed”. The defendant cites Branson v Tucker [2012] NSWCA 310 at [127] (Barrett JA) (“Branson”) and Coshott v Barry [2012] NSWSC 850 at [41] (McCallum J) (“Coshott”) as authority for this proposition.

14. [104]

    In my view, neither authority, when understood in context, supports the defendant’s submission.

15. [105]

    In Branson, Barrett JA stated at [127] and [128] as follows:

16. [106]

    In my view, his Honour’s statement that the filing of the certificate was to “supersede” or “satisfy” a contractual entitlement and give rise to a “judgment debt” makes clear that the role of a costs assessor was to determine the amount that, at the time of the assessment, was due.

17. [107]

    In Coshott, McCallum J stated at [41]:

18. [108]

    However, Coshott was not a case where the costs agreement was void or not valid. The extinguishment of rights and obligations in this case arises from the Second Costs Agreement being void. Thus, I do not discern any inconsistency between McCallum J’s reasons and my views above.

19. [109]

    I note that no party submitted that the Costs Assessor had committed jurisdictional error in his determination and it is not necessary then to resolve any issues concerning whether the Costs Assessor had exceeded the jurisdiction conferred upon him by statute.

Was there any good faith or irregularity?

1. [110]

   As noted above, the Court may exercise a discretion under r 36.15 of the UCPR to set aside a judgment or order of the Court if “sufficient cause” is shown that the judgment or order was given, entered or made “irregularly, illegally or against good faith”.

2. [111]

   In Kendall v Carnegie (2006) 68 NSWLR 193; [2006] NSWCA 302, Bryson JA, (with whom Hodgson and McColl JJA agreed) said at [45], that the phrase "sufficient cause" recognised the need for finality in judgments of the Court by protecting those judgments from being set aside "... for slight or uncertain causes".

3. [112]

   In Weber v Aquaqueen International Pty Ltd [2013] NSWSC 1181, Garling J stated that, in resolving an application under r 36.15 of the UCPR, the Court should have regard to:

4. [113]

   The defendant relied only on the grounds that the judgment was entered irregularly or against good faith.

5. [114]

   In Calandra, it was stated that a judgment may be entered irregularly if “there was no amount of unpaid costs in respect of which the respondent was entitled to judgment”: at [20]. The Court in Calandra noted that Lopes LJ in Hughes v Justin [1894] 1 QB 667 at 670 described as “irregular” a default judgment signed for an amount to which the plaintiff was not entitled.

6. [115]

   In my view, there is no irregularity in the entering of the judgment, upon filing the certificate, in these proceedings. I agree with the submissions for the plaintiff that it was reasonable to register the certificate in light of the certificate certifying that the costs were “payable” and creating a positive liability for the costs determined by the Costs Assessor.

7. [116]

   The defendant argued that the judgment was entered irregularly because there was no “unpaid money” in s 70(5) of the LPULA Act. This submission was predicated on the continued existence of the contingency clause which did not operate upon the circumstances of the certificate because the Second Costs Agreement was void.

8. [117]

   Calandra can be distinguished because there was a valid Deed of Release and Indemnity that released the respondent in that case from paying costs and thus there was no “unpaid money”. Here, there is no explanation provided by the defendant for how the contingency survived after the Costs Agreement was found as not valid.

9. [118]

   In my view, it was also not entered against good faith at the date of entry of judgment. There is no lack of good faith in the plaintiff filing a certificate certifying costs “payable” to him.

10. [119]

    The meaning of "against good faith" was considered in Kendell v Carnegie (2006) 68 NSWLR 193; [2006] NSWCA 302 where Bryson JA (with whom Hodgson and McColl JJA agreed) stated at [60]:

11. [120]

    There may be an argument that the plaintiff may be estopped, notwithstanding the void costs agreement, from filing the certificate. However, no such argument was advanced by the parties and it is not appropriate to consider it here.

12. [121]

    In Industry Funds Management (Nominees 2) Pty Limited v James Nicholas Panagopoulos and Anor [2013] NSWSC 868, Sackar J stated at [40]:

13. [122]

    In my view, the factors identified by Sackar J apply, not only to a consent judgment, but a judgment arising from the filing of a certificate from a costs assessment.

14. [123]

    In this case, I do not consider any of those factors have been made out. In particular, I do not consider that the judgment should be set aside for “non-disclosure of a material fact or where disclosure was required” because there is no requirement in s 70(5) to disclose that a costs agreement that was found to be void contained a contingency clause.

Conclusion

1. [124]

   In conclusion, the defendant has not demonstrated "sufficient cause" that the judgment was entered irregularly or against good faith for the purpose of r 36.15 or to establish a proper basis for the exercise of this Court’s inherent jurisdiction. It follows that the third prayer of relief of the Notice of Motion should be dismissed and there should be costs awarded to the plaintiff.

2. [125]

   The parties should have an opportunity to consider the form of orders which should be made to reflect these conclusions. Short Minutes of Order should be filed. Those Short Minutes may also include, by consent, any consequential orders with respect to the interlocutory orders made by Davies J or other aspects of the Notice of Motion.