Supreme Court Dismisses Appeal on Costs Agreement Enforceability

The court dismissed an appeal challenging the enforceability of a costs agreement, finding that the agreement was supported by independent legal advice and there was no evidence of unconscionability or duress.

Supreme Court New South Wales

Medium Neutral Citation: [NAME] and Li v Ngo [2021] NSWSC 49 Hearing dates: 13 July 2020 Date of orders: 13 July 2020 Decision date: 05 February 2021 Jurisdiction: Common Law Before: Rothman J Decision: (1) Leave to appeal refused; (2) Appeal dismissed; (3) The [NAME] pay the [NAME] costs, being lump sum costs, and interest, which together with the judgment debt of $89,000 and interest of $33,531.96 shall be calculated at $138,532.96. (4) In addition to the foregoing, the [NAME] shall pay interest, pursuant to the terms of s 101 of the Civil Procedure Act 2005 (NSW), at the prescribed rate from the date of the initial judgment of this Court, being 13 July 2020. Catchwords: APPEAL – no error of law and no ground raising – mixed law and fact – reagitation of findings of fact – leave to appeal necessary – grounds of appeal without merit – leave refused. Legislation Cited: [ADDRESS] 2007 (NSW) Cases Cited: [NAME] by her next friend [NAME] v State of New South Wales [2008] NSWSC 1257 Hunter Area Health Service v Presland (2005) 63 NSWLR 22; [2005] NSWCA 33 Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Zelden v Sewell [2011] NSWCA 56 Category: Procedural rulings Parties: [NAME] (Appellant) [NAME] (Appellant) [NAME] (Respondent) Representation: [NAME] (Self-represented) (Appellant) [NAME] (Self-represented) (Appellant) [NAME] (Respondent) File Number(s): 2020/00095445

Judgment 1. HIS HONOUR: On 27 March 2020 the plaintiffs, [NAME] and [NAME] (hereinafter "the [NAME]") applied by summons to appeal the whole of the decision of [NAME] issued, ex tempore, on 28 February 2020. The appeal requires leave of the Court.

2. The [NAME] were self-represented and some allowances are made for that aspect in the determination of the appeal. Written submissions were filed by the [NAME] and by the defendant on the appeal (hereinafter "the respondent").

3. The [NAME] were the defendants in the proceedings below which concerned an amount of debt said to be owed by the [NAME] to the respondent to the appeal, who was the plaintiff below.

Background 1. It is necessary to set out some background to the proceedings. The first appellant was charged with various serious offences, the details of which are largely irrelevant but seem to be drug-related offences. The matter proceeded to trial, which was heard between 1 August and 23 September 2016.

2. The first appellant retained the respondent as her solicitor in respect of those proceedings. The first appellant entered a costs agreement (executed by the first appellant on 3 June 2016), which provided for the payment of a fixed amount of $80,000 for preparation and attendance at the hearing on the assumption that the hearing would last 15 days.

3. It became clear that the hearing would last longer than 15 days and a further agreement was executed, seemingly partly in writing and partly oral, which retained the respondent for the remainder of the trial at a rate of $20,000 per week.

4. It appears that the first appellant's obligations under this [NAME] cost agreement were guaranteed by her son, the [NAME] appellant. The [NAME] appellant entered into a deed and provided security by way of mortgage documents, all dated 1 September 2016. The material before the [ADDRESS] attested to advice being received by the [NAME] from an independent solicitor and, in particular, by the [NAME] appellant in relation to the guarantee.

5. Before the Court, there is a declaration entitled "Declaration by Borrower" signed by the [NAME] appellant on 1 September 2016, stating, at clause 2 thereof, that the [NAME] appellant received independent legal advice in relation to the Deed of Agreement and the Mortgage documents.

6. The respondent did not attend the criminal proceedings on each day, nor did the other principal solicitor of his firm, [NAME]. On days when he did not attend, his employed solicitor, [NAME], attended. At some stage during the trial, seemingly after jury deliberations and verdicts were entered, the first appellant appears to have terminated the retainer of the defendant.

7. The first appellant had paid for work in accordance with a payment plan in the amount of $31,000, by way of $500 weekly instalments. The payments were made between 24 October 2016 and 22 May 2017.

8. The respondent commenced [ADDRESS] proceedings, seeking payment of an amount outstanding under the costs agreement, which amount was claimed to be $89,000, and sought to enforce the deed against the [NAME] appellant.

9. Separately from the foregoing, the first appellant lodged a complaint to the [COMPANY]. The complaint was dismissed.

10. As already stated, the proceedings below were commenced by the respondent to the appeal and the [NAME] filed a defence, which, primarily, asserted:

1. The existence of an implied term in the costs agreements to the effect that the two principal solicitors were required to attend the trial each and every day; and 2. That the [NAME] appellant was suffering from a mental disability at the time that he entered into the Deed of Guarantee and security documents and/or that his signature was otherwise compelled by duress.

1. The [NAME] found for the respondent and dismissed the [NAME]' crossclaim. The [NAME]' crossclaim alleged that the respondent was incompetent; and that this incompetence and/or the result of the application of the incompetence caused the first appellant mental and/or physical harm and economic loss, arising from her incarceration. 2. [ADDRESS], as presently constituted, has noted, in unrelated proceedings, the principles that establish that a lawfully imposed period of incarceration cannot be claimed as damages. In discussing the issue, as it applies to persons under a mental impairment, the Court considered the judgment of the Court of Appeal in Presland [1] and recited extracts of the judgment of the majority in Presand at length. [ADDRESS], as presently constituted said, in [NAME] by her next friend [NAME] v State of New South Wales: [2] "[106] The reasons for judgment in Presland, cited above, make clear that in circumstances such as that now before the Court, in these proceedings, [NAME] cannot succeed. [NAME] was held responsible (albeit on a diminished basis) for her actions and the State of New South Wales cannot owe a duty of care to a person to take steps to prevent damage, of the kind here claimed, arising from that person's own criminal conduct. [107] It is instructive to recite two passages from the judgment of the High Court of Australia in Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61; (2000) 205 CLR 254. In Modbury Triangle, Gleeson CJ said: "[14] In some cases, where there is a problem as to the existence and measure of legal responsibility, it is useful to begin by identifying the nature of the harm suffered by a plaintiff, for which a defendant is said to be liable." … [110] The duty of the State, while [NAME] was on remand, was to conduct its facility in a way that would, as soon as possible, allow [NAME] to take her place in the community as a person who will observe the law. To make actionable a duty of care that would prevent the State from providing [NAME] with cooking lessons, or a pen, would be inconsistent with that duty and so broad that the conduct of such centres would become prohibitive, if the duty of care were directed at "damage" occasioned by the operation of the law itself. [111] On the basis of the authority in Presland, and on the basis of first principles, the State of New South Wales owes no duty of care to [NAME] to take reasonable steps to prevent [NAME] from conducting herself in a way which would lead to the imposition on her of the criminal law or a limiting term under the Mental Health (Criminal Procedures) Act. … [118] The cause of the loss of liberty is the order of the Court of Criminal Appeal in accordance with law. While the order of the Court of Criminal Appeal would not have occurred without prior unlawful conduct, which, in turn, would not have occurred unless [NAME] had access to the knife (or some other sharp instrument), it cannot be said that the killing of [NAME], or the prior access to the knife, is the cause of the loss of liberty."

1. Regardless of whatever is said to be incompetence on the part of the legal representatives, the criminal conviction for which a sentence was imposed was a lawful act that reflected the law and cannot be impugned in these proceedings. No damages are occasioned by the imposition of the law by a court or tribunal with the jurisdiction to impose it.

2. Further, there is in place a lawful order of a court that imposed a sentence. Any damage associated with the restrictions on the first appellant's liberty is the result of the lawful conduct of authorities. Even in wrongful imprisonment cases, damages are awarded only up to the point in time that there is a lawful order authorising imprisonment.

3. Nevertheless, before the [ADDRESS], the [NAME] argued that the clause in the costs agreement that identified the responsible solicitor should be construed to mean that it was the responsible solicitor, and no one else, that would have carriage of the matter and be required to attend. The [NAME] found that there was no evidence to suggest that the identified principal solicitor or responsible solicitor ceased having carriage of the matter. The respondent remained in charge of the conduct of the proceedings; attended most days of the trial; and was assisted by various people. There was no clause requiring the respondent to attend court every day.

4. Further, the first appellant asserted that threats were made in respect of her and her sons' safety. The [NAME] appellant is the first appellant's son. It was said, in the [ADDRESS], that these threats were made by the respondent and/or an employed solicitor answerable to the respondent. The respondent denied the allegations.

5. The employed solicitor never met with the first appellant without the presence of counsel. No particulars were provided as to when the alleged threats were conveyed, and the allegation was rejected by the [ADDRESS].

6. Lastly, the [ADDRESS] dealt with an assertion relating to the unconscionability of the guarantee. [ADDRESS] determined that the guarantee was enforceable and rejected any allegation of unconscionability or undue influence or duress. Further, the [ADDRESS] rejected the proposition that the [NAME] appellant did not read the guarantee. Each of these allegations were not, according to the [ADDRESS], established.

7. Further, there was no admissible evidence to support the contention that the [NAME] appellant suffered from a special disadvantage. The first appellant suggested that the [NAME] appellant provide a guarantee and, on the evidence before the [ADDRESS], as it held, the [NAME] appellant received advice from an independent solicitor in relation to the guarantee.

8. Over and above the foregoing, the [ADDRESS] made reference to a gift provided by the first appellant to the [NAME], during the course of the trial, as appreciation of the work that was being done and the payment of the instalments towards the debt, neither of which is suggestive of duress or any other basis upon which the costs agreement would be rendered unenforceable. Indeed, it is suggestive of recent invention for the purpose of avoiding contractual responsibility.

Grounds of Appeal 1. The [NAME] appeal from the decision of [NAME] on the following three grounds:

1. Ground One: miscarriage of justice has arisen on account of the civil hearing Magistrate's abuse of power of disrespecting the Supreme Court of Criminal Appeal proceedings (sic), disrespecting the Judicial Commission's proceedings and went across boundaries to give false determination on the legitimacy issue related to the trial lawyer's action in the criminal trial;

2. Ground Two: "miscarriage of justice" has arisen on account of the civil hearing Magistrate's abuse of power to alter and change [NAME]'s court evidence filed on 30 January 2020 and, based on that, to give false determination on the issue of the trial lawyer's action of legitimacy and on the issue of both [NAME] and [NAME] being put under a duress situation;

3. Ground Three: miscarriage of justice has arisen on account of the civil hearing Magistrate's inconsistency and sudden change without providing the reason on the term of "exclusive cost agreement".

1. I have sought to be as accurate as possible in the recitation of the grounds of appeal, but some alterations were made for the purpose of making the ground less unintelligible.

2. The [NAME] filed written submissions from which, to the extent that the submissions are able to be understood fully, the [NAME] make the following complaints:

1. The Magistrate erred in not adjourning the proceedings pending the resolution of the first plaintiff's appeal to the Court of Criminal Appeal, in respect of her criminal conviction;

2. The Magistrate erred in not admitting certain evidence;

3. The Magistrate erred in switching off the first plaintiff's video link during the proceedings in the [ADDRESS];

4. The Magistrate erred in not finding (or otherwise failed to provide adequate reasons for a finding) that the defendant breached his costs agreement by: his incompetence as a legal representative in the criminal trial in that the respondent and/or counsel did not advance the case in the manner desired by the first appellant; and by not attending the trial in person throughout the whole hearing; and 5. The Magistrate erred in not finding that the [NAME] appellant was compelled to enter the guarantee under duress or that the [NAME] was otherwise subject to a mental incapacity.

The hearing in the [ADDRESS]

1. The transcript of the proceedings before the [ADDRESS] are before the Court. The judgment of the [NAME] was provided ex tempore and is included in the transcript. The transcript of the evidence is attached to the affidavits of the respondent, dated 28 January 2020 and 14 October 2019.

2. Essentially the respondent submits that the grounds of appeal are incomprehensible and otherwise not known to law. Further, the grounds of appeal disclose no error of law in the Court below. Nor do the grounds of appeal give rise to a mixed question of fact and law that would allow this Court to grant leave pursuant to the terms of s 40 of the [ADDRESS] 2007 (NSW).

3. Lastly, the respondent submits that the findings in the Court below are totally supported and manifestly correct and are in accordance with the unchallenged evidence of the respondent below.

4. The [NAME] rely upon the [ADDRESS] transcript and various affidavits of the [NAME] themselves. Those other documents are listed in the Court Book and p 1 of the [NAME]' Written Submissions.

5. The [NAME] submit, in relation to Ground One, that the criminal trial was run incompetently and assert that the criminal trial should have been terminated, once certain evidence came to light, namely, that certain search warrants were improperly obtained. The submission of the [NAME] seem to suggest, as is a ground of appeal, that the respondent was incompetent in not obtaining orders from the Court vacating the trial once this evidence was ascertained.

6. Further, the [NAME] submit that the respondent did not attend eight weeks of the criminal proceedings, having attended only for the first two weeks. The [NAME] also make various allegations that her lawyers, and the judge, in the criminal trial lied to the jury. The [NAME] deny that the first appellant provided a gift to the respondent's wife and the first defendant states that the Magistrate did not consider the [NAME] appellant's mental health issue in respect of the guarantee.

7. Further, the [NAME] argue that the [NAME] was not independent and was, in fact, associated with the respondent. I do not seek to summarise all of the submissions in relation to the cross-claim.

Consideration 1. The [NAME] in civil proceedings in New South Wales is established on the basis that claims of a certain value may be argued, at first instance, in the [ADDRESS]; claims up to a certain value, greater that allowed to be argued in the [ADDRESS], may be determined in the District Court of New South Wales; and, lastly, claims of unlimited value may be the subject of proceedings in the Supreme Court. Where proceedings are taken in the Supreme Court, for example, for a debt, the amount of which was within the jurisdiction of the [ADDRESS], the Supreme Court has the jurisdiction to remit the matter to the [ADDRESS] and/or the District Court.

2. There are reasons for the establishment of the [NAME] in the manner established in this State. The [NAME] established under law in this State reflects the [NAME] throughout the common law world and beyond. Indeed, its history may be traced, at least, from the advice provided, according to Biblical passages, by [NAME] to Moses, his son-in-law. [3] Archaeologists suggest that the structure also applied well before any Biblical injunction.

3. Nevertheless, in this State and most other jurisdictions, there is a right of appeal to the Supreme Court but "only on a question of law". [4] None of the grounds raised in this appeal are confined to a question of law.

4. Over and above the right of appeal, there is a capacity on a party adversely affected by or dissatisfied with a judgment or order of the [ADDRESS] to appeal on a ground that involves a question of mixed law and fact but, in those circumstances, the appeal to the Supreme Court is "only by leave of the Supreme Court". [5]

5. The determination by the Court to grant leave is not automatic. In a case such as this, which involves a relatively small claim, it is important that there be early finality in determining the litigation and an end to the costs of litigation involving small amounts. Otherwise the costs of litigation will, even more than is usually the case, swamp the money sum involved. [6]

6. Ordinarily, it is appropriate to grant leave to appeal only concerning matters that involve an issue of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond that which is merely arguable. [7]

7. The appeal and the application for leave to appeal with which the Court is currently dealing seeks to reagitate the questions of fact that were determined by the [NAME]; do not raise any issues of public importance; do not raise any issues of public interest or principles; and do not raise any ground of appeal which would allow the Court, as presently constituted, to interfere with the findings of fact below or any exercise of discretion associated therewith.

8. Nothing in the grounds of appeal or the submissions in support of the grounds of appeal satisfies the Court, as presently constituted, that leave to appeal should be granted. As a consequence of the foregoing determination at the hearing of the appeal, the Court refused leave to appeal and dismissed the appeal. An order was made that the [NAME] pay the respondent's costs of and incidental to the proceedings.

9. On the application of the respondent, leave was granted to put a submission and material supporting a fixed cost order by the Court, in order to avoid any further litigation costs associated with this matter. Leave was granted to the [NAME] to answer any such application.

10. Having considered the material raised on the question of the fixed cost, the Court is of the view that, given the amount involved in these proceedings, being the substantive proceedings, to make an order, the effect of which would be to add to the cost of litigation, would not be consistent with the primary purpose of the Civil Procedure Act 2005 (NSW) in that it would not achieve the just, quick and cheap resolution of the issues between the parties.

11. I accept the material that has been submitted in relation to the costs and consider that the costs associated with the appeal, its preparation and hearing occasioned by the respondent are reasonable and appropriate. The amount prescribed in the ensuing orders will include the fixed costs; the judgment debt; interest; and court costs, being the filing fee for the statement of claim and motion, solicitors' fees and counsel fees.

12. In all of the circumstances, the Court varies the order originally made and makes the following orders:

1. Leave to appeal refused;

2. Appeal dismissed;

3. The [NAME] pay the [NAME] costs, being lump sum costs, and interest, which together with the judgment debt of $89,000 and interest of $33,531.96 shall be calculated at $138,532.96.

4. In addition to the foregoing, the [NAME] shall pay interest, pursuant to the terms of s 101 of the Civil Procedure Act 2005 (NSW), at the prescribed rate from the date of the initial judgment of this Court, being 13 July 2020.

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Endnotes 1. Hunter Area Health Service v Presland (2005) 63 NSWLR 22; [2005] NSWCA 33. 2. [NAME] by her next friend [NAME] v State of New South Wales [2008] NSWSC 1257.

3. English Standard Version Bible, 2001, Exodus 18:17-22. 4. [ADDRESS] 2007 (NSW), s 39. 5. [ADDRESS] 2007 (NSW), s 40(1).

6. Zelden v Sewell [2011] NSWCA 56, per [NAME] at [22].

7. Jaycar Pty Ltd v Lombardo [2011] NSWCA 284, citing Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69 (Kirby P). DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 February 2021