Supreme Court New South Wales Medium Neutral Citation: Michael v Stewart t/as Stewart & Associates Solicitors and Barristers [2020] NSWSC 1361 Hearing dates: 30 September 2020 Date of orders: 30 September 2020 Decision date: 06 October 2020 Jurisdiction: Common Law Before: Walton J Decision: The Court made the following orders: (1) Order pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW) that the proceedings brought by the plaintiff against the defendant in the District Court of New South Wales, being proceeding number 2019/45423, be transferred to the Supreme Court of New South Wales. (2) The costs of the Summons, filed by the plaintiff on 29 July 2020 in these proceedings, be reserved. Catchwords: CIVIL PROCEDURE – transfer of proceedings from District Court to Supreme Court – orders Legislation Cited: Civil Procedure Act 2005 (NSW) Cases Cited: Australian Timber Supplies Pty Ltd v Agia [2014] NSWSC 1308 Sanderson Motors Pty Ltd v Kirby [2000] NSWSC 924 Category: Principal judgment Parties: Jason Michael (Plaintiff) Andrew Stewart trading as Stewart & Associates Solicitors and Barristers (Defendant) Representation: Counsel: M Condon SC (Plaintiff) E Cabban (Defendant) Solicitors: Evangelos Patakas & Associates (Plaintiff) K&L Gates (Defendant) File Number(s): 2020/00221712 reasons for decision 1. By summons filed on 29 July 2020, Jason Michael ("the plaintiff") seeks an order pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW) ("the Act") that proceedings 2019/45423 in the District Court be transferred to this Court. 2. At the hearing of the matter on 30 September 2020, the defendant, Andrew Stewart t/as Stewart & Associates Solicitors and Barristers, by his solicitor, did not oppose the application although sought to clarify various factual matters and was heard as to costs. 3. The Court made the following orders: 1. Order pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW) that the proceedings brought by the plaintiff against the defendant in the District Court of New South Wales, being proceeding number 2019/45423, be transferred to the Supreme Court of New South Wales. 2. The costs of the Summons, filed by the plaintiff on 29 July 2020 in these proceedings, be reserved. 1. These are the Court's reasons for decision. 2. The present application is supported by an affidavit sworn on 29 July 2020 by the plaintiff's solicitor, Mr Patakas. His evidence, in summary, is to the following effect: 1. The plaintiff claims that the defendant, Mr Stewart, acted as his solicitor to advise and prepare documents in respect of a loan in the sum of $100,000 to Mr Bert and Mrs Diane Mendelsohn on about 7 February 2013 ("the loan"), which was to be secured by a second mortgage over Mrs Mendelsohn's property at Double Bay ("the Double Bay Property"). 2. The defendant prepared, inter alia, a loan agreement dated 7 February 2013 ("the loan agreement"). 3. The Mendelsohns defaulted in repaying the Loan and all interest thereon, which as at 18 January 2019 totalled $179,197.50. 4. From late 2018, Mr Stewart acted as the plaintiff's solicitor for the purpose of bringing proceeding to recover the Loan ("the Mendelsohn Proceedings"). 5. On 18 January 2019, Mr Stewart commenced the Mendelsohn Proceeding by filing pleadings in the District Court against the estate of the late Mr Mendelsohn and against Mrs Mendelsohn. 6. On 7 February 2019, being exactly six years after the date of the Loan Agreement, the plaintiff, acting for himself, filed a claim against Mr Stewart, alleging professional negligence ("the Stewart Proceedings"). 7. Both parties in the Stewart Proceedings filed applications which were heard by Acting Judge Curtis on 5 July 2019. The Stewart Proceedings were stood over to the inactive list 8. The pleadings in the Mendelsohn Proceedings were amended to insert a claim that Mrs Mendelsohn had agreed to give a charge over the Double Bay Property; and because specific performance of that obligation could only be ordered by the Supreme Court, the Mendelsohn Proceedings were transferred to this Court. 1. Mrs Mendelsohn denied executing the Loan Agreement. She further denied granting a charge to the plaintiff to secure the Loan over the Double Bay Property, albeit without particularising the basis of that denial. Because of her principal defence, the plaintiff has sued the person who purported to witness her signature on the Loan Agreement, Mr Dezarnaulds. 2. In the Stewart Proceedings, the plaintiff makes a claim against Mr Stewart including as follows: If (contrary to the plaintiff's principal claims in the Mendelson Debt Recovery Proceeding) Mrs Mendelsohn succeeds in her defence of the Mendelssohn Amended SOC on the basis of the alleged forgery of her signature or in any dispute she may raise regarding the existence, operation or enforceability of the charge alleged by the plaintiff to arise by the terms of the Loan Agreement (which defence is, on the terms pleaded in the Mendelsohn Recovery Amended SOC denied) then in those circumstances the plaintiff claims that the Defendant solicitor has, breached the terms of the Mendelsohn Loan retainer and/or the Duty of Care and/or the Fiduciary Duty arising form that retainer. 1. Thus, the plaintiff alleged that (if Mrs Mendelsohn is correct in her denial of his claims against her) Mr Stewart failed to: 1. prepare security for the loan that was efficacious; and 2. take steps to ensure that Mrs Mendelsohn had in fact executed the loan agreement. 1. In relation to the Stewart Proceedings, the Judicial Registrar of the District Court has expressed concern to the effect that there is potential for this Court to determine issues in the Mendelsohn Proceeding which are also issues in the Stewart Proceeding, which might in turn lead to a potential embarrassment to the court system if common issues are sought to be re-litigated. 2. Mr Stewart's solicitors have sought to have the Stewart Proceeding dismissed for want of prosecution. The plaintiff has contended otherwise. As Mr Patakas summarises the matter in par 35(d) of this affidavit: Given that damages is the gist of the plaintiff's negligence claim against Mr Stewart in the Stewart Proceeding and that such claim is an alternative claim to the relief sought against Mrs Mendelsohn, the issue of whether the plaintiff has an enforceable charge is not the issue in the Stewart Proceeding but instead the issue is whether this Court finds in the Mendelsohn Proceeding that such a charge exists. 1. The present application seeks only a transfer pursuant to s 140. The relevant principles for present purposes are incorporated in two decisions of this Court: 1. In Australian Timber Supplies Pty Ltd v Agia [2014] NSWSC 1308, Robb J said (at [2]): [2] The court can make the order whenever it considers that removal of the proceedings is appropriate in the light of the particular circumstances of the proceedings and the matters in issue: McCormack v BP Australia Limited [2003] NSWSC 690. The fundamental consideration is whether there is "sufficient cause" for the transfer to be made and that permits a wide range of discretionary considerations. Those considerations may be impressionistic and evaluative: Sanderson Motors Pty Limited v Kirby [2000] NSWSC 924. 1. In Sanderson Motors Pty Ltd v Kirby [2000] NSWSC 924, Bryson J said of the section's predecessor (at [41]): [41] No limits or restrictions on the discretion are established by authority. When asked to exercise this power the Court should, in my opinion, appraise the facts and circumstances of the case before it and consider whether the applicant has shown something which, within the framework of the purposes for which the power exists, is a sound ground or a good reason why an order ought now to be made. The subject does not admit of more particular exposition. 1. The circumstances referred to in s 140(3) are not present in this case. There is no claim for damages for death or personal injury. Accordingly, the application is to be determined by reference to the discretion conferred by s 140(1). 2. It is not, and nor can it be, the vehicle for the determination of the question whether the Stewart Proceedings and the Mendelsohn Proceeding should be heard at the same time. Whether that so will be informed by the submissions of, inter alia, Ms Mendelsohn and Mr Dezarnaulds. They are not parties to this proceeding. 3. Nevertheless, as senior counsel for the plaintiff submitted, the Stewart Proceedings are derivative upon the facts which are pleaded in the Mendelsohn Proceedings and assume a particular outcome of these proceedings. If Ms Mendelsohn is correct in her defence no security was provided for the loan and, inter alia, she did not execute her signature on the loan agreement. 4. There is also a question as to whether the dispute is ripe for determination, given that in neither case is the evidence closed. The defendants in the Mendelsohn Proceeding have yet to serve their evidence. As importantly, the matters relied upon by Mrs Mendelsohn to deny the efficacy of the purported security have not been articulated (other than her claim that her signature was forged). Nonetheless, there is the potential for a common substratum of facts in the respective proceedings. 5. In these circumstances, I accept the submission by the plaintiff, it is appropriate this Court determine how the two cases should be managed. If the Court determines that they should be heard at the same time, then there is no issue that the Stewart Proceedings should be determined in this Court. In any event, the one Court ought to determine the matter with the benefit of submissions from all interested parties. This can only occur if the Stewart Proceedings are transferred pursuant to s 140. 6. Having regard to the submissions of the parties, it is appropriate that costs be reserved. ********** 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: 09 October 2020