District Court New South Wales Medium Neutral Citation: Weller v Fong BHNF Calvin Yao Ping Fong [2023] NSWDC 429 Hearing dates: 11 October 2023 Decision date: 11 October 2023 Jurisdiction: Civil Before: Newlinds SC DCJ Decision: (1) Order pursuant to r 36.15 of the Uniform Civil Procedure Rules 2005 (NSW) that the judgment entered 4 May 2021 in NSWDC 2021/123747 be set aside. (2) Order that Ms Fong pay Mr Weller's costs of and incidental to that notice of motion. (3) Discharge any stay that is currently in place in relation to the enforcement of the judgment dated 24 September 2021. Catchwords: CIVIL – application to set aside judgment obtained pursuant to certificate filed under s 70(3) of the Legal Profession Uniform Law Application Act 2014; irregularity Legislation Cited: Legal Profession Uniform Law Application Act 2014, pt 7, ss 70(3), 76, s 89, s 93C(3) Uniform Civil Procedure Rules, r 36.15 Cases Cited: Bingham v Bevan [2023] NSWCA 86 BP v BP Refinery (Westerport) v Shire of Hastings (1977) 180 CLR 266 at 285 Codelfa Constructions Pty Ltd v State Rail Authority v State Rail Authority of NSW (1982) 149 CLR 337 Category: Principal judgment Parties: Herbert Weller (plaintiff) Rosie Hong Jia Fong (through her tutor Calvin Yao Ping Fong) (defendant) Representation: Counsel: H Weller (plaintiff) M Sahade (defendant) Solicitors: Herbert Weller (plaintiff) Oliveri Lawyers (defendant) File Number(s): 2021/269122 Publication restriction: None JUDGMENT: EX TEMPORE 1. HIS HONOUR: This is an application brought by notice of motion filed 18 May 2023 by Ms Fong, who is the defendant in the proceedings. Ms Fong seeks orders pursuant to r 36.15 of the UCPR that two judgments entered by Herbert Weller, who is the plaintiff in the proceedings, obtained as a result of filing with this Court two certificates of determination by firstly a costs assessor and secondly the review panel established under pt 7 of the Legal Profession Uniform Law Application Act 2014 following a costs assessment review process. 2. Mr Weller is a solicitor and the costs the subject of the assessment were in relation to legal work he says that he performed for Ms Fong. 3. UCPR 36.15 is in the following terms. 36.15 General power to set aside judgment or order (cf DCR Part 13, rule 1, Part 31, rule 12A; LCR Part 11, rule 1, Part 26, rule 3) (1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith. (2) A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent. 1. Ms Fong relies on what the Court of Appeal said recently in Bingham v Bevan [2023] NSWCA 86, in particular relying upon what Basten AJA (with whom Meagher and White JJA agreed) said at para 69, as follows. The final version of this judgment will then set out para [69] of that judgment. "Three points may be made with respect to the current statutory scheme. First, as was held in Calandra with respect to the predecessors to the current provisions, that which was taken to be a judgment of the Court was "the amount of unpaid money", and not the "amounts specified in the certificate". The deemed judgment thus took into account any amount which had been paid in diminution of the costs assessed. Indeed, where the amount paid exceeded the costs specified in the certificate, the excess could be recovered as a debt: s 70(4). The form to be filed with the certificate required that the party filing the certificate swear an affidavit stating how much, if any, of the assessed costs had been paid. These provisions assume that there was a legal liability to pay the costs as determined by the costs assessor. Accordingly, consistently with Calandra, a judgment based upon a certificate may be set aside upon the judgment debtor demonstrating that the liability to pay costs no longer exists, or has not arisen. In such circumstances, it is appropriate to describe the judgment as having been entered "irregularly"." 1. The submission on behalf of Ms Fong in reliance on Bingham v Bevan is as follows: 1. Costs assessors and the Costs Review Panel do have the ability to determine what might be described as "contractual questions" as between a solicitor and a client, for example, whether there was actually a retainer between the solicitor and the client, or if there was, whether that retainer had come to an end during the period for which the costs are being claimed, or whether, as another example, what would otherwise be a solicitor's entitlement to be paid legal costs pursuant to an agreement had been lost because of a settlement agreement of the claim for costs between the solicitor and the client. This is because they are "anterior" or "incidental" to the assent of the costs. 2. Such decisions are not binding on the parties and are open to be relitigated before a court because of the provisions of s 93C(3) of the Legal Profession Uniform Law Application Act which is in the following terms: "For the purpose of determining an application for assessment or exercising any other function as a costs assessor, a costs assessor may determine any anterior or incidental question of fact or law, but not so as to establish an issue estoppel for that question for the purpose of any other proceedings." 1. The argument is that Bingham v Bevan is authority for the proposition that it is open to Ms Fong in this case to apply to set aside the judgment obtained by Mr Weller by the lodgement of the costs certificate pursuant to s 70(3) of the Uniform Law. 2. It is said that if it can be proved that underlying the costs assessment there is no entitlement of Mr Weller to any costs at all, then there is an "irregularity" which would then vest the Court with a discretionary power to set aside that judgment. 1. I am not at all sure that that is the real ratio of Bingham v Bevan. I say that because of the provision of s 73 of the Act which is in the following terms: "73. Costs determination to be final A costs determination is binding on all parties and no appeal or other assessment lies in respect of the determination, except as provided by this Part." 1. Within the Part of the Act, one finds div 6 under the heading "Appeals" and, in particular, s 89 which provides for appeals on matters of law and fact to either the District Court or the Supreme Court as the case may be. 2. I find it very difficult to square away the concept which emerges out of s 93C(3) to the effect that any determination of a costs assessor or costs review panel that is incidental to their function of assessing costs does not establish an issue estoppel for that question for the purpose of any other proceedings as compared to the clear statement in s 73 of the same Act, that a costs determination is binding on all parties and no appeal is available except as provided by s 89. 3. The submission that is made on behalf of Ms Fong is that the apparent tension between those provisions is explicable because it is only the determination as to the amount of costs that are fair and reasonable that is final and binding on the parties, and it is only that determination that is subject to the appeal provisions of s 89. Any other determination is incidental and can only be dealt with in circumstances where the certification by the costs assessor has become a judgment by recourse to r 36.15. 4. I am not seeking to cavil, or suggest that I am not going to follow what the Court of Appeal said in Bingham v Bevan, but it does seem to me, in circumstances where there is no reference in the judgment to s 73 or s 86, that perhaps that case turned on its own special facts, or perhaps the proper reading of s 93C(3) is that a determination of an "anterior or incidental question of fact or law" by a costs assessor or the review panel does create an issue estoppel on that question for the purpose of the costs assessment and the certificate and judgment that issues thereafter (this being consistent with s 73), but does not create an issue estoppel in relation to any other proceedings that might take place between the same parties. 5. For the purpose of this application, I do not propose to resolve that question. Rather, I propose to accept, over Mr Weller's submissions to the contrary, that the jurisdiction being invoked by Ms Fong via r 36.15 does give her any standing to seek to and provide the power to set aside the judgment, if she can make out a relevant "irregularity". 6. I will now deal with the substance of the application upon that assumption, to determine whether in fact there is any irregularity that can be identified and if there is, whether in all the circumstances I should exercise my discretion to set aside the judgment. 7. I should say at the outset that the reason there are two judgments is that one followed a determination and issue of a certificate by a costs assessor, and the second followed the review panel's determination and a second certificate which is for a slightly lower amount. It is accepted by Mr Weller in those circumstances that whatever else I do, I should make an order setting aside the judgment entered on 4 May 2021 because, to use a word that comes up later in this judgment, it was "superseded" by the later certificate and judgment entered on 24 September 2021. 8. To understand the case, it is necessary to understand a little bit of background. Mr Weller was retained to act for Ms Fong in relation to proceedings concerning a will. There was a written costs agreement entered into between his firm and Ms Fong on 27 February 2014. 9. Proceedings were then commenced and shortly thereafter, Mr Weller became concerned as to Ms Fong's capacity to instruct him and sought the advice of medical practitioners to determine whether she had the mental capacity to properly provide instructions. 10. A report was obtained from Patricia Jungfer on 24 September 2014 wherein she expressed the view that: "In my opinion, for the reasons given in the preceding sections of the report, Mrs Fong lacks capacity to instruct legal counsel." 11. Upon that basis, an application was made to the Supreme Court for the appointment of a tutor, a Mr Jia, was duly appointed by order of the Court, and on 19 November 2014, Mr Weller entered into a second costs agreement with Mr Jia in relation to the same proceedings. 12. The two costs agreements, the first being between Mr Weller and Ms Fong dated 27 February 2014 and the second being between Mr Weller and Mr Jia dated 19 November 2014, are relevantly in identical terms (the first starts at p 10 of the affidavit of Mr Oliveri sworn 18 May 2023 and the second being at p 29). 13. Thereafter, Mr Weller sought to enforce his costs against Ms Fong. There has been litigation in various arenas concerning the entitlement to those costs, which included proceedings number 2017/00043529 in this Court where Mr Weller sued Ms Fong for unpaid legal costs. She defended those proceedings on various bases, including that she did not have mental capacity to enter into the costs agreement relied upon and also brought a cross-claim for negligence. 14. Those proceedings were settled, the terms of settlement being as follows: "By consent, the plaintiff's statement of claim and the defendant's cross-claim be dismissed. 2. No order as to costs." 1. Thereafter, Mr Weller invoked the jurisdiction of a costs assessor pursuant to pt 7 of the Legal Profession Uniform Law Application Act 2014. There was a determination by a costs assessor, wherein Ms Fong took the point that she did not have mental capacity to enter into the costs agreement relied upon and therefore, there was no such costs agreement. There was then a review of that decision by the review panel. Again, Ms Fong took part in that proceeding but was unsuccessful. 2. It was as a consequence of the determination of the review panel that Mr Weller obtained the certificate which, upon filing with this Court, became the judgment of 24 September 2021. 3. Ms Fong puts three reasons why she says that the entry of that judgment was irregular in the way explained by the Court of Appeal in Bingham v Bevan. They are: 1. There was never any costs agreement or retainer at all between her and Mr Weller because at the time that she executed the costs agreement, she had no mental capacity to do so. 2. That the entry by Mr Weller into the second costs agreement with the tutor "superseded" and thus brought to an end the earlier costs agreement that he had executed with Ms Fong, and therefore it no longer has any force or effect; and 3. The settlement of the District Court proceedings to which I have referred, properly construed, involved releases going both ways between Mr Weller and Ms Fong, which means that if she was otherwise liable to pay any costs, the effect of that release is that she has been discharged from that liability. 1. Dealing with each argument in turn: Capacity 1. I have carefully reviewed the evidence relied upon by Ms Fong in support of the suggestion that as at 27 February 2014, her mental capacity was such that she was incapable of entering into any contract at all. I do not think the evidence gets close to proving that. 2. Firstly, all of the medical opinions relied upon significantly postdate the relevant date and the opinions are directed to a later point in time. 3. Secondly, as I have alluded to, Dr Jungfer's opinion of 24 September 2014 is no more than an opinion that as at that date, Ms Fong did not have the capacity to instruct legal counsel in the context of contested litigation. I think that is a very different concept to being incapable of entering into a binding contract. 4. Thirdly there is a further report relied upon of Dr Eddie So - also a consultant psychiatrist - dated 10 June 2023. Dr So's opinion, which speaks as at 10 June 2023, is that: "In my opinion, Ms Fong currently lacks the necessary mental capacity to attend court and to address her case… I am in accord with Dr Jungfer's 2014 findings and recommendations. In my opinion, Mrs Fong currently does not have the mental capacity to instruct legal counsel." 1. To my mind, this takes the matter no further than Dr Jungfer's opinion. 2. Mr Weller has put before me a series of file notes and the like between Ms Fong and members of Mr Weller's staff in March 2014 which, to my mind, make it tolerably clear that she had significant ability to conduct at least her financial affairs which, of course, is a different thing to being able to give instructions to run a contested court case. 3. Accordingly, I am not satisfied that the costs agreement of 27 February 2014 was entered into by Ms Fong at a time when she had no legal capacity. The effect of the later agreement 1. I accept that the law in relation to consecutive agreements between the same parties covering the same subject matter is that often, as a matter of inference, the effect of the second agreement is that the first agreement is, by inference or perhaps implication , found to have come to an end either by a consensual termination or otherwise. 2. The reasoning in all those cases, as far as I can recall, is that it follows, from an observation that the two contracts simply cannot operate sensibly together in the same universe at the same time, which means that it should be imputed to the parties, even if they did not say so, that their intention was to replace the earlier contract with the later one and thus the conclusion that the first contract has come to an end is not at all surprising. 3. By analogy, Ms Fong is seeking to rely on those type of cases. However, it seems to me a very fundamental distinction between those cases and this is that the parties are different. Mr Jia, whilst he was appointed tutor of Ms Fong by order of the Supreme Court, did not become Ms Fong, and the contract between Mr Weller and Mr Jia is a separate and distinct contract, albeit it covers the same topics and is in relation to the same litigation as the earlier contract. 4. Moreover, one thing is clear. By the time of the second contract with Mr Jia, it has been proved and I am satisfied that Ms Fong had no mental capacity herself to enter into contracts. Nor is there any evidence that she even knew of the 19 November 2014 agreement. 5. Accordingly, it is very difficult to understand how I could impute an intention to both Mr Weller and Ms Fong that they intended the February contract to come to an end. True it is that during the period that Mr Jia was tutor, it would not have been possible for all of the terms, either express or implied, in the February agreement to be performed, the most obvious being Mr Weller had no obligation to follow the instructions of Ms Fong in relation to the litigation after the appointment of Mr Jia as tutor, but it seems to me that that is a long way removed from a conclusion that I should impute to both Mr Weller and Ms Fong an intention to bring that contract to an end. 6. I also do not think Ms Fong gets there by the submission that was made to the effect that Mr Jia, upon his appointment as tutor, not only had the ability to enter into a costs agreement himself in relation to the litigation, but also had a power to bring to an end the earlier contract between Ms Fong and Mr Weller. I do not think bringing an end to that contract is so connected with the conduct of the litigation as to be something that Mr Jia was clothed with as a result of his appointment as tutor. 7. Accordingly, I am not satisfied that the entry into the second contract on 19 November 2014 with Mr Jia brought to an end the costs agreement of 27 February 2014 upon which Mr Weller relied before the costs assessor. The settlement 1. The final argument is based on the settlement of the District Court proceedings which took place in July 2019. The settlement occurred in circumstances where there was an exchange of text messages between Ms Fong herself and Mr Weller in July 2019, the conclusion of which was Ms Fong saying the following: "Hi Mr Weller. I accept that your offer made this morning is that you drop your statement of claim against me, I drop my cross-claim against you. Kind regards, Rosie Fong". To which Mr Weller replied: "Very good. I will send terms of settlement. Regards, Herbert Weller". 1. The terms of settlement that were sent were signed by the parties in the following terms: "By consent, the plaintiff's statement of claim and the defendant's cross-claim be discontinued." 1. Those terms were sent by email to a judge of this Court who, on reviewing them, indicated to the parties that the Court was not prepared to make orders in those terms but required the word "discontinued" to be deleted and the word "dismissed" used in its place. The parties amended the terms of settlement, each initialled it, and so the final orders of the Court were: "By consent, the plaintiff's statement of claim and the defendant's cross-claim be dismissed." 1. The simple point put on behalf of Ms Fong is that I should imply into the contract of settlement, evidenced by the exchange of text messages and the terms of settlement as amended, a mutual intention of the parties that included as a term of that settlement was a mutual release. Presumably, the submission relies on the type of implied terms discussed in cases like BP v BP Refinery (Westerport) v Shire of Hastings (1977) 180 CLR 266 at 285 and Codelfa Constructions Pty Ltd v State Rail Authority v State Rail Authority of NSW (1982) 149 CLR 337 at 374 wherein, as is well understood, terms can be implied if a series of reasonably strict criteria are satisfied, which include that the term is necessary to give business efficacy to the contract, the term is so obvious that it goes without saying, among others. 2. Dealing with those two aspects of the test. Firstly, the contract of settlement, to my mind, works perfectly well with or without a mutual release. The terms of settlement without a mutual release had the effect that the claims as they then stood were brought to an end. As a matter of law, a dismissal by consent does not bring about an estoppel of any type and it is open to any party to recommence. 3. Furthermore, I do not think the term is so obvious that it goes without saying. Indeed, I think that the absence of an express term in what might be described as the usual way to the effect that as well as the dismissal of the proceedings going both ways, each party promises to release the other absolutely from any claims arising from the circumstances of the proceedings very much points in the opposite direction to the implied term contended for. 4. Accordingly, I have concluded that the alleged term of settlement involving a release has been made out. 5. I have decided to dismiss the application because, on those findings, there is no basis for me to conclude that there was any irregularity in what Mr Weller did when he filed the costs certificate and the judgment of 24 September was entered. I say all that without having come to a concluded view as to whether Ms Fong has the ability to make this application, and whether the authority upon which she relies really means what she contends it means. 6. What that all means is that I will make the following orders in relation to the motion filed by Ms Fong on 18 May 2023: 1. Order pursuant to r 36.15 of the Uniform Civil Procedure Rules 2005 (NSW) that the judgment entered 4 May 2021 in NSWDC 2021/123747 be set aside. 2. Order that Ms Fong pay Mr Weller's costs of and incidental to that notice of motion. 3. Discharge any stay that is currently in place in relation to the enforcement of the judgment dated 24 September 2021. 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: 17 October 2023