HWOMA & ANOR v PAWLAK [2008] NSWSC 1324

New South Wales Supreme Court

CITATION : HWOMA & ANOR v PAWLAK [2008] NSWSC 1324

HEARING DATE(S) : Wednesday 10 December 2008

JUDGMENT DATE : 10 December 2008

JURISDICTION : Common Law

JUDGMENT OF : Hall J at 1

DECISION : Grant leave to appeal. Order that the costs orders made by the Magistrate on 6 August 2007 in the Local Court proceedings be set aside. Defendant to pay the second plaintiff's costs of this appeal.

LEGISLATION CITED : Legal Profession Act 2004 Local Courts Act 1982

CASES CITED : Lemoto v Able Technical Pty Limited (2005) 63 NSWLR 300

PARTIES : Somar HWOMA & ANOR v Krzyszpof PAWLAK

FILE NUMBER(S) : SC No 14493 of 2007

1P: No appearance COUNSEL : 2P: J Raime D: M Preece

1P: No appearance SOLICITORS : 2P: de Mestre & Company D: Wells Yates & Associates

LOWER COURT JURISDICTION : Local Court

LOWER COURT FILE NUMBER(S) : 5879/06

LOWER COURT JUDICIAL OFFICER : M Price

LOWER COURT DATE OF DECISION : 2 and 6 August 2007

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

HALL J

WEDNESDAY 10 DECEMBER 2008

No 14493 of 2007

SOMAR HWOMA & ANOR v KRZYSZPOF PAWLAK

JUDGMENT

1 HIS HONOUR: In these proceedings, the second plaintiff to the amended summons seeks leave to appeal, pursuant to s.74(1) and s.74(2)(c) of the Local Courts Act 1982, against an order made in Local Court proceedings No 5879 of 2006, namely, that he pay the costs of the proceedings on an indemnity basis. 2 The second plaintiff seeks an order that the costs orders made by the Magistrate, his Honour Magistrate Price, on 6 August 2007 in those Local Court proceedings be set aside. 3 The proceedings by way of appeal to this Court were initiated by summons filed on 31 August 2007 and, pursuant to leave granted by Kirby J on 23 June 2008, an amended summons was filed on 8 July 2008. In the amended summons, a number of asserted errors are relied upon as the appeal grounds. The court constituted by the Magistrate made the challenged costs order on the basis that the second plaintiff had failed to comply with his obligations under the Legal Profession Act 2004 and I will say more about the order made and the basis for it. 4 In order to understand the present proceedings and the relief claimed, I will briefly provide some context in terms of the proceedings that were originally brought in the Local Court by the second plaintiff's client. 5 The first plaintiff, Somar Hwoma, was the unsuccessful plaintiff in the Local Court proceedings. Ms Hwoma had brought a claim against the defendant, Mr Pawlak, seeking damages said to have arisen out of a motor vehicle accident concerning a vehicle driven by her and another vehicle driven by Mr Pawlak on 11 February 2005. 6 The second plaintiff's firm acted on behalf of the first plaintiff in those proceedings. It appears that the matter was handled in his firm from time to time by employed solicitors and, at the time of the hearing of the proceedings in the Local Court, by Mr Lum, solicitor. 7 The second plaintiff, Mr de Mestre, is a principal of the firm of solicitors, de Mestre & Co. He was on the record as the solicitor for the first plaintiff. 8 The accident is said to have occurred on 11 February 2005, in circumstances that suggest the driver of the other vehicle was at fault. The dispute between the parties to a large extent focussed upon the components of the claim and the quantum of the claim brought by Ms Hwoma against Mr Pawlak. 9 On 9 January 2006, Mr de Mestre's firm sent a letter of demand to Mr Pawlak claiming the sum of $36,767.50. The letter of demand prompted an exchange of correspondence between the solicitors who then acted for the parties, in particular, Mr de Mestre's firm, and the legal representatives for the defendant. The plaintiff's claim was put on the basis that she was the owner of the vehicle in question that was damaged in the accident. Miss Hwoma claimed that she had purchased the vehicle that she was driving for the amount of $22,000 from a friend a few years earlier. She had sought damages in respect of the car that she was claiming on the basis that it had sustained significant damage rendering it, in effect, a write-off and resulting in expenses for towing and storage of the vehicle. 10 The solicitors for the defendant made requests for further and better particulars. 11 In the course of correspondence, the solicitors for the defendant alerted Mr de Mestre's firm to some matters that I will refer to as factual irregularities in Ms Hwoma's claim. 12 On 20 June 2006, Ms Hwoma commenced proceedings by way of statement of claim in the Local Court against Mr Pawlak and Rick Damelian Pty Limited who is apparently said to be the employer of Mr Pawlak. The amount claimed totalled $35,115.62 of which $22,000 in damages was said to be for the cost of the car and $8,616.30 for towing fees. Mr de Mestre's signature appears on the statement of claim certifying, pursuant to s.347 of the Legal Profession Act, his belief as to the reasonable prospects of success in the matter. 13 The terms of the certificate dated 19 June 2006 were- "I certify that there are reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law that the claim for damages in these proceedings has reasonable prospects of success." 14 It would appear from some of the correspondence that from November 2006 onward Mr Pawlak had concerns about the claim and that there was reference in the correspondence to him instructing his solicitors to refer the claim to the New South Wales Police for investigation. There was correspondence between the police and the defendant's solicitors indicating the interest of the people investigating the matter should any witnesses commit perjury during the forthcoming hearing. 15 On this appeal, the plaintiff relied upon the evidence being the affidavit of Bruce Lum sworn on 8 October 2008. The defendant relied upon the affidavit of Margaret Wells, solicitor, sworn on 23 October 2008. 16 Miss Wells' affidavit contains a detailed chronology and history of the matter and annexed to her affidavit are the statement of claim and correspondence. Exhibited to the affidavit is a substantial body of material being exhibits to that affidavit numbered MGW 1 to MGW 38. 17 On the hearing of this appeal, the second plaintiff was represented by Mr J Raime of counsel and the defendant was represented by Mr M Preece of counsel. I am indebted to both counsel for their very helpful written submissions that identified the relevant facts for the purpose of this appeal and the issues and points of law that are germane to it. I have also had the benefit of oral submissions from both counsel. 18 I will say something about the history of the proceedings on the property damage claim and to the proceedings concerning the order made against the second plaintiff. 19 In support of Ms Hwoma's case that the vehicle was owned by her at the time of the accident, she called evidence from a Mr Archi. The plaintiff relied upon a document said to have been signed by Mr Archi in which he purported to certify that the Toyota vehicle, XPM 225, had been sold by him to her for $22,000 on 24 January 2005. It bore a signature and it became an issue in the proceedings as to whether he had written that document or not. Attention was also given to the document written by the plaintiff which, like the certificate referred to by Mr Archi, formed part of Exhibit MGW 2 of Miss Wells's affidavit. In that document addressed to "To whom it may concern", she, in her own handwriting, set out a request amongst other things for her compensation injury claim to be, as it were, held in suspension. 20 The significance of that letter became obvious in the hearing in that the handwriting on it was said to be similar to the handwriting on the purported certificate attributed to Mr Archi. In due course, the plaintiff, Ms Hwoma, was cross-examined upon the basis that the certificate of ownership was a fraudulent document and that she had sought to claim ownership of the vehicle fraudulently in support of her claim. 21 A number of other issues arose in the course of the hearing about components of the claim said to have been inflated or otherwise fraudulent in various aspects. 22 The hearing was conducted before the Magistrate on 24 July. On that date a submission was made on behalf of the defendant that, in effect, there was no case to answer. At page 40 of the transcript of 24 July 2007, the learned magistrate gave his reasons and his Honour stated that he was not satisfied that the plaintiff had discharged her evidentiary onus and, accordingly, gave a verdict in favour of the defendant. His Honour indicated that he would give further reasons because of concern about the evidence that had been given in the first plaintiff's case. He gave those reasons on 2 August 2007. Again the transcript is an exhibit to Ms Wells' affidavit, MGW 30, and at pages 10 to 13 of the transcript his Honour set out what he describes as "fuller reasons". 23 In the course of those reasons, his Honour gave considerable attention to the issue of ownership and the circumstances in which the plaintiff was said to have begged Mr Archi to provide the document about purchase, or to confirm purchase of the vehicle, and that he freely acknowledged the handwriting on the document was not his. To quote the magistrate "as was becoming glaringly obvious when he was asked to write the same document in the witness box and make a direct comparison". 24 His Honour then concluded his reasons by saying, based upon the evidence and other material and on demeanour, "the court was very comfortable in determining the plaintiff had no standing to bring the proceedings as owner of the vehicle and as an owner who could substantiate any loss". 25 The proceedings were then listed on 6 August 2007. 26 I should however observe that on 24 July 2007 Mr Preece of counsel said:- "… The reason I foreshadow that is that there would be an application for costs on an indemnity basis and an application for those costs to be met by the plaintiff's solicitor for reasons that I will fully set out on the next occasion." 27 The transcript then refers to discussion as to a suitable date. 28 On 2 August 2007, Mr Lum appeared for the plaintiff and Mr Preece of counsel appeared for the defendant. Submissions were made at some length by Mr Preece in support of the application. Page 4 of the transcript of that day sets out the submissions made on the basis of the two documents that I have earlier referred to supporting what was referred to as an overwhelming suspicion that they were penned by one and the same person. Submissions were made about the question of ownership and the question of fraud, including the matters concerning quantum that I earlier referred to. 29 Mr Lum is recorded as commencing submissions at page 7. The submissions appear to be fairly brief. He, in effect, opposed the making of the order. It is accepted that Mr de Mestre was not present on that occasion. There had been no affidavit evidence filed by Mr de Mestre in respect of the application being made against him. 30 At page 10 it is noted that the proceedings were adjourned for judgment to Monday 6 August 2007 at 9.30 am. On that date, his Honour delivered reasons. They are comprised within two pages of transcript of that date. His Honour referred to the provisions of s.345 and s.347 of the Legal Profession Act and that specifically his Honour said "… the applicant or the defendant relies upon an exchange of correspondence, specifically..." and his Honour then refers to a number of letters by date and then continues a little later, "...more tellingly on 12 June 2006 a letter or a document headed 'without prejudice', that communication disclosing what I might describe as some disquiet at the integrity of the vehicle and/or its history...". 31 I note that the reference to 12 June appears to be an error. Apparently his Honour was referring to the letter of 13 June 2006 to which I have earlier referred. His Honour refers briefly to submissions made and essentially his reasoning for the orders made are in the two paragraphs on page 2 commencing at line 20. 32 His Honour again in the second last paragraph refers to material relied upon by the defendant as applicant. The fundamental reason for the order appears in the last paragraph where his Honour said:- "This is certainly a case where the court would take the view that a reasonable practitioner, having been put on notice prior to the filing of a statement of claim of all of those matters set out in the defendant's letter of 12 [sic] June 2006, should have been on notice that there were a number of matters requiring further investigation and/or clarification with their client. Against that background, the court is prepared to make an order for costs. Those costs will be on an indemnity basis. That indemnity basis will be payable by the solicitor on the record. They shall commence from the day that the statement of claim was filed which is 19 June 2006."