Legal Employment Consulting & Training Pty Ltd v Patterson & Anor [2010] NSWSC 130

New South Wales Supreme Court

CITATION : Legal Employment Consulting & Training Pty Ltd v Patterson & Anor [2010] NSWSC 130

HEARING DATE(S) : 22 February 2010

JUDGMENT DATE : 22 February 2010

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : Palmer J

EX TEMPORE JUDGMENT DATE : 22 February 2010

DECISION : Application dismissed.

CATCHWORDS : CORPORATIONS – STATUTORY DEMAND – Application to set aside Statutory Demand – whether there is a genuine dispute as to the amount of the debt.

LEGISLATION CITED : Corporations Act 2001 (Cth) – s 459G, s 459J(1)(b) Legal Profession Act 2004 (NSW) - s 385(2)

CATEGORY : Principal judgment

Legal Employment Consulting & Training Pty Ltd (formerly Insight Litigation & Legal Services Pty Ltd) (Plaintiff) PARTIES : Lisa Patterson (First Defendant) Joanne Patterson (Second Defendant)

FILE NUMBER(S) : SC 2009/00291441

COUNSEL : G. Viljoen (Sol) (Plaintiff) M.J.B. Lee, Ms J. McDonald (Defendants)

SOLICITORS : Dejure Commercial Lawyers (Plaintiff) William Roberts Lawyers (Defendants)

2009/00291441 Legal Employment Consulting & Training Pty Ltd v Patterson & Anor

JUDGMENT – Ex tempore

22 February, 2010

1 This is an application to set aside a Statutory Demand made under s 459G of the Corporations Act 2001 (Cth). The Statutory Demand is dated 20 October 2009. There is no issue as to the commencement of these proceedings within the time prescribed under s 459G(3). The affidavit in support of the Originating Process is that of Bradford William Gower filed on 26 November 2009. The Statutory Demand is founded upon a judgment entered against the Plaintiff, Legal Employment Consulting & Training Pty Ltd ("Legal Employment") (formerly Insight Litigation & Legal Services Pty Ltd), pursuant to a determination by a Costs Review Panel in relation to cost orders made by the Local Court of New South Wales at Sydney in proceedings 4916/2006. Legal Employment is an incorporated law practice. 2 The Local Court proceedings were purportedly commenced by a person, Ms Latuharhary, seeking damages for damage to her car in a motor vehicle accident. The car was insured with NRMA Insurance and the insurer took over the conduct of the proceedings. 3 On 25 August 2006, the defendants in the Local Court proceedings moved to have the proceedings dismissed on the ground that they had been commenced by Legal Employment's solicitors, without the authority of the plaintiff. The matter came on for hearing before a Magistrate on 22 and 23 August 2007. The Magistrate found that the proceedings had been commenced without proper authority and made orders that the proceedings be dismissed, and that Legal Employment pay the costs of the proceedings on the indemnity basis. 4 The Defendants then lodged an application for assessment of the costs. A Certificate of Determination of the costs was issued on 29 September 2008. The assessor determined that the costs to be paid by Legal Employment amounted to $52,700. Legal Employment applied to have that determination reviewed. 5 On 24 April 2009, the Costs Review Panel issued a Certificate of Determination revoking the prior Certificate and substituting as the costs to be paid an amount of $48,000. On 27 May 2009, that Certificate of Determination was filed at the Local Court of New South Wales for registration as a judgment. 6 On 17 June 2009, Legal Employment filed a Summons in the District Court of New South Wales seeking leave to appeal against that cost determination. The proceedings were heard by Williams DCJ on 2 October 2009. Legal Employment's Summons was dismissed upon the ground that the appeal fell within s 385(2) of the Legal Profession Act 2004 (NSW) and the proper avenue for appeal was not the District Court but the Local Court. His Honour made some observations about the grounds for appeal which are pertinent to this present application. 7 I bear in mind that I must be satisfied either that there is a genuine dispute as to the amount of the costs which is still open to Legal Employment to argue, or that the pendency of an application in the Local Court to review the cost determination in itself constitutes some other reason for setting aside the Statutory Demand in accordance with the provisions of s 459J(1)(b). I am satisfied of neither. 8 The grounds upon which the costs review is said to be challenged are stated as no more than conclusions in the Summons for leave to appeal filed in the District Court. They are not elaborated or particularised in any way in Mr Gower's affidavit of 26 November 2009. For example, one of the principal grounds for challenging the costs determination is stated to be that the solicitors for the defendant in the Local Court proceedings, that is William Roberts Lawyers, were in fact not properly retained by the Defendants in those proceedings, so that the Defendants do not properly owe any costs to the solicitors apparently acting for them and are therefore not entitled to a costs order against Legal Employment to recover costs payable to their solicitors. There is nothing in the evidence of Mr Gower to give any indication as to whether such a statement has any foundation in fact whatsoever. In fact, for what it is worth, I am informed by Mr Viljoen, who appears for Legal Employment, that all that Legal Employment intends to do is to issue some subpoenas in the Local Court proceedings – assuming that Legal Employment gets leave to commence the proceedings there – to ascertain whether the assertion as to lack of retainer on the part of the Defendant's solicitors is supportable – a classic "fishing expedition". Accordingly, it seems to me that no basis whatsoever has yet been demonstrated for asserting that there is a genuine dispute as to the costs debt upon the ground that the Defendants' solicitors were not properly retained. 9 The other main ground referred to in the grounds of appeal filed in the District Court for challenging the costs review was that the Defendants would be unjustly enriched if a costs order was made in their favour since they had the benefit of an insurance policy with NRMA, that NRMA had in fact paid their costs and that the Defendants would receive a windfall if a costs order were enforced against Legal Employment. 10 Williams DCJ dealt with that ground comprehensively in his judgment. Legal Employment's proposition is untenable in law by reason of the doctrine of equitable subrogation. I need not say anything further about it; it is covered in his Honour's judgment. 11 No arguable basis has been put forward in this application to support the claim that there is a genuine dispute in relation to the costs order which has been made and is which supported by a judgment. There is no basis for supposing that Legal Employment's application to the Local Court for leave to commence proceedings to review the costs order will have any prospect of success. Even if that application is successful, I have to be satisfied for the purposes of this application that there is an arguable basis upon which it could be successful. If I were so satisfied, that would be a ground under s 459J(1)(b) for setting aside the Statutory Demand rather than depriving Legal Employment of the opportunity to contest the costs order in the Local Court. However, as I said, no ground has been put forward which would lead me to conclude that there is an arguable basis for success in the Local Court proceedings. 12 For those reasons, it seems to me that the Originating Process must be dismissed. 13 The Plaintiff is to pay the Defendants' costs of the proceedings. – oOo –