Supreme Court New South Wales Medium Neutral Citation: Weller v Williams [2011] NSWSC 910 Hearing dates: 18 August 2011 Decision date: 09 December 2011 Jurisdiction: Common Law Before: Davies J Decision: 1. The Summons is dismissed. 2. The Plaintiff is to pay the Defendant's costs Catchwords: APPEAL - from Local Court - leave to appeal - what must be shown - interlocutory orders concerning pleadings - Anshun estoppel - inconsistent judgments - relief inconsistent with earlier judgment - duty to give reasons - barristers - to whom duty is owed. Legislation Cited: Fair Trading Act 1987 Limitation Act 1969 Local Court Act 2007 Trade Practices Act 1974 Uniform Civil Procedure Rules Cases Cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; Ashi Pty Ltd v Karasco Investments Pty Ltd [2009] NSWSC 780; Bracks v Smyth-Kirk [2009] NSWCA 401 Chapmans Ltd v Yandell [1999] NSWCA 361; Cosmos E-C Commerce Pty Ltd v Sue Bidwell & Associates Pty Ltd [2004] NSWCA 261; Moy v Pettman Smith (a Firm) [2002] EWCA Civ 875 O'Doherty v Birrell [2001] 3 VR 147 Port of Melbourne Authority v Anshun (1981) 147 CLR 589; Re Luck [2003] HCA 70; (2003) 78 ALJR 177 Tanning Research Laboratories Inc v O'Brien [1990] HCA 8; (1990) 169 CLR 332; Weller v Phipps [2010] NSWCA 323 Wilson v Carter [2005] NSWSC 1351 Category: Principal judgment Parties: Herbert Hugo Weller (Plaintiff) Dominic John Williams (Defendant) Representation: B Oliak (Plaintiff) C Purdy (Defendant) H Weller (Plaintiff) Moray & Agnew (Defendant) File Number(s): 2011/6130 Decision under appeal Jurisdiction: 9109 Date of Decision: 2010-12-09 00:00:00 Before: Magistrate Price Judgment 1The Plaintiff is a Solicitor who is being sued by a Barrister for fees said to be owing to the Barrister. The proceedings are in the Local Court. 2The Barrister brought a Notice of Motion dated 4 November 2010 to strike out the Defence and a Cross-Claim that the Solicitor had brought. The Solicitor brought a Notice of Motion dated 3 December 2010 seeking leave to file an Amended Defence in those proceedings. 3On 9 December 2010 the Magistrate found both Motions in favour of the Barrister. The Solicitor now seeks leave to appeal to this Court against the Magistrate's determination. Background 4The Barrister filed a Statement of Claim on 12 July 2010 in the Local Court seeking $18,795 in professional fees from the Solicitor based on tax invoices forwarded in the following matters: (a) Susan Raymond (19 June 2006 - $7,000.00) (b) Fyfe ats Kessie (15 May 2006 - $2,300.00) (c) Chapman ats Taylor (25 November 2004 - $1,595.00) (d) Phipps ats Knott (12 July 2004 - $7900.00) 5The last of those matters, the Phipps matter, assumes the greatest significance, in these proceedings. 6On 30 July 2010 the Solicitor filed a Defence which said this: 1. The Defendant denies that he owes moneys to Plaintiff as alleged in paragraph 1 of the Statement of Claim or at all. 2. The Defendant pleads the terms of the Cross-Claim as a set-off and complete defence to the claim brought by the Plaintiff. 7The Cross-Claim pleaded an action in negligence and breach of retainer by the Barrister in relation to the Phipps matter. Before coming to the terms of the Cross-Claim it is necessary to set out some background concerning the Phipps matter. That is most conveniently summarised in the Court of Appeal's judgment in Weller v Phipps [2010] NSWCA 323 as follows: [5] From about 1983, Mr Phipps had lived in his grandmother's house at Richmond; and prior to her death on 20 February 2000 at the age of 100, he had been caring for her for a number of years. [6] Apart from money on deposit in a bank, the house at Richmond was the only significant asset in the grandmother's estate. The grandmother's will gave her whole estate to her two daughters; one being Mr Phipps' mother, and it appointed them her executors. However, after the grandmother's death Mr Phipps continued to reside in the house; and on 8 September 2000, he commenced proceedings under the Family Provision Act 1982 (since repealed) against the executors. [7] Mr Weller represented Mr Phipps in those proceedings. In his affidavit sworn on 3 April 2002 and used in those proceedings, Mr Phipps deposed to a conversation with his grandmother in 1993 to the effect that she was going to give her house to him. [8] The Family Provision Act proceedings were heard on 24 February 2003, and on 30 May 2003, Master McLaughlin gave his decision in them. He determined that the estate consisted of one substantial asset, being the house, which was valued at $800,000.00 in December 2002. He noted that, by reason of the costs of the proceedings, the house would have to be sold. He ordered that there be a legacy of $150,000.00 to Mr Phipps from the estate, and that his costs be paid out of the estate. [9] On 6 June 2003, the executors' Solicitors wrote to Mr Weller requesting that Mr Phipps vacate the property by 20 June 2003, pointing out that the property had to be sold. [10] On 20 June 2003 there was a conference between Mr Phipps and Mr Weller. Mr Phipps said that he wanted to bring a claim in quantum meruit and/or express or implied agreement, claiming an interest in the house; and he was requested to make a detailed statement concerning the express agreement. The possibility of appeal from the Family Provision Act decision was discussed. [11] On 23 June 2003, a six-page letter from Mr Phipps to Mr Weller noted that an appeal in the Family Provision Act proceedings had no prospects, and gave details of Mr Phipps' dealings with the grandmother. A further such letter, now seven pages, giving expanded details, was sent on 21 July 2003. [12] On 22 July 2003, there was a telephone conversation between Mr Phipps and Mr Weller. Mr Phipps referred to a letter passing between Solicitors acting for the individual executors concerning obtaining possession from him, and he said he was drafting his statement. [13] On 30 July 2003, there was a conference between Mr Phipps and Mr Weller in which Mr Phipps brought his statement as prepared that far; and a fee disclosure letter was produced from Mr Weller to Mr Phipps. Mr Weller estimated his fees up to and including the first hearing date of new proceedings at $25,240.00. [14] On 29 August 2003, there was a letter from the executors' Solicitors to Mr Weller advising that they were about to brief counsel regarding a proposed application for possession of the house, and advising that this would result in further costs which they would seek against Mr Phipps. On 2 September 2003, Mr Weller sent Mr Phipps a copy of this letter, and asked for instructions as to whether he wished to commence proceedings claiming an interest in the property. On the same day there was also a conference between Mr Weller and Mr Phipps. [15] Between 12 and 16 September 2003, Mr Weller was working on drafting an affidavit for Mr Phipps. [16] On 3 October 2003, a statement of claim seeking possession was issued by the executors. In phone conversations on 16 and 17 October, Mr Phipps advised Mr Weller that he had received this statement of claim. [17] On 17 October 2003 Mr Weller had a conference with a Barrister Dominic Williams. He gave Mr Williams a copy of Mr Phipps' draft statement, but not of Master McLaughlin's judgment. [18] On 21 October 2003, Mr Williams provided a memorandum of advice, which included the following: 1. I have read the Statement of Claim and Statement by Mr. Mark Phipps. Mr. Phipps has a possible defence based on the doctrine of promissory estoppel. More detailed instructions will be needed in this respect as the two elements to succeed in a defence based on promissory estoppel is firstly that there must be an unequivocal promise and secondly the person must have relied on such promise and acted to his detriment so as to put himself at a disadvantage as a result of the representation. 2. Based on the Statement by Mr. Phipps there has been a promise made by the late Mrs. Edith Knott on at least three or four occasions that because Mr. Phipps was caring for her she would change her Will to leave him the house. It is not entirely clear to me that Mr. Phipps as a result of such promise altered his behaviour or continued to care for her thus acting to his detriment in reliance on the promise as he had already commenced caring for her in any event. ... 4. As Mr. Phipps did take proceedings under the Family Provisions [sic] Act and was awarded the sum of $150,000.00 it would be relevant in considering the remedies to which he may be entitled to consider the decision in those proceedings. Would you please let me have a copy of the Judgment of the Court as soon as possible. My instructions are that he received $150,000.00 after a hearing in which the Richmond house was valued at $800,000.00. You might also advise what were the assets of the Estate. ... 6. A Notice of Appearance must be filed within fourteen (14) days after service. A Defence should be filed within twenty-eight (28) days. Under Part 15.15 in proceedings for possession of land a Defendant must specifically plead every ground of Defence on which he relies and not simply state that he is in possession of the land. Equitable estoppel must be specifically pleaded: Laws Holdings Pty. Limited v. Short [1972] 46 ALJR 563 at 571. Generally in recent authorities a person will be only estopped if there is some unconscionable component, i.e. the person will be only estopped if it would be unconscionable to depart from the assumption relied upon by him. This now seems to be the touchstone for all relevant forms of estoppel: Commonwealth of Australia v. Verwayen [1990] 170 CLR 394 at page 409 ff, 431 ff, 453-500. 7. Would you please take instructions from your client on exactly in what manner he says he altered his position or for that matter continued to act in a way which was detrimental or a disadvantage to himself as a result of representations by his grandmother. You should let me have that Statement for my Brief as soon as possible. I will then draft the necessary Defence. [19] On 24 October 2003 Mr Weller sent Mr Williams a copy of Master McLaughlin's judgment, a list of the assets of the estate and an additional statement from Mr Phipps; and on 28 October 2003, Mr Weller filed an appearance in the possession proceedings. [20] On 6 November 2003 there was a further memorandum of advice from Mr Williams given to Mr Weller. That advice included the following: 1. Further to my Advice dated 21 October 2003 I have given further consideration to the matter in the light of the Judgment. 2. What concerns me is that the Mr. Phipps has made an Application under the Family Provisions Act which is one cause of action when he also had a second cause of action for either promissory estoppel and/or straight out contract whereby he was promised the home in return for his services as a carer for his grandmother. 3. The Plaintiffs in the present action in the possession list will no doubt say that Mr. Phipps has made an election to pursue one cause of action and thereby abandoned his possible cause of action based on promissory estoppel and/or contract. The Court in those circumstances may hold that he has waived his rights. 4. The other problem for Mr. Phipps is a credit issue. Why didn't he raise this previously in his Statements when pursuing a claim under the Family Provisions Act. I endeavoured to contact you yesterday to request that the Statements made by him in those proceedings be sent to me. 5. Mr. Phipps is in a serious predicament as he ought to have raised these matters in the proceedings under the Family Provisions Act . To raise these matters at this stage brings the risk that he will not be believed with the consequent very real risk that he would lose his Defence and Cross Claim in the Possession proceedings at great expense to himself. 6. On the other hand if he did raise these promises and on legal advice chose to proceed under the Family Provision Act , the Court will treat such election as a waiver of his rights. The Court is unlikely to allow him to now have "a second bite of the cherry" by claiming the home. In that regard I draw your attention to paragraph 6 of the Judgment by Master McLaughlin in the Family Provision Act proceedings where he stated:- It is inevitable that the Windsor Street property must be sold, if only to meet the costs of the proceedings." 7. Obviously Mr. Phipps will not be able to be paid his $150,000.00 plus costs awarded in these earlier proceedings if the house is not sold. 8. In my view it was encumbent [sic incumbent] upon him to raise his contractual and/or promissory estoppel claims in these earlier proceedings. If he did raise the subject with his legal advisers I can only assume that he instructed them to not raise those matters in the Family Provision Act claim, thereby in my opinion waiving his rights to pursue such claims as a Defence to the present claim for possession. 9. In accordance with my instructions I have drafted the following documentation:- (i) Defence; (ii) Cross-Claim. 10. Both the Defence and Cross-Claim are arguable. However, in the light of my above Advice I believe that Mr. Phipps would have great difficulty in convincing a Court that he can now proceed on a claim based on promissory estoppel and/or contract given that he has elected to proceed under the provisions of the Family Provision Act . 11. I would be happy for Mr. Phipps to get a second opinion should he choose to proceed with the Defence and Cross-Claim. I note that Mr. Julian Trebeck represented him in the earlier proceedings and I would suggest that it may be appropriate to refer my opinion to him. If he agrees with my views I suggest that Mr. Phipps negotiate a Time Table to vacate the property and co-operate in the sale of the home rather than defending the proceedings at the risk of losing a substantial portion of the compensation he has gained in the earlier proceedings. [21] There were in evidence notes made by Mr Weller evidencing phone conversations with Mr Williams on 7 November 2003, and with Mr Phipps on 7, 8 and 10 November 2003. [22] On 10 November 2003, there was a conference between Mr Weller and Mr Phipps dealing with the defence and cross-claim in the possession proceedings and an application to postpone fees to the Supreme Court; and it was noted that Mr Phipps "will now ask the witnesses to write out their draft statements". [23] A defence to the possession proceedings was filed on 11 November 2003. The cross-claim was not then accepted for filing because there was no affidavit verifying; but it was ultimately filed on 19 December 2003. [24] On 5 December 2003, the executors filed a notice of motion seeking to strike out the defence and cross-claim, and seeking judgment for possession of the house. [25] On 19 December 2003, the Registrar fixed a timetable for dealing with the notice of motion, ordering inter alia that affidavits on behalf of Mr Phipps be filed and served by 15 January 2004. [26] On 6 January 2004 there was a conference between Mr Williams and Mr Phipps. Mr Williams sent Mr Weller a memorandum of advice concerning the conference, which did not deal with the problems raised in his advice of 6 November 2003, but did recommend the obtaining of an opinion from senior counsel. [27] On 27 January 2004, Mr Weller wrote to Mr Phipps concerning a possible statement from Mr Phipps' mother. [28] On 28 January 2004, the executors' Solicitors wrote a letter to Mr Weller pointing out that Mr Phipps was in breach of the orders of 19 December 2003 in that no affidavit had been served by 15 January 2004. [29] On 6 February 2004 there was a conference between Mr Weller and Mr Phipps concerning evidence. [30] On 13 February 2004 a brief was sent to Mr Hallen SC to advise. [31] On 23 February 2004, there was a conference between Mr Hallen SC and Mr Williams and Mr Phipps, at which Mr Weller did not attend. Mr Hallen advised that the proceedings were doomed to fail. This was confirmed by a written memorandum dated 26 February 2004, referring to Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589, and also to issue estoppel arising from the determination in the Family Provision Act proceedings that the house was part of the estate. The advice recommended that efforts be made to settle the case, if possible, on the basis that the defence and cross-claim be dismissed, Mr Phipps vacate the property by 30 April 2004 (or some other negotiated date), and that each party pay its own costs. [32] On 1 March 2004 Mr Williams wrote to Mr Weller advising that Mr Phipps accepted the advice and would give instructions to settle along the lines outlined. [33] On 2 March 2004 Mr Weller sent Mr Phipps a copy of the joint advice and asked Mr Phipps to contact him. [34] On 4 March 2004, Mr Phipps wrote to Mr Weller seeking consideration of whether there could be some other cause of action, and of the possibility of briefing other counsel to advise. [35] At a meeting between Mr Phipps and Mr Weller on 11 March 2004, Mr Weller asked Mr Phipps to draft an amended defence giving effect to matters raised by Mr Phipps. On the same day, Mr Phipps sent a letter to Mr Weller saying he was willing to accept the proposed short minutes of order (prepared with a view to giving effect to the proposed settlement terms), and on 16 March 2004 he faxed his draft amended defence to Mr Williams. [36] On 17 March 2004, Mr Williams wrote to Mr Weller advising that if Mr Phipps insisted on filing the amended draft defence he would have no option but to return the brief, and recommended settlement on the terms of the short minutes of order. [37] On 25 March 2004, the executors' Solicitors wrote indicating that the offer to settle on the terms of the short minutes of order was rejected, but offering to settle on the basis that Mr Phipps pay the costs of the proceedings, that the executors make Mr Phipps an ex gratia payment of $5,000.00, and that Mr Phipps leave on the property items of furniture and effects listed in schedule provided. [38] That offer was not accepted by Mr Phipps. There were further attempts to settle. Ultimately, Mr Phipps vacated the property on 26 July 2004. He became liable to pay the costs of the executors of the proceedings. 8Mr Phipps ultimately sued the Solicitor alleging negligence and breach of his retainer for the amounts that Mr Phipps was required to pay when the proceedings against him were finalised. The matter was heard by Charteris DCJ who found a verdict in favour of Mr Phipps for $40,489 plus costs. An appeal to the Court of Appeal by the Solicitor was dismissed. 9The Cross-Claim relevantly pleaded the case against the Barrister in these terms: 2. Mark Phipps instructed the Defendant to act on his behalf in relation to a claim for ownership and or possession of a property at Richmond owned by his deceased grandmother. 3. The executors of the estate of the late grandmother demanded that Mark Phipps vacate the property. 4. In the course of acting for Mr Mark Phipps the Defendant sought the advice of the Plaintiff in respect of a possible claim against the executors for the ownership and or possession of the said property 5. The executors commenced proceedings for possession of the property. 6. The Plaintiff advised the Defendant and Mark Phipps that he could bring a claim for the ownership of the property and that he could defend the proceedings for possession of the property brought by the executors. 7. The Plaintiff drew the Defence and Cross Claim and the same were filed in the Supreme Court on or about the 19th December 2003. 8. It was a term of the retainer or contract between the Plaintiff and the Defendant that the Plaintiff would use all reasonable care, skill, diligence and competence as a Barrister. 9. The Plaintiff owed the Defendant a duty to exercise all reasonable skill, care and diligence in the provision of his advice to the Defendant and Mark Phipps. 10. The Plaintiff was guilty of various breaches of the retainer and duty: PARTICULARS: Failing to advise the Plaintiff and or his client Mark Phipps that the latter: a) was precluded from claiming the property as his own pursuant to the principles in Port of Melbourne Authority v Anschun (1981) 147 CLR 589, b) had no prospects of success as a matter of law in filing and proceeding with the Defence and Cross Claim, c) would have great difficulty in convincing a court that he could proceed on a claim based on promissory estoppel and or contract given that he had elected to proceed under the provisions of the The (sic) Family Provisions Act. 11. As a consequence of the failure by the Plaintiff to provide to use all reasonable care, skill, diligence and competence the Plaintiff has suffered loss and damage. PARTICULARS The Plaintiff has expended moneys in the payment of Counsels fees, experts reports, Court filing fees and is liable to Mark Phipps for damages, costs and interest (the amount of the costs and interest have not yet been assessed). 10In his Defence to the Cross-Claim the Barrister pleaded the advices that he had provided to the Solicitor, alleged that the cross-claim was barred by virtue of the Limitation Act 1969, pleaded an estoppel by virtue of the factual findings of Judge Charteris, and pleaded an Anshun estoppel in that the Solicitor did not join the Barrister as a Cross-Defendant in the Phipps proceedings. 11On 3 December 2010 the Solicitor filed his Motion to amend the Defence. The proposed Amended Defence pleaded 2 agreements. The first agreement was said to have been in December 2002 whereby the Barrister would be paid his fees upon receipt of funds into the Solicitor's trust account and upon instructions of the client. The practical effect of that was that the Solicitor was saying that the Barrister agreed he would not be paid his fees if the Solicitor was not paid by the client. 12The second agreement was said to have been made between 12-15 August 2008. The agreement was said to be that the Barrister promised that on receipt of $70,000 he would not make a further demand for fees unless they were paid into the Solicitor's trust account. The proposed Defence also alleged that the promise by the Barrister in that regard was a representation as to future matters, that the Solicitor paid the Barrister the $70,000, and that (presumably) by making the demands for the further fees, the Barrister contravened s 52 Trade Practices Act 1974 and/or s 42 Fair Trading Act 1987 as well as other provisions of those Acts. 13The Barrister's Notice of Motion was filed on about 4 November 2010. It asked that the Cross-Claim be struck out pursuant to Rule 14.28 UCPR on the grounds: (a) that the Cross-Claim was statute barred; (b) that there was an Anshun estoppel that precluded its being brought; (c) that it had no prospects of success because of factual findings by Judge Charteris; and (d) by reason of those matters it was an abuse of process. 14The 2 Motions were heard and decided by Magistrate Price on 9 December 2010. The Magistrate's Reasons 15The Magistrate gave an ex tempore judgment at the conclusion of the hearing of the Notices of Motion. In the course of that judgment he dealt with objections to evidence and an issue over a Notice to Produce. Omitting those matters he said: This particular statement of claim relates to a statement of claim by a barrister for what might be described as professional fees, which, inclusive of various costs and interest, amount in round figures to approximately $22,000. The present motion before the Court is filed by the plaintiff. It is specifically a notice of motion that the defence filed in this matter does not disclose a defence but rather simply raises a cross-claim. The proceedings in a matter of Phipps were determined in the District Court on 26 June 2009. In that matter the present defendant, Mr Weller, was the defendant and his former client, Mr Phipps, the plaintiff, and a determination in that matter was made in favour of the applicant, Mr Phipps, against the present defendant in this matter, Mr Weller. A visiting of the transcript of those proceedings would indicate that a finding adverse to Mr Weller's professionalism was made. By way of an aside, it is accepted that the substantive matter, which I will call the Phipps matter, did not succeed. More recently the Court of Appeal has revisited the District Court decision of 2009, as recently as last week, or specifically on 30 November 2010. Mr Weller informs this Court that he proposes to seek the leave of the High Court of Australia to reconsider or revisit the Court of Appeal's decision. Mr Weller additionally informs this Court that he proposes to transfer the present action from the Local Court to another jurisdiction that enjoys a significantly higher monetary jurisdiction. Returning to the substantive motion, the plaintiff submits essentially that the defence raises no defence and that there is no merit in the cross-claim, inter alia, that it is bad in law and raising issues of estoppel. The defendant has filed a notice of motion last week and seeks the leave of this Court to file an amended notice of grounds of defence to the present action. ... Insofar as the application for leave to file the amended defence is concerned, the respondent or the plaintiff's submissions, the issues are, "years after the event". It is also submitted that these proceedings have been afoot now for something like five months and this is the first time that these issues are raised. It is also indicated that, "not a word about these has been mentioned in the defence originally filed". The defendant submits on his notice of motion - that is the one relating to the amended defence that: (1) It pleads an agreement specifically with counsel, or the plaintiff in the present matter; (2) It pleads breach of that or those agreements; (3) Raises issues of law; (4) Raises triable issues, specifically in instances where an insurer has been put on notice so far as a potential claim is concerned. This Court reads with concern the submissions of the plaintiff, specifically part of a submission appearing at about pt 9 on p 6 of counsel's written submission, the paragraph commencing, "Inescapably one would think," et cetera, et cetera. Additionally the Court reads with concern para 38 insofar as it touches upon a reference to a payment of $70,000, so far as it may or may not have any application to what has been described variously as the Phipps litigation. Insofar as the two matters before the Court are concerned, they are specifically the plaintiff's notice of motion and secondly the defendant's notice of motion for leave to file his amended grounds of defence. This Court accepts, indeed, with some force, the written submissions made on behalf of the plaintiff, particularly against a factual background supported to a significant extent by documentation which was tendered or handed up. HAVING CONSIDERED THE COMPETING SUBMISSIONS OF BOTH THE MOVE [sic] OF THE MOTION AND THE RESPONDENT, THE DETERMINATION OF THE COURT IS, SO FAR AS THE DEFENDANT'S MOTION IS CONCERNED, THAT IS, LEAVE TO FILE AN AMENDED GROUNDS OF DEFENCE IS CONCERNED, THAT APPLICATION IS REFUSED. SO FAR AS THE PLAINTIFF'S MOTION IS CONCERNED, THE COURT DOES NOTE THAT THE PLAINTIFF ABANDONS THE FIRST OF THOSE MOTIONS. THAT IS THE ONE RELATING TO MATTERS TOUCHING UPON THE LIMITATIONS ACT. SO FAR AS IT TOUCHES UPON THE DEFENCE FILED ON 30 JULY 2010, THAT MOTION SUCCEEDS AND THE DEFENCE IS STRUCK OUT. SO FAR AS IT RELATES TO THE CROSS-CLAIM FILED THE SAME DAY, THAT IS 30 JULY 2010, THAT CROSS-CLAIM IS ALSO STRUCK OUT. The Court comes to this view on the basis that, essentially, of the matters that have been determined at earlier times by other Tribunals. The appeal Is leave necessary? 16Although the Summons seeks leave to appeal to this Court Counsel for the Plaintiff argued that final orders had been made by the Magistrate with the result that the Plaintiff had an appeal as of right under s 40 Local Court Act 2007. The Plaintiff argues that the effect of the Magistrate's orders is final even if the orders were not. 17In my opinion neither the orders made by the Magistrate nor their effect is final. The orders made were these: (a) The existing Defence is struck out; (b) The existing Cross-Claim is struck out; (c) Refuse leave to file the proposed Amended Defence. Although the Barrister sought summary judgment in his motion the Magistrate did not enter judgment against the Defendant nor, as I understand it, has any judgment been entered against the Defendant in the Registry whether default, interlocutory or final. The costs order made by the Magistrate concerned only the Notices of Motion. None of this precludes the Defendant making a further application to file a Defence or Cross-Claim. 18Accordingly, the present Summons is brought only against interlocutory orders. Leave is required under s 40(2)(a) LCA . Subject to that matter the appeal grounds are these: 1. The Learned Magistrate erred in: a) not providing reasons or adequate reasons in respect of the Orders made. b) ordering summary judgment in favour of the Defendant. c) refusing to allow the Plaintiff to file the Amended Defence and Amended Cross Claim. 2. In the event that the Learned Magistrate relied upon the principle in Anshun , the Learned Magistrate erred in that: a) the claim, facts and issues of law raised in 'the Phipps' proceedings are distinct from those in the lower proceedings, b) in the lower proceedings there, are issues of law and fact not raised or determined in 'the Phipps' proceedings. c) a final judgment has not been delivered in 'the Phipps' proceedings. 3. In the event that the Learned Magistrate found the Plaintiffs pleadings and/or Amended pleadings were an abuse of process, the Learned Magistrate erred In that such findings and consequent power of dismissal are to be exercised with extreme caution, only in the clearest cases, and the said pleadings did not justify such findings in that there are issues to be tried between the parties on the merits. 4. In the event that the Learned Magistrate dismissed the Defence and Cross Claim pursuant to Part 14.28, the Learned Magistrate erred in that there is are issues to be tried on the merits. 5. The Learned Magistrate erred in that he failed to exercise the extreme caution or caution required in making orders for striking out pleadings and orders for summary judgment. 19It can be accepted that the reasons given by the Magistrate are rather unsatisfactory. Apart from making reference to a few specific matters in the Barrister's submissions to him (albeit, to understand what is being said it is necessary to go to those submissions), the Magistrate simply says "having considered the competing submissions" of both parties, before he made the orders. 20The authorities indicate that where leave is necessary for the bringing of an appeal, something more than the demonstration of error is needed. Not only must there be error of principle but the decision appealed from must work a substantial injustice; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177; and see also Chapmans Ltd v Yandell [1999] NSWCA 361 at [10]-[12]; Ashi Pty Ltd v Karasco Investments Pty Ltd [2009] NSWSC 780 at [34]. Moreover appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure: Adam P Brown at 177. 21The Solicitor, when asked to say what injustice there was over and above any error, only put forward his erroneous view that the Magistrate had entered summary judgment. It is difficult to see what injustice, let alone substantial injustice, has resulted from an order striking out the Cross-Claim, and refusing leave to file a Defence. Nevertheless, I will consider the matter on the basis of leave having been granted to see if, by his orders, anything over and above error has been established. Cross-Claim 22It is convenient to deal first with the Cross-Claim because both the struck-out Defence and the proposed Defence both refer to and rely on the Cross-Claim. 23In Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 the plurality judgment said (at 602-603): In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings, eg expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few: see the illustrations given in Cromwell v County of Sac (94-US at 356-7). It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment. ... The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding. By "conflicting" judgments we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction. 24The Plaintiff submitted that Anshun was inconsistent with Re Luck [2003] HCA 70; (2003) 78 ALJR 177 concerning whether orders staying or dismissing proceedings as an abuse of process are interlocutory or final. In Bracks v Smyth-Kirk [2009] NSWCA 401 McColl JA said: [31] In my view this court is required to apply Anshun (No 1) notwithstanding the later decision in Re Luck . The ratio decidendi of Anshun (No 1) was that an order staying or dismissing proceedings as an abuse of process on the basis that a party is attempting to litigate an issue which is res judicata is a final order. This court is bound to follow the ratio decidendi of High Court decisions, not decide for itself whether that decision should be departed from: Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395 (at [17]) per Gaudron, McHugh, Gummow and Hayne JJ. 25Accordingly, I consider that I am bound to follow Anshun rather than considering it to have been qualified by what was said in Re Luck. 26The Plaintiff further submitted that Anshun is now to be read as qualified by what was said by the High Court in Tanning Research Laboratories Inc v O'Brien [1990] HCA 8; (1990) 169 CLR 332 at [18]: A plaintiff who has an unadjudicated cause of action which can be enforced only in fresh proceedings ( Duedu v Yiboe [1961] 1 WLR 1040, at 1046) cannot be precluded from taking fresh proceedings merely because he could have and, if you will, should have counterclaimed on that cause of action in a forum chosen by the opposite party in proceedings in which the opposite party sued him. We do not read the majority judgment in Port of Melbourne Authority v Anshun Pty Ltd as holding the contrary, except in a case where the relief claimed in the second proceeding is inconsistent with the judgment in the first: see especially at 599-601. That is not the present case. 27Even accepting this statement at its highest for the Solicitor's submission, what is clear is that if the Cross-Claim was made out by the Solicitor there would be likely to be inconsistent judgments. It is apparent from the judgment of the Court of Appeal in Weller v Phipps that the fault was found to lie entirely with the Solicitor, and no criticism was made of the Barrister. The Court said: [ 46] One important dispute in the evidence before the primary judge arose from evidence of Mr Phipps that at no stage was he shown the advice of Mr Williams of 6 November 2003, nor was this advice discussed; whereas Mr Weller asserted that he showed Mr Phipps this evidence, and also in a telephone conversation told Mr Phipps that there were doubts expressed by Mr Williams and that there was a discussion concerning waiver. [47] In cross-examination of Mr Weller, it was put to him that, having had the advice of Mr Williams of 6 November 2003, he did not follow that advice; and Mr Weller conceded he did not follow it until 23 February 2004. ... [52] The primary judge did not accept Mr Weller's evidence that he allowed Mr Phipps to read the advice of 6 November 2003, and the primary judge was not satisfied that Mr Weller conveyed to Mr Phipps the thrust of that advice. He did not find that Mr Weller discharged his duty to Mr Phipps to inform him of the very substantial risks he was running in prolonging the litigation. ... [63] It is true that initially Mr Williams advised that Mr Phipps had a possible defence to the executors' claim for possession, and that no criticism was made of Mr Williams. But once Mr Williams had been provided with the Family Provision Act judgment, he promptly advised that those proceedings and that judgment raised serious difficulties for Mr Phipps. It is true that Mr Williams did not identify the core problem of issue estoppel, or even Anshun estoppel, but he did recognise that the proceedings and judgment made it unlikely that Mr Phipps' claim could succeed. [64] Although it was not in terms put to Mr Weller or Ms Suttor that Mr Weller should have obtained counsel's advice by 31 July 2003, or otherwise himself given correct advice by that time, the thrust of the cross-examination of both of them was that Mr Weller should have quickly recognised the threshold problem raised by the Family Provision Act proceedings and judgment, and should have taken action to resolve that problem within a reasonable time, rather than spending several months in seeking to obtain a full statement from Mr Phipps and to obtain statements from other witnesses. ... [66] In my opinion, there is one matter about which there can be no doubt. Mr Weller had, by his conduct at least, represented to Mr Phipps that it was a worthwhile exercise to incur substantial legal costs in preparing evidence to support a claim for the house, and to incur the risk of loss of interest on the legacy and of liability for legal costs of possession proceedings, while doing so. The advice of Mr Williams given on 6 November 2003 to the effect that it was unlikely that such a claim should succeed should have been promptly conveyed to Mr Phipps; and in my opinion, in circumstances where there was a continuing representation by Mr Weller that the costs and risks were worthwhile, there was an evidentiary onus on Mr Weller to show that he did convey the effect of that advice to Mr Phipps. The primary judge found that this evidentiary onus was not discharged, and no challenge is made on appeal to that finding. It was in my opinion clearly a breach of Mr Weller's duty to continue, after 6 November 2003, to represent to Mr Phipps that the costs and risks of the continued preparation of his case were worthwhile, without conveying to him the effect of Mr Williams' advice. Such a finding however would give rise to different questions of causation of damage from those raised by the finding actually made by the primary judge. ... [75] In my opinion, it was open to the primary judge to consider that a legal practitioner of any degree of expertise, who undertakes litigation work, should have recognised that the existence of a court decision, to the effect that $150,000.00 should be paid to a person out of an estate consisting primarily of a house, could raise a substantial difficulty to a subsequent claim to the house by that person against the estate; and that before substantial costs and risks were incurred in pursuing such a claim, the question of this difficulty should be resolved with reasonable expedition. This issue was raised squarely and openly in the conduct of the case, and in my opinion there was no denial of natural justice in the primary judge taking that view. It is a view with which I agree. ... [78] In my opinion, no error is shown in the primary judge's conclusion to the effect that a reasonably competent and careful solicitor, if not himself or herself in a position to give the advice that Mr Phipps' claim could not succeed, should have obtained counsel's opinion by 31 July 2003 or thereabouts. ( emphasis added) 28The conclusions from these passages appears to me to be: (1) The advice provided by the Barrister was sufficient to make clear that it was unlikely the client would succeed; (2) The advice should have been, but was not, obtained by the Solicitor in about July 2003; (3) The advice given by the Barrister was not conveyed to the client; (4) The Solicitor did not follow the advice until Senior Counsel's advice was given in February 2004; (5) The client incurred unnecessary legal costs and liabilities by reason of the Solicitor's failures. 29In that way, the relief claimed by the Solicitor in the Cross-Claim is inconsistent with the Court of Appeal's judgment and is likely to result in inconsistent judgments. In particular, paragraph 6, and particular (c) under paragraph 10 of the Cross-Claim are inconsistent with the highlighted passage in [63] of the judgment. Further, since the Solicitor did not, as the Court of Appeal held, pass on the Barrister's advice to the client, the loss sustained by the client (now the Solicitor's claim in the Cross-Claim) cannot have been caused by that advice. 30The claim made also depends upon the Barrister owing a duty of care to the Solicitor rather than, or in addition, to his duty to the client. What little authority there is suggests strongly that no such duty is owed: Moy v Pettman Smith (a Firm) [2002] EWCA Civ 875; O'Doherty v Birrell [2001] 3 VR 147. Certainly, the obligation in Rule 111 of the Barristers' Rules suggests no duty is owed by barrister to solicitor because the duty imposed by Rule 111 would conflict with such a duty: cf Wilson v Carter [2005] NSWSC 1351 [80]-[81]. It is not, however, necessary to form a concluded view on this matter. For the reasons I have given the relief claimed was likely to result in inconsistent judgments. 31Even, therefore, if the Magistrate had articulated his reasons otherwise than by reference to submissions he had considered, the result that the Cross-Claim should be struck out was correct. The proper basis was that an Anshun estoppel precluded the Solicitor from bringing the Cross-Claim. 32The Solicitor submitted that the judgment of the Court of Appeal was not a final judgment because he had sought Special Leave from the High Court to appeal the Court of Appeal's decision. At the time of the hearing before me there was no stay of the Court of Appeal's judgment nor the judgment of Charteris DCJ. That would have justified a rejection of that submission. However, the matter has now been put beyond doubt, since the High Court refused Special Leave on 7 October 2011. Defence 33In my opinion it was appropriate for the Magistrate to strike out the existing Defence. Paragraph 1 was either a plea of the general issue (prohibited by Rule 14.20 UCPR) or was pleaded as an ancillary to the plea in reliance on the Cross-Claim. Paragraph 2 claimed a set-off based on the Cross-Claim. For the reasons I have given, I consider the Cross-Claim was correctly struck-out. Accordingly, the Defence was correctly struck out. Even if that was not correct, any set-off based on a proposed negligence claim against the Barrister could only apply to the claim for fees of $7,900 claimed by the Barrister for the Phipps matter. It would provide no defence to the remainder of the claims. In such circumstances it would not be appropriate to grant leave to appeal from an interlocutory decision on practice and procedure for so small a sum of money. 34The more significant question is whether the Solicitor should be permitted to file his further proposed Defence. The Barrister concedes that "it is possible to discern in the proposed amended pleading the basis of a defence" but says that the pleading is incoherent. 35The proposed Defence relevantly says this: [2] In December 2002 the Plaintiff and the Defendant entered into an agreement. The agreement was express and oral. [3] It was term of the agreement between the Plaintiff and the Defendant that the Plaintiff would be paid his fees upon receipt of funds into the Defendants Trust Account and upon instructions for the client. [4] In breach of the agreement the Plaintiff demands payment from the Defendant of his fees that as yet have not been paid into the Trust Account of the Defendant. [5] Between the 12th and 15th August 2008 the Plaintiff and the Defendant entered into a second agreement. It was a term of the agreement that the Plaintiff, upon receipt of $70,000 would not make further demand for payment of fees unless the same were received by the Defendant into his Trust Account and if they were not so received would not seek to demand those fees from the Defendant. [6] Between the 12th August and 15th August 2008, the Plaintiff made representations to the Defendant to the following effect ('the representations"): a. That the Plaintiff would not seek to recover or demand from the Defendant any fees unless those fees were received by the Defendant into his Trust Account and if they were not so received would not seek to demand those fees from the Defendant. b. That upon the payment by the Defendant to the Plaintiff of the sum of $70,000 the Plaintiff would not seek to demand any fees from the Defendant unless those fees were received by the Defendant into his Trust Account. ... [12] The conduct pleaded above was in contravention of Section 58 of the TPA and Section 53 of the FTA in that the Plaintiff accepted payment without intending to cease demand for payment of fees unless the same were received by the Plaintiff into his Trust Account. [13] The Defendant pleads the terms of the Cross Claim as a Set Off and complete defence to the claim brought by the Plaintiff. [14] In consequence of the Plaintiffs breach of contract, breach of the TPA and or the FTA the Defendant has suffered loss and damage. Particulars a) On the 15th August 2008 the Defendant paid to the Plaintiff the sum of $10,600.00 b) Damages. 36As can be seen, no particulars are set out in relation to the agreements. Ms Oliak of Counsel, who appeared for the Solicitor on the appeal, informed me that the material on which the Solicitor relies was set out in the Solicitor's affidavit read at the hearing of the motions before the Magistrate, together with 2 letters written by the Barrister to the Solicitor dated 15 August 2008 and 15 June 2010. The letter of 15 August 2008 relevantly says: Thank you for payment of $70,000 which settles in full payment of those matters listed as nos 1, 2, 4, 9, 11, 14, 15, 16 and 17 of the Schedule of Fees outstanding previously sent to you, a copy of which is attached and also I will credit you as agreed with $7,245 towards the Crunkhorn matter leaving $7,000 owing to be paid by S Raymondre Crunkhorn. I am prepared to defer for a reasonable time the payment of the $7,000 from Crunkhorn and to similarly defer the remaining outstanding fees in matters 5, 6, 7, 8, 12 and 13 on the attached Schedule of Fees outstanding to give you some further time to pursue these clients for the amounts owing. Would you please let me have a report in due course on your progress in obtaining payment from your clients in the outstanding matters. In relation to five of the outstanding matters I am attaching amended tax invoices in compliance with the Legal Profession Act 2004 although not for the tax invoices for Mrs Salmon nor for Mark Phipps as these comply with the previous Legal Profession Act 1987 in that the original tax invoices were endorsed with the requirement to pay interest. I would be grateful if you would pursue both of these clients to obtain payment together with interest as these accounts are long overdue. 37The letter of 15 June 2010 relevantly says: I would be grateful if you would let you know the position with regard to the following outstanding accounts which were deferred in August 2008 to a later date to enable collection: Matter Invoice date Amount Susan Raymond v Estate Raymond 19 June 2006 $7,000.00 Fyfe ats Kessie 15 May 2006 $2,300.00 David Chapman ats Taylor 25 November 2004 $1,595.00 Mark Phipps ats Knott & Witherow 12 July 2004 $7,900.00 Salmon v Menezes 23 November 2004 $10,587.50 I understand Mrs Salmon has filed for bankruptcy and if so I will write this debt off at the end of the financial year unless you advise there is some chance of recovery. Likewise with Mark Phipps, I will write that amount off as a bad debt unless you are successful in your appeal. Please advise the position regarding the first three mentioned matters and what action if any you have taken to enforce payment of my fees and your costs. If you do not wish to pursue these matters, please advise the address of the clients so that I can write to them direct after seven days from today seeking payment of my outstanding fees before they become statute barred. 38On the face of it the letter of 15 August 2008 is no support for the agreement the Solicitor says that he reached with the Barrister in 2002 and is only scant support for the alleged Agreement in 2008. It contains an offer from the Barrister to defer requiring the Solicitor to pay the fees to enable the Solicitor to see if he could obtain payment from the client. No reference is made to the 2002 Agreement nor to the further Agreement allegedly made only days before. Nothing is said about a general agreement not to press for payment unless the Solicitor was put in funds by the client. Further, if there was already an agreement in place in the terms the Solicitor alleges from 2002, why was any further agreement necessary in 2008 in the terms alleged? The letter of 15 June 2010 may be consistent with the alleged 2002 Agreement except for its reference to the letter of August 2008. 39The Barrister submitted that weight could be placed on the fact that there had been no mention of any such Agreements by the Solicitor until the Barrister's Motion of November 2010. No explanation is provided by the Solicitor why these Agreements were not pleaded at the outset. 40Whilst these are powerful factors suggesting such a Defence will not be made out there are factual and credit matters to be determined, and that can only be done at a trial. In Cosmos E-C Commerce Pty Ltd v Sue Bidwell & Associates Pty Ltd [2004] NSWCA 261 Hodgson JA said: [15] The material relied on by the primary judge to disallow the defence of forgiveness was very powerful, but there is a real question whether a judge should make such a finding contrary to sworn evidence in this kind of application, particularly where there was no cross-examination of the deponent. A similar situation obtains here. The Solicitor was not cross-examined on his affidavit at the hearing before the Magistrate, and he had sworn that 2 agreements were made. 41However, the proposed Defence is entirely deficient in particularising the two Agreements. The Barrister is entitled to know precisely what case he must meet and now, whether the letter of 15 August 2008 forms part of the 2008 Agreement or is merely relied upon as confirmatory of it. 42The remainder of the proposed Defence, involving allegations of breaches of the Trade Practices Act and the Fair Trading Act is difficult to understand. There is a reference to a payment of $10,600 on 15 August 2008 but what that has to do with anything else pleaded is not made clear. The amount is not mentioned in the Solicitor's affidavit nor the 2 letters relied upon by him. Nor is it clear why there is a claim for damages, nor what damage has been suffered by the Solicitor. 43Moreover, the proposed Defence again pleads a set-off as a complete defence based upon the Cross-Claim which I have held was correctly struck out. 44The Magistrate has not provided reasons in accordance with the law. The Magistrate merely refers to having read the parties' submissions, and says that he accepts the Barrister's submissions. The only 2 specific parts of those Submissions mentioned by the Magistrate do not appear to relate to that part of the proposed Defence concerning the 2 alleged Agreements. It is not a compliance with the Magistrate's responsibility to provide proper reasons simply to refer generally to a party's submissions as the explanation for the Magistrate's determination. In this case, some of the Barrister's submissions suggested reasons why, in substance, the defence should not be allowed. Other submissions pointed only to the form of the pleading as being the basis for a refusal. Ultimately, it is not possible to discern from the Magistrate's reasons which of those submissions he adopted, nor the true basis for his refusal to permit it to be filed. 45Nevertheless, for the reasons I have given, the Magistrate's refusal to permit the filing of this proposed Defence cannot be said to be an error. The proposed Defence is not properly pleaded nor particularised. Parts of it are embarrassing. Conclusion 46Although the Solicitor has shown that the Magistrate's reasons are inadequate and deficient there was no error in the orders the Magistrate made. Nothing has been shown by the Solicitor, in any event, to justify why leave to appeal should be granted. Even if the Magistrate was wrong to have struck out the Cross-Claim and refused leave for the filing of the Amended Defence no injustice or substantial injustice over and above the error is shown to justify the grant of leave. The matter involves a matter of practice and procedure. 47I make the following orders: (1) The Summons is dismissed. (2) The Plaintiff is to pay the Defendant's costs. ***************** 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: 12 December 2011