Neale v Mahony [2018] NSWSC 40

Supreme Court New South Wales

Medium Neutral Citation: Neale v Mahony [2018] NSWSC 40 Hearing dates: 8 December 2017 Date of orders: 05 February 2018 Decision date: 05 February 2018 Jurisdiction: Common Law Before: Harrison J Decision: No order required Catchwords: CIVIL PROCEDURE – discontinuance of proceedings – where notice filed without consent of other party or leave of the court – notice ineffective to discontinue proceedings Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 12.1 Category: Procedural and other rulings Parties: James Woodward Neale (Plaintiff) John Mahony (trading as Mahony Law) (Defendant) Representation: Counsel: A Maroya (Defendant)

Solicitors: Mahony Law (Defendant) File Number(s): 2017/88092 Publication restriction: Nil

Judgment 1. HIS HONOUR: By his statement of claim filed on 22 March 2017, James Woodward Neale claims damages from John Francis Mahony alleging negligence in the performance of his retainer as Mr Neale's solicitor. Mr Neale alleges that Mr Mahony was retained to prepare a class action for him and others against the Commonwealth Bank for selling property at an undervalue. The statement of claim suffers from some obvious formal and substantial difficulties and appears to have been prepared without the benefit of legal assistance. 2. Be that as it may, at 12.43pm on 18 May 2017, Mr Neale's then solicitor, Trevor Hall, filed a notice of discontinuance of the proceedings. Mr Mahony was served with a copy of that notice at 1.10pm the same day. Mr Mahony maintains that the notice operated according to its terms and that the proceedings have come to an end. Mr Neale either contends that it did not do so or that the proceedings should in some unexplained fashion be revived or reinstated. 3. Some insight into Mr Mahony's understanding of the position following the filing of the notice can be gleaned from his letter to the Registrar dated 14 August 2017. That letter is in the following terms: "I refer to your email in this matter of last Friday, 11 August 2017 (copy enclosed). That email was in response to email received [sic] from Trevor Hall, solicitor for the Plaintiff Mr James Neale. I confirm that I am the Defendant and I am representing myself through my Firm, Mahony Law. Firstly, I advise that I consented to the Plaintiff's solicitors [sic] request for the matter to be stood over on 11 August 2017, so as not to inconvenience the Court. However, I wish to bring to your attention what I believe to be a significant and important irregularity, which I would like you to further investigate if at all possible. The chronology of events is as follows: 1. At 12.43pm on 18 May 2017, the Plaintiff's solicitor, Mr Hall, filed a Notice of Discontinuance of these Proceedings. A copy of that filed Notice of Discontinuance is enclosed. 2. At 1.10pm on 18 May 2017 I was served with a copy of the filed Notice of Discontinuance together with a filed Notice of Appointment of Mr Hall to act for the Plaintiff. A copy of the email (without annexures) serving the Notice of Discontinuance is enclosed. 3. At 1.19pm on 18 May 2017 I forwarded an email to Mr Hall requesting his intentions in regard to my costs/LawCover's costs in this matter. Mr Hall replied at 1.35pm on 18 May 2017 stating amongst other things, 'You can make a costs application if you wish and in which case the proper course is probably for us to make application for the proceedings to be reinstated.' A copy of those two emails is enclosed. 4. Thereafter, I had no further correspondence with Mr Hall in relation to this matter and I assumed that the Notice of Discontinuance, having been filed, had effectively ended the matter. 5. On 10 August 2017 I received an email from Mr Hall seeking my agreement to the matter being stood over at what he said was the next mention of the matter on 11 August 2017. 6. I queried Mr Hall as to why the matter was still in the list, because as far as I was concerned it had been discontinued on 18 May 2017. Mr Hall responded stating that the Notice of Discontinuance could not be accepted by the Court, 'as your position was as … to costs'. 7. The 10th August 2017 was the first occasion on which I became aware that the matter had apparently not been discontinued and had not been taken from the Court's list after 18 May 2017. 8. As previously noted, no communication to that effect was received by me from Mr Hall. His last communication was an email forwarding to me a copy of the Notice of Discontinuance and thereafter telling me that if I wished to claim costs the matter would have to be reinstated and relisted to argue costs. After that I had no further correspondence or conversations with Mr Hall in relation to the matter and I assumed that the Notice of Discontinuance stood. 9. On 10 August 2017 I discovered, for the first time, that the original return date on the Statement of Claim being 30 June 2017 had remained listed before the Court. As I understood that the Statement of Claim had been discontinued in May, I assumed that the first return date on the Statement of Claim, being 30 June 2017 had been vacated, due to what I understood was the discontinuance of the proceedings. Accordingly, I did not arrange for an attendance before the Court on that day, as I thought that the date had been vacated. 10. I understand that Mr Hall attended at the mention on 30 June 2017, at which time I assume [sic] the matter was stood over for further mention until 11 August 2017. 11. Again, I received no notification from Mr Hall or the Court as to that next mention date. Accordingly, I seek your assistance in determining, amongst other things, the following: 1. Did Mr Hall attend the mention on 30 June 2017? If so, what representations were made to the Court by Mr Hall? 2. How is it that the filed Notice of Discontinuance of 18 May 2017 was apparently set aside. If so, on whose application was that action taken (noting again that no correspondence was received by me from Mr Hall on the matter after 18 May 2017, until the correspondence from Mr Hall seeking an agreement to an adjournment on 10 August 2017). I thank you for your anticipated assistance and look forward to receiving your reply at your earliest convenience." 1. As far as I can determine from the Court file, the Registrar did not specifically reply to Mr Mahony's letter. However, immediately following the filing of the disputed notice of discontinuance on 18 May 2017, the Registrar did write to Trevor Hall, the solicitor who filed the document in the first place. The Registrar's letter said this: "NOTICE OF REJECTION Document received: Notice of Discontinuance The document(s) received on 18 May 2017 are being returned because: The document has not been signed. Also, noting that there has been no appearance filed by the defendant – file an affidavit as to non-service of the Statement of Claim – UCPR 12.1(4). If the Statement of Claim has been served you will need to seek leave to discontinue the proceedings." 1. Between 18 May 2017 and 14 August 2017, Mr Hall and Mr Mahony engaged in a somewhat curious series of email correspondence about the proceedings. This is referred to in an affidavit sworn by Mr Mahony on 10 October 2017. It bears consideration. 2. Mr Hall wrote to Mr Mahony on 17 May 2017. He said this: "My client discontinued today as it would amount to an abuse of process to have 2 proceedings in the same court seeking overlapping relief. On the assumption leave is granted in the Federal Circuit Court and it emerges that the damages exceeds the jurisdictional limit of that court we may seek transfer of that action to the Federal Court, but that is another matter. Please send me anything further you have as to why you say that none of the fee base for which you seek recovery vests in you where the right to bill related to fees over the period of the bankruptcy." 1. Mr Mahony replied the same day as follows: "Please provide evidence of the discontinuance. I reserve all my rights in that matter. The Federal Court matter is an abuse of process. I can't wait to see the 'evidence'. You are on notice that I will be seeking indemnity costs against you personally in relation to that matter. I will be relying upon this email, inter alia, in support of a personal costs order against you." 1. As earlier noted, the notice of discontinuance was forwarded to Mr Mahony by Mr Hall at 1.10pm on 18 May 2017. 2. Mr Hall wrote to Mr Mahony 25 minutes later in the following terms; "You can make a costs application if you wish and in which case the proper course is probably for us to make application for the proceedings to be reinstated. Your true costs in this matter would be zero I would have thought. Let's just litigate the real issues. (1) what were the circumstances in which you came to get all this legal work and the clients referrals for which you are now suing people? (2) is the right to sue an asset in the bankruptcy? Any information you can provide as to these matters will be helpful and constructive. Everything else is a total and utter waste of time as are your completely meaningless threats as to personal costs orders." 1. Mr Hall next wrote to Mr Mahony on 10 August 2017 in these terms: "Are you appearing tomorrow for Mr Neale and Mr Mahony – in that matter? What orders do you want, I say just stand it over for say 8 weeks with liberty to restore whilst we see what happens in bankruptcy court? That way no money is wasted on appearances? If you are happy with that I can put consent orders together?" 1. Shortly after that on the same day, Mr Mahony wrote to Mr Hall: "Have you not filed the notice of discontinuance in the matter, that is apparently in for mention tomorrow?" Please advise." 1. Mr Hall replied: "They would not accept it because you would not sign it because you were insisting on recovery of costs. That was the sticking point, so it remains listed tomorrow? Shall I mention this and get this stood over?" 1. Mr Mahony's immediate response was in the following terms: "I am sure that I gave up the claim for costs, some time ago. Anyway, please send me the notice of discontinuance and I will sign it, so that you can hand it up in Court tomorrow, to dispose of the matter." 1. Finally for present purposes, Mr Hall replied: "The problem is that now Neale will never give those instructions. Not at the moment anyway. Hence I can send you some orders standing it over for 8 weeks with liberty to apply. That is the best I can get out of Neale. If you are okay with that let me know. Otherwise we will all be wasting time. Please advise? Can we do this and I'll send you some orders?" 1. It can be seen that a few days later Mr Mahony sought clarification of the position from the Registrar. 2. In his written submissions on behalf of Mr Mahony, Mr Maroya of counsel contends that the notice of discontinuance should take effect according to its terms. 3. UCPR 12.1 is in the following relevant terms: "12.1 Discontinuance of proceedings (1) The plaintiff in any proceedings may, by filing a notice of discontinuance, discontinue the proceedings, either as to all claims for relief or as to all claims for relief so far as they concern a particular defendant: (a) with the consent of each other active party in the proceedings, or (b) with the leave of the court. (2) A notice of discontinuance: (a) must bear a certificate by the plaintiff, or by his or her solicitor, to the effect that the plaintiff does not represent any other person, and (b) except where it is filed with the leave of the court, must be accompanied by a notice from each party whose consent is required by subrule (1) to the effect that the party consents to the proceedings being discontinued in accordance with the notice of discontinuance. (3) If any such consent is given on terms, those terms are to be incorporated in the notice of consent. (4) If any party has not been served with the originating process, the plaintiff must file an affidavit to that effect. (5) …" 1. The notice of discontinuance filed by Mr Neale's then solicitor was not filed with Mr Mahony's consent. Nor was it filed with the leave of the Court. It was ineffective and inoperative for want of compliance with this rule. The Registrar was correct to reject it. 2. Although it is beside the point, it is apparent that the solicitors at various times both operated upon the basis that the proceedings remained on foot notwithstanding the filing of the notice. Indeed, on 30 June 2017, the Registrar made orders by consent adjourning the proceedings to 11 August 2017. The Registrar made that order following the receipt of short minutes of order bearing the electronic signatures of Mr Hall and Mr Maroya. 3. The following evidence should, however, be noted. Mr Mahony swore an affidavit on 2 November 2017. Paragraphs 16 and 17 of that affidavit are as follows: "16 On 20 October 2017, these proceedings were listed for directions before Registrar Bradford. I was represented by Mr Maroya of counsel, and Mr Neale was represented by Mr Hall, solicitor. I am informed by Mr Maroya and verily believe that on that date, Registrar Bradford drew to Mr Maroya's attention the fact that the Registry did not accept for filing the notice of discontinuance, as it was not signed by Mr Hall. Registrar Bradford directed that these proceedings be adjourned till 3 November 2017, for further consideration by the Common Law Duty Judge. 17 Mr Maroya reported these matters to me on 20 October 2017. Until Mr Maroya's report, I had been unaware that the Registry had not accepted for filing the notice of discontinuance, by reason of its not having been signed by Mr Hall. Mr Hall did not at any time draw that fact to my attention. It is not referred to in the exchange of correspondence which is annexed to my affidavit of 10 October 2017." 1. I have not been able entirely to reconcile the matters referred to in paragraph 17 with paragraph 7 in Mr Mahony's 14 August 2017 letter which, for ease of reference, is repeated here: "7. The 10th August 2017 was the first occasion on which I became aware that the matter had apparently not been discontinued and had not been taken from the Court's list after 18 May 2017." 1. Presumably Mr Mahony would in any event have been aware that his consent to the filing of the notice of discontinuance had neither been sought nor provided. Presumably as well Mr Mahony would have been aware that he was never required to attend court on an application by Mr Neale for leave to discontinue the proceedings. The status of the notice of discontinuance must at all times in those circumstances have been questionable and of some concern to Mr Mahony despite the fact that its particular deficiencies had not by his account been drawn to his attention by Mr Hall. 2. Although I have received detailed submissions from Mr Maroya and a lengthy, largely unhelpful and irrelevant, affidavit from Mr Neale, they are not germane to the issue, which is that the proceedings have never properly been discontinued. They remain on foot. Whether they are later disposed of in some other way, having regard to the form of the statement of claim, is something about which it is unnecessary to comment. 3. It is in the circumstances unnecessary to make any orders. The proceedings should simply be listed before the Registrar for directions on a date suitable to the parties.