Baker & Ors v Pastrello & Anor [2004] ACTSC 38 (12 March 2004)

Last Updated: 23 June 2004

WILLIAM JOHN BAKER & ORS v LORENZO PASTRELLO & ANOR [2004] ACTSC 38 (12 March 2004)

EX TEMPORE JUDGMENT

PROCEDURE - Supreme Court Procedure - Australian Capital Territory - Supreme Court Rules Order 29 rule 2 - point of law - disposition before trial - question of law arising out of the facts - relevant facts not ascertainable until all evidence given - unsuitable for preliminary determination.

Legal Profession Act 1987 (ACT)

Supreme Court Rules Order 29 rule 2

Bonython & Ors v The Commonwealth of Australia [1950] HCA 37; (1950) 81 CLR 486

In re United Railways of the Havana & Regla Warehouses Ltd (1960) Ch 52

Akai Pty Ltd v The People's Insurance Company Ltd [1996] HCA 39; (1996) 188 CLR 418

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337

Thompson v Australian Capital Television Pty Ltd & Ors (1989) 97 FLR 366

Bass & Anor v Permanent Trustee Company Ltd & Ors [1999] HCA 9; (1999) 198 CLR 334

No. SC 511 of 2002

Judge: Gray J

Supreme Court of the ACT

Date: 12 March 2004

IN THE SUPREME COURT OF THE )

) No. SC 511 of 2002

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: WILLIAM JOHN BAKER,

IAN LONGFIELD MARJASON,

PETER JAMES BEVAN,

CHARMAINE TUNN t/as BAKER DEANE & NUTT, SOLICITORS

Plaintiffs

AND: LORENZO ANTONIO PASTRELLO and CARLA LILIANA PASTRELLO

Defendants

ORDER

Judge: Gray J

Date: 12 March 2004

Place: Canberra

THE COURT ORDERS THAT:

1. The order of the court made on 3 October 2003 be discharged.

2. Costs of this motion be costs in the cause.

1. This matter was due to be heard this morning in respect of a preliminary question which was reserved. An application was made to adjourn the hearing, however, before considering that application, I raised the question of whether it was appropriate, in any event, for the court to proceed to hear the preliminary question. After hearing argument, I am satisfied that the court should not proceed with respect to this hearing.

2. The matter involves a claim by the plaintiffs, a firm of solicitors, against the defendants for costs of advising and acting for them in respect of a matter described in the statement of claim.

3. For present purposes, it is sufficient to note that the defendants each deny that the plaintiffs "were engaged ... as alleged" in the statement of claim. In other words, the very foundation of the claim is in issue. In addition, in paragraph 6 of what is described as, "Notice of grounds of defence to amended statement of claim", the defendants plead, in separate but identical documents -

Additionally and in answer to the whole of the plaintiffs Statement of Claim the defendant says as follows:

a. The plaintiffs were not engaged by her as her solicitors, or to advise her, or to act for her in the Australian Capital Territory and the dealings she had with the plaintiffs occurred within the State of New South Wales and concerned matters arising within that State;

b. If, which is denied, the defendant engaged the plaintiffs to provide advice and to act for her in respect of the matters set out in paragraph 3 of the Statement of Claim then such engagement occurred in the plaintiff's Queanbeyan offices and was subject to the laws of New South Wales, including the Legal Profession Act 1987 (hereinafter referred to as the Legal Profession Act 1987);

c. At no time did the defendant enter into a costs agreement with the plaintiffs within Section 184 of the Legal Profession Act 1987, in respect of any of the matters relied upon in paragraph 3 of the Statement of Claim;

d. At no time did the plaintiffs, in respect of any of the matters relied upon in paragraph 3 of the Statement of Claim, provide the defendant with the information required by either Section 175 or 176 of the Legal Profession Act 1987;

e. At no time has the plaintiff obtained an assessment within Division 6 of Part 11 of the Legal Profession Act 1987, of the legal costs and disbursements claimed in paragraphs 4 and 5 of the Statement of Claim;

f. If, which is denied, the defendant engaged the plaintiffs as alleged in the Statement of Claim to act as her solicitors and to provide advice and to act for her, then she is not required to pay the claimed legal costs and disbursements due to the plaintiffs failure to comply with the provisions of the Legal Profession Act 1987 as set out above;

g. If, which is denied, the defendant engaged the plaintiffs as alleged in the Statement of Claim to act as her solicitors and to provide advice and to act for her, then the plaintiffs may not maintain these proceedings for the recovery of the claimed legal costs and disbursements by reason of section 182 of the Legal Profession Act 1987;

h. If, which is denied, the defendant engaged the plaintiffs as alleged in the Statement of Claim to act as her solicitors and to provide advice and to act for her, then the plaintiff's Claim constitutes an abuse of process and the plaintiff is not entitled to maintain it;

i. By reason of the matters set out above the defendant is not indebted to the plaintiffs as alleged, or at all;

j. Further and/or additionally, if, which denied, the defendant is liable as alleged in the Statement of Claim, or liable for some of the costs and disbursements claimed, then the Itemised Bill of Costs relied upon by the plaintiffs includes costs which do not relate to the matter relied upon in paragraph 3 of the Statement of Claim and the defendant is not liable in respect of those costs in any event.

4. What is set out in the statement of claim would appear to be a roundabout way of saying that the proper law to be applied to the contract is that of the State of New South Wales and, accordingly, that the claim for costs is unenforceable by reason of the operation of the Legal Profession Act 1987 of that State.

5. I point out, and it may be noted, that as pleaded, paragraph 6(a) only contains an admission of "dealings" with the plaintiffs, so that even the most basic factual issue remains unresolved. I also note that paragraph 6(j) puts in issue items in the bill of costs not related to the engagement, and that clearly indicates that resolution of the matter before me will not end these proceedings.

6. On 3 October 2003, by consent, the parties in this matter obtained an order of the court that -

The issue of the proper law of the contract raised by the defendants in paragraph 6 of the notice of grounds of defence to the amended statement of claim filed on 9 April 2003 be decided as a preliminary point.

7. What the order seeks to raise and have determined is the proper law of the contract that is the subject of the proceedings between the parties. An argument was put to me that might have been a pure question of law concerning the question of whether there was a statute determinative of the law governing the contract. I do not propose, nor is it appropriate, to decide that question in this context as there is no statute to which I was referred which expressly, and unequivocally requires that the law of a particular forum be applied notwithstanding any provision in the contract.

8. The other questions that were raised as the subject of argument dealt with the question of choice of law as far as the parties were concerned. The test to be applied in circumstances where the parties have not expressed any choice of law to apply is that set out by Lord Simonds in Bonython & Ors v The Commonwealth of Australia [1950] HCA 37; (1950) 81 CLR 486 at 498. That test may shortly be expressed as being the system of law by reference to which the contract was made or that which the transaction has its closest and most real connection. This requires a consideration of all of the circumstances surrounding the making of the contract and that may include the place of contracting, the place of performance, the place of residence or business of the parties, and the nature of the subject matter of the contract, see In re United Railways of the Havana & Regla Warehouses Ltd (1960) Ch 52 at 91.

9. What that question requires for it to be answered is the resolution of all of the factual circumstances. As Toohey, Gaudron and Gummow JJ observed in Akai Pty Ltd v The People's Insurance Company Ltd [1996] HCA 39; (1996) 188 CLR 418 at 441 when speaking of the task set out in Bonython v The Commonwealth (supra) they said -

In approaching that task ... the court applies the ordinary rules of the common law relating to the construction of contracts. That requires consideration of the terms and nature of the contract and "the general circumstances of the case" in the sense explained with reference to contractual construction by Mason J in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 [at 347 and 353].

The issue to be determined is as Mason J said in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 352 -

The objective framework of facts within which the contract came into existence and to the parties presumed intention in this setting.

The effect is that what is at issue in relation to this matter is the whole of the subject matter.

10. Supreme Court Rules Order 29 rule 2 is specific as to the matters that may be raised in proceedings of this nature. That rule provides -

Any party may raise by his or her pleading any point of law, and any point so raised shall be disposed of by the judge at or after the trial, by consent of the parties, or by order of the court. On the application of either party the same may be set down for hearing and disposed of at any time before the trial.

11. In the present case, it is quite unclear what the point of law is. It is certainly not set out with the precision that is required under the rule. Nor is it clearly defined, as it would have to be, by reference to agreed facts if it were truly able to be determined in advance of the hearing.

12. It should be remembered that the procedure set out in Order 29 rule 2 replaces the procedure formerly available upon demurrer. It allows a greater degree of flexibility in not requiring the admission of all the matters of fact in the opposite pleading. Nevertheless, it is quite clear that it would be rare indeed, where there was a disputed area of fact bearing upon the point of law, for the point of law to be disposed of prior to that determination. I refer to Miles CJ, Thompson v Australian Capital Television Pty Ltd & Ors (1989) 97 FLR 366 where he said -

In the present case, the ascertaining of the factual circumstances concerning the making of the contract alleged is integral to that question of law. In my view, the only proper course is for those facts to be found and that should be done at the trial and not by way of this procedure.

13. Even if broader scope were available to this court to determine preliminary questions, I would not be satisfied that an appropriate question in the circumstances of this case could be formulated to be tried as a preliminary issue. I have regard to what Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ said in Bass & Anor v Permanent Trustee Co Ltd & Ors [1999] HCA 9; (1999) 198 CLR 334 at 358 when they said -

Preliminary questions may be questions of law, questions of mixed law and fact, or questions of fact. Some questions of law can be decided without any reference to the facts. Others may proceed by reference to assumed facts as, on demurrer or some other challenge to the pleadings. In those cases, the judicial process is brought to bear to give a final answer to the question of law involved. Findings of fact are made later, if that is necessary. When a preliminary question is a pure question of fact that, too, can be answered finally in accordance with the judicial process if the parties are given an opportunity to present their evidence and, also, to challenge the evidence led against them.

Special problems can arise when the preliminary question is one of mixed fact and law. As Brooking J pointed out in Jacobson v Ross [[1995] 1 VR 337 at 341], it is necessary in that situation there be precision both in formulating the question and in specifying the facts upon which it is to be decided. His Honour added:

Care must be taken to ensure that, in one way or another, all the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable ... as facts assumed to be correct for the purposes of the preliminary determination, or as facts which both sides accept as correct, or as facts which are to be judicially determined. Failure to do this, and in particular failure to perceive that the facts alleged in a pleading, are some only of the facts relevant to the determination of the preliminary question, may make the order for preliminary determination unfruitful.

Quite apart from rendering the "order for preliminary determination unfruitful", the failure to identify the relevant facts or the means by which they are to be ascertained may result in procedures which do not conform to the judicial process.

14. In the present case, the suggested solution by way of affidavit evidence as evidence-in-chief is plainly not a proper procedure to determine questions of fact. Further, in the present case the relevant facts are not able to be ascertained until all the evidence has been given. It would be totally inappropriate to attempt to answer what might be said to be a question of law arising in respect of those facts until that event has occurred. The issue is just not suitable for preliminary determination.

15. I consider that the appropriate course is to discharge the order of the court made on 3 October 2003 that there be a determination of a preliminary question in this matter and to order that costs be costs in the cause.

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Gray.

Associate:

Date: 1 June 2004

Counsel for the plaintiffs: Mr W Arthur

Solicitor for the plaintiffs: Baker Deane & Nutt

Counsel for the defendants: Mrs L Donohue

Solicitor for the defendants: CC Law Attorneys & Advocates

Date of hearing: 12 March 2004

Date of judgment: 12 March 2004