Preston v Nikolaidis [2010] NSWSC 131 (2 March 2010)

Last Updated: 2 March 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
Preston v Nikolaidis [2010] NSWSC 131


JURISDICTION:
Equty Division

FILE NUMBER(S):
1993/00023395

HEARING DATE(S):
17/12/09

JUDGMENT DATE:
2 March 2010

PARTIES:
John Michael Preston - First Plaintiff
Western Suburbs Constructions Pty Ltd - Second Plaintiff
Leon Nikolaidis and the estate of Mitrofanis D Nikolaidis trading as M D Nikolaidis & Co - Defendants

JUDGMENT OF:
Barrett J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
Mr R R I Harper SC/Mr T D Anderson - Plaintiffs
Mr T S Hale SC/Mr J S Tobin - Defendants

SOLICITORS:
Davidson Gerathy Lawyers - Plaintiffs
McLachlan Chilton - Defendants


CATCHWORDS:
PROCEDURE – miscellaneous procedural matters - application by defendants for summary dismissal – proceedings commenced by clients against solicitors in 1993 – adjudication by judge in 1995 – adjudication by master in 2000 – question whether any claims extant thereafter – held that claims with respect to clients’ liability for solicitors’ costs remain undetermined – decisions by court in 2001 that the issue of the terms of the solicitors’ retainer must be determined by the court – points of claim and points of defence on that issue then filed on several occasions – leave granted in 2002 concerning points of claim taken to include leave to amend – those points of claim plead fraud by solicitor in relation to formation of retainer – fraud alleged to make retainer void or unenforceable - order in 2009 that the proceedings proceed on pleadings – statement of claim filed which pleads the same fraud as a basis for claims for damages and equitable compensation – such statement of claim held to involve amendment – leave to amend neither granted nor sought – statement of claim pleading new causes of action not authorized by 2009 order – statement of claim struck out – proceedings not dismissed - need for case as articulated in 2002 points of claim and points of defence to be brought to trial expeditiously – PROCEDURE – parties – joinder – one of three solicitors practicing in partnership neither named as a defendant in the summons nor joined by any later order – that solicitor said in a judgment of the court to be a defendant, recorded in an order and various court documents as a defendant, represented by other parties to be a defendant and representing himself to be a defendant – submissions to be made on consequences of findings with respect to him.

LEGISLATION CITED:
Civil Procedure Act 2005, ss 56, 57, 58, 59, 60, 64
Legal Profession Act 1987, Part 11, Division 5, ss 198, 199, 203(1), 206
Legal Profession Reform Act 1993
Uniform Civil Procedure Rules 2005, rule 13.4, Part 20

CATEGORY:
Principal judgment

CASES CITED:
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Bi v Mourad [2010] NSWCA 17
DJL v The Central Authority [2000] HCA 17; (2000) 201 CLR 226
Newmont Yandall Operations Pty Ltd v The J Aron Corporation [2007] NSWCA 195; (2007) 70 NSWLR 411
Nikolaidis v R [2008] NSWCCA 323
Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 533

TEXTS CITED:


DECISION:
1. Order that the statement of claim filed on 19 June 2009 be struck out.
2. Order that the defendants’ claim by notice of motion filed on 2 October 2009 for an order that the proceedings be dismissed be itself dismissed.
3. Direct that each party deliver to my Associate within fourteen days written submissions as to any orders that should be made to give effect to the findings in paragraphs [84] to [91] of the reasons for judgment dated 2 March 2010.
4. Direct that each party deliver to my Associate within fourteen days written submissions as to the costs order or orders that should be made in relation to the notice of motion filed on 2 October 2009.
5. Direct that the proceedings be listed on a day to be fixed by me after receipt of the written submissions for oral argument not exceeding 30 minutes supplementary to those written submissions.
6. Direct that when the matter comes back before me for supplementary oral argument, the parties present an agreed timetable to deal with any remaining interlocutory steps and to make the proceedings ready for trial.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION



BARRETT J

TUESDAY 2 MARCH 2010

1993/00023395 JOHN CLEMENT PRESTON & ANOR v LEON NIKOLAIDIS & ANOR

JUDGMENT

1 I am dealing with a notice of motion filed on 2 October 2009 by Leon Nikolaidis, Michael John Zwar and the legal personal representative of Mitrofanis D Nikolaidis. The notice of motion was heard by me on 17 December 2009.

2 The applicants seek, as against John Clement Preston and Western Suburbs Constructions Pty Ltd, an order under rule 13.4 of the Uniform Civil Procedure Rules 2005 “that the proceedings herein be dismissed”. Rule 13.4 is in these terms:

“(1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:

(a) the proceedings are frivolous or vexatious, or

(b) no reasonable cause of action is disclosed, or

(c) the proceedings are an abuse of the process of the court,

the court may order that the proceedings be dismissed generally or in relation to that claim.

(2) The court may receive evidence on the hearing of an application for an order under subrule (1).”

3 The “proceedings herein” are proceedings 4001 of 1993 commenced by a summons filed more than sixteen and a half years ago, on 24 August 1993. The persons named in that summons as plaintiffs are the present respondents. It will be convenient to refer to them as “the plaintiffs”. The named defendants are Mitrofanis D Nikolaidis and Leon Nikolaidis.

4 The summons filed on 24 August 1993 sought orders as follows:

“1. ORDERS pursuant to section 208 of the Legal Profession Act 1987, that Bills of costs be delivered by the Defendants to the Plaintiff:

(a) In respect of the matters set out in Schedule A hereto;

(b) Alternatively, in respect of such of the matters set out in Schedule A hereto wherein accounts were rendered by the Defendants to the Plaintiff within twelve (12) months of the commencement of these proceedings.

2. ORDERS pursuant to section 199 and section 200 of the Legal Profession Act 1987, that there be referred for taxation:

(a) The matters set out in Schedule A;

(b) Alternatively, such of the matters set out in Schedule A as the court deems appropriate.

3. AN ORDER pursuant to section 208 of the Legal Profession Act 1987, that the Defendants deliver up to the Plaintiffs, on such terms, if any, that the Court deems appropriate, the Plaintiff’s documents in the matters of:

(a) P R & L M Moore T/as Sunrise Pools v. John Preston

(b) Western Suburbs Constructions Pty Ltd v. Monier Ltd and Anor.

(c) J C Preston Pty Ltd (In Liquidation) and Others v. Geoffrey K Strong – Supreme Court (NSW)

(d) J C Preston Pty Ltd (In Liquidation) v. Neil King – Supreme Court (NSW).

4. AN ORDER that accounts be taken:

(a) Of payments made to the Defendants for Defendants’ costs, and the disbursement or application of such payments, in respect of the matters set out in Schedule A, from 1 January 1989 to 30 October 1992;

(b) Of the payment of $50,000.00 into the Defendants’ trust account, in or about July 1989 and the disbursement or application hereof, in respect of the matter Western Suburbs Constructions Pty Limited (formerly Preston Erections Pty Limited) and G K N Australia Limited.

5. That for the purposes of the orders sought in paragraph 4 above, directions be given as to the manner of taking the said accounts.

6. AN ORDER that the matters referred to in paragraphs 4 and 5 above be referred to the Master, Equity Division, to take accounts, and make inquiries to enable such accounts to be taken.”

5 The annexed schedule listed twenty client assignments undertaken by the defendants for the plaintiffs and other persons.

6 On 9 November 1993, R S Hulme J made orders as follows:

“1. I order that the defendants do deliver to the plaintiffs on or before Thursday 10 November bills of costs in respect of the matters numbered three, four, five, seven, ten, thirteen, fourteen and fifteen on the document entitled ‘Summary of accounts owing’ initialled by me and placed with the papers.

2. I order that the defendants do deliver to the plaintiffs on or before Tuesday, 30 November, bills of costs in respect of the other matters or groups of matters in that summary of accounts owing.

3. I direct that the defendants within fourteen days serve on the plaintiffs an affidavit annexing a copy of their office and trust account records of the matters listed in schedule A to the summons herein.”

7 At that point, therefore, the court had taken steps to ensure that bills of costs in taxable form were brought into existence in relation to all matters referred to in the schedule annexed to the summons and R S Hulme J stood the summons over to 6 December 1993 “with a view to making an order for taxation of such bills of costs”.

8 The matter of taxation of the bills directed by the orders of 9 November 1993 to be prepared was dealt with by R S Hulme J on 16 December 1993 when he made orders that included the following:

“1. Order that there be referred for taxation the Defendants’ bills of costs in respect of the matters listed in the schedule to the summons herein filed on 24 August 1993.

2. Order that, conditional upon there first being filed in court a written undertaking to the court given by such expert that

(i) he will use such access to the defendants’ files, solely for the purposes of taxation of bills of costs relating thereto;

(ii) he will insure that any copies taken of documents in the files are used solely for the purposes of taxation of bills of costs relating thereto; and

(iii) he will ensure that, as long as any copies he takes of documents in such files remain in existence, such copies shall remain in his possession at all times;

the Defendants on reasonable notice make available to a costs expert appointed by the plaintiffs all of their files in respect of the matters listed in the schedule to the summons herein, such access to commence not later than 31 January 1994.”

9 The proceedings were next before the court on 3 February 1994 when R S Hulme J made certain directions for the filing and service of affidavits in relation to “paragraphs 4, 5 and 6 of the Plaintiffs’ Summons dated 23 August 1993”. After several extensions of the timetable set on 3 February 1994, the matter came before R S Hulme J on 9 June 1994 and his Honour dealt with a notice of motion filed by the defendants on 27 May 1994 seeking the appointment of a referee “to take accounts of payments made to the defendants for the defendants’ costs, and the disbursements or application of such payments, in respect of the matters set out in Schedule A to the summons dated the 17^th of September 1993”.

10 Upon the hearing of that notice of motion, R S Hulme J made orders as follows:

“The Court orders that -

1. Pursuant to Part 72r(2)(1) refer to Mr G D Needham, QC the account and objections referred to in paragraph 3 below for inquiry and report.

2. In these terms of reference the term ‘Plaintiffs’ means and includes:

Preston International Pty Limited (Thorsten)

(ACN 003 792 247)

Preston Erection Pty Limited (Preston Equipment Hire)

(ACN 003 991 062)

Nilbrook Pty Limited (ACN 050 070 374)

Gemit Pty Limited (ACN 001 951 239)

Mevon Pty Limited (ACN 002 601 363)

Norfeld Pty Limited (ACN 003 792 229)

Four MJ Pty Limited (ACN 001 447 481)

Gateside Pty Limited (ACN 003 798 945)

Down to Earth Springwater (NSW) Pty Limited (Dunwich)

(ACN 000 815 172)

Everything and Anything Storage Pty Limited (Redewood)

(ACN 002 739 399)

Preston Engineering Pty Limited (ACN 000 531 546)

Down to Earth Springwater Pty Limited (ACN 050 058 476)

Deep Rock Springwater Pty Limited (ACN 056 626 941)

JC Preston Pty Limited (in Liquidation) (No ACN No.) 1980 litigation

JC & ME Properties (Partnership) (No ACN No.)

John Preston

Marjo Preston

Preston Family Trust

3. Make the following directions for the purpose of facilitating the reference:

(a) within 14 days of the making of this Order the Defendants shall

(i) serve on the Plaintiffs their detailed account verified by their affidavit of all moneys received by them from the Plaintiffs (or on their behalf) and disbursed by the Defendants on their behalf as solicitors, and of the dealings and transactions of the Defendants therewith upon the trust and other accounts kept by the Defendants in relation to the plaintiff;

(ii) the said account shall specify in respect of each payment and receipt

(1) the date and account thereof;

(2) to whom the payment was made;

(3) the purpose or account to which the amount was paid, appropriated or received, as the case may be;

(4) the manner in which all payments received in respect of fees and disbursement were dealt with, with reference to particular files and matters.

(b) permit the Plaintiffs to inspect all entries in the Defendants’ trust and general account ledgers relating to any work done or accounts charged by the Defendants in connection with the affairs of the Plaintiffs;

(c) The items of such account shall be numbered consecutively;

(d) Within 21 days after service upon them of the said account and affidavits the Plaintiffs to notify the Defendants of their objections and any items in dispute.

(e) The hearing of the inquiry to be before the referee on such date as he may direct.

(f) Permit the Defendants to inspect the entries in the Plaintiffs (as defined to Clause 2) ledgers or other accounting records relating to payments made or alleged to be made to the Defendants.

4. Direct that (without affecting the powers of the Court as to costs) the parties namely John Preston and Western Suburbs Constructions Pty Limited and Mitrofanis D Nikolaidis, Leon Nikolaidis and Michael Zwar be jointly liable to the referee for the fees payable to him.

5. Direct that the parties deliver to the referee forthwith a copy of this order together with a copy of Pt 72 of the Rules.

6. Direct that –

(a) subject to paragraphs (b) and (c) hereof the provisions of Pt 72 r8 shall apply to the conduct of proceedings under the reference;

(b) the referee consider and implement such manner of conducting proceedings under the reference as will without undue formality or delay enable a just determination to be made including if the referee sees fit the making of enquiries by telephone, site inspection, inspection of plant and equipment and communication with experts retained on behalf of the parties;

(c) the referee submit the report to the Court in accordance with Pt 72 r11 addressed to the Associate to Mr Justice Hulme on or before 1 September 1994.

7. The referee shall have power to permit such amendments or additions to the matter in paragraph 3 as the referee sees fit in order to dispose of the true issues between the parties the subject of the reference.

8. Grant liberty to the referee or any party to seek directions with respect to any matter arising in proceedings under the reference upon application made on twenty-four hours’ notice or such less notice as to the Court seems fit through the Associate to his Honour Mr Justice Hulme.

9. Reserve costs of the proceedings.

10. Stand the proceedings over for further directions on 15 September 1994.”

11 It is clear from the reference in order 1 to “paragraph 3 below” – and from the terms of the notice of motion - that the referee was to take an account of receipts and payments as between the plaintiffs and the defendants named in the summons and that these orders were made by reference to the claims in paragraphs 4, 5 and 6 of the summons.

12 At the end of 1994, therefore, the matter of preparation of bills of costs and taxation of costs had become the subject of the orders of 9 November 1993 and 16 December 1993; while the matter of an account had become the subject of the reference out ordered on 9 June 1994. The first aspect, arising under paragraphs 1, 2 and 3 of the summons, had been dealt with by orders for the preparation of bills of costs in relation to the relevant solicitor-client matters, an order for taxation of those bills and an order allowing access to the defendants’ files to a “costs expert” retained by the plaintiffs, no doubt to assist the plaintiffs in preparing their case in anticipation of proceedings before a taxing officer. The second aspect, covered by paragraphs 4, 5 and 6 of the summons, had been referred out to a referee for the taking of the relevant accounts.

13 The two procedures thus set in train were separate but there was, of necessity, an overlap between them, in that a full accounting between the parties could not be completed without completion of the quantification involved in the taxation of costs. This interdependence was recognised in a judgment delivered by R S Hulme J on 28 February 1995 to which I now turn.

14 There is reference in that judgment of 28 February 1995 to the fact that the state of the account between the parties became the subject of a report commissioned by the defendants from Armstrong Wily, a firm of accountants. The preparation of such a report was not something envisaged or required by the court orders. The report seems to have been commissioned by the defendants independently and by their own decision. Having referred to the Armstrong Wily report, R S Hulme J continued:

“The conclusion at which that firm arrived was that the defendants were indebted on those accounts – which I interpolate did not reflect any taxation of bills – in an amount of some $116,000, an amount which it will be noted exceeds that which the defendants were claiming.”

15 R S Hulme J later said:

“Following upon the plaintiffs’ receipt of that report and consideration of the matter by accountants or other persons engaged on their behalf, the plaintiffs indicated they would no longer pursue the topic of the reference before Mr Needham. I think the only proper inference to be drawn from the plaintiffs’ conduct in this regard is that the plaintiffs were conceding that the defendants’ claim for some $97,000 was, on the basis which was then advanced, correct. Again I interpolate, this is without any taxation.”

16 His Honour then said:

“Accordingly the plaintiffs have lost the issue raised by order 4 in the ultimate, though they did obtain some interlocutory orders directed to facilitating the resurrection of that issue.”

17 R S Hulme J went on to consider the costs orders that should be made. Having said that he had decided that each side should bear its own costs, his Honour continued:

“In doing so I make it clear that I am not directing attention to the question of who should pay for the preparation of the bills of costs themselves or who should pay for the costs of and incidental to their taxation, but I do intend that the orders which I have envisaged should be made irrespective of the result which ensues upon taxation.

The issues on prayers 3 and 4 of the summons as they have been raised before me, do not depend upon the ultimate result of taxation.

It seems to me that I can effect the intention apparent in the above if the formal orders I make are these:

(1) I confirm existing orders for costs.

(2) Except in so far as orders have previously been made thereon, I dismiss the summons.

I make no order as to costs.”

18 The references in this judgment to an indication by the plaintiffs that they “would no longer pursue the topic of the reference before Mr Needham” are explained by a letter of 15 November 1994 from the plaintiffs’ solicitors to the defendants’ solicitors that was obviously before the court. The letter read in part as follows:

“I confirm my telephoned advice on 11^th November 1994 that, in consequence of the books of your firm being made available pursuant to the orders made on 9^th June 1994, confirmed on 12^th October 1994, my clients’ accountants have been able to reconcile payments made by my clients to your firm with particular accounts for professional work. It is quite apparent that, in the absence of this examination such reconciliation would have been impossible. Because the reconciliation was effected it will now be unnecessary for the parties to incur the expense of pursuiung the reference.

Would you please let me know by return that I may inform Mr Needham QC accordingly.

With reference to paragraph 2 of your letter dated 7^th November 1994 I confirm Mr Zwar’s advice on 11^th November 1994 that the document headed ‘Confirmation of retainer’ is the only document evidencing an agreement as to a fee rate between your firm and my clients.

I expect to be filing and serving objections to your bills of costs shortly. They are now in the final stages of preparation.”

19 The foreshadowed objections to the defendants’ bills of costs were obviously served, since, in March 1996, the solicitor for the defendants swore an affidavit in which he said:

“The Defendants have sought taxation of bills of costs rendered to the First and Second Plaintiffs and filed during the course of the proceedings.

Objections have been received from the Plaintiffs and in order to finalise the taxation, it will be necessary to determine as a preliminary issue the retainer between the parties in connection with work done on behalf of both the First and Second Plaintiffs and other companies associated with the First and Second Plaintiffs.

Approximately sixteen (16) itemised bills of costs were delivered to the First and Second Plaintiffs in January 1994 and in those circumstances the Defendants seek an order that all taxation be consolidated and dealt with before a taxing master.”

20 This affidavit was sworn in support of a notice of motion filed on 14 March 1996 seeking an order as follows:

“That the application for assessment of Party/Party Costs presented by the First and Second Plaintiffs on or about 16^th February 1996 be consolidated with the taxation of all bills rendered by the Defendants to the First and Second Plaintiffs and filed in these proceedings herein.”

21 The Legal Profession Reform Act 1993 had introduced, with effect from 1 July 1994, a system of assessment of costs by legal practitioners appointed by the Chief Justice to be costs assessors, to replace the time-honoured procedure of delivery of bills of costs, notification of objections and taxing of the bills by an officer of the court in what was, in substance, an adversary proceeding. The affidavit just quoted makes it clear that the plaintiffs, acting outside the scope of these proceedings, had resorted to the new costs assessment process some time after 1 July 1994 in relation to all the costs the subject of these proceedings. The orders for taxation of bills of costs made on 16 December 1993 nevertheless remained in force.

22 The notice of motion filed on 14 March 1996 was obviously prompted by a concern that inconsistencies or other difficulties were emerging from the steps taken to obtain assessments of costs under the new system while the order for taxation under the old system remained extant. The solicitor for the defendants gave further explanation in an affidavit of 17 May 1996:

“The Defendants have requested this Honourable Court to undertake taxation of the Bills of Costs presented by the Defendants to the Plaintiffs in December 1993 and January/February 1994.

Annexed hereto and marked with the letter ‘A’ is a true copy of a letter dated 22^nd March 1996 to the Taxing Officer of the Supreme Court of New South Wales.

At present it appears that the cost division of this Honourable Court is reluctant to undertake taxation of files due to amendments to the Legal Profession Act which took effect from July 1994. I am advised by the Taxation Registry that no further taxations are being conducted by the Court.

An order was made by His Honour, Mr Justice Hulme on that the Bills filed in Court be taxed.

Annexed hereto and marked with the letter ‘B’ is a true copy of His Honour’s order dated 16^th December 1993.”

23 The “accompanying Notice of Motion” is a notice of motion filed on 31 May 1996 seeking an order that Mr Costs Assessor Hattersley “be restrained from conducting any further assessment in connection with the Bill of Costs delivered by the First and Second Respondents dated 13 March 1996”, being, no doubt, a bill that had been made the subject of the new system of costs assessment.

24 On 13 May 1996, however, Mr Hattersley told the defendants’ solicitor that he had already completed the assessment assigned to him. He furnished a certificate of determination dated 31 May 1996.

25 This caused an application to come before Young J as duty judge on 25 July 1996. His Honour noted that the costs recoverable by the defendants had still not been quantified when the system of taxation of costs was superseded. He said, in relation to that, in his judgment of 25 July 1996:

“Regulation 80 under the Legal Profession Act probably operates to amend the order that was made by Hulme J before 1 July 1994 as to taxation, so that under regulation 80(3) the costs are to be assessed in accordance with the new Pt 11 of the Act, but the former taxation principles apply.”

26 Young J’s judgment concluded:

“Accordingly, I will stay the enforcement of the order for taxation of the respondent’s bill of costs, with liberty to apply to lift the stay should the ongoing process break down.

The other bills of costs now have to be considered by the appropriate official. They will need to be dealt with by assessment and the assessor will apply the principles of taxation.

There is an issue between the parties not that the solicitors were retained by the client, but as to the terms of the retainer. It seems sensible to isolate that issue and refer it to the decision of the same person who makes the assessment of costs.

Each party should pay their own costs, except that the defendant should pay the costs of preparing and filing the plaintiff’s notice of motion of 25 June 1996. Otherwise I make orders in accordance with the short minutes of orders initialled by me, dated and placed with the papers.”

27 It appears that the orders as made on 25 July 1996 (that is, the orders in the short minutes) were not precisely as foreshadowed in the judgment. The orders made were:

1. Order that the plaintiffs be restrained until further order of the court from enforcing or seeking to enforce the certificate of M L Hattersley in relation to costs payable pursuant to orders of Hulme J.

2. Liberty to the plaintiffs to apply on 7 days notice to vary or reserve [sic] such stay.

3. Direct the proper officer of the court to refer to M L Hattersley solicitor the defendants’ bill of costs for assessment pursuant to s 206 of the Legal profession Act 1987.

4. Refer the question of the terms of the defendants’ retainer by the plaintiff to M L Hattersley for inquiry and report.

5. Liberty for the referee and the parties to approach the court for directions under Pt 72 r 8 on 3 days notice.

6. Defendant undertakes to provide plaintiff’s solicitors and its costs assessors with access to the rules [sic; scil: “files”] on reasonable notice for a period of 6 weeks.”

28 It subsequently emerged that this task set by order 4 caused difficulty for Mr Hattersley. He said so in a letter of 27 February 1998 to the plaintiffs’ solicitors:

“The terms of Order 5 [sic] cause me difficulty. Whilst I am able to conclude the assessments according to law by issuing my determination I do not know what further ‘enquiry’ I should make and what and to whom I should ‘report’.”

29 In a subsequent letter dated 6 April 1998, Mr Hattersley observed that the process undertaken by a costs assessor was “totally paper driven” and that there were “no avenues available to me to hear and see any witnesses giving evidence scrutinised and tested through cross examination”. Mr Hattersley then said:

“Accordingly I would encourage the parties or one of them to seek directions and declarations from the Court so as to establish what were the precise terms and conditions of the solicitors’ retainers from time to time.”

30 It was no doubt because of these difficulties that it was ordered by Young J on 5 November 1998 that the order of 25 July 1996 referring to question of retainer to Mr Hattersley for inquiry and report be set aside. His Honour directed that the plaintiffs file and serve points of claim “on the issue of the terms of the retainer by 25 November 1998, that points of defence be filed and served by 9 December 1998”, and that any affidavits to be relied on by the defendants in the matter of the terms of the retainer be filed and served by 23 December 1998, with any affidavits of the plaintiffs in reply to be filed by 10 February 1999.

31 The proceedings came back before Young J on 18 February 1999. His Honour extended the timetable set on 5 November 1998 with respect to determination of the terms of the retainer so that the deadline for the final step was 7 June 1999 and the matter was to come back to court for mention on 17 June 1999. On that date, the timetable was extended to a date in September 1999 and the proceedings were stood over to 27 September 1999 for mention. There was yet another extension of the timetable so that the last step was due to be taken by 6 December 1999 and the matter was to come back to court on 13 December 1999.

32 On 26 July 2000, the plaintiffs (or, more precisely, Mr Preston alone) filed a notice of motion seeking leave to amend the summons. The proposed amendments appeared from a form of amended summons annexed to the notice of motion which, in the usual way, showed the amendments by underlining. There were three proposed amendments, namely, the addition of eleven new plaintiffs (as third to thirteenth plaintiffs), the addition of Mr Michael John Zwar as a defendant and the addition of a prayer for an order “that any sums found, by virtue of the taxation and accounts referred to herein, to have been overpaid by any or all of the plaintiffs to the defendants be repaid”.

33 The amendment application was heard and determined by Master McLaughlin on 25 August 2000. It is pertinent to quote at length from the judgment. After referring to the parties and the relief sought by the summons as originally filed, the Master said:

“9. I have been informed that on 28 February 1995 final orders were made by Hulme J in the terms of prayers 1 and 2 in the summons, and that otherwise the summons was dismissed. I have not been informed as to whether his Honour’s order was ever entered.

10. There is a most voluminous file in this matter, the contents of which were the subject of comment by Young J on 25 July 1996, when his Honour said:

‘It is really absurd that it should have taken the amount of paper that has been created and the amount of delay that has occurred.’

11. Since the matter came before Young J more than four years ago a considerable quantity of additional paper has been created in the matter. From what I have been told -- and I would emphasise that no evidence has been placed before the Court by affidavit or otherwise in support of the present notice of motion – the plaintiffs were formerly clients of the defendants, who are solicitors. It would appear from the judgment of Young J on 25 July 1996 that there is a dispute (described by his Honour as ‘a squabble’) between solicitor and client as to costs.

12. The amended summons (which by the notice of motion presently before me the first plaintiff seeks to file) seeks the relief sought in the original summons together with a further prayer for relief which is consequential upon the earlier prayers for relief originally sought. That additional prayer for relief is ‘an order that any sums found by virtue of the taxation and accounts referred to herein to have been overpaid by any or all of the plaintiffs to the defendants be repaid’.

13. More significantly, however, is the fact that the amended summons includes upon its entitlement the names of eleven additional plaintiffs (being described as referring to one to thirteen plaintiffs respectively) and the name of an additional natural person included in the description of the defendants. I have been informed by Counsel for the defendants that the additional person was in fact joined as a defendant many years ago at an early stage in the proceedings and that such additional joinder at this stage is not necessary. More significantly to the present application if the proposed joinder of the eleven additional plaintiffs.

14. The first plaintiff seeks to ground his present application upon the provisions of Part 20 rule 1 of the Supreme Court Rules. That rule relates to amendment of any document in the proceedings. It does not expressly relate to the joinder of parties. The addition of parties is the subject of express provision in Part 8 of the Rules, in particular Part 8 rule 8.

15. The defendants oppose the present application. The ground for the opposition essentially is that the relief sought in the summons has now been the subject of final orders by Hulme J on 28 February 1995. His Honour granted the relief sought in prayers 1 and 2 in the summons. His Honour otherwise dismissed the summons.

16. In those circumstances it is the submission of the defendants that the proceedings have been brought to a conclusion and that what the first plaintiff now seeks to do is in effect to resurrect proceedings that have been totally and finally dealt with.

17. The fact that the processes of conducting the taxation and the assessment, the subject of orders 1 and 2 in the summons may not yet have been brought to a conclusion does not in my view in any way affect the validity of the foregoing submission on the part of the defendants. It seems to me that what the applicant is attempting now to do is to reinstate proceedings which, if they should have been instituted at all, should have been instituted no later than the making of the final orders by Hulme J five and a half years ago.

18. To accede to the present application would in my view be verging upon an abuse of the processes of the Court. In any event, no evidence whatsoever has been placed before the Court which would have the effect of justifying the Court in adding the eleven additional plaintiffs to the proceedings.

19. The applicant has chosen not to disclose to the Court firstly why those entities and persons should now be joined, and secondly, why they were not joined at an earlier stage in the proceedings. Although the defendants do not rely upon this submission in their present opposition to the relief sought in the notice of motion, I observe that Part 8 rule 8 provides, in subrule (2) to thereof, that a person shall not be added as a plaintiff without his consent, and that there is no consent presented to the Court in respect to the proposed additional eleven plaintiffs. However, as I say, although this matter was originally raised in opposition by the defendants, the defendants no longer rely upon non-compliance with that provision of the rules.

20. I have no hesitation whatsoever in dismissing the present notice of motion.”

34 The proceedings came before Bryson J on 11 April 2001. His Honour said in a judgment of that date:

“It seems to me that assessment of costs (as has been ordered in accordance with the claims in the Summons that certain bills rendered by the defendants should be taxed) cannot as a matter of practicality be sent back to Mr Hattersley as assessor or to some new assessor without first determining the issue which the plaintiffs have raised relating to the nature of the retainer. It is to this issue that the claim for production of documents in the Notice to produce of 9 May 2000 relates. As the dispute about the extent of the retainer appears to have brought proceedings before Mr Hattersley as assessor to an inconclusive end, I cannot allow the possibility to continue that another reference to an assessor might be frustrated.”

35 Bryson J then undertook case management which resulted in the making of orders to the following effect when the proceedings came before the court (Windeyer J) on 25 June 2001:

1. Order that the question of the terms of the retainer so far as costs are concerned be determined by the court.

2. Direct that the plaintiff file any amended points of claim on the retainer issue on 16 June 2001 to identify any matters in respect of which Mr Preston claims he would not be liable.

3. Direct the defendants to file amended points of defence on that issue, such document to clearly state the basis of any retainer claim alleged by the defendants to be filed by 6 August 2001.

4. Plaintiffs to file any response to the points of defence by 20 August 2001.

36 Amended points of claim were filed on 13 July 2001. Amended points of defence were filed on 16 August 2001. On 27 August 2001, Windeyer J directed that the matter be placed in the next Registrar’s call over on 12 September 2001 for the appointment of a hearing of two to three days. On 14 November 2001, the Registrar fixed the proceedings for hearing by Santow J on 29 April 2002 with an estimate of two days. That fixture was afterwards vacated.

37 As will be seen presently, further amended points of claim filed by the plaintiffs on 15 April 2002 contained allegations of fraud in relation to the creation of a letter bearing the date 19 April 1984. At a directions hearing on 10 May 2002 the court noted the intention of the defendants to rely on a report by a document examiner relating to a carbon copy of the letter dated 19 April 1984. There were also other directions about examination of that carbon copy.

38 The letter dated 19 April 1984 had, by then, come to occupy a prominent place in the plaintiffs’ contentions concerning the terms of the defendants’ retainer by the plaintiffs. The letter was signed by the second defendant, Leon Nikolaidis, and addressed to Mr Preston. It purported to set out terms of engagement. It appears that the plaintiffs denied receipt of the letter and alleged that it was a forgery, in the sense that it had been created much later than the date it bore, with the carbon copy then inserted into the defendants’ files.

39 On 14 June 2002, there were further directions concerning examination of the carbon copy letter by forensic experts. There were similar directions on later occasions.

40 A hearing of the proceedings fixed for 17 and 21 February 2003 was vacated on 21 November 2002. On the same day it was ordered that, save for steps then directed with respect to certain incidental costs issues, the proceedings be stayed “until the conclusion of the criminal trial against Leon Nikolaidis, and the elapsing of any appeal time following the conclusion of that trial, or until further order of the Court”. On 11 December 2003, the stay order was varied so as to cause the stay to operate until 27 February 2004. The stay was later extended to 7 December 2004 and subsequently to 1 March 2005.

41 Leon Nikolaidis stood trial in the District Court in late 2007 and was convicted on a single count under s 300(1) of the Crimes Act 1900 of making a false instrument with the intention of using it to induce another person to accept it as genuine and because of that acceptance to do some act to the prejudice of Mr Preston. He was sentenced to a term of imprisonment. An appeal against both conviction and sentence was dismissed on 17 December 2008: Nikolaidis v R [2008] NSWCCA 323. The instrument in question was the letter of 19 April 1984.

42 While the criminal proceedings and the appeal were in progress, these proceedings remained in abeyance. It is not clear that any stay was in place beyond 1 March 2005 but, following the conclusion of the criminal proceedings and the appeal, Bergin CJ in Eq ordered on 12 May 2009 that “the order staying these proceedings is discharged”. It is apparent that the matter had come before her Honour for case management following the long period of inactivity. Bergin CJ in Eq also made orders as follows:

“2. I order that the plaintiff produce to the defendant by no later than 25 May 2009 a list of the fee notes or bills that are in question in the litigation setting out in schedule form the amount rendered in the bill and the amount alleged by the plaintiff to be an overcharging of the plaintiff.

3. The plaintiff to provide copies of those bills placed behind the list and schedule referred to in order 2.

4. I order that the matter proceed on pleadings and that the plaintiff file and serve a statement of claim by no later than 8 June 2009 subject to the defendant’s entitlement to raise any objection to the matters pleaded by reason of any claims that the matters raised in the pleading have already been dealt with or have been abandoned or are the subject of the statute of limitations.”

43 Two things happened after the making of these orders on 12 May 2009. First, the plaintiffs filed a statement of claim on 19 June 2009. Its content will be mentioned presently. Second, the notice of motion with which I am now dealing was filed by the defendants on 2 October 2009. The latter step was obviously taken to raise matters of the kind contemplated by the condition attached to the Chief Judge’s order 2.

44 In approaching the present application, I must first identify the claims made in the proceedings. It is useful to trace their development. I have already set out the claims in the summons (see paragraph [4] above). I have also referred to the emergence, over time, of a question about the terms of the defendants’ retainer as solicitors for the plaintiffs, that being a matter of central importance to the determination of the matters of quantification of and liability for costs raised by the summons. Further, I have referred to the directions made by Young J on 5 November 1998 for the filing of points of claim and points of defence “on the issue of the terms of the retainer”, to subsequent directions concerning points of claim and points of defence and to Windeyer J’s order of 25 June 2001 that the question of the terms of the retainer be determined by the court. Bryson J had earlier indicated the need for such a determination.

45 It is pertinent now to note the steps that flowed from the making of the directions and the steps that were taken to plead the respective cases.

46 A document entitled “Points of Claim on the Issue of Retainer” was filed by the plaintiffs on 5 November 1999. They there pleaded what they considered to be the terms of the defendants’ retainer, including hourly rates of charge for work done for the plaintiffs and a number of other entities. The pleading concludes, at paragraph 64:

“Further and in the alternative there is no enforceable retainer agreement between any of the above and the defendants.”

47 Particulars follow to which it is not necessary to refer.

48 Points of defence were filed by the defendants on 17 December 1999. The defendants either denied or did not admit most of the allegations in the points of claim, including that in paragraph 64. Amended points of claim were filed on 13 July 2001. Amended points of defence were filed on 16 August 2001.

49 On 15 April 2002, Gzell J granted the plaintiffs leave to file further amended points of claim in relation to the terms of the retainer. The grant of leave was made by reference to a particular form of further amended points of claim, being the form constituting the annexure “A” to an affidavit of Mr Colqhoun sworn on 12 April 2002. The court thus expressly allowed the reformulation of the plaintiffs’ case in the form set out in that document.

50 In these further amended points of claim (which were filed in court immediately after leave was granted on 15 April 2002), the plaintiffs raised for the first time, in paragraphs 65 to 77, issues about the letter of 19 April 1984. Drawing on material in an affidavit sworn on 27 March 2002 by a former employee of Leon Nikolaidis, the further amended points of claim alleged action of Leon Nikolaidis to bring the letter dated 19 April 1984 (and a carbon copy of it) into existence many years after that date and to insert the carbon copy into one of the defendants’ files. There was also an allegation of fraudulent conduct by Leon Nikolaidis in relation to three other identified documents. The further amended points of claim set out under distinct headings particulars of the fraudulent conduct alleged in relation to the 19 April 1984 letter and particulars of the fraudulent conduct in relation to the three other documents. Then followed, under a heading “Orders Sought”:

“(1) A declaration that the terms of the retainer agreement between the plaintiffs and the defendants in respect of the matters set out in the Schedule to the Summons are as pleaded herein.

(2) A declaration that the second defendant is guilty of fraudulent conduct as alleged in paragraphs 71, 76 and 77 hereof in respect of the matters pleaded in paragraphs 65 to 70, 72 to 75 and 77 respectively hereof.

(3) A declaration that in the events which have happened the defendants’ bills of costs in respect of the matters set forth in the Schedule to the Summons are unenforceable as tainted by the fraudulent conduct of the second defendant.

(4) Such further or other declarations, orders and/or relief as the nature of the case may require.

(5) An order that the defendants pay the plaintiffs costs of the proceedings on an indemnity basis.”

51 Further amended points of defence were filed on 19 April 2002, also pursuant to leave granted by Gzell J on 15 April 2002. The defendants denied the allegations in paragraphs 65 to 77. They also said that the plaintiffs were estopped by their conduct from relying on the matters therein alleged.

52 I have already referred to the order made by Bergin CJ in Eq on 12 May 2009 that the matter proceed on pleadings and that a statement of claim be filed. The plaintiffs filed a statement of claim on 19 June 2009. The orders sought are:

“1. An order that the defendants deliver up to the plaintiffs, or alternatively the court, such files of the plaintiffs as remain in the possession of the defendants.

2. An order for the taking of accounts by the defendants in common form or alternatively on the basis of wilful default as the court may determine.

3. Further or alternatively, an order that such question or questions as the court may determine be referred pursuant to Part 20 of the Uniform Civil Procedure Rules.

4. A declaration that a document generated by Leon Nikolaidis and dated 19 April 1984 is void and of no effect.

5. An order that the defendants be ordered to pay the plaintiffs such amount as the court may determine.

6. Damages.

7. Equitable compensation.

8. Interest pursuant to section 101 of the Civil Procedure Act 2005 and Part 36.7 of the Uniform Civil Procedure Rules.

9. The defendants to pay the plaintiff’s costs.”

53 In the pleading and particulars that follow, the plaintiffs make allegations about the terms of the retainer and about overcharging (in the sense that charges made were in breach of the retainer and “fiduciary duties”). Among the allegations in relation to the terms of the retainer is an allegation that the 19 April 1984 letter “was found to be fraudulent” and “is void and of no effect”. The whole tenor of the statement of claim is that the proceedings are proceedings for breach of retainer and breach of fiduciary duty giving rise to an obligation to account or to render equitable compensation or to pay damages.

54 The pleaded material on the question of the retainer was in the state described in paragraphs [49] to [51] above when these proceedings were stayed on 21 November 2002 and remained in that state on 11 May 2009 when Bergin CJ in Eq made the orders referred to at paragraph [42] above. Subsequently, however, the pleaded case sought to be advanced by the plaintiffs took the form described in paragraphs [52] and [53] above by reference to the statement of claim filed on 19 June 2009. It is in that context that I approach the motion now before me and the question whether it should be ordered pursuant to rule 13.4 of the Uniform Civil Procedure Rules “that the proceedings herein be dismissed”.

55 Three main questions were canvassed on the present application:

1. Whether orders made in the past disposed of the proceedings in their entirety, so that there is nothing left requiring adjudication.

2. Whether the statement of claim filed on 19 June 2009 is authorised by order 4 made by Bergin CJ in Eq on 11 May 2009.

3. Whether the claims in the statement of claim are statute-barred so that they cannot now be pursued.

56 In relation to the first of these questions, I am of the opinion that orders made in the past disposed of the proceedings in part but not in their entirety. It is true that the orders made by R S Hulme J on 28 February 1995 included the following:

“Except in so far as orders have previously been made thereon, I dismiss the summons.”

57 At an earlier point, however, his Honour had made two orders of significance. On 16 December 1993, he ordered that “there be referred for taxation” the identified bills of costs. On 9 June 1994, he referred to a referee “for inquiry and report” what were described as “the account and objections referred to in paragraph 3 below”. That paragraph 3 contained directions for the preparation of a detailed account of moneys received by “the Defendants” from “the Plaintiffs” and of the disbursement of and dealings with those moneys, with provision for “the Plaintiffs” to notify their objections and “any items in dispute”.

58 The effect of those two orders was to set in train two separate processes directed towards a final determination of the state of the account between the plaintiffs and the solicitors. This was obviously with a view to the determination of the claims advanced by the summons, as set out at paragraph [4] above. The need to determine those claims remained extant when R S Hulme J made the orders of 28 February 1995. Order (2) of that date quoted at paragraph [17] above was, by its terms, in the nature of a residual order – in the sense that it dealt with matters not already dealt with in some other way. It therefore did not operate to cut across the processes that had already been set in train to determine the liability of the plaintiffs to the defendants for costs and the state of account between the plaintiffs and the defendants as their solicitors.

59 It is clear that there was an expectation on the part of R S Hulme J that the processes set in train by his orders would determine both those matters – subject, of course, to adoption by the court of the report to be prepared by the referee in respect of the second matter; and with the possibility that the court might decline to adopt the report or might adopt it with modifications. As at 28 February 1995, however, his Honour stated that a position had been reached where the taxation of costs was proceeding but neither party wished to pursue the reference to the Honourable G D Needham QC; also that the plaintiffs had conceded, in respect of paragraph 4 of the summons (that is, the claim for an order that accounts be taken), that the defendants’ claim for “some $97,000” was “correct” (with the question of taxation of costs still left to one side). The letter of 15 November 1994 referred to at paragraph [18] above supported the conclusion that the parties had reached a compromise on the account aspect.

60 The court thus noted on 28 February 1995 that agreement between the parties had produced a result where the plaintiffs were to pay a stated sum to the defendants and there was no need for an account. It was that conclusion that led R S Hulme J to say, “the plaintiffs have lost the issue raised by order 4 in the ultimate”. The order than made dismissing the summons “[e]xcept in so far as orders have previously been made” must therefore be taken to have extended to the claim in paragraph 4 of the summons, that is, the claim for an order than accounts be taken. That part of the proceedings was, at that time, concluded and the claims in the summons were, at least to that extent fully adjudicated.

61 What is perfectly clear, however, is that the adjudication of 28 February 1995 did not touch upon or affect the part of the relief claimed in the summons that was concerned with the quantification of solicitor-client costs. When R S Hulme J made what was, in a sense, a residual order of dismissal on that day, the orders of 9 November 1993 and 16 December 1993 were extant with respect to the question of quantification of costs. As a consequence, the proceedings remained alive in relation to the claims in paragraphs 1 and 2 of the summons. I say this because of the effect the orders of 9 November 1993 and 16 December 1993 actually had, having regard to the statutory scheme then in force.

62 Division 5 of Part 11 of the Legal Profession Act 1987, as then in operation, dealt with the taxation of solicitor-client costs. Section 198 provided that proceedings for the recovery of costs by a solicitor were not to be commenced until at least one month after a bill of costs had been delivered. Section 199 permitted any person liable to pay costs to seek taxation of costs. The opening words of s 199(1) were:

“An application for taxation of a bill of costs may be made to the Supreme Court. . .“

63 Under s 199(3), referral for taxation was automatic if made, within one month after the giving of the bill, by the person liable to pay the costs. Otherwise, an order of the Supreme Court referring a bill for taxation was required by s 199(4). Section 200 empowered the Supreme Court to make an order referring a bill of costs for taxation. Section 203(1) said:

“A bill of costs shall be taxed in accordance with the rules of the Supreme Court.”

64 By s 206, the certificate of a taxing officer as to the amount to be paid in respect of a bill of costs was final and conclusive – subject, however, to “any retaxation of the bill” and “any review of the taxation of the bill by the Supreme Court”. Section 206(3) empowered the court to order the entry of judgment for the taxed amount together with the costs of the proceedings for obtaining the order.

65 In the statutory context existing at the time, taxation of solicitor-client costs was something that the court undertook. The orders of 9 November 1993 and 16 December 1993 were thus orders made to progress the taxation by the court in the particular proceeding which had, as one of its objectives at the time of its commencement, the quantification of solicitor-client costs by the court in accordance with the statutory scheme.

66 A change of course occurred as a consequence of the alteration of the statutory scheme with effect from 1 July 1994. As I have noted, the plaintiffs acted outside the scope of these proceedings by resorting to the new system of assessment of costs introduced by the Legal Profession Reform Act 1993. That prompted the move by the defendants, by notice of motion filed on 14 March 1996, to have the taxation that was already in train and the subsequently instituted assessment process “consolidated”. That in turn led to the decision of Young J on 25 July 1996 the effect of which was to halt the 1993 steps directed towards taxation and to allow the assessment under the new regime to go ahead (his Honour noted that transitional provisions were to the same effect in any event). By that time, the question about the terms and scope of the retainer had arisen in stark form and was before the court. The court, by the orders of Young J, brought that question within the confines of this proceeding and referred it out to a referee, being the costs assessor in whose hands the assessment task already was (see order 4 at paragraph [27] above).

67 The referee, however, considered himself unable to perform the reference (see paragraphs [28] and [29] above). As a result, the court made directions on the footing that the court itself should determine the terms of the retainer. That was confirmed by the order made by Windeyer J on 25 June 2001 (see paragraph [35] above). That order was made following the observation of Bryson J on 11 April 2001 that the assessment of costs could not be progressed until the terms of the retainer had been ascertained.

68 Ascertaining of the terms of the retainer has therefore been an established and central part of these proceedings for a long time; and there has been no adjudication on that matter.

69 It is for that reason that I am of the opinion that the proceedings have not been disposed of in their entirety by orders made in the past.

70 I turn now to the second question set out at paragraph [55] above, that is, whether the statement of claim filed on 19 June 2009 is authorised by the order made by Bergin CJ in Eq on 12 May 2009.

71 The answer to that question is “no”. An order that the matter proceed on pleadings is an order directed towards delineation of a case already advanced. Thus, in a proceeding commenced by a summons which does no more than state the relief sought, an order that the proceeding proceed on pleadings makes it necessary for the plaintiff to formulate allegations and particulars in support of the proposition that the relief sought in the summons should be granted. The order does not allow the plaintiff to add new claims or to advance new causes of action. For that to happen, there must be a grant of leave to amend under s 64 of the Civil Procedure Act 2005.

72 The tangled history of this case warrants a conclusion that, immediately before the orders of 12 May 2009 were made, the plaintiffs’ claims were those in the further amended points of claim of 15 April 2002 (see paragraph [50] above). Those claims went entirely to the question of the terms of the retainer, that being a question that, pursuant to the order made by Windeyer J on 25 June 2001, was to be determined by the court in order that the matter of quantification of solicitor-client costs raised by the summons filed on 24 August 1993 might be properly addressed in the light of the consequences of the operation of the transitional measures under the Legal Profession Reform Act 1993 upon the orders of 9 November 1993 and 16 December 1993. The question of fraud was raised by the further amended points of claim of 15 April 2002 and bore a direct relationship to the aspect of the retainer in which the letter of 19 April 1984 was said to play a part. The question of the effect of any such fraud upon the retainer and therefore the right of the defendants to recover costs for the legal services rendered by them to the plaintiffs was clearly within the scope of the necessary inquiry into the terms of the retainer. Furthermore, the filing of those further amended points of claim was the subject of a grant of leave made by Gzell J by reference to the particular document (see paragraph [49] above), so that, to the extent that there was a need for leave to amend, the leave actually granted by Gzell J necessarily included leave to amend.

73 The claims in the statement of claim filed on 19 June 2009 are much wider than and quite different from those in the further amended points of claim. In the first place, there is a claim for the delivery up of “all such files of the plaintiffs as remain in the possession of the defendants”. Second, there is a claim for an order that accounts be taken by the defendants. Third, there is a claim that unspecified questions be referred out to a referee pursuant to Part 20 of the Uniform Civil Procedure Rules. There is no equivalent or similar relief specified in the further amended points of claim of 15 April 2002. There having been no grant of leave to amend to include those claims, they cannot be pursued. The order that the matter proceed on pleadings is insufficient to allow them to be pursued.

74 In relation to the second of the claims referred to in the immediately preceding paragraph, there is the additional point that, as I have said at paragraph [60] above, R S Hulme J’s order of dismissal made on 28 February 1995 extended to the claim in paragraph 4 of the summons for an order that accounts be taken. It follows that that aspect of these proceedings has been determined by the court. That is an additional reason why the claim for an account cannot now be renewed.

75 The same is true, to a certain extent, in relation to the claim in the statement of claim of 19 June 2009 for an order that the defendants deliver up “such files of the plaintiffs as remain in the possession of the defendants”. There was in the summons of 24 August 1993 a claim for an order that the defendants deliver up the plaintiffs’ documents in specified “matters”, each of which appears to have been a court proceeding to which one of the plaintiffs was a party and in which, it may be inferred, the defendants acted as that party’s solicitors. The order of dismissal of 28 February 1995 extended to that claim in the summons, with the result that the claim cannot now be renewed with respect to the documents in the particular matters.

76 Returning to the statement of claim filed on 19 June 2009, it may be noted that paragraphs 5, 6, 7 and 8 all advance claims for the payment of money by the defendants to the plaintiffs – in one case (paragraph 5) without any classification of the nature of the obligation to pay and in the others as damages (paragraph 6), equitable compensation (paragraph 7) and interest (paragraph 8). These are all new claims, in that that they have no counterpart in the further amended points of claim of 15 April 2002 or any earlier articulation of the plaintiffs’ case. It is therefore not open to the plaintiffs to pursue them in the absence of a grant of leave to amend. The order that the matter proceed on pleadings did not operate to allow any such amendment.

77 The only claim common, at least in substance (although not in precise terms), to the further amended points of claim of 15 April 2002 and the statement of claim filed on 19 June 2009 is the claim for declaratory relief as to the fraudulent character of the letter of 19 April 1984: see prayer (2) in the further amended points of claim and prayer 4 in the statement of claim. The purpose of or pretext for such a declaration is, however, quite different in each case. In the claims of 15 April 2002, the allegedly fraudulent character of the letter of 19 April 1984 goes to the validity or enforceability of the defendants’ retainer and therefore their right to the remuneration the quantification of which is the sole remaining purpose of these proceedings. In the claims of 19 June 2009, the allegedly fraudulent character of the letter is not raised in any way in relation to definition of the terms of the retainer for the purposes of quantification of costs. It is put forward as part of a quite separate case seeking an account or equitable compensation or damages for breach or retainer or breach of fiduciary duty. The pursuit of such a case is not open to the plaintiffs in the absence of leave to amend.

78 The conclusions reached with respect to the first and second questions at paragraph [55] above make it unnecessary to address the third question there mentioned, that is, whether the claims advanced through the statement of claim filed on 19 June 2009 are statute barred. While the likelihood that that is the case appears on the surface to be very strong indeed, the fact that the matter does not need to be determined and the general reluctance one should have to decide limitation questions upon an interlocutory application (see Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 533) cause me to say no more about the matter.

79 The notice of motion with which I am currently dealing seeks, in terms, one substantive order only, that is, an order under rule 13.4 of the Uniform Civil Procedure Rules that the proceedings be dismissed. For such an order to be made, it would be necessary to find facts making up one of the grounds in that rule, as set out at paragraph [2] above. When it is recognised that the proceedings as now constituted are not as indicated by the statement of claim filed on 19 June 2009 but, rather, as indicated by the further amended points of claim of 15 April 2002, it is apparent that there remains extant a coherent but quite confined claim of the plaintiffs related to ascertaining the terms of the retainer which cannot be said to be affected by any of the rule 13.4 vices and which ought to be allowed to proceed to trial, assuming that the plaintiffs still wish to see it come to trial. It would therefore not be correct to dismiss the proceedings out of hand.

80 The present motion is not advanced on the basis of want of prosecution by the plaintiffs. I note, in that respect, the stay that was in force (or apparently understood to be in force) for a considerable time – of the order of six and a half years: see paragraphs [40] and [42].

81 Although the proceedings will not be dismissed, the record should be set right by ordering that the statement of claim filed on 19 June 2009 be struck out. Such an order is within the subsidiary claim in the notice of motion for “such further order as the nature of the case may require”. It will then be up to the plaintiffs to decide whether to seek leave to amend by converting the case as pleaded on 15 April 2002 into the quite radically different case indicated by the statement of claim filed on 19 June 2009. Given that s 64 of the Civil Procedure Act concerning amendment is expressed to be subject to s 58 (which in turn directs attention to s 56 and s 57 and the overriding purpose of the Act and the rules of court), the prospects that the plaintiffs would succeed upon any such application at this stage – when they have been aware for some eight years of the alleged fraud pleaded for a different purpose in the further amended points of claim of 15 April 2002 but did not see fit until 19 June 2009 to make it the basis for a claim for damages or equitable compensation - must be rated as very problematic: see, for example, Bi v Mourad [2010] NSWCA 17 where the Court of Appeal yet again emphasised the force of the principles in s 56 to s 60 of the Civil Procedure Act, particularly in light of the decision of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175. The observations at [94] to [96] of the judgment of Gummow, Hayne, Crennan, Kiefel and Bell JJ in Aon Risk Services seem to me to apply with particular force to this case.

82 The orders I will make are:

1. Order that the statement of claim filed on 19 June 2009 be struck out.

2. Order that the defendants’ claim by notice of motion filed on 2 October 2009 for an order that the proceedings be dismissed be itself dismissed.

83 It remains to mention a separate matter canvassed on the hearing of the notice of motion. It concerns Mr Zwar and the question whether he is in truth a party to the proceedings.

84 It is accepted on both sides that Mr Zwar was not named as a defendant in the summons and that there was no explicit order of the court at any time after the filing of the summons joining him as a party. Indeed, an application by way of the notice of motion filed on 26 July 2000 for an order joining him as a defendant was dismissed on 25 August 2000: see paragraph [33] above. Master McLaughlin said, in relation to that, in his judgment of the latter date:

“I have been informed by Counsel for the defendants that the additional person was in fact joined as a defendant many years ago and that such additional joinder at this stage is not necessary.”

85 Master McLaughlin’s refusal to order that Mr Zwar be joined a defendant was not the product of a conclusion that he ought not be a party. It was based on the erroneous view that Mr Zwar was already a defendant and had been for “many years”, so that there was no need for any such order. In the balance of the Master’s judgment, there are several references to “the defendants”. It is clear, in the light of the explicit comments made in the judgment concerning Mr Zwar, that it was intended to include him in everything said about “the defendants”.

86 It may also be noted that, almost six years earlier, R S Hulme’s orders of 9 June 1994 dealing with the reference to the Honourable G D Needham QC as a referee included the following:

“direct that (without affecting the powers of the Court as to costs) the parties namely John Preston and Western Suburbs Constructions Pty Limited and Mitrofanis D Nikolaidis, Leon Nikolaidis and Michael Zwar be jointly liable for the fees payable to him.” [emphasis added]

87 There is no dispute that Mr Zwar was a partner in the firm M D Nikolaidis & Co in the relevant period after March 1992 and therefore logically a party to proceedings concerning costs rendered by that firm. An application for assessment of costs as against the current plaintiff, Mr Preston, was signed by both Leon Nikolaidis and Mr Zwar. An affidavit sworn by Mr Zwar for the purposes of these proceedings on 16 January 1995 says:

“I am one of the defendants.”

88 That affidavit, prepared by M D Nikolaidis & Co and carrying a reference “MJZ:ERR(PREMSMZ161A)” which appears to incorporate Mr Zwar’s initials, names M D Nikolaidis, Leon Nikolaidis and Mr Zwar as the defendants in the proceedings. Other affidavits prepared by M D Nikolaidis & Co also name Mr Zwar as one of the defendants. One such affidavit is another affidavit of Mr Zwar himself (sworn on 13 March 1996) in which he describes himself as “the solicitor for the Defendants herein” and says that the defendants have sought taxation of certain bills of costs. By a notice of motion dated 30 May 1996 and signed by Mr Zwar as “Solicitor for the Applicant”, application was made by an “Applicant” consisting of M D Nikolaidis, Leon Nikolaidis and Mr Zwar. There was a notice of motion in like form for another purpose dated 30 May 1996.

89 It was the notice of motion dated 30 May 1996 (filed on 31 May 1996) that was the foundation for the orders made by Young J on 25 July 1996. The stay granted by his Honour was the stay that had been sought by M D Nikolaidis, Leon Nikolaidis and Mr Zwar in relation to assessment of costs rendered by the firm of which they were the partners.

90 Moving to recent times, it is, I think, of particular significance that the notice of motion with which this judgment is concerned:

(a) describes “Person seeking orders” as:

“Leon Nikolaidis t/as M D Nikolaidis & Co and Michael John Zwar and Estate of Mitrofanis D Nikolaidis defendants” [emphasis added];

(b) describes “Legal representative” as:

“Michael John Zwar

McLachlan Chilton”; and

(c) is signed by Mr Zwar.

91 It is clear that Mr Zwar was recognised by the court itself (in, at the least, an order of 9 June 1994 and a judgment of 25 August 2000) as a co-defendant with M D Nikolaidis and Leon Nikolaidis, that he was treated by the plaintiffs on several occasions as one of the defendants and that he represented himself on several occasions in documents presented to the court to be a co-defendant, including, most recently, in the notice of motion filed on 2 October 2009. If there were such a thing as a “de facto party” or a “party de son tort”, Mr Zwar would without doubt be a co-defendant

92 There is discussion in the judgment of Spigelman CJ (with whom Santow JA and Handley AJA agreed) in Newmont Yandall Operations Pty Ltd v The J Aron Corporation [2007] NSWCA 195; (2007) 70 NSWLR 411 of the court’s inherent power to correct its record. His Honour made a number of important points at [67] to [80]. Among them are, first, that a court is bound not to pretend to believe that something happened in the course of proceedings before it when it knows that that thing did not happen and, second, that the court may make an order for the correction of its records to make certain that they truly represent “what the court had pronounced or had intended to pronounce” [original emphasis]. The second matter reflects what was said by the High Court in DJL v The Central Authority [2000] HCA 17; (2000) 201 CLR 226 at 244 in a formulation that Spigelman CJ said “should be accepted as authoritative”.

93 Since no submissions were made as to the course that it would be proper for the court to take if the findings I have recorded with respect to Mr Zwar were made, it is desirable that I hear argument on that aspect. There should also be submissions on the question of the costs of the notice of motion. I will make directions as follows:

3. Direct that each party deliver to my Associate within fourteen days written submissions as to any orders that should be made to give effect to the findings in paragraphs [84] to [91] of the reasons for judgment dated 2 March 2010.

4. Direct that each party deliver to my Associate within fourteen days written submissions as to the costs order or orders that should be made in relation to the notice of motion filed on 2 October 2009.

94 Upon receipt of those submissions, I shall arrange for the proceedings to be listed for supplementary oral argument not exceeding 30 minutes.

95 Finally, I am bound to say that these proceedings are in obvious need of close case management. If the plaintiffs intend to bring to trial a case as delineated by the further amended points of claim filed on 15 April 2002, they should be compelled to do so promptly. If they have it in mind to seek leave to amend, they should likewise be required to move with expedition. The history I have related – I would go so far as to call it an embarrassing history – shows that the proceedings have come before no less than seven judges and one master in the Equity Division over a period of more than sixteen years. There have been numerous listings before registrars. When the matter comes back before me for the supplementary oral argument just mentioned, the parties must present an agreed timetable to deal with any remaining interlocutory steps and to make the proceedings ready for trial. It is likely that, whatever the parties come up with at that stage, I will direct that the proceedings be referred to the Chief Judge in Equity so that her Honour may make suitable arrangements for close and ongoing attention to case management with a view to an early hearing.

96 I should record, by way of postscript, that the description of the history of these proceedings appearing at paragraphs [3] to [52] above was compiled in part from documents put into evidence upon the hearing before me on 17 December 2009 and in part from my own subsequent examination of the voluminous court file. By letter from my Associate dated 22 December 2009, that statement in draft form was placed before the parties’ legal representatives with a request that they notify any corrections considered necessary or any objections. The solicitors for the plaintiffs replied on 3 February 2010 saying that no amendments were sought. The solicitors for the defendants replied to like effect on 23 February 2010. Future case management might therefore be approached on an initial assumption that the parties accept that description.

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LAST UPDATED:
2 March 2010