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Sommer v C Pty Ltd (No.3) [2020] FCCA 2156 (7 August 2020)

Last Updated: 13 August 2020

FEDERAL CIRCUIT COURT OF AUSTRALIA

Cases cited: Australian Securities and Investment Commission v Edensor Nominees Pty Ltd [2001] HCA 1; (2001) 204 CLR 559 Baxter v Commissioners of Taxation (NSW) [1907] HCA 76; (1907) 4 CLR 1087 Kimber v The Owners Strata Plan No.48216  [2017] FCAFC 226  Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597 Neil v Nott [1994] HCA 23; (1994) 68 ALJR 509 Obrart v Grego [2017] FCCA 929 Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd [1981] HCA 7; (1981) 148 CLR 457 Rana v Google Inc [2017] FCAFC 156 Re Judiciary Act 1903-1920 & In re Navigation Act 1912-1920 [1921] HCA 20; (1921) 29 CLR 257 Re Wakim; ex Parte McNally [1999] HCA 27; (1999) 198 CLR 511 Rizeq v The State of Western Australia [2017] HCA 23; (2017) 262 CLR 1 Serobian v Commonwealth Bank of Australia [2010] NSWCA 181 Sommer v C Pty Ltd [2020] FCCA 1412 Sommer v C Pty Ltd (No.2) [2020] FCCA 1898

REPRESENTATION

ORDERS

(1) The respondent’s application that the proceeding be terminated by the Court making an order setting aside bankruptcy notice ...54 issued on ... 2020 is dismissed.

(2) Subject to order 3, the applicant has liberty to apply on such notice as the circumstances warrant for an order that the respondent be restrained from taking any further steps in relation to the “Application for review of determination(s) of a Costs Assessor” referred to in paragraph 8 of the affidavit of Mr L affirmed on 30 July 2020 (Costs Review Application) other than such steps as are necessary to withdraw the Costs Review Application, or to obtain an order staying the Costs Review Application, or to communicate to the Manager, Costs Assessment that the respondent does not intend to take any further steps in relation to the Costs Review Application.

(3) The applicant is not to exercise the liberty reserved by order 2 unless:

(a) the applicant first requests the respondent to undertake in writing that it will not take any further steps in relation to the Costs Review Application other than such steps as are necessary to withdraw the Costs Review Application, or to obtain an order staying the Costs Review Application, or to communicate to the Manager, Costs Assessment that the respondent does not intend to take any further steps in relation to the Costs Review Application; and

(b) the respondent does not give an undertaking to the effect referred to in (a) within seven days after the day on which the applicant requests the respondent give such undertaking.

IT IS NOTED that publication of this judgment under the pseudonym Sommer & C Pty Ltd (No.3) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

SYG 697 of 2020

Applicant

And

Respondent

REASONS FOR JUDGMENT

Introduction

1. In the afternoon before the directions hearing scheduled for 31 July 2020 the respondent filed submissions prepared by its counsel in which the respondent conceded that the bankruptcy notice, which is the subject of this proceeding, should be set aside. The respondent submitted there is an “obvious jurisdictional error in the costs assessment” and, for that reason, “the outcome of these proceedings is foregone”; and the “Court should accordingly set aside the bankruptcy notice . . . without requiring . . . a further trial”.^[1]
2. The “costs assessment” referred to in the respondent’s submissions is the costs determination (Costs Determination) recorded in the Certificate of Determination of Costs (Costs Certificate) issued on 18 July 2019 pursuant to s.70 of the Legal Profession Uniform Law Application Act 2014 (NSW) (LP Act) to which I refer in my reasons for judgment of 5 June 2020 (first judgment).^[2] The Costs Certificate is the basis on which the judgment referred to in the bankruptcy notice was registered with the Supreme Court of New South Wales (Judgment).
3. After the submissions came to my attention I directed my associate to send to the parties the following email:

His Honour would appreciate receiving submissions at tomorrow’s directions hearing or a[t] some later time on the following questions:

1. The respondent’s submissions assume that the only issues before the Court are those arising under the Bankruptcy Act 1966 (Cth). Is that correct, given the matters and issues identified in paragraphs 46 and 47 of the judgment his Honour delivered on 5 June 2020, and given the Federal Circuit Court may have jurisdiction over non-federal claims that arise out of the same substratum of facts out of which claims in relation to which it does have jurisdiction arise? (See, for example, El-Hanania v Vella (No.4) [2020] FCCA 265)
2. However 1 is answered, should the Court set aside the costs order it has made for the reasons submitted by the applicant, and also because the applicant has been put to the trouble of having to file evidence and submissions which, because of the respondent conceding the bankruptcy notice should be set aside, constituted wasted effort?
4. At the directions hearing on 31 July 2020 counsel for the respondent made submissions that reflected the respondent’s written submissions. In addition, counsel submitted that even if this Court has jurisdiction over a non-federal claim it should not exercise it. Counsel also submitted there is no reason why I should set aside the costs order I made on 5 June 2020;^[3] there is no error, and to set aside the costs order because the applicant has been put to inconvenience would amount to the Court awarding an unrepresented litigant costs which the Court has no power to do.
5. The applicant submitted I should not set aside the bankruptcy notice without a hearing of all the issues that arise on her application to set aside the bankruptcy notice. The applicant submitted that she challenged the bankruptcy notice on a number of grounds, and the proceeding should not be terminated in circumstances where the respondent has conceded only one of a number of grounds, and leave the grounds the respondent has not conceded to be litigated elsewhere. The applicant further submitted that the circumstances in which the respondent has conceded that the bankruptcy notice should be set aside manifest an abuse of power by the respondent. The applicant submitted the respondent made its concession only after certain events occurred which are detailed in an affidavit, and in documents attached to an email the applicant sent to the respondent’s solicitor and to my associate on 23 July 2020.^[4]
6. In these reasons for judgment, therefore, I consider whether I should accept the respondent’s contention that, given the concession the respondent has or has apparently made, I should terminate the proceeding by setting aside the bankruptcy notice without considering any other issue that arises in the proceeding. Although I had intended to consider whether I should set aside the order for costs I made on 5 June 2020, I do not propose to consider that question in these reasons.
7. Before I consider whether I should accept the respondent’s contention, it will be necessary to set out the course of events after I delivered the first judgment. These events are relevant to assessing the nature and extent of the respondent’s concession or apparent concession. The events are also relevant to assessing the applicant’s submission that the respondent has engaged in an abuse of power.

Events after 5 June 2020

8. When I published the first judgment I also set down for hearing on 10 July 2020 the application to set aside the bankruptcy notice, and made directions in relation to the hearing. As I noted in my reasons for judgment I published on 14 July 2020 (second judgment),^[5] however, by email sent by the respondent’s lawyer to the applicant on 18 June 2020 the respondent purported to withdraw the bankruptcy notice.
9. On 10 July 2020, being the day on which I had set down for hearing the application to set aside the bankruptcy notice, I heard submissions about whether it was open to the respondent to unilaterally withdraw the bankruptcy notice. I reserved my decision on that question, indicating that I would give judgment on 14 July 2020, and I listed the matter for directions on 17 July 2020. On 14 July 2020 I published the second judgment in which I held it was not open to the respondent to unilaterally withdraw the bankruptcy notice.
10. At the directions hearing on 17 July 2020 counsel for the respondent applied for the matter to be adjourned for two weeks to give the respondent an opportunity to consider whether it should apply for leave to appeal from my determination that it was not open to the respondent to unilaterally withdraw the bankruptcy notice. I granted the respondent’s request, and adjourned the matter to 31 July 2020.
11. The respondent did not decide to apply for leave to appeal. Instead, on 23 July 2020 the respondent filed an application purportedly under s.83(1A) of the LP Act (Costs Review Application) for an order that the “Manager, Costs Assessment . . . extend the period for lodging an application”. The “application” to which s.83(1A) of the LP Act applies is that provided for by s.83(1), namely, one that a “party to a costs assessment” may make “within 30 days after the certificate of determination by the costs assessor has been forwarded to the parties” for “a review of the determination”. Thus, on 23 July 2020 the respondent applied for an order to extend the time provided for by s.83(1) of the LP Act to permit the respondent to apply for a review of the Costs Determination.^[6]
12. The respondent’s lawyer served the Costs Review Application on the applicant by email sent on 23 July 2020. The respondent’s lawyer did not explain to the applicant the contents of the Costs Review Application, or why the respondent decided to make such application. These matters must be inferred from the contents of the Costs Review Application, to which I now turn.
13. The Costs Review Application (assuming an order extending time is granted under s.83(1A) of the LP Act) purports to invoke the jurisdiction conferred by s.85 of the LP Act on a “review panel”. Under s.82 of the LP Act, “review panels are established under the costs assessment rules and are each constituted by 2 costs assessors appointed under those rules”; and a “review panel may be established for one or more costs reviews”. Section 85 of the LP Act provides:

(1) A review panel may, on an application made under section 83 or 84, review the determination of a costs assessor and may
(a) affirm the costs assessor's determination, or
(b) set aside the costs assessor's determination and substitute the determination that, in its opinion, should have been made by the costs assessor.
(2) The review panel has, in relation to the application for review, all the functions of a costs assessor in relation to the assessment concerned and is to determine the application, subject to this Part and the costs assessment rules, in the manner that a costs assessor would be required to determine an application for costs assessment.
(3) Without limiting subsection (2), the review panel is not bound by the rules of evidence and may inform itself on any matter in the manner it thinks fit.
(4) If the costs assessors who constitute the review panel are unable to agree on a determination in relation to an application, the panel is to affirm the determination of the costs assessor.
14. Under the section headed “Grounds of Review”, the Costs Review Application claims the costs assessor “fell into error in not applying the prescribed requirements for assessment of the Review Applicant’s costs”. In particular, the Costs Review Application claims as follows:

1. The costs assessor erred when assessing the $252,423.90 for the professional fees component of the costs claimed in the respondent’s tax invoice of 15 March 2019, in that the costs assessor went no further than assessing the reasonableness of the hourly rates at which the work was performed, and the costs assessor did this by reference to the level of experience of the lawyer who performed the work; and the costs assessor did not otherwise direct her mind to and consider whether the legal costs for the work described in the tax invoice were fair and reasonable for the work so described, having regard to the matters identified in s.172(2) of the Legal Profession Uniform Law (NSW) (LP Law), to the extent they are applicable.^[7]
2. The costs assessor erred when assessing the $127,671.25 disbursements in that the costs assessor proceeded on the basis that because the applicant did not provide “any objections to the quantum of counsel’s fees” she was not required to direct her mind to and consider whether the legal costs claimed by counsel for the work described in the invoices issued were fair and reasonable for the work so described having regard to the matters identified in s.172(2) of the LP Law, to the extent they are applicable.^[8] It appears the respondent also claims that whether the costs assessor proceeded on such basis, the costs assessor failed to direct her mind to and consider whether the legal costs claimed by counsel for the work described in the invoices issued were fair and reasonable for the work so described having regard to the matters identified in s.172(2) of the LP Law, to the extent they are applicable.^[9]

100. The costs assessor erred when considering whether the legal costs described in the tax invoice of 15 March 2019 are fair and reasonable in that the costs assessor did not have regard to “whether the legal costs conform to any applicable requirements of this Part, the Uniform Rules and any fixed costs legislative provisions” as required by s.172(3) of the LP Law, and further, and in particular, the costs assessor erred in not having regard to there having been “no disclosure as required prior to the briefing of counsel”, and there having been “a serious failure to advise in advance of increased costs and disbursements generally”.^[10]

15. These grounds rearrange into affirmative propositions the words that in the first judgment I had framed as questions that were directed to whether the costs assessor had undertaken the statutory tasks she was required to undertake when making the Costs Determination and, if not, whether that raised a substantial reason for questioning whether behind the Judgment there is a real debt.^[11] At least on the face of the Costs Review Application, therefore, the respondent positively contends the costs assessor erred by failing to undertake the tasks she was required to undertake when assessing the costs identified in the respondent’s tax invoice of 15 March 2019. If that is the case, why has the respondent decided to advance these grounds in the context of a purported application under s.83(1A) of the LP Act rather than conceding them in the proceeding before me? The answer is to be ascertained from the material contained in the Costs Review Application.

16. In the section of the Costs Review Application headed “Prejudice” the respondent submits that “if the review application is not allowed to stand it brings into question the entirety of the assessment of [the] costs regime under the” LP Act and the LP Law; and that any “party involved in that process whether an applicant or respondent should be entitled to consider that that process is final, subject to any rights of review or appeal as specified in the” LP Act and the LP Law.^[12] These contentions appear to be based on the following submissions that appear under the heading “Public Interest”:
    1. This Court in the proceeding before me “is attempting to perform the role of the Review Panel by reviewing the decision of the assessor”.^[13]
    2. If “such a proposition is upheld on the basis that the assessor has not considered a prescribed requirement” under s.172 of the LP Law “it brings into issue, and has the potential to, undermine the entirety of the assessment process as governed by the” LP Act and the LP Law.^[14]
    100. By raising the questions set out in paragraph 60 of the first judgment, this Court is “seeking to look at what the assessor did and whether the assessor ‘ticked’ every box when she came to her decision”; and the Court is “conducting a quasi-review to ascertain whether the assessor applied the provisions of the” LP Law.^[15]
    4. The “only way to ensure that the learned Judge in the FCCA does not fall into error is that the” respondent “must be entitled to file this review application out of time to allow the Review Panel to consider each of the grounds herein”.^[16]
17. Also relevant to assessing the reasons why the respondent has chosen to make a purported application under s.83(1A) of the LP Act are the following submissions contained in the Costs Review Application under the heading “Prejudice”:
    1. If “the learned judge is allowed to proceed to act as a quasi-review panel and review the determination and review the determination of the assessor then the potential prejudice to the” respondent is significant because an “adverse finding will mean that the very determination has the potential to be a nullity and as such will prejudice any rights the Review Applicant has and relied on when the determination was issued”. Among the rights that will be prejudiced is that the respondent “will have considered to be estopped on having another assessment on the same tax invoices”, and that is because under s.198(3) of the LP Law the respondent “will be out of time to commence proceedings to recover on the tax invoices”.^[17]
    2. The respondent is a party to “the Family Law proceedings” (being the proceedings in the Family Law Court of Australia to which I refer in the first judgment); and if “leave is not granted for the review application, and should the FCCA find that the costs determination is the subject of jurisdictional error it may prejudice the [respondent’s] right to recover its costs via the Family Law proceedings and potentially give rise to the risk that the [respondent] has to disgorge the monies ($100,000) that it received by order of . . . the Family Law Court”.^[18]
18. There are a number of observations that may be made about the Costs Review Application, and the submissions the respondent makes in that document.
    1. First, the Costs Review Application mischaracterises what I said at paragraph 60 of the first judgment in relation to the Costs Determination. In that paragraph I went no further than identifying questions in relation to the Costs Determination with a view to inviting submissions on those questions. On no fair reading of what I said in paragraph 60 of the first judgment could it be submitted that I am “attempting to perform the role of the Review Panel by reviewing the decision of the assessor”; or that I am “seeking to look at what the assessor did and whether the assessor ‘ticked’ every box when she came to her decision”; or that I am “conducting a quasi-review to ascertain whether the assessor applied the provisions of the” LP Law.^[19] The respondent understood that paragraph 60 of the first judgment went no further than identifying questions with a view to inviting submissions. That is apparent from the email the respondent’s lawyer sent to the applicant on 16 June 2020, where the lawyer said:^[20]

With respect, you have misunderstood the Court’s decision. At this stage the Court has merely sought submissions as to whether jurisdictional error has occurred. The Court has not determined that jurisdictional error exists. In our view, no jurisdictional error could possibly exist in any event.

2. Second, the Costs Review Application mischaracterises the issue to which I considered relevant the questions I identified in paragraph 60 of the first judgment. That issue is whether “there are substantial reasons for questioning the validity of” the Costs Certificate because the Costs Certificate might have been issued on the basis of a costs determination that may be affected by jurisdictional error. I did not identify as an issue whether I should “perform the role of the Review Panel”.

100. Third, the Costs Review Application makes submissions on matters that I addressed and determined in Obrart v Grego.^[21] In that case I considered and made determinations about the availability of collateral attack of a costs determination on the ground of jurisdictional error in circumstances where there are provisions for the review of costs determinations. Yet the respondent, in the Costs Review Application, makes submissions about the same issues without referring to a court having considered and determined those matters in a manner that may be inconsistent with the submissions the respondent makes in the Costs Review Application.

4. Fourth, the submissions made in the Costs Review Application manifest an apparent misunderstanding of the nature of federal jurisdiction. By making the Costs Review Application the respondent purports to invoke jurisdiction under the LP Act – a law of New South Wales – to determine the very questions I have identified in paragraph 60 of the first judgment. Those questions, however, have been raised in a “matter” in relation to which this Court has jurisdiction. The “matter” is one that arises in the exercise of jurisdiction Parliament has conferred on this Court by a law it has made under s.77(i) of the Constitution, that law being s.27(1) of the Bankruptcy Act 1966 (Cth),^[22] and which the applicant, by filing her application to set aside the bankruptcy notice, has regularly invoked. Once a federal court has jurisdiction over a “matter”, that is, over a justiciable controversy, which may consist of claims arising out of federal and non-federal law,^[23] any “State jurisdiction” (that is, “the authority which State Courts possess to adjudicate under the State Constitution and laws”^[24]) that may otherwise have applied to any part of the “matter” is incapacitated in relation to that part of the “matter”. That point was made by the plurality in Rizeq v The State of Western Australia:^[25]

The incapacity of a State law to affect the exercise of federal jurisdiction by a State court is a manifestation of the general incapacity of any Parliament or legislature other than the Parliament of the Commonwealth to affect the exercise of federal jurisdiction conferred by or conferred or invested under Ch III of the Constitution. That general incapacity stems from the exclusory operation of Ch III explained in the Boilermakers’ Case and reinforced in Re Wakim; Ex parte McNally.

5. Fifth, what is said in the previous paragraph assumes that by making the Costs Review Application the respondent has purported to invoke the jurisdiction of the Supreme Court of New South Wales. That assumption, however, is incorrect. The jurisdiction the Costs Review Application purports to invoke is that conferred on a “review panel” – persons who are not judges of the Supreme Court of New South Wales. To the extent the respondent intends by the Costs Review Application to urge a “review panel” to consider whether the Costs Determination is affected by jurisdictional error, that would constitute an attempt to urge the review panel to exercise judicial review jurisdiction. It is stating the obvious, however, that persons who do not hold a commission to exercise judicial power do not have jurisdiction to engage in judicial review. This may suggest that in truth the respondent does not seek to invoke any judicial review jurisdiction. This, in turn, may be relevant to ascertaining the nature of the concession the respondent apparently makes in its written submissions that there has been an “obvious jurisdictional error in the costs assessment”.

19. After the applicant received the email from the respondent’s lawyer attaching the Costs Review Application, on 23 July 2020 the applicant sent an email to the respondent’s lawyer asking whether “your client has filed this review to the Supreme Court as it will affect the judgement [sic] by His Honour”. The respondent’s lawyer did not respond to the applicant’s email until 6:47 pm on Monday 27 July 2020 when he sent the following email (emphasis in original):

I refer to the above proceedings and note the matter returns before his Honour on Friday 31 July 2020.
My client has now sought advice and agrees that the Costs Assessor has fallen into jurisdictional error. With a view of avoiding further costs being incurred in the proceedings we attach consent orders to set aside the bankruptcy notice and, because of that jurisdictional error, consent orders to set aside the judgment in the Supreme Court in proceedings 2019/00260128 (this being the judgment entered on the back of the certificate of assessment).
If you agree to the consent orders could you kindly sign and return both sets of orders. Once we receive the orders signed by you we will attend to filing the consent orders whether in the registry or in court and look to provide you a sealed copy in due course.
Noting the matter is returning to court on Friday we ask that you send signed copies on or before 5pm on Tuesday 28 July 2020. If we do not receive a [sic] signed orders, as attached, by that time, we then intend to advise his Honour of us providing you with a copy of the consent orders to set aside the bankruptcy notice on jurisdictional error grounds, seek such orders at that time and advise His Honour of our client’s intention to seek orders to set aside the judgment.

20. The email attaches two draft consent orders. One relates to the proceeding before me, which is as follows (FCC Draft Orders):

By consent of the parties the Court orders:
THE COURT NOTES:
That by consent and on the grounds of jurisdictional error in Supreme Court assessment, Assessment Number ...79 that the parties have agreed to set aside Bankruptcy Notice ...54 and Supreme Court of NSW Judgment No. ...28 and the Court orders:

1. The proceedings are dismissed;
2. Bankruptcy Notice ...54 is set aside; and
3. No order as to costs.
21. The second consent order is one that contemplates being made by the Supreme Court of New South Wales (SC Draft Orders), and is as follows:

1. Judgment is set aside
2. No order as to costs

22. It may be relevant that the FCC Draft Orders do not identify the jurisdictional error it asks this Court to note the costs assessor made when making the Costs Determination; and the SC Draft Orders do not purport to contain an order setting aside the Costs Certificate.

The respondent’s submissions

23. In its written submissions the respondent submits “there is an obvious jurisdictional error in the costs assessment”; and that, in those circumstances, it “would be inappropriate to require the respondent to participate in a trial in circumstances where the outcome is foregone”; and that this “Court should accordingly set aside the bankruptcy notice and dispose of the proceedings without requiring such a further trial”.^[26]
24. The respondent then identifies what it submits is the “obvious jurisdictional error”, and that is the manner in which the costs assessor dealt with counsel’s fees.^[27] The respondent’s submissions do not, however, identify any other jurisdictional error. The respondent does not refer to the Costs Review Application, or to the grounds on which the respondent in that document contends the costs assessor erred in the manner in which she arrived at the Costs Determination. In any event, the respondent submits that, in the light of the Costs Determination being affected by jurisdictional error, it would be unreasonable and “an obvious abuse of process” for the applicant not to consent to the Court terminating this proceeding by making an order to set aside the bankruptcy notice.^[28] The respondent submits:^[29]

. . . . Both the applicant and the respondent are united in their position that the costs assessor failed to properly turn her mind to whether counsel’s fees were fair and reasonable (even though the applicant does not appear to have precisely understood the relevant legal issue), and as set out above it is plainly the case. There is no relevant controversy.
Once that is accepted, the proceedings are decided – the bankruptcy notice must be set aside, and there is nothing further for the Court to determine. This Court’s jurisdiction is to determine questions in bankruptcy, and once that question is determined there is no remit to embark on a further enquiry into collateral issues with no impact upon the bankruptcy question, regardless of the wishes of any party.
Even if that were not the case as a matter of jurisdiction, as a matter of discretion the respondent should not be put to the cost of a full hearing in circumstances where the outcome of the proceedings is already determined, simply because the applicant seemingly wishes to have a day in Court to ventilate issues that cannot affect the Court’s ultimate orders. That is an obvious abuse of process, in that it will achieve no proper purpose aside from putting the respondent to expense.

25. From these submissions, the following two questions arise:
    1. Has the respondent in truth conceded the Costs Determination is affected by jurisdictional error?
    2. Assuming the respondent has so conceded, must or ought the Court terminate the proceeding by making an order to set aside the bankruptcy notice without determining the other issues that arise in the proceeding?

Conceded jurisdictional error?

26. The question whether the respondent has conceded, as it claims it has, that the Costs Determination is affected by jurisdictional error, is to be assessed by reference to three things: the respondent’s having made the Costs Review Application; the submissions contained in the Costs Review Application; and the SC Draft Orders.

Relevance of making of the Costs Review Application

27. By making the Costs Review Application the respondent purports to invoke the jurisdiction s.85 of the LP Act confers on a review panel. This assumes that the Costs Determination has legal effect. That, however, is inconsistent with the respondent’s purported concession that the Costs Determination is affected by jurisdictional error. As I have noted elsewhere,^[30] “jurisdictional error” is an expression that is applied to an attempted exercise of power by a power repository, or to a power repository’s not exercising power. When applied to an attempted exercise of power, “jurisdictional error” signifies that the power repository’s attempt to exercise the power has failed in some way so that the act constituting the attempted exercise of the power has no legal effect or, at least, is liable to be held by a court not to have any legal effect. Further, a “decision that involves jurisdictional error is a decision that lacks legal foundation and is properly regarded, in law, as no decision at all”;^[31] and, once it is recognised that a court could set aside a decision for jurisdictional error, “the decision can be seen to have no relevant legal consequences”.^[32]
28. If, therefore, the respondent in truth concedes the Costs Determination is affected by jurisdictional error, it would not have done that which it has purported to do, namely, make an application under s.83(1A) of the LP Act for an extension of time to apply for a review of the Costs Determination; the respondent would instead have sought a declaration from this Court to the effect that the Costs Determination is affected by jurisdictional error and, assuming this Court were satisfied the Costs Determination is affected by jurisdictional error and made a declaration to that effect, the respondent would apply under s.198(4) of the LP Law for an order extending the time by which under s.198(3) of the LP Law an application for an assessment of legal costs may be made under s.198(1) of the LP Law (assuming the respondent would otherwise be entitled to make such application).^[33]

Submissions made in the Costs Review Application

29. I have already noted that in the Costs Review Application the respondent submitted that “if the review application is not allowed to stand it brings into question the entirety of the assessment of [the] costs regime under the” LP Act and the LP Law; and that any “party involved in that process whether an applicant or respondent should be entitled to consider that that process is final, subject to any rights of review or appeal as specified in the” LP Act and the LP Law.^[34] These submissions are predicated on the assumption that the only means by which a costs determination can be challenged are those provided for by the LP Act and the LP Law. In other words, the submissions the respondent makes in the Costs Review Application are premised on the view that judicial review is not available or, at the very least, as a matter of discretion ought not to be available, in relation to a costs determination made or purportedly made under the LP Act. That is inconsistent with the respondent’s purported concession that the Costs Determination is affected by jurisdictional error.

SC Draft Orders

30. The SC Draft Orders do not address the Costs Determination. They only provide for the setting aside of the Judgment. If in truth the respondent conceded that the Costs Determination was affected by jurisdictional error, it would at the very least have sought a declaration from the Supreme Court of New South Wales to that effect; and it could only have obtained such declaration by filing an application for judicial review in the Supreme Court of New South Wales seeking an order to set aside the Costs Determination.

Conclusion

31. For these reasons, I am not satisfied the respondent has in truth conceded that the Costs Determination is affected by jurisdictional error. Alternatively, if the respondent has conceded that the Costs Determination is affected by any jurisdictional error, its understanding of what it believes it has conceded is not jurisdictional error as understood by the law which, entails that the purported decision that is affected by jurisdictional error “is a decision that lacks legal foundation and is properly regarded, in law, as no decision at all”.^[35]

Must proceeding be terminated assuming jurisdictional error?

32. In this section of my reasons I will assume the respondent concedes the Costs Determination is affected by jurisdictional error and, for that reason, is of no legal effect; and I am satisfied the Costs Determination is affected by jurisdictional error. Does that mean, as the respondent submits, there is no other question in the proceeding before me that the Court can legitimately determine and, for that reason, I must or at least I should terminate the proceeding by making an order setting aside the bankruptcy notice?
33. The respondent’s submission that, once it is accepted or found that the Costs Determination is affected by jurisdictional error, there is no other issue for the Court to determine, is premised on the view that this “Court’s jurisdiction is to determine questions in bankruptcy” and, by implication, no other question or questions.^[36] It is correct that this Court has jurisdiction to determine “questions in bankruptcy”; but that does not mean that the scope of this Court’s jurisdiction in relation to the applicant’s application to set aside the bankruptcy notice is limited to “questions in bankruptcy”. What is before the Court is a “matter”; and the scope of this Court’s jurisdiction is defined by that which comprises the “matter” that is before it. Before I consider what comprises the “matter” that is before me, it will be necessary to say something about the notion of “matter” itself.

Notion of “matter”

34. “Matter”, when used in relation to the expression “arising under any laws made by the Parliament” in s.76(ii) of the Constitution, means a single justiciable controversy - that is, a controversy “about legal rights and legal obligations”^[37] - that includes at least one claim that arises under a law of the Parliament. If a federal court is granted jurisdiction in relation to such matter it will also have jurisdiction to entertain any claim for relief that does not arise out of a law made by Parliament, provided there is a sufficiently substantial overlap between the facts out of which the federal claim and the non-federal claim arise. That the exercise of federal jurisdiction may involve the application of non-federal law was referred to as a “common place” by the plurality in Rizeq v Western Australia (emphasis added):^[38]

Thus, it is commonplace that resolution of a matter within federal jurisdiction may involve application both of Commonwealth law and of State law. Indeed it can happen that a matter in federal jurisdiction is resolved entirely through the application of State law. Application of State law in federal jurisdiction came for a period to be described, “[f]or want of a better term”, as “accrued jurisdiction”. There is “no harm in the continued use of the term ‘accrued jurisdiction’ provided it be borne in mind ... there [is] but one ‘matter’”. However, the imprecision the term introduces into the word “jurisdiction” means that the term is best avoided. There is but one matter and that matter is entirely within federal jurisdiction, as distinct from State jurisdiction.
The simple constitutional truth is that State laws form part of the single composite body of federal and non-federal law that is applicable to cases determined in the exercise of federal jurisdiction in the same way, and for the same reason, as they form part of the same single composite body of law that is applicable to cases determined in the exercise of State jurisdiction – because they are laws.

35. There are three things to note about the notion of “matter”. First, a “matter” is distinct from a proceeding: ^[39]

We . . . do not think that the word “matter” in sec. 76 [of the Constitution] means a legal proceeding, but rather the subject matter for determination in a legal proceeding. In our opinion there can be no matter within the meaning of the section unless there is some immediate right, duty or liability to be established by the determination of the Court.

36. Second, a “matter” is not synonymous with a cause of action or a claim for relief. A matter is a set of asserted facts that have such a degree of commonality as to give rise to one justiciable controversy, even though the one controversy may give rise to more than one cause of action, and to more than one claim for relief. Different expressions have been used to describe the required degree of commonality among asserted facts before they can properly be characterised as giving rise to one justiciable controversy. In Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd, Mason J said there must be “common transactions and facts” arising “out of a common substratum of facts”.^[40] In Re Wakim; ex Parte McNally Gummow and Hayne JJ said:^[41]
    • What is a single controversy ‘‘depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships’’. There is but a single matter if different claims arise out of ‘‘common transactions and facts’’ or ‘‘a common substratum of facts’’, notwithstanding that the facts upon which the claims depend ‘‘do not wholly coincide’’. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are ‘‘completely disparate’’, ‘‘completely separate and distinct’’ or ‘‘distinct and unrelated’’ are not part of the same matter.
    • Often, the conclusion that, if proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter.
37. Third:^[42]

Once federal jurisdiction is attracted, it is not lost because the claim or assertion which attracted it has not been substantiated or has been displaced by some countervailing fact. Once attracted, by whatever path attracted, the jurisdiction persists to enable the Court to resolve the matter. The jurisdiction to do so accrues to the Court because there is a matter, in relation to which federal jurisdiction has been attracted, to be resolved. The jurisdiction thus accrued is itself federal jurisdiction. But, of course, it is limited to the resolution of the matter in relation to which, but not necessarily by which, the federal jurisdiction was attracted in the first instance.
Scope of matter before me

38. I now consider the scope of the matter that is before me. In form it is an application to set aside a bankruptcy notice. But that application arose out of the circumstances revealed by the evidence that was before me when I delivered my first judgment.^[43] That evidence shows there is a controversy about whether, as the applicant asserts, the respondent terminated the Retainer Agreement to which I refer in the first judgment or whether, as the respondent asserts, the applicant terminated the Retainer Agreement. In paragraph 46 of the first judgment I articulated what I then understood the applicant intended to claim in relation to this controversy, and in paragraph 47 of the first judgment I identified issues to which this claim gives rise; and those issues include whether, in the events that have occurred, the applicant owed any money to the respondent at the time the respondent applied to have its costs assessed, and whether the respondent is entitled to recover fees under the Retainer Agreement.
39. The evidence before me, however, revealed additional controversies between the applicant and the respondent. These are the subject of the complaints the applicant made to the Office of the Legal Services Commissioner, and the submissions the applicant made to the costs assessor. For example, in her affidavit of 17 May 2020 the applicant says that in her submissions to the costs assessor she was “seeking for the costs to be set aside due to the Respondent’s serious breach of its cost agreement with” her, and the applicant now submits that, in the light of the cost assessor’s finding that “there was a serious failure to advise in advance of increased costs and disbursements generally”, the costs agreement is void because of the operation of s.178(1) of the LP Law. ^[44] The determination of these controversies may affect the respondent’s ability to recover its costs from the applicant, or the amount it may be entitled to recover from the applicant on account of its costs.
40. It is true, as counsel for the respondent submitted, that the applicant did not formulate the claim and issues I identified in paragraphs 46 and 47 of the first judgment. That, however, is not surprising; the applicant is not a lawyer. But the evidence that was before me at the time I delivered the first judgment records the applicant’s asserting and complaining that the respondent terminated the Retainer Agreement.^[45] Further, it is basic contract law that a party’s right to sue for money under a contract may be affected by the contract’s having been terminated, depending on the terms of the contract and the events that had occurred up to the day on which the contract was terminated.^[46] These are not matters I can ignore only because the applicant is not a lawyer who, for that reason, cannot be expected to understand or entirely understand the legal significance of that of which she asserts and complains, or to formulate her asserted rights in the manner a lawyer could. As the High Court said in Neil v Nott, a “frequent consequence of self-representation is that the court must assume the burden of endeavouring to ascertain the rights of parties which are obfuscated by their own advocacy”.^[47] I refer to this passage, not because I intend to suggest the applicant has obfuscated anything; but because it says that a court must endeavour to ascertain the rights of an unrepresented litigant who does not have the ability to identify or articulate them as a lawyer could, even where the litigant, by his or her own advocacy, obfuscates his or her rights.
41. The controversies I have identified above, and the claim and issues I identified in paragraphs 46 and 47 of the first judgment, will remain unresolved, even if I were satisfied the Costs Determination on the basis of which the Cost Certificate was issued is affected by jurisdictional error and, for that reason, is of no legal effect. Moreover, some of those controversies might have to be resolved if the Costs Determination is of no legal effect, and the respondent were to again apply under s.198 of the LP Law to have its costs assessed; and that may be so because s.198(1) of the LP Law provides for the making of an application for the assessment of costs “of the whole or any part of legal costs payable to a law practice” (emphasis added).
42. Counsel for the respondent appeared to accept that if the bankruptcy notice were set aside because the Costs Determination is affected by jurisdictional error, there would remain outstanding controversies between the parties. Counsel submitted, however, that these should be litigated in another court. That submission cannot be accepted where the respondent has not submitted that the controversies counsel submitted should be litigated elsewhere do not form part of the matter before me.
43. In its written submissions the respondent submits the applicant “seemingly wishes to have a day in Court to ventilate issues that cannot affect the Court’s ultimate orders”, and that this constitutes “an obvious abuse of process”.^[48] There are three things to be said about these submissions. First, I have already concluded I am not satisfied the respondent has in truth conceded the Costs Determination is affected by jurisdictional error. Second, that the determination by this Court of one or more of a number of controversies will not affect the orders the Court may make because the respondent concedes one of those controversies does not deny the Court jurisdiction to determine the live controversy or controversies. The purpose of the exercise of jurisdiction over a “matter” is for the Court to quell “controversies about legal rights and legal obligations through [the] ascertainment of facts, application of law and [the] exercise, where appropriate . . . [of] judicial discretion”.^[49] Third, it is inaccurate to characterise the applicant’s intention to litigate in this Court the issues the respondent has not conceded as an intention to “ventilate issues” and to “have a day in Court”. The issues the respondent has not conceded, and which the applicant intends to litigate in the matter before me, include the questions whether, in the events that have occurred, the applicant owed any money to the respondent at the time the respondent applied to have its costs assessed, whether the respondent is entitled to recover fees under the Retainer Agreement, or whether the Retainer Agreement is void. These are not irrelevant or trivial issues.

Discretion

44. In his written submissions, and during oral address, counsel for the respondent submitted that, as a matter of discretion, I should not exercise jurisdiction in relation to the controversies the respondent does not concede. Counsel did not identify the basis on which it is permissible for this Court not to exercise jurisdiction over a matter other than, perhaps, the respondent’s submission that it is an abuse of process for the applicant to insist on pursuing her application in the light of the respondent’s apparent concession that the Costs Determination is affected by jurisdictional error. I do not accept that the applicant’s insisting to proceed with the matter is an abuse of process. In those circumstances, and given that “[o]rdinarily, questions of abuse of process, forum non conveniens and the like aside, jurisdiction conferred upon a court is to be exercised”,^[50] I do not accept I have any discretion not to exercise jurisdiction in relation to the matter that is before me.

Abuse of power?

45. The applicant submits that the manner in which the respondent has conducted itself in this proceeding constitutes an “abuse of power”. The basis of this submission appears to be the respondent’s attempt to have the proceeding terminated first, on the ground that it purportedly withdrew the bankruptcy notice, and, second, by purportedly conceding after I delivered the second judgment that the Costs Determination is affected by jurisdictional error in circumstances where, in an email sent to the applicant on 16 June 2020, the respondent’s lawyer had stated that in “our view, no jurisdictional error could possibly exist”.^[51] I do not accept that these matters manifest an abuse of power. My consideration of the applicant’s submission, however, led me to the decision of the Full Federal Court of Australia in Kimber v The Owners Strata Plan No.48216.^[52]
46. In that case summary judgment was granted against an unrepresented litigant. On appeal the unrepresented litigant submitted that the represented party before the primary judge failed to do what the New South Wales Court of Appeal in Serobian v Commonwealth Bank of Australia held a represented party ought to have done in relation to an unrepresented party, namely:^[53]

Where, as here in the case of the respondent, a party is represented by competent and experienced lawyers and is opposed by litigants in person, the party and its lawyers have a duty to assist the court to understand and give full and fair consideration to the submissions of the litigants in person. In particular such a party must refer the court to evidence in the proceedings that is relevant to those submissions. This duty is accentuated where, again as here, the party is a substantial institution accustomed to litigating cases involving issues such as are involved in the present case, often against litigants in person.

47. The Full Federal Court endorsed this passage,^[54] and concluded that in the circumstances of the case before it “the proper observance of the represented party’s duty to the Court encompasses telling the Court what may be the weaknesses of their summary judgment or summary dismissal application as well as making the case for it”.^[55]
48. The discharge of the duty identified in Serobian assumes that the represented party is aware of the weaknesses in its case. It cannot be said in the case before me that the respondent has failed to disclose to the Court weaknesses in its application that I terminate the proceeding by setting aside the bankruptcy notice; and that is because the respondent and its legal representatives must be taken to have been unaware of them.

Further progress

49. At the hearing on 31 July 2020 I indicated that if I were not to accept the respondent’s contention that the proceeding should be terminated by making an order to set aside the bankruptcy notice, I would make an order referring the applicant to a lawyer for legal assistance. Having considered the matter again, I do not propose to make an order to that effect.
50. I propose to order that the respondent’s application for the proceeding to be terminated by the Court making an order setting aside the bankruptcy notice be dismissed, and to set the matter down for hearing. I also propose to reserve to the applicant liberty to apply on such notice as the circumstances warrant for an order that the respondent be restrained from taking any further steps in relation to the Costs Review Application other than such steps as are necessary to withdraw the Costs Review Application, or to obtain an order staying the Costs Review Application, or to communicate to the Manager, Costs Assessment that the respondent does not intend to take any further steps in relation to the Costs Review Application. The liberty will be conditional on the applicant first requesting the respondent to give an undertaking that it will take no steps in relation to the Costs Review Application other than steps necessary to withdraw or stay that application, and the respondent declining to give such undertaking within seven days after the request for an undertaking is made.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Associate:

Date: 7 August 2020

^[1] Respondent’s outline submissions as to setting aside of bankruptcy notice, at [4]
^[2] Sommer v C Pty Ltd [2020] FCCA 1412, at [5]
^[3] Sommer v C Pty Ltd [2020] FCCA 1412
^[4] The email and the attachments to that email are exhibit A.
^[5] Sommer v C Pty Ltd (No.2) [2020] FCCA 1898
^[6] Sommer v C Pty Ltd [2020] FCCA 1412, at [5]
^[7] Costs Review Application, at [2.1]
^[8] Costs Review Application, at [2.2]
^[9] Costs Review Application, at [2.2]
^[10] Costs Review Application, at [2.3]
^[11] Sommer v C Pty Ltd [2020] FCCA 1412, at [60]
^[12] Costs Review Application, at [20]
^[13] Costs Review Application, at [4]
^[14] Costs Review Application, at [5]
^[15] Costs Review Application, at [6]
^[16] Costs Review Application, at [8]
^[17] Costs Review Application, at [10]
^[18] Costs Review Application, at [12]
^[19] Costs Review Application, at [6]
^[20] Applicant’s affidavit 19.06.2020, annexure J
^[21] Obrart v Grego [2017] FCCA 929, at [52]-[72]
^[22] Which provides: “The Federal Court and the Federal Circuit Court have concurrent jurisdiction in bankruptcy, and that jurisdiction is exclusive of the jurisdiction of all courts other than: (a) the jurisdiction of the High Court under section 75 of the Constitution; or (b) the jurisdiction of the Family Court under section 35 or 35A of this Act.”
^[23] I discuss the notion of “matter” later in these reasons.
^[24] Baxter v Commissioners of Taxation (NSW) [1907] HCA 76; (1907) 4 CLR 1087, at page 1142 (Issacs J)
^[25] Rizeq v The State of Western Australia [2017] HCA 23; (2017) 262 CLR 1, at [58] (citations omitted)
^[26] Respondent’s outline submissions as to setting aside of bankruptcy notice, at [4]
^[27] Respondent’s outline submissions as to setting aside of bankruptcy notice, at [5]-[13]
^[28] Respondent’s outline submissions as to setting aside of bankruptcy notice, at [15], [18]
^[29] Respondent’s outline submissions as to setting aside of bankruptcy notice, at [16]-[18] (citations omitted)
^[30] Obrart v Grego [2017] FCCA 929, at [70]
^[31] Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597, at pages 614-614 ([51])
^[32] Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597, at page 647 ([153])
^[33] The qualification is necessary because, as I note later in these reasons, s.198(1) of the LP Law provides that an application for an assessment for costs may be made “of the whole or any part of legal costs payable to a law practice”.
^[34] Costs Review Application, at [20]
^[35] Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597, at pages 614-614 ([51])
^[36] Respondent’s outline submissions as to setting aside of bankruptcy notice, at [17]
^[37] Rizeq v Western Australia [2017] HCA 23, at [52]
^[38] Rizeq v Western Australia [2017] HCA 23, at [55], [56] (Emphasis added, citation omitted.)
^[39] Re Judiciary Act 1903-1920 & In re Navigation Act 1912-1920 [1921] HCA 20; (1921) 29 CLR 257, at page 265
^[40] Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd [1981] HCA 7; (1981) 148 CLR 457, at page 512
^[41] Re Wakim; ex Parte McNally [1999] HCA 27; (1999) 198 CLR 511, at [140]- [141] (references omitted)
^[42] Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd [1981] HCA 7; (1981) 148 CLR 457, at page 474. See also Rana v Google Inc [2017] FCAFC 156, at [21]: “Upon the existence of federal jurisdiction, the matter remains within federal jurisdiction regardless of how the federal issue or issues within it are ultimately resolved.”
^[43] Sommer v C Pty Ltd [2020] FCCA 1412, at [9]-[39]
^[44] Although not read, it is apparent from the affidavit the solicitor for the respondent made on 6 April 2020 that the respondent understands that the applicant is making “various allegations to the effect that the Respondent is not entitled to payment due to particular clauses of the costs agreement entered into by the Respondent and the Applicant”.
^[45] In addition to the evidence to which I refer in Sommer v C Pty Ltd [2020] FCCA 1412, at [9]-[39] see, for example, applicant’s affidavit 19.03.2020, at [28], [29], [32]; applicant’s affidavit 09.04.2020, at [31], [32], [35]; the applicant’s complaint to the Office of the Legal Services Commissioner, at page 214 of the annexures to Ms A’s affidavit made on 12 May 2020 in the section headed “Threaten to terminate representation”.
^[46] See, for example, Heydon on Contract The General Part Lawbook Co 2019, [24.470]-[24.540]; Carter’s Breach of Contract, LexisNexis Butterworths 2011, Chapters 12 and 13
^[47] Neil v Nott [1994] HCA 23; (1994) 68 ALJR 509, at page 510
^[48] Respondent’s outline submissions as to setting aside of bankruptcy notice, at [18]
^[49] Rizeq v Western Australia [2017] HCA 23, at [52]
^[50] Australian Securities and Investment Commission v Edensor Nominees Pty Ltd [2001] HCA 1; (2001) 204 CLR 559, at pages 585-586 [52], page 639 [218]
^[51] Applicant’s affidavit 19.06.2020, annexure J
^[52] Kimber v The Owners Strata Plan No.48216  [2017] FCAFC 226 
^[53] Serobian v Commonwealth Bank of Australia [2010] NSWCA 181, at [42]
^[54] Kimber v The Owners Strata Plan No.48216  [2017] FCAFC 226 , at [71]
^[55] Kimber v The Owners Strata Plan No.48216  [2017] FCAFC 226 , at [73]