and George Defteros v Justin Scott
[2014] VSCA 154
•24 July 2014
SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCI 2014 0062 | |
| GEORGE DEFTEROS | Applicant |
| v | |
| JUSTIN SCOTT | Respondent |
JUDGES: | NEAVE and SANTAMARIA JJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 24 July 2014 | |
DATE OF JUDGMENT: | 24 July 2014 | |
MEDIUM NEUTRAL CITATION: | [2014] VSCA 154 | |
JUDGMENT APPEALED FROM: | [2014] VSC 205 (Kaye J) | |
---
LEGAL PRACTITIONERS – Solicitors – Entitlement to engage in legal practice – Unqualified person - Cost consultant – Work performed on several files – Work performed under supervision of solicitor – Whether engaged in legal practice - Appeal from Magistrates’ Court – Whether Magistrate erred in holding that Court could not be satisfied that respondent engaging in legal practice – Sufficiency of evidence before Magistrate - Legal Profession Act 2004 (Vic) s 2.2.2 – Cornall v Nagle [1995] 2 VR 188.
---
| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr J A Ribbands with Mr L P Wirth | Defteros Lawyers |
| For the Respondent | Mr M R Pearce SC with Mr T J Mullen | Benjamin Ian Zylberszpic Pty Ltd |
NEAVE JA:
I agree with the reasons of Santamaria JA.
SANTAMARIA JA:
Introduction
In September 2010, the applicant engaged the respondent to provide costing services for his firm. Pursuant to the retainer, the respondent provided services to the applicant in respect of a number of matters until April 2012. The applicant paid the respondent’s accounts for those services until August 2011. In April 2012, a dispute arose between the applicant and the respondent concerning fees alleged to be owing by the applicant to the respondent.
In May 2012, the respondent commenced proceedings against the applicant in the Magistrates’ Court claiming $16,823.50 in respect of the fees which he alleged were outstanding to him. The applicant resisted that claim on two bases. First, he contended that the fees, claimed by the respondent, were in respect of work which fell outside the scope of the services, which the respondent was either retained or requested to perform. Secondly, the applicant submitted that the work consisted of the engagement by the respondent in legal practice contrary to s 2.2.2 of the Legal Profession Act 2004 (Vic) (‘the Act’). Accordingly, the applicant contended that the respondent was precluded, by s 2.2.2(4) of the Act, from claiming any fee in respect of that work.
The magistrate rejected both of those bases upon which the applicant had resisted the respondent’s claim. She was satisfied that the fees, claimed by the respondent, were for work which fell within the scope of services for which he was retained, or which he had been requested to perform by the applicant. Secondly, she held that the applicant had not established that the performance by the respondent of that work involved the engagement by him in legal practice contrary to s 2.2.2 of the Act. Accordingly, the magistrate upheld the respondent’s claim for the
outstanding fees. She also upheld a counterclaim by the applicant for fees in respect of services provided by the applicant to the respondent in relation to a family law dispute in which the respondent was involved. The magistrate set off the amount of those fees ($4,000), and ordered the applicant to pay the respondent $12,823.50 together with interest and costs.
The applicant appealed on a question of law to the Supreme Court pursuant to s 109 of the Magistrates’ Court Act 1989 (Vic).[1] The matter was heard by a judge in the trial division who dismissed the appeal on 14 May 2014.[2] By summons dated 27 May 2014, the applicant has applied for leave to appeal.[3]
[1]Section 109 of the Magistrates’ Court Act 1989 (Vic) provides:
Appeal to Supreme Court from final order made in civil proceeding
(1)A party to a civil proceeding in the Court may appeal to the Supreme Court, on a question of law, from a final order of the Court in that proceeding.
…
(3)Subject to subsection (2), an appeal under subsection (1) must be brought in accordance with the rules of the Supreme Court.
…
(6)After hearing and determining the appeal, the Supreme Court may make such order as it thinks appropriate, including an order remitting the case for re-hearing to the Court with or without any direction in law.
(7)An order made by the Supreme Court on an appeal under subsection (1), other than an order remitting the case for re-hearing to the Court, may be enforced as an order of the Supreme Court.
[2]Defteros v Scott [2014] VSC 205 (‘Reasons’).
[3]In the present appeal, the jurisdiction of the Court of Appeal is conferred by s 17A(3A) of the Supreme Court Act 1986 (Vic). Section 17A provides:
…
(3A)An order made by the Trial Division constituted by a Judge of the Court or constituted by an Associate Judge on an appeal to the Court –
…
(b) under section 109 of the Magistrates’ Court Act 1989 –
is not subject to appeal to the Court of Appeal except by leave of the Court of Appeal or by leave of the Judge of the Court or Associate Judge constituting the Trial Division.
Legal Profession Act 2004
Section 2.2.2 of the Act, so far as is relevant to this appeal, provides:
(1)A person must not engage in legal practice in this jurisdiction unless the person is an Australian legal practitioner.
Penalty: Imprisonment for two years.
...
(4)A person is not entitled to recover any amount in respect of anything the person did in contravention of subsection (1).
Decision of the Magistrate
The reasons of the magistrate are summarised by the judge in the trial division. The magistrate referred to eight different matters: five concerned disputes between the applicant and former clients; two concerned files in which the applicant had obtained certificates for his clients under the Appeals Costs Act 1998 (Vic); and, the final matter was referred to as relating to ‘practice management’. Relevantly the applicant and the respondent gave evidence. The judge summarised the evidence of the work performed by the respondent in respect of each of the eight matters. Having considered the evidence the magistrate found that none of the work performed by the respondent of any of the files constituted the engagement by him of engagement in legal practice for the purposes of s 2.2.2 of the Act. She said:
I note that ‘engage in legal practice’ has a common law definition. I am referred to Hall J in The Council of the New South Wales Bar Association v Davison [2006] NSWSC 65, [44]:
Whether or not a person does practise as a barrister is a question of fact to be objectively determined on the evidence … . The determination of that question requires the court to examine any advice given or services provided in order to determine whether either may be properly characterised as practising as a barrister.
This has not happened here. In order to support its case, the defendant has relied on line items in the plaintiff’s invoices which describes services which might fall under the banner of ‘legal practice’. The evidence of the plaintiff was firstly, that this work was done on instructions (which I have found in his favour) and secondly, it was done as it pertained to the aspect of costs, where the plaintiff holds some expertise and the defendant does not. In any event, the work by the plaintiff was performed for the defendant who holds the qualification as an ‘Australian legal practitioner’. No documents were tendered in court as evidence to support the defendant’s contention regarding the exact work performed by the plaintiff. I cannot accept that any summons or court document, drafted by the plaintiff went out with his name on it. In the absence of any evidence to base my decision as ‘a question of fact to be objectively determined’ the defence must fail. In no way can I be satisfied that the work fell within that envisaged by Heerey J when he states in Will Writers Guild Pty Ltd [2002] FCA 1252 at [94]:
This is the essence of legal practice, the advising of a particular person in a particular situation and the production of a document which affects legal rights and is tailored to the particular needs of that person.
In my view, there is insufficient evidence to support the defendant’s contention that the plaintiff was engaged in “legal practice”. The case law says this is to be determined on the evidence and no single document or file has been produced by the defendant in support of its argument. It relies solely on the line items in the plaintiff’s invoices. The defendant had staff members involved in cases where those staff instructed the plaintiff yet none of them were called in this case.
I note that the plaintiff never held himself out to the defendant as a legal practitioner and in fact, through previous dealings, the defendant was well aware that the plaintiff was not a legal practitioner and the reasons why. The defendant specifically engaged him to provide advice and expertise in costs disputes. In view of the defendant’s knowledge of the plaintiff’s history, that his evidence supports the fact that he was fully aware of the activities of the plaintiff on his files and never raised a single word of protest, in my view this is a bold and ultimately unsuccessful defence.[4]
[4]Reasons [37].
On the hearing of the appeal, the judge referred to s 2.2.2 of the Act and to several decisions which interpreted it or provisions which correspond to it. In particular, he referred to Cornall v Nagle.[5] In that case the Court had made an order restraining the defendant from ‘acting or practising as a solicitor or from using a name or title implying that he was qualified to practise as a solicitor or from holding himself out as being qualified to practise as a solicitor’. The Secretary of the Law Institute of Victoria commenced proceedings to have the defendant punished for contempt of court for disobeying that order, in respect of four separate matters, in which the defendant had acted on behalf of clients. JD Phillips J considered the authorities relating to the questions when and in what the circumstances a person might be properly considered to be ‘acting as a solicitor’. He concluded his analysis of the authorities as follows:
Based on the foregoing, I conclude that a person who is neither admitted to practice nor enrolled as a barrister and solicitor may ‘act or practise as a solicitor’ in any of the following ways:
(1)by doing something which, though not required to be done exclusively by a solicitor, is usually done by a solicitor and by doing it in such a way as to justify the reasonable inference that the person doing it is a solicitor. This is the test in Sanderson.[6]
(2)by doing something that is positively proscribed by the Act or by Rules of Court unless done by a duly qualified legal practitioner. Examples of such prohibitions in a statute are ss 93 and 111 of the Legal Profession Practice Act.
(3)by doing something which, in order that the public may be adequately protected, is required to be done only by those who have the necessary training and expertise in the law. For present purposes, it is unnecessary to go beyond the example of the giving of legal advice as part of a course of conduct and for reward.[7]
[5][1995] 2 VR 188.
[6]Re Sanderson; ex parte Law Institute of Victoria [1927] VLR 394, 397 (Cussen J).
[7]Cornall v Nagle [1995] 2 VR 188, 210.
Having analysed Cornall v Nagle and the other authorities, the judge said that there were four principles which apply to the present appeal:
First, the question whether the work performed by the respondent, which was the subject of the fees claimed by him from the appellant, constituted the engagement by him in legal practice, is to be answered by an analysis of the evidence as to the actual work performed by the respondent, and which is the subject of the invoices rendered by the respondent to the appellant. In order to establish that the magistrate had erred, in concluding that the appellant had failed to prove that that work involved the engagement by the respondent in legal practice, the appellant must demonstrate that that conclusion was not open to the magistrate on the evidence.
Secondly, it is clear that the first two categories of conduct, described by Phillips J in Cornall v Nagle, are not applicable in this case. Accordingly, the critical question for the magistrate was whether the work performed by the respondent, which was the subject of the fees charged by him, came within the third category described by Phillips J in Cornall v Nagle, namely, work that, although not expressly proscribed by any particular provision in an Act or Regulation, nevertheless involved the exercise by the respondent of such expertise that, in order that the public be adequately protected, it was required to be done only by those who had the necessary training and expertise in the law.
Thirdly, as observed by Phillips J, in the absence of a specific proscription by a particular Act or Regulation, the courts should exercise caution in identifying work which is the exclusive province of lawyers. In such a case, as Phillips J noted, the “touchstone” is whether it is necessary that the work, so performed, be confined to legal practitioners, for the protection of the public.
Fourthly, a conclusion, that the respondent acted in breach of s 2.2.2 of the Legal Practice Act, is a serious finding. Such a finding must be based on precise proofs as to the work done by the respondent, and a careful analysis of how that work constituted the exercise by the respondent of such legal expertise that, in order that the public be protected, it is required to be done only by a legal practitioner.
The magistrate, in her decision, noted that she was not referred in detail to any evidence, such as primary documents, which demonstrated the type of work which was undertaken by the respondent. Rather, in cross-examination, the respondent was questioned by counsel for the appellant as to some of the items contained in the invoices rendered by the respondent to the appellant. By their nature, the descriptions of the work, in the invoice, were brief and, in many cases, unspecific. Thus, the evidence as to the nature and content of the work performed by the respondent was quite sparse.[8]
[8]Reasons [68]–[72].
On the hearing of the appeal, the applicant it seems made a more fundamental submission. He contended that the work of a costs consultant, in preparing a bill of costs and in performing tasks allied to that, of necessity, involved work which constituted the engagement by the consultant in legal practice. However, the judge held that, by reason of the evidence which had been adduced before the magistrate, it was open to her to find that the applicant had failed to prove that the respondent had engaged in legal practice in respect of the particular work he had performed in relation to the eight matters. Accordingly, he found no error in her approach to that issue. It is to be recalled that an appeal from the Magistrates’ Court to this Court is confined to a question of law. For that reason, the judge dismissed the appeal.
In concluding his reasons, the judge said:
It must be understood that the conclusion, which I have reached in this case, is that, based on the evidence that was put before the magistrate, it was open to her Honour to conclude that she was not satisfied that, in performing the work in respect of which he claimed fees from the appellant, the respondent was engaged in legal practice. Thus, this case is not authority in respect of the more general question whether a cost consultant is, or is not, engaging in legal practice, contrary to s 2.2.2 of the Act.[9]
[9]Reasons [85].
Proposed Grounds of Appeal
The applicant identifies two grounds of appeal in his proposed notice of appeal.
(1)His Honour erred in failing to find that costs consultants engage in legal practice within the meaning of s 2.2.2 of the Legal Profession Act 2004 (Vic) and that the respondent had engaged in legal practice within the meaning of s 2.2.2 of the Legal Profession Act 2004 (Vic).
(2)His Honour erred in failing to find that the work undertaken by the respondent as a costs consultant was of such a nature that, in order that the public may be protected, is required to be done only by those who have the necessary training and expertise in the law.
Applicant’s Contentions
The applicant submitted that the decision of JD Phillips J in Cornall v Nagle,[10] is the ‘seminal authority’ on the meaning of the phrase ‘engage in legal practice’. He said that the question whether the respondent engaged in legal practice is whether the work performed, taken as a whole, could be characterised as ‘legal practice’ and not whether a discrete item of the work is that of a solicitor. He said that there was no material difference between the work undertaken by the respondent and the litigious or cost-related work undertaken by qualified legal practitioners and that it was an error for the magistrate to focus on the exact content of the work done. The applicant said that the work of the respondent fell within both the first and third of the categories identified in Cornall v Nagle. It fell into the first category because the nature of the work done gave rise to the reasonable inference that the work was being done as a solicitor; the fact that the applicant knew the respondent was not a solicitor was irrelevant. It fell into the third category because, although a solicitor could delegate ‘purely ministerial tasks’, the actual tasks performed by the respondent were analogous to those performed by a solicitor and the performing of those tasks by an unqualified person gave rise to the very difficulties that the regulation of the legal profession was intended to obviate.
[10][1995] 2 VR 188.
Analysis
In order to succeed in an application for leave to appeal, the applicant must show that the order is attended by sufficient doubt to warrant reconsideration and that substantial injustice would result if leave were refused. The discretion to grant leave is unfettered and it is always open to the court to grant leave in a suitable case. For example, if the court were of the view that a case squarely raised an issue of public importance, it would be justified in granting leave.
On the hearing of the application for leave, there was controversy between the parties as to the scope of the dispute that was placed before the magistrate for her determination. The applicant contended that the work of a person designated as a ‘costs consultant’ in preparing a bill of costs in taxable form necessarily involved that person engaging in legal practice. The applicant said that, on the material before her, the magistrate was compelled to come to the conclusion that the respondent was engaged in legal practice. The respondent contended that no such case had been propounded before the magistrate. Rather, the only issues before the magistrate were whether the particular work which the respondent had done in relation to the eight files necessarily involved engagement by the respondent in legal practice.
Examination of the reasons of the magistrate, together with the process before the Magistrates’ Court, makes it plain that the issues that she was asked to decide were confined to the particular matters involved in the eight files. The magistrate rejected a contention that the work done by the respondent fell outside the terms of his retainer by the applicant. That holding is not the subject of the present application. The work performed by the respondent in respect of each of those files was conducted under the supervision of the applicant. It was plainly open to the magistrate to decide, in those circumstances, that on the material placed before her, the applicant had failed to establish that, in respect of that work, the respondent was engaged in legal practice.[11] Further, as indicated above, s 2.2.2(1) provides that a person must not engage in legal practice unless the person is an Australian legal practitioner. A penalty of imprisonment for two years is imposed. In those circumstances, the magistrate was right to require proof in the nature of that described in Briginshaw v Briginshaw.[12]
[11]Ibid 198–200, 205, 209, 210.
[12](1938) 60 CLR 336.
Although it is strictly unnecessary to do so, it may be useful to offer some observations on what is necessary to establish in seeking to show that the conduct of an unqualified person falls within the third category identified in Cornall v Nagle. Two enquiries must be pursued: the first enquiry will reveal the major premise in an analysis whether work performed is work for which the public must be protected so that it is only performed by suitably qualified persons; the second enquiry involves the minor premise: what was done in the particular case. Just because work is done by a person with particular professional qualifications does not mean that that work will be work for which the person must have professional qualifications. A solicitor may perform functions that can be adequately performed by staff without professional qualifications. Not all the work done by solicitors is work for which they require either professional qualifications or a practising certificate. Conversely, much of the work which is done by unqualified persons in the office of a solicitor will not involve those persons engaging in legal practice where that work is done under the supervision of a solicitor.
The first enquiry addresses the question: what work associated with legal practice should only be done by those ‘who have the necessary training and expertise in the law’. That enquiry will involve both empirical and evaluative considerations. The empirical considerations will involve an analysis and description of the work which is done by solicitors; the evaluative considerations will involve an assessment as to what parts of that work may only be done by persons admitted to practice. The second enquiry will involve an analysis of what was done in the particular case.
In the present case, the magistrate found that there was insufficient evidence before her for her to find that the particular work performed by the respondent answered the description of carrying on legal practice. That finding related to the second enquiry identified above. As the judge said ‘the evidence as to the nature and content of the work performed by the respondent was quite sparse’.[13] Moreover, the judge also pointed out that:
The appellant did not place before the magistrate any of the bills of costs prepared by the respondent, or any primary evidence as to the work performed by the respondent, and thus did not demonstrate (nor seek to demonstrate) that the preparation by the respondent of those particular bills of costs, or work allied to them, involved the engagement by him in legal practice.[14]
[13]Reasons [72].
[14]Reasons [80].
The finding by the magistrate was plainly open to her. As the appeal to the Magistrates’ Court was confined to questions of law, the judge correctly dismissed the appeal.
One can accept the comments made by Associate Justice Wood in Mietto v G4S Custodial Services Pty Ltd,[15] and their endorsement by the judge.[16] However, because of the paucity of the evidence as to what the respondent did in this particular case (together with a failure to give any evidentiary attention to the major premise), the present case is not a suitable case to draw any wider conclusions as to the more general question whether some or all of the work performed by costs consultants involves their engaging in legal practice contrary to s 2.2.2 of the Act.
[15][2010] VSC 304, [70].
[16]Reasons [86].
In opposing the application for leave, the respondent pointed to three matters which, when taken together, established that the refusal of the present application would work no substantial injustice. First, the respondent said that the major questions of principle relating to the work of costs consultants had been raised by the applicant for the first time before this Court; before the magistrate, the applicant’s case had been confined to particular activities of the respondent in relation to the eight files. Second, the respondent said that the present proceeding involved opportunistic reliance by the applicant on the provisions of the Legal Profession Act 2004 (Vic): the applicant was seeking to take advantage of provisions designed for the protection of the public in order to avoid meeting a just debt. The respondent also pointed to s 2.2.10 of the Act which provides that an Australian legal practitioner who permits a person who is not an Australian lawyer to engage in legal practice commits a contempt of the Supreme Court: the respondent said that the applicant was relying upon his own contempt to deny his obligation to satisfy the respondent’s entitlements. Third, in the overall scheme of things, the application involved only a small amount of money.
Given my conclusion that no doubt attaches to the holdings on the questions of law either of the magistrate or of the judge, there is no need to discuss these considerations further.
After the court ordered that the applicant pay the respondent’s costs of the application, the respondent sought certification that it had been proper for him to obtain representation by both senior and junior counsel. His senior counsel submitted that this Court had power to grant such certification under its general discretion to make orders as to costs.[17]
[17]Supreme Court Act 1986 (Vic) s 24.
The respondent argued that if the application for leave to appeal had been granted and the applicant had succeeded on the appeal the respondent might have lost his livelihood because he would no longer be able to work as a costs consultant. In addition he would have been exposed to the risk of criminal prosecution because he had engaged in legal practice in the past. This made it appropriate for him to be represented by both senior and junior counsel. The applicant submitted that certification should not be granted and that the question of the appropriateness of the respondent’s representation should be resolved by the Costs Court.
There is no specific provision for certification by this Court of the kind that was requested here. It is not normal practice for such orders to be made and it is the Costs Court which usually determines whether costs incurred by a party to proceedings were appropriate. There would be a risk that litigants would be treated unequally if certification were granted on an ad hoc basis, following the hearing of an application for leave to appeal.
For these reasons we decline to grant the certification sought. Nevertheless we recognise the effect that a successful appeal could have had on the respondent. Of course our refusal to certify does not preclude the Costs Court from concluding that it was appropriate in the circumstances of this case for the respondent to be represented by both senior and junior counsel.
- - -
0
3
0