Bailey v Pryles & Defteros (A Firm)
[2003] WASC 41
BAILEY -v- PRYLES & DEFTEROS (A FIRM) [2003] WASC 41
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 41 | |
| 14/03/2003 | |||
| Case No: | CIV:1638/1997 | 14 FEBRUARY 2003 | |
| Coram: | ROBERTS-SMITH J | 14/02/03 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Motion for judgment on part of claim allowed | ||
| B | |||
| PDF Version |
| Parties: | MARK CHRISTIAN JOSEPH BAILEY PRYLES & DEFTEROS (A FIRM) |
Catchwords: | Practice and procedure Motion for judgment on part of claim Retention of moneys by solicitor Taken in payment of costs Taxation of costs Significant reduction of costs made on taxation Judgment for balance retained Interest |
Legislation: | Rules of the Supreme Court (WA), O 41 |
Case References: | Bailey v Pryles & Defteros, unreported; SCt of WA (Heenan J); Library No 970710; 17 December 1997 Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
PRYLES & DEFTEROS (A FIRM)
Defendant
Catchwords:
Practice and procedure - Motion for judgment on part of claim - Retention of moneys by solicitor - Taken in payment of costs - Taxation of costs - Significant reduction of costs made on taxation - Judgment for balance retained - Interest
Legislation:
Rules of the Supreme Court (WA), O 41
Result:
Motion for judgment on part of claim allowed
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr M L Bennett
Defendant : Mr S D Hay
Solicitors:
Plaintiff : Bennett & Co
Defendant : Laurie Levy & Associates
Case(s) referred to in judgment(s):
Bailey v Pryles & Defteros, unreported; SCt of WA (Heenan J); Library No 970710; 17 December 1997
Case(s) also cited:
Nil
(Page 3)
1 ROBERTS-SMITH J: This matter came before me on a motion for part judgment and for directions on 14 February 2003 on the application of the plaintiff. On that date I made a number of orders and gave only brief reasons. I indicated to counsel at the time that if the parties wished me to provide detailed reasons, I would do so in due course. Such a request has since been made and these are those reasons.
2 The orders I made on 14 February 2003 included that judgment be entered for the plaintiff in the sum of $90,223.48 together with interest accrued until 14 February 2003 in the sum of $31,644.87 and thereafter accruing at the rate of $14.83 per day. That order was without prejudice to, and not in derogation from the plaintiff's claim made in the proceedings for, inter alia, equitable compensation, equitable damages and compound interest. I further ordered that the defendant pay the plaintiff's costs of the taxation and review of taxation of professional costs which were in part the subject of these proceedings, to be paid forthwith upon an indemnity basis. In addition to some procedural orders, I ordered in addition that the defendant file and serve a minute of amended defence on or before 4 pm Friday 28 February 2003 failing which its defence be struck out and judgment be entered for the plaintiff for damages to be assessed.
3 The proceedings were commenced by originating summons dated 30 May and filed 9 June 1997 in which the plaintiff claimed a declaration that the defendant as solicitors for the plaintiff had wrongfully refused to repay money held by the defendant for and on behalf of the plaintiff, an order for the return of $118,343 and interest thereon.
4 The summons was supported by an affidavit of the plaintiff sworn 14 May 1997 in which he deposed to the following matters.
5 About early June 1996 the plaintiff was served with a summons to appear before the National Crime Authority ("the NCA") pursuant to a reference to the NCA to investigate the dealings of motor cycle clubs.
6 The plaintiff deposed that at no time had he ever had any illegal dealings with any motor cycle club and indeed never had any prior reason to engage solicitors. Upon receipt of the summons he contacted the defendant's office located in Perth and subsequently attended on the defendant's employed solicitor Ms Vesna Amidzic in conference on 5 June 1996 in Perth to instruct the defendant to act on his behalf and on behalf of his girlfriend who had also been summoned to appear before the NCA.
(Page 4)
7 Subsequently, on the advice of Ms Amidzic, the plaintiff and his girlfriend travelled to Melbourne to attend on a partner of the defendant, Mr George Defteros, who he says was described by Ms Amidzic to him as being an expert criminal lawyer.
8 About early June 1996 Mr Defteros advised the plaintiff to sell shares that he then held and send the proceeds and any other money that he had on deposit, to the defendant's office to be held by it for and on the plaintiff's behalf, to avoid the risk that the NCA might obtain an injunction freezing his assets and preventing him from having use of the funds.
9 The plaintiff deposed that he thereupon advised his sharebroker to sell his shares and subsequently forwarded to the defendants a sum of $251,545,88 being the total of the proceeds of the share sales and other money he had on deposit.
10 He stated that Mr Defteros advised him it would be necessary to engage two Queen's counsel, one on his behalf and one on behalf of his girlfriend, to prepare for, and appear upon the application for an adjournment of the two summons to appear before the NCA.
11 The plaintiff stated that on about 16 August 1996, he requested the defendant to return the money he had paid to it. He subsequently received by facsimile transfer, a copy of papers purporting to be statements of account and bills totalling $43,200. He deposed that he had at no time prior to then or subsequently prior to February 1997, received any other bills or statements of account from the defendant. At no time did he authorise the defendant to deduct moneys from those held by them for and on his behalf.
12 About September 1996 the plaintiff asked the defendant to repay the money. The defendant paid him $132,657 and despite repeated demands has refused to pay the balance. The plaintiff deposed that at no time has he authorised the defendant to deduct money in order to pay its fees. The defendant acted for the plaintiff until 10 December 1996 when he instructed them to cease acting.
13 About early February 1997 the plaintiff received from the defendant a bill purporting to be in taxable form and annexed to his affidavit. He deposed that forthwith upon receipt of it he, by his then solicitors, requested the defendant to tax the bill but the defendant refused.
(Page 5)
14 On 16 June 1997 the defendant filed a memorandum of conditional appearance pursuant to O 12 r 6(1) of the Rules of the Supreme Court ("RSC").
15 On 25 June 1997 the defendant filed a notice of motion pursuant to O 54 r 5 of the RSC for an order that this Court did not have jurisdiction to hear and determine the originating summons.
16 By an affidavit of Mr Defteros filed 10 June 1997, he asserted that at all material times all work undertaken on behalf of the plaintiff, apart from preliminary advice given to the plaintiff from the defendants' then employee solicitor in Perth, had been undertaken in Melbourne. He deposed that the plaintiff attended at Melbourne on at least three separate occasions to consult with senior and junior counsel, an accountant and the members of the defendant firm in relation to what Mr Defteros described as a highly sensitive and confidential inquiry before the NCA. He further deposed that the plaintiff was presented with a detailed bill of costs in taxable form in accordance with the appropriate Supreme Court scale of costs in Melbourne, but the plaintiff had refused to have that bill of costs presented for taxation before the Supreme Court of Victoria. He sought an adjournment to prepare, file and serve detailed affidavit material in response to the plaintiff's allegations.
17 A statement of claim was filed on behalf of the plaintiff on 16 January 1998. In that, the plaintiff pleaded that he was at all material times a client of the defendant who was a firm of solicitors practising from premises at Hay Street, Perth in Western Australia. He pleaded that about 20 June 1996 the plaintiff paid $251,545.88 to the defendant to hold for and on his behalf and on 16 August 1996 requested the defendant to repay that sum to him. It was pleaded that about 19 August 1996 the defendant paid $132,657 to the plaintiff but refused to pay the balance.
18 The defendant filed a defence on 30 January 1998 and an amended defence on 6 February that year.
19 The gravamen of the defendants' pleading was to admit payment of the amount asserted by the plaintiff to the defendant in Victoria and to assert that it was thereafter held in trust by the defendant in Victoria. Further, it was said such payment was made with authority to the defendant to deduct from those moneys all legal costs and disbursements properly incurred on behalf of the plaintiff by the defendant. There was a plea that on about 1 June 1996 the defendant delivered to the plaintiff an account for legal costs and disbursements dated 13 June 1996 and the
(Page 6)
- plaintiff then orally authorised and instructed the defendant to pay the amount claimed from the moneys held on his behalf. It was pleaded that about 2 August 1996 a further account was sent to the plaintiff by post and that prior to it being so forwarded, the plaintiff orally authorised the defendant to deduct the amount of that account from the moneys held on his behalf.
20 By its pleadings, the defendant admitted that on about 16 August 1996 the plaintiff requested the defendant to account to him for the balance of moneys held on his account less $10,000 to be retained in trust and admitted that about 19 August 1996 the defendant paid $132,657 to the plaintiff, which amount represented the balance held on behalf of the plaintiff by the defendant after deductions made in accordance with the authority previously pleaded. There were further pleas asserting that the application of moneys by the defendant to the plaintiff was governed by the law of the State of Victoria which, inter alia, expressly authorised application or retention of moneys in the ways pleaded.
21 The primary jurisdictional issue was dealt with by Heenan J on 17 December 1997. In reasons published that day (Bailey v Pryles & Defteros, unreported; SCt of WA (Heenan J); Library No 970710; 17 December 1997) his Honour held that this Court had jurisdiction. Whether or not the defendant's costs should be taxed in Western Australia or Victoria was an issue for argument at trial. His Honour further held that procedure by originating summons was inappropriate in what was obviously a contested case in which there were going to be disputes of fact. He accordingly ordered pursuant to O 58 r 27(1) RSC that the matter proceed as if begun by writ of summons. Programming orders were subsequently made.
22 The proceedings then meandered on their tortuous way. There were numerous applications on both sides.
23 By orders made 30 August 1999 the plaintiff was given leave to file a substituted statement of claim and the defendant given leave to file an amended defence. There were requests for further and better particulars and a further application to amend the defence.
24 On 7 April 2000, a Registrar ordered that the time for the plaintiff to enter the matter for trial be extended from 24 March to 7 April 2000. That was subsequently extended to 19 May 2000. The entry for trial was filed on 31 May that year. Orders for directions for trial were made by Owen J on 28 March 2001.
(Page 7)
25 By notice filed 19 June 2001, Messrs Birman & Ride advised they were acting for the defendant (which had previously been acting for itself).
26 On 5 July 2001 the defendant filed a minute of a proposed substituted defence. At that stage the matter had been listed for trial between 17 and 23 July 2001.
27 In an affidavit filed 6 July 2001 in support of the defendant's application to substitute its defence, Mr Defteros advanced the following reasons.
28 He is resident in Melbourne and visits the defendant's Perth office from time to time. Until 19 June 2001 when it engaged the services of Messrs Birman & Ride, the defendant was unrepresented by solicitors on the record as it was conducting the matter on its own behalf and retaining other practitioners for advice and in some cases representation on specific issues.
29 He noted that the pleadings had been amended on several occasions. A chronology of pleadings was annexed to his affidavit.
30 Mr Defteros deposed that he is a criminal law specialist and has very little recent experience in the conduct of civil matters and superior courts. His employees in Perth at the material times were Laurence Levy (employed from 1 May 1997 to 6 July 2000) and Brian Jackson (employed from October 1998 until October 2000) and admitted in Western Australia on 3 February 1998, both of whom practiced exclusively in the field of criminal law. The defendant's employed solicitors in Perth were responsible for the day to day conduct of these proceedings subject to Mr Defteros' supervision. Neither of them however, had any direct involvement with the plaintiff's affairs when he was a client of the firm.
31 Mr Defteros' partner, Peter Pryles, practices almost exclusively as a commercial lawyer and the Perth employees of the defendant practice almost exclusively as criminal lawyers. The firm has very little expertise in the field of superior court civil litigation.
32 Prior to retaining the services of Messrs Birman & Ride, Mr Defteros obtained advice from time to time in relation to pleadings and other developments in the matter from a West Australian solicitor, Mr David Garnsworthy, although at no time did Mr Garnsworthy formally represent the defendant on the court record.
(Page 8)
33 Mr Garnsworthy was retained by the firm to settle the further re-amended defence which was amended pursuant to the order made on 17 February 2000. Although Mr Defteros met with Mr Garnsworthy for two brief conferences, most of his dealings with him were by telephone.
34 He stated that as a result of these arrangements, there was no one practitioner in full control of the conduct of the proceeding.
35 According to Mr Defteros, Mr Levy prepared the amended defence filed on 29 October 1999 and Mr Garnsworthy prepared the (then) current defence filed on 14 February 2000 without the benefit of a proof of Mr Defteros' evidence, on the basis of limited instructions received from him by telephone and whilst not in possession of all of the relevant documents on the defendant's files.
36 Mr Defteros went on to depose that although he received a draft prior to the (then) current defence being filed, he did not give it full and proper attention and in particular "it is obvious" that he did not compare it adequately with the relevant provisions of the (then) current statement of claim. He asserted that he did not instruct Messrs Levy or Garnsworthy, nor any other person associated with the conduct of the proceedings on behalf of the defendant, to make the admissions contained in pars 6 and 7 of the (then) current defence.
37 As matters then stood, those were admissions, formally made in the pleadings, that about June 1998 Mr Defteros had orally advised the plaintiff that it was imminent that the NCA, the Australian Taxation Department or some other Government body would bring an application for a mareva injunction over the plaintiff's assets, that the plaintiff should liquidate those of his assets which were not in cash form and then transfer them into the defendant's trust account in Melbourne, for the purposes of avoiding the consequences of any such mareva injunction or similar action or proceeding and that the defendant would then cause all of the plaintiff's funds held on trust to then be transferred out of the defendant's trust account into an account which the defendant would set up for the plaintiff for the purpose of receiving those funds. The defendant further admitted that in reliance upon such advice, the plaintiff had organised the liquidation of his non-cash assets and paid moneys to the defendant on trust.
38 In his affidavit filed 6 July 2001 Mr Defteros went on to say that he was now advised by the defendant's new solicitors and counsel that that the defence was not particularised properly nor in sufficient detail, nor
(Page 9)
- prepared with reference to all of the relevant documents and most importantly the specific paragraphs referred to contained admissions that were "… crucial to the issues in dispute between the parties and that are wrong".
39 He deposed that he did not diligently compare the relevant paragraphs of the current defence with the allegations in the statement of claim when he received the draft of the defence and therefore failed to detect the error.
40 The proposed amended defence would deny the relevant allegations in the statement of claim; it would, inter alia, plead that the money was to be transferred as security for the defendant's costs.
41 The defendant's application to file a substituted defence came on before me on 9 July 2001. There was also an application for certain pre-trial directions. On that occasion Mr R Richardson of counsel appeared for the defendant. In the course of submissions he contended that if the amendment were allowed the argument that the contract was made in Victoria would become a dead issue, because the defendant would be acknowledging in its pleading that this Court has jurisdiction to tax the bill (t 29, 9/7/01). He said further that it was the defendant's position then that the bill should be taxed as soon as possible.
42 I granted leave to amend the defence, albeit not quite in the form sought, vacated the trial dates which had been set, ordered the defendant to file within seven days a bill or bills of costs covering the subject matter of the action and ordered that such bill or bills be taxed.
43 On 10 October 2001 the defendant filed a 27 page bill of costs for taxation dated 30 July 2001 concerning the work said to have been done in respect of costs retained by it out of the plaintiff's moneys. The bill covered the period June 1996 to December that year. There was also a separate bill for Children's Court work. The defendant claimed profit costs of $80,366.80 plus disbursements of $14,713.90, a total of $95,080.70.
44 In due course the bill was supported by an affidavit of Vesna Amidzic sworn 18 March 2002 and affidavits of George Defteros sworn 18 March and 11 April 2002. Those affidavits had become necessary because the material provided to the Registrar for taxation had been found to be inadequate. There had also been substantial delays. These are detailed in the report on taxation delivered by the learned Registrar on 27 June 2002.
(Page 10)
45 The learned Registrar noted that the orders requiring the defendant to file a bill of costs for taxation had been made by me on 9 July 2001 and required them to be filed within seven days of that order. In fact the bills were not filed until 10 October. An appointment to give directions in respect to the taxation was made for 12 December 2001 and on that date the learned Registrar gave directions requiring the defendant to file and serve all vouchers for disbursements incurred and referred to on the bills to be taxed by 15 February 2002 and that by 25 February 2002 the plaintiff file and serve a list of objections to items on the bills or appearing in the vouchers. She further directed that by 25 February 2002 the plaintiff and the defendant were to each file and serve short submissions detailing the basis on which each was contending she should proceed to tax, namely the appropriate hourly rate to be applied and the appropriate scale of charges.
46 The taxation was then adjourned initially to 7 and 8 March 2002.
47 The vouchers the defendant was required to file were not filed until 1 March. The plaintiff filed objections to items in the bill by 5 March and on 6 March filed submissions dealing with the issues raised. The defendant filed no submissions nor any affidavit.
48 On the first morning of the taxation counsel for the defendant, Mr Birman, requested an adjournment on the basis that an expert witness he was hoping to call to provide evidence had not been able to provide his affidavit in time for the taxation. This expert was a Victorian legal costs expert who it was said would provide evidence of the basis of charging in the bill and charging practices at the Victorian Bar.
49 The learned Registrar refused the adjournment, taking the view the defendant had been given more than adequate time to file an affidavit and to make submissions.
50 In her report on taxation the learned Registrar was extremely critical of the material (or lack of it) relied upon to support the bill. She noted (p 8):
"There was no primary evidence. There were almost no contemporaneous records. Not even time sheets. No documents. There were no critical file notes. There were no follow up letters. There was no evidence of any consequential work that would have indicated that the work claimed for had been necessarily done to discharge the retainer.
(Page 11)
- Counsel for the Defendants, in difficult circumstances, did his very best to provide some explanation for the charges appearing on the bill. Without assistance from those who instructed him, Counsel was unable to provide an explanation sufficient to satisfy me of the work for which charges had been rendered."
51 The learned Registrar told counsel that before she disallowed any of the items, she would give the defendant further opportunity to provide some evidence to support the charges. It was as a result of that indication that the affidavits of Mr Defteros and Ms Amidzic were filed.
52 The affidavits did not overcome the fundamental difficulties with the bill.
53 The report notes that Mr Defteros said in his affidavit the absence of notes and supporting or follow-up documents was because the work he was doing was of the most confidential nature; it was so sensitive that it was not his practice to keep records or file notes. The learned Registrar described it as a claim "akin to privilege" and observed that while she could appreciate the sensitivity of the area in which Mr Defteros practices:
"… it seems extraordinary that when the client puts his own solicitor to proof that this work was done for him, … the practitioner maintains some sort of client privilege, particularly where the solicitor must bear the onus of establishing compliance with the retainer."
54 Amongst the deficiencies of the bill were several instances of duplication of claims, charges made for telephone attendances between Mr Defteros in Melbourne and Ms Amidzic in Perth for which there was no apparent justification to charge and several large claims for research which were not substantiated and where there was no coherent explanation as to why such a degree of research was required. There were no notes supporting the degree of research nor any adequate explanation of what was researched. The learned Registrar was not satisfied that much of the work charged for had in fact been done.
55 At p 11 the learned Registrar noted that:
"Ms Amidzic charged in the bill for considerable time spent on this file. The numbers of hours claimed is frequently astonishing. For example on 5 June she claims 5 hours of research before she sees the client. She then spends another 2 hours considering the NCA summons and another 3 hours in
(Page 12)
- research. On top of this she claims hours of attendances, conferences and phone calls. … These all occurred on the same day (5 June) and would total more than 12 hours of billable time. There is little support for the assertion that this work was necessary. There is no evidence of what was being done. No notes exist to support what was done, particularly what research was undertaken.
Ms Amidzic in her affidavit sets out an explanation of her problems with note keeping and time recording. While all busy practitioners can suffer the same difficulties, most practitioners recognise the need to manage their retainers, to keep proper file records and to retain basic supporting evidence of the charges they render to their clients. When the client challenges the charges, in the absence of supporting evidence, I am unable to allow the claims."
56 In the event, on the taxation of the primary bill, the learned Registrar allowed $14,874.90 of the $95,080.70 claimed. In addition she allowed a further amount of $1,600 and uncontested disbursements of $10,400.50. To that was added the amount taxed on the bill for the Children's Court work, bringing the total that would be the subject of allocatur to $18,264.90 plus agreed disbursements.
57 The matter was then referred back to me.
58 On 8 August 2002 I directed that the Registrar sign the allocatur.
59 By letter dated 12 August 2002 the defendant's solicitors requested a review of the taxation.
60 The review was conducted on the papers and the learned Registrar delivered her report on the review on 6 December 2002. She concluded that she did not consider that she had erred in principle in respect to any aspect of the bill, whereupon she signed the allocutur in the sum of $28,665.40.
61 Messrs Birman & Ride were given leave to remove themselves from the record as solicitors for the defendant on 11 November 2002.
62 The matter came before me again on 14 February 2003, there having been no appeal lodged against the taxation in the meantime.
(Page 13)
63 Mr Bennett moved for "interim" (that is partial) judgment for the plaintiff. The minute of proposed orders recited that the orders were sought pursuant to O 43 r 16 of the RSC but it is apparent it was a motion for judgment under O 41.
64 In my view it was apposite to give the plaintiff judgment in the terms claimed. The plaintiff remained entirely out of funds and the amount involved was substantial. He had been out of his funds for some six years. The amount allowed on taxation was approximately one-third of that claimed. The defendant has repeatedly failed to comply with time limits in the conduct of these proceedings and to take the opportunity to provide appropriate supporting material to justify the substantial costs claimed. The process of taxation was lengthy, essentially due to the failure of the defendant to cooperate with it. Of the $28,665.40 allowed on taxation, some $10,000 represented disbursements which had been agreed prior to the taxation occurring. The effective profit costs of the defendant were reduced from in excess of $90,000 to approximately $18,000.
65 The issue of jurisdiction to tax the bill was not conceded until the trial itself was imminent. As a result the trial dates had to be vacated. There was then further inordinate delay, principally as a result of the conduct of the defendant and in the end the defendant's bill was found by the learned Registrar to have been grossly unreasonable.
66 The date of the hearing of the application was almost two years after the trial was originally listed. The interests of justice require that it be progressed expeditiously henceforth.
67 A further reason for acceding to the application for judgment at this point was that although the signing of the allocatur takes effect as a judgment between the parties, it does not constitute an order of the court for the repayment of difference between the costs allowed and the moneys retained. Execution to recover the difference would not be possible without judgment. In the circumstances, it seemed to me appropriate that judgment should be given to that extent.
68 The making of the orders was not opposed by Mr Hay who appeared as counsel for the defendant on 14 February 2003.
69 By his amended and substituted statement of claim, the plaintiff had pleaded payment of the sum of $251,548.88 to the defendant about 20 June 1996. Receipt of that money was admitted by the defendant at par 8 of its further re-amended defence.
(Page 14)
70 By par 10 of the statement of claim the plaintiff pleaded that about 19 August 1996 the defendant paid to the plaintiff by cheque the sum of $132,657 but wrongly withheld the sum of $118,888.88. The repayment of $132,657 on 19 August 1996 was admitted at par 8 of the defence. The amount retained in trust was shown as $10,000.
71 If the taxed costs of $28,665.40 are deducted from the $118,888.88 as at the date of taxation, the balance of the money wrongfully retained by the defendant since 19 August 1996 is $90,223.48.
72 The relevant rate of interest between 19 August 1996 and 12 September 1997 was 8 per cent (or $19.78 per day). The rate of interest from 13 September 1997 to 14 February 2003 was 6 per cent ($14.83 per day). On that basis I allowed 389 days interest totalling $7,694.42 for the first period and four years 155 days (the year 2000 was a leap year) in an amount of $23,950.45 making a total interest of $31,644.87, and thereafter accruing at the rate of $14.83 per day.
73 Mr Bennett submitted that the defendant should be required to bring in a minute of amended defence within seven days because in light of the taxation, the pleaded defence that the retainer was not in Western Australia and the defendant was not obliged to submit its bill for taxation in this State, could not stand. He submitted the order should be in the form of a springing order because of "the conspicuous failure of the defendant to comply with time limits in the past". I accepted those submissions with the exception that at Mr Hay's request I allowed the defendant 14 days to bring in its amended defence.
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