Bechara v Legal Services Commissioner

[2011] HCATrans 156

[2011] HCATrans 156

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S25 of 2011

B e t w e e n -

MARIA BECHARA

Applicant

and

LEGAL SERVICES COMMISSIONER

Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 JUNE 2011, AT 12.11 PM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friends, MR P.W. NEIL, SC and MR P.D. DOYLE GRAY, for the applicant.  (instructed by Bechara & Company Lawyers)

MS C.A. WEBSTER:   If the Court pleases, I appear for the respondent.  (instructed by Legal Services Commissioner (NSW))

GUMMOW J:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, may I just say something about the base facts by way of introduction before going to the statutory provisions which ultimately affect the matter.  Your Honours, the base facts are these.  The applicant was solicitor for three plaintiffs.  They were suing the same defendant.  Their actions arose out of different circumstances in relation to the same premises.  The applicant had a costs agreement with each.  Its terms can be seen relevantly at page 73, paragraph 11, in the reasons for judgment of the Court of Appeal and your Honours will see various rates set out there.  The agreements were conditional in the sense that if a plaintiff failed, the applicant received no costs in respect of that plaintiff. 

Shortly before the actual trial, it was agreed that the matters, though not consolidated, would be heard together and that occurred with each plaintiff being successful.  You will see that in paragraphs 12 and 13 on page 73.  The applicant sent bills to her three clients, in each case billing at the agreed rate for each for the hearing.  You will see that in paragraph 14 at page 73 and the party and party bill was prepared on the same basis.  When the party and party bill was assessed, the costs assessor doing it wrote to the respondent, as appears at page 75, paragraph 17, suggesting that she may have engaged in deliberate charging of grossly excessive amounts.  Now, there were offers made by the applicant to reduce her fees at a time before she was aware that there had been any such referral.  You will see that in paragraphs 16 and 18 on pages 74 and 75. 

Your Honours, the applicant was found guilty of professional misconduct for charging for that part of the case, that is, the part when the case was heard together, at the rates provided for in the costs agreement.  She was reprimanded, fined $6,500 and ordered to pay the costs, a large sum.  The essence of the Court of Appeal’s views, your Honours, was that in some way there was an obligation on a solicitor and own client basis to charge only one fee and apportion it or to charge one fee but, in effect, increase it a bit because there were three cases being dealt with.  You will see that at paragraph 138 on page 123.  This is the heart of the ultimate decision of the Court of Appeal:

To my mind an analysis of the cases confirms the correctness of the views expressed in Quick on Costs at [4.3380].

which you will see in the preceding paragraph.  Then their Honours set out the correct principle:

where a solicitor is retained to act for multiple clients whose proceedings are heard together with evidence in one being evidence in the other (regardless of whether the proceedings are formally consolidated), and the clients are charged on a time‑costed basis, there must be an apportionment of time spent on matters common to two or more of the proceedings.  One unit of time cannot be charged more than once.

Your Honours will see paragraph 139, I will not read it out, your Honours, but your Honours will see the last sentence of that, in particular, the principle that one unit of time may not be charged for more than once.  Your Honours will see then at paragraph 140, going over to page 124, at about line 13:

If a solicitor can apply the benefit of his or her work to two clients, he or she should do – indeed must do so – without any expectation of double recovery. 

Now, your Honours, that is the heart of the approach taken by the Court of Appeal and your Honours will see that it does not turn upon any statutory provision.  That approach, in our submission, does not give sufficient recognition to the terms of the Legal Profession Act 1987. They were the provisions relevantly in force. Similar provisions are in force in the current Act. Could I take your Honours to the Legal Profession Act 1987 and, in particular, to section 208C? It should be at page 12 at the top, I think, your Honours. Your Honours will see that section 208C provides in subsection (1) that:

A costs assessor is to decline to assess a bill of costs if –

the two matters referred to in 208C(1) are satisfied.  The first of those is that:

the disputed costs are subject to a costs agreement that complies with Division 3 –

Your Honours, may I just say this.  There was no suggestion that the costs agreement were not complying costs agreement in that regard and I shall in a moment take your Honours to the part of the reasons for judgment and the Court of Appeal illustrates that.  The second feature, your Honours, set out in section 208C(1)(b) is that the cost assessor cannot assess a bill of costs if a complying costs agreement specifies the amount of the costs or if the agreement, as in this case, specifies the rate for calculating costs and there is a dispute as to that rate.  In other words, that is foreclosed by the agreement.  Then, if there is any other aspect which is in dispute, costs are yet to be assessed on the basis of the rate specified in the agreement.  That is subsection(2) of 208C.  Your Honours, I said I would give a reference to the Court of Appeal and I should say, your Honours, that there is one further provision, section 208C(3) which says that:

This section does not apply to any provision of a costs agreement that the costs assessor determines to be unjust under section 208D.

Your Honours, unjust is determined in accordance with 208D and as subsection(1) of section 208D makes clear, injustice in that sense is to be determined at the time the costs agreements were made.  Your Honours, I said I would give a reference to the Court of Appeal in relation to that and at page 99 you will see in paragraph 60 in the last six lines after the reference to 208D, it said:

The Commissioner did not allege that the costs agreement were non‑compliant or unjust. 

Your Honours, I should also add, a costs agreement is not to be applied when assessing party and party costs, as one might expect.  That is section 208H(2).  The situation, your Honours, which, in our submission, thus obtained was that the legislature had provided for greater freedom of contract by costs agreement provided that the costs agreements comply with Division 3 and that their terms are not unjust.  When made, they are binding.  They are binding in the sense they cannot be challenged, for example, as to rate and any other dispute is to be determined by the application of that rate. 

Your Honours, in those circumstances, in our submission, it is difficult, with respect, to see that the correct starting point should be as was said in the Court of Appeal at page 123, paragraph 138, to which I referred.  Surely, in our submission, one should start with the statute and its terms do not sit well with the suggested obligation to apportion stated in paragraphs 138 to 140.  No doubt, of course, many practitioners would be inclined to offer a reduction from the amounts agreed in their fee agreements as, indeed, the applicant attempted to do on two occasions before the proceedings against her were commenced, but, in our submission, there was no obligation to do so.  The way in which the Court of Appeal dealt with this question is at page 101 in paragraph 70 where it was said that:

the absence of a formal assessment does not preclude consideration being given to whether the [applicant] is guilty of a breach of s 208Q.

Now, I have not taken your Honours yet to 208Q and may I do so now.  It is at page 22 of that material where it is said that:

If a costs assessor considers that any conduct of a barrister or solicitor involves the deliberate charging of grossly excessive amounts of costs or deliberate misrepresentations as to costs, the costs assessor must refer the matter to the Commissioner.

Then subsection (2), to do so is “declared to be professional misconduct.”  Your Honours, if one goes to paragraph 70 at page 101, the bottom of that page in the last three lines, it said:

The essential question, and one which caused the Commissioner concern, was whether the appellant was entitled to charge single units of time more than once.  That the individual costs agreements complied with Div 3 of the LPA 1987 and were not themselves unjust under s 208D was not to the point. 

Then your Honours will see the question as posed by the Court.  Your Honours, in our submission, what is grossly excessive must depend on a consideration of the other provisions of the Act.  It is not, we would submit with respect, a freestanding provision which derives no meaning or content from those other provisions.  Your Honours, could we just say that if one looks at the terms of section 208C, they do not lend themselves to the suggestion that at the point at which the issue arose the charges made by the applicant in accordance with the contract which he had were ones which were grossly excessive.  They were simply the agreed fees. 

Your Honours, I should say provisions equivalent to those to which I have adverted can be seen in the Legal Profession Act 2004, the current Act.  Could I refer to sections 361 and 399.  Could I also say this, your Honours, that our learned friend’s submissions at page 165, paragraph 4, place reliance on the decision in Veghelyl v The Law Society referred to in the third last line on that page.

GUMMOW J:   Also referred to on page 171, paragraph 35.

MR JACKSON:   Yes, your Honour.

GUMMOW J:   Along with a number of other cases, too.

MR JACKSON:   Yes.  Could I just say about them, your Honour, the first thing is that if one looks at the passages to which reference is made from Justice Mahoney in that case, he referred, it is true, to the existence of costs agreement in respect of part of that case, but the operation of the statutory provisions was not considered, the reason being they had yet to be enacted at the time of that case.  So the case does not deal with the statutory provisions at all.  Your Honours, in the case which is referred to as ‑ ‑ ‑

GUMMOW J:   The question is whether the statutory provisions overcome or displace or qualify the general considerations going to the control of the court which the respondent details at paragraphs 27 and following on pages 170 and 171.

MR JACKSON:   Well, your Honour, it is not really a question of displacement.  It is a question of the general considerations having to be read with ‑ ‑ ‑

GUMMOW J:   General fiduciary considerations.

MR JACKSON:   Well, your Honour, I was about to say it is a question of the considerations, be they for the moment fiduciary or otherwise, having to be read with the entitlements given by the provisions for costs agreements and really what has occurred is that the attitude which has been taken by the legislature is that by making provision for costs agreements which have to satisfy various requirements to be ones which comply by having provisions by which they are tested as to whether they are or are not unjust at the time they are made, they then are ones which are to be applied, in our submission.  Your Honours, the approach taken in the Court of Appeal was simply, in effect, to treat them as if they had no ultimate relevance and, in our submission, they did and that that was a matter which the Court of Appeal did not take in account.

GUMMOW J:   It may have had relevance, but they did not treat it as not having determinative effect on this question of professional misconduct.

MR JACKSON:   Your Honour, I would accept that they are determinative on the issue and otherwise the provisions do have to be read together.  If one sees the Court of Appeal doing what it did in those three paragraphs to which I referred earlier, to apportion in the way they suggest, which is one of the remedies they suggest, is something that does not seem to accord with section 208C(2), to take one example, your Honours, and, in our submission, that is something that was not appreciated by the Court of Appeal. 

Could we also say, your Honour, in relation to fiduciary duty, at paragraph 140 at page 123, your Honours will have seen a reference to

“indeed must do so” in the passage to which I referred earlier and that is on the basis of fiduciary duty.  Your Honours, could we just this, that that does really leave out of account once more the relationship between the costs agreement that have been entered into and the statutory provisions under them.  Your Honours, that is the principal point in the matter.  Could I just say this, that there is also a question relating to the report of Ms Castle.  Your Honours will see her evidence set out relevantly by the tribunal at page 30, paragraph 43.

Your Honours, this is an issue to which we have referred in our written submissions at page 160, paragraph 23.  The evidence of Ms Castle was to attempt to derive the principle from the approach of cost assessors or some cost assessors, but the Court of Appeal, your Honours, as we have said in paragraph 24 on page 160 really transposed the matter and it treated the instances as manifestations of the principle rather than what she was saying and we submit the issue is really a question of the law, but there is a second aspect to her evidence which is this.  If it was germane or critical to the respondent’s case as the Court of Appeal recorded at page 96, paragraph 49, we would say, how could the opinion which the Act required to have been formed by section 155(2) have been formed before the institution of the proceedings against the applicant.  This is the issue referred to in paragraphs 14 and immediately following of our submissions at page 158.  Overall, your Honours ‑ ‑ ‑

GUMMOW J:   Which particular paragraphs?

MR JACKSON:   Your Honour, I was referring to paragraph 15 on page 158.  The point of it is that in a decision of the New South Wales Court of Appeal in Murray, to which we have there referred, it was held that under section 155, which is, your Honour, paraphrased in the commencing words of that paragraph, the institution of legal proceedings against a practitioner did not arise merely by there being a prima facie case.  The view had to be formed that the proceedings would be ones where there was a reasonable likelihood that the practitioner would be found guilty.

GUMMOW J:   Is this not now in the past? 

MR JACKSON:   Well, it was, your Honour, but in Murray it was held, in effect, that it was a jurisdictional matter and the point about it, your Honours, is that we would simply say if the evidence of Ms Castle was critical to the matter, then the opinion could not have been formed before the proceedings against the applicant were instituted.  Your Honours, may I conclude by saying this.  In our submission, this is a case where, as we submit at page 163, paragraphs 39 to 42, the special leave, in our submission, should be granted.

GUMMOW J:   Yes, we do not need to call on you, Ms Webster.

There are insufficient prospects of success on an appeal in this matter to warrant a grant of special leave.  Special leave is refused with costs.

The Court will adjourn to reconstitute.

AT 12.33 PM THE MATTER WAS CONCLUDED