Biggins v Kevin Penkin and Associates
[2001] WASC 163
BIGGINS -v- KEVIN PENKIN AND ASSOCIATES [2001] WASC 163
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 163 | |
| Case No: | CIV:1185/2001 | 22 MAY 2001 | |
| Coram: | WHEELER J | 26/06/01 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed in part | ||
| PDF Version |
| Parties: | STEPHEN JOHN BIGGINS KEVIN PENKIN AND ASSOCIATES |
Catchwords: | Costs Written agreement Matters relevant to taxing officer Costs Written agreement Unreasonableness |
Legislation: | Nil |
Case References: | Nil Alman v Macdonald Rudder [2001] WASC 65 Portch v Fanconi (1994), unreported; SCt of WA (Seaman J); Library No 940174; 31 March 1994 Retail Equity Pty Ltd & Ors v Murie and Edwards (No 1), unreported; SCt of WA (White J) ; Library No 940163; 31 March 1994 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
KEVIN PENKIN AND ASSOCIATES
Defendant
Catchwords:
Costs - Written agreement - Matters relevant to taxing officer
Costs - Written agreement - Unreasonableness
Legislation:
Nil
Result:
Application allowed in part
(Page 2)
Representation:
Counsel:
Plaintiff : Mr G P Mohen
Defendant : Mr S V Forbes
Solicitors:
Plaintiff : Friedman Lurie Singh
Defendant : Paiker & Overmeire
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Alman v Macdonald Rudder [2001] WASC 65
Portch v Fanconi (1994), unreported; SCt of WA (Seaman J); Library No 940174; 31 March 1994
Retail Equity Pty Ltd & Ors v Murie and Edwards (No 1), unreported; SCt of WA (White J) ; Library No 940163; 31 March 1994
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1 WHEELER J: This is a summons to set aside an agreement as to costs between the plaintiff and the defendant made in relation to certain criminal injuries compensation and employment related matters, which were dealt with in one agreement. Affidavits have been filed both by the plaintiff and the defendant. There are significant factual disputes concerning the circumstances in which the agreement was entered into, and representations made before, during and after the currency of the plaintiff's retainer of the defendant. No order was sought for cross-examination of witnesses and it is conceded by the plaintiff that he bears the burden of establishing unreasonableness and that he cannot therefore rely upon those portions of his affidavits which are disputed by the defendant. In the end, I am left with a bare chronology, the agreement itself, and the practitioners' bills of costs purportedly served pursuant to that agreement. Those matters can be fairly briefly stated.
2 The plaintiff entered into two cost agreements with the defendant at different times. The first, on 21 June 2000, was entered into in somewhat unusual circumstances. The plaintiff had been convicted of assault occasioning bodily harm in the Court of Petty Sessions and the solicitor who had represented him in that hearing had commenced an appeal on the plaintiff's behalf in respect of that conviction. However, during the course of preparation for the appeal that solicitor advised the plaintiff that as a result of his on-going depression and inability to work efficiently, he would be unable to represent the plaintiff. He recommended that the plaintiff request the defendant to assist in relation to the appeal. The plaintiff did so.
3 The letter which was sent to the plaintiff by the defendant at the time at which the defendant sent for perusal the first costs agreement recommended that the plaintiff seek independent legal advice in relation to the costs agreement. The plaintiff did seek advice from the solicitor who had been previously acting for him. The content of that advice, and dealings between the plaintiff and the defendant in relation to it, is the subject of some dispute. The end result is not. The plaintiff entered into the cost agreement which was witnessed by the former solicitor from whom he had sought advice about it. The appeal was successful. It is not sought to set aside that costs agreement.
4 There then arose, out of the substratum of facts which gave rise to the criminal proceedings, the possibility that the plaintiff might be able to make a claim pursuant to the Criminal Injuries Compensation Act for certain injuries received by him. Consideration was at some stage also given to the possibility of a civil action against certain persons arising out
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- of those facts. The underlying dispute also gave rise to proceedings in the Industrial Relations Commission in which the plaintiff sought reinstatement in his former position. It was agreed between the plaintiff and the defendant, again in circumstances which are the subject of considerable dispute, that the plaintiff wished the defendant to act for him in the Industrial Relations Commission and in relation to a criminal injuries compensation claim. Again, a covering letter was sent to the plaintiff, together with a costs agreement. The letter and costs agreement deal with both the Criminal Injuries Compensation Act claim and the Industrial Relations Commission matter, although they appeared under separate headings and were plainly separate matters. There are a couple of odd features of the covering letter and agreement, so far as they relate to the criminal injuries matter.
5 One of the issues which the letter suggested arose pursuant to the Criminal Injuries Compensation Act was whether the plaintiff was within time to make a claim against the police in respect of certain conduct, given the requirements of s 6 of the Crown Suits Act 1947. That Act would be relevant to a civil action against the Crown as employer of a police officer, but would appear to have no relevance to an application pursuant to the Criminal Injuries Compensation Act. In the schedule to the Agreement, although the description of the relevant matter is "claim under the Criminal Injuries Compensation Act(1985)" the relevant court or tribunal is identified as 'District Court of Western Australia'. A claim under the Act is not made to the District Court, but to the Chief Assessor, an office created pursuant to the Act.
6 The costs estimated as likely to be incurred with respect to the claim under the Act is the very significant amount of $15,000. This is a most improbable estimate, having regard to the informal nature of the jurisdiction and the fact that determinations may be, and often are, made without conducting any hearing at all. I have read the opinion of counsel which was sought in relation to this matter, and which gives some of the relevant factual background and an idea of the issues involved. The claims sought to be made would be against a private individual and one or more police officers. None of them had been convicted of an offence in relation to the plaintiff and it is likely that at least the relevant police officers would see a determination in favour of the plaintiff as reflecting adversely upon them in their professional capacity. The case was therefore likely to be more complex than the majority of criminal injuries compensation matters and might well have proceeded to a hearing. Although the defendant's submissions were not put to me on this basis, it seems to me that the estimate would be excessive even in those
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- circumstances, but an estimate greater than one would normally expect might well have been justified by the unusual nature of this case.
7 However, under the heading "estimate of recoverable costs" for the criminal injuries compensation claim there appears the sum of $12,000. This is clearly in error. The criminal injuries compensation jurisdiction is a no-cost jurisdiction, and none of the amounts payable to the defendant could have been recovered by the plaintiff as legal costs in that application.
8 So far as the Industrial Relations Commission matter was concerned, there is nothing in either the covering letter or the schedule which appears to me to be in any way out of the ordinary. The estimated costs are $5,000 and it is correctly recorded that the jurisdiction is a no-cost jurisdiction and that the plaintiff would be unable to recover any costs.
9 It is to be noted that the defendant referred in the covering letter to the most likely analogous scales as being the Supreme Court scale in respect of the criminal injuries matter and the solicitor's costs determination in respect of the Industrial Relations Commission matter. It appears to me that a suggestion that a criminal injuries application should be remunerated at the Supreme Court scale is somewhat optimistic. However, no issue is taken with the hourly rates referred to in the agreement in respect of either matter, and I was advised from the bar table by counsel for the defendant, without objection, that the rates charged for a senior solicitor in the costs agreement were in any event lower than those contained in each of the two scales referred to at the relevant time.
10 The attack upon the agreement is based, so far as the Industrial Relations Commission matter is concerned, simply on the discrepancy between the costs estimated and the costs actually charged by the practitioner. The matter was apparently settled prior to reaching hearing. The costs actually incurred are said by the defendant to have been of the order of $6,900 to that stage. It is submitted by the plaintiff that the discrepancy between the estimate of $5,000, which was prepared on the basis that the matter would be determined by a hearing, and the actual costs, is enough to establish that the agreement is inherently unreasonable. There are at least two difficulties with this submission.
11 One is, that part of the submissions on behalf of the plaintiff, as I understood them, were to the effect that work had been done by the defendant which was not necessary for the purpose of the Industrial Relations Commission matter, and it was suggested that work had been
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- unnecessarily done because of the defendant's lack of expertise in the jurisdiction. It appears to me that this would not be a matter which would make the agreement of itself unreasonable. Rather, it would be a matter for the taxing officer. A written costs agreement, which sets an hourly rate, does not have the effect of permitting a practitioner to charge that rate for work which is not necessary to be performed or which is performed negligently. Any excess arising in that way would not be an unreasonable effect of the costs agreement itself, but would arise from the practitioner charging for work for which he was not entitled to charge.
12 The second, and still more significant, difficulty is that the defendant's affidavit contains material which may explain some or all of the discrepancy. He deposes that the plaintiff required him to write very lengthy letters to the Commissioner of Police setting out certain matters in an attempt to gain reinstatement without going to a hearing. The plaintiff denies that lengthy letters were written at his express instruction, but this is a matter which I am unable to resolve on the affidavits. All I am able to determine is that there is a possible explanation for the discrepancy which would say nothing about the reasonableness or otherwise of the costs agreement. It is my view that the plaintiff has not discharged the onus which he bears in relation to this agreement.
13 The more difficult matter is the agreement so far as it pertains to the criminal injuries compensation matter. Again, there is a discrepancy between the amount which it is estimated the plaintiff will have to pay and the costs actually incurred. In this case, the plaintiff points to the sum of $3,000 as being an estimate of the costs which he would be likely to bear, that being the difference between the estimated costs of $15,000 and the estimated recoverable costs of $12,000. It appears that the plaintiff had performed work for which he had charged a sum of $3,650, in addition to obtaining an opinion from counsel, upon the express instructions of the plaintiff, in the sum of $1,100, by the time that a disagreement arose between the plaintiff and the defendant about costs and the defendant's retainer was terminated. The criminal injuries compensation matter has now been taken over by other solicitors.
14 Again, it is suggested that the difference between the sum of $3,000, as the plaintiff's estimated net costs, and the sum of $3,650 for an uncompleted application suggests that the agreement is necessarily unreasonable. Again, there are difficulties with this approach. First, it must be noted that the agreement expressly provides that the plaintiff will have to bear GST in addition to the costs to be charged and this accounts for some $360 of the discrepancy. Next, I have no way of knowing how
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- far advanced the criminal injuries compensation claim was by the time at which the instructions were terminated. I have noted that counsel's opinion was obtained. I have noted that the matter was more complex than average. The bills of costs which I have seen suggest that a significant amount of information had been collated and considered by the defendant.
15 Finally, it may well be that these bills of costs contain matters which are not to be attributed to the agreement relating to the criminal injuries compensation matter. It appears from the affidavits of both plaintiff and defendant that some work for which the defendant has billed involved consideration of a potential District Court action against either the private individual or the police or both, seeking damages at common law. Although there are hints in the agreement and covering letter that a common law action may be contemplated, in my view the agreement should be construed strictly as against the practitioner and would extend only to work done in preparation for and in the making of an application pursuant to the Criminal Injuries Compensation Act 1985. If other work was done pursuant to an oral agreement between the plaintiff and the defendant that certain other matters should be considered, that should be taxed without reference to the costs agreement. All of these issues would be matters for the taxing officer.
16 However, it is also said on behalf of the plaintiff that so far as the criminal injuries compensation matter is concerned, it was a serious misstatement to suggest to the plaintiff that the costs would be of the order of $15,000, and a still more serious misstatement to suggest that any costs at all would be recoverable from any other party. The first submission is not without its difficulties. An inflated estimate of costs is likely, if anything, to deter a potential litigant from entering into such an agreement. It may often work against the interests of the practitioner and in favour of the client. However, it must also be borne in mind that as a practical matter a substantial overestimate of costs may have the effect of causing a client not to question a bill which is well outside the usual range and which may cover work for which the practitioner was not entitled to charge (it having been, for example, unnecessarily and inefficiently done). Because no material has been put before me suggesting what actual costs would be likely to be incurred in an application of this complexity were it to proceed to hearing, it is difficult for me to form a view as to how great a discrepancy exists between the sum of $15,000 and the amount reasonably likely to be incurred. However, bearing in mind the sort of work involved in preparing an application, and the likelihood that a hearing of an informal nature and involving a limited number of witnesses
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- would be unlikely to exceed one day, it seems to me that the estimate is perhaps a little over twice the amount which should have been estimated in respect of a matter of this kind.
17 More importantly, the reference to the sum recoverable from any other party was of course wholly in error. The true position, having regard to the nature of the claim involved, was that the plaintiff was likely to incur significant costs in making the application in a situation where it would be impossible for him to recover from any other party. It seems to me that that is a very serious misstatement. It is not, I think, to be cured by the defendant's submission that the plaintiff was interested only in the difference between the two amounts and that the amount that he was in fact charged bore a close relationship to that "difference". As I have pointed out, the work in fact done by the practitioner does not represent all of the work necessary to bring the application to a conclusion and that matter has been taken over by another practitioner.
18 On the evidence before me which relates to the nature of the potential criminal injuries claims, the plaintiff has established that the estimated costs payable by the plaintiff and the estimate of costs recoverable are plainly and significantly erroneous. Both of them are very important matters for a potential client to consider. In those circumstances, it seems to me that the agreement must be set aside. It does not of course necessarily follow that the amount which a taxing officer may find that the plaintiff has to pay will necessarily differ greatly from the amounts actually charged by the practitioner. I express no view as to whether or not the hourly rates charged by the practitioner are reasonable, having regard to the matter in question, nor do I express a view as to whether any portion of the work performed by the practitioner in relation to the criminal injuries matter was unnecessarily or inefficiently performed.
19 The defendant submitted that, even if I found the argument to be unreasonable, I should not set it aside as a matter of discretion. It was argued that the defendant had relied, to his detriment, on a representation by the plaintiff that he would make payment of the costs incurred. I do not think it is necessary to say more of that submission than to observe that the representation (assuming it to have been made) neither expressly nor impliedly waived the plaintiff's right to seek taxation or to seek to set the agreement aside.
20 Finally, I mention briefly the plaintiff's submission that if I formed the view that either part of the agreement was to be set aside, I must set
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- aside the agreement as a whole. I do not accept that submission. It appears to me that although what was sent to the plaintiff was in form one single costs agreement, it covered two discrete matters which were capable of being separately identified and which were in the event separately costed by the defendant. There was not in truth one single agreement; rather there were two agreements, one in respect of the criminal injuries compensation matters and the other in respect of the Industrial Relations Commission matter, which were for convenience set forth in the same document. It seems to me that the two are severable and I would therefore set aside the agreement only insofar as it relates to the criminal injuries compensation matter.
Conclusion
21 I would set aside so much of the agreement made 17 August 2000 between the plaintiff and the defendant as provides for the remuneration of the defendant in respect of an application pursuant to the Criminal Injuries Compensation Act and order that the costs of that matter be taxed in the ordinary way. As a matter of first impression, it seems to me that it would be appropriate for each party to bear their own costs of this application. The plaintiff was successful on one and the defendant on the other of the two substantial issues which were before me. I am conscious that the argument in relation to the criminal injuries compensation matter occupied the greater part of the time at hearing, and that that was the matter in respect of which the plaintiff was successful. However, I am also conscious of the fact that a significant portion of preparation of this matter would appear to be attributable to the preparation of affidavit material containing factual disputes, in respect of which the plaintiff bore the onus and in respect of which the plaintiff has failed to satisfy me as to the merits.
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