Defteros v Scott
[2014] VSC 205
•14 May 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
No. SCI 2013 03346
| GEORGE DEFTEROS | Appellant |
| v | |
| JUSTIN SCOTT | Respondent |
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JUDGE: | KAYE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5 May 2014 | |
DATE OF JUDGMENT: | 14 May 2014 | |
CASE MAY BE CITED AS: | Defteros v Scott | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 205 | |
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LEGAL PRACTITIONERS – Cost consultant not admitted to practice – Whether engaging in legal practice contrary to Legal Practice Act 2004 (Vic) s 2.2.2 – Appeal from Magistrates’ Court – Whether Magistrate erred in holding respondent not engaging in legal practice – Sufficiency of evidence before Magistrate.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr J Ribbands and Mr L Wirth | Defteros Lawyers |
| For the Respondent | Mr D Triaca | Benjamin Ian Zylberszpic |
HIS HONOUR:
This is an appeal, pursuant to s 109 of the Magistrates’ Court Act 1989 (Vic), against a judgment given by the Magistrates’ Court at Melbourne on 5 June 2013, by which it was ordered that the appellant pay to the respondent $12,823.50 together with interest and costs.
The appellant is a solicitor and the principal of the firm Defteros Lawyers. The respondent is a legal cost consultant. He had practised as a solicitor, but was struck off the roll of barristers and solicitors by order of the Supreme Court made in 1987.
In September 2010, the appellant engaged the respondent to provide costing services for his firm. The respondent’s evidence, before the magistrate, was that the terms of his engagement by the appellant were contained in a letter which he sent to the appellant dated 16 September 2010. The appellant denied receiving that letter. However, the precise terms of the retainer of the respondent by the appellant are not germane to the issues in the appeal. Pursuant to the retainer, the respondent provided services to the appellant in respect of a number of matters until April 2012. The appellant paid the respondent’s accounts for those services until August 2011. In April 2012, a dispute arose between the appellant and the respondent concerning fees alleged to be owing by the appellant to the respondent.
In May 2012, the respondent commenced proceedings against the appellant in the Magistrates’ Court claiming $16,823.50 in respect of the fees which he alleged were outstanding to him. The appellant 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 appellant 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 appellant 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 appellant had resisted the respondent’s claim. Her Honour 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 appellant. Secondly, the magistrate held that the appellant 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. Her Honour also upheld a counterclaim by the appellant for fees in respect of services provided by the appellant to the respondent in relation to a family law dispute in which the respondent was involved. Her Honour set off the amount of those fees ($4,000), and ordered the appellant to pay the respondent $12,823.50 together with interest and costs.
In essence, the appellant submits that the magistrate erred in law in failing to hold that, by performing the work in respect of which the outstanding fees were claimed, the respondent had engaged in legal practice contrary to s 2.2.2 of the Act.
The decision of the magistrate was based, substantially, on an assessment by her Honour of the evidence (or lack of evidence) led by the appellant on the issue of whether the respondent did engage in legal practice in performing the work, which was the subject of the fees claimed by the respondent. It is therefore necessary to summarise some of that evidence in a little detail.
The evidence
In the proceedings before the Magistrates’ Court, the respondent and the appellant each gave evidence. The appellant’s wife, Mrs Alexandra Defteros, also gave evidence for the appellant. However, her evidence was not relevant to the issue which is the subject of the appeal.
The respondent’s claim for the outstanding fees related to costing services he provided to the appellant in respect of eight different matters. Five of those matters involved disputes between the appellant and his former client in respect of fees charged by the appellant to the client. Those clients were Wilson, Bajpe, Savrimootoo, Anastasiadis and Salter. Two other matters concerned files in which the appellant had obtained certificates for his clients under the Appeal Costs Act 1998. The clients in those matters were Zukanovic and Sindoni. The eighth matter was referred to in the evidence as “practice management”.
At the commencement of his evidence, the respondent described, in general terms, the work performed by a cost consultant. He said that the work involved producing legal cost assessments for a solicitor. That work required the consultant to examine the solicitor’s file and to provide the solicitor with a certificate or advice as to his assessment of the costs which were chargeable in a particular matter. In cases in which the client is entitled to a bill of costs pursuant to the Legal Profession Act, the consultant is instructed to draw such a bill. Sometimes the consultant is also retained to appear before the Costs Court in the Supreme Court to make submissions in relation to the fairness and reasonableness of the costs which are claimed. The cost consultant profession is basically unregulated. Only one-third of cost consultants have practising certificates. A cost consultant, who does not have a practising certificate, is required to seek leave of the court, before the consultant is entitled to appear before the Costs Court. The respondent stated that the consultants always provide their work to a solicitor.
In cross-examination, the respondent agreed that he would provide advice to a solicitor as to the solicitor’s entitlement to the costs which are claimed. However, he would not give advice relating to the enforceability of costs agreements. He stated that that was the role of counsel. He agreed that he made submissions to the Costs Court, with the leave of the court.
In the matter of Wilson, the respondent was instructed by the appellant in respect of a dispute between the appellant and his former client. The matter was somewhat complicated, and so another cost consultant (Grant Pedlar) was engaged to assess the party/party costs, and the respondent assessed the solicitor/client costs.
In response, the appellant, in his evidence, disputed that the respondent had carried out the work claimed by him. However, in cross-examination he accepted that Mr Pedlar might have assessed the party/party costs, and the respondent might have assessed the solicitor/client costs.
In the matter of Bajpe, the respondent stated that he was engaged to resolve a complicated costs dispute between the appellant and Dr Bajpe. For that purpose, the respondent attended a meeting at the appellant’s office with Dr Bajpe’s new solicitor. The work, which he performed on the file, was directed to determining the amount of costs which the appellant should charge Dr Bajpe. The appellant had issued a Magistrates’ Court proceeding against Dr Bajpe. For the purposes of those proceedings, the respondent attended a conference, which took place between the appellant’s counsel and the appellant. The respondent stated he had attended the meetings, with counsel and with the appellant, in order to provide advice as to the quantum of the costs, which could be claimed by the appellant against his former client. For that purpose, the respondent also attended a prehearing conference with counsel, for which he did not charge a fee.
In cross-examination, the respondent agreed that he had drawn the summons in the Magistrates’ Court proceeding against Dr Bajpe. He had also drafted an amended defence to the counterclaim served by Dr Bajpe, for the purposes of the appellant or counsel settling it. He said that he prepared that document in order to address the issues that had been raised by Dr Bajpe in his defence and counterclaim.
In his evidence, the appellant stated that he had not requested the respondent to perform the work, in respect of which the respondent charged fees, of preparing a summons in the Magistrates’ Court, speaking to Bajpe’s solicitors, and preparing a brief to counsel. He said he did not know of any other cost consultant who carried out that type of work.
In her Honour’s reasons for decision, the magistrate did not accept the appellant’s evidence about the parameters of his instructions to the respondent, particularly as they related to actions performed by the respondent with the appellant’s knowledge and at his offices. She found that the appellant had, in effect, acquiesced in the performance by the respondent of that work, and he had never, at the relevant time, questioned any aspect of the invoice rendered by the respondent in respect of that work.
In the matter of Savrimootoo, the appellant’s former client challenged the fees claimed by the appellant. The client also challenged the cost agreement between himself and the appellant. The respondent stated, in his evidence, that the work, which he performed for the appellant, involved costing the work performed by the appellant. He attended the Costs Court on several occasions. The Crown also had a claim for costs in the Savrimootoo matter. Accordingly, the respondent liaised with the Victorian Government Solicitor’s Office in respect of that claim, and attended a directions hearing at the Victorian Civil and Administrative Tribunal (“VCAT”). In cross-examination, the respondent agreed that he had also attended a directions hearing at VCAT.
In evidence, the appellant stated that he had instructed the respondent to prepare bills of costs in taxable form. He agreed that the respondent had read Savrimootoo’s submissions to VCAT, and that he had attended a directions hearing at VCAT. He said that the respondent had taken it upon himself to attend that directions hearing, but that he (the appellant) “wasn’t averse to it”. He claimed that it was not appropriate for the respondent to have telephoned the solicitor for Savrimootoo or the Victorian Government Solicitor’s Office. He said he had never instructed the respondent to do that work, but he conceded that the respondent had done it “with good intentions”.
The magistrate held that the appellant was aware of the work that was being carried out by the respondent on the Savrimootoo file, and he had failed to question or control it. Accordingly, her Honour found that the work, performed by the respondent, was within the scope of the work which the appellant had authorised him to carry out.
In the matter of Zukanovic, the respondent was required to prepare a bill of costs, for the purposes of a claim to the Appeal Costs Fund. The claim was somewhat complicated. The respondent stated that a principal issue concerned the fees claimed by counsel. Part of the fees which he charged the appellant related to recalculating and reconciling counsel’s fees.
In evidence, the appellant agreed that the respondent had been instructed to prepare bills in taxable form. He claimed that the work performed by the respondent, and claimed in his invoice, exceeded his authority. He said that the respondent had taken it upon himself to become involved in matters beyond his authority.
The magistrate rejected the appellant’s contention that the work was outside the scope of the respondent’s authority. In particular, her Honour stated that the basis upon which the appellant contended that the respondent had overcharged “was not explained” and that the appellant’s concerns “… are weakened by the fact that the matter was never raised with the plaintiff (respondent) at the time”.
In the Anastasiadis matter, the respondent stated that he was instructed, by the appellant, to conduct a dispute which the appellant had with two of his clients, Anastasiadis and Sheehan. A summons for taxation had already been issued by the solicitors acting for the former clients. The respondent rendered two invoices in respect of the work which he performed in that matter. He said that he had never received any complaints from the appellant relating to the amount which he claimed. In cross-examination, it was put to him that he was not asked to do the work, but he maintained that the appellant had engaged him to do it.
In his evidence, the appellant said that he never received the bill in taxable form, and he did not recall giving the respondent instructions in relation to some of the items claimed in the bill.
The magistrate rejected the evidence of the appellant. Her Honour found there was sufficient evidence that the respondent had been instructed to act in the matter.
In the matter of Salter, the respondent gave evidence that the appellant’s former client had requested that the appellant provide details as to the fees claimed by him. The work, which the respondent performed on the file, involved liaising with Salter’s wife, who was the bookkeeper in Salter’s plumbing business, in order to quantify the costs. That work was difficult because the file was a mess. The appellant had never complained about the work which he was performing in the matter, and he did not complain about the amount of the fees charged by the respondent for that work in the invoice rendered by him.
In evidence, the appellant stated that the respondent had been asked by the appellant to prepare bills and reconcile the bills. He maintained that the respondent was not required to collate the file, and that the matter was not complicated. The appellant asserted that the amount claimed by the respondent was grossly excessive.
The magistrate rejected the appellant’s contentions in relation to the Salter matter, for the same reasons that her Honour had given for rejecting the appellant’s contentions in relation to the respondent’s claim for fees in respect of the Zukanovic matter.
In the matter of Sindoni, the respondent gave evidence that he was instructed by the appellant in respect of the preparation of a claim to the Appeal Costs Board. For that purpose, he dealt with Ms Jory, a solicitor employed by the appellant. In cross-examination, he stated that he prepared a summons for taxation, because he had been requested to do so by the appellant. The respondent said that a summons for taxation is different to a summons in other proceedings. He denied that work, that he performed on the Sindoni matter, was outside the scope of the work that he had been requested to do. He said that he might have done a number of things in order to prepare the bill of costs. He said that he had attended Ms Jory at her request. He had also attended the appellant at his request.
In evidence, the appellant stated that the Sindoni matter was a complicated one. The Appeals Costs Board had paid some of the costs and disbursements claimed, but part of the claim by the client under the certificate was in dispute. He claimed that the respondent had claimed a large amount for the work which he performed, which basically was to prepare bills in taxable form. He claimed that the work performed by the respondent was “an absolute mess”, and that he had to engage a cost consultant in order to complete the work.
In her decision, the magistrate found as follows:
“The defendant (appellant) did not admit the work was performed by the plaintiff on the Sindoni file. I prefer the plaintiff’s evidence that he was instructed by Ms Jory and did work on two issues, the matter before the Appeal Costs Board, and preparing a bill of costs to be taxed in the Supreme Court. The defendant’s evidence was vague; ‘the file was a mess’ and ‘not finalised’. Again, the work invoiced by the plaintiff was not queried or any issues regarding quantum raised by the defendant at the time.”
In the practice management matter, the respondent stated that he was requested to give a lecture on costs to the appellant’s staff. He also, at the request of the appellant, attended an interview of a solicitor who the appellant was considering employing. The solicitor did not have any previous experience working in the private sector, and it was important to ascertain whether he understood costs issues which related to private practice. The respondent also stated that one of the major difficulties, which the appellant had with his former clients, concerned the form of the costs agreement then used by the appellant, which the respondent regarded as defective. He recommended that the appellant obtain the advice of counsel who specialised in costs issues. When the advice was received from counsel, the respondent read it, and gave advice to the appellant relating to it. He suggested that the appellant adopt a model cost agreement, consistent with counsel’s advice.
In cross-examination, the respondent stated that part of the work, which he performed on the “practice management” matter, related to a file of Mason. He said that that should have in fact formed part of a discrete invoice. In that matter, he was involved in drawing and engrossing a bill of costs, and responding to a letter from Mrs Mason, to the appellant, which the appellant had referred to him. The respondent also stated that the advice, which he gave to the appellant concerning the costs agreement, related to the commerciality of the fees that the appellant was considering charging under the new costs agreement, which counsel had prepared. He had perused the current costs agreement and the cost agreement which was recommended by counsel, and he had reviewed the scale of costs which the appellant was considering charging.
The appellant, in his evidence, stated that the respondent had offered to conduct a seminar over lunch to staff about file management and costs. The seminar was informal, and he had not expected to be charged a fee by the respondent in relation to it. He stated that he did not request the respondent to attend the interview with the prospective employee, but that, rather, the respondent had suggested that he attend. There was no discussion about the respondent charging a fee for attending that interview. The appellant did not recall asking the respondent to become involved in the Mason matter. He said that he did have discussions with the respondent concerning the costs agreement, and the respondent did peruse the agreement a few times.
The magistrate held that, as the respondent was not employed by the appellant, there was no basis for the appellant to assume that the respondent would not charge a fee for the talk which he gave to the appellant’s staff at lunch time. Her Honour accepted that the appellant had requested the respondent to attend the interview with the prospective member of staff.
The Magistrate’s decision
Having made the findings, to which I have just referred, the magistrate considered the question whether the work, performed by the respondent, constituted the engagement by the respondent in legal practice for the purposes of s 2.2.2 of the Act. In her reasons for decision, the magistrate stated:
“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.”
Grounds of Appeal
In his Notice of Appeal, the appellant identified two questions of law, which arise in the appeal. In submissions, only the first question was relied on, namely:
“(1)Does a person who practises as a legal cost consultant, however described, engage in legal practice within the meaning of s 2.2.2 of the Legal Profession Act 2004 (Vic)?
In the Notice of Appeal, the appellant specified five grounds of appeal. In argument, only the first and fifth grounds were pressed. They are:
“(1)The learned magistrate erred in failing to hold that the respondent had engaged in legal practice within the meaning of s 2.2.2 of the Act.
….
(5)The learned magistrate erred in holding that the test of legal practice was defined by the description, quoted in her Honour’s reasons, of legal practice given by Heerey J in Australian Competition and Consumer Commission v Murray [2012] FCA 1252 [94].”
Legal Profession Act 2004 s 2.2.2
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).”
Submissions
On behalf of the appellant, Mr J Ribbands, who appeared with Mr L Wirth, submitted that the magistrate erred in failing to conclude that the respondent had engaged in legal practice in performing the work for which he was retained by the appellant. He submitted that, by its nature, the work of a cost consultant was, necessarily, work which involved the engagement by the consultant in legal practice.
In particular, Mr Ribbands submitted that the preparation of a bill of costs in a taxable form is analogous to the drafting of pleadings in a civil claim. The bill of costs sets out, in detail, the claim by a party for costs, and the basis upon which the costs are claimed. The other work performed by the respondent ‑ giving advice to the solicitor who retained him, perusing documents, and negotiating with the other party in respect of the costs ‑ is necessarily associated with that work. Mr Ribbands contended that where the respondent had negotiated with the former client, the respondent was, in effect, acting as the advocate on behalf of the appellant. The negotiations were conducted on the basis of the bill of costs prepared by the respondent, which only highlighted, he submitted, the fact that the bill of costs is a form of pleading. In addition, Mr Ribbands pointed out that the respondent had performed other tasks, which are ordinarily performed by a solicitor, such as by drawing summonses, and attending court.
Mr Ribbands referred to a passage from the judgment of Hall J of the Supreme Court of New South Wales in TheCouncil of the New South Wales Bar Association v Davison,[1] in which his Honour described the work which a barrister normally performs in conducting litigation on behalf of a client. Mr Ribbands submitted that each of the tasks, described by Hall J in that passage, correspond with work which was performed by the respondent in the course of his retainer with the appellant.
[1][2006] NSWSC 65, [141].
Mr Ribbands also referred to the judgment of Associate Justice Wood in Mietto v G4S Custodial Services Pty Ltd.[2] In that case, the Associate Justice disallowed costs claimed in respect of the appearance of a cost consultant (who was not a solicitor) before the Cost Registrar, on the grounds that the scale of costs did not make any allowance for an unqualified cost consultant to appear at a taxation. In the conclusion to his reasons, his Honour outlined a number of policy issues which arise from the expanding area of practice of unqualified cost consultants, and, in particular, that those consultants do not have the same ethical obligations to the court as legal practitioners, and that they may not be subject to the principles of legal professional privilege. Mr Ribbands submitted that those concerns highlight the fact that cost consultants, such as the respondent, conduct work that ordinarily is affected by principles of legal privilege, duties to the court, and the like, which apply to persons engaged in legal practice.
[2][2010] VSC 304.
Mr Ribbands did not point to any particular evidence, on which he relied, other than that which is described in the magistrate’s decision, and which I have already summarised. He submitted that the work, which the magistrate found to have been performed by the respondent, was, by its very nature, work involving the engagement by the respondent in legal practice. Thus, he submitted that the magistrate erred in relying on the fact that the appellant had not tendered the original documents, produced by the respondent, as evidence to support his contention relating to the exact work performed by the respondent.
Mr Ribbands further submitted that the role performed by cost consultants is very much sui generis, and is quite distinct from the role performed by practitioners such as town planners, building consultants, and the like. He submitted that although the work of town planners and building consultants may involve areas similar to areas of legal practice, nevertheless their work also extends well beyond those areas. In particular, town planners and building consultants often act as expert witnesses. Furthermore, their work is subject to codes of conduct specified by the rules of court. By contrast, the work of cost consultants is confined solely to the assessment of legal costs, and is not subject to any separate code of conduct.
In response, Mr D Triaca, who appeared for the respondent, submitted that the primary role of a cost consultant is to prepare an assessment or bill of costs, and that that work does not involve the consultant in engaging in legal practice. Rather, that task requires the consultant to examine the solicitor’s file in order to assess the work which was performed by the solicitor, and to apply the scale of costs applicable to that work. He submitted that the work of a cost consultant is akin to the work of a building consultant, who assesses the work performed by the builder, and applies a particular scale of costs to that work.
Mr Triaca pointed out that s 2.2.2(2)(f) of the Act entitles a person, who is not a legal practitioner, to appear before a court or a tribunal, provided that that person has the leave of the court or tribunal. Thus, the work of the respondent, in appearing before the Costs Court, did not, of itself, involve the respondent engaging in legal practice.
Mr Triaca referred to the decision of JD Phillips J in Cornall v Nagle,[3] and the decision of Hall J in Davison’s case, to which Mr Ribbands had referred. He pointed out that in each of those two cases, the judge had examined, in substantial detail, the precise work which was performed by the person who, it was contended, had practised illegally as a legal practitioner. Thus, he submitted, the magistrate was correct in noting that the appellant had not tendered, as evidence, the primary documents which evidenced the type of work performed by the respondent for the appellant. In this connection, Mr Triaca pointed out that a contravention by the respondent of s 2.2.2(1) of the Act constitutes an offence punishable by imprisonment. In addition, if, as contended by the appellant, the work performed by the respondent constituted engaging in legal practice, the respondent would lose his livelihood. In those circumstances, Mr Triaca submitted that in order to establish the defence, the appellant was required to prove his case to a standard consistent with the principles stated by the High Court in Briginshaw v Briginshaw.[4]
[3][1995] 2 VR 188.
[4](1938) 60 CLR 336.
Mr Triaca also pointed out that where any expert – such as a town planning expert or building consultant – is engaged to provide advice to a client in litigation, that expert is not necessarily bound by legal professional privilege, and other principles which apply to a legal practitioner. The fact, that such concerns may arise where an expert or consultant is engaged in a particular matter, does not have the effect that the particular consultant is thereby engaging in legal practice.
Finally, Mr Triaca submitted that if any of the work, performed by the respondent for the appellant, involved the engagement by him in legal practice, the performance by him of that work was permissible, because he was carrying out that work under a delegation from the appellant, who is a legal practitioner. In that regard, Mr Triaca referred to the principles stated by JD Phillips J in Cornall v Nagle,[5] that where the relevant legislation or the Rules of Court require a particular thing to be done by a party or a solicitor, such a task may, in an appropriate case, be delegated to a person who is not a legal practitioner.
[5][1995] 2 VR 188, 198.
Analysis
The question, which the magistrate was required to address, was whether the fees, claimed by the respondent, were in respect of work, which, contrary to s 2.2.2(1) of the Act, had involved the respondent engaging in legal practice.
On appeal, the appellant has submitted that the magistrate erred in not finding that the respondent, in performing that work, was engaging in legal practice. In order to establish an error of law made by the magistrate, the appellant must demonstrate that the conclusion by the magistrate, that the appellant had failed to prove that the respondent was engaging in legal practice, was a conclusion which was not open on the evidence adduced in the Magistrates’ Court proceeding.[6]
[6]S v Crimes Compensation Tribunal [1998] 1 VR 83, 89 (Phillips JA).
A determination, by a court, that a person has contravened s 2.2.2(1) of the Act, is a serious finding. Such a conclusion would involve a determination by the court that the person, in this case the respondent, had engaged in conduct which constituted an offence punishable by imprisonment of up to two years. In addition, such a determination would have the consequence of depriving the respondent of the capacity to continue to engage in the occupation in which he worked for the last 25 years. Accordingly, such a conclusion, by a court, would require a careful analysis of the evidence, and, insofar as any particular factual issue was in dispute, the proof of that factual issue to the comfortable satisfaction of the court. In essence, a conclusion, that a person has acted illegally, as alleged by the appellant, should not be lightly drawn on inadequate or imprecise proofs.[7]
[7]Briginshaw v Briginshaw (1938) 60 CLR 336, 350 (Rich J), 362-3 (Dixon J); The Council of the New South Wales Bar Association v Davison [2006] NSWSC 65, [51] (Hall J); Evidence Act 2008 (Vic) s 140(2).
The phrase “engage in legal practice” is not defined in the Act. The predecessor of s 2.2.2 of the Act was s 90 of the Legal Profession Practice Act 1958, which, in effect, prohibited any person from acting or practising as a solicitor unless that person was admitted to practice as a barrister and solicitor, and held a practising certificate to do so.
Counsel did not submit that there was any relevant difference, for the purposes of deciding this case, between the phrase “engage in legal practice”, as it appears in s 2.2.2 of the Act, and the concept of a person “acting” or “practising” as a solicitor referred to in the 1958 legislation. In particular, no issue arises in this case as to whether a person might “engage in legal practice” by performing one solitary piece of legal work.[8] The respondent was involved in performing costing work in respect of five files in which the appellant was seeking to recover costs from former clients, and costing two files, in respect of which the appellant was seeking, on behalf of a client, to recover costs from the Appeal Costs Board.
[8]Compare Cornall v Nagle [1995] 2 VR 188, 207.
The principal authority, in relation to the meaning of the phrase “act as a solicitor”, is the judgment of JD Phillips J (as his Honour then was) in Cornall v Nagle.[9] In that case, McGarvie J, of this 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 is 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. Phillips J considered, in some detail, the authorities which related to the question of the circumstances in which a person might be properly considered to be “acting as a solicitor”. His Honour concluded from those authorities as follows:[10]
“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.[11]
(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 sections 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.”[12]
[9]Ibid.
[10]Ibid 210.
[11]In Re Sanderson; ex parte of the Law Institute of Victoria [1927] VLR 394, 397 (Cussen J).
[12]Cornall v Nagle [1995] 2 VR 188, 210.
It is clear, from the reference by Phillips J to the decision in Sanderson,[13] that his Honour, in describing the first category, was referring to circumstances in which a person conducts himself in such a way as to give rise to an inference, by the consumer or potential consumer of that person’s services, that he or she is a solicitor. In the present case, the appellant was well aware that the respondent had been struck off the roll of barristers and solicitors, and that he was not, thus, representing himself as acting as a solicitor. Accordingly, the case does not come within the first category described by Phillips J.
[13]In Re Sanderson; ex parte of the Law Institute of Victoria [1927] VLR 394.
Nor does this case come within the second category of cases specified by his Honour. The appellant has not pointed to any provision of the Act, or of the Rules of Court, which proscribes any of the particular tasks performed by the respondent, unless those tasks are done by a duly qualified legal practitioner. In particular, there is no equivalent, in the Act, to s 111 of the Legal Profession Practice Act 1958.
In discussing the third category of cases, Phillips J noted that some caution must be exercised in determining whether, in the absence of a specific statutory proscription, an area of work should be held to fall within the exclusive province of lawyers in the interests of protecting the public. His Honour stated:[14]
“Of course, views will differ about what ‘should only be done by members of the legal profession’, even if the protection of the public be the touchstone. Nowadays, it has become a commonplace for laymen to attempt things which hitherto might have been regarded as the province of the lawyers, and to be encouraged to do so in order to save expense (although undoubtedly the end is not always achieved by the means). But, obviously enough, with changing attitudes, any test which depends upon isolating what is the exclusive province of the lawyers in the interests of protecting the public, will call for very careful application, lest too wide a net be cast.”
[14]Cornall v Nagle [1995] 2 VR 188, 209-210.
Phillips J also acknowledged, as a qualification to the second and third categories, that where an Act or Rules of Court require that a particular thing be done by a party or its solicitor, it is permissible for a solicitor to delegate, to a person who is not a qualified legal practitioner, the performance of tasks associated with that work which could be described as “purely ministerial”.[15] His Honour provided, as examples of such permissible delegations, the lodging of a caveat, the attendance at the Prothonatory’s office for the purpose of filing documents, the filing, in the Registry of the Probate Division, of original wills with proper affidavits, and the fetching away of the probate in response.[16]
[15]Ibid 198-9.
[16]Compare the Law Society of the United Kingdom v Waterlow Brothers and Layton (1883) 8 AC 407, 410-11 (Lord Selborne LC); 415 (Lord Blackburn).
Significantly, in reaching the conclusion that the defendant had contravened the order of McGarvie J, Phillips J analysed, in substantial detail, the four matters or files in respect of which it was alleged, by the plaintiff, that the defendant was in contempt of court by acting as a solicitor. In particular, his Honour set out, in detail, the precise work, in each of the matters, which he found that the respondent had performed. His Honour concluded that in two of the four matters the defendant had breached the order of McGarvie J, and thus was in contempt of court.
In The Council of the New South Wales Bar Association v Davison,[17] the plaintiff commenced proceedings against the defendant contending that the defendant had, contrary to s 25(1) of the Legal Profession Act 1987 (NSW), practised “as a barrister or solicitor” without being the holder of a current practising certificate. In that case, the defendant had been a barrister specialising in the field of local government and planning law until 2001, when his practising certificate was cancelled by resolution of the Bar Council. Thereafter, he worked as a town planning expert. Hall J upheld the plaintiff’s claim, and made orders restraining the defendant from performing work which was detailed in a schedule attached to his Honour’s orders.
[17][2006] NSWSC 65.
In the course of his judgment, Hall J observed that, sometimes, there can be no clear line of distinction between work undertaken by legal practitioners and other professionals in areas involving legal practice. His Honour stated:
“There will sometimes be no clear boundary or bright-line between the work undertaken by legal practitioners and other professionals in certain areas of legal practice including the areas of local government and those involving environmental regulation and planning issues. Work performed in areas such as these may involve a number of professionals (including lawyers) who necessarily interact one with the other in the provision of advice to clients and in assisting them in disputes or proceedings. Accordingly, the work of a town planner, for example, may involve advising clients in both a non-litigious context and in the provision of advice in relation to legal proceedings. Their advice may draw on and expressly refer to precedent cases for the purposes of identifying and applying authoritative principles in relation to particular issues with which clients are concerned. In such cases, legal practitioners may perform overlapping or similar functions. A question can arise, as in the present proceedings, as to whether a particular aspect of work involves or requires the application of legal expertise by a legal practitioner (in particular that of a barrister), or whether it falls within the province of a town planner or of both.”[18]
[18]Ibid [41].
For that reason, Hall J observed that the determination of the question, whether such work involved a person practising as a barrister or solicitor, requires the court to examine any advice given or services provided.[19] His Honour stated:
[19]Ibid [44].
“It will be necessary to refer to some of the detailed evidence concerning the work or services provided by the defendant … in order to determine whether or not in the relevant period he undertook the work of a barrister, as claimed by the plaintiff. In evaluating the evidence, it has been necessary to have regard to:
•the essential nature or substance of his conduct including the type of advice given and the nature of documents drafted or representations made by him on behalf of others;
•the dealings between the defendant and others to whom he provided services, and, in particular, the context in which services were rendered as well as the nature and basis upon which fees for services were rendered and paid;
•the extent to which any particular conduct of the defendant required, involved or demonstrated the application of legal knowledge or expertise;
•the occasional statement made by the defendant that he was either not giving legal advice or the clients should seek legal advice on a particular matter from another qualified legal practitioner;
•the fact that particular conduct should not always be examined in isolation but in the context of the operation of Sydney Development Services Pty Ltd [the defendant’s company] noting, as appropriate, any pattern of conduct concerning the services rendered.”[20]
[20]Ibid [45].
Applying those principles, Hall J analysed, in detail, the work carried out by the defendant in relation to a number of matters, on which he had been retained. A number of documents, produced by the defendant in the performance of that work, were tendered in evidence and examined by Hall J. It was on the basis of a detailed analysis of that evidence that his Honour came to the conclusion that, in particular respects, the defendant had, contrary to s 25 of the Legal Profession Act 1987 (NSW), acted as a barrister.
Conclusion
In light of those authorities, there are 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.
Faced with that difficulty, on appeal, Mr Ribbands, on behalf of the appellant, endeavoured to make the appellant’s case with a broader brush. His fundamental submission was that the work of a cost 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.
In this respect, in my view, Mr Ribbands sought to make too much of the analogy, which he drew, between the preparation by a cost consultant of a bill of costs, and the drafting of pleadings by a legal practitioner in respect of legal proceedings. In civil litigation, pleadings are formulated by reference to the basic elements of the cause of action, or causes of action, which the pleader relies on. The pleader is required to specify each material fact which is relevant to the elements of the cause of action, or causes of action, pleaded on behalf of the client. That work involves, of necessity, the exercise of specific legal expertise and knowledge of legal principles, both procedural and substantive. By contrast, the preparation of a bill of costs involves, in essence, the itemisation of work which is contained in a solicitor’s file, and the application, to those items of work, of the prescribed scale of fees.
In that way, the preparation by a bill of costs cannot be appropriately compared with the drafting of pleadings, as Mr Ribbands sought to contend. No doubt, the task of the preparation of a bill of costs does involve some knowledge of the principles of the law relating to legal costs. However, in a similar way, the task of the town planning expert, the building consultant and the tax accountant, each require an understanding by those experts of principles of law which affect the area of work in which each of them specialise. The fact that a consultant, in the performance of his work, applies some knowledge of legal principles in the area of the consultant’s specialty, does not have the consequence that the consultant is thereby engaging in legal practice. Certainly, the application of legal learning, and in particular the application of detailed legal learning, in a particular area, might weigh in favour of a conclusion that a consultant has engaged in legal practice. However, as I stated, it is not, of itself, sufficient to necessitate the conclusion that the particular consultant is, ipso facto, engaging in legal practice.
In this respect, the appellant adduced little evidence, before the magistrate, as to the precise legal knowledge, which the respondent was applying in performing the work in respect of which he rendered the fees that were in dispute. In particular, the respondent was not cross-examined as to any of the bills of costs prepared by him, with a view to demonstrating that, in performing that work, and work allied to it, he was applying any particular principle or principles of law, or exercising any particular legal expertise. In that way, the appellant led little evidence on which to base a conclusion that, for the protection of the public, the work performed by the respondent involved the exercise of such legal expertise or other characteristics that it should be the exclusive preserve of legal practitioners who hold a current practising certificate.
Certainly, some of the items of work performed by the respondent were tasks which, ordinarily, might be expected to be carried out by a legal practitioner. In particular, in one case, he prepared a summons for taxation, and in another case he drafted a defence to counterclaim. However, in each case, the document was filed in court under the name of the appellant. In his evidence, the respondent stated that he drew those documents, because aspects of them required the application by him of cost principles, in which he had some expertise. While that circumstance does militate in favour of the proposition that the respondent was, thereby, engaging in legal practice, it does not necessitate such a conclusion.
The work performed by a cost consultant, such as the respondent, does give rise to the concerns referred to by Associate Justice Wood in Mietto v G4S Custodial Services Pty Ltd.[21] In particular, a cost consultant has access to documents, which would otherwise be covered by legal professional privilege. The consultant, in performing his or her work, is not bound by the same ethical obligations which apply to a legal practitioner. There is no requirement for a cost consultant to be covered by a policy of professional indemnity insurance. Each of those factors are, again, relevant to an assessment as to whether the respondent was performing work which involved the engagement by him in legal practice. However, there are many consultants – such as town planning experts and the like – to whom similar considerations apply, and who would not ordinarily be considered to be engaged in legal practice. In particular, many consultants have access to documents, which would otherwise be privileged, and they may not necessarily be insured under an appropriate policy of indemnity insurance.
[21][2010] VSC 304.
Taking those matters into account, I am not persuaded that the magistrate erred in concluding, on the evidence before her Honour, that the appellant had failed to prove that the respondent had engaged in legal practice in respect of the work which was the subject of the fees claimed by him from the appellant. As I stated, the central plank of Mr Ribbands’ submission was that, in preparing a bill of costs, a cost consultant must, necessarily, be engaged in legal practice. The appellant bore the onus of proof to make good that proposition. In light of the serious consequences of the proposition, the appellant was required to put before the magistrate detailed and cogent evidence from which the magistrate should conclude that the work, performed by the respondent, involved the respondent engaging in legal practice. The requirement, that the appellant put before the magistrate appropriate evidence, is emphasised by the observations by Phillips J, in Cornall v Nagle, of the need for caution in isolating work, which would be the exclusive province of lawyers, in the absence of any specific statutory provision proscribing the carrying out of that work by persons who are not legal practitioners.
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. In the absence of that evidence, I am not persuaded that the state of the evidence before the magistrate was such that it was not open to her Honour to conclude that she was not satisfied, on the balance of probabilities, that, in performing the work which was the subject of the fees claimed by the respondent from the appellant, the respondent had engaged in legal practice. In those circumstances, the appellant has failed to make out ground 1 of the Notice of Appeal.
I turn to ground 5 of the Notice of Appeal. Mr Ribbands did not rely on ground 5 as a separate ground of appeal. Rather, he relied on it in conjunction with ground 1. Further, Mr Ribbands did not, as I understand his submissions, contend that the test, stated by Heerey J in Australian Competition and Consumer Commission v Murray,[22] and quoted by the magistrate, was incorrect. Rather, he submitted that the magistrate did not properly apply the test so stated by Heerey J.
[22][2002] FCA 1252, [94].
For the same reasons, which I have given for rejecting ground 1, ground 5 must also fail. The point made by the magistrate, in referring to the passage from the judgment of Heerey J in Murray, was that there was not sufficient evidence adduced by the appellant as to the work performed by the respondent, to establish that it corresponded with the description by Heerey J of legal practice in Murray’s case. In particular, the magistrate pointed out that the appellant had not tendered any documents, which had been prepared by the respondent in the course of his engagement by the appellant. Nor did the appellant call, as witnesses, any of the staff, who had worked with the respondent in performing that work.
In my view, the magistrate was not in error in the manner contended for on behalf of the appellant. As I have already stated, the state of the evidence ‑ or the lack of it ‑ was such that it was open to the magistrate to conclude that the appellant had not satisfied her Honour that the work, performed by the respondent, answered the description of “legal practice” contained in the passage from the judgment of Heerey J.
It follows that both ground 1 and ground 5 of the Notice of Appeal fail. Accordingly the appeal should be dismissed.
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.
Further, in reaching that conclusion, I do not wish to detract, at all, from the observations made by Associate Justice Wood, in Mietto v G4S Custodial Services Pty Ltd,[23] concerning the work performed by unqualified individuals who practise as cost consultants. His Honour has considerable experience and expertise in the area of legal costs. I respectfully endorse, and support, the remarks made by his Honour in the concluding paragraphs of his judgment, and, in particular, in the last paragraph where his Honour stated:
[23][2010] VSC 304.
“There has clearly evolved over time a mini industry of unqualified individuals who have become involved in the area of costing. Their status and the lack of transparency, regulation and confusion around their status are issues that may need to be addressed by legislation or considered by the Legal Services Commissioner or Law Institute of Victoria.”[24]
[24]Ibid [70].
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