Eversol Legal Services Pty Ltd v Bechara

[2010] NSWDC 72

CITATION:	Eversol Legal Services Pty Ltd v Bechara [2010] NSWDC 72
HEARING DATE(S):	27 January 2010
EX TEMPORE JUDGMENT DATE:	27 January 2010
JURISDICTION:	Civil
JUDGMENT OF:	Gibson DCJ
DECISION:	(1) Notice of motion dismissed. (2) Defendant pay plaintiff’s costs of the motion.
CATCHWORDS:	Legal Profession Act 1987 - whether applicable to subsequent contract with third party to indemnify client by paying costs - ambit of savings provision
LEGISLATION CITED:	Legal Profession Act 1987 (NSW), Part 11 Legal Profession Act 2004 (NSW), Schedule 9
CASES CITED:	Amirbeaggi v Business in Focus (Australia) Pty Ltd [2008] NSWSC 421 Cameron v Dennis [2006] NSWDC 32; (2006) 3 DCLR (NSW) 392 Levy v Bergseng (2008) 72 NSWLR 178; (2008) 217 FLR 90; [2008] NSWSC 294
PARTIES:	Plaintiff: Eversol Legal Services Pty Ltd Defendant: Deanna Michelle Bechara
FILE NUMBER(S):	2866 of 2009
COUNSEL:	Plaintiff: Mr R Sutherland SC Defendant: Mr D English
SOLICITORS:	Plaintiff: Everingham Solomons Defendant: Paul A Curtis & Co

JUDGMENT

[1] HER HONOUR: The defendant in these proceedings, Deanna Michelle Bechara, by notice of motion filed on 18 January 2010, seeks orders as follows:

(1) The proceedings be stayed pending assessment of the plaintiff’s (“SRC”) costs.

(2) The plaintiff to pay the defendant’s costs of and incidental to this notice of motion.

(3) Any other order the court deems fit.

[2] Eversol Legal Services Pty Limited, a company trading as Everingham Solomon, Solicitors seek to enforce an agreement to pay costs against Deanne Michelle Bechara. The statement of claim, filed on 29 October 2008, seeks payment of a sum of $185,000 and asserts that Ms Bechara, on or about 19 June 2006, entered into an agreement with the plaintiff. The terms of the agreement were that, in consideration of the plaintiff for bearing to enforce its rights to the balance of legal costs and disbursements against their client Mr John Bechara, who is her brother, Ms Bechara would pay the plaintiff the sum of $185,000 within “a reasonable time”, calculated by reference to the events set out in paragraph 11 of the statement of claim.

[3] The circumstances in which those costs are asserted to arise are set out in paragraphs 5 to 9, namely the circumstances in which Everingham Solomons gave advice to Mr John Bechara and to the defendant Ms Deanna Bechara in her capacity as a witness in his personal injury proceedings, as set out in paragraph 10 of the statement of claim. I do not propose to set out in any more detail the quite serious matters referred to therein, save to say that it will be an issue for the trial judge to determine not only whether or not a contract was entered into on that date but also whether the very serious allegations of fraud were in fact what actually occurred.

[4] The issue that is before me is one of narrow compass, and it is one that has been dealt with by several other decisions of this court, the Supreme Court and the Court of Appeal. These decisions consider the ambit of the savings provisions of the Legal Profession Act 2004 (NSW) in Schedule 9.

[5] The solicitors who were retained to act for Mr Bechara, namely the plaintiffs, were retained in January 1998, in relation to a personal injury he suffered in November 1997. The relevant legislation enforced then was the Legal Profession Act 1987 (NSW). The Legal Profession Act 1987 contained a requirement, in Part 11, for disclosure of costs. It is not in dispute that those requirements were met by the plaintiffs in these proceedings, in relation to their client Mr John Bechara.

[6] Importantly, the provisions for the protection of third parties which are a feature of the Legal Profession Act 2004 were not contained in the Legal Profession Act 1987. Those were simpler days, when entitlement to enter into a speculative fee agreement, and other entitlements and obligations of the more complex kind that are now a common feature of costs issues for solicitors, were of a comparatively unknown nature.

[7] When Mr Bechara’s proceedings came before the court in June 2006, the obligation of the client was clearly to pay costs in accordance with the 1987 Act, and indeed this is conceded by the defendant.

[8] The question is whether, by entering into an agreement on or about 19 June 2006, the defendant is a “third party” who has entered into an agreement which falls outside the 1987 Act or is otherwise not governed by that Act. As is always the case where new legislation intervenes in the course of a contractual relationship between parties, the question boils down to what is contained in the savings provisions. These are as follows:

“ Schedule 9 - savings transition and other provisions.

18 - client information and legal costs:

(1) Subject to sub clauses 2 and 3 part 3.2 of this Act applies to the matter if the client first instructed the law practice on or after the commencement day and part 11 of the old Act continues to apply to a matter, if the client first instructed the law practice in the matter before that day.

(2) Part 3.2 of this Act does not apply in respect of the law practice but is retained by another law practice on behalf of the client on or after the commencement day in relation to a matter in which the other law practice was retained by the client before that day and then that has part 11 of the old Act continues to apply.

(3) If:



(a) an application for assessment of costs which are referred to a costs assessor for assessment under the part 11 of the old Act and

(b) the assessment was not completed, commenced or completed before that day the application maybe dealt with under that part as if that part had not been repealed. ”

[9] The interaction between Schedule 9 of the Legal Profession Act 2004 and the 1987 Act has been the subject of consideration in several decisions, notably Amirbeaggi v Business in Focus (Australia) Pty Ltd [2008] NSWSC 421, and, helpfully, by Rothman J in Levy v Bergseng (2008) 72 NSWLR 178; (2008) 217 FLR 90; [2008] NSWSC 294 at [21]ff.

[10] What as Rothman J points out is that by reason of the savings provisions, Part 3.2 applies to a variety of matters, and not simply to the obligation of the client to pay legal costs in the narrow way that the defendant asks me to construe it in these circumstances.

[11] It is not in dispute that the Legal Profession Act 2004, which came into operation on 1 October 2005, was in effect as at the date of the obligations included by the third party under the contract which she is alleged to have entered into on 19 June 2006. Certainly if she had become a client on that day, or had retained Everingham Solomons, the provisions of that Act would have applied. However, that is not the case.

[12] The second point I need to deal with is the point raised and explained by Johnstone DCJ in Cameron v Dennis [2006] NSWDC 32; (2006) 3 DCLR (NSW) 392 at [12]-[25].

[13] I should note, however, that what I have to say about the nature of the agreement allegedly entered into on 19 June 2006 (and I note that it is disputed that any agreement was entered into), is effectively surplusage. My finding that the 1987 Act still applies means that the application for a stay so that the costs should be assessed in accordance with the provisions of ss 282A and 317 is misconceived.

[14] In Cameron v Dennis, Johnstone DCJ (at [19]-[20]) found that the claim was not one for recovery of costs but for breach of contract. In that there was an agreement of a contractual nature, as opposed to a costs agreement.

[15] While I suspect that this is probably a matter which ought to be determined by the judge who hears this issue at the trial. I would express the view that this is not a claim for the recovery of costs, but a claim for breach of contract, namely the failure to comply with the terms of the agreement of 19 June 2006 which, while they relate to the payment of legal costs, do so in specific terms relating to the very unusual factual circumstances in which a specific sum was arrived at, and in circumstances where it would appear some advice was given not only to Mr Bechara but to his sister in her capacity as a witness as to what might occur to her in the event that she gave evidence.

[16] The principal issue in this judgment is, of course, the narrow question of which Act applies. As I have indicated, I am satisfied that, by reason of the savings provisions, the Act which applies, not only to Mr John Bechara, but to the question of payment so that led to the obligations and liabilities in relation to the defendant arising out of the contract allegedly entered into by her on 19 June 2006, is the 1987 Act. To find otherwise would be to misconceive the basis upon which the savings provisions were inserted, to avoid the undue complication of litigation by having issues falling to be determined under provisions upon which one Act is silent and the other is not, which would lead to doubt and inconsistency in the statutory requirement which must always be avoided when determining issues falling for consideration as a matter of statutory interpretation.

Orders

[17] Accordingly I dismiss the notice of motion and the orders I will make are:

(1) Notice of motion dismissed.
(2) Defendant pay plaintiff’s costs of the motion.
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