Fu v Carmody
[2012] NSWSC 1362
•11 October 2012
Supreme Court
New South Wales
Medium Neutral Citation: Fu v Carmody [2012] NSWSC 1362 Hearing dates: 11 October 2012 Decision date: 11 October 2012 Jurisdiction: Common Law Before: Adams J Decision: 1. Appeal dismissed.
2. Plaintiff will pay the defendant's costs in the sum of $6,000.
Legislation Cited: Contracts Review Act 1980
Fair Trading Act 1987
Legal Profession Act 1987
Legal Profession Act 2004
Legal Profession Regulations 2002Category: Principal judgment Parties: Quen Fu (Plaintiff)
John Edward Carmody trading as Carmody & Co Solicitors (Defendant)Representation: A Kumar (Plaintiff)
M Pesman (Defendant)
John Carmody & Co Solicitors (Defendant)
File Number(s): 2012/164207
EX TEMPORE Judgment
This is an appeal from the Local Court at Burwood which gave judgment in favour of the defendant in this Court (Mr Carmody) against the plaintiff in this Court (Ms Fu) in respect of a claim made by Mr Carmody for professional costs amounting to $48,566.50 plus interest.
The proceedings were commenced by statement of claim filed on 29 June 2011 and then amended on 16 December 2011. The statement of claim alleged that Ms Fu retained Mr Carmody's firm to undertake the defence of certain proceedings and to prosecute certain proceedings in the Supreme Court. Those costs agreements, pursuant to Pt 11 of the Legal Profession Act 1987, were tendered. Bills of costs in respect of that work were provided and it was accepted by Ms Fu that work was done pursuant to the retainer. The proceedings were somewhat complicated by the fact that Ms Fu at the time of the litigation, and for some little time thereafter, was in a relationship and gave evidence that much, though not all, of the communications with the solicitor were undertaken by her partner and that she was not aware of all the details of the litigation or the work done.
In due course Ms Fu filed a defence. That defence, amongst other things, denied compliance with the relevant provisions of the Legal Profession Act 1987 in relation to the cost agreements, asserting that she had not signed the agreements and did not otherwise enter into them. She also denied that she had received the bills of costs tendered by Mr Carmody. She also asserted that Mr Carmody had represented his bill would be assessed and that, relying on this representation, Ms Fu did not have the bills assessed. It is alleged the bills were not assessed, the representation was misleading or deceptive under the Fair Trading Act 1987 and that she is entitled to relief by way of setting aside the agreement. Amounts were also alleged to have been owing by Mr Carmody for goods and services provided to him in the amount of $14,510.90 which Ms Fu claimed as a set-off, made up as follows -
2006
Retention of monies - 1/2 Meredith St Homebush
$1,000
2006
Purchased for John's daughter Kiara's Toshiba Lap Top
$4,050
5/08/2007
Eastcoast Business Equipment P/L Statement
$6,050
5/08/2007
Eastcoast Business Equipment P/L Statement
$943.80
6/08/2007
Eastcoast Business Equipment P/L Statement
$2467.10
$14,510.90
An amended defence was later filed which added the further particulars that Ms Fu only saw for the first time the bills rendered by Mr Carmody when they were produced pursuant to subpoena in the proceedings. The amended defence also alleged that Ms Fu had made an application to the Supreme Court on 22 December 2011 for an assessment of the costs pursuant, as I understand it, to the Legal Profession Act 1987, although Mr Kumar of counsel on her behalf submitted that the making of such an application in some respects was governed by the Legal Profession Act 2004. I will return to this matter in due course. Ms Fu also by way of defence claimed that the contract was harsh and unjust or otherwise unconscionable or unfair pursuant to s 7 of the Contracts Review Act 1980 or the common law. The particulars given in relation to this last claim were as follows -
(i) The defendant did not sign the costs agreement;
(ii) There was no negotiation between the defendant and the plaintiff and owing to the manner in which the plaintiff conducted itself there was no negotiation or scope for negotiation;
(iii) There is no equality of powers between the Plaintiff and the Defendant;
(iv) The Defendant did not sign the purported agreements / documents and there was no independent legal representation or independent legal advice; nor any communication with the defendant with her ability to pay;
(v) The Defendant has English language as a second language and other relative background;
(vi) The Defendant lacks business experience and the Plaintiff has been dealing with others purportedly on her behalf
(vii) The plaintiff declined to follow proper procedure in respect of following up and ensuring the defendant understood the documents;
(viii) The Plaintiff did not take any or adequate measures to ensure that the Defendant understood the nature and implication of the document and most part did not deal with the defendant.
(ix) Failing to comply with the LPA in relation to these contracts.
(x) The plaintiff has refused and neglected to pay monies owed to the defendant.
In accordance with the usual practice, Mr Carmody provided an affidavit which briefly set out the fact of the litigation, conversations between him and Ms Fu occurring in mid 2007 and early 2008 involving payment of his bill and annexing also a list of assets and liabilities prepared by Ms Fu in connection with her then pending Family Court proceedings with her partner. In that affidavit he also denied owing any of the moneys alleged by Ms Fu in her statement of claim as constituting a set-off. Mr Matulich, an employee of Mr Carmody's who had the substantive carriage of the litigation in the Supreme Court, also swore an affidavit, briefly setting out the background to the Supreme Court proceedings, and the fact that he prepared and mailed the costs agreements and, in due course, the bills.
Ms Fu made a statement, which was tendered, stating that she had not received the bills of costs, making allegations that Mr Carmody had acted in her name without instructions, that he did not take instructions from her or keep her informed and, in substance, that he was acting on her partner's behalf, although he charged her for the work which he did in that behalf.
There can be no doubt, I think, that the litigation in the Supreme Court was jointly conducted and Ms Fu conceded that she left it to her partner to communicate with the solicitors, although she herself did so on a number of occasions. She said that she did not receive the costs disclosures. She also alleged some payments. She stated that Mr Carmody was supplied with goods and services specified in the statement. It is worth mentioning, however, an allegation that Mr Carmody used to be her neighbour and at his request she purchased a computer for Mr Carmody's daughter to use in school and her purchase price had not been reimbursed. This was one of the matters contained in the list of moneys claimed as an offset.
Mr Carmody, Mr Matulich and Ms Fu all gave evidence. Ms Fu denied receiving the costs agreements and deposed, in substance, that her deceased partner had dealt with the litigation and she had not communicated with the solicitor except on one or two occasions. The other matters, concerning the lack of legal advice, lack of business experience, difficulty with English (I should mention that Ms Fu's evidence, which I have read with care, does not suggest any such difficulty) and lack of understanding the costs agreement were not adverted to. I think it was not disputed that she did not have independent legal advice in relation to the costs agreements. Ms Fu did not give evidence that Mr Carmody represented that he would provide an assessed bill, nor that her partner was not authorised to deal with the solicitors in connection with the litigation on behalf of both of them, nor that she did not understand the documents which she did receive. It is plain that this aspect of the defence was, in effect, not pressed at the hearing.
There was no cross-examination of Mr Carmody or Mr Matulich to the effect that any particular item, or indeed any of the bills, were in fact over-inflated, unjustified or unreasonable. It is self-evident, but I mention because of submissions subsequently made by Mr Kumar as to evidence of the reasonableness of the bills, that they took the form of a narrative detail, dated and timed in respect of the work. The tender of these bills without objection and without Mr Kumar seeking to limit their evidentiary effect must lead to the result that they were not only evidence of the amount charged but evidence of the facts contained in them, namely, as to the work done, as to its nature and as to the time spent. Mr Kumar did not at any point put to either Mr Carmody or Mr Matulich, on the one hand, or the Magistrate, on the other, in respect of any item that the Magistrate should not accept that the work was not done or might not have been done or the hours were not spent or might not have been spent.
At the close of the evidence the Magistrate was left with unqualified evidence as to the work undertaken and the amounts charged, which was not the subject of any animadversion made by Mr Kumar on Ms Fu's behalf. Indeed, Mr Kumar confined his argument to submitting that, since Ms Fu did not admit that the work was done, although she agreed that some of it was done, or that the time was spent, as alleged, or that the work was reasonable, it was necessary that there be an assessment by some independent assessor going through each item and requiring Mr Carmody to justify each charge. He submitted, firstly, that the Magistrate should stay the proceedings to permit the assessment which had been sought in the Supreme Court to go ahead, in the alternative that it be done, for example, by a Registrar of the Local Court and, as a last resort (but only weakly hinted at), that the Magistrate himself might undertake that assessment.
As to the propriety of the amounts charged, the following exchange is significant -
HIS HONOUR: Yes, but what is it that you say is wrong with the bill?
KUMAR: Well, there are certain disbursements she quibbles with, and she quibbles with the amount of time taken. The usual objection that will be raised in an assessment procedure, in my submission, could be availed of.
No attempt was made to identify these "quibbles". The Magistrate referred to the fact that no issue had been taken in cross-examination of Mr Carmody as to the propriety of any part of his bills, and went on -
I have read the cases that have been provided to me, and whilst it might be that there is a common law right even over and above the statutory regime that is now in place, here we have someone who has received the accounts, as I find it, has made no objection, concedes, as it were, the statement made by Mr Carmody that she will pay him when something else takes place by way of a development. She concedes in the witness box today the reasonableness of the amount as she guessed it back then when she prepared the statement of assets and liabilities. There has been not one shred of evidence that would indicate any item that she says is outrageous or wrong, or somehow improper.
Mr Kumar made reference to some disbursements that were in issue. They have not been ventilated in court, and certainly there is nothing, as I understand it, from the evidence of Ms Fu either by way of her statements or her oral testimony that would in any way make me feel uncomfortable about allowing the plaintiffs the full amount of their accounts as they were rendered back in 2005 and 2006.
It is clear that his Honour accepted that the possibility that he had jurisdiction to deal with the matter apart from the statutory regime under the Legal Profession Act, but plainly considered that the evidence before him did not provide a proper or sufficient basis for him to undertake either any assessment himself or refer the matter for assessment to the Registrar, (even assuming, as I doubt, that he had power to undertake the latter course). I will deal with other aspects of his Honour's reasoning in response to the grounds of appeal specified in the summons.
Ground 1 alleged that the matter was stayed pursuant to the operation of s 355 of the Legal Profession Act 2004 since an application had been made for an assessment under Division 11 of that Act. Assuming for the moment that the Legal Profession Act 2004 applied, s 355 relates to, "[a]n application for a costs assessment ... made in accordance with this Division..." An application made in accordance with the Division must be made within 12 months after the bill was given to the client: s 350(4).
The Magistrate determined that, firstly, the bill was in fact received by Ms Fu and that this occurred more than 12 months before the application for assessment was made. His Honour referred to the evidence as to preparation of the accounts and the process of mailing them, and then dealt with the submissions of Mr Kumar as to non-receipt in the following way -
It is asserted that she did not receive the accounts. In one way, I do not really have to find that she did or she did not. However, for the purposes of this case today, I am satisfied on the balance of probabilities that the accounts were sent, delivered, and that at the very least she had knowledge of them, and that they did find their way into her home, and that she did have knowledge of them. I say that simply because she has conceded that the statement of assets and liabilities given to Mr Carmody in 2008, with the reference to $50,000, was her own estimate of the costs as she understood them.
This is a lay person; no legal knowledge, to my understanding, has a guess at legal fees for two matters that are contested, and by sheer coincidence, as she says, they reflect effectively the same amount that the plaintiffs are seeking. I find that evidence very unconvincing and I do not accept it. I am without a shadow of a doubt convinced that she did know what the figures were, did know about the accounts, and that they were received by her.
It was in effect, conceded that, if she had received the bills in accordance with the finding and necessarily before, as I understand it, the statement of assets and liabilities, more than 12 months had indeed elapsed before her application for assessment.
On the assumption the 2004 Act applied, it must follow, absent an order by the Supreme Court extending time in accordance with the provisions of s 355, there was no jurisdiction for any assessment to take place in accordance with Div 11. If, on the other hand, the relevant Act is the Legal Profession Act 1987 the matter is governed by Pt 11 Div 6 of that Act which does not provide for any stay, although no time limit is imposed for the making of such an application if the account is unpaid.
In substance, Mr Kumar submitted no more than that it would have been open to his Honour to have granted a stay and that this would have been the better course. The application for a stay plainly lay well within the discretion of the Magistrate to determine. I am unable to discern any error in the considerations which his Honour applied to the making of that decision. Accordingly, ground 1 is rejected.
Ground 2 alleged that the learned Magistrate misconstrued s 199 of the Legal Profession Act 1987 and cl 52 of the Legal Profession Regulations 2002 in failing to have regard to Ms Fu's common law rights of assessment. Although the ground asserts that the common law rights of assessment arose under s 199, I think it is clear that it is meant by this to refer to the common law rights apart from the right of assessment given by the Legal Profession Act 1987. In substance, this ground states in other words, the error alleged in ground 1. For the reasons I have already given, I am satisfied that his Honour properly considered the relevant statutory provisions and exercised his discretion without error.
Ground 3 alleges that the learned Magistrate erred in failing to deal with all grounds of defence including whether "the bill of costs was unjust pursuant to s 7 of the Contracts Review Act and other common law or equitable relief".
Although the Contracts Review Act has nothing to do with the bill of costs, but deals with the contract of retainer, no point is taken in this regard. As I have already mentioned, no evidence was adduced to support the factual particulars alleged under this part of the amended defence. Furthermore, no submissions were put to the learned Magistrate as to why the contract of retainer, here of course, the fee agreements, were unjust. At all events, those contracts were in conventional terms, entirely appropriate to the conduct of litigation in the Supreme Court, and it is easy to understand why, in the result, Mr Kumar on Ms Fu's behalf, did not press this part of her defence. It follows that this ground is without merit.
Ground 4 alleges that the learned Magistrate erred in failing to carry out himself an assessment upon the basis that he erroneously found "estoppel" when the matter was disputed in the sense that there was no admission that the bills were reasonable in part or in whole, and that an assessment had been sought in the Supreme Court. In my view, the Magistrate did not rely on any estoppel. His Honour simply identified the issues as they had been articulated before him and showed how, though his Honour did so briefly, there was no evidentiary basis or sufficient evidentiary basis for his undertaking an assessment by himself or staying the proceedings to enable an assessment to be made by another. This ground also fails.
Ground 5 alleges a failure to give reasons or adequate reasons in respect of what are described as "material matters" but not further particularised. The material matters determined by the Magistrate concerned the circumstances in which the bills came to the attention of Ms Fu, the amount charged and the set-offs. I have already set out the Magistrate's reasons for finding that Ms Fu was aware at an early stage of the content of the bills. As I have mentioned, there was evidence in the tendered accounts of the work that justified the charges. It was not suggested that, if the work as specified had been done, the charges were wrong in any way. The part of the judgment dealing with this issue is set out above. It followed that assessment was unnecessary.
In respect of the $1,000 trust sum claimed as set-off is concerned, Mr Kumar said that Ms Fu had no documentation about it and the matter had been dealt with by her late partner. Mr Carmody said in his affidavit that he had not acted for Ms Fu in relation to the sale of the property, but had acted for the purchaser and retained no monies in respect of the transaction. He was not cross-examined on this evidence and Ms Fu adduced no evidence about it. It was, therefore, a dead issue requiring no decision. Some evidence was given by Ms Fu about the other claims. In dealing with them, his Honour said -
I must say from the very start I had difficulty in understanding the significance of the set-off, particularly in relation to matters where certain moneys were apparently owed to a company called East Coast Business Equipment Pty Limited, which I gather was a company in which Ms Fu had an interest with her partner. It was alleged that there was some form of assignment of those amounts for the benefit of the defendant. No assignment has been produced as evidence.
More importantly, as it comes very much out of the words of the defendant herself, she was not sure that the monies were owed. She had no record that they had been paid, as she understood it, and therefore just assumed that they were still owed. Mr Carmody, in his own statement, has given an explanation for certain matters that have been paid, not only of the personal items but in relation to the business expenses. In any event, as I see it, the set-off or alleged set-off amounts are not provable in the form in which they have been given to me and on which the evidence, as it transpires, has come out, and I reject it.
In my view, in dealing with all these matters, his Honour's reasons were adequate.
Ground 6 alleged that the learned Magistrate erred by failing to take an assessment on an erroneous belief that the assessment was not required. I have already dealt with this ground. The conclusion that the assessment was not required was based upon his Honour's view of the way in which the case had been run before him and the matters placed in issue by Mr Kumar on behalf of Ms Fu. I repeat that in deciding that it was not necessary or, for that matter, desirable for his Honour to undertake an assessment of the bills for himself, there was no error.
Ground 7 concerned the duplication of figures, and the erroneous disallowance of matters alleged in the cross-claims. The particulars of this Ground state -
The learned Magistrate erred in law when he failed to take correct items and amounts and erred in respect of onus of proof (and reversed the onus of proof) in dealing with the cross-claim and other items.
These particulars were not usefully addressed during submissions. As to the cross-claim, it was simply not pressed (as I mentioned above) and there was no need for the Magistrate to deal with it. As I understand him, Mr Kumar submitted that the Magistrate considered that Ms Fu was estopped from raising a case that the amounts charged were proper. I can see nothing in his Honour's reasons that justify this submission. Nor did the reasons set out above as to his Honour's acceptance of the accounts as payable suggest any reversal of onus. I accept that it was for Mr Carmody to prove the reasonableness of his accounts. He did this by tendering them together with the narrative description of the work done and the time taken, and no issue was raised with him as to any of these items in that respect. As is clear from the exchange between the Bench and Mr Kumar set out above, Ms Fu plainly accepted the propriety of almost all of the amounts billed. Asserting that there were some amounts as to which there were quibbles without cross-examining upon them did not raise matters necessary to be determined. The Magistrate in my respectful view, was entitled to find that Mr Carmody had indeed satisfied the onus of proof on this issue. I should add (in fairness to Mr Carmody, in light of the way in which the matter was conducted in this Court) that I have looked at the bills of account myself, although it is not for me to determine any question of fact and can see nothing which suggests, let alone establish, that any work was unreasonable or any amount charged was inappropriate.
The Magistrate accordingly found in favour of Mr Carmody in respect of his claim. He then dealt with the question of interest, which was not controversial.
Mr Kumar, on Ms Fu's behalf, further submits that the agreement for costs was with the firm, rather than with the particular legal practitioner and, hence, failed to comply with the requirements of the Legal Profession Act.
First of all, I am sceptical that this distinction is significant for the purposes of determining whether or not there was a valid contract and, if so, what were its terms, but, at all events, such a submission was not made below and I do not think it appropriate that it can be made now the subject of a further ruling. At all events, Mr Carmody was trading in the name of the firm. It is clear I think that he was the principal and that the contract at all times was with him.
It follows that the appeal must be dismissed.
The plaintiff will pay the defendant's costs in the sum of $6000.
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Decision last updated: 15 November 2012
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