Hagos v Carne Reidy Herd Lawyers
[2015] QCAT 175
•20 May 2015
| CITATION: | Hagos v Carne Reidy Herd Lawyers [2015] QCAT 175 |
| PARTIES: | Berhane Hagos (Applicant/Appellant) |
| v | |
| Carne Reidy Herd Lawyers (Respondent) |
| APPLICATION NUMBER: | OCR092-13 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | 5 December 2014 |
| HEARD AT: | Brisbane |
| DECISION OF: | Justice DG Thomas, President |
| DELIVERED ON: | 20 May 2015 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The application to set aside the costs agreement is dismissed. 2. The Applicant is to pay the Respondent outstanding legal fees of $6,716.11, plus interest, within 30 days of the date of this order. 3. The Applicant is to pay the Respondent’s costs of $98.00 within 30 days of the date of this order. |
| CATCHWORDS: | PROFESSIONS AND TRADES – LAWYERS – REMUNERATION – COSTS AGREEMENTS – REASONABLENESS – application to set aside two costs agreements – whether costs agreements were fair and reasonable or should be set aside pursuant to s 328 of the Legal Profession Act 2007 Legal Profession Act 2007 s 328 Hagos v Volvo Group Australia Pty Ltd [2013] FCCA 513 (23 May 2013) |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr B Hagos representing himself |
| RESPONDENT: | Mr D Quinn, Carne Reidy Herd Lawyers |
REASONS FOR DECISION
Claims
Mr Berhane Hagos has applied to the Tribunal to set aside a costs agreement between Carne Reidy Herd Lawyers and himself.
Mr Hagos also seeks orders that Carne Reidy Herd refund to him the sum of $4,100.00 paid by him for legal fees.
Carne Reidy Herd claims the sum of $6,716.11 from Mr Hagos for legal fees owing. Carne Reidy Herd also claims interest.
In his application, Mr Hagos asserts that:
1. Carne Reidy Herd breached the terms of the costs agreement.
2. Carne Reidy Herd gave incorrect legal advice.
3. Carne Reidy Herd failed ‘to do their job with due diligence’.
4. Carne Reidy Herd acted improperly by inducing Mr Hagos to take actions against his interest and will.
5. Carne Reidy Herd had a conflict of interest.
The Legal Profession Act
Under s 328 of the Legal Profession Act 2007 (Legal Profession Act), the Tribunal may order that a cost agreement be set aside if satisfied that it is not fair and reasonable.[1]
[1]Legal Profession Act 2007 s 328(1).
In deciding whether an agreement is fair or reasonable, regard can be had, amongst other things, to the matters set out in s 328(2) of the Legal Profession Act.
If the Tribunal orders that a cost agreement be set aside it may make an order as it considers appropriate in relation to payment of the legal costs which are the subject of the agreement.[2]
[2]Ibid s 328(4).
Discussion
There is a large range of complaints made about the services provided by Carne Reidy Herd. The allegations are closely related to the facts as they unfolded. The following discussion sets out my findings as to the facts, based on the affidavits and oral evidence. I will deal with the allegations made by Mr Hagos as they occur in the chronology.
Both Mr David Quinn (a partner at Carne Reidy Herd) and Mr Hagos swore affidavits and each gave oral evidence.
As a general observation, Mr Quinn gave his evidence in a clear and concise fashion, answering questions in a direct way. On the other hand, Mr Hagos was frequently evasive in the way in which he responded to questions, on some occasions refusing to answer.
Mr Hagos contacted Mr Quinn on 9 August 2012 in relation to an “adverse action” claim against his former employer, Volvo. That day, Mr Hagos forwarded a number of documents to Mr Quinn.
On 13 August, Mr Quinn forwarded a disclosure notice and costs agreement to Mr Hagos. The scope of this costs agreement was to advise Mr Hagos in relation to his adverse action claim against Volvo, with initial instructions being limited to drafting amendments to the adverse action application then before the Federal Magistrates Court.[3]
[3]Affidavit of Berhane Hagos sworn 2 April 2013, exhibit BH3, Costs Agreement and Disclosure Notice - Part B clause 2.
Based upon an overview of the material initially provided, Mr Quinn’s assessment was that Mr Hagos had a reasonable claim that his persistent complaints had been one of the reasons why relevant officers from Volvo decided not to renew his employment contract – that is, Mr Hagos had made such a nuisance of himself by his persistent complaints it was a reasonable inference that his complaints were one of the reasons why his employment had been terminated – establishing the basis for the claim under the adverse action provision.[4]
[4]Affidavit of David Quinn sworn 8 July 2013, paragraph 9.
Mr Quinn communicated this preliminary view to Mr Hagos.[5]
[5]Affidavit of Berhane Hagos sworn 2 April 2013, paragraph 4.
However, Mr Quinn had the opinion that the broader the allegations made, the less credible was Mr Hagos’ version of events and so, if Mr Hagos persisted in alleging that everyone was involved in some form of conspiracy against him, his claim would have been less likely to succeed.[6] He communicated this concern to Mr Hagos on a number of occasions.[7]
[6]Affidavit of David Quinn sworn 8 July 2013, paragraph 10.
[7]Affidavit of David Quinn sworn 8 July 2013, paragraph 11.
Mr Hagos signed the client agreement and, on 14 August and by 23 August, had paid a total of $1,600.00 into trust, which is the amount of the estimate provided in the cost agreement and also the advanced payment required.[8]
[8]Affidavit of Berhane Hagos sworn 2 April 2013, exhibit BH3, Costs Agreement and Disclosure Notice - Part A clause 3 and Part B clauses 6-7; Affidavit of David Quinn sworn 8 July 2013, paragraphs 17 – 18.
On 20 August 2012, Mr Hagos told Mr Quinn that he intended that Carne Reidy Herd continue to represent him in the proceedings after the claim had been amended. Mr Quinn indicated that a further cost agreement would be required for the additional work and instructions.[9] Mr Quinn exhibits a copy of his file note relating to that conversation to his affidavit.[10]
[9]Affidavit of David Quinn sworn 9 December 2013, paragraph 5.
[10]Ibid, exhibit DQ9.
On 23 August 2012, Mr Hagos and Mr Quinn met to review the amended claim. Because his firm had not been asked to become solicitor on the record and also because Mr Quinn was unable to substantiate all of the allegations of fact contained in the application, Mr Hagos signed the amended document which he then filed in the Federal Magistrates Court.[11]
[11]Affidavit of David Quinn sworn 8 July 2013, paragraphs 12 – 16.
By 30 August 2012, the solicitor assisting Mr Quinn identified the omission of two definitions from the amended statement of claim and forwarded an email to Mr Hagos as to this issue.[12]
[12]Affidavit of Berhane Hagos sworn 2 April 2013, exhibit BH6.
Mr Hagos asserts that, in the email, he was ‘advised to lie on behalf of Carne Reidy Herd Lawyers to the solicitors of Volvo in order to cover up for a mistake that was actually done by Carne Reidy Herd Lawyers’.[13]
[13]Affidavit of Berhane Hagos sworn 2 April 2013, paragraph 7(c).
A review of the email does not substantiate the claim by Mr Hagos. There is no indication of any advice to lie.
Mr Hagos was asked about this allegation whilst giving evidence.[14]
[14]Transcript of proceedings on 5 December 2014, page 58, lines 35 – 47; page 59, lines 1 – 15.
From the answers given by Mr Hagos, it seems that his suggestion to do with lying was because he perceived that Mr Quinn was ‘trying to make me admit mistakes that I had not done’.[15]
[15]Transcript of proceedings on 5 December 2014, page 59, lines 11 – 12.
In circumstances where Mr Hagos had signed and lodged the documents, and Carne Reidy Herd were not solicitors on the record, the steps outlined in the communication of 30 August were not inappropriate and there is no basis for the assertion by Mr Hagos that he was advised to lie.
Mr Hagos also asserts that Carne Reidy Herd did not ‘do their job with due diligence’.[16] He refers to failure to identify and or include certain breaches of his employment contract in the amended claim prepared on 23 August 2013. Specifically, he refers to breaches of clauses 12, 13, 19 and 25 of the standard conditions of employment.[17]
[16]Affidavit of Berhane Hagos sworn 2 April 2013, paragraph 8.
[17]Affidavit of Berhane Hagos sworn 2 April 2013, paragraphs 8a-d.
Those issues were the subject of a later decision by the Federal Circuit Court of Australia, Judge Jarrett, which was published on 23 May 2013. Mr Jarrett dismissed those possible causes of action, observing ‘the claim based on that clause is misconceived and, in my view, has no prospect of succeeding’,[18] ‘that claim cannot succeed’,[19] ‘the claims are so bereft of merit that to permit their joinder would be pointless’,[20] and that ‘these claims that Mr Hagos wishes to pursue have no prospect of success. It is important not to over-egg the pudding when one considers an application for leave to add fresh causes of action. One should not jump to unwarranted conclusions about the strengths of the claims that are to be added’[21].
[18]Hagos v Volvo Group Australia Pty Ltd [2013] FCCA 513 (23 May 2013) at 22.
[19]Ibid at 31.
[20]Ibid at 44.
[21]Ibid at 43.
In the circumstances, the assertion made by Mr Hagos is unwarranted, unjustified and without substance.
On 30 August 2012 an email was sent to Mr Hagos, attaching the second costs agreement and disclosure notice.[22]
[22]Affidavit of David Quinn sworn 9 December 2013, exhibit DQ11.
Mr Hagos received this email with the costs agreement and disclosure notice.[23]
[23]Transcript of proceedings on 5 December 2014, page 51, lines 20 – 40.
This agreement was also posted to Mr Hagos under cover of a letter dated 31 August 2012,[24] but Mr Hagos asserts that he did not receive the letter.[25]
[24]Affidavit of David Quinn sworn 9 December 2013, exhibit DQ12.
[25]Transcript of proceedings on 5 December 2014, page 51, line 41.
The second costs agreement describes the work as advising Mr Hagos and representing him in adverse action proceedings in the Federal Magistrates Court[26] and requires an advance payment of $5,500.00.[27]
[26]Affidavit of David Quinn sworn 9 December 2013, exhibit DQ11, Client Agreement and Disclosure Notice - Part B clause 2.
[27]Ibid Part B clause 7.
Mr Hagos was asked whether he had a telephone conversation on 30 August about the costs agreement which was attached to the email. His answer was ‘probable. I mean I can’t remember. I have many conversations with yourself’.[28]
[28]Transcript of proceedings on 5 December 2014, page 52, line 12.
I find that a conversation took place between Mr Hagos and Mr Quinn on 30 August 2012. During the conversation there was a discussion about the costs agreement including the required advance deposit. Mr Hagos indicated he could not afford to pay the sum of $5,500.00 and proposed, rather, to pay the sum of $2,000.00 into trust on account. Mr Hagos also asked Mr Quinn to formally commence acting for him in the Federal Magistrates Court proceedings. I find that the terms of the costs agreement were confirmed at that time.
The conversation is confirmed in an email sent that day by Mr Hagos which reads ‘further to our conversation today I’m proposing to pay $2,000.00 as advance payment you will then represent me on my Court matter and will be making payments as we go’.[29]
[29]Affidavit of David Quinn sworn 9 December 2013, exhibit DQ14; Affidavit of Berhane Hagos sworn 2 April 2013, exhibit BH7.
Mr Quinn confirmed this arrangement by way of an email dated 3 September 2012 which attached a letter dated 3 September 2012.[30]
[30]Affidavit of David Quinn sworn 9 December 2013, exhibit DQ15; Affidavit of Berhane Hagos sworn 2 April 2013, exhibit BH8.
In the letter, Mr Quinn outlined to Mr Hagos the various risks of failure which were associated with the adverse action application.
Mr Hagos responded saying that he had read the letter and was ‘clear with its content’.[31]
[31]Affidavit of David Quinn sworn 9 December 2013, exhibit DQ16, email from Mr Hagos to Ms Yeo and Mr Quinn dated 9 September 2012.
Mr Hagos describes this interchange as his being ‘induced’ to make a written commitment to pay the advanced payment, and describes the actions as Mr Quinn applying ‘more pressure’ on him.[32]
[32]Affidavit of Berhane Hagos sworn 2 April 2013, paragraphs 9 and 10.
To the extent that this submission is intended to be a criticism of Mr Quinn, it is misguided and incorrect. Mr Quinn acted as a prudent lawyer should. He was clear as to the need for a further client agreement and also as to his requirements for deposit of monies in trust. He provided his client with advice concerning the risks of litigation.
A hearing in regards to costs in the claim against Volvo was scheduled for 15 October 2012. During the review of materials and with the provision of further instructions, Mr Quinn’s view as to the prospects of Mr Hagos’ claim changed because of the likely credit worthiness of Mr Hagos’ as a witness, the strength of evidence he would likely produce, the accuracy of his instructions, the inferences that could be drawn from the competing evidence as well as evidence available to support the more outlandish elements of his claim which Mr Hagos insisted on maintaining.[33]
[33]Affidavit of David Quinn sworn 8 July 2013, paragraph 24.
There were discussions about these issues following the hearing on 15 October. Mr Quinn recommended that settlement options be pursued and sought instructions in writing. Mr Hagos describes himself as being under ‘immense pressure from Mr Quinn’ and emailed instructions on 16 October setting out minimum settlement requirements.[34]
[34]Affidavit of Berhane Hagos sworn 2 April 2013, paragraph 12; exhibit BH9, email dated 16 October 2012.
An offer was made to Volvo but not accepted.
On 27 October 2012 Mr Hagos forwarded an email to Mr Quinn indicating, amongst other things, that he had decided to self-represent. He also offered to pay outstanding fees by instalments of $200.00 per month.[35]
[35]Affidavit of Berhane Hagos sworn 2 April 2013, exhibit BH12.
Mr Quinn responded by way of an email dated 29 October, whereby he provided further advice and comments concerning negotiation of a possible settlement.[36]
[36]Affidavit of Berhane Hagos sworn 2 April 2013, exhibit BH13.
Mr Hagos asserts that this ‘exerted [sic] undue pressure on me to settle my claim’.[37] This email was the subject of cross examination of Mr Quinn, where he was asked why he provided such advice after the retainer had been terminated.
[37]Affidavit of Berhane Hagos sworn 2 April 2013, paragraph 16(c).
He commented that he wished
to ensure that I’ve properly identified to them the risks before they leave my – well, before or as my retainer ends. I need to ensure that they’re fully [sic] informed of those risks and then they’re perfectly entitled to go and make their own decision about what to do next.[38]
[38]Transcript of proceedings on 5 December 2014, page 21, lines 33 – 37.
This was an appropriate approach for Mr Quinn to take. The duty of a legal practitioner is to provide advice, consistent with the legal opinion of the practitioner, in the best interests of the client. It goes without saying that the final decision rests with the client.
Summary of Claims and Findings
As to the claims made by Mr Hagos concerning the client agreement, Mr Hagos asserts:
1. He was given wrong legal advice by Carne Reid Herd Lawyers.[39]
2. Carne Reid Herd Lawyers failed to do their job with due diligence.[40]
3. Carne Reid Herd Lawyers had conflict of interest.[41]
4. Mr Quinn, on 23 August 2012, refused to sign off on the amended claim that was prepared by him.[42]
5. Carne Reidy Herd Lawyers failed to do their work with due diligence.[43]
6. On or around 30 August 2012, Mr Quinn acted improperly by demanding a written guarantee stating he would be paying $2,000.00 in advance – such demand being inconsistent with the terms of the cost agreement that was already signed on 14 August.[44]
7. On 3 September 2012, Mr Quinn made more inappropriate requests in an attempt to put him under pressure unnecessarily.[45]
8. On 15 October 2012 Mr Quinn applied more pressure on him to settle the case against Volvo.[46]
9. On 29 October he was induced by Mr Quinn to take actions that were against his interest and will.[47]
[39]Affidavit of Berhane Hagos sworn 2 April 2013, paragraph 18a.
[40]Ibid paragraph 18b.
[41]Ibid paragraph 18c.
[42]Ibid paragraph 22a.
[43]Ibid, paragraph 22b. Paragraph 22b refers to allegations relating to the errors detected in the statement of claim and corrected on 30 August 2012.
[44]Ibid, paragraph 22c.
[45]Ibid, paragraph 22d. Reference is made to the letter of 3 September in which Mr Quinn sought deposit of the sum of $2,000.00 on account and provided advice concerning the risks associated with litigation.
[46]Ibid, paragraph 22e. Reference is made to the discussions following the hearing on 15 October when Mr Quinn provided advice about prospects and possible settlement.
[47]Ibid, paragraph 22f. Reference is made to the email from Mr Quinn dated 29 October in which Mr Quinn set out options with respect to settlement and provided advice about the risks associated with litigation.
The claims are discussed, in detail, in the previous section of these reasons.
The allegations made by Mr Hagos are unjustified and ill conceived.
There is no evidence which supports the assertion made by Mr Hagos that:
a) Wrong legal advice was given by Carne Reidy Herd Lawyers.
b) Carne Reidy Herd Lawyers failed to do their job with due diligence.
c) Carne Reidy Herd Lawyers acted in a situation where there was a conflict of interest.
d) Mr Quinn acted improperly by demanding monies on account of costs.
e) Mr Quinn put any inappropriate or unnecessary pressure on Mr Hagos.
Costs agreements
As to the costs agreements, I make the following findings based upon the evidence:
1. A cost agreement was entered into between Mr Hagos and Carne Reidy Herd Lawyers on 14 August 2012.
2. That costs agreement complied in all respects with the requirements of the Legal Profession Act.
3. A further cost agreement was entered into between Mr Hagos and Carne Reidy Herd Lawyers on 3 September 2012.
4. That cost agreement complied in all respects with the provisions of the Legal Profession Act.
I am not satisfied that either of the costs agreements is not fair or reasonable and there is no basis upon which the costs agreements should be set aside pursuant to s 328 of the Legal Profession Act.
The claims by Mr Hagos are dismissed.
The debt claim
Carne Reidy Herd filed a minor debt claim in an attempt to recover the outstanding legal fees from Mr Hagos.[48] In response to the minor debt claim, Mr Hagos filed his application to set aside the costs agreement.[49]
[48]Queensland Civil and Administrative Tribunal, Minor Civil Dispute Claim 502/13, filed on 13 March 2013.
[49]Queensland Civil and Administrative Tribunal, Minor Civil Dispute Claim 502/13, Application to set aside or amend a default decision, filed on 5 June 2013.
The finding that valid costs agreements were entered into disposes of the response by Mr Hagos in the minor debt claim. It follows that Carne Reidy Herd is entitled to be paid the outstanding legal fees of $6,716.11 in accordance with the costs agreements, and I order that this sum be paid by Mr Hagos within 30 days of the date of this order.
Part A, clause 4.4 of both costs agreements provide for interest to be paid on outstanding amounts at the Reserve Bank of Australia’s cash rate that applied at the time the work in questions was undertaken. The RBA cash rate in October and November 2012 was 3.25%.[50] I order that Mr Hagos pay interest on the principal debt of $6,716.11 from 1 December 2012.[51]
[50]Respondent’s Final Submissions of 2 February 2015, paragraph 48.
[51]Ibid, paragraph 50.
I also order that Mr Hagos pay Carne Reidy Herd’s costs in the amount of $98.00 within 30 days of the date of this order.
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