Hassan Awadallah v Galbally and O'Bryan Lawyers
[2017] VSCA 16
•15 February 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0065
| HASSAN AWADALLAH | Applicant |
| v | |
| GALBALLY & O’BRYAN LAWYERS | Respondent |
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| JUDGES: | KYROU AND McLEISH JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 9 February 2017 |
| DATE OF JUDGMENT: | 15 February 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 16 |
| JUDGMENT APPEALED FROM: | Galbally & O’Bryan Lawyers v Awadallah [2016] VSC 68 (Cameron J) |
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LEGAL PRACTITIONERS – Costs – Application for leave to appeal against decision of Trial Division judge dismissing appeal from Costs Court – Application refused.
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| APPEARANCES: | Counsel | Solicitors |
| The Applicant appeared in person | ||
| For the Respondent | Mr C Wilson, solicitor | Galbally & O’Bryan Lawyers |
KYROU JA
McLEISH JA:
Introduction and summary
The respondent law firm represented the applicant in a negligence proceeding against his former solicitors, who had acted for him in a proceeding in the Family Court of Australia.
The issues in the Family Court proceeding included whether a financial agreement between the applicant and his former wife should be set aside. The issues in the negligence proceeding included whether the applicant’s former solicitors were negligent in preparing the financial agreement and, if so, the loss that the applicant suffered as a result of that negligence.
At 4.54am on 22 September 2014, prior to a scheduled mediation in the negligence proceeding, the applicant sent an email to a partner of the respondent, Andrew O’Bryan, advising that he could not ‘continue to keep your legal [services]’ and that he would represent himself at the mediation. At 9.34am on the same day, Mr O’Bryan sent an email to the applicant stating that, prior to the respondent filing and serving a notice of ceasing to act, he wanted to meet the applicant to discuss the consequences of the respondent ceasing to act for him. On 23 September 2014, the respondent served a notice of ceasing to act on the applicant and the practitioners acting for his former solicitors.[1]
[1]The negligence proceeding settled after the respondent ceased to act. On 9 November 2015, consent orders were made dismissing the proceeding with no order as to costs.
On 6 October 2014, the respondent sent to the applicant a bill for $56,346.58 (‘bill’). The bill was for professional fees incurred for the period from 6 November 2013 until 23 September 2014 in the conduct of the negligence proceeding. The amount of $56,346.58 was made up of professional fees of $39,223.80 and disbursements (including counsel’s fees) of $17,122.78.
The applicant refused to pay the bill, alleging that the respondent overcharged him and was negligent in its conduct of the negligence proceeding.
On 12 November 2014, the respondent filed, in the Costs Court, a summons for taxation of costs under s 3.4.40 of the Legal Profession Act 2004 (‘LPA’)[2] to have the bill reviewed. On 10 September 2015, following reconsideration of a decision previously made by him on 17 April 2015, Wood AsJ reduced the bill to $51,177.87.
[2]The Legal Profession Act 2004 was repealed on 1 July 2015 by s 157 of the Legal Profession Uniform Law Application Act 2014, which Act now governs the legal profession in Victoria.
On 18 September 2015, the applicant filed a notice of appeal against Wood AsJ’s order. That appeal was dismissed by Cameron J on 2 March 2016.[3]
[3]Galbally & O’Bryan Lawyers v Awadallah [2016] VSC 68 (‘Reasons’).
The applicant seeks leave to appeal against the decision of Cameron J on the basis that she erred in finding that Wood AsJ correctly applied the provisions of the LPA and the Supreme Court (General Civil Procedure) Rules 2005 (‘Rules’). He represented himself before this Court, as he had done before Wood AsJ and Cameron J.
For the reasons that follow, the application for leave to appeal will be refused.
Factual and procedural history
The applicant and respondent entered into a Legal Services Agreement dated 6 November 2013 (‘Agreement’) in relation to the negligence proceeding.
Clause 1.1 of the Agreement described the respondent’s retainer as ‘no win no fee’. Clause 1.4(b) entitled the respondent to cease acting for the applicant if he failed to accept its advice and recommendations regarding the conduct and settlement of the negligence proceeding. Clause 1.5 provided that if the respondent were to cease to act for the applicant pursuant to cl 1.4 or the applicant were to terminate the retainer, he would be liable to pay the respondent’s professional fees and disbursements incurred up to the termination date. Clause 4.2 set out estimates for disbursements such as counsel’s fees. Clause 4.1 provided estimates for professional fees for the following seven stages of work:
(a)Stage 1 — Case review and advice: $5,500
(b)Stage 2 — Recovery of documents, review and advice: $9,900 to $11,000
(c)Stage 3 — Court process (1): $5,500
(d)Stage 4 — Court process (2): $2,200
(e)Stage 5 — Court process (3): $2,200 plus $9,900 to $11,000
(f)Stage 6 — Court process (4) (Preparation and attendance at mediation): $6,600
(g)Stage 7 — Trial: To be advised
The estimated professional fees for stages 1 to 5 ranged from $35,200 to $37,400. The estimated disbursements for the same stages ranged from $5,141 to $7,011.
In the course of acting for the applicant in the negligence proceeding, the respondent opposed an application by the applicant’s former solicitors for inspection of documents in respect of which the applicant had claimed legal professional privilege (‘privilege application’). In oral submissions on the hearing of the application for leave to appeal, the respondent informed the Court that the key document that was the subject of the privilege dispute was a memorandum of advice from counsel briefed on behalf of the applicant in the Family Court proceeding (‘counsel’s memorandum’). We were informed that counsel’s memorandum advised the applicant to settle the dispute with his former wife because of two risk factors. The first risk factor was that the financial agreement might be set aside because the Family Court might find that the applicant’s conduct in relation to the making of the agreement had been unconscionable. The second risk factor was that the Family Court might find that the applicant had failed to mitigate his loss.
On 21 August 2014, Daly AsJ decided that the applicant had waived privilege over the disputed documents. The cost of opposing the privilege application was not included in the estimates set out in the Agreement.
At a hearing of the respondent’s summons for taxation of the bill before Wood AsJ on 16 and 17 April 2015 (‘taxation hearing’), the applicant took issue with several categories of work reflected in the bill, only two of which are currently relevant. Those categories are as follows:
(a) Work performed by the respondent after 21 August 2014.
(b)Work performed by the respondent in relation to the privilege application.
In relation to the first category of work, the applicant gave evidence that he instructed an employee solicitor of the respondent, Carl Wilson, immediately after the hearing of the privilege application on 21 August 2014, to stop work and ‘put everything on hold’. Mr Wilson gave evidence that the applicant did not provide any such instructions. Wood AsJ preferred the evidence of Mr Wilson.
In relation to the second category of work, Wood AsJ rejected the applicant’s contention that he had not given instructions to the respondent to oppose the privilege application. He referred to an email dated 18 June 2014 from the applicant to the respondent containing such instructions. Wood AsJ also rejected the applicant’s contention that he should not be liable for the costs associated with the privilege application because the respondent had given negligent advice in relation to it. Wood AsJ stated that the privilege issue was not clear-cut and it was reasonable to run the argument. He noted that counsel had recommended an appeal but the applicant had rejected that recommendation.[4]
[4]Galbally & O’Bryan Lawyers v Awadallah (Unreported, Supreme Court of Victoria, Wood AsJ, 23 April 2015) [9] (‘Taxation Decision’).
At the taxation hearing, the applicant sought an order that the Agreement be set aside on the basis that it was not ‘fair or reasonable’. When Wood AsJ pointed out to him that s 3.4.32 of the LPA confers jurisdiction to set aside costs agreements on the Victorian Civil and Administrative Tribunal (‘VCAT’), rather than the Supreme Court, the applicant elected to proceed with the taxation rather than make an application to VCAT.[5]
[5]Taxation Decision [17].
Wood AsJ upheld the applicant’s objection that the respondent was not entitled to charge him for work performed prior to the signing of the Agreement. He also accepted some of the applicant’s objections in relation to the time spent on the statement of claim and particulars of damage. He reduced the bill by $4,698.83 to reflect the value of these items, taking the bill to $51,647.75.[6]
[6]Taxation Decision [4].
On 6 May 2015, the applicant filed a notice of appeal against Wood AsJ’s order. On 25 May 2015, Cavanough J dismissed the appeal as incompetent on the basis that a reconsideration of Wood AsJ’s decision needed to occur before a judge could conduct a review.
On 11 June 2015, the applicant filed a notice of review requesting that Wood AsJ reconsider his order of 17 April 2015.[7] Wood AsJ conducted a reconsideration hearing on 4 September 2015 (‘reconsideration hearing’) at which the applicant relied on three discrete arguments in support of his contention that he was not liable for any costs or, alternatively, that the bill should be substantially reduced.
[7]See Rules r 63.56.1.
The applicant’s first argument was that the Agreement should be set aside on the ground that it was not ‘fair or reasonable’ and that a qualified assessor should be appointed to assess the work performed. Wood AsJ rejected this argument on the basis that the Supreme Court did not have jurisdiction to set aside costs agreements and the work performed had already been assessed by him in the taxation hearing.[8]
[8]Galbally & O’Bryan Lawyers v Awadallah (Unreported, Supreme Court of Victoria, Wood AsJ, 10 September 2015) [7]–[8] (‘Reconsideration Decision’). See also [18] above.
The applicant’s second argument was that he was not liable for any costs because the Agreement was a ‘no win no fee’ agreement. Wood AsJ rejected this argument on the basis that, as the retainer was terminated by the applicant, cl 1.5 of the Agreement entitled the respondent to recover legal costs.[9]
[9]Reconsideration Decision [9]. See [11] above.
The applicant’s third argument was that he was not liable for any costs relating to the privilege application because he was affected by medication when he gave instructions to oppose that application and also because the respondent was negligent. Wood AsJ rejected this argument for the following reasons.
There is no medical or other evidence about [the applicant’s] mental capacity at the time [he gave instructions in relation to the privilege application], and even if there were, the question is whether the [respondent] acted reasonably when giving the advice and acting on the [applicant’s] instructions. It does not necessarily follow that the running of unsuccessful arguments or cases means there was negligence on the part of the legal practitioners. A client is not automatically excused from paying lawyers on the basis that an argument was unsuccessful. In every case there are successful and unsuccessful arguments run both in the trial and along the course of the case leading up to trial. As outlined in the [Taxation Decision] the issue was not clear cut and in fact an appeal from the adverse decision of Daly AsJ was advised by … counsel.[10]
[10]Reconsideration Decision [14].
In addition to the three specific arguments we have already discussed, the applicant took issue with particular items of work, arguing either that they were of poor quality and of little value to him or that the fees charged in relation to them were excessive. Wood AsJ reviewed the impugned items and concluded that they were reasonable and there was no basis to disallow any of them. He noted that the fees charged by the respondent were closely aligned with the estimates for the various stages of work set out in the Agreement, particularly when allowance was made for the fact that the estimates did not anticipate the privilege application.[11]
[11]Reconsideration Decision [24].
On 10 September 2015, Wood AsJ decided to reduce the bill by a further $469.88 on account of a GST adjustment. On the same day, he made the following order:
1Pursuant to r 63.56.1(6)(b) [of the Rules], the taxation result of 17 April 2015 is reduced by $469.88 to $51,177.87.
2The Notice for Reconsideration dated 11 June 2015 is dismissed.
3The [applicant] pay the [respondent’s] costs of the Reconsideration.
On 18 September 2015, the applicant filed a notice of appeal against the order Wood AsJ made on 10 September 2015. The notice of appeal contained the following grounds of appeal:
1There has been an error in law, in that, the trial Judge failed to apply the [principle] of law and equity as it should be and the relevant principle grounds of [the LPA] to determine that the total amount of the legal cost in dispute should have been $16,500 not $51,177.87 which the trial Judge had made His judgment on the total amount of [$51,177.87] whereas His Honour should have made His judgment on the total amount of $16,500.
2His Honour was in error in finding the [applicant] was not forcibly instructed by [the respondent] while the [applicant] was under the influence of his medication and his state of health impacted upon his capacity to give proper instructions to his former solicitors to agree in relation to the hearing of maintaining his professional privilege.
3His Honour was in error in finding that [the respondent was] acting reasonably in relation to the legal issues of the professional privilege. His Honour should have found that, the [respondent was] negligent and incompetent to handle these legal issues according to the law of negligence act 2003[12] (it was a solicitor’s penumbral duty of care).
4The learned trial judge erred in finding that [the respondent] was providing [its] legal service in accordance with requirements of [the LPA]. His Honour should have found that [the respondent] was not acting in accordance with the requirements of the [LPA] as is made clear that the legal fees must be fair, just and reasonable according to the [LPA]. Regardless if there is a cost agreement or there is no cost agreement.
[12]It appears the applicant intended to refer to the Wrongs and Other Acts (Law of Negligence) Act 2003.
Cameron J’s decision
Cameron J rejected all of the applicant’s grounds of appeal.
Cameron J held that there was no proper basis for Ground 1, as it constituted mere assertion. She did not consider that there was any evidence upon which she was able to decide that Wood AsJ failed to apply any statute or principle of law in reaching his decision. In fact, Cameron J held that Wood AsJ carefully considered the evidence before him which informed his decision to reduce the bill from $56,346.58 to $51,647.75.[13]
[13]Reasons [45]–[46].
In relation to Ground 2, Cameron J held that the evidence in relation to the applicant’s mental capacity was ‘incomplete, inconsistent and, to [her] mind, not credible’.[14] She considered that there was no sufficient basis upon which to conclude that the applicant was forcibly instructed by the respondent to brief counsel in relation to the privilege application and, in fact, the evidence suggested that the applicant endorsed the strategy.[15] Cameron J concluded that she could not uphold Ground 2 ‘[i]n the absence of compelling medical evidence and in light of the unequivocal terms of the instructions provided by [the applicant]’.[16]
[14]Reasons [49].
[15]Reasons [50].
[16]Reasons [52].
Cameron J found that there was no evidence to support the applicant’s arguments in relation to Ground 3, and that there was no reason to conclude that the respondent was negligent or incompetent in its management of the privilege application. She considered that the applicant’s arguments in this regard ‘did not appear to amount to anything more than a level of dissatisfaction about an adverse result’[17] and endorsed Wood AsJ’s comments to the effect that a legal practitioner is not negligent merely because he or she ‘lost a point, an application or indeed a whole trial’.[18]
[17]Reasons [55].
[18]Reasons [63].
In relation to Ground 4, Cameron J was satisfied that Wood AsJ carefully considered the evidence before him, and had the benefit of directly hearing the witness evidence. She concluded as follows:
The [respondent’s] fees, in my opinion, were fair, just and reasonable. They have (albeit modestly) been reduced. Careful consideration has been given to the amount of those fees on two separate occasions by his Honour, Wood AsJ. I see no reason, and have heard no compelling argument, to disturb his Honour’s findings in relation to this ground of appeal.
…
On the basis of the matters set out in this judgment, I do not consider that there has been any legal, factual or discretionary error in the decision of Wood AsJ. In my opinion, there is no evidence to suggest that his Honour’s decision displayed an error of principle in the exercise of his discretion. Further, there is no basis whatsoever to conclude that his Honour was guided or affected by irrelevant matters or made a manifest mistake.[19]
[19]Reasons [60], [64].
On 2 March 2016, Cameron J made the following order:
1The [applicant’s] application under r 63.56.1 of the [Rules] for a review of the order of Wood AsJ made 10 September 2015 be dismissed.
2 The [applicant] pay the [respondent’s] costs of the application.[20]
[20]The order misdescribed the applicant’s appeal under s 3.4.47 of the LPA as an application for review under the Rules. The relevant rule is r 63.57.
Grounds of appeal
The application for leave to appeal relies on the following proposed grounds of appeal:
1The learned Justice Cameron erred in finding that [Wood AsJ] was right [that] the legal service cost agreement made by the [respondent] was fair, just and reasonable. Justice Cameron should have found that the legal service costs agreement … failed to satisfy the formal statutory [requirements] of [the LPA] and … [rr] 63.77, 63.79 and 63.81 [of the Rules].
2The learned Justice Cameron erred in finding that [Wood AsJ] made the right assessment [of] the tax invoice of the [respondent]. Justice Cameron should have found that [Wood AsJ] did not make a proper assessment [of] the tax invoice as it should be under the [LPA] and … [r] 63.88 [of the Rules].
3The learned Justice Cameron erred in finding that [Wood AsJ] [correctly] allowed the [respondent] to charge the [applicant] for their negligence. Justice Cameron should have found that the [applicant] should not have been charged for any cost incurred by their negligence according [to] the legal principles ground of the [LPA] and … [rr] 63.70 [and] 63.71 [of the Rules].
4The learned Justice Cameron erred in finding that [Wood AsJ] was right [that] the [respondent] was providing [its] legal service in accordance with the requirements of the [LPA] and … [rr] 63.48, 63.60 [and] 63.77 [of the Rules]. Justice Cameron should have found that the trial judge was in error of law in finding that [the respondent] was acting in accordance with the requirements of the [LPA] and … [rr] 63.48, 63.60 and 63.77 [of the Rules], regardless if there is a cost agreement or not.
In support of his application for leave to appeal, the applicant filed a written case which referred to a document titled ‘Summary for Court of Appeal’ (‘summary document’). Instead of setting out, in neutral terms, a summary of the relevant facts and issues to be provided to the respondent for comment with a view to the parties reaching agreement on its contents, the applicant’s draft summary set out further submissions.[21] We will deal with the matters set out in the summary document insofar as they are relevant to any of the grounds of appeal.
[21]In these circumstances, the Court of Appeal Registry dispensed with the requirement for the parties to work cooperatively to file an agreed summary. See Supreme Court of Victoria, Practice Note No 7 of 2014 — Court of Appeal: Civil Applications, including for Leave to Appeal, and Appeals, 5 November 2014, 13–16. On 30 January 2017, this Practice Note was replaced by Practice Note SC CA 3 — Civil Applications.
At the hearing of the application for leave to appeal, the applicant provided to the Court a document headed ‘The Submission of the Appellant’ (‘submission document’). The submission document repeated some of the submissions in the applicant’s written case and summary document, as well as raising some new issues. With one exception, our consideration of the submission document will be confined to those matters that are relevant to any of the grounds of appeal. The exception relates to allegations in the submission document that Wood AsJ and Cameron J were biased, which are discussed at [85] below.
Ground 1: Legal services agreement
Rules 63.77, 63.79 and 63.81 of the Rules to which Ground 1 refers provide as follows:
63.77Procuring evidence
(1)Reasonable charges and expenses properly incurred in procuring evidence, and the attendance of witnesses, shall be allowed.
(2)For the purpose of paragraph (1) the attendance of a witness includes attendance at a conference with counsel before trial, and, in the case of an expert witness, includes qualifying to give evidence as an expert.
…
63.79 Conference
A fee for a conference shall not be allowed in addition to the fee of a solicitor or counsel for drawing and settling, or perusing, or advising on any document, unless for special reason the conference was necessary or proper.
…
63.81 Advice and other work of counsel
(1) Costs reasonably and properly incurred with respect to—
(a)the advice of counsel on the pleadings, evidence or other matter in a proceeding;
(b)counsel drawing or settling any pleading or other document in a proceeding which is proper to be drawn or settled by counsel;
(c)counsel engaging in any preparation, view, conference or consultation—
shall be allowed.
(2)Where affidavits or interrogatories which are proper to be drawn or settled by counsel are or could have been drawn or settled at the same time, only one fee shall be allowed.
Ground 1 does not identify the requirements of the LPA which the Agreement is said to have failed to satisfy.
The applicant submitted that before he signed the Agreement, he negotiated with the respondent each estimated item of costs in the Agreement, as required by r 63.78 of the Rules.[22] According to the applicant, when he complained that the estimated fees were too high, the respondent explained that the estimated fees made provision for unanticipated work but that he would only be charged for work that was actually necessary and reasonably required in acting for him, in accordance with r 63.70 of the Rules.[23] The applicant submitted that the respondent has failed to meet this commitment.
[22]Rule 63.78 of the Rules is inapplicable. It provides that ‘[c]osts reasonably and properly incurred with respect to negotiations for compromise shall be allowed whether or not the negotiations were successful.’
[23]Rule 63.70 of the Rules is set out at [67] below.
The applicant contended that the Agreement is not ‘fair, just and reasonable’ according to the LPA and rr 63.77, 63.79 and 63.81 of the Rules and should have been set aside by Cameron J for the following reasons:
(a) Most of the legal service items in the Agreement were irrelevant to the applicant’s case and he was charged more than a reasonable amount. He was charged for the same work under different items.
(b) The applicant was charged more fees than what was agreed or provided for in the Agreement at the time the applicant terminated the respondent’s retainer.
In the submission document and in oral submissions, the applicant contended that the Agreement is not fair and reasonable because cl 1.4 obliged him to follow the advice and recommendations of the respondent, otherwise the respondent would be entitled to terminate the retainer and charge him for professional costs and disbursements incurred up to the termination date.
The respondent submitted that the issues raised by Ground 1 were not argued before Cameron J and cannot be the basis for a ground of appeal to this Court.
The respondent noted that the issue whether the Agreement was fair, just and reasonable and/or complied with the requirements of the LPA and the Rules was raised by the applicant but abandoned at the taxation hearing.[24]
[24]See [18] and [22] above.
In relation to whether the costs charged by the respondent pursuant to the Agreement were fair, just and reasonable, the respondent submitted that Cameron J’s findings in that regard were clearly open and the applicant had not demonstrated any error on her part.
In our opinion, Ground 1 is misconceived.
As set out at [18] above, Wood AsJ did not make any finding about whether the Agreement was ‘fair or reasonable’ because, under s 3.4.32 of the LPA, jurisdiction to set aside a costs agreement on this ground is vested in VCAT rather than the Supreme Court. When Wood AsJ informed the applicant that, if he wanted to challenge the validity of the Agreement he would have to apply to VCAT, the applicant elected to continue with the taxation.
As the issue of the fairness and reasonableness of the Agreement was not before Wood AsJ and he did not make any findings in relation to it, the issue was also not before Cameron J. Unsurprisingly, her reasons do not contain any findings on this issue. In these circumstances, it is not possible for this Court to find that Cameron J made any error in relation to the Agreement.
In any event, save for the applicant’s complaint about cl 1.4 of the Agreement, the matters upon which the applicant relied for his contention that Cameron J should have set aside the Agreement focus on the reasonableness of the costs actually charged by the respondent rather than the reasonableness of the terms of the Agreement. Wood AsJ compared the fees charged by the respondent, for the various stages of work performed by it, with the estimated charges for each of those stages and concluded that the fees charged were closely aligned with the estimates.[25] Cameron J correctly found that Wood AsJ did not err in reaching this conclusion.
[25]See [25] above.
The provisions of the Rules upon which Ground 1 relied — as set out at [37] above — have nothing to do with costs agreements. The provisions of the LPA which deal with costs agreements are ss 3.4.26 to 3.4.32. These sections do not contain any provisions which assist the applicant in relation to Ground 1.
It is not clear whether the negotiations between the parties in relation to the Agreement upon which the applicant relied in his submissions to this Court — as set out at [39] above — were the subject of evidence before Wood AsJ. Those negotiations were not referred to in the applicant’s affidavit of 27 January 2015. In any event, even if those submissions accurately set out the course of the negotiations, those negotiations do not alter the fact that Wood AsJ considered the items in the bill which the applicant sought to impugn and concluded those items were reasonable and there was no basis to disallow any of them.[26] Cameron J correctly found that Wood AsJ did not err in reaching this conclusion.
[26]See [25] above.
In oral argument, the applicant contended that his decision not to make an application to VCAT was premised on the understanding that Wood AsJ would then conduct a proper review of the fees charged by the respondent. Even so, it is plain that this is exactly what Wood AsJ did. We return to that matter in relation to Grounds 2 and 4.
Grounds 2 and 4: Whether Wood AsJ made a proper assessment of the bill
As Grounds 2 and 4 overlap, we will consider them together.
Rules 63.48, 63.60, 63.71 and 63.88 of the Rules to which Grounds 2 and 4 refer provide as follows:
63.48 Discretionary costs
(1)Except where these Rules or any order of the Court otherwise provides, the fees and allowances which are discretionary that are referred to in Appendix A shall be allowed at the discretion of the Costs Court.
(2)In exercising the discretion under paragraph (1), the Costs Court shall have regard to—
(a) the complexity of the matter;
(b)the difficulty or novelty of the questions involved in the matter;
(c)the skill, specialised knowledge and responsibility involved and the time and labour expended by the legal practitioner;
(d)the number and importance of the documents prepared and perused, regardless of length;
(e) the amount or value of money or property involved;
(f) research and consideration of questions of law and fact;
(g)the general care and conduct of the legal practitioner, having regard to the instructions and all relevant circumstances;
(h)the time within which the work was required to be done;
(i)allowances otherwise made in accordance with the Scale in Appendix A;
(j) any other relevant matter.
…
63.60 Taxation between solicitor and client
(1)Costs not reasonably incurred or not of reasonable amount may nevertheless be allowed to a solicitor against a client if—
(a)the costs were incurred with the authority of or the amount was authorised by the client; and
(b)before the costs were incurred the solicitor expressly warned the client that the costs might not be allowed on a taxation of costs as between party and party.
(2)An authority for the purpose of this Rule may be express or implied.
(3)Where the client is a person under disability, references to the client in paragraph (1) include references to the litigation guardian of the client.
…
63.71Gross sum for costs
(1)Where costs are incurred improperly or without reasonable cause or are wasted by undue delay or negligence or by any other misconduct or default or where from any other cause the amount of costs is excessive, only costs which were reasonable and proper shall be allowed, and the Costs Court may assess those costs at a gross sum.
(2)The Costs Court may apportion costs assessed under paragraph (1) among different parties.
…
63.88 Estimate
(1)The Costs Court, in the absence of the parties and without making any determination on the individual items in the bill, may make an estimate of the approximate total for which, if the bill were to be taxed, an order on taxation under Rule 63.56 would be likely to be made.
(2)The Costs Court shall notify in writing each party of an estimate made under paragraph (1).
(3)Within 21 days after the date of the issue of a notice under paragraph (2), a party may file and serve on each other party a notice of objection to the estimate.
(4)If no notice of objection is filed under paragraph (3), the Costs Court may make an order on taxation under Rule 63.56 for the amount of the estimate.
(5)If an order on taxation has been made under paragraph (4), a party that did not receive a notice under paragraph (2) within sufficient time to file a notice of objection may apply to the Costs Court for an order to set aside the order on taxation.
Rule 63.77 has already been set out at [37] above.
Ground 4 does not identify the requirements of the LPA which Wood AsJ is said to have failed to apply.
The applicant submitted that Wood AsJ erred by failing to conduct his assessment of the bill in accordance with principles of law, equity, the LPA and r 63.88 of the Rules. He contended that Wood AsJ only reduced the bill in respect of work the respondent performed before the Agreement was signed, including work done in preparation of the Agreement, and made no assessment of any other work that was included in the bill. In support of his contention that he was overcharged by the respondent, the applicant set out in the summary document particular items in the bill which were said to be excessive or in respect of which there should have been no charge. In the submission document, the applicant contended that Wood AsJ reviewed only 20 per cent of the bill rather than every item in the bill.
The applicant referred to the requirement in s 3.4.44 of the LPA that, in conducting a review of legal costs, the Costs Court must consider: whether or not it was reasonable for a legal practitioner to carry out the work to which the legal costs relate; whether or not the work was carried out in a reasonable manner; and the fairness and reasonableness of the amount of costs. According to the applicant, by reference to those principles, the statement of claim prepared by the respondent was the only benefit he received from the legal services performed by the respondent. Even that document, so it was said, was not drafted properly. Accordingly, the applicant submitted that the costs charged by the respondent were not fair or reasonable. He also implicitly submitted that those costs were not proportionate to the complexity or importance of the issues in the negligence proceeding or the amount in dispute and that the respondent performed the work in relation to that proceeding in a way that unnecessarily increased costs.
In oral submissions, the applicant argued that the charges for work performed by the respondent on the statement of claim were unreasonable. This was said to be because there were 13 separate items of work on the statement of claim, well above the two or three items that he considered would have been reasonable.
The applicant submitted that in the light of the errors made by Wood AsJ in this regard, Cameron J ought to have found that the principles in House v The King[27] were satisfied and ought to have upheld the appeal.
[27](1936) 55 CLR 499.
The respondent submitted that Cameron J’s conclusions should be upheld as there is nothing before this Court to indicate that she failed to have regard to any particular evidence or made any error. As to the applicant’s submissions in relation to the statement of claim, the respondent submitted that any alleged deficiencies and omissions had not previously been raised and accordingly could not be a basis on which to demonstrate an error in Cameron J’s findings.
In our opinion, Grounds 2 and 4 are not made out.
Ground 2 relies on r 63.88 of the Rules which enables the Costs Court to make an estimate of the approximate total costs in the absence of the parties instead of conducting a taxation where individual items are assessed. As neither party requested an estimate under r 63.88 and the exercise of the power under that rule is discretionary, it cannot be demonstrated that Wood AsJ made any error in not exercising it.
In relation to Ground 4, we have already stated under Ground 1 that Wood AsJ reviewed the items of the bill which the applicant sought to impugn and, subject to the small number of objections that he upheld, he concluded that the items were reasonable and there was no basis to disallow any of them.[28] The material before this Court does not enable us to conclude that Cameron J was wrong in rejecting the applicant’s contention that Wood AsJ had erred. On the contrary, that material indicates that Wood AsJ was correct in rejecting all but a small number of the applicant’s objections. For example, it is clear from the summary document and the submission document that the applicant has erroneously treated the estimates in the Agreement as binding quotes and misunderstood some of the items in the bill. This misunderstanding can be illustrated by the applicant’s complaint that he was charged for two conferences when in fact he was charged two separate items for a single conference, the respective items representing the time spent at the conference by each of the two solicitors who attended it. Another illustration is the applicant’s contention that it is unreasonable for a solicitor to work on a statement of claim on more than two or three separate occasions. Furthermore, there is no substance to the applicant’s submission that Wood AsJ reviewed only 20 per cent of the bill.
[28]See [50] above.
The summary document alleges that Wood AsJ erred in preferring the evidence of Mr Wilson over the applicant’s evidence on the question whether the applicant requested Mr Wilson to cease work on 21 August 2014. As Wood AsJ’s factual finding on that issue was not the subject of the appeal to Cameron J, her Honour did not address the point and it is not a matter that is before this Court. Likewise, the applicant’s complaints about the costs of the Costs Court proceeding and the interest payable to the respondent in respect of the bill fall outside the scope of the application for leave to appeal.
At the reconsideration hearing, the applicant sought to impugn items of work performed by the respondent that related to amendments of the statement of claim and the preparation of a draft reply to the defence of the applicant’s former solicitors. He took issue with the quality of the draft reply, which was never filed or served. Wood AsJ concluded that there was no basis on which to disallow these items of work. Once again, the material before this Court does not enable us to conclude that Cameron J was wrong in rejecting the applicant’s contention that Wood AsJ had erred.
There is nothing in rr 63.48, 63.60, 63.71 or 63.77 which assists the applicant in relation to Grounds 2 and 4.
Ground 3: Negligence
Rule 63.70 of the Rules to which Ground 3 refers provides as follows:
63.70 Unnecessary or careless work
(1)The Court by order or the Costs Court on a taxation may disallow the costs of any work which is not necessary or is done without due care.
(2)Where a document is of unnecessary length, for the purpose of paragraph (1) work which is not necessary shall include work for that part of the document which is not necessary.
(3)A party whose costs for work is disallowed under paragraph (1) shall, unless the Court or the Costs Court otherwise orders, pay costs for any work by another party occasioned by the work for which the costs were disallowed.
Rule 63.71 of the Rules has already been set out at [53] above.
Ground 3 does not identify the provisions of the LPA which are said to deal with non-recovery of costs for negligent work.
The applicant submitted that he should not be charged for any costs incurred as a result of any negligence or mistakes on the part of the respondent. According to the applicant, the opposition to the privilege application was unsuccessful because it was based on the respondent’s negligent advice. He contended that, contrary to the finding of Wood AsJ that he was not willing to pay the respondent’s bill because his former solicitors succeeded in the privilege application, he did not pay the bill because the respondent was negligent and r 63.54 of the Rules absolved him from liability to pay for legal services performed negligently.
The applicant also submitted that the privilege application should not have been opposed because the documents in question were not harmful to his case in any event. In his oral submissions, the applicant emphasised that counsel’s memorandum was not harmful to his case because the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 (‘Federal Act’) amended s 90K(1)(e) of the Family Law Act 1975 (‘FLA’) so that unconscionability was no longer a ground for setting aside a financial agreement.
The applicant relied on statements deposed to in his affidavit of 27 January 2015 to the effect that, before he signed the Agreement, he made it clear to the respondent that if the respondent was negligent in acting for him, he would be entitled to terminate the respondent’s retainer without being liable to pay any costs.
The applicant contended that the respondent did not act reasonably or in his best interests and that it had failed to properly investigate the issues relevant to his case before proceeding with the negligence claim against his former solicitors.
According to the applicant, he was under the influence of medication at the time when the respondent sought his instructions in relation to the privilege application and he did not agree with the respondent to oppose that application.[29] The applicant contended that when the respondent telephoned him a few times seeking instructions to oppose the privilege claim, he strongly rejected that course. He said that, at that time, he had had an operation at the Monash Private Hospital and was still under medical observation. According to the applicant, on 16 June 2014, the respondent sent him an email recommending that he oppose the privilege application and he agreed to do so in reliance on counsel’s advice. The applicant contended that, at this time, he was acting under the influence of his medication.
[29]The applicant relied on Stamp v Stamp (2007) 37 Fam LR 235.
The applicant contended that he had provided to Wood AsJ a medical certificate to prove that he was under the influence of his medication but Wood AsJ was not interested in looking at it. He also contended that he provided the medical certificate to Cameron J but she wrongly declined to look at this evidence.
The applicant submitted that Cameron J should not have agreed with Wood AsJ because the decision contradicted the provisions of the LPA and the Rules.
The respondent submitted that the issues of alleged negligence, the applicant’s alleged mental incapacity, and the alleged forcible instructing of the applicant by the respondent had been ventilated before Wood AsJ and Cameron J. The respondent contended that, as the applicant on those occasions failed to adduce any evidence in support of those claims, Cameron J cannot be said to have erred in her conclusions in relation to them.
In relation to whether loss of privilege over counsel’s memorandum would be harmful to the applicant’s case, the respondent submitted that the Federal Act did not remove unconscionability as a ground for setting aside a financial agreement under s 90K(1)(e) of the FLA.
In our opinion, Ground 3 must be rejected.
The only document before this Court that provides any relevant information about the issues in the privilege application is the reasons for decision of Daly AsJ dated 26 August 2014. There is nothing in those reasons that indicates that the respondent was negligent in opposing the privilege application. Wood AsJ and Cameron J were clearly correct in stating that the fact that a party is unsuccessful in relation to an application to the Court is insufficient on its own to establish that the lawyers who provided advice in relation to the application or who appeared at the hearing of the application were negligent.
In relation to the applicant’s submission that the privilege application should not have been opposed because the documents in question were not harmful to his case, we agree with the respondent that there is nothing in the Federal Act which removed unconscionability as a ground for setting aside a financial agreement under s 90K(1)(e) of the FLA. The material before the Court shows that the respondent and counsel were of the view that counsel’s memorandum and the other documents which were the subject of the privilege dispute had the potential to prejudice his case. There is simply nothing before us to sustain the applicant’s submission.
Although the applicant also made general assertions that the respondent was negligent in acting for him, there is no material before this Court that supports those assertions. Accordingly, the applicant cannot derive any assistance from rr 63.70 or 63.71 of the Rules. His reliance on r 63.54 is misplaced, as that rule deals with a solicitor’s conduct in a proceeding before the Costs Court.
There is nothing in the material before us that supports the applicant’s contention that he produced medical certificates before either Wood AsJ or Cameron J regarding his mental capacity at the time he gave instructions to the respondent to oppose the privilege application. The medical documents which the applicant produced to this Court deal with a number of physical ailments but say nothing about his mental state or the medication he was using at any particular time. It follows that his complaint that Wood AsJ and Cameron J ignored evidence about his mental state must be rejected. It also follows that he has not demonstrated that he was not liable to pay any costs in relation to the privilege application because it was opposed without appropriate instructions. The case of Stamp v Stamp[30] upon which the applicant relied cannot assist him to overcome the absence of evidence about his mental state at the relevant time.
[30](2007) 37 Fam LR 235. This case involved the question whether, by putting in issue her capacity to provide proper instructions to her former solicitor at the time she agreed to consent orders, due to a mental disability, the respondent in that case had waived privilege in the contents of her former solicitor’s file.
The applicant’s assertion in his affidavit of 27 January 2015 that he informed the respondent that he would be entitled to terminate the respondent’s retainer without being liable for any costs if the respondent was negligent, does not assist him. This is because, even if the assertion were accepted, it would not affect his liability to pay the respondent’s costs, as he did not adduce any evidence that the respondent was negligent in acting for him.
New allegations upon which the applicant sought to rely
In the submission document, the applicant made vague allegations, for the first time, that Wood AsJ and Cameron J sought to ‘defend’ the respondent rather than impartially adjudicating upon the issues between the parties, and that Wood AsJ prejudged relevant issues against him. As these allegations were not the subject of the notice of appeal to the Trial Division or the application for leave to appeal to this Court, they are outside the scope of that application. We hasten to add that there was no evidence to substantiate the allegations.
In his oral submissions on the hearing of the application for leave to appeal, the applicant contended that, as he had terminated the respondent’s retainer in the email he sent to the respondent at 4.54am on 22 September 2014,[31] the respondent was not entitled to charge him for any work performed after that time.
[31]See [3] above.
The bill contains four items of work for 22 September 2014 and six items of work for 23 September 2014.
The issue whether the respondent was entitled to charge the applicant for work performed after the termination of its retainer had been raised by the applicant before Wood AsJ. The applicant had contended that the respondent was not entitled to charge him for work performed after 21 August 2014 on the basis that he had terminated the retainer on that day. The applicant did not specifically submit that the respondent was not entitled to charge him for work performed on 22 and 23 September 2014, and Wood AsJ did not make any specific finding in relation to that work. None of the grounds of appeal are directed at the charges for that work.
Before us, the respondent submitted that the question whether it was entitled to charge for work performed on 22 and 23 September 2014 was a new issue which was not the subject of any ground of appeal either to the Trial Division or to this Court. The respondent contended that, if the applicant had raised this issue before Wood AsJ, the respondent would have adduced evidence in support of the proposition that it was entitled to charge the applicant for the work performed on 22 and 23 September 2014, and that the respondent would be prejudiced if the applicant were given leave to rely upon this issue before this Court. The respondent also submitted that there was an additional issue upon which it would have adduced evidence, namely, whether, following the applicant’s email, the parties agreed to defer formal termination of the retainer pending a meeting between the parties to discuss the consequences of the respondent ceasing to act.
There is a fundamental principle that a point not taken at first instance cannot be taken on appeal if it is possible that evidence could have been given at the first instance trial which would have prevented the point from succeeding.[32] In accordance with this principle, we have concluded that the applicant should not be given leave to rely on the submission that the respondent was not entitled to charge for work performed on 22 and 23 September 2014.
[32]Devon v Capital Finance Australia Ltd [2014] VSCA 73 [75] citing Suttor v Gundowda Pty Ltd (1950) 81 CLR 418, 438; Coulton v Holcombe (1986) 162 CLR 1, 7–8; Water Board v Moustakas (1988) 180 CLR 491, 497; Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, 284; Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 [51].
Although the applicant contended before Wood AsJ that the respondent was not entitled to charge for any work performed after 21 August 2014, the basis for that contention was that he had terminated the respondent’s retainer on that date. The only evidentiary issue that arose before Wood AsJ in relation to that contention which required rebuttal evidence from the respondent was whether the applicant had instructed Mr Wilson on 21 August 2014 to stop work and ‘put everything on hold’. We accept the respondent’s submission that, if the applicant had contended that he terminated the retainer on 22 September 2014 and that the respondent was not entitled to charge for any work performed on and after that date, the respondent could have adduced further evidence before Wood AsJ. On that basis, the respondent would be prejudiced if the applicant were given leave to raise that contention for the first time before this Court.
Conclusion
For the reasons set out above, the application for leave to appeal has no real prospect of success.[33] Accordingly, it will be refused.
[33]Supreme Court Act 1986 s 14C.
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