(The Honourable President Livesey, the Honourable Justice Doyle and the Honourable Justice Bleby)
23 March 2023
APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - OTHER MATTERS
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - STATUTE OF FRAUDS, SECTION 4 - NON-COMPLIANCE WITH STATUTE - EXECUTED CONTRACTS AND ACTIONS FOR QUANTUM MERUIT
RESTITUTION - CLAIMS ARISING OUT OF INEFFECTIVE CONTRACTS - ILLEGAL CONTRACT - RECOMPENSE FOR SERVICES RENDERED
The appellant solicitor made a claim for costs and disbursements incurred in representing the respondent client between 2004 and 2012.
The respondent had been convicted of murder and gaoled and required legal representation to challenge his conviction. The appellant claimed that the retainer agreed in December 2004 was in the nature of a contingency costs agreement: payment of costs and disbursements was conditional on the appellant securing the respondent's release from prison and a payment of compensation to him.
The appellant’s retainer was terminated in 2012 and a different legal team represented the respondent before the Court of Criminal Appeal, which in 2014 ordered that the respondent’s conviction be set aside and that there be a new trial. Instead, the Director of Public Prosecutions entered a nolle prosequi in 2015. The State government later made an ex gratia payment of $2.57 million to the respondent in 2018.
The appellant then claimed his legal costs and disbursements of $535,000 on the basis that the contingency in his retainer was satisfied.
On the respondent’s application, a Master gave summary judgment against the appellant on the basis that there was no “reasonable basis” for prosecuting the claim.
By the hearing of the appeal from the Master’s decision, the appellant had abandoned all appeal grounds save that he was entitled to reasonable fees and disbursements by way of a claim in quantum meruit.
HELD (the Court), dismissing the appeal and refusing permission to appeal the order that the respondent recover the costs of the action from the appellant:
1.There is no reasonable basis for the appellant’s claim within the meaning of r 144 of the Uniform Civil Rules 2020 (SA).
2.The claim in quantum meruit fails because it was not unjust for the respondent client to accept the benefit of the appellant solicitor’s legal services without making restitution where those legal services were never to be remunerated unless the agreed contingency manifested, but it never did.
3.The three limbs of the contingency were not satisfied: the appellant was not acting for the respondent and did not perform the work required in connection with the respondent’s release and receipt of compensation and, properly understood, the respondent was neither released nor compensated as the contingency costs agreement anticipated.
4.Observations made about the law of maintenance and the requirements for a complying contingency costs agreement at common law and under the Legal Practitioners Act 1981 (SA) and the Professional Conduct Rules in force at the time…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Hegarty v Keogh (No 2) [2023] SASCA 30
Case
[2023] SASCA 30
Decision Date
CaseChat Overview and Summary
This case concerned an appeal by the appellant, Hegarty, against an order made by a Master regarding the respondent's, Keogh's, costs of an action. The dispute arose from a contingency costs agreement, described as a "no win – no fee" arrangement, entered into between the appellant and the respondent, who was a solicitor.
The legal issues before the court included the extent to which maintenance is permissible in South Australia, the common law requirements for a contingency costs agreement in Australia, and whether such an agreement is permissible in a criminal matter. The court also considered the necessity for a solicitor to provide considered advice to a client about costs under a retainer, a requirement that predates statutory provisions like s 42(6) of the Act.
The court reasoned that while maintenance and champerty were historically unlawful, modern attitudes have seen considerable relaxation, particularly following the High Court's decision in *Campbells Cash & Carry Pty Ltd v Fostif*. This decision recognised the lawfulness of litigation funders sharing in a client's award for profit, indicating that such arrangements are not necessarily contrary to public policy or an abuse of process. The court noted that there was no suggestion of a written retainer conforming to s 42(6) of the Act or that the appellant received advice regarding the draft contingency costs agreement.
Ultimately, the appeal was dismissed, and leave to appeal the costs order was refused. The appellant was ordered to pay the respondent's costs of the appeal.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Accordingly, the appellant cannot succeed with a challenge to the Master’s order that the appellant pay the respondent’s costs of the action on the usual basis. Assuming it is required, leave to appeal against this finding should be refused. Conclusion For these reasons, the appeal against the Master’s decision will be dismissed and leave to appeal the costs order will be refused. The orders of the Court are:1.The appeal is dismissed. 2.Leave to appeal against the costs order is refused. Subject to hearing from the parties, the appellant must pay the respondent’s costs of this appeal.
Ratio Decidendi
Legal Principle Established
As has been mentioned, there is no suggestion that there was a relevant written retainer which conformed to s 42(6) of the Act, nor that the appellant gave the respondent any advice about what appears to have been a draft written retainer, nor about the terms of the proposed speculative or “no win – no fee” contingency costs agreement. The necessity for considered advice to be given by a solicitor to a client about costs under a retainer has been a consistent requirement at common law, long before the introduction of s 42(6) of the Act. It will be necessary to return to this issue.Two further common law considerations Before addressing the terms of the Act and the Conduct Rules in more detail, it is next necessary to consider two further aspects of the common law: first, the extent to which maintenance is permissible in South Australia and, associated with that, the common law requirements for a contingency costs agreement in Australia. The second aspect relates to whether a contingency costs agreement has been recognised as permissible in a criminal matter in Australia. Where a solicitor acts for a client on the basis that the client will not be expected to pay the solicitor’s fees and disbursements unless the client obtains an agreed outcome, such as success in the litigation, that kind of retainer involves both a contingency costs agreement and a form of “maintenance”.[75] Maintenance has been described as “the act of assisting the plaintiff in any legal proceeding in which the person giving the assistance has no valuable interest, or in which he acts from any improper motive”.[76] [75] See generally, G E Dal Pont, The Law of Costs (LexisNexis, 5th ed, 2021), [3.42ff].[76] Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 (Campbells Cash & Carry v Fostif), [68] (Gummow, Hayne and Crennan JJ), footnote 137, citing Stephen ‘A Digest of the Criminal Law (Crimes and Punishments)’ (1877), 86. Champerty is a form of maintenance. Champerty is maintenance in which “the subject matter of the suit shall be divided between the plaintiff and the maintainor”.[77] [77] See Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 226 CLR 386, [68]-[82] (Gummow, Hayne and Crennan JJ), footnote 137, citing Stephen ‘A Digest of the Criminal Law (Crimes and Punishments)’ (1877), 86. At common law, maintenance and champerty were unlawful and regarded as torts. Until relatively recently, they were also crimes.[78] Whilst there has been considerable relaxation in modern attitudes to maintenance, there has remained opposition to champerty in Australia, particularly where a solicitor seeks a share of the client’s award as is apparently routinely done in the United States. Nonetheless, the point of the decision of the High Court in Campbells Cash & Carry v Fostif was to recognise the circumstances in which it was lawful for a litigation funder to take a share of the client’s award for profit, and the Court held that to do so was not necessarily contrary to public policy or an abuse of process.[79][78] Although whether maintenance was properly regarded as a crime at common law was doubted by the High Court in Clyne v New South Wales Bar Association (1960) 104 CLR 186, 203.[79] Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386, [88]-[91] (Gummow, Hayne and Crennan JJ, with whom Gleeson CJ [1] and Kirby J [146] agreed). Discussed in G E Dal Pont, The Law of Costs (LexisNexis, 5th ed, 2021), [3.45].