IFW Global Pty Limited v Seung Phil Yang t/as Youngs Attorneys

[2019] NSWSC 953

Supreme Court

New South Wales

Medium Neutral Citation:

IFW Global Pty Limited v Seung Phil Yang t/as Youngs Attorneys [2019] NSWSC 953

Hearing dates:

25 July 2019

Decision date:

29 July 2019

Jurisdiction:

Common Law

Before:

Adamson J

Decision:

(1) Extend the time within which the plaintiff was entitled to commence these proceedings to 31 January 2019.

 

(2) Dismiss the appeal.

 (3) Order the plaintiff to pay the defendant’s costs of the proceedings.

Catchwords:

APPEAL – no leave sought – limited to questions of law – construction of Uniform Law – whether law practice entitled to recover legal costs when disclosure requirements of Uniform Law as to legal costs had not been complied with – factual findings open to Court below – no error of law shown

  LEGAL PRACTITIONERS – whether legal services provided is question of substance not form – where legal services found to have been provided in the context of investigative services – disclosure obligations apply to provision of legal services

Legislation Cited:

Legal Practitioners Act 1898 (NSW), s 21
Local Court Act 2007 (NSW), ss 39, 40
Legal Profession Uniform Law (NSW), ss 6, 10, 30, 32, 33, 38, 103, 169, 174, 175, 178, 194
Uniform Civil Procedure Rules 2005 (NSW), r 42.1

Cases Cited:

Australian Broadcasting Corporation Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33
Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139
Blatch v Archer (1774) 1 Cowp 63; (1774) 98 ER 969
Burbridge v Wolf [2008] NSWSC 60
Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333; [2001] NSWSC 60
Lewis v Doran [2008] NSWSC 186
M47/2018 v Minister for Home Affairs [2019] HCA 17; (2019) 93 ALJR 732
Orrong Strategies Pty Ltd v Village Roadshow Ltd [2007] VSC 1; (2007) 207 FLR 245
Rose v Tunstall [2018] NSWCA 241
Small v K & R Fabrications (W’gong) Pty Ltd [2016] NSWCA 70
Wolfenden v International Theme Park Pty Ltd (trading as Wonderland) [2008] NSWCA 78
Zizza v Seymour [1976] 2 NSWLR 135

Category:

Principal judgment

Parties:

IFW Global Pty Limited (Appellant)
Phil Seung Yang t/as Youngs Attorneys (Respondent)

Representation:

Counsel:
A Duc (Plaintiff)
V Bedrossian (Defendant)

  Solicitors:
East Coast Law (Plaintiff)
Youngs Attorneys (Defendant)

File Number(s):

2019/33278

 Decision under appeal 

Court or tribunal:

Local Court

Jurisdiction:

Civil

Date of Decision:

6 December 2018

Before:

Donnelly LCM

File Number(s):

2017/291268

Judgment

Introduction

1. By notice of appeal filed on 31 January 2019, the plaintiff, IFW Global Pty Ltd (IFW) appeals against the judgment ordered by Donnelly LCM on 6 December 2018 in favour of the defendant, Phil Seung Yang trading as Youngs Attorneys (Mr Yang). IFW had claimed an amount of $91,339.32 for services alleged to have been rendered to Mr Yang. The principal basis for his Honour’s judgment was the finding that IFW was not entitled to bring the proceedings by reason of the operation of s 178 of the Legal Profession Uniform Law (NSW) (the Uniform Law) as IFW had provided legal services and had not complied with the disclosure obligations imposed by the Uniform Law. All references to legislation in these reasons are to the Uniform Law unless otherwise stated.

2. IFW appeals to this Court pursuant to 39 of the Local Court Act 2007 (NSW), which allows a party which is dissatisfied with a decision of the Local Court to appeal to this Court “but only on a question of law”. Although the correct initiating process is a summons, IFW filed a notice of appeal in the Court of Appeal, following which orders were made to refer the proceedings to the Common Law Division without the need for any separate originating process to be filed. The notice of appeal does not fulfil the formal requirements of a summons. However, it was common ground that it was intended to fulfil the same purpose and to constitute an exhaustive statement of the grounds of appeal and the orders sought.

The relevant legislation

3. Before turning to the decision of the Court below, I propose to set out the relevant provisions of the Uniform Law.

4. Section 6 includes the following definitions. The term “law practice” is defined to include an incorporated legal practice. The term “legal costs” is defined to mean:

“(a)     amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services; or

(b)     without limitation, amounts that a person has been or may be charged, or is or may become liable to pay, as a third party payer in respect of the provision of legal services by a law practice to another person—

including disbursements but not including interest; …”

5. The term “legal services” is defined to mean “work done, or business transacted, in the ordinary course of legal practice”. The term “engage in legal practice” is relevantly defined to include practising law or providing legal services. A “corporate legal practitioner” is relevantly defined to mean “an Australian legal practitioner who engages in legal practice only in the capacity of an in-house lawyer for his or her employer or a related entity”.

6. Part 2.1, entitled “Unqualified legal practice”, contains s 10, which prohibits “an entity” from engaging in legal practice unless it is a “qualified entity”, being, relevantly, an Australian legal practitioner or a law practice.

7. Chapter 3, entitled “Legal practice”, includes s 30 which relevantly provides:

“30   Objectives

The objectives of this Chapter are—

(a)  to enable the provision of legal services through a range of business structures; and

(b)  to ensure that any particular type of business structure does not hinder a law practice and the legal practitioners within it from complying with this Law, the Uniform Rules and the other professional obligations of Australian legal practitioners; and

(c)  to ensure that clients of law practices are adequately protected regardless of the business structure through which a law practice provides legal services; …”

8. Chapter 3 includes Part 3.2, entitled “Law practices – general provisions”, which contains the following provisions:

“32   Business structures

Legal services may be provided under any business structure, subject to the provisions of this Law and the Uniform Rules.

33   Obligations not affected by nature of business structures

(1)  An Australian legal practitioner must comply with this Law, the Uniform Rules and his or her other professional obligations, regardless of the business structure in which or in connection with which the practitioner provides legal services.

(2)  A law practice must comply with this Law, the Uniform Rules and its other professional obligations, regardless of the business structure in which or in connection with which the law practice provides legal services.”

9. Section 38 preserves the “professional privileges of an Australian legal practitioner” who provides legal services and provides that client legal privilege or other legal professional privilege is not excluded, in substance, by the business structure in which those services are provided.

10. Part 3.7, entitled “Incorporated and unincorporated legal practices”, includes s 103, which provides:

“103   Services that may be provided

A law practice to which this Division applies is entitled to engage in legal practice in this jurisdiction, and may also provide other services.”

11. Part 4.3 of the Uniform Law makes provision for legal costs. The objectives of the Part, which are identified in s 169, include:

“(a)   to ensure that clients of law practices are able to make informed choices about their legal options and the costs associated with pursuing those options…”

12. Division 3 of Part 4.3, entitled “Costs disclosure”, relevantly provides:

“174   Disclosure obligations of law practice regarding clients

(1) Main disclosure requirement

A law practice—

(a)  must, when or as soon as practicable after instructions are initially given in a matter, provide the client with information disclosing the basis on which legal costs will be calculated in the matter and an estimate of the total legal costs; and

(b)  must, when or as soon as practicable after there is any significant change to anything previously disclosed under this subsection, provide the client with information disclosing the change, including information about any significant change to the legal costs that will be payable by the client—

together with the information referred to in subsection (2).

. . .

(6) Disclosure to be written

A disclosure under this section must be made in writing....

…

175   Disclosure obligations if another law practice is to be retained

(1)  If a law practice (the first law practice) intends to retain another law practice (the second law practice) on behalf of a client, the first law practice must disclose to the client the details specified in section 174(1) in relation to the second law practice, in addition to any information required to be disclosed to the client under section 174.

(2)  If a law practice (the first law practice) retains or intends to retain another law practice (the second law practice) on behalf of a client, the second law practice is not required to make a disclosure to the client under section 174, but must disclose to the first law practice the information necessary for the first law practice to comply with subsection (1).

…

178   Non-compliance with disclosure obligations

(1)  If a law practice contravenes the disclosure obligations of this Part—

(a)  the costs agreement concerned (if any) is void; and

(b)  the client or an associated third party payer is not required to pay the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority; and

(c)  the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority or under jurisdictional legislation; and

(d)  the contravention is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention.

…”

13. Division 6 of Part 4.3, entitled “Unpaid legal costs”, relevantly provides:

“194   Restriction on commencing proceedings to recover legal costs

(1)  A law practice must not commence legal proceedings to recover legal costs from a person unless a bill has been given for the legal costs and the bill complies with the requirements of this Law and the Uniform Rules.

(2)  A law practice must not commence legal proceedings to recover legal costs from a person who has been given a bill until—

(a)  where the legal costs are the subject of a costs dispute before the designated local regulatory authority—the authority has closed or resolved the dispute; and

(b)  at least 30 days after the later of—

(i)  the date on which the person is given the bill; or

(ii)  the date on which the person receives an itemised bill following a request made in accordance with section 187.”

The proceedings in the Court below

The background

14. The background to the dispute between the parties was that Mr Yang, a legal practitioner, retained IFW to perform services for the ultimate benefit of Korean clients, who were the applicants in proceedings in the Federal Court in which they alleged that they had been victims of an international fraud. On 19 June 2017 Mr Yang accepted IFW’s terms and became liable, subject to the provisions of the Uniform Law, for the payment of invoices rendered by IFW for work performed at his request. IFW purported to perform investigative services but, as part of the overall service provided to Mr Yang, IFW also made available two lawyers, Michelle Huntsman and Ian Taylor, to perform services, which included the preparation of an affidavit evidencing the findings of the investigation. It was contemplated that the affidavit would, after having been settled by counsel, be filed in the Federal Court proceedings in support of the applicants’ case.

15. As referred to above, IFW rendered invoices to Mr Yang claiming a total amount of $91,339.12. Mr Yang contended that he was not obliged to pay those invoices until costs had been assessed because IFW had not complied with the Uniform Law. He also contended that IFW was prohibited from commencing the proceedings by reason of s 178.

The course of the proceedings in the Court below

16. The hearing in the Court below commenced on 31 July 2018. The parties agreed that there would be no cross-examination of any witness but that the affidavits of Mr Gamble and Mr Yang would be read subject to objections. After the evidence, which was entirely documentary, was closed, the parties addressed his Honour. At the conclusion of the hearing, his Honour listed the matter for judgment on 27 September 2018. A timetable was ordered for further written submissions. IFW filed written submissions on 15 August 2018 and Mr Yang responded by submission filed on 28 August 2018. On 25 September 2018 his Honour requested that the parties address in written submissions, first, the issue whether legal professional privilege attached to any of the work done by IFW for Mr Yang; and, secondly, authorities cited by his Honour on the question of what constituted “legal services”. On 27 September 2018 the Court below made the following directions:

“1.   Plaintiff to file written submissions concerning the 2 questions asked by/of Magistrate Donnelly by 11/10/18.

2.   Plaintiff to file submissions addressing the issue of apportionment in the event the court finds the work was 'legal services' by 18/10/18

3.   Defendant to reply to those submissions by 25/10/18

4.   Matter for decision 6/12/18”

17. On 11 October 2018 IFW filed written submissions which addressed the question of client legal privilege and the authorities cited by his Honour. On 17 October 2018, IFW maintained its position that none of the services provided to Mr Yang were legal services. It did not provide any assistance to the court as to how the apportionment between legal services and non-legal services ought be made. IFW submitted, relevantly:

“4.    First, there is no legislative reason why the balance of the claim for non-legal expenses would be declined by the Court. There is nothing in the legislation that prohibits the approach.

…

12.   The Plaintiff submits that the Court would find that the costs of legal services can be excised and treated separately. It is for the Court to determine what is a legal service and proceed from there as to what costs are subject to the Uniform Law.

13.   The Plaintiff is not a law practice. It never provided legal services. The full contractual amount should be awarded.

14.   The Plaintiff submits that if the Court finds that some services were legal, and defines who they were, the appropriate course is to direct the parties to confer on bringing in short minutes of order to give effect to the decision.”

18. Mr Yang filed submissions in response on 25 October 2018, which concluded as follows:

“25.   Essentially, the Plaintiff does nothing other than leave it to the Court to guess what portions of its services were or were not legal services. This is the position plainly adopted at paragraphs [12] and [14] of the Plaintiff’s Submissions on Apportionment.

26.    With respect, the Court ought not to be burdened with that task, completely unaided by any analysis from the Plaintiff.

27.   In any event, the Court cannot undertake that task, for the same reason that the Plaintiff has not attempted to undertake that task - namely, an identification of the quantum of legal services or non-legal services in the Plaintiff’s invoice is impossible, because the level of detail recorded in that document is entirely inadequate.

Conclusion

28.   The Plaintiff has failed to answer the question posed by the Court, because there is no answer favourable to the Plaintiff that can be given. Its claim must be dismissed.”

[Footnotes omitted.]

The issues in the Court below

19. Counsel in the Court below agreed that the following five issues, which were proposed on behalf of Mr Yang, arose for determination by the magistrate:

“(1)   Whether any part of the monies claimed by the Plaintiff in these proceedings relate to, or arise in respect of, the provision of services in the nature of legal services, being services ordinarily undertaken by a legal practitioner.

(2) If the answer to sub-paragraph (1) above is ‘Yes’ whether the Plaintiff is entitled to bring these proceedings by reason of the operation of s 178 of the Legal Profession Uniform Law (NSW) 2014.

(3)   Even if the Plaintiff is entitled to bring these proceedings, whether it is entitled to seek recovery of amounts relating to the provision of services in the nature of legal services.

(4)   Whether Mr Yang was personally liable for payment of the Plaintiffs fees and expenses prior to 19 June 2017, being the date of Mr Yang's acceptance of the Plaintiffs ‘Standard terms’ document.

(5)   In the event that the Plaintiff is entitled to bring these proceedings, but Mr Yang is only personally liable from 19 June 2017, what items or amounts claimed by the Plaintiff arose after 19 June 2017?”

20. The Court below answered question (1) “Yes” and question (2) “No”. His Honour did not proceed to answer any of the further questions as they did not arise.

The first issue: whether any part of the monies claimed was for legal services

21. As to the first issue, Mr Yang submitted that the services which IFW had provided to him included legal services, which obliged IFW to comply with the disclosure obligations in ss 174 and 175 of the Uniform Law. Mr Yang argued that, as IFW had not complied with those obligations, he was not, by reason of s 178, required to pay the amounts claimed in IFW’s invoices as the invoices include legal costs which had not been assessed and any costs dispute had not been determined. IFW argued that it was an investigation firm, which provided investigative services which were not legal services and that therefore it was not bound to comply with the Uniform Law and could recover the amounts claimed in accordance with the ordinary principles of contract law.

22. The Court below found that “[a]n analysis of the proposal, the express terms of the agreement and the invoices submitted by the plaintiff all lead to an unassailable conclusion that part of the monies claimed by the plaintiff related to the provision of services in the nature of legal services”: [41]. His Honour’s findings were based on the following evidence, which is summarised in [42]-[43] of the reasons:

“42.   This conclusion is based on the use of the expression by Mr Gamble [the ‘lead investigator” of IFW] in his proposal email of 23 May 2017 ‘investigative and legal team,’ the fact that Ms Huntsman and Mr Taylor were described in the proposal as ‘Senior Lawyer’ and ‘Lawyer’ respectively, the higher hourly and daily rates charged by the plaintiff for Ms Huntsman ($350 and $2450) and Mr Taylor ($650 and $4,500) compared to the investigators Mr Gamble ($300 and $2100) and Mr Watson ($300 and $2100), the fact that the rates charged were comparable to professional legal fees and the substance of the tasks that were proposed and performed by Ms Huntsman as set out in [22], [25], [28] and finally the proposed ‘strategic’ advisory role of Mr Taylor. The fact that it was agreed that the defendant would discuss the work completed by the plaintiff with Counsel retained in the Federal Court litigation does not change the nature and quality of the work performed. So far as the tasks performed by Mr Gamble set out at [29] - which the defendant also claims are legal services - it is not necessary for the court to determine whether they are in the nature of legal services given that the first issue is framed as ‘any part of the monies claimed’ are ‘legal services’. The list of services cited by the plaintiff (see [30] of this judgment) is incomplete in light of the ‘legal team’ offered in the agreement.

43.   The cases in this area the law often concern people who are not qualified doing tasks which the courts sometimes characterise as legal work. But in the case of Ms Huntsman it involves a legally qualified person performing legal work. In the case of Mr Taylor he was held out as the role of "Senior Lawyer" making "strategic" decisions. The work of Ms Huntsman itself could not simply be regarded as only investigative work. The plaintiff’s reliance on Felman v Law Institute of Victoria (1998) 4 VR 324 is misplaced. This is not a case where it is necessary to distinguish the work of a person in a specialised area from work involved in legal practice. The cases of The Council of the NSW Bar Association v Davison [2006] NSWSC 65 per Hall J at [143] and Law Institute of Victoria Ltd v Marie [2008] VSCA 46 at [102] are examples. Ms Huntsman's role within the plaintiff cannot realistically be described as ‘the lawful pursuit of an occupation other than law’ as that expression is used in Felman. Ms Huntsman was explicitly described in the proposal as a ‘Lawyer.’ In the invoice she is described as ‘Investigator/In- house Legal’: Exhibit 4 at page 95. Nor could it be said that she was, in accordance with the passage in Felton, expressing ‘an opinion about the requirements of relevant legislation, statutory rules or the like’. Ms Huntsman's work was far more involved than that description. Her work involved the application of legal expertise in the preparation of legal proceedings in the Federal Court. The knowledge and skill held and exercised by Ms Huntsman for the performance of the tasks described at [22], [25], [28] above, are, in the words of Hall J in The NSW Bar Association v Davison [2006] NSWSC 65 at [145], ‘plainly not’ that of an investigator. The answer to the first issue is ‘Yes.’”

The second issue: whether IFW was entitled to bring the proceedings having regard to s 178 of the Uniform Law

23. In the Court below, IFW argued that neither IFW nor Ms Huntsman was a “legal practice” for the purposes of ss 178 or 194. IFW submitted further that s 178 did not operate as a bar to the proceedings even if some of the services it provided were found to be legal services. It submitted that Mr Yang was required to prove that all of the services included in the invoices claimed were “legal services” before it could be concluded that the proceedings were barred by s 178.

24. In the Court below, Mr Yang relied on the circumstances that Ms Huntsman was registered as a legal practitioner and held a practising certificate as a “Corporate Legal Practitioner (Supervised)” in support of his contention that she was a “legal practice”. Mr Yang submitted that, although the evidence did not establish that Mr Taylor was supervising Ms Huntsman, the inference was available since his charge-out rate ($650 per hour and $4,500 per day) was significantly higher than hers ($350 per hour and $2,450 per day). Mr Yang submitted that if any part of IFW’s claim comprised legal costs, IFW was prohibited by s 178 of the Uniform Law from commencing proceedings to recover the amounts invoiced.

25. The Court below found that Ms Huntsman was a “law practice” within the meaning of the definition in s 6 of the Uniform Law. His Honour rejected IFW’s submission that legal costs must be “identified and quarantined” by him. His Honour’s conclusions appear from [58] of the reasons:

“I accept the submission of Counsel for the defendant that the plaintiff is effectively seeking a judgment from the court in respect of amounts which comprise legal costs and disbursements and it usurps the function and jurisdiction of the cost assessor. I accept the interpretation advanced of s 178 by counsel for the defendant. I find that contrary to the plaintiff’s submission it is not for the court to identify and quarantine the costs for the legal services in this case. As Counsel for the defendant points out a person providing legal services is obliged to provide a bill of costs in order for the client to properly understand the items of work which make up the bill and to allow a costs assessor to determine what items are properly recoverable and in what amounts. In this case there is no bill of costs and it is not for the defendant to embark upon the itemisation process or the court. Section 178 would apply to prohibit the commencement of proceedings for the whole of the claim. Strictly I leave to one side s 194 for the purposes of determining the second issue. The second issue as framed is answered ‘Yes’.”

The alternative basis for the answer to the second issue

26. His Honour raised a further issue in the following passage from the reasons:

“[59] Even if I am incorrect about the operation of s 178 there is very compelling reason why the plaintiff has not established its claim. In Orrong Strategies Pty Ltd v Village Roadshow Ltd [2007] VSC 1, a case I referred to the parties, the court made reference to the argument of Village Road Show, that:

‘...based on authorities such as Watts v Rake (1960) 108 CLR 158 and Purkess v Crittenden (1965) 114 CLR 164 that if Village Road Show established that there was some material showing charges were made for legal work the evidentiary onus shifted to Orrong to show how much of the amount charged was for non-legal work.’

[60]   The plaintiff has failed to meet its evidentiary onus on the balance of probabilities to establish its contractual claim for services other than legal services. The court made a specific request on 27 September 2018 for the plaintiff to file submissions addressing the issue of apportionment in the event the court found any of the monies claimed was for legal services. In the submissions filed the plaintiff has not identified a distinct portion of its claim which relates to services other than legal services. It has not discharged the onus referred to in the passage in Orrong. This includes any of the tasks performed by Mr Gamble. The invoice relied upon by the plaintiff is insufficient and inadequate to determine a distinct and identifiable portion which relates only to services other than legal services. The plaintiff has simply left it to the court to calculate what portions of its services were, or were not, legal services. Fundamentally the plaintiff has not met its evidentiary onus in proving its claim on the balance of probabilities.

[61] Given the answers to the first and second issue[s] and the evidentiary problem referred to above it is not necessary to answer the remaining issues for the purpose of determining the dispute before the court. This includes determining whether an offence has been committed under s 10 of the Uniform Law.

[62]   The plaintiffs claim has not been established and judgment is entered for the defendant.”

The grounds of appeal

27. IFW relies on the following grounds of appeal:

“1 The learned Magistrate erred in construing the Legal Profession Uniform Law (NSW) 2014 in deciding that the Plaintiff and/or Ms Huntsman were legal practices for the purposes of section 6 of the Legal Profession Uniform Law (NSW) 2014.

2 The learned Magistrate erred in construing the Legal Profession Uniform Law (NSW) 2014 in deciding that the Plaintiff’s costs were legal costs for the purposes of section 6 of the Legal Profession Uniform Law (NSW) 2014.

3 The learned Magistrate erred in construing the Legal Profession Uniform Law (NSW) 2014 in deciding that the Plaintiff’s services were legal services for the purposes of section 6 of the Legal Profession Uniform Law (NSW) 2014.

4 The learned Magistrate erred in finding on the evidence that the Plaintiff and/or Ms Huntsman were legal practices for the purposes of the Legal Profession Uniform Law (NSW) 2014 (Uniform Law), particularly the reliance on facts found in [22], [25] and [28] and failed to give proper weight to other evidence that the Plaintiff was an investigation service.

5 The learned Magistrate erred in finding on the evidence that the costs were legal costs for the purposes of the Legal Profession Uniform Law (NSW) 2014 (Uniform Law), particularly the reliance on facts found in [22], [25] and [28] and failed to give proper weight to other evidence that the costs were for investigation services.

6 The learned Magistrate erred in failing to draw the proper inference of fact in finding on the evidence that the Plaintiff’s services were legal services for the purposes of the Legal Profession Uniform Law (NSW) 2014 (Uniform Law), particularly the reliance on facts found in [22], [25] and [28] and failed to give proper weight to other evidence that the Plaintiff provided an investigation service.

7 The learned Magistrate erred in failing to draw the proper inference of fact in finding on the evidence that the Plaintiff and/or Ms Huntsman were legal practices for the purposes of the Legal Profession Uniform Law (NSW) 2014 (Uniform Law).

8 The learned Magistrate erred in failing to draw the proper inference of fact in finding on the evidence that the costs were legal costs for the purposes of the Legal Profession Uniform Law (NSW) 2014 (Uniform Law).

9 The learned Magistrate erred in finding on the evidence that the Plaintiff’s services were legal services for the purposes of the Legal Profession Uniform Law (NSW) 2014 (Uniform Law).

10   The learned Magistrate erred in finding that the Plaintiff did not file evidence to show it was not a legal practice, thereby reversing the onus of proof and failing to apply the relevant standard of proof to the finding of fact.

11   The learned Magistrate erred at [43] and [52] in drawing a wrong inference that Ms Huntsman was involved in preparation of legal proceedings, thereby leading to an error in the finding of fact.

12   The learned Magistrate erred in failing to give adequate reasons for the decision that the Plaintiff failed in its claim (at [60] of the Decision).

13   [Not pressed.]

14 The learned Magistrate erred in finding that the whole of the Plaintiff’s claim was barred, and in doing so misinterpreted section 178 of the Uniform Law.

15   The learned Magistrate erred in applying the wrong legal principle (at [59] of the Decision), namely that Orrong Strategies Pty Ltd v Village Road Show Ltd [2007] VSC 1 had any application to the matter before him.

16   The learned Magistrate erred by failing to give proper weight to the evidence that the Defendant was a solicitor and was, or should have been, aware of the Uniform Law requirements.

17   [Not pressed.]

18   The First Appellant respectfully seeks an order that time to file an appeal be extended as the appeal has merit, the First Respondent will suffer no prejudice and to not permit the extension of time will work an injustice on the First Appellant.”

Whether the grounds raise a question of law alone for the purposes of s 39 of the Local Court Act

28. Mr Bedrossian, who appeared on behalf of Mr Yang, contended that grounds 4, 5, 6, 7, 8, 9, 11, 16 raise purely factual questions in respect of which this Court has no jurisdiction. He submitted that grounds 1, 2, 3, 10 and 14 raise questions of mixed fact and law in respect of which an appeal lies only by leave: s 40 of the Local Court Act. He submitted that, although ground 15 would appear to raise a question of law, in substance it raises either a question of fact or a question of mixed fact and law because it seeks to challenge his Honour’s conclusion that IFW failed to satisfy the evidentiary onus regarding the fees that related to the provision of non-legal services.

29. Mr Duc, who appeared on behalf of IFW, confirmed at the outset that IFW did not seek leave to appeal on any ground but relied solely on its rights pursuant to s 39 of the Local Court Act. He maintained this position throughout the hearing. He argued that the grounds raised a question of law because they challenged inferences from primary facts, rather than the primary facts themselves, which he contended were largely uncontroversial. In support of this submission Mr Duc relied on the following extract from the judgment of Mason CJ in Australian Broadcasting Corporation Tribunal v Bond (1990) 170 CLR 321 at 355; [1990] HCA 33:

“The question whether there is any evidence of a particular fact is a question of law: McPhee v. S. Bennett Ltd.; Australian Gas Light Co. v. Valuer-General. Likewise, the question whether a particular inference can be drawn from facts found or agreed is a question of law: Australian Gas Light; Hope v. Bathurst City Council.”

[Footnotes and citations omitted.]

30. Mr Duc submitted, on the basis of this extract, that the inference drawn by the magistrate that, for example, Ms Huntsman was a “legal practice” raised a question of law because it was an inference drawn from facts found or agreed: namely, that she had a practising certificate and described herself in correspondence as an “in-house lawyer”.

31. I reject this submission which I regard as based on a misapprehension of Mason CJ’s judgment in Australian Broadcasting Corporation Tribunal v Bond. In order to understand the true import of his Honour’s judgment, it is necessary to read what Mason CJ said in the passage following the extract relied on by Mr Duc, which was:

“This is because, before the inference is drawn, there is the preliminary question whether the evidence reasonably admits of different conclusions: Federal Commissioner of Taxation v. Broken Hill South Ltd. So, in the context of judicial review, it has been accepted that the making of findings and the drawing of inferences in the absence of evidence is an error of law: Sinclair v. Maryborough Mining Warden.

But it is said that ‘[t]here is no error of law simply in making a wrong finding of fact’: Waterford v. The Commonwealth, per Brennan J. Similarly, Menzies J. observed in Reg. v. District Court; Ex parte White:

‘Even if the reasoning whereby the Court reached its conclusion of fact were demonstrably unsound, this would not amount to an error of law on the face of the record. To establish some faulty (e.g. illogical) inference of fact would not disclose an error of law.’

Thus, at common law, according to the Australian authorities, want of logic is not synonymous with error of law. So long as there is some basis for an inference — in other words, the particular inference is reasonably open — even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place.”

[Emphasis added.]

32. In oral argument, Mr Duc confirmed that where a factual finding was challenged in a ground of appeal, it should be understood as an allegation that it was not open to the magistrate to make the finding. Whether a factual finding is open to a decision-maker is a question of law: Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 156 (Glass JA, Samuels JA agreeing). It therefore falls within this Court’s jurisdiction under s 39 of the Local Court Act. However, the jurisdiction under s 39 does not permit me to embark on any review of the decision-making process of the Local Court beyond that necessary to answer the appropriately identified questions of law: Rose v Tunstall [2018] NSWCA 241 at [29]-[32] (Payne JA, Basten JA and Simpson AJA agreeing).

33. Subject to the qualifications expressed below, I accept Mr Bedrossian’s submissions as to the classification of the grounds. However, in light of Mr Duc’s concession as to the gloss that can be applied to the grounds to ask whether a particular finding was open to the Court below, I propose to address the grounds on that basis.

34. Ground 18, although expressed as a ground, is an application for an extension of time. Mr Bedrossian indicated that no objection was taken to time being extended. In light of Mr Yang’s attitude, I propose to extend time for the originating process to be filed.

Grounds 1-9 and 11: findings as to law practice, legal services and legal costs

35. Mr Duc accepted that grounds 1-9 and 11 essentially raised the same issue and could conveniently be dealt with together. In effect, these grounds, with the gloss referred to above, raise the question whether it was open to the Court below to find that IFW and/or Ms Huntsman, as a “law practice”, provided legal services for which legal costs were charged to Mr Yang by IFW and which formed part of the amount claimed in the proceedings in the Court below.

36. It was common ground that there had been no compliance with ss 174 or 175 of the Uniform Law either by IFW or Ms Huntsman. It was also common ground that the work Ms Huntsman performed as an in-house lawyer at IFW was included in the invoices sent to Mr Yang which were the subject of the proceedings.

37. Mr Duc accepted in oral argument that Ms Huntsman was “using her legal experience and skills” when she performed work for IFW in performance of its contract with Mr Yang but contended that the work ought properly be classified as investigative work and was not legal work. He argued that although Ms Huntsman was drafting Mr Gamble’s affidavit, she was not in a position to file the version she had drafted as it would be submitted to Mr Yang and the counsel he retained before it was filed. Mr Duc stressed that it was Mr Yang and not Ms Huntsman who controlled the form in which the affidavit would be filed. He submitted that the work Ms Huntsman performed ought take its character from the person for whom she performed it, being Mr Gamble, the lead investigator, and that it ought not be inferred that she was providing legal services when Mr Yang himself was a lawyer and counsel had been retained. Although Mr Duc accepted that Ms Huntsman was described in IFW’s proposal to Mr Yang, in the invoices, and in correspondence as an “in-house lawyer”, he submitted that her title was not necessarily indicative of her role.

38. The evident intention of the provisions of the Uniform Law referred to above is that lawyers be permitted to work in whatever business structure is suitable but that their role and the substance of the work determine their obligations and privileges rather than the structure: Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333; [2001] NSWSC 60 at [17]-[21] (Davies AJ). Further, the question whether proceedings are “proceedings for the recovery of any or all of the legal costs” is also to be determined as a matter of substance: Burbridge v Wolf [2008] NSWSC 60 at [36]-[40] (Nicholas J).

39. The question whether Ms Huntsman is a “law practice” who is providing legal services to Mr Yang or to his ultimate clients, is to be determined by reference to the work she has done. It is not to be determined by reference to the identity or qualifications of her supervisor or employer. Nor is the answer to the question dependent on whether she has contracted directly with Mr Yang or whether her contract of employment or services is with another entity which has a contractual relationship with Mr Yang. Further, s 103 makes it clear that the fact that IFW may also provide investigative services to clients does not mean that it cannot also provide legal services to its clients, including the same clients to which it provides investigative services. A misapprehension as to the effect of s 103 would appear to underpin ground 4.

40. As the reasons of the Court below set out above indicate, his Honour’s finding that Ms Huntsman, as a “legal practice”, was providing legal services which were included in the invoices rendered by IFW to Mr Yang, was based on her qualifications as a legal practitioner and her holding a current practising certificate; the way in which she was described in the proposal, correspondence and invoices; and the descriptions of the work she performed. This work included drafting Mr Gamble’s affidavit and reviewing pleadings. His Honour was entitled to take into account that Ms Huntsman had not given evidence. Thus there was no evidence that undermined her title or the description of the work in the documents. The maxim that “all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted” applied: Blatch v Archer (1774) 1 Cowp 63; (1774) 98 ER 969 at 970. I am satisfied that it was open to the Court below to be satisfied of these matters based on this evidence. This is sufficient to address the first category of grounds, as reworded, based on Mr Duc’s concession and the circumstance that no leave to appeal is sought.

Ground 10: process of reasoning

41. There is considerable force in Mr Bedrossian’s submission that ground 10 raises only a question of fact. To the extent to which there is a legal kernel in the ground it raises the question whether the Court below was entitled to take into account that IFW had not called evidence to qualify or contradict the inferences which were available from IFW’s documents (the proposal, the invoice and Ms Huntsman’s sign off title on correspondence). The maxim from Blatch v Archer extracted above sufficiently answers this ground. A tribunal of fact is entitled to take into account whether the party against whom an inference is open has given evidence to contradict or qualify that inference, particularly where it is peculiarly in the power of that party to do so. Therefore, to the extent to which ground 10 raises a question of law, the ground has not been made out.

Ground 12: alleged failure to give reasons in [60] of the judgment

42. Alleged inadequacy of reasons raises a question of law. Mr Duc submitted that his Honour’s reasons in [60] of the judgment were insufficient to explain why IFW had not discharged the onus of proving what part of its claim related to non-legal services. It is well-established that reasons must be read fairly as a whole: Small v K & R Fabrications (W’gong) Pty Ltd [2016] NSWCA 70 at [53]-[54] and [73] (Basten JA, McColl and Simpson JJA agreeing). It is plain from the terms of [60] and the judgment as a whole that his Honour had made all relevant findings in the paragraphs up to and including [58]. His Honour had found that IFW and/or Ms Huntsman, as “legal practice[s]”, had provided legal services and that the invoices rendered by IFW to Mr Yang included legal costs. His Honour found that the commencement of the proceedings was barred by s 178 of the Uniform Law because the costs had not been assessed.

43. In [59]-[60], his Honour explained why he did not make an alternative finding as to what portion of the amount claimed related to non-legal services. As I read the reasons of the Court below, his Honour was endeavouring to comply with the obligation placed on judicial officers at first instance to make all relevant findings of fact to avoid further litigation if an appellate court corrects an aspect of the decision below. This obligation most often arises where the primary judge has decided against the plaintiff on liability but is expected to quantify damages: Wolfenden v International Theme Park Pty Ltd (trading as Wonderland) [2008] NSWCA 78 at [3]-[4] (Giles JA) and [53] (Hodgson JA). Since this part of his Honour’s decision was obiter, it does not give rise to a ground of appeal.

44. Mr Duc accepted that IFW had not at any time up until judgment was delivered by the Court below departed from its primary position that all of the amounts claimed were for “investigative services” and none was for “legal services” and conceded that IFW had not sought to disentangle any portion of the amounts claimed on that basis. Although some of the services listed in the invoices were legal services, some might have been investigative or legal depending on the precise ambit of the task. This task could not have been performed without more evidence. The onus rested on IFW. It was open to his Honour to find that IFW had not established what part of the total amount claimed was not referable to legal costs.

Ground 14: finding that the whole of the claim was barred

45. Ground 14 repeats some of the aspects of grounds 1-9 and 11. While I accept Mr Bedrossian’s submission that the question involved is a question of mixed fact and law in respect of which leave is required and has not been sought, there is a discernible question of law within ground 14. This legal question is whether IFW could recover amounts claimed in the invoices which were not legal costs if any of the amounts claimed in the invoices were legal costs. As his Honour found, IFW did not undertake this task at all. There are strong policy reasons why it would be inappropriate for a court in recovery proceedings to be required to undertake this task: see Lewis v Doran [2008] NSWSC 186 at [44]-[78] (Hammerschlag J). In the present case, this question was moot since IFW, being the party which bore the onus of proof, did not attempt to differentiate which items on the invoices were for legal services and which were not.

Ground 15: alleged incorrect legal principle

46. Mr Duc submitted that, on proper analysis, Orrong Strategies Pty Ltd v Village Roadshow Ltd [2007] VSC 1; (2007) 207 FLR 245 (Orrong) did not establish any relevant principle since the passage extracted in his Honour’s reasons was merely a reference to a party’s argument in that case. It is apparent from the passage from Orrong which was extracted in the reasons of the Court below that his Honour was referring to an argument put in that case, rather than to what was decided. However, the “principle” to which his Honour referred was, in essence, equivalent to the maxim in Blatch v Archer quoted above, which is a principle of general application which is often cited in different contexts. For example, the plurality (Kiefel CJ, Keane, Nettle and Edelman JJ) said in M47/2018 v Minister for Home Affairs [2019] HCA 17; (2019) 93 ALJR 732 at [40] in the context of an unlawful non-citizen:

“This consideration is compelling in this case: it is the plaintiff, not the defendants, who could reasonably be expected to provide information on the facts relating to the identity of his parents and their place of birth and residence. Insofar as the special case is deficient by reason of the absence of this information, that deficit does not provide a basis for drawing any one of the inferences urged by the plaintiff. In that regard, the present case brings to mind the considerations of common sense underlying the maxim stated by Lord Mansfield in Blatch v Archer that ‘all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted’.”

[Footnotes omitted.]

47. The relevance of the principle to the present case is plain. IFW knew what services had been provided in greater detail than appeared from the invoices it rendered to Mr Yang. It provided no further detail than appeared in them and relied on the bland assertions in Mr Gamble’s affidavit that the services were “investigative services”. His Honour applied the well-established principle in deciding that the disentanglement between amounts charged for legal services and those charged for non-legal services was part of IFW’s onus of proving the amounts to which it was entitled. I discern no error of law in his Honour’s approach. This ground has not been made out.

Ground 16: the effect of Mr Yang’s status as a legal practitioner

48. Although ground 16, as formulated, raises a purely factual question, Mr Duc raised the legal question whether Mr Yang’s status as a legal practitioner was relevant to the issues to be determined. He submitted that Mr Yang was in a position to know of the provisions of the Uniform Law and to require that IFW make disclosure to him, if he sought it. Although Mr Duc maintained the submission, he was unable to point to anything in the Uniform Law which would authorise differential obligations being imposed depending whether the “client” was legally qualified.

49. The only relevant distinction drawn by the Uniform Law between legal services provided to a client and those provided to another law practice appears in ss 174 and 175. A law practice is required, by s 174, to make certain disclosures to a client. Under s 175 a law practice (the second law practice) retained by another law practice (the first law practice) is required to make disclosures to the first law practice (so that it can make disclosure to the client under s 174) but not to the client directly.

50. In the present case, Mr Yang was, as Mr Duc accepted, relevantly, a “client”, since the agreement with IFW was with him and not with the ultimate clients (being the Korean clients). In light of his Honour’s findings, Mr Yang was, as the “client”, entitled to disclosure from IFW under s 174. However, as Mr Yang was also, relevantly, “a law practice” and had, on his Honour’s findings, retained “another law practice” (IFW), IFW was obliged to make disclosure to Mr Yang under s 175. For present purposes, it did not matter whether s 174 or s 175 applied since each section imposed disclosure obligations on IFW with which it has not complied.

51. Legislation governing the conduct of legal practitioners has long since made provision for disclosure of the basis of fees charged by lawyers to clients. There is no justification either in the terms or the policy of the Uniform Law and its statutory predecessors or in the authorities for legal practitioners themselves to be disentitled to the level of protection afforded to others to whom legal services are provided. The exemption postulated by Mr Duc is inconsistent with the purpose of the provisions. In Zizza v Seymour [1976] 2 NSWLR 135, the Court of Appeal considered s 21 of the Legal Practitioners Act 1898 (NSW) which provided that “no solicitor … shall commence or maintain any action or suit for the recovery of any fees, charges or disbursements for any business done by such solicitor until the expiration of one month after a bill of such fees, charges or disbursements” has been delivered to the party to be charged. Moffitt P said at 139:

“The defence under s. 21 does not depend upon the client claiming the solicitor's charges are excessive. The requirements of the section are designed to provide the client with the material and the time to enable him to form an opinion, with or without advice, whether the bill is excessive before he is faced with legal proceedings.”

52. I discern no legal error in his Honour’s approach. Ground 16 has not been made out.

Conclusion and costs

53. None of the grounds which fall within this Court’s jurisdiction under s 39 of the Local Court Act has been made out. The parties agreed that if Mr Yang was successful, IFW ought be ordered to pay his costs of the proceedings in accordance with the general rule that costs follow the event: Uniform Civil Procedure Rules 2005 (NSW), r 42.1.

Orders

54. For the reasons given above, I make the following orders:

1. Extend the time within which the plaintiff was entitled to commence these proceedings to 31 January 2019.

2. Dismiss the appeal.

3. Order the plaintiff to pay the defendant’s costs of the proceedings.

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Decision last updated: 29 July 2019