Jackson v Ben Aulich and Associates Pty Ltd
[2018] ACTSC 93
•15 March 2018
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Jackson v Ben Aulich & Associates Pty Ltd |
Citation: | [2018] ACTSC 93 |
Hearing Dates: | 27 February, 15 March 2018 |
DecisionDate: | 15 March 2018 |
Before: | Mossop J |
Decision: | See [31] |
Catchwords: | CIVIL LAW - PRACTICE AND PROCEDURE – Appeal – appeal against decision of Registrar – costs dispute – application for costs assessment – no delegation of functions by Law Society Council – no notification of entitlement to apply for costs assessment – costs not assessable – appeal allowed |
Legislation Cited: | Legal Profession Act 2006 (ACT), ss 277, 277(1), 277(2), 291, 294A, 296, 304, 304(1), 304(2), 304(2)(a), 304(2)(a)(i), 304(2)(a)(ii), 304(2)(b), 399, 400, 409, 577(1), 577(2) Legislation Act 2001 (ACT), ss 232, 233(1)(b), 242, 242(1) |
Cases Cited: | Ben Aulich & Associates Pty Ltd v Jackson [2017] ACTMC 21 Nicholl & Co Pty Ltd v Turner [2015] ACTSC 42; 10 ACTLR 291 |
Text Cited: | Macquarie Dictionary (Macquarie Dictionary Publishers, 6th ed, 2013) |
Parties: | Gary Jackson (Appellant) Ben Aulich & Associates Pty Ltd (Respondent) |
Representation: | Counsel J Moffett (Appellant) W Sharwood (Respondent) |
| Solicitors Marjason & Marjason (Appellant) Ben Aulich & Associates (Respondent) | |
File Number: | SC 222 of 2017 |
Decision under appeal: | Court/Tribunal: Supreme Court of the ACT Before: Registrar Glover Date of Decision: 29 November 2017 Case Title: Ben Aulich and Associates v Jackson Court File Number: SC 222 of 2017 |
MOSSOP J:
Application
By a further Amended Notice of Appeal filed 15 March 2018, the appellant has appealed against a decision of the Registrar on 29 November 2017. The substantive proceedings are an application for assessment of costs made by the respondent pursuant to s 296 of the Legal Profession Act 2006 (ACT) (LP Act). The Registrar’s decision was a decision on an Application in Proceeding, filed 27 July 2017, seeking that the Originating Application be dismissed or alternatively permanently stayed. The Registrar dismissed that application with costs. The appeal from that decision is by way of a hearing de novo.
Background
The somewhat tortured history of the costs dispute leading to the filing by the respondent of the application for costs assessment is as follows.
In 2014, Mr Jackson (the appellant) engaged Ben Aulich & Associates (the respondent) to represent him in a criminal matter listed before the New South Wales District Court. He was sent a bill in July 2015 and paid it in part.
On 11 March 2016, the appellant lodged a complaint with the ACT Law Society against the respondent alleging non-disclosure of costs and excessive charging in relation to the matter. The respondent wrote to the Law Society responding to the appellant’s complaint on 1 June 2016.
On 16 January 2017, Mr Robert Reis, the “Professional Standards Manager” at the Law Society, wrote to the appellant in relation to the complaint. The letter said that the Complaints Committee of the Law Society considered the complaint at its meeting on 4 August 2016 and “the Committee agreed that your complaint against Mr Ben Aulich should be dismissed pursuant to section 399 of the Legal Profession Act 2006 … on the basis that your complaint lacked substance.”
In April 2016, while the appellant’s complaint was with the ACT Law Society, the respondent commenced proceedings in the ACT Magistrates Court for breach of contract and debt. The total amount claimed was $14,589 plus interest and costs. A default judgment was entered against the appellant on 23 September 2016. The appellant filed an Application in Proceeding seeking to set aside the default judgment on 9 February 2017, and subsequently amended the application on 6 March 2017 to seek summary judgment or alternatively a permanent stay of the proceedings. On 29 March 2017, the judgment was set aside by consent of the parties and costs reserved. On 23 November 2017, a magistrate ordered a stay of proceedings until a costs assessment under the LP Act had occurred: see Ben Aulich & Associates Pty Ltd v Jackson [2017] ACTMC 21.
The respondent had, in fact, filed an Originating Application for a costs assessment with the Supreme Court on 27 June 2017. In response, on 27 July 2017 the appellant filed an Application in Proceeding seeking the dismissal or a permanent stay of the costs assessment proceedings. The application was heard by the Registrar on 7 August 2017 and 29 November 2017, and on the latter date the Registrar dismissed the appellant’s Application in Proceeding with costs.
On 14 August 2017, the appellant filed an appeal against a ruling alleged to have been made by the Registrar on 7 August 2017 that s 304(2) of the LP Act applied. By leave of the Court, an Amended Notice of Appeal was filed on 6 March 2018, an appeal of the ultimate decision of the Registrar noted above. A further Amended Notice of Appeal was filed by leave without opposition on 15 March 2018.
Statutory provisions
During oral submissions, the respondent conceded there was not full compliance with its obligation to provide information notifying a client of his rights as required by s 291 of the LP Act. The effect of such a failure is determined by s 277 of the Act, most relevantly sub-ss (1) and (2), which provide that fees need not be paid and proceedings may not be commenced to recover those fees unless they have been assessed.
Where there is a consumer dispute over legal costs, as the respondent conceded there was here, s 304(1) of the LP Act precludes the making of an application for a costs assessment under div 3.2.7 of the LP Act unless the conditions in s 304(2) are met. Section 304 provides:
304 Legal costs subject to consumer dispute not assessable
(1)Despite anything to the contrary in this part, legal costs that are or have been the subject of a consumer dispute under chapter 4 (Complaints and discipline) must not be the subject of a costs assessment under this division.
(2)Subsection (1) does not apply—
(a) to the extent that the relevant council for the legal practitioner—
(i)is unable to resolve the costs dispute and has notified the parties of their entitlement to apply for a costs assessment; or
(ii)refers a matter to the Supreme Court for a costs assessment under section 409 (Referral of matters for costs assessment—complaint investigation); or
(b) if the costs dispute is withdrawn in accordance with section 400.
The appellant submitted that s 304(2) as it currently appears in the LP Act did not apply because the condition in s 304(2)(a)(i) was not satisfied.
Is the notice sufficient?
The relevant paragraph of s 304(2) is para (2)(a)(i). That is because there has been no referral under s 409 of the LP Act: see s 304(2)(a)(ii), and the costs of dispute has not been withdrawn under s 400: see s 304(2)(b).
The respondent relied upon the letter sent by Mr Reis dated 16 January 2017 as constituting the notice required by s 304(2)(a)(i). The appellant submitted:
(a) First that Mr Reis was not “the relevant council” for the purposes of s 304(2)(a) and had not been delegated the powers of the relevant council so as to make his letter a letter of the relevant council giving the relevant notification.
(b) Second, that the reference to costs assessment in the letter was not enough to show that the letter “notified the parties of their entitlement to apply for a costs assessment” within the meaning of s 304(2)(a)(i).
Delegation
Section 577(1) of the LP Act identifies the functions of the Law Society Council. The Law Society Council is “the relevant council” for the purposes of these proceedings. Section 577(2) provides that the Council may delegate the Council’s functions under the Act to:
(a) a committee of the council; or
(b) to a member of the staff of the law society.
On the first day of the hearing of this appeal, the respondent led evidence in hearsay form as to the existence of delegations to the Complaints Committee of the Law Society. The respondent sought and was granted an adjournment of the proceedings so that it could further investigate the extent of delegation of powers of the Law Society Council to the Complaints Committee or to its Professional Standards Manager, Mr Reis.
At the adjourned hearing the position was as follows:
(a) The respondent submitted:
After significant efforts by representatives of the Law Society, no signed delegations of power to the Complaints Committee or Mr Reis have been found, except for the delegations listed in the Complaints Committee Charter and a list of delegations current as at 20 August 2012.
The tender of “a list of current delegations current as at 20 August 2012” was ultimately withdrawn.
(b) There was no evidence of an express notification to the parties under s 304(2)(a)(i) by the Council itself.
(c) The functions of the Complaints Committee of the Law Society are described in a document entitled “Complaints Committee Charter”. That document is said to commence on 1 March 2013. It refers to the adoption of a proposed disciplinary model that had been outlined in a report to the Law Society Council. The Charter referred to the delegation of additional powers to the Complaints Committee. The Charter referred to the powers of the Complaints Committee as including the power to dismiss a complaint under s 399 as if such a delegation had been made previously, but did not disclose the date or terms of the delegation. It also referred to delegations of power to the “Executive Director” and “Professional Standards Director” under s 399 of the LP Act.
(d) There was a letter from the Chief Executive Officer of the Law Society asserting that the Council had delegated power to the Complaints Committee to dismiss a complaint under s 399, but as the basis for that assertion has not disclosed in the document and the other evidence about the state of delegations by the Council demonstrates a less than meticulous approach to recording and documenting such delegations, no weight can be placed on that assertion for the purposes of proving that fact.
(e) There was no evidence of any delegation by the Council to the Committee or Mr Reis of the power to notify parties under s 304(2)(a)(i).
(f) There was evidence that Mr Reis, the Professional Standards Manager of the Law Society, is responsible for managing complaints and discipline under ch 4 of the LP Act and his duties included an obligation to report decisions of the Complaints Committee. There is no evidence as to the relationship between the position of “Professional Standards Manager” and the position referred to in the Complaints Committee Charter, namely the “Professional Standards Director”.
(g) Mr Reis is not a member of the Complaints Committee, however he attends meetings of the Committee, his role is to manage the business of the Committee.
In considering the arguments advanced by the respondent, it is important to note that the letter of 16 January 2017 makes it clear that the Complaints Committee was the decision maker and that it, not Mr Reis, purported to exercise power under s 399 of the LP Act to dismiss the complaint on the basis that it lacked substance. The terms of the letter are consistent with Mr Reis acting as an amanuensis to record and communicate the reasons for the Committee and are inconsistent with Mr Reis himself having exercised power under s 399 of the Act.
Additionally, I consider that it was open for a collective body such as the Complaints Committee to act through an amanuensis such as Mr Reis to record its decision and communicate them on the Committee’s behalf if he was authorised by the Committee in accordance with its own administrative arrangements to do so, notwithstanding that there was no formal delegation of powers to him by the Committee. This appears to me to be an application of or analogous to the Carltona principle discussed in Lewis v Chief Executive, Department of Justice and Community Safety [2013] ACTSC 198; 280 FLR 118 at [114]-[117].
The respondent advanced a number of arguments:
(a) It recognised that s 232 of the Legislation Act 2001 (ACT) provided that a delegation “must be made, or evidenced, by writing signed by the appointer”. However, it relied upon s 242(1) of the Legislation Act which provides that “a delegation, or anything done under a delegation, is not invalid only because of a defect or irregularity in or in relation to the delegation”. It submitted that s 242 could overcome “the administrative error of resolutions of the Council on 20 August 2012 not being in writing”. The difficulty with this submission is that, insofar as it is based upon the evidence that a delegation was made by the Council on 20 August 2012, any such delegation did not include a delegation to the Committee of power under s 399. Insofar as the Complaints Committee Charter suggests that there was an earlier delegation to the Complaints Committee of power under s 399, there is no evidence to indicate when it was made, how it was made or the terms of any delegation. On the evidence before me, I cannot be satisfied on the balance of probabilities that a delegation had been made by the Council to the Complaints Committee of power under s 399 that remained in force in August 2016 or January 2017. There was no evidence of any delegation to either the Professional Standards Manager or the Committee of power under s 304 of the LP Act. Because it has not been established on the balance of probabilities that such delegations existed, it is not necessary to attempt to determine the full scope of s 242 of the Legislation Act which was discussed in Lewis v Chief Executive, Department of Justice and Community Safety at [109]–[113].
(b) Next, the respondent submitted that the delegation of power under s 409 to the Committee and under s 399 to the “Professional Standards Director” carried with them the power to notify parties under s 304(2)(a) as a necessary incident of the exercise of the expressly delegated powers”. So far as s 399 is concerned, insofar as there is any delegation to a person or entity other than the Council, it is a delegation to the “Professional Standards Director”. That is a delegation “nominating the occupant of a position”: Legislation Act, s 233(1)(b). Mr Reis’s evidence was that he has held the position of “Professional Standards Manager” since October 2006.
(i) The relationship between the position of “Professional Standards Manager” and “Professional Standards Director” is not explained by the evidence.
(ii) The fact that there was a delegation of power under s 399 to the “Professional Standards Director” would not, even assuming it applied to a person holding the position of Professional Standards Manager, assist the respondent in the present case. That is because in the absence of a delegation of power under s 399 to the Committee, even if notification was a necessary incident of the exercise of the expressly delegated power, it would only be so in relation to the exercise of that power by the delegate, Mr Reis, and would not be applicable in circumstances where the power was purportedly exercised by the Complaints Committee. In the present case, it is clear that it was the Complaints Committee that was purporting to exercise the power under s 399 and that Mr Reis was simply acting as an amanuensis to record the reasons of the Committee and communicate those to the appellant. Even if Mr Reis had power to give a notification under s 304 in relation to a decision that he made as delegate under s 399, he would not have the power implied from his delegation under s 399 to give the s 304 notification where he did not himself make the decision under that section.
(iii) So far as any power is necessarily inherent in s 409 to give notification of a decision to refer a matter of costs assessment, that is not relevant in the present case because no such power was exercised by the Committee.
The position is therefore that the respondent has not established, as an element of the exception provided for by s 304(2)(a)(i), that the action of Mr Reis in sending the letter was, in law, the action of the “relevant council”.
Notice of entitlement to assessment
The respondent relied upon the terms of the letter from Mr Reis dated 16 January 2017 as providing the relevant notification for the purposes of s 304(2)(a)(i). In particular it relied upon numbered para 21 in that letter. It is necessary to understand the terms of that paragraph in the context of the letter as a whole.
The letter was dated 16 January 2017 and notified the appellant that his complaint was considered by the Complaints Committee at its meeting on 4 August 2016, at which time the Committee agreed that the complaint should be dismissed pursuant to s 399 of the LP Act because it lacked substance. The letter opened by identifying that decision and explaining the function of the Committee. Under the heading “Background” the letter outlined the basic parameters of the fee dispute. The balance of the letter appeared under the heading “The Complaints Committee”. It is the material under this heading that constitutes the substance of the reasons of the Committee. The Committee addressed the allegation that there was no costs agreement in place because such an agreement had not been signed. It provided reasons for the conclusion that by continuing to instruct the respondent the appellant had accepted the costs agreement. Paragraph 21 of the letter then continued:
21. However, even if this is not the case, in circumstances where there is no cost agreement and costs have been paid, a party is entitled to apply for assessment of costs in the Supreme Court. In your case the Committee’s view is that an assessment of the costs in this matter is reasonably likely to conclude that the charges were appropriate and reasonable.
The letter then went on to consider various other matters, including the particular circumstances surrounding the ultimate plea of guilty and sentencing proceedings. In the final numbered paragraph it provided:
30. The Committee was of the view that given the above analysis the charges were within the range of what could be regarded on an assessment as appropriate and within the range of reasonable charges.
The issue is whether or not the reference in para 21 to “a party is entitled to apply for assessment of costs in the Supreme Court” is sufficient to constitute, for the purposes of s 304(2)(a)(i), notification of the appellant of his entitlement to apply for a costs assessment. In my view it is not. That is for two reasons.
(a) First, the reference to costs assessment occurs simply as part of the explanation of the reasoning process of the Committee. It simply occurs along the way as an explanation for the Committee’s conclusion that having regard to the work done the complaint lacked substance. It was therefore not a “notification of” a statutory entitlement of the appellant which presently existed. Relevantly notification is defined in the dictionary as “a formal notifying, or informing”: see Macquarie Dictionary (Macqaurie Dictionary Publishers, 6th ed, 2013) 1006. What is required to notify someone of something under a statute will vary depending upon the terms and purpose of the statute in question. In the statutory context of the LP Act, the requirement to notify a party of its entitlement to apply for a costs assessment involves more than simply mentioning that possibility in a non-specific way in the course of explaining the reasons of the Committee. The reference to the entitlement must be one which draws to the attention of the recipient in some formal way the existence of a present entitlement to make such an application, notwithstanding the inability of the Law Society to resolve the costs dispute. The reference in para 21 did not constitute a notification so understood.
(b) Second, the reference to assessment of costs is made in the context of the alternative scenario that there was “no cost agreement and costs have been made”. The Committee made it clear that it considered that there was a costs agreement by reason of the provision of continuing instructions after receipt of a proposed costs agreement. Thus, even if it involved a “notification”, it was notification of an entitlement that existed only in limited circumstances and did not provide notification of the full scope of the appellant’s entitlement to a cost assessment under s 294A of the LP Act.
What relief should be granted?
The appellant has established that the assessment of legal costs is prima facie precluded by s 304(1). The respondent has not established that the exception in s 304(2)(a)(i) applies. Therefore, the prohibition in s 304(1) is in operation.
This outcome is, in one sense, unsatisfactory. That is because costs assessment by the Supreme Court is a mechanism by which the quantum of fees charged by a legal practitioner that can be recovered by that practitioner may be determined. It involves a binding determination through a judicial process where contractual or other dispute resolution mechanisms are unavailable. It provides the means by which fees, the recovery of which is precluded by s 277 of the LP Act, may become, in whole or in part, recoverable. It is thus desirable that, consistent with the terms of the Act, parties have access to that process. The legislature has put very specific limitations on access to that process where a “consumer dispute” exists. In the present case the appellant has relied upon a failure to properly notify him of a right to have the costs the subject of the dispute assessed by the Court in circumstances where he is endeavouring to avoid any such assessment taking place because it provides the means by which costs would be recoverable from him. The respondent is in a position where it is unable to achieve an assessment of costs that it has charged because of a failure on the part of the Law Society to delegate its powers to deal with the complaint so that the delegations correspond with its administrative arrangements and the failure, when dismissing or purporting to dismiss the appellant’s complaint, to satisfy the requirements of s 304(2)(a)(i) and hence enliven the relevant exemption from s 304(1). Thus the inability to proceed with an assessment results not from a failure on the part of the respondent, but from administrative failures of a third party.
Given my conclusions in relation to the exception in s 304(2)(a)(i) and the operation of s 304(1), I do not consider that it is open as a matter of discretion to simply ignore the statutory prohibition and allow the costs assessment to continue. I considered that it might be appropriate to grant only a temporary stay of the proceedings if the only defect was a failure to give the required notice because of a failure to delegate to either the Complaints Committee or Mr Reis the statutory power to give that notice. Had that been the case then it was highly likely that the steps necessary to enliven the exception in s 304(2)(a)(i) could be carried out within a very short period and hence the prohibition in s 304(1) overcome. However, at least so far as the evidence presently before me discloses, on the balance of probabilities there was no delegation in place that would have permitted the Complaints Committee to dismiss a complaint under s 399.
Because the defects in the process are not obviously simply remedied, I consider that the appellant is entitled to relief which finally disposes of the present application. In Nicholl & Co Pty Ltd v Turner [2015] ACTSC 42; 10 ACTLR 291 at [26], I gave some consideration as to the appropriate form of relief, concluding that a permanent stay was appropriate, although, because of the limited submissions made on the issue, gave liberty to the parties to apply for some different order. The circumstances in that case were somewhat different to the present case because of the different statutory provision at the time and a different sequence of events. In the present case it is likely that the Law Society will rectify the position in relation to delegations and put itself in a position where it can comply with s 304(2)(a)(i) and hence permit the respondent to make an application for costs assessment. However, on the findings set out above, the appellant has been wrongly subjected to an application for costs assessment over a number of months and is entitled to some finality in the present proceedings, even if ultimately an application for assessment of costs may lawfully be made. Therefore the appropriate orders will involve the application for costs assessment being dismissed.
Costs
The appellant has succeeded in his appeal. The general rule in those circumstances will be the costs follow the event. Two factors might tell against such an outcome in the present case. First, that the appellant is seeking to enforce a notice requirement in relation to an entitlement to seek costs assessment while at the same time actively opposing the making of any application for a costs assessment. Second, the difficulties facing the respondent are difficulties which have been caused, not by its conduct, but by the conduct of the Law Society. However, at least from the date of Mr Douglas Dawson’s affidavit of 6 October 2017, the respondent was on notice of the need to prove matters relating to delegation necessary to satisfy the requirements of s 304 and the limitations on the evidence on those issues available from the Law Society. It only took further steps to investigate the issue of delegations after the first day upon which the appeal was heard.
While, in the circumstances, some departure from the prima facie rule is warranted in relation to the period up until 6 October 2017, following the point at which the respondent was on notice with the issue and the difficulties with the evidence, I think the usual rule should apply. The conclusion that costs should be payable in relation to the latter period is reinforced by the fact that at the conclusion of the hearing on 27 February 2018 the respondent was granted a significant indulgence in the form of an adjournment. That occurred in circumstances where it appeared to have made a forensic choice not to pursue the Law Society for more than the unsatisfactory evidence which was provided to it in relation to the existence of delegations to the Complaints Committee and to Mr Reis. While I was persuaded that an adjournment should be granted so that proper evidence in relation to the existence of delegations could be obtained, had the matter been more thoroughly prepared, such material as there was would have been obtained by the respondent prior to the first day of the hearing. If that had been done, then only a single day of the hearing would have been necessary.
Orders
In the circumstances, the orders of the Court, including the orders in relation to costs, are as follows:
(1) The appeal is allowed.
(2) The orders made by the Registrar on 29 November 2017 are set aside.
(3) The application for costs assessment filed 28 June 2017 is dismissed.
(4) In relation to the costs of the Application in Proceeding filed 27 July 2017 and of the appeal from the decision of the Registrar on 29 November 2017, including reserved costs:
(a) there is no order as to costs up to and including 6 October 2017;
(b) after 6 October 2017 the respondent is to pay the appellant’s costs.
| I certify that the preceding thirty-one [31] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop. Associate: Date: 1 May 2018 |
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