Jefferis v Gells Pty Ltd trading as Gells Lawyers

[2018] NSWDC 288

District Court

New South Wales

Medium Neutral Citation:	Jefferis v Gells Pty Ltd trading as Gells Lawyers [2018] NSWDC 288
Hearing dates:	18 June 2018 – 19 June 2018; 22 August 2018 – 23 August 2018; 27 September 2018
Date of orders:	09 October 2018
Decision date:	09 October 2018
Jurisdiction:	Civil
Before:	Dicker SC DCJ
Decision:	The parties are to bring in Short Minutes of Order within 14 days in accordance with these reasons.
Catchwords:	Contract – costs - legal fees allegedly owed to barrister by firm of solicitors pursuant to three costs agreements – alleged conditional costs agreements – whether costs agreements conditional – whether costs agreements fell within or outside the provisions of the Legal Profession Act 2004 (NSW) – consequences of falling outside the Act - waiver - estoppel – misleading or deceptive conduct   District Court – jurisdiction – jurisdiction of District Court in commercial matters – conflict of authority – whether bound by Court of Appeal decisions
Legislation Cited:	Australian Consumer Law (being Schedule 2 to the Competition and Consumer Act 2010 (Cth)) Civil Procedure Act 2005 (NSW) Competition and Consumer Act 2010 (Cth) District Court Act 1973 (NSW) Fair Trading Act 1987 (NSW) Interpretation Act 1987 (NSW) Legal Profession Act 2004 (NSW) Legal Profession Uniform Law Application Act 2014 (NSW) Legal Profession Uniform Law Application Regulation 2015 (NSW) Legal Profession Uniform Law (NSW) Succession Act 2006 (NSW) Supreme Court Rules 1970 (NSW) Trade Practices Act 1974 (Cth)
Cases Cited:	AA Tegel Pty Ltd v Madden (1985) 2 NSWLR 691 AAI Ltd v State Insurance Regulatory Authority (NSW) [2016] NSWCA 368 Abbott v Klein [2015] NSWDC 45 Agricultural and Rural Finance v Gardiner (2008) 238 CLR 570 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27; [2009] HCA 41 Ashton v Pratt [2015] NSWCA 12 Australian Medico-Legal Group Pty Ltd v Claireleigh Mosman Pty Ltd [2017] NSWCA 218 Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 Caringbah Investments Pty Ltd v Caringbah Business & Sports Club Ltd (In Liquidation) [2016] NSWCA 165 Clare v Joseph [1907] 2 KB 369 Clutha Developments Pty Ltd v Barry (1989) 18 NSWLR 86 Commonwealth Bank of Australia v QBE Insurance (Australia) Ltd [2018] NSWSC 1440 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 244 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; [1992] FCA 557 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 Ferella v Stomo [2017] NSWCA 268 Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473 Firebird Global Master Fund II Ltd v Republic of Nauru [2015] HCA 43; (2015) 258 CLR 31 Forsyth v Deputy Commissioner of Taxation (2007) 231 CLR 531 Gilles v Palmieri [2017] NSWCA 370 Keesing v Adams [2010] NSWSC 336 Kirk v Industrial Relations Commission (NSW) (2010) 239 CLR 531 Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343 LSKF Holdings Pty Ltd v Shield Lifestone Holdings Pty Ltd [2018] NSWCA 129 Mahommed v Unicomb [2017] NSWCA 65 Meehan v Jones (1982) 149 CLR 571; [1982] HCA 52 Mega-Top Cargo Pty Ltd v Moneytech Services Pty Ltd [2015] NSWCA 402 New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338 Newell v De Costi [2018] NSWCA 49 Nova 96.9 Pty Ltd v Natvia Pty Ltd [2018] NSWSC 1288 Owners Strata Plan No 57164 v Yau [2017] NSWCA 341 OXS Pty Ltd v Sydney Harbour Foreshore Authority [2016] NSWCA 120 Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (2006) 149 FCR 395 Payne v Parker [1976] 1 NSWLR 191 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Prospect Resources Ltd v Molyneux [2015] NSWCA 171 Redowood Pty Ltd v Mongoose Pty Ltd [2005] NSWCA 32 Sapphire Suite Pty Ltd v Bellini Lounge Pty Ltd [2018] NSWDC 160 Sapphire Suite Pty Ltd v Bellini Lounge Pty Ltd [2018] NSWSC 1366 Tallerman & Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd (1957) 98 CLR 93 The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194 TMA Australia Pty Ltd v Indect Electronics & Distribution GmbH [2015] NSWCA 343 Watson v Foxman (2000) 49 NSWLR 315 Webster v Strang; Steiner v Strang [No. 2] [2018] NSWSC 1411 Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 WKA Legal Pty Ltd v Gleeson [2018] NSWSC 318 Young v Salkeld (1985) 4 NSWLR 375
Category:	Principal judgment
Parties:	Richard Jefferis (Plaintiff) Gells Pty Ltd trading as Gells Lawyers (Defendant)
Representation:	Counsel: P Doyle Gray and J Cook (Plaintiff) M Castle (Defendant)   Solicitors: Kenneth Harrison (Plaintiff) Gells Lawyers (Defendant)
File Number(s):	2016/00005874

Judgment

1. In this matter the plaintiff, Mr Richard Jefferis, sues the defendant corporation Gells Pty Ltd trading as Gells Lawyers (“Gells”), for certain moneys which he claims are owed to him by Gells for legal services provided by him in relation to a number of matters in the Supreme Court of New South Wales concerning the rights and entitlements of a Mr John Steiner in relation to the Estate of the late Dorothy Steiner who was Mr Steiner’s mother. The amount sought is $71,790.90 together with interest. Mr Jefferis claims that he is entitled to the moneys as fees which are owed to him pursuant to a number of costs agreements which were entered into by the parties in 2012 and 2014.

2. The defendant Gells denies that it is liable to the plaintiff Mr Jefferis as claimed on the bases that:

1. This court has no jurisdiction to hear the matter;

2. The work was agreed to be performed by Mr Jefferis on a speculative basis;

3. Mr Steiner has not received his completed entitlements in relation to the Estate of his late mother. In other words, the condition of the conditional costs agreements entered into has not yet occurred;

4. In the alternative, Mr Jefferis waived his rights to insist on a strict compliance with the terms of the costs agreements entered into. Further, he is estopped from pursuing those rights;

5. In the alternative, Gells pleads that it had an agreement or agreements as to costs with Mr Jefferis “which were an agreement or agreements which did not entirely comply with the requirements of the Legal Profession Act 2004 but is or are nevertheless enforceable in law in accordance with their terms”: paragraph 118 of the Amended Defence filed 2 July 2018;

6. In the further alternative, Mr Jefferis has engaged in misleading or deceptive conduct which entitles the defendant to damages.

3. Mr Jefferis denies:

1. This court does not have jurisdiction to hear the matter;

2. There can be any oral terms to a conditional costs agreement;

3. The representations alleged in Gells’ Cross-Claim;

4. There was any waiver by him;

5. There was any estoppel; and

6. There was any alleged misleading or deceptive conduct by him falling within s 18 of the Australian Consumer Law.

4. The matters in issue in the proceedings require a close examination of the terms of Part 3.2 of the Legal Profession Act 2004 (NSW) (“LPA"). The LPA has been repealed. However, the LPA remains relevant because the costs agreements entered into by Mr Jefferis were all entered into before 1 July 2015 and relate to legal proceedings commenced before that date. The Legal Profession Uniform Law commenced on 1 July 2015: see the Legal Profession Uniform Law Application Act2014 (NSW) s 167(a); Clauses 2 and 18 of Schedule 4 of the Legal Profession Uniform Law (NSW); see also Ferella v Stomo [2017] NSWCA 268 at [15]-[29] per White JA (with whom Macfarlan JA and Sackville AJA agreed) and Gilles v Palmieri [2017] NSWCA 370 at [37].

5. On the third day of the final hearing, the defendant raised by way of Notice of Motion an issue concerning the jurisdiction of the District Court to hear the plaintiff’s claim. I will refer to this in some detail further below.

The pleadings

6. The plaintiff relies on a Further Amended Statement of Claim filed on 21 July 2017.

7. In the Further Amended Statement of Claim, Mr Jefferis pleads as follows:

1. At all material times he was a barrister within the meaning of s 4 of the LPA;

2. At all material times the defendant Gells was an incorporated legal practice under the LPA;

3. On various occasions in May 2012 and November 2014, the plaintiff and the defendant entered into a costs agreement about the payment of legal costs in relation to legal services concerning Supreme Court actions involving Mr Steiner;

4. The terms of the costs agreements included the payment of specified rates in relation to legal services provided by the plaintiff and the payment of interest on those amounts if not paid after 30 days from the date of memoranda of fees which were provided;

5. The plaintiff provided legal services and issued invoices;

6. The plaintiff applied for the relevant invoices to be assessed by a cost assessor appointed by the Supreme Court under the LPA;

7. The Supreme Court appointed a cost assessor and the relevant invoices were assessed by the cost assessor;

8. The cost assessor issued certificates of determination of costs and certificates of determination of costs of costs assessment;

9. The defendant Gells has failed to pay the assessed costs;

10. The defendant Gells has not sought a review of the costs assessed under the LPA;

11. The plaintiff alleges that the defendant is indebted to him for the amounts stated in the Further Amended Statement of Claim and claims the balance of the fees owing together with certain costs of the costs assessment.

8. In the Further Amended Statement of Claim, the plaintiff particularises that the costs agreements are in writing and were set out in disclosure letters from the plaintiff to Gells and the costs agreements were accepted by the defendant continuing to instruct the plaintiff barrister in the matters after receipt of the relevant costs disclosure letters with the proposed terms.

9. The defendant filed an Amended Defence to the Further Amended Statement of Claim on 2 July 2018. The Defence pleads a positive case as well as pleading to the Further Amended Statement of Claim. Overall, Gells denies that it is indebted as alleged by the plaintiff in the Further Amended Statement of Claim.

10. In the Defence, Gells also sets out extensive specific pleadings in relation to the Steiner matters (paragraphs 2-82). In essence, the defendant pleads:

1. that in the various matters the plaintiff was briefed on a speculative basis;

2. the plaintiff agreed with a solicitor Mr Noss in a conversation on or about 9 May 2012 to accept the first relevant brief on a speculative basis and that the defendant “would not be liable of itself for fees of the Plaintiff and the entitlement of fees for the Plaintiff would only arise where Steiner received money from the Estate under his bequest or a Family Provision Claim (“the Terms”)” (paragraph 16);

3. that at all material times experienced counsel of the Sydney bar were prepared to act on a contingency basis in claims “under family provisions principles and on contests of bequests or of Estates” (paragraph 19);

4. the defendant would not have delivered a brief to the plaintiff relating to Mr Steiner unless the plaintiff had agreed with Mr Noss to accept a brief to act for Mr Steiner on a speculative basis (paragraph 18); and

5. that although some moneys were paid to the plaintiff by Gells on behalf of Mr Steiner, at no time whilst he was briefed did Mr Jefferis the plaintiff seek to be paid the balance (see for example paragraphs 36 and 48).

11. The defendant further:

1. Denies that it entered into costs agreements with the plaintiff as alleged in the Further Amended Statement of Claim;

2. Says the plaintiff was aware at all times of the applications by Mr Steiner for interim payments under the will to cover his pressing financial circumstances;

3. Says all work was completed by the plaintiff on the Terms set out in the Defence; and

4. Says in paragraph 117 of the Defence, that although payments were made to the plaintiff from time to time from the trust account of the defendant, the payments “were accepted by the Plaintiff but the agreements with the Plaintiff otherwise were on the Terms pleaded …” (paragraph 117(b)). It is also pleaded in the alternative, that in the circumstances the plaintiff waived reliance on the cost agreements (paragraph 117(c)) and that the plaintiff in the further alternative is estopped from relying on the costs agreements as alleged because the defendant changed its position in that the plaintiff would not have continued to be retained “if the Defendant had been made aware of the demand for payment from the Defendant rather than from John Steiner” (paragraph 117(d));

5. Says in paragraph 118 that even though conditional costs agreements entered into with the defendant did not entirely comply with the LPA, they are nevertheless enforceable at law in accordance with their terms.

12. Mr Jefferis filed a Reply on 30 July 2018. The Reply essentially repeats the plaintiff’s claims:

1. The agreements upon which the plaintiff sues Gells are costs agreements (paragraphs 1-4);

2. The oral terms and conduct pleaded by Gells in its Amended Defence do not form part of any costs agreement upon which the plaintiff sues the defendant as they are not in writing or evidenced in writing under s 322 of the Legal Profession Act 2004 (paragraphs 5-8);

3. The costs agreements are not conditional costs agreements within the Legal Profession Act 2004. The terms relied on by Gells do not set out the circumstances that constitute the successful outcome of the matter. If they are, the condition pleaded by Gells has been satisfied (paragraphs 9-15) through the making by the Supreme Court of considerable interim distributions to Mr Steiner;

4. The costs agreements alleged by Gells are void as not complying with ss 322-328 of the Legal Profession Act 2004. Legal costs under a void costs agreement are recoverable under the legislation according to the reasonable value of the legal services provided (paragraphs 16-21);

5. A legal practitioner cannot rely on anything beyond the four corners of a costs agreement in writing to contradict the documentation (paragraph 22);

6. Gells is estopped by the assessments made in favour of Mr Jefferis by the costs assessor from asserting Mr Jefferis is entitled to be paid a different amount than determined by the costs assessor (paragraphs 27-29).

13. On 22 August 2018, the court granted leave to the defendant to file a Rejoinder. This disputed a number of matters pleaded in the Reply.

14. In a Cross-Claim filed on 3 May 2018, the defendant pleads misleading or deceptive conduct by the plaintiff in breach of s 18 of the Australian Consumer Law (being Schedule 2 to the Competition and Consumer Act 2010 (Cth)) based on an alleged representation and conduct by the plaintiff that he would undertake the work on a speculative basis (see in particular paragraphs 17-19 and 43-44) and that the defendant relied on the relevant representation and conduct. Damages are sought against the plaintiff by the defendant under s 236 of the Australian Consumer Law.

15. In a Defence filed 15 June 2018, Mr Jefferis in essence denies the allegations in the Cross-Claim. In particular, it is pleaded that the issuing of invoices by the plaintiff constituted demands for payment of fees. Any liability under the Australian Consumer Law is expressly denied.

16. As stated above, on the third day of the trial the defendant raised an issue relating to the jurisdiction of this court to hear the plaintiff’s claim. The defendant was granted leave to file in court a Notice of Motion dated 22 August 2018 seeking an order that the case be transferred to the Local Court of New South Wales. In support of that Motion the defendant relied on an affidavit of Michael Gerard Coffey sworn 21 August 2018 which attached correspondence between the parties’ solicitors concerning the question whether this court has jurisdiction. The matter was raised by the defendant in the light of a number of recent cases which have considered the jurisdiction of this court in commercial cases following the decision of Parker J in The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194.

17. There was considerable discussion between the court and counsel in relation to the appropriate course which the court should take. Submissions were made by both parties in relation to this issue. In the end, I determined that having regard to the indications from the bar table that the remaining evidence would be of short duration, that the appropriate course to adopt, consistent with ss 56-59 of the Civil Procedure Act 2005 (NSW), was to complete the hearing of the evidence and hear submissions on all matters including as to jurisdiction. The court could then determine the matter in its ultimate reasons for decision. This approach was taken because of the potential for further delay and cost if the court heard the jurisdiction argument, decided it and there was an appeal to the Court of Appeal which necessitated the matter either being sent back to this court some considerable time in the future or being reheard by another judge. I consider the jurisdiction issue in some detail further below.

The relevant provisions of the LPA

18. As indicated above, the LPA continues to apply to the costs in a matter if the brief was delivered, or the proceedings to which the costs relate commenced, before 1 July 2015. That is the case in the present matter.

19. Numerous provisions of the LPA are relevant to the current matter. The LPA relevantly provides as follows:

“Part 3.2  Costs disclosure and assessment

Division 1 Preliminary

301   Purposes

The purposes of this Part are as follows:

(a)  to provide for law practices to make disclosures to clients regarding legal costs,

(b)  to regulate the making of costs agreements in respect of legal services, including conditional costs agreements,

(c)  to regulate the billing of costs for legal services,

(d)  to provide a mechanism for the assessment of legal costs and the setting aside of certain costs agreements.

302 Definitions

(1)  In this Part:

bill means a bill of costs for providing legal services.

…

conditional costs agreement means a costs agreement that provides that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate, as referred to in section 323 (Conditional costs agreements), but does not include a costs agreement to the extent to which section 324 (Conditional costs agreement involving uplift fees) or section 325 (Contingency fees are prohibited) applies.

costs includes fees, charges, disbursements, expenses and remuneration.

costs agreement means an agreement about the payment of legal costs.

…

(2)  In this Part, a reference to a law practice includes a reference to:

(a)  in the case of a person who was a sole practitioner when the legal services concerned were provided:

(i)  the former sole practitioner, or

(ii)  the executor of the will of the former sole practitioner, or

(iii)  the trustee or administrator of the estate of the former sole practitioner, and

…

Division 3 Costs disclosure

…

310 Disclosure if another law practice is to be retained

(1) If a law practice intends to retain another law practice on behalf of the client, the first law practice must disclose to the client the details specified in section 309 (1) (a), (c) and (d) in relation to the other law practice, in addition to any information required to be disclosed to the client under section 309.

(2) A law practice retained or to be retained on behalf of a client by another law practice is not required to make disclosure to the client under section 309, but must disclose to the other law practice the information necessary for the other law practice to comply with subsection (1).

(3)  This section does not apply if the first law practice ceases to act for the client in the matter when the other law practice is retained.

Note. An example of the operation of this section is where a barrister is retained by a firm of solicitors on behalf of a client of the firm. The barrister must disclose to the firm details of the barrister’s legal costs and billing arrangements, and the firm must disclose those details to the client. The barrister is not required to make a disclosure directly to the client.

311 How and when must disclosure be made to a client?

(1) Disclosure under section 309 must be made in writing before, or as soon as practicable after, the law practice is retained in the matter.

(2) Disclosure under section 310 (1) must be made in writing before, or as soon as practicable after, the other law practice is retained.

(3) Disclosure made to a person before the law practice is retained in a matter is taken to be disclosure to the person as a client for the purposes of sections 309 and 310.

…

315 Form of disclosure

(1)  Written disclosures to a client under this Division:

(a)  must be expressed in clear plain language, and

(b)  may be in a language other than English if the client is more familiar with that language.

(2)  If the law practice is aware that the client is unable to read, the law practice must arrange for the information required to be given to a client under this Division to be conveyed orally to the client in addition to providing the written disclosure.

…

317 Effect of failure to disclose

(1)  Postponement of payment of legal costs until assessed

If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, the client or associated third party payer (as the case may be) need not pay the legal costs unless they have been assessed under Division 11.

Note. Under section 369, the costs of an assessment in these circumstances are generally payable by the law practice.

(2)  Bar on recovering proceedings until legal costs assessed

A law practice that does not disclose to a client or an associated third party payer anything required by this Division to be disclosed may not maintain proceedings against the client or associated third party payer (as the case may be) for the recovery of legal costs unless the costs have been assessed under Division 11.

…

(7)  Non-disclosure capable of constituting unsatisfactory professional conduct or professional misconduct

Failure by a law practice to comply with this Division is capable of being unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner or Australian-registered foreign lawyer involved in the failure.

…

Division 4 Legal costs generally

319 On what basis are legal costs recoverable?

(1)  Subject to the provisions of this Part, legal costs are recoverable:

(a)  in accordance with an applicable fixed costs provision, or

(b) if paragraph (a) does not apply, under a costs agreement made in accordance with Division 5 or the corresponding provisions of a corresponding law, or

(c)  if neither paragraph (a) or (b) applies, according to the fair and reasonable value of the legal services provided.

(2)  However, the following kinds of costs are not recoverable:

(a)  the costs associated with the preparation of a bill for a client,

(b)  the costs associated with the making of disclosures for the purposes of Division 3,

(c)  the costs associated with the making of a costs agreement with a client.

…

Division 5 Costs agreements

322 Making costs agreements

(1)  A costs agreement may be made:

(a)  between a client and a law practice retained by the client, or

(b)  between a client and a law practice retained on behalf of the client by another law practice, or

(c)  between a law practice and another law practice that retained that law practice on behalf of a client, or

(d)  between a law practice and an associated third party payer.

(2)  A costs agreement must be written or evidenced in writing.

(3)  A costs agreement may consist of a written offer in accordance with subsection (4) that is accepted in writing or by other conduct.

Note. Acceptance by other conduct is not permitted for conditional costs agreements—see section 323(3)(c)(i).

(4)  The offer must clearly state:

(a)  that it is an offer to enter into a costs agreement, and

(b)  that the client may accept it in writing or by other conduct, and

(c)  the type of conduct that will constitute acceptance.

(5) Except as provided by section 395A, a costs agreement cannot provide that the legal costs to which it relates are not subject to costs assessment under Division 11.

Note. If it attempts to do so, the costs agreement will be void—see section 327(1).

(6)  A reference in section 328 and in any prescribed provisions of this Part to a client is, in relation to a costs agreement that is entered into between a law practice and an associated third party payer as referred to in subsection (1)(d) and to which a client of the law practice is not a party, a reference to the associated third party payer.

323 Conditional costs agreements

(1)  A costs agreement may provide that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate.

(2) A conditional costs agreement may relate to any matter, except a matter that involves criminal proceedings or proceedings under the Family Law Act 1975 of the Commonwealth.

(3)  A conditional costs agreement:

(a)  must set out the circumstances that constitute the successful outcome of the matter to which it relates, and

(b)  may provide for disbursements to be paid irrespective of the outcome of the matter, and

(c)  must be:

(i)  in writing, and

(ii)  in clear plain language, and

(iii)  signed by the client, and

(d)  must contain a statement that the client has been informed of the client’s right to seek independent legal advice before entering into the agreement, and

(e)  must contain a cooling-off period of not less than 5 clear business days during which the client, by written notice, may terminate the agreement.

(4) Subsection (3)(c)(iii), (d) and (e) do not apply to a conditional costs agreement made under section 322(1)(c) (Costs agreements between law practices).

(4A)  Subsection (3)(c)(iii), (d) and (e) do not apply to a conditional costs agreement if disclosure under:

(a) section 309 (Disclosure of costs to clients), or

(b) section 310(1) (Disclosure if another law practice is to be retained),

in relation to the agreement was not or would not be required in the circumstances referred to in section 312(1)(c) or (d) (Exceptions to requirement for disclosure).

(4B)  Subsection (3)(c)(iii), (d) and (e) do not apply to a conditional costs agreement made with a sophisticated client.

(5)  If a client terminates an agreement within the period referred to in subsection (3)(e), the law practice:

(a)  may recover only those legal costs in respect of legal services performed for the client before that termination that were performed on the instructions of the client and with the client’s knowledge that the legal services would be performed during that period, and

(b)  without affecting the generality of paragraph (a), may not recover the uplift fee (if any).

…

327 Certain costs agreements are void

(1)  A costs agreement that contravenes, or is entered into in contravention of, any provision of this Division is void.

(2) Subject to this section and Division 11, legal costs under a void costs agreement are recoverable as set out in section 319(1)(a) or (c) (On what basis are legal costs recoverable?).

(3)  However, a law practice is not entitled to recover any amount in excess of the amount that the law practice would have been entitled to recover if the costs agreement had not been void and must repay any excess amount received.

(3A)  A law practice that has entered into a costs agreement in contravention of section 324(2)–(5) (Conditional costs agreements involving uplift fees) is not entitled to recover the whole or any part of the uplift fee and must repay any amount received in respect of the uplift fee to the person from whom it was received.

(4)  A law practice that has entered into a costs agreement in contravention of section 324(1) (Conditional costs agreements involving uplift fees) or 325 (Contingency fees are prohibited) is not entitled to recover any amount in respect of the provision of legal services in the matter to which the costs agreement related and must repay any amount received in respect of those services to the person from whom it was received.

(5)  If a law practice does not repay an amount required by subsection (3) or (4) to be repaid, the person entitled to be repaid may recover the amount from the law practice as a debt in a court of competent jurisdiction.

328 Setting aside costs agreements or provisions of costs agreements

(1)  On application by a client, a costs assessor may order that a costs agreement or a provision of a costs agreement be set aside if satisfied that the agreement is not fair or reasonable.

Note. Section 317(2) also enables a client to make an application under this section for an order setting aside a costs agreement or a provision of a costs agreement where the law practice concerned has failed to make the disclosures concerning costs required by Division 3.

…

331 Legal costs cannot be recovered unless bill has been served

(1)  Subject to section 332A (Person may request itemised bill), a law practice must not commence legal proceedings to recover legal costs from a person until at least 30 days after the law practice has given a bill to the person in accordance with sections 332 (Bills) and 333 (Notification of client’s rights).

(2)  The Supreme Court may make an order authorising a law practice to commence legal proceedings against a person sooner if satisfied that:

(a)  the law practice has given a bill to the person in accordance with sections 332 and 333, and

(b)  the person is about to leave this jurisdiction.

(3)  A court or tribunal before which any proceedings are brought in contravention of subsection (1) must stay those proceedings on the application of a party, or on its own initiative.

(4)  This section applies whether or not the legal costs are the subject of a costs agreement.

…

Division 11 Costs assessment

Subdivision 1 Applications

349A Definition

In this Division:

client means a person to whom or for whom legal services are or have been provided.

350 Application by client or third party payers for costs assessment

(1)  A client may apply to the Manager, Costs Assessment for an assessment of the whole or any part of legal costs.

(2)  A third party payer may apply to a costs assessor for an assessment of the whole or any part of legal costs payable by the third party payer.

(3)  An application for a costs assessment may be made even if the legal costs have been wholly or partly paid.

…

Subdivision 2 Assessment

357 Referral of matters to costs assessors

(1)  The Manager, Costs Assessment is to refer each application for costs assessment to a costs assessor to be dealt with under this Division.

(2)  A costs assessor who has an interest in an application must, as soon as practicable after becoming aware of that fact, refer the application to the Manager, Costs Assessment for referral to another costs assessor.

(3)  If the Manager, Costs Assessment is satisfied that it is inappropriate for a costs assessor to determine a particular application that has been referred to the costs assessor, the Manager, Costs Assessment may:

(a)  revoke the referral of the application, and

(b)  refer the application for assessment to another costs assessor.

(4)  An application that has been referred to another costs assessor under this section is to be dealt with as a new assessment or, if the Manager, Costs Assessment so directs, by continuing the assessment.

(5)  When a referral has been revoked, the costs assessor to whom the application was initially referred must return all documents relating to the assessment of the application to the Manager, Costs Assessment. This includes documents relating to any work done on the assessment and a statement of the amount calculated for costs in respect of any work done on the assessment.

…

359 Consideration of applications by costs assessors

(1)  A costs assessor must not determine an application for assessment unless the costs assessor:

(a)  has given both the applicant and any law practice or client or other person concerned a reasonable opportunity to make written submissions to the costs assessor in relation to the application, and

(b)  has given due consideration to any submissions so made.

(2)  In considering an application, a costs assessor is not bound by rules of evidence and may inform himself or herself on any matter in such manner as he or she thinks fit.

(3)  For the purposes of determining an application for assessment or exercising any other function, a costs assessor may determine any of the following:

(a)  whether or not disclosure has been made in accordance with Division 3 (Costs disclosure) and whether or not it was reasonably practicable to disclose any matter required to be disclosed under Division 3,

(b)  whether a costs agreement exists, and its terms.

…

363 Criteria for costs assessment

(1)  In conducting an assessment of legal costs, the costs assessor must consider:

(a)  whether or not it was reasonable to carry out the work to which the legal costs relate, and

(b)  whether or not the work was carried out in a reasonable manner, and

(c) the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 361 or 362 applies to any disputed costs.

…

365 Effect of costs agreements in assessments of party/party costs

(1)  A costs assessor may obtain a copy of, and may have regard to, a costs agreement.

(2)  However, a costs assessor must not apply the terms of a costs agreement for the purposes of determining appropriate fair and reasonable costs when assessing costs payable as a result of an order by a court or tribunal.”

20. The general regime relating to costs set out in the LPA and its predecessor legislation applied from 1 July 1994. As is seen, the LPA sets out a comprehensive regime in relation to cost disclosure, costs agreements and the recovery of legal costs including on assessment.

21. Lead counsel for the plaintiff, Mr Doyle Gray, gave an extensive opening at the commencement of the final hearing. That opening covered numerous aspects of the plaintiff's case. As part of the opening, counsel for the plaintiff made a number of submissions in relation to the LPA which included in summary the following:

1. The LPA provides an extensive regulatory regime in relation to costs disclosure, costs agreements and the recovery of legal costs on assessment;

2. Its provisions apply in varied terms to costs disclosure and costs agreements between clients and solicitors and between solicitors and barristers who are briefed by the solicitors: see ss 309 and 310(2);

3. The importance of compliance by lawyers with the regime set out in the LPA is emphasised by the fact that the Act states that a failure to comply with aspects of its requirements can constitute unsatisfactory professional conduct or professional misconduct: see for example ss 312(4); 317(7);

4. In relation to disputes as to costs, the LPA sets out a regime for costs assessment following an application made to the Manager, Costs Assessment of the Supreme Court who appoints an assessor to assess the costs. That assessor determines an assessment on the papers taking into account the application form and the submissions of the parties. The fact that an assessment occurs on the papers emphasises the importance of costs disclosures and costs agreements being in writing under the Act. As the cost assessment process does not contemplate any oral hearing or determination of disputed matters with witnesses, the importance of complying with the terms of the LPA in relation to costs disclosure and costs assessment is crucial: see ss 354, 357-8, 359(1);

5. The central principle of Part 3.2 of the LPA is the protection of the client by requiring legal practices to make disclosures to clients regarding legal costs, to regulate the making of costs agreements in respect of legal services and to provide a mechanism for disputes to be resolved by an assessment including the setting aside of certain costs agreements: see for example s 328(1);

6. The LPA contemplates a number of stages of the legal relationship. In the case of a barrister and solicitor it involves the briefing of the barrister, a costs disclosure by the barrister to the solicitor (except in the case of marked briefs), a costs agreement between the barrister and solicitor, the issuing of bills of costs for providing legal services by the barrister to the solicitor and, in the case of disputes, an assessment process see s 301;

7. Part 3.2 of the LPA frequently uses the terms “must” and “may”. The word “must” in general terms denotes a mandatory requirement which must be complied with by the legal professional involved;

8. Where a solicitor retains a barrister on behalf of a client, the barrister must disclose to the solicitor details of the barrister's legal costs and billing arrangements to enable the solicitor to disclose the details provided by the barrister directly to the client: s 310;

9. Section 311(2) which places an obligation on the solicitor to make a disclosure to the client in writing of details in relation to the other law practice shows that the obligation is placed on the barrister to disclose those details promptly to the solicitor;

10. It is not suggested that any of the exceptions in s 312 of the LPA applied in the present case. It is noted that in s 315 written disclosures to a client must be expressed in clear plain language. There is an ongoing obligation to disclose in writing any substantial change to anything included in a disclosure: s 316. The effect of a failure to disclose is set out in s 317. In that circumstance, a relevant lawyer cannot seek payment of legal costs including in proceedings, until the costs have been assessed;

11. Section 322 relates to the making of costs agreements which includes between a solicitor and a barrister: s 322(1)(c). Section 322 makes clear that a cost agreement must be written or evidenced in writing: s 322(2). However, a costs agreement may consist of a written offer that is accepted in writing by a solicitor or “by other conduct”: s 322(3). The note under s 322(3) of the Act indicates that acceptance “by other conduct” is not permitted for conditional costs agreements: see s 323(3)(c)(i) of the LPA. Section 322(4) notes the requirements that the offer forming part of a costs agreement must clearly state that it is an offer to enter into a costs agreement, that the client may accept it in writing or by other conduct and the type of conduct that will constitute acceptance;

12. Except in the case of sophisticated clients, a costs agreement cannot provide that the legal costs to which it relates are not subject to costs assessment: s 322(5);

13. Conditional costs agreements are covered by s 323 of the LPA. Conditional costs agreements are defined in s 302 of the LPA as meaning “a costs agreement that provides that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate, as referred to in section 323…” Conditional costs agreements are what are alleged by the defendant in the present case. Conditional costs agreements are permissible except in limited circumstances which are not relevant here: s 323(1) and (2) of the LPA;

14. Section 323(3) provides that a conditional costs agreement must set out the circumstances that constitute the successful outcome of the matter to which it relates and may provide for disbursements to be paid irrespective of the outcome of the matter and must be in writing in clear plain language. Where the conditional costs agreement is between a solicitor and a barrister it need not be signed by the solicitor: s 323(3) and (4). Similarly, the requirement for the conditional costs agreement to be signed by a client does not apply to a conditional costs agreement made with a sophisticated client such as a bank, government department or insurance company. The purpose of this is that a sophisticated client which includes a solicitor is taken to be able to understand the nature of the conditional costs agreement. The importance of the requirement for a conditional costs agreement to set out the circumstances that constitute the successful outcome of the matter to which it relates and the requirement for it to be in writing were emphasised;

1. A costs agreement that contravenes or is entered into in contravention of any provision of ss 322-328 is void: s 327(1). However, legal costs under a void costs agreement are recoverable following an assessment in which the fair and reasonable value of the legal services provided are assessed: s 327(2) and s 319;

2. Legal costs cannot be recovered unless a bill has been served by the relevant law practice or practitioner. The Act has requirements in relation to bills: ss 331-334. A costs assessment is covered by Division 11 of the LPA in which there are detailed provisions. This includes an application for a costs assessment by a law practice retaining another law practice and by a law practice giving a bill: ss 351-352 of the LPA;

3. It is noted that the effect of a costs agreement subject to certain provisions is that a costs agreement may be enforced in the same way as any other contract: s 326;

4. The importance of having a valid costs agreement is emphasised by the fact that a cost assessor must assess the amount of any disputed costs that are subject to a costs agreement by reference to the provisions of the costs agreement if a relevant provision of the costs agreement specifies the amount or a rate or other means for calculating the amount of the costs and the agreement has not been set aside: s 361 of the LPA. A costs assessor may have regard to a costs agreement but is not bound by the rates specified in the costs agreement: s 365(1).

22. Counsel for the plaintiff emphasised that what appears to be argued on the pleadings by the defendant is a conditional costs agreement with oral terms. He submitted that a conditional costs agreement cannot have oral terms and must be in writing and must set out the circumstances that constitute the successful outcome of the matter to which it relates: s 323(3) of the LPA. Reliance was placed on the decision in the Supreme Court in WKA Legal Pty Ltd v Gleeson [2018] NSWSC 318 where Kunc J, in an application to restrain a costs assessment from continuing, concluded that proceeding on the papers in an assessment would not afford the parties procedural fairness: at [29]. At [33] Kunc J stated as follows:

“[33] Fifth, and again not in and of itself a determinative consideration, but nevertheless informing the exercise of the Court’s discretion, I am unable to identify any material prejudice to Mr Gleeson in not being permitted to pursue the Assessment. In particular, I found Mr Gleeson’s legal contention in the Assessment to be rather odd. This is because Mr Gleeson’s primary case (in both the Assessment and the Local Court Proceedings) is that the relevant costs agreement contained both written and oral terms. If that is correct, then it is not a costs agreement under the Act because s 322(3) provides that “a costs agreement must be written or evidenced in writing”. Mr Gleeson’s counsel, to maintain the consistency of his client’s position, had to concede that, in pressing for the Assessment to continue, Mr Gleeson had to accept that the costs assessor might find that there was no costs agreement under the Act.”

23. Counsel for the plaintiff in particular relied on the view of Kunc J that a costs agreement is not a costs agreement under the LPA where it allegedly contains both written and oral terms because s 322(3) provides that “a costs agreement must be written or evidenced in writing”. This is a fortiori in the case of an alleged conditional costs agreement under s 323 of the Act.

24. It was submitted in opening that the alleged conditional costs agreement put forward on the pleadings by the defendant could not be valid but is void as the requirements of s 323 of the Act had not been complied with.

Evidence on behalf of the plaintiff

25. The plaintiff read three affidavits of Mr Kenneth Harrison, solicitor, sworn 27 October 2017, 22 December 2017 and 12 February 2018.

26. In the first affidavit sworn 27 October 2017, Mr Harrison, who is the solicitor for the plaintiff, states that he acted for the plaintiff in regard to the assessments of the tax invoices which the plaintiff rendered to the defendant Gells in various matters. Mr Harrison states that on 19 October 2016 he lodged various applications for costs assessments on behalf of the plaintiff. This process was undertaken initially as a result of certain defences which had been raised by the defendant.

27. Mr Harrison, in the exhibit to his 27 October 2017 affidavit, exhibits the relevant documents relating to the four cost assessments which were undertaken, one of which is no longer relevant, being that related to the client Wong.

28. The other three assessments all relate to the Steiner matters.

29. The first relevant assessment related to bills forwarded by the plaintiff to the defendant arising from a disclosure letter dated 16 May 2012 (affidavit exhibit page 70). The disclosure letter on the letterhead of the plaintiff is addressed to Mr Stephen Noss and is headed: “Re: John Steiner - Strang and Tang: The Estate of Dorothy Steiner - Further provision claim under the Succession Act 2006 (NSW): Application for interim distribution from Estate - Supreme Court of New South Wales”. The disclosure letter purports to be made under the LPA and is directed to Gells Lawyers. The costs agreement terms provide in paragraph 1: “This agreement is between you and me only and your client is not a party to it”. The letter provides in paragraph 2: “This agreement commences when, after having received this document from me: you give me any work or further work to do in the matter and, upon that commencement, this agreement applies to any work I have done in the matter prior to that commencement”. It is clear from the bills later sent, that work was completed by the plaintiff after the date of the letter. The letter provides that the plaintiff will send to Gells a memorandum of fees for his costs from time to time at his discretion or upon Gells' request. Paragraph 6(ii) of the letter terms provides: “You will pay the costs within thirty (30) days from the date on which I send my memorandum of fees to you” (exhibit page 71). It is stated in paragraph 10 of the letter that an estimate of legal costs cannot be given.

30. There is no mention in the letter or the written agreement, which the letter is a part of, that the work was to be completed by the plaintiff on a conditional or speculative basis.

31. Also included in relation to the first costs agreement are the following relevant documents:

1. A certificate of determination of costs issued on 10 May 2017 and sent on 16 June 2017 by the costs assessor which provides that the balance owing by Gells to the plaintiff is $23,632.09 (exhibit page 28);

2. A statement of reasons from the cost assessor. This includes a determination by the costs assessor that proper disclosure of the plaintiff's fees and costs was made by the letter dated 16 May 2012 and was sent to Gells. It is also stated that Gells continued to instruct the plaintiff after the cost disclosure was issued and hence a cost agreement existed between the parties. The assessor found that the terms of the costs agreement were fair and reasonable and that the bill was drawn in accordance with the terms (exhibit pages 29-31);

3. A certificate of determination of costs of costs assessment in the sum of $1,503.26 which was to be paid by Gells. This was issued on 10 May 2017 and was sent on 16 June 2017 (exhibit page 32);

4. The submissions of the parties (exhibit pages 33-44 and 49-52);

5. The invoices in question (exhibit pages 59-69). These invoices cover the period from 22 April 2012 to 28 May 2013.

32. The second relevant assessment relates to a disclosure letter dated 5 July 2012 from the plaintiff to the defendant addressed to Mr Michael Coffey and headed: “Re: John Steiner and Robyn Webster: The Estate of Dorothy Steiner - Application for appointment of administrators in respect of proceedings in Utah in right of Maggie Sottero Designs LLC share sale agreements with L Midgley Irrevocable Trust and Lesley Webster Irrevocable Trust: Supreme Court of New South Wales proceedings”. The disclosure letter is in similar terms to the first matter. It is clear that it amounted to a costs agreement as the defendant gave further work to the plaintiff to do after the letter was sent.

33. A determination by the assessor was made in relation to the matter, who found that there was no sum owing by Gells to the plaintiff: Certificate of Determination of Costs issued on 1 May 2017 (exhibit page 90). There was a Certificate of Determination of Costs of Costs Assessment which found that Mr Jefferis was to pay the sum of $900 for the costs (exhibit page 91). The memoranda of fees show that work was completed from 15 June 2012 by the plaintiff (exhibit page 111).

34. The third relevant matter relates to a costs disclosure letter dated 16 November 2014 from the plaintiff to the defendant addressed to Mr Coffey. That letter is headed: “Re: Steiner - Strang and Tang and Ors - Summons seeking relief in relation to Assets of the Estate: Supreme Court of New South Wales matter number: 2014/10747”. The disclosure letter further provides: “Thank you for the brief in the above matter relating to the Summons issued her [sic] by Mr Steiner claiming in respect of various aspects of the Estate of his late mother, where there is some issue as to whether the Executors have acted appropriately in getting in assets of the Estate.”

35. The letter is in similar terms to the disclosure letter in the previous two matters. The 16 November 2014 letter from Mr Jefferis does provide an actual estimate of fees in the matter to be in the vicinity of $16,000-$22,000 to the completion of the matter (exhibit page 177). Again, there is no reference to the brief being on a speculative or conditional basis.

36. The documents in the exhibit to the affidavit include:

1. A certificate of determination of costs issued on 7 May 2017 and dated and sent 16 June 2017 providing that Gells was to pay the plaintiff the sum of $44,859.46 (exhibit page 142);

2. A Certificate of Determination of Costs of Costs Assessment providing that Gells was to pay to the plaintiff the costs of $1,796.09 which was issued on 7 May 2017 and sent on 16 June 2017 (exhibit page 143);

3. The statement of reasons of the assessor includes a consideration of three invoices and related documents. It was accepted by the assessor that an appropriate costs disclosure was made by the plaintiff to the defendant dated 16 November 2014. It was determined that as Gells instructed the plaintiff thereafter a costs agreement was made between the parties. The assessor found that the terms of the agreement were fair and reasonable and that the bills were drawn in accordance with the terms (exhibit pages 144-147);

4. Submissions were included from both parties as well as the costs assessment application with the related invoices (exhibit pages 164-174).

37. In his affidavit sworn 22 December 2017, Mr Harrison gives the background to the proceedings including that on 7 January 2016 the plaintiff commenced these proceedings against the defendant Gells for unpaid fees in four matters (paragraph 4). Mr Harrison again refers to the costs assessment process which was undertaken (paragraphs 6-10). The various Certificates of Determination issued by the costs assessor are referred to and exhibited (paragraphs 15-21). It is stated that neither the plaintiff nor the defendant filed and served an application for review of any of the cost assessor’s determinations or any related legal proceedings (paragraph 22). It is stated by Mr Harrison that the plaintiff filed and served a Further Amended Statement of Claim on 1 July 2017 which incorporated details in relation to the assessments (paragraphs 23-24).

38. In his third affidavit sworn 12 February 2018, Mr Harrison corrects an aspect of his earlier affidavit and notes that the plaintiff paid the costs in three of the matters even though the defendant was obliged under the determinations to pay those costs (paragraph 4). Filing fees are also noted as being paid by the plaintiff (paragraph 6).

39. Mr Harrison was not required for cross-examination.

Evidence on behalf of the defendant

Mr Michael Coffey

40. In support of its case, the defendant read the affidavit of Michael Gerard Coffey sworn 4 May 2018.

41. The affidavit:

1. Notes that Mr Coffey is the solicitor for the defendant Gells and a director of it;

2. Provides Mr Coffey's professional background including that he has undertaken considerable advocacy work in the course of his career as a solicitor (paragraphs 7-10);

3. States that he became familiar with the practice of claims under the principles of the previous Family Provision Act. Mr Coffey states that he observed that “many barristers who practised in the family provisions and succession areas would accept work on a contingency basis for plaintiffs claiming further provision from an Estate” (paragraphs 24-25). Mr Coffey states that over the years he has briefed a number of counsel for plaintiffs and defendants in family provision matters and that the other counsel briefed in the Steiner matter were briefed “on a contingency basis” (paragraph 27);

4. States that Stephen Noss, solicitor, became a consultant to the defendant in 2007 and was an experienced practitioner having been admitted to the Supreme Court in about 1975. Mr Coffey states that whilst at Gells, Mr Noss had carriage of his own litigation matters and matters including family relationships and family law cases. Mr Coffey states that Mr Noss left Gells in mid-2016 and that he was friendly with the plaintiff Mr Jefferis (paragraphs 29-34);

5. Mr Coffey gives evidence in relation to his instructions from Mr Steiner received in March 2012 in relation to the Estate of the late Dorothy Steiner, his mother. It is noted that under the terms of Mrs Steiner's will, John Steiner received a bequest of $2 million and was one of two residuary beneficiaries of the Estate with his sister Robyn Webster. Mr Coffey exhibits a copy of the will to the affidavit (paragraphs 36-37);

6. Mr Coffey states that he was on leave between 14 April and 6 May 2012 and that Mr Noss had carriage of the Steiner claim between 18 April and mid-May 2012. Mr Coffey exhibits to his affidavits various emails passing between Mr Noss and the plaintiff in April-May 2012 (paragraphs 36-40);

7. Mr Coffey states that in May 2012 and at all material times Mr Steiner lived in Townsville and was under extensive pressure from his creditors to pay money. Mr Steiner had various creditors at the time. A decision was made to make an application for an interim award of family provision on behalf of Mr Steiner. The plaintiff Mr Jefferis was briefed as the barrister on the application for Mr Steiner (paragraphs 41-44);

8. Mr Coffey gives evidence that on the Gells file was a copy of a memorandum which Mr Noss wrote which he put on the file. The note states: “Richard Jefferis barrister will do on spec”. The memorandum is exhibited to Mr Coffey's affidavit. He states that he read the handwritten memorandum and he recognised it to be in the writing of Mr Noss. Mr Coffey states that before he sent a brief to the plaintiff he had a conversation with Mr Noss about the case. Mr Coffey says that had he been aware that the plaintiff was not prepared to do work on a contingency basis he would not have briefed the plaintiff and that there were other barristers he could brief on a contingency basis as counsel (paragraphs 45-46);

9. Mr Coffey states that on 10 May 2012 Gells sent Mr Steiner a letter and costs disclosure document which he exhibits. This also does not appear expressly to be on a conditional or speculative basis as stated in the document (paragraph 48);

10. Mr Coffey provides the history of the Steiner matter in his affidavit (paragraph 50 and following);

11. In May 2012 Gells sent to Mr Steiner a letter enclosing the plaintiff’s costs disclosure document and costs agreement document and Gells’ trust account statement (paragraph 68);

12. In relation to the various matters, Mr Coffey repeats that had he been aware that the plaintiff was not prepared to do work on a contingency basis he would not have briefed the plaintiff (paragraph 76);

13. Mr Coffey gives details of interim distributions made to Mr Steiner following appearances by the plaintiff. On 17 July 2012, Justice White ordered an interim distribution to Mr Steiner of $300,000 (paragraph 80);

14. Evidence is given by Mr Coffey in relation to the plaintiff rendering various invoices and some payments being made to the plaintiff (see paragraphs 81-86);

15. Mr Coffey notes that the plaintiff did not demand payment for more of his invoiced fees (paragraph 89);

16. Mr Coffey gives evidence of a meeting on 9 October 2012 between the plaintiff, Mr Steiner and Mr Coffey at the plaintiff's chambers in which the discussion included a discussion in relation to Mr Steiner's dire financial circumstances. Mr Coffey states that during the meeting Mr Steiner said to the plaintiff and him words to the effect: “The judge better grant my application for money or I cannot pay you”. Mr Coffey understood Mr Steiner to mean by the use of the word “you” his lawyers, and noted that the plaintiff did not reply to Mr Steiner or say anything to Mr Coffey about the terms of his retainer (paragraph 99). Mr Coffey states that he relied upon the lack of reply from the plaintiff as an acknowledgement of his understanding that his retainer was that he was doing work on a “spec” or contingency basis. Mr Coffey says that if he had understood the plaintiff was not doing the matter on a contingency basis he would have ceased the retainer (paragraphs 98-100);

17. Mr Coffey gives evidence of further part distributions from the Executors to Mr Steiner including one of $85,000 on 5 April 2013 (page 110) and on 20 June 2013 in the sum of $250,000 (page 116). Mr Coffey states that on 23 June 2014 Rein J ordered a further distribution of $50,000 to Mr Steiner (paragraph 132);

18. Further references are made to part payments made to the plaintiff in respect of his fees. The absence of complaint from the plaintiff is noted (paragraphs 135-139);

19. Further appearances by the plaintiff and Mr Blackburn Hart SC on behalf of Mr Steiner instructed by Mr Coffey are referred to (paragraphs 144-148);

20. Mr Coffey gives evidence of the plaintiff appearing on a Notice of Motion for a further interim distribution from the estate before Justice Ball (paragraphs 152-157). This application was rejected;

21. The final hearing of the application for family provision by Mr Steiner was heard by Justice Kunc in the Supreme Court in 2017 and his Honour handed down his reasons for judgment on 23 April 2018. Kunc J indicated that further provision should be provided to Mr Steiner under the will of his late mother (paragraphs 166-168).

42. I have already referred to some of the more important documents which are exhibited to Mr Coffey's affidavit. These include:

1. The will of the late Dorothy Steiner which sets out the bequests to Mr Steiner (exhibit pages 1-5);

2. Initial email correspondence between Mr Noss and Mr Jefferis in May 2012 that does not refer to the brief being on a speculative or conditional basis (exhibit pages 6-9);

3. Various documents referring to Mr Steiner's urgent need for money and for an interim payment (see for example the letter dated 1 May 2012 which commences at page 18 of the exhibit). This letter included a request for money to fund Mr Steiner's current legal fees (exhibit page 24);

4. Correspondence from Mr Steiner in relation to briefing a barrister. This does not refer to the brief being on a speculative basis (see email dated 8 May 2012 at exhibit page 28);

5. The memorandum referred to above, which is apparently in Mr Noss' handwriting, which states: “Richard Jefferis barrister will do on spec” (exhibit page 29);

6. The letter from Mr Coffey to Mr Steiner attaching Gells’ costs disclosure letter which, as indicated above, does not state the retainer is to be on a speculative basis (exhibit pages 30-34). The letter includes a notation of Gells’ rights to seek interest if unpaid costs are not paid within 30 days of receipt by Mr Steiner of a bill of costs from Gells. The letter refers to the possibility of an engagement of another law practice including for advocacy services. There is no reference to a speculative or conditional costs agreement in this paragraph (exhibit page 33);

1. There is an email dated 18 May 2012 from Mr Jefferis to Mr Coffey suggesting an initial amount for an interim distribution of $475,000 which included $50,000 for legal expenses (exhibit page 39);

2. The letter from Mr Coffey to Mr Steiner enclosing Mr Jefferis' costs disclosure and costs agreement document (exhibit page 47). The specific costs disclosure letter and agreement are not identified but only the first agreement dated 16 May 2012 was in existence at this time;

3. Various letters relating to part payment of the plaintiff's fees are included. None of these state that the brief is on a speculative basis (see for example exhibit page 51);

4. There is an email dated 30 May 2013 from the plaintiff to Mr Coffey which states: “Please find enclosed my memorandum of fees for attendances in this matter since July 2012” (exhibit page 71);

5. There is extensive documentation showing the complexity of some of the issues in the legal proceedings involving Mr Steiner. Some of these are set out in an email message from the plaintiff to Mr Coffey dated 30 April 2014 (exhibit page 97);

6. Mr Coffey also exhibits to his affidavit various Summons and affidavits filed in the various proceedings. These affidavits primarily relate to the dire financial circumstances of Mr Steiner, his lack of income, the health issues relating to himself and his wife and the fact that he was being pressed by numerous creditors including in relation to the mortgage on his residence. At this time Mr Steiner was in his mid-60s. The main Summons in the Supreme Court sought both interim and final relief in relation to family provision payments (see exhibit “MC T2” pages 1-5);

7. One factor which is not given prominence in the affidavits from Mr Steiner is his obligations to pay legal fees to the defendant and the plaintiff. The affidavits focus on his own requirements for living expenses and to meet his other various liabilities (see exhibit “MC T2” at pages 19-20). There is a similar lack of reference to legal fees’ obligations in affidavits prepared by Mr Coffey (see exhibit “MC T2” at pages 26-28 and 40-41). An affidavit of Mr Steiner sworn 9 October 2012 does refer to the use of some funds advanced to him including some of the $300,000 to meet “some of my legal fees” (exhibit page 50, paragraph 3). There is no reference in the application for further payments from his mother's estate by Mr Steiner to it being used to pay legal fees (exhibit page 51, paragraph 11). See also Mr Steiner's affidavit sworn 18 March 2013 at paragraph 6 (exhibit page 59).

43. Mr Coffey gave further oral evidence in chief with the leave of the court. He was directed to paragraph 47 of his affidavit sworn 4 May 2018. Mr Coffey stated that he returned from leave by about 8 May 2012. He said he read the Steiner file to update himself as to what had occurred. He said he had a conversation with Mr Noss who came to see him. Mr Coffey states that Mr Noss said to him words to the effect: “We need to brief counsel. I have spoken to Richard Jefferis, he’s prepared to do it “on spec””. Mr Coffey then said “Okay” and he wrote to Mr Steiner with Gells’ costs letter: see T77.20.

44. Mr Coffey was subject to cross-examination by lead counsel for the plaintiff.

45. The cross-examination of Mr Coffey extended to his understanding of a number of relevant provisions in the Legal Profession Act 2004. Mr Coffey agreed that as an experienced solicitor he knew in general terms for many years prior to the events giving rise to the current dispute of his obligations as set out in s 311 of the LPA as a solicitor to make disclosure to a client in relation to costs: T115.9. He also agreed that he knew of it being a normal part of practice to send a written document to a client which addressed the amount by which his firm would be remunerated: T115.14.

46. Mr Coffey agreed that he was familiar with the obligations to disclose costs to a client in general terms as set out in s 309 of the LPA: T115.36. In relation to s 310 of the LPA, Mr Coffey agreed that a solicitor had an obligation to disclose to a client how much a barrister briefed by the solicitor on behalf of the client proposed to charge for their legal services: T116.9.

47. Mr Coffey was taken to paragraph 48 of his 4 May 2018 affidavit, in which he states that on 10 May 2012 Gells sent to Mr Steiner a letter and costs disclosure document. He agreed that these were the documents at Court Book 428 and following: see Exhibit “MC T1” to Mr Coffey’s affidavit. Mr Coffey agreed that the document commencing at Court Book 429 was the costs disclosure document of Gells. Mr Coffey agreed that this was sent to Mr Steiner partly because of the obligations of Gells under ss 309 and 311 of the LPA: T116.30. In re-examination, Mr Coffey said that the documents were also partly sent to set up the contractual relationship between the client and Gells and to inform the client of the terms of the retainer with Gells: T130.6. Mr Coffey agreed that there was no reference in the costs disclosure letter and document to counsel's fees apart from the reference in paragraph 11 of the costs disclosure document to the possibility of the firm retaining another law practice such as a barrister who would be briefed for the client: T116.34.

48. Mr Coffey was taken to an email dated 18 May 2012 from Mr Jefferis, the plaintiff, in which Mr Jefferis suggested an amount to be sought from the Supreme Court on behalf of Mr Steiner as an interim distribution and which included “5. $50,000 being for legal expenses for 12 months – this matter and the appeal in Queensland”: T117.22; T117.43. Mr Coffey agreed that this email was received after the conversation between Mr Jefferis and Mr Noss: T117.26. Mr Coffey stated that “the plan” at that time was to use part of the interim distribution to fund future legal expenses for the work he and Mr Jefferis were doing: T117.49. This email and Mr Coffey’s evidence was relied on by the plaintiff as being inconsistent with a conditional costs agreement. If the lawyers were acting conditionally, particularly Mr Jefferis, why would $50,000 be needed for legal expenses? It was submitted this could not be explained away as applying to filing fees and photocopying costs only.

49. Mr Coffey was taken to paragraph 68 of his 4 May 2018 affidavit where he states that on 25 May 2012 Gells sent Mr Steiner a letter enclosing Mr Jefferis' cost disclosure document and costs agreement and a Gells Trust Account statement. The letter is at page 47 of Exhibit “MC T1” to Mr Coffey's affidavit: Court Book 445; T118.18. Mr Coffey agreed that neither of the enclosures to the 25 May 2012 letter were exhibited to his affidavit following the letter: T118.23. The enclosures as sent by Gells with the letter dated 25 May 2012 were confirmed by Mr Coffey and became part of Exhibit A in the proceedings: T119.

50. Mr Coffey agreed that part of the reason for sending the letter at Court Book 445 with the document from Mr Jefferis was to comply with Gells’ obligations in ss 310-311 of the LPA: T120.22. In re-examination, Mr Coffey said that the other reason was to disclose to Mr Steiner the general terms of retainer of Mr Jefferis as sent by him to Gells. This answer was heavily relied on by the plaintiff. It was submitted that it was inconsistent with the defendant’s case. Either what was sent by Mr Coffey was misleading to his knowledge or Mr Jefferis had an unconditional costs agreement as reflected in the document sent by Gells to Mr Steiner.

51. Mr Coffey agreed that Mr Jefferis forwarded a number of letters to him in relation to the payment of fees: T120.28. Letters from Mr Jefferis in relation to fees became Exhibit B in the proceedings. Mr Coffey said he did not recall receiving the one dated 16 June 2015 (T120.36) but accepted that the letter from Mr Jefferis dated 16 June 2015 which was part of Exhibit B was correctly addressed to him. Mr Coffey agreed that the other letters were sent by Mr Jefferis to him. The letters cover a period from 16 June 2015 to 25 August 2015. The letters are ones in which Mr Jefferis, in summary, referred to fees alleged to be owing to him from Gells and requested payment of part of them or a response from Gells in relation to the issue of payment.

52. Mr Coffey agreed that a firm of solicitors named KeyPoint Law had taken over the handling of Mr Steiner's matters from Gells after Mr Coffey had ceased acting for Mr Steiner: T122.2. A letter from Mr Coffey to Ms Ross-Maranik dated 28 March 2017 became part of Exhibit C in the proceedings and made reference to certain legal costs and disbursements said to be outstanding to Gells as well as referring to certain invoices from Counsel, including the plaintiff, which were said to be partly unpaid. The amounts unpaid concerning Mr Jefferis referred to in the 28 March 2017 letter were $27,460.07 and $41,031.46. The letter included the following comment: “Payments for professional fees came from interim distributions”. Mr Coffey stated that according to his calculations the balance of the fees to Mr Jefferis not stated to be unpaid had already been paid by Gells: T124.35. The plaintiff relies on this letter. He submits that if the costs agreement between Gells and him was conditional then there would have been no reason for Gells to have partly paid Mr Jefferis’ fees.

53. Mr Coffey was then asked questions in relation to paragraphs 16-19 of the Defence and the Amended Defence filed by the defendant in the proceedings. Mr Coffey agreed that paragraphs 16-19 summarised in part the allegations concerning the conversation between Mr Jefferis and Mr Noss as had been communicated to Mr Coffey: T125.27. Mr Coffey said that he knew Mr Noss had a conversation with Mr Jefferis and was aware of what he regarded as the substance of the conversation as he had spoken to Mr Noss: T126.10. Mr Coffey agreed that between the swearing of the affidavit verifying the Defence and the swearing of the affidavit verifying the Amended Defence he had discussed with Mr Noss the nature and content of the evidence that he would give in relation to the conversation he had had with Mr Jefferis: T126-127. This was particularly in relation to the allegation in paragraph 16 of the Amended Defence: T127.13. Mr Coffey agreed that on 18 June 2018 on the first day of the hearing, that he had spoken with Mr Noss although he could not recall whether it was in person or by telephone: T127.45. He denied that Mr Noss had informed him that what was pleaded by the defendant at paragraph 16 of the Defence was incorrect: T128.11.

54. In answer to questions from the court, Mr Coffey confirmed that the cost disclosure document forwarded with his 10 May 2012 letter to Mr Steiner did not refer to the retainer being conditional: T129.21. He also stated that his understanding was that the cost disclosure document of Mr Jefferis which he sent to Mr Steiner did not include all the terms of the arrangement between Mr Jefferis and Gells: T130.31. The plaintiff relied on this answer. It was submitted that either Mr Coffey sent an agreement which was wrong and thus it was misleading or he had sent a document which was unconditional and properly reflected the true position between Gells and Mr Jefferis.

Mr Stephen Noss

55. Mr Noss was not called as a witness by either party. The plaintiff submitted that a Jones v Dunkel inference should be drawn against the defendant in relation to Mr Noss. The defendant said a Jones v Dunkel inference should be made against Mr Jefferis as the plaintiff is a friend of Mr Noss.

56. In the light of the evidence, particularly the evidence at T126-128, in my view I am able to draw that inference against the defendant and should draw it. Mr Noss was previously a consultant at the defendant firm for nine years. For part of the early relevant period, he had day to day carriage of Mr Steiner’s matter. Mr Noss was obviously willing to speak to the defendant in relation to his evidence and did so. He was a crucial witness in relation to the early May 2012 conversation with Mr Jefferis and paragraph 16 of the defendant’s Amended Defence. Prior to his conversation with Mr Coffey and counsel for the defendant, the defendant proposed to call Mr Noss as a witness in its case: T72.28; T77.46; T79.26; T93.26-.32; T105.38-.42; T110.30. The conversation was crucial to the defendant’s case as the plaintiff relied on the terms of the 16 May 2012 written agreement and denied a conditional costs agreement. The defendant’s claim that the file note was clear enough and this was the reason Mr Noss was not called should not be accepted. The file note was very short and undated. I accordingly am of the view that I should, in all the circumstances, draw the inference that the evidence of Mr Noss would not have assisted the defendants’ case: Payne v Parker [1976] 1 NSWLR 191 at 201-202; Newell v De Costi [2018] NSWCA 49 at [78]-[80]. However, my findings in the present case would have remained the same even if that inference had not been drawn in favour of the plaintiff.

57. I am not willing to draw the Jones v Dunkel inference against the plaintiff through his failure to give evidence, even though Mr Noss and the plaintiff were on friendly terms. I would have considered drawing that inference if Mr Noss had given evidence as to the relevant conversation in May 2012 and Mr Jefferis had not given evidence.

58. No evidence was led in reply on behalf of the plaintiff. No further evidence was led for the plaintiff/cross-defendant in relation to the Cross-Claim.

Submissions

59. The parties provided the court with very detailed submissions. As I mentioned above, one aspect of the defendant’s case was to challenge the court’s jurisdiction to hear this matter.

60. The plaintiff’s submissions, in general summary, were as follows:

1. The court has jurisdiction to determine the matter. The court should follow two decisions of the Court of Appeal (New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338 at [71] and Mega-Top Cargo Pty Ltd v Moneytech Services Pty Ltd [2015] NSWCA 402 at [47]-[49]) in preference to three decisions of single judges of the Supreme Court (The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194, Nova 96.9 Pty Ltd v Natvia Pty Ltd [2018] NSWSC 1288 and Sapphire Suite Pty Ltd v Bellini Lounge Pty Ltd [2018] NSWSC 1366). This court is bound by the Court of Appeal decisions and must follow them or, in the alternative, should follow them as a matter of precedent even if the court thinks the Court of Appeal was in error, due to the significance of a finding of lack of jurisdiction. I will set out further detail in relation to this submission below;

2. There are a number of other bases upon which this court is given jurisdiction to hear the matter other than under s 44 of the District Court Act 1973;

3. The court should find there was no conditional costs agreement between the plaintiff and the defendant. Mr Coffey’s oral evidence of the conversation between Mr Coffey and Mr Noss in early May 2012 should be struck out as it is hearsay. The file note is vague and establishes only a conversation between Mr Noss and Mr Jefferis at some time in which Mr Jefferis said he would do a matter “on spec”;

4. The written costs agreements in evidence between Mr Jefferis and Gells are all unconditional. The first written costs agreement was forwarded by Gells to Mr Steiner without any qualification: Exhibit A. Why would this have been sent if it was inaccurate? The file note does not satisfy the requirements of s 323(3)(c)(i) of the LPA as to conditional costs agreements cf s 323(2) for an unconditional costs agreement. Even if the court finds a conversation occurred between Mr Noss and Mr Jefferis as relayed to Mr Coffey, this does not establish the matters pleaded in paragraph 16 of the Amended Defence;

5. The written costs agreement between Gells and Mr Steiner sent on 10 May 2012 was unconditional, contrary to the arrangements alleged by the defendant: see Court Book 428-432. This supports the assertion that the plaintiff’s costs agreement was unconditional;

6. At the highest, the file note can only relate to the first written costs agreement;

7. The first written costs agreement related only on its face and in the context in which it was prepared to the interim application for an award of family provision;

8. Why would Gells have paid any of Mr Jefferis’ fees at all if there was a conditional costs agreement or a deferred arrangement? Unarguably, some of Mr Jefferis’ fees were paid by Gells: Exhibit C;

9. Mr Coffey’s evidence of “a plan” to obtain $50,000 for future legal expenses as at 18 May 2012 (Court Book 437) is inconsistent with a conditional costs agreement;

10. The plaintiff’s demands/queries about his fees (Exhibit B) are inconsistent with a conditional costs agreement. There is no evidence they were met promptly by responses from Gells alleging a conditional costs agreement or a deferred arrangement;

11. If there was a conditional costs agreement it was void under s 327 of the LPA;

61. The defendant’s submissions, in general summary, were as follows:

1. The court does not have jurisdiction to hear the plaintiff’s claim. The court’s primary grant of jurisdiction is found in s 44(1) of the District Court Act 1973 (NSW). The transactions at the centre of the proceedings were retainers of a barrister by a solicitor to provide legal services for a fee and whether any right to payment for those services has yet arisen. An agreement to retain the services of a barrister for a fee is a commercial transaction, it is not a private or non-business relationship. The matter also has importance in trade or commerce. Accordingly, as at 2 February 1998 the hearing of the matter would have been allocated to the Commercial Division of the Supreme Court and not to the Common Law Division under Part 14 of the Supreme Court Rules 1970. Therefore, the court does not have jurisdiction under s 44 of the District Court Act;

2. The court should follow the decisions of Justice Parker in The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194, of Justice Rein in Nova 96.9 Pty Ltd v Natvia Pty Ltd [2018] NSWSC 1288 and of Justice Harrison in Sapphire Suite Pty Ltd v Bellini Lounge Pty Ltd [2018] NSWSC 1366. The comments of the Court of Appeal in New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338 at [71] and Mega-Top Cargo Pty Ltd v Moneytech Services Pty Ltd [2015] NSWCA 402 at [47]-[49] are not binding on the court under the principle of stare decisis. The comments were obiter and the Court of Appeal did not consider Part 14.2 of the Supreme Court Rules 1970 as at 2 February 1998. This court must construe the statute and rules and apply them accordingly. When that is done, the court does not have jurisdiction to determine the matter;

3. The plaintiff’s other allegations in relation to alternative bases of jurisdiction in the court to determine the matter should be rejected;

4. The plaintiff has failed to prove the agreement between the parties it contends for on the balance of probabilities. A quantum meruit claim is not pleaded;

5. On the facts, a conditional costs agreement was entered into between the parties which is enforceable in relation to the plaintiff. This is established by the file note, the conversation between Mr Coffey and Mr Noss and the post contractual conduct. A lack of compliance with the LPA does not prevent the enforcement of that agreement in accordance with contractual principles;

6. Waiver, estoppel and misleading and deceptive conduct are established;

7. I refer to further submissions made by the defendant in the course of my analysis below.

Findings of fact

62. Taking into account the evidence and the submissions of the parties, I make the following findings of fact:

1. At all relevant times, Mr Jefferis was a barrister, Gells was an incorporated legal practice under the LPA and Mr Coffey was a solicitor and a director of Gells;

2. Mr John Steiner has been a party from 2012 in a number of disputes in the Supreme Court of New South Wales in relation to his rights and entitlements concerning the will and the estate of his late mother;

111. I do not consider that the defendant’s point is established. First, Clare v Joseph considered a particular piece of legislation different to the one here. Secondly, there was no written agreement in Clare v Joseph unlike here. Thirdly, I do not read Keesing or WKA Legal as supporting this proposition. I consider that is reading too much into the paragraphs relied on in the two decisions. It seems to me that a party cannot enforce as a matter of contract a conditional costs agreement which does not comply with the provisions of the LPA. That seems to be the effect of s 327 of the LPA. To find otherwise would be to subvert the legislative scheme intended by Parliament. The word “may” in s 322 (1) of the LPA merely refers to the alternatives set out in the remainder of that section. This approach as submitted by the plaintiff also appears to be consistent with the objects in s 301(a) and (b) of the LPA.

112. However, I will consider whether there was a conditional costs agreement in the present case if I am in error.

(d)  Did the parties enter into a conditional costs agreement?

115. There were four alleged conditional costs agreements entered into between the plaintiff and the defendant. The costs agreement relating to the Wong matter is not relevant. The three costs agreements relating to the Steiner matters were constituted by:

1. The disclosure letters from the plaintiff to the defendant dated 16 May 2012, 5 July 2012 and 16 November 2014; and

2. The conduct of Gells in giving the plaintiff further work to do in the matters which constituted a concluded costs agreement in each case by conduct.

116. The relevant conversation relied upon by the defendant seems to have occurred in or about early May 2012 from the location of the file note in Mr Noss’ handwriting on the file and its contents. The fact the note is on the file seems to confirm it relates to this file. It is assumed a competent solicitor would otherwise not have allowed the note to be on the file. Mr Jefferis and Mr Blackburn Hart SC had been barristers under consideration to be briefed: CB 426 (8 May 2012 email). The note is in Mr Noss’ handwriting: Coffey affidavit sworn 4 May 2018 paragraph 45. I make a finding to the effect that it is in Mr Noss’ handwriting and relates to the file. I have referred to the file note above but I repeat its contents now: “Richard Jefferis barrister will do on spec”.

117. It is not entirely clear from this file note what is being referred to as the legal services which will be done “on spec” by Mr Jefferis. The disclosure letter dated 16 May 2012 in its heading refers to both a further provision claim under the Succession Act 2006 (NSW) and an “application for interim distribution from the estate”. It is clear that as at early May 2012 the focus was on obtaining an interim distribution from the Estate based at least in part on the decision in Young v Salkeld (1985) 4 NSWLR 375 which Mr Jefferis brought to Mr Noss’ attention. The 18 May 2012 email confirms this. It seems clear that as a result of an application brought to the Supreme Court that Justice White ordered the sum of $300,000 to be paid by the executors into the trust account of Gells: affidavit of John Steiner sworn 9 October 2012, paragraph 2 at page 50 of exhibit “MC T2” to Mr Coffey’s 4 May 2018 affidavit. See also Mr Steiner's 18 March 2013 affidavit at paragraph 5: exhibit “MC T2” paragraph 5; see also Mr Coffey’s 4 May 2018 affidavit read in the proceedings at paragraphs 79-82. It is also clear that the plaintiff appeared before Justice White in the application which led to the interim distribution of $300,000.

118. The oral evidence of Mr Coffey in chief merely stated that he was informed by Mr Noss that he had spoken to the plaintiff and he was quite prepared to do “it” “on spec”. It is not entirely clear what this was referring to. In my view, having regard to the evidence of Mr Coffey of his conversation with Mr Noss, the file note of Mr Noss, the disclosure letter dated 16 May 2012 from the plaintiff and the legal services which were contemplated at the time that disclosure letter was sent, the conditional aspect of the costs agreement agreed orally at that stage was success in relation to an application for substantial interim provision from the Estate and nothing further. I am not satisfied on the evidence that the terms of the arrangement are those referred to in paragraph 16 of the Amended Defence filed 2 July 2018. In submissions, Ms Castle, counsel for the defendant, submitted that the term on “spec” meant that it was only satisfied if final orders had been made in the Supreme Court in favour of Mr Steiner and the relevant legal fees relating to Mr Steiner had been received by Gells. This seems to be somewhat different to paragraph 16 of the Amended Defence.

119. The application for interim provision was for an extensive amount of money. From the evidence it seems that it may have been for $475,000: CB 437. Although the financial circumstances of Mr Steiner were acute, as is clear on the evidence, it seems inconceivable that if a large amount of money was obtained as an interim provision from the court as a result of an application by the plaintiff, that this did not constitute a successful outcome where the disclosure letter points to the application being for interim provision.

120. One also asks the question why Mr Steiner should have his interests preferred in relation to his financial liabilities and living expenses, where the interim provision was only obtained as a result of legal services from his barrister and solicitors. It seems that the answer is that his dire financial position necessitated this result.

121. Accordingly, in my view the conditional nature of any oral agreement had been satisfied by the success of the application for interim provision with the award of $300,000 by Justice White and the receipt of the monies. The evidence is clear that later, substantial additional distributions were made from the Estate by the executors including as a result of other orders from the Supreme Court.

122. In circumstances where Mr Steiner had obtained substantial distributions, and where there were no express additional references relating to a conditional retainer in the other and later costs agreements of July 2012 and November 2014, it does not appear to me that the later two agreements were conditional. No further conversations are relied on relating to the two later agreements.

(e)  If such a conditional costs agreement was oral, what is the consequence of entry into subsequent written costs agreements which do not refer to any conditional costs agreement?

123. Further, after the discussion which appears to have been between Mr Noss on behalf of the defendant and the plaintiff in or about early May 2012, the 16 May 2012 disclosure letter was forwarded by Mr Jefferis to Gells and a costs agreement was subsequently entered into through Mr Jefferis continuing to be given further work. It is clear that Gells received this letter as it was apparently forwarded to Mr Steiner by letter from Gells dated 25 May 2012: see also Exhibit A. The other two disclosure letters were later in time to 25 May 2012.

124. I consider this issue on two bases. The first is that the oral agreement was as I have found. I also consider it on the basis that I am wrong in that finding, and the oral agreement was as is pleaded in paragraph 16 of the Amended Defence. I also consider the matter if the retainer entered into between Mr Jefferis and Gells occurred prior to this time, either by the discussion being an offer by Mr Jefferis and the acceptance of the offer being the forwarding of a brief by Gells to Mr Jefferis or the offer being the offer by Mr Noss to Mr Jefferis of a brief on conditional terms and Mr Jefferis accepting the offer by agreeing to the terms. The court must consider the whole of the evidence, including the conduct and communications of the parties, in determining objectively the contract reached between the parties: Bryson JA (with whom Spigelman CJ agreed) in Redowood Pty Ltd v Mongoose Pty Ltd [2005] NSWCA 32 at [130]. Some cases are not easily analysed in classic offer/acceptance terms: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at 176-7.

125. What was the effect of the 16 May 2012 disclosure letter being sent by Mr Jefferis to Gells and Gells continuing to brief Mr Jefferis?

126. In my view, the subsequent costs agreement which was entered into as a result of the 16 May 2012 disclosure letter and the subsequent provision of further work, did not refer to the agreement being conditional and was later in time to the oral conversation. Accordingly, the terms of that written costs agreement superseded or replaced the oral conversation and any prior agreement and constituted objectively the agreement as to costs between the parties. This novation, being the termination of any prior contract and the entry into of a new contract, should be implied from the forwarding of the 16 May 2012 disclosure letter and the acceptance by the subsequent provision of further work: Tallerman & Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd (1957) 98 CLR 93 at 144; Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473 at 491-2. If the parties had objectively intended to incorporate the oral term in the costs agreement, or objectively intended that an agreement not be terminated by the subsequent agreement, the oral term would likely have been referred to expressly, or Gells would have disputed the terms of Mr Jefferis’ letter when received. Contrary to Gells submissions, this later agreement provided certainty in relation to payment terms.

127. Gells point to Mr Jefferis’ dire financial position and say this negates an agreement on normal payment terms. That is a factor to be taken into account. That is less relevant to the agreement between the plaintiff and the defendant. It also does not take into account the real possibility of interim distributions. In the end, the contractual arrangement has to be determined objectively on the evidence.

128. Gells also submits that post contractual conduct negates a finding of an unconditional costs agreement. Post-contractual conduct of the parties is admissible on the question of whether a contract has been formed and its content: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at 163-164; Australian Medico-Legal Group Pty Ltd v Claireleigh Mosman Pty Ltd [2017] NSWCA 218 at [70].

129. Gells relies on:

1. Mr Jefferis not demanding his fees whist he was retained;

2. Mr Jefferis not disputing Mr Steiner’s comments at the 9 October 2012 conference;

3. Mr Jefferis continuing to do work.

130. In my view this submission should be rejected.

131. Mr Coffey forwarded Mr Jefferis’ costs disclosure and unconditional costs agreement to Mr Steiner on 25 May 2012 without qualification. It must be inferred that he had read it and accepted it. Any reasonably competent solicitor would have read it before sending it.

132. Gells own costs agreement with Mr Steiner was unconditional: see CB 428-432. It would seem likely that the solicitors and Mr Jefferis would have similar terms.

133. Later correspondence did have Mr Jefferis requesting his fees. See the correspondence in Exhibit B. In the 16 June 2015 letter from Mr Jefferis he refers to amounts “due”, “outstanding” and “owing” to him.

134. The part payments made by Gells to Mr Jefferis at various stages are more consistent with an unconditional costs agreement than a conditional costs agreement, particularly having regard to the dire financial position of Mr Steiner revealed on the evidence.

135. The comments made in the 9 October 2012 conference by Mr Steiner, and the lawyers’ lack of response, are in my view equivocal.

136. Mr Coffey conceded in cross-examination that he sent Mr Jefferis’ costs disclosure and costs agreement letter to Mr Steiner in part “to disclose to the client the general terms of the retainer of Mr Jefferis as sent to Gells”: T129.43. Those terms contained an unconditional costs agreement not a conditional costs agreement. This answer is inconsistent with the defendant’s case on this point.

137. Thus, in my view, the three costs agreements between the plaintiff and the defendant were unconditional.

138. Even if I am wrong in relation to that conclusion, my views in relation to the oral conversation show that it is limited to the first costs agreement which I find related to an application for an award of substantial interim provision for Mr Steiner only. This occurred.

(f)  Did the plaintiff waive his rights under the written costs agreements?

139. The defendant pleads, in the alternative, that in the circumstances the plaintiff waived reliance on the costs agreements: Defence paragraph 117(c).

140. The defendant has claimed that the plaintiff has waived his contractual rights to the extent that the costs agreements between the defendant and the plaintiff entitled the plaintiff to call for payment of the invoices in circumstances where the costs agreements on the face of the disclosure letters do not refer to the costs agreements being conditional.

141. It is clear that the concept of waiver can be used in various senses but here it is in relation to the plaintiff not insisting on a term of the costs agreement requiring payment of his invoices within 30 days which is a term for his sole benefit. It applies where a party to a contract has made a conscious decision to relinquish a right to seek an available remedy: see Agricultural and Rural Finance v Gardiner (2008) 238 CLR 570 at [52]-[56] and [84] and Prospect Resources Ltd v Molyneux [2015] NSWCA 171 per Ward JA (with whom Beazley P and Leeming JA agreed) at [57]-[61].

142. The defendant refers to various matters including:

1. The plaintiff accepting part payment of his fees and not insisting on his full rights for immediate payment for a considerable period of time;

2. The plaintiff continuing to do further work without full payment; and

3. The plaintiff not referring at any stage to his right to insist on the terms of his costs agreements.

143. In my view, there was not a waiver from the plaintiff of his contractual rights:

1. There is no evidence that the plaintiff abandoned any right which he had under his costs agreements;

2. I cannot infer from the evidence that he intentionally acted by not insisting on his strict contractual rights in a manner which was inconsistent with those rights;

3. I cannot infer from the evidence that he has consciously made a decision to relinquish his rights;

4. The submission is inconsistent with the letters from Mr Jefferis to Mr Coffey which are Exhibit B.

144. The conduct of the plaintiff is equally consistent with him having the rights to seek his fees but waiting to see whether there were further interim provisions and in what amount or some resolution of the dispute. In my view, there is no clear conduct from the plaintiff amounting to him waving his rights under the various costs agreements: see also Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (2006) 149 FCR 395 at [113].

(g)  Is the plaintiff estopped from relying on his rights under the written costs agreements?

145. The defendant pleads that the plaintiff is estopped from relying on the costs agreements because the defendant has changed its position in that the plaintiff would not have continued to be retained if the defendant had been made aware of the demand for payment by the plaintiff from the defendant rather than from John Steiner: Defence paragraph 117(d).

146. The defendant relies on both conventional estoppel at common law and promissory estoppel.

147. The principles relating to conventional estoppel were set out by the Court of Appeal in TMA Australia Pty Ltd v Indect Electronics & Distribution GmbH [2015] NSWCA 343 at [115]-[117] per Meagher JA (with whom both Macfarlan JA and Bergin J agreed). The matters necessary to establish an estoppel by convention are:

1. That the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant;

2. That the defendant has adopted the same assumption;

3. That both parties have conducted their relationship on the basis of that mutual assumption;

4. That each party knew or intended that the other act on that basis; and

5. That departure from the assumption will occasion detriment to the plaintiff.

148. As Meagher JA emphasised at [116] in TMA Australia, there is a need for the one assumption to be adopted by both parties and for it to be the conventional basis of their relationship. His Honour relied on Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 244 for this proposition.

149. For similar reasons to the waiver argument, I do not believe that conventional estoppel has been established by the defendant. I am not satisfied on the evidence that both parties have adopted the same assumption and have conducted their relationship on the basis of the alleged mutual assumption. The word “conventional” in the context of conventional estoppel carries a connotation of agreement which must be expressed or inferred as the foundation of the dealings between the parties.

150. The following matters are in my view inconsistent with the conventional assumption alleged:

1. The fact the costs agreements did not refer to the alleged conditional nature of the agreement in any way even by referring to the conversation between Mr Noss and Mr Jefferis;

2. There is no reference in the documentary evidence to an alleged conditional relationship after the first disclosure letter was sent on 16 May 2012;

3. Payments were made to the plaintiff by the defendant on a number of occasions where there was no assertion that the payments were being made despite the agreements being allegedly speculative. If the agreements were truly conditional as alleged no payments would have been made at all;

4. Later conduct of the parties was equivocal at best;

5. Merely failing to insist on full payment by the plaintiff does not establish the alleged assumption;

6. Mr Coffey did not refer to the alleged assumption in the meeting on 9 October 2012;

7. The letters in Exhibit B.

151. Further, it was not entirely clear in my view what was to be the conditional nature of any additional costs agreements. For example, if Mr Steiner was advanced the entire $2 million that he was left as a legacy, would that still not have been regarded as a successful outcome for the payment of the fees of the defendant and the plaintiff pending the result of the other disputed matters? The defendant’s claim that it would not was not persuasive.

152. In the end, I am not satisfied that both parties adopted the same assumption that the costs agreements were all to be conditional and that the plaintiff's fees would only be paid on the conclusion of the matters when Mr Steiner received his final payment if he was successful under his application for further final provision.

153. In relation to equitable estoppel, in Ashton v Pratt [2015] NSWCA 12, Bathurst CJ (with whom McColl and Meagher JJA agreed) stated the following at paragraphs [109]-[110], [112]-[113], [141]-[142] and [147]:

“[109]  As I indicated, the estoppel pleaded was described as an equitable estoppel. In Waltons, Brennan J described the elements of such an estoppel in the following terms at 428–429:

“In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.”

[110]  Earlier in his judgment Brennan J appeared to reject the proposition that such an equitable estoppel can only be used defensively and was essentially negative in effect. His Honour stated at 416 that equitable estoppel, unlike estoppel in pais, is a source of legal obligations arising on an actual state of affairs. He stated that whilst it is possible that the estoppel may be used to compel a party to fulfil another’s expectations, that was not the object of the estoppel. He stated at 423 that the object was to avoid the detriment which would be suffered by the party who has been induced to act or to abstain from acting thereon. He stated that if that object is kept in mind, the concern that a general application of the principle of equitable estoppel would lead to non-contractual promises becoming enforceable as contractual promises would be allayed.

…

[112]  In Commonwealth of Australia v Verwayen (1990) 170 CLR 394 each of Mason CJ, Brennan J and Deane J adhered to the broad view of the scope of equitable estoppel at 413, 428–429 and 440 respectively.

[113]  In Giumelli, a case of proprietary estoppel, at [32]–[34] and [48]–[52] the plurality appeared to reject the proposition that the relief in the case of equitable estoppel must be confined to the minimum required to avoid the detriment: see also Sidhu at [85]. Notwithstanding, the plurality in Giumelli did not seek to limit what was said by the majority in Waltons concerning the potential scope of equitable estoppel. The plurality at [35] cited, without disapproval, the following passage of the judgment of McPherson J in Riches v Hogben [1985] 2 Qd R 292 at 300–301:

“A consequence of applying the principle may be to complete an otherwise imperfect gift, as in Dillwyn v Llewelyn, or to give effect to an agreement that, for want of certainty or consideration or of some other essential element, falls short of constituting an enforceable contract. Many of the reported cases are concerned with imperfect gifts; but there is of course a sense in which all agreements made or promises given without consideration are imperfect gifts of the benefits they purport to confer. What distinguishes the equitable principle from the enforcement of contractual obligations is, in the first place, that there is no legally binding promise. If there is such a promise, then the plaintiff must resort to the law of contract in order to enforce it, it being the function of equity to supplement the law not to replace it. The second distinguishing feature is that what attracts the principle is not the promise itself but the expectation which it creates. In that respect it represents the precise converse of what was said by Jessel MR in Ungley v Ungley to be the basis for enforcing the contract in that case. Finally, the equitable principle has no application where the transaction remains wholly executory on the plaintiff’s part. It is not the existence of an unperformed promise that invites the intervention of equity but the conduct of the plaintiff in acting upon the expectation to which it gives rise. That is why in Dillwyn v Llewelyn, where the son built on land promised but not effectively conveyed to him by a memorandum signed by his father, Lord Westbury LC said that the only inquiry was ‘whether the son’s expenditure, on the faith of the memorandum, supplied a valuable consideration, and created a binding obligation’.” (Citations omitted).

…

[141]  The relevant detriment is that which the party asserting the estoppel would suffer, as a result of her original change of position, if the assumption which induced it was repudiated by the party estopped: Delaforce v Simpson-Cook [2010] NSWCA 84; 78 NSWLR 483 at [42], Grundt v The Great Boulder

Proprietary Gold Mines Ltd (1937) 59 CLR 641 at 674–675 and Sidhu at [81].

[142]  What now appears clear is that there is no need to mould any remedy in the case of equitable estoppel to reflect the minimum relief necessary to remove the detriment: Giumelli at [48], Delaforce at [56]–[57] and Sidhu at [85]. Prima facie the courts should enforce a reasonable expectation which the party bound created or encouraged. However, relief will be limited where the enforcement of a plaintiff’s expectation would be out of all proportion to the detriment: Delaforce at [62] and Sidhu at [85]. This is because in those circumstances good conscience does not require the promisor be held to his or her promise.”

…

[147]  As was stated by Gageler J in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; 88 ALJR 552 at [150] the detriment or harm required to ground an estoppel can be any material disadvantage. Such material disadvantage must be substantial, although it need not be quantifiable in the same way as an order of damages. In the present case Ms Ashton suffered no material disadvantage, certainly not one which could be described as substantial.”

154. In my view, the defendant has failed to establish that Mr Jefferis has induced the defendant to adopt any particular assumption or expectation or knew that the defendant acted or abstained from acting in reliance on the assumption or expectation alleged.

155. The conversation between Mr Noss and the plaintiff in May 2012 was, it seems, on the limited evidence, not an entirely clear one. It only referred to Mr Jefferis being willing to do the matter “on spec”. As I have concluded above, this agreement was made when only an interim distribution application was in contemplation. The later costs agreement dated 16 May 2012 did not refer to this conversation or alleged condition. There was no suggestion by the defendant that it disagreed with the terms of that costs disclosure when it was received. In fact, it forwarded a copy of the disclosure letter to Mr Steiner.

156. I am not satisfied that there was any representation or active inducement by the plaintiff for the defendant to believe that all work of any type in relation to the estate of the late Mrs Steiner would be conducted for Mr Steiner by the plaintiff on a speculative basis, in the sense that no payment would be required at all until the plaintiff was ultimately successful in each of the relevant proceedings subject to the relevant costs agreements.

157. In the context of when the conversation between Mr Noss and the plaintiff occurred, at that time only an interim application was contemplated although that was in the context of a summons in which both interim and final relief would be sought. I do not conclude that there was any conduct or representation by or on behalf of the plaintiff which led to the conclusion that irrespective of the amount of any interim payment or payments that the plaintiff would have to wait to the final conclusion of the matter (which could be a number of years later) before he could require payment of his fees. This seems unreasonably to prefer the interests of Mr Steiner to those of his lawyers.

158. In coming to this conclusion, I accept the evidence of Mr Coffey as to what Mr Noss told Mr Coffey as to the conversation between Mr Noss and Mr Jefferis. Mr Coffey appeared to me to be a witnesses of truth.

(h) Did the plaintiff engage in misleading or deceptive conduct in breach of s 18 of the Australian Consumer Law?

159. The defendant sues for misleading or deceptive conduct by the plaintiff in its Cross-Claim.

160. Section 18 of the Australian Consumer Law provides as follows:

“18 Misleading or deceptive conduct

(1)  A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2)  Nothing in Part 3‑1 (which is about unfair practices) limits by implication subsection (1).”

161. Under the definition of “trade or commerce” in s 2 of the Australian Consumer Law, “trade or commerce” includes “any business or professional activity”. What is alleged in the present case were representations and conduct in the course of professional activity.

162. In some circumstances, silence may amount to misleading or deceptive conduct in breach of s 18. The real question is whether, in all the circumstances of the particular case, there has been conduct whether by act or omission (including silence) which is misleading or deceptive or likely to mislead or deceive: Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31; Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 at [209]; OXS Pty Ltd v Sydney Harbour Foreshore Authority [2016] NSWCA 120 at [178].

163. In the present case in its Cross-Claim, the defendant relies on the following matters:

1. An alleged representation on or about 9 May 2012 (the belief of Mr Coffey as to the date) by the plaintiff to Mr Noss that he would act for Steiner against the Estate on a “spec” basis. It is alleged that this representation amounted to a representation by the plaintiff that he would do work as a barrister for Mr Steiner, and Gells would only be liable for the fees of the plaintiff if “the claims involving the estate succeeded”; and

2. Conduct alleged on 9 October 2012 where Mr Steiner said “the judge better grant my application for money or I cannot pay you”. It is noted that Mr Jefferis did not reply to Mr Steiner or Mr Coffey or either of them or say anything to Mr Coffey about his retainer. The lack of reply to Mr Steiner is relied on by the defendant as a representation by, or conduct of, the plaintiff that counsel’s work was being done on a “spec” or contingency basis.

164. In my view, the claims of the defendant should be rejected.

165. In relation to the conduct relied upon on 9 October 2012, the contractual arrangement was between the plaintiff and the defendant not between the plaintiff and Mr Steiner. The costs agreements expressly state that. I can see no reason why a failure to respond by Mr Jefferis to what appears to be an offhand comment from Mr Steiner, a layman, amounts to misleading or deceptive conduct through silence. The costs arrangements between Mr Steiner and the defendant were a matter for them. I can see no reason why it would be reasonable to expect Mr Jefferis to restate his position about his retainer with Gells in the context of such a comment. I do not see that his failure to respond was either unreasonable or amounted to conduct which is misleading or deceptive, particularly in the light of the unconditional nature of the three costs agreements.

166. Mr Coffey did not apparently share his belief set out in paragraph 100 of his 4 May 2018 affidavit with anyone. None of the lawyers responded to the comment from Mr Steiner on the evidence. In fact, if all the arrangements were allegedly conditional, then one wonders why Mr Steiner’s comment was made by him at all. The comment is more consistent with a full paying arrangement, at least between Mr Steiner and Gells.

167. In relation to what is described as the First Representation in paragraph 17 of the Cross-Claim, this relies on the statement by Mr Jefferis to Mr Noss that he would act for Mr Steiner on a “spec” basis. As indicated previously, this has to be seen in the context of:

1. An interim application for provision being the focus of the lawyers at that time;

2. The 16 May 2012 cost disclosure letter from the plaintiff referring to the application for interim provision;

3. That disclosure letter not referring to any conditional costs arrangement; and

4. The nature of what was meant by acting on “spec” not being entirely clear on its face. A representation needs to have clarity in relation to the circumstances in which it occurred to be relied upon: Watson v Foxman (2000) 49 NSWLR 315 at 318-9.

168. Further, I do not see the statement made by Mr Jefferis as meaning that he would continue to act on the basis that Gells would only be liable for the fees of Mr Jefferis if the claims involving the estate succeeded as is alleged in paragraph 18 of the Cross-Claim. The term “claims” in the paragraph presumably refers to all potential claims which could be made relating to Mr Steiner and the Estate. In circumstances where a substantial interim provision was to be applied for, I cannot regard what was said by Mr Jefferis as amounting to the representation alleged. In my view, the statement is far more likely to have the more limited meaning which I have referred to above being that the application for interim provision would be done on a conditional basis pending success in the application of the award of a substantial amount of provision. This is what occurred.

169. Further, on one view there does not appear to have been reliance by Gells on the statement as at 17 May 2012 when it received Mr Jefferis’ costs agreement. No complaint was made by it. However, Mr Coffey was not challenged as to his evidence of reliance. I accept his evidence.

170. Nevertheless, I find that there was no misleading or deceptive conduct as alleged for the reasons given.

Determination

171. For these reasons I find that the plaintiff has established his entitlement to the moneys sought and the Cross-Claim of the defendant fails.

172. The amounts sought by the plaintiff are:

1. The 10 May 2017 determination in the amount of $23,632.09;

2. The costs of assessment of the 10 May 2017 determination in the amount of $1,503.26;

3. The amount in the 7 May 2017 determination of $44,859.46;

4. The costs of assessment of that determination in the amount of $1,796.09.

Total $71,790.90. Interest will need to be added. I note that preliminary submissions were made as to interest issues but, unless agreement is reached, further evidence may be required.

173. I accordingly would propose the following orders:

1. The defendant’s Notice of Motion filed in court with leave on 22 August 2018 is dismissed with costs.

2. Judgment for the plaintiff on his Further Amended Statement of Claim in the sum of $71,790.90 together with appropriate interest;

3. The Cross-Claim is dismissed;

4. The parties are to bring in Short Minutes of Order within 7 days in accordance with these reasons in relation to the amount owing together with interest;

5. The defendant is to pay the plaintiff's costs of the proceedings as agreed or assessed;

6. Liberty to the parties to apply within 14 days to vary the costs order referred to in (4);

7. Liberty to apply on three business days’ notice in relation to the interest issue if agreement cannot be reached.

8. Exhibits to be retained for 28 days.

174. At present, as agreed with the parties, I will only make an order as follows: The parties are to bring in Short Minutes of Order within 14 days in accordance with these reasons.

**********

Decision last updated: 09 October 2018