Kowalski v Lieschke & Weatherill Lawyers - [2015] SASC 76

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master)
KOWALSKI v LIESCHKE & WEATHERILL LAWYERS
[2015] SASC 76
Reasons for Decision of The Honourable Justice Bampton
19 May 2015
PROCEDURE - COSTS - TAXATION - REVIEW - PROCEDURE
Application for further review of a provisional costs order pursuant to rule 278(5) – respondent rendered two bills for work done in relation to an appeal to the Full Court of the Supreme Court – Mr Kowalski made an application for fixing of legal costs pursuant to s 42 of the Legal Practitioners Act 1981 (SA) – provisional costs order in the sum of $2,000 made following taxation by a Master applying rule 274(2)(b)(i) – provisional costs order confirmed by Master upon review pursuant to rule 278(1) – whether retainer between Mr Kowalski and the respondent or Mr Kowalski’s union and the respondent – denial of liability to pay respondent’s costs.
Held:
1. An application for taxation of legal costs can only be made by a person liable to pay the legal costs. Acknowledgement of liability in the application filed for the fixing of legal costs.
2. No basis to interfere with the exercise of the Master’s discretion.
3. Master’s costs order confirmed as a judgment of the Court pursuant to rule 278(6).
4. Application dismissed.
Legal Practitioners Act 1981 (SA) s 42; Supreme Court Civil Rules 2006 (SA) r 274(2)(b)(i), r 278; Supreme Court Act 1935 (SA) s 39, referred to.
Attorney-General v Kowalski [2014] SASC 1; Burgundy Royale Investments Pty Ltd v Westpac Banking Corp (No 2) (1991) 28 FCR 308; Halliday v High Performance Personnel Pty Ltd (In Liq) (1993) 113 ALR 637; King William Law Chambers v Mobitel (International) Pty Ltd (1981) 29 SASR 316; Kedem v Johnson Lawyers Legal Practice Pty Ltd (2014) 121 SASR 118; Kowalski v R J Cole [2015] SASCFC 35; Von Doussas Legal Pty Ltd v Nasr [2008] SASC 206; Watson v Ebsworth & Ebsworth (2010) 31 VR 123, considered.

KOWALSKI v LIESCHKE & WEATHERILL LAWYERS
[2015] SASC 76
Appeal from a Master

BAMPTON J: Mr Kowalski is dissatisfied with a decision on review made by a Master of this Court and seeks a further review pursuant to rule 278(5) of the Supreme Court Civil Rules 2006 (SA) (the Supreme Court Civil Rules).
Mr Kowalski’s request that I disqualify myself
Mr Kowalski emailed my chambers on 14 April 2015 requesting that I disqualify myself on the ground that I was biased against him in my decision in Kowalski v R J Cole & Partners.[1] Prior to commencing the hearing of the further review Mr Kowalski abandoned this request saying he did not want me to disqualify myself “because this is a reconsideration” and it was only in the Stanley and Partners matter that he wanted me to disqualify myself.
Permission pursuant to s 39 of the Supreme Court Act
[1] [2015] SASCFC 35.
Mr Kowalski was declared a vexatious litigant pursuant to s 39 of the Supreme Court Act 1935 (SA) (the Supreme Court Act)[2] by Blue J on 20 January 2014.
[2] Attorney-General vKowalski [2014] SASC 1.
On 21 May 2015, Blue J gave Mr Kowalski permission pursuant to s 39 of the Supreme Court Act to file an application for fixing of the legal costs in respect of two bills rendered by the respondent dated 15 November 1995 and 5 March 1996 totalling $3,536.16.[3]
[3]    The bill allows for a 1.64 per cent increase in the Supreme Court Scale. The Editor’s note in the Fourth Schedule of the Supreme Court Civil Rules 1987 provides:
The following costs are applicable in respect of work done on and after 6 July 1992 and before 31 October 1998 in accordance with R 101A.01(1). See [R101A.01.1].
In accordance with subrule 101A.01(1)(b) the costs to be allowed and paid for under this Schedule shall be increased as follows:
(1)     For work done from and including 13 July 1992 up to and including 28 February 1995 by 0.38 per cent.
(2)     For work done from and including 1 March 1995 by 1.26 per cent.
On 21 May, Blue J settled the Form 54 attached to FDN 1. The Form 54[4] signed by Mr Kowalski states:
[4] The Supreme Court Practice Directions 2006, Part II – Approved Forms were replaced on 1 October 2014 by the Supreme Court Civil Supplementary Rules 2014 Schedule 3.
APPLICATION FOR FIXING LEGAL COSTS
1.I, Kazimir Kowalski of 26 Nalimba Street, Hallett Cove 5158, in the State of South Australia, apply under section 42(1) of the Legal Practitioners Act 1981 (SA) for an adjudication of the following costs. The Bill of Costs of Lieschke & Weatherill Lawyers, dated 15 November 1995 and 5 March 1996, for taxation between solicitor and client pursuant to s 42 of the Legal Practitioners Act.
2.The person who is liable to pay the costs is the applicant.
3.The lawyer or firm of lawyers to whom any such costs are payable is Lieschke & Weatherill Lawyers, 91 Gouger Street, Adelaide, in the State of South Australia.
4.Annexed are copies of the accounts, dated 15 November 1995 and 5 March 1996, issued by the lawyer or firm of lawyers for the costs to which the application relates.
5.The costs in issue are to be adjudicated, pursuant to s 42(6)(a) of the Legal Practitioners Act 1981 (SA) on the applicable Supreme Court scale.
6.The person liable to pay the costs has already paid the Respondent legal costs in the sum of $2,000.00, however, the Applicant does not accept that the Respondent’s legal costs are fair and reasonable.
(Emphasis added)
The provisional costs order and Master’s review
Upon the filing of the Form 54, a Master of this Court conducted a taxation pursuant to s 42 of the Legal Practitioners Act 1981 (SA) (the LPA) on 12 November 2014 and made a provisional costs order in the sum of $2,000. Mr Kowalski sought a review of the provisional costs order pursuant to rule 278(1) on 26 November 2014. Upon review the Master confirmed his order and delivered reasons on 1 December 2014.[5]
[5] Kowalski v Lieschke & Weatherill Lawyers [2014] SASC 182.
On 6 January 2015, Blue J granted Mr Kowalski permission pursuant to s 39 of the Supreme Court Act to seek a further review pursuant to rule 278(5).
Background
Mr Kowalski was employed by Mitsubishi Motors Australia Ltd (Mitsubishi). Following an incident on 16 August 1991 Mr Kowalski claimed workers compensation for emotional distress. Mitsubishi rejected the claim.
Mr Kowalski applied to WorkCover for review of that rejection in October 1991. In March 1994, a Workcover Review Officer rejected the claim. Mr Kowalski appealed against that decision to the Workers Compensation Appeal Tribunal (the Tribunal).
In May 1995, Mr Kowalski’s appeal was allowed and the matter was remitted for hearing before a different review officer. Mitsubishi sought leave to appeal to the Full Court of the Supreme Court against that decision (action no SCCIV-95-1186). Leave was granted and the appeal was heard on 13 November 1995.
By reference to the Court record for action no SCCIV-95-1186:
·On 26 October 1995 an order was made that Mr Blewett ceased to act for Mr Kowalski; and
·On 9 November 1995 a notice of change of address for service was filed by Lieschke & Weatherill Lawyers.
Mr Kowalski paid $2,000 into the respondent’s trust account as security for their costs in November 1995. After the hearing of the appeal, Lieschke & Weatherill Lawyers rendered to Mr Kowalski the bill dated 15 November 1995 in the sum of $3,120 and transferred the $2,000 held in a trust account in part payment of the bill.
On 6 February 1996, the Full Court allowed the appeal, remitted the matter to the Tribunal and ordered Mr Kowalski pay the costs of the appeal and hearings before a Master.
The taxation by the Master and the Master’s decision
At the taxation pursuant to s 42 of the LPA before the Master, Mr Kowalski argued that there was no retainer between him and the respondent and that he therefore had no obligation to pay. Further, he argued that the respondent was only entitled to charge their fees in accordance with costs permitted in the Tribunal.
The Master recorded on the Court file on 12 November 2014 the history of the matter and that after the Full Court appeal the respondents transferred the $2,000 into their firm’s account in full satisfaction of their claim for costs. The Master noted the respondent’s file had been destroyed and that the two bills (copies of which are still available)[6] sent by the firm were detailed and calculated on the Supreme Court Scale applicable in November 1995 and March 1996.
[6] Copies of the bills form part of exhibit KK1 to the affidavit of Mr Kowalski sworn 10 December 2014.
The Master also noted that as the appeal was to the Full Court the normal cost scales of the Supreme Court applied and that Mr Kowalski was only prepared to concede the sum of $454 as being payable. The Master declined to find that the respondent was not retained by Mr Kowalski.
As the respondent’s file no longer existed the Master said he could not conduct the taxation in the usual manner. Accordingly, relying on rule 274(2)(b)(i), the Master conducted the taxation of the firm’s costs by way of estimation and arrived at a provisional costs order of $2,000.
Rule 274(2)(b)(i) provides that the Court may decide a question on adjudication by estimation or in any other way that may be expedient in the circumstances.
Section 42 of the LPA and the Supreme Court Civil Rules 2006
Schedule 3 of the LPA replaced the repealed Division 8 (sections 41 to 43) of the LPA on 1 July 2014. The effect of clause 9 of Part 4 of Schedule 2 to the Legal Practitioners (Miscellaneous) Amendment Act 2013 (SA) No. 44 is that repealed sections 41 to 43 of the LPA continue to apply to matters where first instructions were given before 1 July 2014. The respondent was instructed to act in respect of the appeal to the Full Court in 1995.
Rule 8(2)(a) provides that Chapter 12 (Costs) applies to this matter as the taxation of costs in the proceedings commenced after the commencement date of the Supreme Court Civil Rules.
Accordingly, s 42 of the LPA and Chapter 12 of the Supreme Court Civil Rules apply to Mr Kowalski’s application for fixing of legal costs pertaining to the appeal in action no SCCIV-95-1186.
Did Mr Kowalski retain Lieschke & Weatherill Lawyers?
Mr Kowalski argues it was his union, the Australian Manufacturing Workers Union (the AMWU), who retained the respondent, not him. Mr Kowalski relies on a letter dated 19 September 1995 from Mitsubishi’s solicitors to Mr Blewett of the AMWU noting that Mr Blewett acts for Mr Kowalski in the Full Court appeal. As appears on the Court record, Mr Blewett was the solicitor on the Court record until the order that he cease to act on 26 October 1995.
As Lunn’s Civil Procedure SA states:[7]
The Court has an inherent jurisdiction to determine as an adjunct to proceedings whether a retainer existed between a party to the proceedings and a solicitor for the proceedings, the terms of it and whether others had guaranteed performance of the client’s obligations under it.[8]
The terms of a retainer are to be construed objectively, a retainer may be inferred from conduct and the subjective belief of the solicitor as to who was his client could not override the objective facts.[9] There is a presumption that there is a contract of retainer between a person and a solicitor where to the knowledge of the person a solicitor appears on the record as their solicitor.[10]
[7]    LexisNexis, Civil Procedure: South Australia, Volume 1 (at Service 152) [274.1].
[8]    Burgundy Royale Investments Pty Ltd v Westpac Banking Corp (No 2) (1991) 28 FCR 308.
[9]    Watson v Ebsworth & Ebsworth (2010) 31 VR 123.
[10] Halliday v High Performance Personnel Pty Ltd (In Liq) (1993) 113 ALR 637.
The Court record in action no SCCIV-95-1186 records that Mr Kowalski appeared in person on his application to dismiss Mitsubishi’s appeal on 29 September 1995. An application to cease acting was filed on 10 October 1995 supported by an affidavit of Mr Blewett. Mr Kowalski appeared in person on 26 October 1995 at which time an order was made that Mr Blewett cease to act. Mr Kowalski appeared in person on 30 October 1995 at which time it was noted that his address for service was 26 Nalimba Street, Hallett Cove. On 9 November 1995, a notice of change of address for service FDN 18 was filed by the respondent. Mr Weatherill appeared at the hearing of the appeal for Mr Kowalski. An application to cease acting supported by an affidavit of Mr Weatherill was filed on 29 May 1996. It is recorded on 12 June 1996 that Mr Lieschke previously acted for Mr Kowalski. Mr Weatherill and Mr Lieschke were principals of the respondent in 1995 and 1996.
Accordingly, I infer that FDN 18 was filed by the respondent in this action pursuant to the contract of retainer between them and Mr Kowalski.
Further support for this inference is found in:
·the fact both bills rendered by the respondent are addressed to Mr Kowalski.
·The bill dated 15 November 1995, which records:
-       a telephone attendance on Mr Kowalski 30 October 1995;
-       a telephone attendance on Mr Blewett 31 October 1995;
-       personal attendance on Mr Kowalski on 8 November 1995;
-       drafting and filing of Notice of Change of Address.
·A copy of a Trust Account Statement addressed to Mr Kowalski for the $2,000 paid by Mr Kowalski of settlement funds to Lieschke & Weatherill Lawyers’ office account for payment of legal fees.[11]
[11] Exhibit KK 1 to the affidavit of Mr Kowalski sworn 29 July 2014 (FDN 8).
·Mr Kowalski’s letter to Mr Weatherill dated 14 February 1996 wherein he states:[12]
[12] Exhibit SD2 to the affidavit of Steven Dolphin sworn 20 August 2014 (FDN 9).
I am not prepared to continue to instruct you in regards the appeal that you represented me in the Supreme Court.
…
I formally advise you that I have ceased to instruct yourself as at the 14 February 1996…
I thank you for attempting to help me however as you are aware, our agreement was for you to ONLY represent me in the Supreme Court Action.
(Italics are my emphasis)
·The fact that Mr Kowalski complained to the Legal Practitioners Conduct Board following the appeal in 1996 regarding the respondent’s conduct and their legal costs. In the complaint Mr Kowalski asserts that prior to the appeal and Mr Weatherill accepting instructions from him there was no agreement in writing. Mr Kowalski does not make any complaint to the effect that it was the AWMU that engaged the respondent. The Legal Practitioners Conduct Board by letter dated 13 August 1996 stated they found no evidence of unprofessional conduct and did not take any further action regarding the allegation of overcharging as the respondent agreed to limit their claim for costs to $2,000.[13]
[13] Exhibit SD1 to the affidavit of Steven Dolphin sworn 20 August 2104 (FDN 9).
·Mr Kowalski’s letter dated 8 May 1996 to the Legal Practitioners Professional Complaints Committee (LPCC) wherein he refers to having been threatened with legal action by Mr Weatherill in regards to legal costs. He says he has allowed Mr Weatherill time to consider a proposal he put to him before providing the relevant documents to the LPCC in regards to the threat. He also refers to having given Mr Weatherill an opportunity to resolve the problem.[14]
[14] Exhibit SD1 to the affidavit of Steven Dolphin sworn 20 August 2104 (FDN 9).
·A letter dated 8 May 1996 addressed to Mr Weatherill wherein Mr Kowalski states:
I formally instructed yourself that I terminated my instructions to you as found in letter dated 14 February 1996, so I request you “get off the Supreme Court file” as you are bound to do. …
I have not agreed to your legal costs.
I have requested yourself to provide myself with a bill of costs in taxable form, pursuant to section 41 of the Legal Practitioner’s Act 1981.
You should be aware that if there is no agreement in writing between a solicitor and his client for costs, then the costs are not enforceable.
You were eager to obtain $2000 from myself, however you FAILED to provide the duty of care to myself as would be expected of a legally trained professional person. Now you have to answer to me.
It is of no concern to me if you do not wish to have anything to do with me. You should have made this comment before you accepted instructions from me. I would have represented myself in the Supreme Court and presented all of the evidence you failed to, against my written instructions for you to.
…
I am prepared to withdraw my complaint against yourself and not proceed to provide a copy of this letter and your letter dated 7th May 1996 to the LPCC, if you return the money that I placed into your trust account prior to the appeal in the Supreme Court, in 1995.[15]
(Italics are my emphasis)
·The affidavit of Stephen Dolphin, principal of the respondent, sworn 20 August 2014. Mr Dolphin states he joined the respondent in 2002 after the respondent had ceased acting for Mr Kowalksi. Mr Dolphin deposes to having read certain findings made by the Legal Practitioners Conduct Board indicating that the firm’s file was destroyed in 2006. Mr Dolphin deposes to Mr Kowalski speaking with him on 12 June 2007. Exhibit SD1 is a copy of a letter Mr Dolphin says he received from the LPCB dated 7 December 2009.
Mr Dolphin says he has not ever seen a retainer agreement between his firm and Mr Kowalski. Mr Dolphin refers to the decision of Blue J in Attorney-General v Kowalski in particular paragraphs [122] to [281] and paragraphs [1454] to [1474] where Blue J recites the previous actions brought by Mr Kowalski against Mr Dolphin, all of which Mr Dolphin deposes hinge on Mr Kowalski having retained his firm as his solicitors. Exhibit SD2 is a copy of documents Mr Dolphin deposes to having had served on him over the years by Mr Kowalski. Mr Dolphin says he is not aware that his firm was retained by a union to act for Mr Kowalski in respect of the Full Court appeal.
·The transcript of the proceedings before Judge Dart on 12 November 2014 where Mr Kowalski says that there was no written retainer or costs agreement between the firm and him and that he was referred to Mr Weatherill by the AMWU.[16]
[15] Exhibit SD2 to the affidavit of Steven Dolphin sworn 20 August 2014 (FDN 9).
[16] Transcript pg 2, line 16.
The compelling conclusion to be drawn from the foregoing is that there was a contract of retainer between Mr Kowalski and the respondent.
Mr Kowalski disputes labiality
Mr Kowalski argued before me that he disputed liability before Judge Dart. However, in paragraph 2 of Form 54 set out above, Mr Kowalski states he is the person who is liable to pay the costs. He also argued that the decisions in King William Law Chambers v Mobitel (International) Pty Ltd[17] and Kedem v Johnson Lawyers Legal Practice Pty Ltd[18] support his submission that this Court can determine liability to pay legal costs on an application pursuant to s 42 of the LPA.
[17] (1981) 29 SASR 316.
[18] (2014) 121 SASR 118.
As I said in Kowalski v R J Cole,[19] s 42 of the LPA can only be utilised if a person to whom or for whom legal services have been provided accepts they are liable to pay the legal costs. I further said:[20]
In King William Law Chambers v Mobitel (International) Pty Ltd,[21] the Full Court held that the Court’s role prescribed by s 42 of the Act is confined to the quantification of fees payable and issues of liability have to be determined by other means. In Kedem v Johnson Lawyers Legal Practice Pty Ltd,[22] Kourakis CJ considered that s 42 empowered the Court to consider disputes about fee waivers or payments made on account of fees. It is my view that the Court may have to determine issues of liability on an application in respect of s 42 of the Act in the limited circumstances identified by Kourakis CJ in Kedem and White J in Von Doussas Legal Pty Ltd v Nasr.[23] That is, in circumstances where there is an acknowledgement of liability to pay (thereby enlivening s 42) and the issue in dispute focuses on, for example, whether payments toward legal costs have in fact been made or whether fee waivers have been agreed or where reimbursement is sought by a person who has paid costs.
[19] [2015] SASCFC 35.
[20] Kowalski v R J Cole [2015] SASCFC 35 at [74].
[21] (1981) 29 SASR 316.
[22] (2014) 121 SASR 118.
[23] [2008] SASC 206.

In this case, Mr Kowalski by Form 54 admits he is liable therefore s 42 is enlivened.
The Court’s power on a further review pursuant to rule 278
Upon a further review pursuant to rule 278(6) the Court will not interfere with the taxation unless it is shown that the taxing Master has made a gross mistake. There is no evidence the Master has acted on any incorrect principle or erred. Mr Kowalski instructed the respondent to act for him in respect of the Full Court appeal. As such the respondent was entitled to charge Mr Kowalski in accordance with the costs set out in the Fourth Schedule of the Supreme Court Civil Rules 1987 being the scale of costs for work performed in the jurisdiction of the Supreme Court.
The Master correctly determined that as there was no written agreement between Mr Kowalski and the respondent, and Mr Kowalski was charged on the basis of the Supreme Court scale applicable at the time, there was no work for s 42(7) of the LPA to do. The Court’s power prescribed by s 42(7) only applies to agreements in writing referred to in s 42(6). As the respondent’s file was no longer available it was appropriate the Master conduct the taxation in the manner provided for by rule 274(2)(b)(i). The Master did not err in the exercise of his discretion in finding that if it had been possible to conduct a full taxation on a solicitor and client basis that the amount taxed would have been closer to the amount charged of $3,536.16 rather than the amount of $2,000.
There is no basis to interfere with the exercise of the Master’s discretion.
Conclusion
Upon further review I confirm the costs order made by the Master as a judgment of the Court pursuant to rule 278(6).