Legalwest Pty Ltd v Orchard Holdings Pty Ltd
[2016] WADC 167
•1 DECEMBER 2016
LEGALWEST PTY LTD -v- ORCHARD HOLDINGS PTY LTD [2016] WADC 167
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WADC 167 | |
| Case No: | CIV:435/2016 | 15 JULY & 28 OCTOBER 2016 | |
| Coram: | REGISTRAR KINGSLEY | 1/12/16 | |
| PERTH | |||
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application for summary judgment allowed | ||
| PDF Version |
| Parties: | LEGALWEST PTY LTD ORCHARD HOLDINGS PTY LTD KEITH ROBERT ANDERSON SUE-ANN ELIZABETH ANDERSON |
Catchwords: | Practice Application for summary judgment claim for fees owing under Costs Agreement Turns on own facts |
Legislation: | Nil |
Case References: | BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Cerini v McLeod (a firm) [2004] WASC 45 Clay v Clay (2001) 202 CLR 410 Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Morales v Murray Lions Solicitor (a firm) [2010] QCATA 87 Wiley v Ross Lawyers [2012] QCATA 022 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
ORCHARD HOLDINGS PTY LTD
First Defendant
KEITH ROBERT ANDERSON
Second Defendant
SUE-ANN ELIZABETH ANDERSON
Third Defendant
Catchwords:
Practice - Application for summary judgment - claim for fees owing under Costs Agreement - Turns on own facts
Legislation:
Nil
Result:
Application for summary judgment allowed
Representation:
Counsel:
Plaintiff : Mr A M Freund
First Defendant : Mr D J Garnsworthy
Second Defendant : Not applicable
Third Defendant : Not applicable
Solicitors:
Plaintiff : Lawton Gillon
First Defendant : Appius Lawyers
Second Defendant : Appius Lawyers
Third Defendant : Appius Lawyers
Case(s) referred to in judgment(s):
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Cerini v McLeod (a firm) [2004] WASC 45
Clay v Clay (2001) 202 CLR 410
Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Morales v Murray Lions Solicitor (a firm) [2010] QCATA 87
Wiley v Ross Lawyers [2012] QCATA 022
- REGISTRAR KINGSLEY:
Background
1 The plaintiff is a firm of legal practitioners and pleads that on or about 10 November 2009 they entered into a costs agreement pursuant to the Legal Profession Act 2008 (the Act)with the defendants with regard to legal services to be performed by the firm. The plaintiff accepted the defendant's instructions and performed the legal services.
2 The plaintiff pleads that the defendants instructed the plaintiff to issue proceedings in the Supreme Court against two corporations and an individual and to represent the defendant in those Supreme Court proceedings.
3 Subsequently, in June 2010, the second defendant instructed the plaintiff to represent the second defendant in respect of criminal charges, and in and around September 2012, the defendants instructed the plaintiff to lodge a claim with the Department of Commerce on a fidelity guarantee account established under the Real Estate Business Agents Act 1978.
4 Further, in and around September 2012 the defendants instructed the plaintiff to represent the defendants before the Court of Appeal in an appeal instituted by the two corporations in respect of costs orders made in the Supreme Court proceedings.
5 The plaintiff has rendered bills for the legal services performed, but those bills remain unpaid.
6 The writs have been served on the defendants. Improperly, a memorandum of appearance was filed on behalf of Orchard Holdings Pty Ltd by its director, Keith Anderson (see O12 r 1(2) RSC). On behalf of all defendants, Anderson files a defence dated 9 March 2016. In all defences it is pleaded that there was an implied term of the costs agreement that the fees rendered to the defendants would be fair and reasonable. Further, the defendants plead that the plaintiff has not shown that any of the bills that were rendered have complied with the provisions of the Act.
The First Summary Judgment application
7 The plaintiffs bought an application for summary judgment dated 22 April 2016 with a supporting affidavit of Simon Christopher England, sworn 21 April 2016. A further affidavit sworn 23 May 2016 by England deposes to the fact that the costs agreement entered into between the plaintiff and the first and second defendants with regard to the Supreme Court and Court of Appeal matters had been located but in relation to the other matters, no signed copy of the costs agreement had been located.
8 Anderson in an affidavit sworn 4 May 2016 opposes the application for summary judgment. In his affidavit Anderson deposes that the only costs agreement related to the action by Orchard Holdings against the two corporations and an individual. Anderson deposes that he agrees the invoices were rendered but says that:
(a) there is no evidence of compliance with the obligators [sic] of the plaintiff under the Legal Profession Act;
(b) there is no evidence of costs disclosure when given to the defendants except in the Orchard Holdings Supreme Court action;
(c) the accounts are not fair or reasonable example of which include file administration and inappropriate fee earners.
9 At the hearing on the summary judgment application, counsel, briefed directly by Anderson, appeared at the hearing. Counsel for the defendants raised four issues to support the submission that summary judgment ought not be entered. Those issues are:
1. Leave must be first granted for the hearing of the application.
2. The statement of claim is deficient and cannot support the application.
3. The plaintiff must first establish that the fees are reasonable. Included in this submission is a reference that there is an implied term that costs would be reasonable and necessary.
4. That the plaintiff was under a fiduciary obligation in relation to the costs agreement to disclose material circumstances.
The improper Memorandum of Appearance
10 Subsequent to the hearing of the summary judgment application I noted the Memorandum of Appearance had been improperly lodged. I advised the parties by letter dated 1 September 2016 that in my opinion the summary judgment application had no jurisdictional basis – there being no valid Appearance – and listed a Directions Hearing to determine the future conduct of the action.
Prior to the Directions Hearing Orchard Holdings Pty Ltd lodged a Memorandum of Appearance through a solicitor. At the Directions Hearing the plaintiff's solicitor and the solicitor on the record for Orchard Holdings Pty Ltd appeared.
After hearing submissions, and without opposition, orders were made that the first summary judgment application be dismissed with no order as to costs, the plaintiff have leave to lodge and serve a second application, and the evidence and submissions made on the first summary judgment application be the evidence and submissions on the second application. An opportunity was given to the new counsel for Orchard Holdings Pty Ltd to lodge additional submissions.
Reference in these reasons to Counsel for Orchard is a reference to Orchard's first counsel.
Leave
11 On the first summary judgment application counsel for the defendants raised the issue of the granting of leave. Having regard to the order that leave be given for the plaintiff to lodge and serve a fresh summary judgment application strictly the issue falls away. However for completeness I will deal with the issue of leave.
12 An application pursuant to O 14 Rules of the Supreme Court 1971 (RSC) must be made within 21 days of the appearance being filed. Appearances on behalf of the second and third defendants were filed on 15 February 2016. Improperly an appearance on behalf of Orchard Holdings was filed on 15 February 2016.
13 The defendants having failed to file a defence within 14 days of the appearances being filed, the plaintiff sought to enter default judgment on 3 March 2016. That default judgment was not entered as the default judgment could not be reconciled with certain paragraphs of the statement of claim and the prayer for relief. On 9 March 2016 the defendants filed a defence.
14 The application pursuant to O 14 RSC was filed on 16 April 2016. England in his 21 April 2016 affidavit deposes that after entry of default judgment was rejected by the court, and after considering the defences filed by the defendants, England determined that the plaintiff ought apply for summary judgment. England goes on to depose that it took a substantial period of time to review the files and to prepared the affidavit in support of the application.
15 In the circumstances, in my opinion the delay in bringing the application for summary judgment had been explained, and leave would have been given to bring the first application.
Is the statement of claim deficient
16 The defendants' principle argument is that the requirements of the Act must be pleaded. Compliance with the Act, and the requirements of the Act, must be pleaded as material facts in the statement of claim. Orchard's counsel submits that the Actis legislation with client protection as its central objective. Thus every benefit must be given to a client.
17 In support of this proposition Orchard's counsel sites Morales v Murray Lions Solicitor (a firm) [2010] QCATA 87 and Wiley v Ross Lawyers [2012] QCATA 022. In both of the Queensland Civil and Administrative Tribunal cases compliance with the Queensland Legal Profession Act had not been demonstrated.
18 Morales v Murray Lions Solicitor (a firm) was an appeal against a default judgment and it appears that the Tribunal treated the appeal as an application to set aside the default judgment. To determine whether the default judgment was regular or not, the Tribunal sought evidentiary material from the solicitors to determine whether, as a matter of evidence, the law firm had an entitlement to sue for their fees.
19 As plaintiff's counsel has submitted, Morales has nothing to do with the proper pleading of a claim for the recovery of fees. In any event, the affidavit of England specifically details compliance with the Act.
20 It is well settled that pleading compliance with a statute is unnecessary. Compliance with a statute is presumed unless it is put in issue. Where compliance with a statute is properly raised as a defence it is for the plaintiff to respond to that by way of a reply.
21 However, in this matter the cause of action for the recovery of legal fees. That is not a cause that arises under the Act. The cause is one in contract.
22 In my opinion, it is unnecessary to plead, as material facts, compliance with the Legal Profession Act. England, in his first affidavit, deposes to compliance of the Act which in my opinion is sufficient and accords with the decision in Morales.
23 In my opinion there is no deficiency in the statement of claim to warrant dismissing the summary judgment application.
Reasonableness of the fees
24 As I understand the submissions of counsel for Orchard, the plaintiff has an obligation to show, as a threshold consideration, the fees sought are reasonable or necessary. Counsel for Orchard also submits that a term the fees are reasonable and necessary can be implied into the costs agreement.
25 Section 271 of the Actprovides, subject to div 2 which is not applicable, legal costs are recoverable:
(a) under a costs agreement made in accordance with div 6 or the corresponding provision of a corresponding law;
(b) if paragraph (a) does not apply in accordance with an applicable costs determination;
(c) if neither paragraph (a) nor paragraph (b) applies according to the fair and reasonable value of the legal services provided.
26 Each of the subheadings of s 272 are disjunctive. Thus where a costs agreement is made in accordance with div 6 of the Act then legal costs are recoverable. If there is no costs agreement, and no applicable scale, then legal costs are recoverable only where the fair and reasonable value of the legal service is provided. In my opinion this being a claim under s 271(a) of the Act there is no obligation to plead that the fees be fair and reasonable.
27 Counsel for Orchard further submitted that a term the fees need to be fair and reasonable could be implied into the costs agreement. It is the case that the content of a contract is not limited to the terms actually adopted by the parties, but includes terms implied by the courts to fill gaps and to regulate the performance and enforcement of a contract: Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 348. The implication of a specific term, such as fees rendered must be reasonable and necessary, is to ensure business efficacy. BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283, is authority for the proposition that the implication of the term, amongst other things, must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it.
28 The Actputs in place a regime for the assessment of costs. A client of a legal firm has avenues available under the Act for challenging fees. Orchard Holdings in this matter has chosen not to exercise its right to challenge the bills.
29 In my opinion, there is no requirement to give business efficacy to the costs agreement to imply terms of fairness and reasonableness as a condition of recovery. The contract between Orchard and the plaintiff is complete without the need to imply terms suggested by Orchard's counsel.
The fiduciary obligation
30 There is no reference in the defence to any breach of fiduciary obligation nor is it referred to in the affidavit of Anderson opposing the summary judgment application. As this issue, as well as the issue of compliance with the statute, were raised only by way of oral submissions at the hearing, I gave leave to defendants' counsel to put in written submissions with an opportunity to the plaintiff to respond to those written submissions on those two issues.
31 The written submissions of counsel for Orchard simply states that a lawyer has a duty to disclose material circumstances in the making of a costs agreement, citing Cerini v McLeod (a firm) [2004] WASC 45. There is no content to that submission, nor is there any evidentiary basis for that submission. The plaintiff's counsel has not responded to that submission as, rightly, there is nothing to respond to.
32 It is not for a court to infer what a written submission is in reality saying. However, the use of the words 'material circumstances' does point to the statement made by Pullin J in Cerini's case at [40] that a solicitor has a duty to disclose material circumstances. If there was a sensible, real or substantial possibility (see Clay v Clay (2001) 202 CLR 410 [56]) that the costs under a costs agreement will exceed the costs charged under the Supreme Court scale of costs, then this is a material circumstance. There is then an obligation to make disclosure of that possibility, and to explain this in terms which can be understood by the client.
33 The hourly fee charged by the firm exceeds the hourly rate under the applicable Supreme Court scale at the time. The Costs Agreement provides, under the heading Costs Determinations at par 6, the remuneration of solicitors in contentious business is governed by statutory costs determinations. Paragraph 6.3 states:
There is a real risk of the Legal Costs payable by you under this Costs Agreement being more than under the applicable costs determination.
34 If that is the fiduciary obligation which counsel for Orchard is alluding to then, in my opinion, the par 6.3 statement satisfies the fiduciary obligation.
Conclusion
35 For these reasons I am of the opinion no arguable defence has been raised. I will then hear counsel on the form of judgment and on costs.
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