Max Elio Naso by his father and next friend Sabatino Naso v Cottrell

[2002] WADC 45

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   MAX ELIO NASO by his father and next friend SABATINO NASO & ANOR -v- COTTRELL [2002] WADC 45

CORAM:   NISBET DCJ

HEARD:   30 JANUARY 2002

DELIVERED          :   12 MARCH 2002

FILE NO/S:   CIV 7558 of 1988

BETWEEN:   MAX ELIO NASO by his father and next friend SABATINO NASO

First Plaintiff

SABATINO NASO
Second Plaintiff

AND

FREDERICK COTTRELL
Defendant

AND

PERPETUAL TRUSTEES (WA) LIMITED
Trustee (Applicant)

Catchwords:

Trusts - Court appointed trust for plaintiff of significant award of damages - Application by plaintiff beneficiary to vary court order to vest trust in himself - Capacity to manage own affairs - Application refused - Directions to Trustee - Trustee seeks directions regarding first plaintiff's costs - Costs agreement entered into between first plaintiff and solicitors - Whether should apply to set aside and tax on court scale - Whether to apply to tax costs raised by agreement

Legislation:

Trustees Act 1962

Legal Practioners Act 1893

Result:

Directions given to apply to set aside costs agreement

Representation:

Counsel:

First Plaintiff                :     Mr T H Brickhill

Second Plaintiff            :     No appearance

Defendant:     No appearance

Trustee (Applicant)       :     Mr D M Bruns

Solicitors:

First Plaintiff                :     Brickhills

Second Plaintiff            :     No appearance

Defendant:     No appearance

Trustee (Applicant)       :     Hoffmans

Case(s) referred to in judgment(s):

Brown v Talbot & Olivier (1993) 9 WAR 70

Burgess v D'Alessandro & Associates, unreported; SCt of WA; Library No 920256; 6 May 1992

Perpetual Trustees (WA) Ltd v Naso (1999) 21 WAR 191

Stoddart & Co v Jovetic (1993) 8 WAR 420

X v A & Ors [2000] 1 All ER 490

Case(s) also cited:

Clare v Joseph [1907] 2 KB 369

D'Alessandro & D'Angelo (A Firm) v Cooper, unreported; FCt SCt of WA; Library No 960334; 21 June 1996

Naso v Perpetual Trustees Limited, unreported; SCt of WA; (Master Sanderson); Library No 990078; 19 February 1999

Newton v The Public Trustee [2000] WASC 118

Re Beddoe [1892] 1 Ch 547

Re Mitchell (1913) 30 WN (NSW) 137

NISBET DCJ:

The applications

1. By summons to Chambers dated 2 July 1999 brought pursuant to the provisions of O 70 r 12(2) of the Rules of the Supreme Court, the Trustee sought directions in relation to the application of part of the first plaintiff's investment moneys in respect of:

   "(i)the purchase of a block of land and erection of a specially modified house;

   (ii)the obtaining by the first plaintiff of the opinion of a Queen's Counsel into the possibility of appealing the decision of the Full Court in Supreme Court action No FUL 27 of 1999 to the High Court;

   (iii)payment of the first plaintiff's legal costs already incurred in Supreme Court action No CIV 2195 of 1988 [sic – 1998]."

2. Following a defended hearing I made the following orders on 30 September 1999:

   "1.The trustee acquire Lot 104 Wittenoom Place, Duncraig ('the land') from the second plaintiff and his wife for the use and benefit of the first plaintiff at a price not exceeding $227,500;

   2.The Trustee obtain from each of the architects, Mr Keen and Mr Boshart, quotations for preparing fresh working plans and drawings in consultation with the first plaintiff (and with the Trustee) and contract administration in relation to the erection of a house for the first plaintiff which will provide for his special needs at a cost not exceeding $500,000 upon the land ('the project');

   3.The Trustee then proceed to instruct either Mr Keen or Mr Boshart to carry out such work as is required to enable the project to be let out to tender.

   4.Item (ii) in the Trustee's summons for directions be dismissed but the summons otherwise be adjourned sine die with liberty to all parties to apply generally (including liberty to apply with respect to the working out of this order).

   5.Costs be reserved."

3. A detailed history of this litigation is contained in my judgment delivered 25 January 2001 at [2001] WADC 7. Briefly stated, the first plaintiff sought to terminate a very large trust created by an order of this Court made 29 March 1996. The Trustee resisted the termination of the trust in consequence of which the first plaintiff sought a declaration in the Supreme Court that the trust had been terminated and in the course of those proceedings a Master of the Supreme Court refused an application by the Trustee to have the first plaintiff examined by a psychiatrist pursuant to the provision of O 28 of the Rules of the Supreme Court.  The Trustee appealed from that decision to the Full Court in consequence of which the Full Court made an order providing for the examination of the first plaintiff by a psychiatrist and, inter alia, saying that as the order establishing the trust made by this Court was expressed to be "until further order" then any application to terminate the trust had to be made to this Court:  Perpetual Trustees (WA) Ltd v Naso (1999) 21 WAR 191. The Full Court ordered on 23 June 1999 that proceedings in the Supreme Court be stayed pending an application being made in this Court. such an application was made and heard by me. I refused the application and my reasons are comprised in my judgment delivered 25 January 2001.

4. Following my decision to the first plaintiff appealed to the Full Court and shortly before the appeal was due to be heard he filed a notice of discontinuance on 16 July 2001.

5. That being an end to the litigation between the first plaintiff and the Trustee, a proper working relationship having been established between them in the circumstances set out in the first plaintiff's affidavit sworn 14 December 2001, the first plaintiff's solicitors then proceeded to render accounts for their services broken up to represent the fees rendered by different manifestations of the firm.  These accounts are annexed to the affidavit of Mr Brickhill sworn 22 January 2002 and are as follows:

   •From Brickhill and Hanbury dated 11 July 2001 addressed to "Mr Max Naso" and being in the sum of $24,816.02.

   •From Butler Brickhill & Banaszak dated 11 July 2001 and addressed to "Mr Max Naso" and being in the sum of $21,575.21.

   •From Brickhill Banaszak to "Mr Max Naso" dated 1 October 2001 and being in the sum of $24,475.26.

   •From Brickhill Banaszak dated 1 October 2001 addressed to "Mr Max Naso" and being for the sum of $56,403.73.

6. All of these accounts were said to have been raised in conformity with a series of documents each of which comprises a letter from the solicitors to the first plaintiff and his parents and called "Client Service Agreement".  There are three of them in all.  The first is dated 9 June 1998 and signed by each of the first plaintiff and his parents.  The second is undated as to its date of execution but it was sent by Messrs Butler Brickhill & Banaszak to the first plaintiff and his parents on 16 February 1999 and it has been signed by all three of them.  The third is likewise undated as to the date of execution but was sent by Messrs Brickhill Banaszak to the first plaintiff and his parents on 1 July 1999 and is again signed by all three of them.

7. By summons dated 3 December 2001 the Trustee applied to the court pursuant to the provisions of O 70 r 12(2) for directions:

   "[I]n relation to the application of part of the first plaintiff's investment moneys towards payment of legal costs and in this regard:

   1.Should the Trustee seek to set aside the "Client Services Agreement" dated 1 July 1999 under s 59 of the Legal Practitioners Act.

   2.Should the Trustee pay solicitor/client costs claimed by the first plaintiff's solicitors successively styled Brickhill & Hanbury, Butler Brickhill Banaszak and Brickhill Banaszak and if so to what extent."

8. During the course of submissions before me the parties appear to accept that directions sought in par 1 of the summons applied to all of the client service agreements which I have identified above.

Jurisdiction

1. Again, I was drawn to a consideration of my jurisdiction in this matter because ordinarily only the Supreme Court has jurisdiction to give"… directions concerning any property subject to a trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the Trustee.":  Trustees Act 1962, s 92(1).

2. As was previously the case however, the parties were content that I exercise jurisdiction (not that that would matter of course if I didn't have jurisdiction to begin with) and each was satisfied that this Court was invested with jurisdiction by reason of the application of O 70 r 12(2) which provides:

   "The Court may at any time, and from time to time, give directions for the application of the income or of the capital and income of the investment for the maintenance, welfare, advancement, or otherwise for the benefit of the person under disability."

3. In this context "the Court" is accepted to be the court which made the original order creating the trust, an interpretation I suggest which is consistent with the decision of the Full Court in Perpetual Trustees (WA) Ltd v Naso (supra).

Solicitor and client costs agreements

1. As has been pointed out in a number of cases decided in Western Australia in relatively recent times beginning with Burgess v D'Alessandro & Associates, unreported; SCt of WA; Library No 920256; 6 May 1992 and running through Stoddart & Cov Jovetic (1993) 8 WAR 420 and Brown v Talbot & Olivier (1993) 9 WAR 70, the Supreme Court's power to review costs agreements made between solicitors and clients pursuant to the power conferred by s 59 of the Legal Practitioners Act 1893, is a very wide power indeed.  The power to review is not limited to the terms of the agreement itself and will be extended to the circumstances in which it was made:  Stoddart & Co v Jovetic (supra).

The agreements in question

1. I am presently unable to determine whether there is anything unreasonable on the face of the agreements in question and indeed it would be a fruitless task for me to embark upon because I have no jurisdiction to review them.  What I can say however, is that the three agreements on the face of them purport to have been made between the first plaintiff, the second plaintiff and Mrs Naso on the one hand, and firms of solicitors on the other.  All four accounts, however, have been rendered to the first plaintiff alone.  There are two difficulties I see with this.  The first is that in their terms the bills appear to detail work which could only have been carried out on behalf of the plaintiff's parents.  As an examination of the earlier history of the dealings between these parties will reveal, the Trustee purchased land for the benefit of the first plaintiff which was owned by his parents, pursuant to an order in that regard which I made and as detailed earlier in these reasons.  That land was subject to a mortgage to the Australian and New Zealand Banking Group Limited which had made a demand for payment:  affidavit of Dennis Leslie Ryan sworn 14 July 1999, annexure B refers.  A number of items in the solicitors' account dated 11 July 2001 obviously relate to this matter:  p 61 the affidavit of Mr Brickhill sworn 22 January 2002 refers.  Why should any costs rendered in respect of this matter be borne by the trust estate of the first plaintiff?

2. The next difficulty I have with these agreements is that I found the first plaintiff to be incapable of managing his own affairs.  This finding was made after a trial of that very issue before me in respect of which the first plaintiff gave evidence both by affidavit and viva voce. I tentatively express the opinion that a review by a Judge of the Supreme Court of the costs agreements signed by the first plaintiff may find that my finding regarding the first plaintiff's capacity is in determining a relevant circumstance as to whether or not the agreements are unreasonable within the meaning of s 59 of the Legal Practitioners Act 1893 and liable to be set aside as against the first plaintiff.

3. The solicitors submit that the first plaintiff wants to see them paid and that his views in the matter should be given some weight, citing X v A & Ors [2000] 1 All ER 490. It is true that the first plaintiff wants to see his former solicitors paid. He says at par 18 of his affidavit sworn 14 December 2001:

   "Overall I believe Mr Brickhill should be paid for his reasonable costs in carrying out my instructions which were to put an end to the trust.  These were my instructions throughout until I decided not to proceed with the appeal."

4. This is not to be interpreted as the first plaintiff saying that his solicitors are to be paid whatever they charge, and the Trustee's position is not to be seen as a denial that the first plaintiff's solicitors are entitled to any remuneration at all.  The Trustee is merely seeking a direction from the court to establish the basis upon which it should deal with these accounts received by its beneficiary.

5. I have no hesitation in directing the Trustee to make application to the Supreme Court for a review of the costs agreements insofar as they relate to its beneficiary, the first plaintiff.  In this regard I should also mention that I would not have so directed the Trustee if I had any doubt as to whether the Supreme Court would entertain such an application made by the Trustee in the circumstances of this case, it not being a party to any of the client costs agreements in question.  Stressing that this is a matter entirely for the Supreme Court, prima facie at least it seems to me that it has jurisdiction to entertain such an application by the Trustee.  After all the solicitors have known at all times that in the event their client's application to have the trust vested in himself failed, the only entity they could look to for payment of their costs was the Trustee and then they would have to be paid out of the plaintiff's trust estate.

6. Accordingly, therefore, on the Trustee's summons for directions pursuant to O 70 r 12(2) of the Rules of the Supreme Court dated 3 December 2001 the Court directs the Trustee as follows:

   1.To make application to the Supreme Court of Western Australia for a review of all of the client service agreements entered into by the first plaintiff and his solicitors seeking orders that as against him they be set aside.

   2.The Trustee should not pay any solicitor and client costs claimed by the first plaintiff's solicitors against the first plaintiff until after the determination of the application described in direction 1 above.

   3.In the event the first plaintiff's solicitors elect not to pursue any claim for costs against the first plaintiff arising out of or pursuant to the client service agreements and elect instead to have their costs taxed pursuant to the relevant court scale and the Rules of Court (including but not limited to O 66 r 12) then and in that event the Trustee is not obliged to pursue or further pursue the direction in par 1 above but may instead abide the taxation of the plaintiff's costs in the usual way.

7. I will make these reasons available to the parties either of whom may request that the matter be re‑listed for motions for orders.  As to costs, in my opinion these should be reserved until the outcome of the application to review is known, but I am prepared to hear motions in this regard in any event should the parties so require.