Menzies v Capital Lawyers Pty Ltd
[2022] ACTSC 120
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Menzies v Capital Lawyers Pty Ltd |
Citation: | [2022] ACTSC 120 |
Hearing Date: | 24 May 2022 |
DecisionDate: | 25 May 2022 |
Before: | Mossop J |
Decision: | 1. Direct that a registrar of the Court proceed with the costs assessment. 2. Dismiss the application in proceedings dated 19 May 2022. 3. The respondent is to pay the applicant’s costs of the application in proceedings dated 26 November 2021 and the application in proceedings dated 19 May 2022. |
Catchwords: | CIVIL LAW – JURISDICTION, PRACTICE AND PROCEDURE – Assessment of costs – where conduct complaint against applicant is ongoing in New South Wales – whether s 304 Legal Profession Act 2006 (ACT) applies to costs assessment proceedings – whether the proceedings must be stayed pursuant to the court’s inherent jurisdiction – application of s 194 Legal Profession Uniform Law (NSW) – costs dispute not the subject of a complaint before the NSW Bar Council – stay not appropriate – desirable to have proceedings resolved without further delay – Registrar to proceed with costs assessment – application for stay dismissed – respondent to pay the applicant’s costs |
Legislation Cited: | Court Procedures Rules 2006 (ACT), rr 40(1)(g), 6015 Legal Profession Act 2006 (ACT), Pt 3.2, ss 46(1)(d), 263, 264, 265, 266, 267, 268, 269(m), 296, 300, 304, 316(b), 454, 556(3)(b), Dictionary Legal Profession Uniform Law Application Act 2014 (NSW), s 11 |
Parties: | Paul Menzies (Applicant) Capital Lawyers Pty Ltd (Respondent) |
Representation: | Counsel S Russel-Uren (Applicant) R Thomas (Respondent) |
| Solicitors Aulich Civil Law ( Applicant) Capital Lawyers ( Respondent) | |
File Number: | SC 1 of 2020 |
MOSSOP J:
Introduction
The applicant, a barrister, has sought assessment of the fees he has charged to the respondent, a law practice.
There are two applications which it is necessary to determine. The first is an application in proceedings dated 26 November 2021 which seeks that a judge determine whether s 304 of the Legal Profession Act 2006 (ACT) (LP Act) applies to the costs assessment proceedings and make any appropriate orders following the determination of that issue. The intention behind this is to allow the costs assessment to proceed.
The second application is an application in proceedings dated 19 May 2022 which seeks that the costs assessment be stayed pending determination by the New South Wales Bar Council of a conduct complaint against the applicant. That order is sought pursuant to r 40(1)(g) of the Court Procedures Rules 2006 (ACT) or, in the alternative, pursuant to the Court’s inherent powers.
The basic facts
The respondent acted for a client. The respondent engaged the applicant and another barrister to act in proceedings involving the client in the ACT Civil and Administrative Tribunal, the ACT Supreme Court and the High Court. The applicant provided tax invoices relating to his fees. In aggregate, the amount charged exceeded $200,000. Only about $40,000 was paid. The amount outstanding is in the order of $160,000.
After the tax invoices had been provided and an amount paid, the respondent wrote to the applicant disputing its costs liability. The applicant then applied to the ACT Supreme Court for the assessment of the legal costs claimed in the tax invoices. After that occurred, the client lodged a complaint with the New South Wales Legal Services Commissioner (New South Wales Commissioner). It was common ground for the purposes of the present applications that the client’s complaint was not a frivolous one.
The New South Wales Commissioner referred the complaint to the New South Wales Bar Council. On 5 May 2020, the New South Wales Bar Council referred the complaint back to the New South Wales Commissioner. On 11 May 2020, the New South Wales Commissioner referred the complaint the ACT Bar Association for investigation. The ACT Bar Council then investigated the complaint and in May 2021 provided a report and its investigation file to the New South Wales Commissioner. The New South Wales Commissioner then referred to the complaint again to the New South Wales Bar Council to be dealt with under Chapter 5 of the Legal Profession Uniform Law (NSW) (Uniform Law). The New South Wales Bar Council has not yet concluded its investigations. The evidence does not disclose when it will be in a position to conclude its investigations.
The applicant wishes that the costs assessment proceed notwithstanding the pendency of the investigation. He wished to make progress in relation to the recovery of the outstanding fees. The respondent wishes that the assessment be stayed until the New South Wales Bar Council had reached a conclusion in relation to the complaint. It submitted that the conclusions reached by the New South Wales Bar Council may be relevant to the assessment of the applicant’s fees because s 300 of the LP Act requires the court, when assessing legal costs, to consider whether or not it was reasonable to carry out the work to which the costs relate and whether or not the work was carried out in a reasonable way.
Notwithstanding that the original costs disclosure by the applicant to the respondent in relation to the fees that he would charge made reference to the application of the Uniform Law, for the purposes of these applications there was no argument that the ACT Supreme Court lacked jurisdiction to conduct the costs assessment.
The LP Act and the Uniform Law
The determination of the applications requires consideration of the provisions of the LP Act and the Uniform Law. That is because the applicant contends that there is nothing in the LP Act or the Uniform Law which requires the proceedings to be stayed or that would support the grant of a stay pursuant to the inherent jurisdiction of the court.
Section 296 of the LP Act permits “A law practice that has given a bill in accordance with division 3.2.6 (Billing) [to] apply to the Supreme Court for an assessment of all or any part of the legal costs to which the bill relates”. As pointed out earlier, there was no contest between the parties in relation to the capacity of the applicant to apply to the court for assessment of the legal costs. As a consequence, it was not necessary to consider:
(a)what, in the circumstances, was required by the reference to “in accordance with division 3.2.6”;
(b)the terms of the costs agreements annexed to the application for costs assessment and the consequences, if any, of their reference to New South Wales legislation; or
(c)any matters relevant to the application of Pt 3.2 of the LP Act in accordance with ss 263-268 of that Act.
Section 304 of the LP Act provides a limit on the conduct of costs assessments where those legal costs “are or have been the subject of a consumer dispute under chapter 4 (Complaints and discipline)”. That prohibition did not apply where “the relevant council for the legal practitioner” was “unable to resolve the costs dispute and has notified the parties of their entitlement to apply for a costs assessment” or “refers a matter to the Supreme Court for a costs assessment under section 409”, or where “the costs dispute [was] withdrawn under section 400”.
In the present case, because the complaint was made in New South Wales, it was not a dispute “under chapter 4 (Complaints and discipline)” because that only picks up complaints made under the LP Act as distinct from complaints made in other jurisdictions. That is consistent with the distinction drawn in the Act between matters “under chapter 4” and matters “under provisions of a corresponding law that correspond to chapter 4” as referred to in s 46(1)(d) or other provisions which draw a similar distinction: see ss 269(m), 316(b), 454, 556(3)(b). Reinforcing that interpretation is the fact that the provision could not sensibly operate if it picked up complaints in other jurisdictions because subs (2) could never remove the prohibition on assessment because the “relevant Council” is either the Bar Council (that is, the council of the ACT Bar Association) or the Law Society Council (that is, the Council of the Law Society of the ACT): see Dictionary “relevant council”, and a complaint could never be referred under s 409 or withdrawn under s 400 because those provisions have no application to complaints made in other jurisdictions. In other words, s 304 only operates if it is confined to circumstances where there is or has been a complaint under Chapter 4 of the LP Act.
Although both parties accepted that s 304 did not presently apply so as to prevent the conduct of the costs assessment, there was a difference between the parties as to whether s 304 of the LP Act ever applied to the dispute. In particular, there were competing submissions as to whether it applied during the period when the ACT Bar Council was investigating the complaint. This was really only presently an issue because it reflected upon the merits of the past deferral of the costs assessment in this court over a significant period which had the potential to affect the willingness of the court to further delay the costs assessment.
It is not essential to resolve the issue of the past application of s 304 for the purposes of the present applications. Further, it is undesirable to attempt to resolve that issue in circumstances where only part of the relevant evidentiary material is available in relation to the period during which the matter was investigated by the ACT Bar Association. The correspondence from the New South Wales Commissioner at the point of referring the matter to the ACT Bar Association did not specifically invoke a provision of the Uniform Law or the LP Act to justify the referral. The documents relating to the actual conduct of the investigation by the ACT Bar Council were not in evidence and it is not clear whether that investigation purported to be one conducted pursuant to the LP Act or not, and if it was, what the relevant provisions of the LP Act relied upon were.
The respondent submitted that s 194 of the Uniform Law applied to the assessment of the applicant’s fees because the proper law of the contract was New South Wales law, the applicant was New South Wales practitioner and the client’s complaint was referred to the Bar Council which consented to the complaint being dealt with under New South Wales law.
Reliance on s 194 has the potential to raise a number of different issues.
Section 194(2) of the Uniform Law provides that
A law practice must not commence legal proceedings to recover legal costs from a person who has been given a bill until-
(a) where the legal costs are the subject of a costs dispute before the designated local regulatory authority–the authority has closed or resolved the dispute…
Section 6 of the Uniform Law provides “designated local regulatory authority means a person or body specified or described in a law of this jurisdiction for the purposes of a provision, or part of a provision, of this Law in which the term is used”. In the circumstances that must mean that there is currently a “costs dispute” before the New South Wales Commissioner or the New South Wales Bar Council.
Section 197 of the Act is a similar prohibition on costs assessment under Div 7 of Pt 4.3 of the Uniform Law.
The application of s 194 can, for reasons described below, be resolved by reference to the operation of s 194(2)(a). If this were not the case, then it would be necessary to determine:
(a)whether, having regard to the dealings between the parties and the provisions of the Uniform Law and the LP Act, s 194 governed the dealings between applicant and respondent;
(b)whether and how the section affected costs assessment proceedings in the ACT; and
(c)whether the restriction on commencement of proceedings “to recover legal costs” applied at all to a process of costs assessment and if so, whether the fact that the costs assessment proceedings were commenced prior to the complaint affected its application.
As there has been no challenge to the jurisdiction of the Supreme Court to entertain the costs assessment proceedings and no party made submissions that addressed the cross-jurisdictional awkwardness of the current circumstances, it is not appropriate to attempt to address these issues. Rather, it is possible to deal with the matter on the assumption that s 194 was otherwise applicable and consider whether, if that was the case, any prohibition would have been removed as a result of the operation of s 194(2)(a).
The regime in New South Wales draws a distinction between “a consumer matter” and “a disciplinary matter”, each of which may be subject to a complaint under the Uniform Law. Complaints may contain either or both of a consumer matter and a disciplinary matter. A “costs dispute” is a subtype of “a consumer matter”: s 269(2).
The local regulatory authority is empowered to resolve consumer matters: s 290. However, it is only empowered to deal with a costs dispute if the total bill for the legal costs is less than “$100,000 (indexed)” or if the total bill is equal to or greater than that amount then if the amount in dispute is less than “$10,000 (indexed)”. If it cannot be dealt with by the local regulatory authority then “the designated local regulatory authority is not to deal with or continue to deal with the dispute, but is to inform the parties of the right to apply for a costs assessment or to make an application under jurisdictional legislation for the matter to be determined”: s 291(2).
The applicant then points to a letter from the New South Wales Bar Council (which I assume is exercising functions delegated by the New South Wales Commissioner under s 405(2) of the Uniform Law: see Legal Profession Uniform Law Application Act2014 (NSW) s 11) dated 24 January 2022. That includes the following:
Although [the client’s] complaint is in part a costs dispute within the meaning of s 269(2) of the [Uniform Law], the Bar Association notes from your letter that a total of $163,842.88 in respect of [the applicant’s] fees remains outstanding. Given that this sum exceeds the amounts as indexed in s 291(1) of the [Uniform Law], the Bar Council is unable to deal with any costs dispute forming part of [the client’s] complaint.
Pursuant to s 291(2) of the [Uniform Law], the Bar Council is not to deal with or continue to deal with that part of [the client’s] complaint that constitutes a costs dispute, but is to inform both [the client] and [the applicant] of the right to apply for a costs assessment or to make an application under the Legal Profession Uniform Law Application Act 2014 (NSW) for the matter to be determined.
The applicant contends that this is sufficient to indicate that for the purposes of s 194, the dispute over costs was not “before the designated local regulatory authority” or has been “closed or resolved”.
Having regard to the terms of the letter, the costs dispute was not “the subject of a costs dispute before” the New South Wales Bar Council and therefore s 194 could have no application. Therefore, even if the section was otherwise applicable, it could not prevent the costs assessment from proceeding.
Stay of costs assessment
Finally, it is necessary to deal with the general contention that a stay should be granted. If a stay is to be granted it would be pursuant to the inherent powers of the court rather than pursuant to r 40(1)(g) of the Court Procedures Rules which applies at an early stage of proceedings in circumstances where there is an objection to jurisdiction or similar: see r 6015. For the reasons given above, a stay as a result of the operation of s 194 of the Uniform Law is not warranted. Nor is a stay warranted by reason of some evident policy in the New South Wales legislation.
In oral submissions, counsel for the respondent submitted that a stay should be granted in order to avoid the multiplicity of proceedings. The respondent contended that if the assessment proceeded in this court prior to the New South Wales Bar Council reaching any conclusions and prior to any subsequent disciplinary proceedings against the applicant, then the court would be denied that information in conducting any costs assessment.
The respondent drew attention to s 300 of the LP Act which provides:
(1) In conducting an assessment of legal costs, the Supreme Court 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 way; and
…
He submitted that these issues were likely to be informed by the outcome of the New South Wales complaint.
The position of the applicant was that any opinion expressed by the New South Wales Bar Council or by the New South Wales Civil and Administrative Tribunal (NCAT) would not be admissible as part of any costs assessment. He accepted, however, that it would be open to raise in the costs assessment matters relevant to ss 300(1)(a) and (b) with admissible evidence and that the court would need, as part of the costs assessment, to consider that evidence in reaching its determination.
It is unlikely that any opinion of the New South Wales Bar Council or, indeed, of the NCAT would be admissible evidence in the cost assessment. The respondent submitted that in the event that the complaint was successful and the fees permitted to be charged by the applicant were required to be varied or waived as a result of the outcome of those proceedings, then that itself would involve further proceedings. It submitted that it was undesirable to adopt a course which may involve further proceedings and hence that a stay should be granted pending the outcome of the complaint.
The applicant pointed to the capacity under the Uniform Law for the designated local regulatory authority or NCAT to order that the lawyer “waive or reduce the fees for the work”: s 290(2)(c), s 299(1)(d), s 302(1) and a somewhat more limited power to require the lawyer to pay compensation to the complainant: s 290(2)(e), s 302(1)(k). The applicant also gave an undertaking to the court to make any repayment required as a result of the determination of the complaint.
In my view, the spectre of further proceedings following an assessment consequent upon the outcome of the complaint does not provide an appropriate basis upon which to stay the costs assessment. First, it raises a matter which has not yet arisen and, depending upon the decision of the New South Wales Bar Council and a possible future decision of NCAT, may never arise. Second, the provisions of the Uniform Law relating to waiver of fees are unlikely to require further proceedings even if the cost assessment has proceeded to judgment. Unless financially unable to do so, it is very unlikely that a legal practitioner who had been paid fees following a costs assessment would fail to repay those fees if compelled under statute to waive the complainant’s liability for them. In any event, the applicant in the present case has given to the court an unequivocal undertaking to do so.
While there is the potential for issues relating to the adequacy of legal services and the reasonableness of the fees charged to be directly or indirectly the subject of proceedings in different forums, in the circumstances of this case that is not a sufficient reason to stay the costs assessment proceedings. Rather, it appears to me to be desirable to have those proceedings resolved without further delay and permit the dealings in New South Wales with the client’s complaint to run their course.
The orders of the Court are:
1. Direct that a registrar of the Court proceed with the costs assessment.
2. Dismiss the application in proceedings dated 19 May 2022.
I will hear the parties as to costs.
[The parties were heard on costs.]
The applicant, who has been successful in relation to both applications, has sought costs on a party and party basis. That application has been resisted on the basis that the undertaking given by the applicant which was tendered yesterday was a matter which was a very late development in the position adopted by the applicant. The submission was made that the outcome of the case may have been very different in the absence of that undertaking. In my view, the appropriate order in this case is that costs should follow the event. I do not accept the submission that the position was significantly changed by the offering of the undertaking. As I hope my reasons have indicated, the undertaking was an additional matter going beyond the circumstances which would exist if an order was made in disciplinary proceedings but not one, in the circumstances of this case, which transformed the position of the applicant from a loss to a win. There were no other reasons identified why costs should not follow the event. In particular, there was no indication that there were offers of settlement that may reflect upon the ultimate reasonableness of proceeding with the costs assessment. In relation to the pendency of the complaint, if the resolution of the complaint casts a different light upon the conduct of the applicant in pressing for assessment of the costs, then that can be dealt with in by the relevant regulatory body in the context of the resolution of the complaint. The order of the Court in relation to costs is:
3. The respondent is to pay the applicant’s costs of the application in proceedings dated 26 November 2021 and the application in proceedings dated 19 May 2022.
| I certify that the preceding thirty-eight [38] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop. Associate: Date: 1 June 2022 |
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