O'Connor Partners v Purvis - [2005] WASC 248

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: O'CONNOR PARTNERS -v- PURVIS [2005] WASC 248

CORAM: JENKINS J

HEARD: 20 OCTOBER 2005

DELIVERED : 20 OCTOBER 2005

PUBLISHED : 25 NOVEMBER 2005

FILE NO/S: LPA 1 of 2005

MATTER :Section 232 of the Legal Practice Act 2003

BETWEEN: O'CONNOR PARTNERS
Practitioner
AND
ERIC ALBERT JAMES PURVIS
Party Charged

Catchwords:

Procedure - Costs - Solicitor and client - Taxation of bill of costs - Powers of taxing officer - A "party charged" who requests taxation of a bill thereby accepts the existence of a retainer

Legislation:

Legal Practice Act 2003 (WA), Pt 13 Div (3), s 228, s 230, s 231(1), s 231(3), s 232(3), s 236, s 240

Legal Practitioners Act 1893 (WA)

Supreme Court Rules, O 66 r 5, O 66 r 44, O 66 r 45

Result:

The answer to question 1(a) is yes
The answer to question 1(b) is no

Category: A

Representation:

Counsel:

Practitioner : Mr M A Detata
Party Charged : Mr S V Forbes

Solicitors:

Practitioner : O'Connor Partners
Party Charged : Stewart Forbes

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

Baalman v Dare Reed (1984) 52 ACTR 3
Goodwin v Storrar [1947] 1 KB 457
In Re Bracey (1845) 8 Beav 266
In Re Herbert [1887] 34 Ch D 504
In Re Hirst & Capes [1908] 1 KB 982
In Re Jones [1886] Ch D 105
In Re Morgan [1883] 24 Ch D 114
Rapoff v Macdonald Rudder, unreported; SCt of WA (Franklyn J); Library No 8353; 6 July 1990
Silverstone Holdings Pty Ltd v Edward and Anor [2000] WASC 290

Case(s) also cited:

Nil

JENKINS J: This is a reference to a Judge pursuant to Supreme Court Rules ("SCR") O 66 r 45. I will summarise the facts before reciting the questions that are submitted to me in the reference.
O'Connor Partners, a firm of solicitors ("the practitioner") rendered five accounts to Eric Albert James Purvis, ("the client") for legal work allegedly done by the practitioner on behalf of the client in respect of an information memorandum and prospectus prepared by the practitioner and the incorporation of a company called Property Express Corporation Ltd. The five accounts are dated on different dates between 8 May 2003 and 14 April 2004.
On 18 April 2004 the client emailed the practitioner saying that he had just received the accounts and asking for the practitioner to arrange for them to be taxed. The email queried the size of the accounts but not the existence of a retainer. On 22 April 2004 the client sent a letter to the practitioner repeating his request. He also asked to see a copy of the practitioner's authority to act, "[t]o ensure the correct entity for accounting purposes".
On 23 April 2004 the client sent a further letter to the practitioner. This appears to be subsequent to a communication between the parties which is not before me. The client says that the accounts are in dispute. The client says he has many issues with the accounts, particularly that they refer to work done by people to whom he has never spoken to.
On 7 May 2004 a solicitor for the client sent a letter to the practitioner. The letter repeats the client's request for a taxation of the accounts other than that dated 8 May 2003 and further requests an itemised bill of costs. The letter does not allege that a retainer did not exist between the parties. The practitioner filed an amended bill of costs dated 23 May 2005. At the subsequent taxation before a learned Registrar of this Court, the client objected to any allowance being made on the taxation because he said that there was no retainer between him and the practitioner.
The Registrar, I am told, refused an application for an adjournment of the taxation so that the issue of the existence of the retainer could be determined in a Court and instead proceeded to hear evidence as to the existence of a retainer and submissions from both parties. Ultimately, he ruled:
"On the evidence as it stands, I could not make a finding as to whether there was a retainer or, if so, by whom. There is no conclusive evidence one way or the other. In such circumstances, I must find against the solicitor. See Quick on Costs paragraph 3.70. If the matter was left at that, I would do so but for the letter of 7 May 2004 from Hotz and Co solicitors stating that they act for [the client] and requesting on his behalf taxation, 'Of all your accounts other than your account dated 8 May 2003.' Therefore, Rapoff v Macdonald Rudder, unreported, WASC, Franklyn J, delivered 6 July 1990, library number 8353 applied. The person requesting taxation is estopped from denying a retainer or that he is the party charged. The taxation can therefore proceed."
Counsel for the parties requested the Registrar to refer the following questions to the Court pursuant to SCR O 66 r 45. The questions referred to me are:
"(a)Is the Party Charged, [Mr E Purvis], precluded from denying a retainer at the taxation as to the whole of the practitioner's amended bill of costs filed 23 May 2005, between him, in his personal capacity, and the practitioners, O'Connor Partners?
(b)If the answer to (a) is yes, then is the Party Charged precluded from denying that a retainer exists between him in his personal capacity and the practitioner in regard to part or parts of the practitioner's amended bill of costs filed 23 May 2005?"
SCR O 66 r 45 says:
"The taxing officer may, of his own motion, refer any question arising in the course of a taxation for the direction of the Court."
The parties agree that the above questions arose during the course of the taxation and, thus, the matter is properly before me.
The Legal Practice Act 2003 (WA), ("the Act), Pt 13 Div (3) deals with the taxation of costs. The Act does not disturb a practitioner's right to sue for the recovery of any services, fees, charges or disbursements, but s 230 provides that a practitioner may not do so until a bill for those amounts has been served on "the party charged". The Act, s 228 defines "the party charged" so as to include a person liable to pay or to reimburse another for costs in a bill.
The scheme of Div (3) is to provide a method by which a client may have taxed, usually by a taxing officer of this Court, any charges made by a legal practitioner for professional services and associated fees, charges or disbursements. By s 231(3) the person charged may require an itemised bill of charges and by s 232(3) within 30 days of receiving the itemised bill, the person charged may give written notice of intention to have the bill taxed. Upon service of that notice, the person charged may have the bill taxed by the taxing officer.
By s 236 a taxing officer may order that any proceedings for the recovery of costs be stayed. Upon the bill of costs being lodged with a taxing officer of the Supreme Court, a taxing officer is either to proceed with the taxation by appointing a date and time for it or, pursuant to s 231(1), may remit the bill to an officer of the court or tribunal in the jurisdiction to which the bill relates.
At the conclusion of a taxation, a taxing officer must certify in writing the amount at which the bill of costs and the costs of and incidental to the taxation of the bill of costs are respectively allowed by the taxing officer. It is made clear by the Act, s 240, that a certificate is binding and conclusive on both parties. A taxation may be reviewed by this Court.
It is accepted that the matter came before the taxing officer as a result of a request made by the client pursuant to the Act, s 232(3). The only basis for the client requesting a taxation of the bills was on the basis that he was the party charged because he was a person liable to pay the practitioner for costs in the bills.
There are also provisions in the SCR relating to the taxation of bills. Extensive powers are given to taxing officers, including the power to make final determinations of fact pursuant to O 66 r 44. A taxing officer may, for the purpose of the taxation, summons and examine witnesses, require the production of documents, issue subpoenas and do other matters.
However, there is no express power in the Act or the SCR for the taxing officer to look behind a bill of costs to establish whether or not there was a retainer between the parties. The first questioned referred to me raises the issue as to whether a taxing officer at a taxation can determine whether there was a retainer at all between the putative solicitor and client or, in the terms of the Act, the person charged and the legal practitioner.
Although the Act sets out the procedure and rules for obtaining a taxation of a bill of costs, it does not define a taxation. In Goodwin v Storrar [1947] 1 KB 457 at 458, Denning J, purported to define the natural and ordinary meaning of "taxation as between solicitor and client" to be an inquiry as to the costs which a client ought properly to pay his own solicitor.
It is also relevant to consider the definition of the word retainer. The learned author of "Cordery on Solicitors", 8th ed 1988, defines a retainer as:
" … a contract whereby in return for the client's offer to employ the solicitor, the solicitor expressly or by implication undertakes to fulfil certain obligations."
The practitioner submits that it is not open for a taxing officer to determine whether a retainer existed between parties to a taxation. The submission relies upon In Re Herbert [1887] 34 Ch D 504, where North J, is said to have expressed the view that at least since an earlier case of In Re Bracey (1845) 8 Beav 266, it has been established that a taxing Master may upon a taxation consequent upon a common order for taxation herein determine the objections on the grounds of want of retainer to any items of the bill except for those that the party has admitted the retainer by his petition for the common order.
Thus, the practitioner says, after having sought a taxation of the whole bill, it was not open for the client to dispute the retainer as to the whole bill. InRe Herbert was followed in Rapoff v Macdonald Rudder, unreported; SCt of WA (Franklyn J); Library No 8353; 6 July 1990. As was said by Steytler J, as he then was, in the more recent decision of Silverstone Holdings Pty Ltd v Edward and Anor [2000] WASC 290 at 8, the ratio of that decision appears relevantly to be:
" … when a client requires that a bill rendered for legal services to be taxed, the client must be taken to admit the existence of a retainer but desires to be assured that he or she is being charged only what is appropriate to the services rendered pursuant to the retainer and not to matters which do not fall within it."
I respectfully agree with the summary of the ratio. So much is clear from Rapoff's case at p 12 – 13 where Franklyn J said:
"In my view it is clear on the authority of Re Herbert (supra) and on the provisions of the Legal Practitioners Act and O.66 of the Rules of the Supreme Court that, having received the bill and elected to have it taxed, it is not open to the client to deny a retainer as to the whole of the bill as opposed to part or parts thereof."
In Rapoff's case, the Court construed the relevant provisions of the Legal Practitioners Act 1893 (WA), which was the predecessor to the Act. There is no substantial point of distinction between the relevant provisions of the two Acts.
The practitioner submits that the request, pursuant to the Act, s 232(3), to have the bill taxed can be equated with the earlier procedure for a petition referred to InRe Herbert (supra) and InRe Bracey (supra). Whereas the client submits that the English cases rely on an entirely different procedure. That is a procedure whereby a party had to petition a court for a common order for taxation. Consequently the principles deriving from such a procedure no longer apply. Further, the client says that Rapoff's case can be distinguished on its facts from the facts of this case because in Rapoff's case there was no dispute that there was a retainer.
It is clear that the English position was that by a petition for a common order for taxation the client admitted the existence of a retainer and the taxing officer did not have the power to determine the existence of it. On the other hand, where a client disputed particular items in the bill being taxed, the taxing officer had power to construe the terms of the agreement for the purposes of the taxation without requiring a court to do so. Authority for those principles comes not only from the case of In Re Bracey (supra) and In Re Herbert (supra), but from other cases such as In Re Jones [1886] Ch D 105.
In Australia it seems that the English authorities have been followed, despite the fact that the procedure for a petition for a common order for taxation is not – and from what I can determine has not – been the usual procedure in Australian jurisdictions. The argument being that by requesting a taxation of a bill the client admits that there is or was a retainer between them and the solicitor. For example, this reasoning was applied in In Re Morgan [1883] 24 Ch D 114.
There is at least one other justification that some courts have found for finding that a client cannot dispute the existence of a retainer once they have sought a taxation of a bill of costs. That justification was referred to by Gallop J in Baalman v Dare Reed (1984) 52 ACTR 3. In that case his Honour referred to approximately 10 cases from England and Australian jurisdictions in which the question had been considered as to whether a taxing officer had the jurisdiction to determine whether a retainer existed between the parties to a taxation. The vast majority of those cases concluded that he or she did not have the jurisdiction to do so.
However, they did not all do so on the basis that the client had admitted the existence of the retainer by seeking the order for taxation or requesting a taxation pursuant to statute. The other justification for the finding was that the taxing officer should not determine matters such as the existence of a contract between the parties because the issue should be tried in an action. Gallop J in Baalman v Dare Reed (supra), went even further to say that in the ACT a taxing officer, not being the court when taxing a bill, did not have the jurisdiction to determine the existence of a contract; not just that it was undesirable that he or she do so.
The view that it is desirable for taxing officers to construe the terms of a retainer but not to decide whether a retainer exists at all appeared to be the reasoning of the majority InRe Hirst & Capes [1908] 1 KB 982. In that case Farwell LJ at 994 said:
"It may well be that where the existence of the alleged agreement, or of any liability under it, is in dispute, such a dispute ought to be settled by action. But, where there is an admitted agreement for payment of costs and the only question is as to the true construction of some terms in it, having regard to the circumstances, it is competent for the taxing Master for the purposes of the taxation to determine that question."
Kennedy LJ agreed and said at 997:
" … as must necessarily often be the case, the practice is for the Master to construe such agreements for the purpose of dealing with particular items in bills of costs, just as he has to construe the judgment given by a Judge in order to see what the effect of it is with regard to costs. There may no doubt be cases, as for instance of oral agreements, or agreements which have to be gathered from a long correspondence, in which, if there were great difficulty as to the real meaning of the agreement, a judge might direct an issue to be tried, but there is nothing of that kind here."
In my view, the preponderance of authority supports the proposition that, where a taxation of a bill of costs has been sought by the client as the party charged, upon a taxation of the bill, the client is precluded from denying a retainer as to the whole of the subject and even if the client seeks to do so a taxing officer has no power to determine that question. I respectfully agree with Franklyn J's comments in Rapoff (supra), which I have quoted earlier. I further agree with the comments of Franklyn J where he says further on the same page:
"Sections 65‑71 of the Legal Practitioner's Act, like O.66 rr.32‑56, are concerned with assessing the amount properly payable in respect of services effected by a solicitor for his client pursuant to a retainer, not to determining whether there was a retainer. When a client requires the bill rendered for such services to be taxed, it seems to me that he admits the existence of a retainer but desires to be assured that he is being charged only what is appropriate to the services rendered pursuant to the retainer and/or that he is not being charged for matters which do not fall within the retainer."
The taxing officer's lack of jurisdiction to decide the existence of a retainer is justified on basis articulated by Franklyn J, which is just as legitimate when the provisions of s 232 and related provisions of the Legal Practice Act 2003 (WA) are substituted for those previously in the Legal Practitioners Act 1893 (WA), and by the principle that a decision as to the existence of a contract should, in the normal course of events, be determined in an action properly brought between the parties. Such an action, unlike a decision of a taxing Master, gives the parties rights at law, including rights of appeal. It would require a clear expression of intention in the Act or Rules to give this jurisdiction to a taxing officer. No such clear expression exists.
My only concern, having come to this view, is what procedure is open for a client who wishes to dispute the existence of a retainer and also wishes, if that issue is decided against them, to object to the amount of the bill? The Act states that the request for the taxation of the bill has to be made within strict time periods. It is highly unlikely that a Court would decide whether or not a retainer existed between the parties before those time periods expired.
On the other hand, if the client seeks to protect their position by applying for a taxation before the existence of a retainer is determined at law, theoretically they could be forced to conclude the taxation and a certificate of taxation binding upon them may be signed prior to determination of their liability at law.
I have heard the submissions of both parties in this respect. It seems to me that one option is for the client not to request a taxation, but rather to defend any action for enforcement of the bill of costs, both on the basis that no retainer existed and if it did, that the amount claimed was excessive. The Court hearing the enforcement proceedings would then have to determine both quantum and liability. The alternative is if, either in ignorance of the law or otherwise, the client applied for a taxation the client may apply for an adjournment of the taxation pending the outcome of the enforcement proceedings. A taxing officer being satisfied that there was a dispute between the parties as to whether a retainer actually existed should look upon such an application favourably. Consequently I am satisfied that the view I have come to with respect to the first question, as a matter of principle and statutory construction, does not deprive a client of his or her ability to both dispute the retainer and the amount of the bill.
In order to clarify the first question for my determination I would insert the words "in the taxation" after the word precluded. My answer to that question is yes, the party charged is so precluded.
I now turn to the second question. A number of the authorities which I have already referred to, indicate that the answer to this question is no. The preponderance of authority indicates that this is the case. Franklyn J said as much in Rapoff's case at p 13 where he said:
"It is not open to the client to deny a retainer as to the whole of the bill as opposed to part or parts thereof." (My underlining)

In Re Herbert (supra) North J also said as much at page 505 where he said:
" … It is not open to them to dispute the retainer as to the whole bill, but it is to do so as to any particular items or as to any head of charges." (My underlining)
This view was also expressed by Gallop J in Baalman v Dare Reed (supra) at page 17 line 35 to 40 where he said:
"I do not accept the argument that the Registrar had jurisdiction under the Ordinance or otherwise to determine the terms of the contract of retainer except in so far as they relate to particular items in the solicitors' bill of costs." (My underlining)
It seems clear from these authorities that a client is not precluded from denying that a retainer existed between him and the practitioner in regard to particular items or parts of a bill of costs.
Given the wide powers given to taxing officers in the Supreme Court Rules and given the practical difficulty for a taxing officer in taxing a bill without straying into the area of the nature and extent of a retainer, my opinion is that the second question should be answered no.
The alternative view would mean that a taxing officer, in effect, could not determine the terms and conditions of a retainer unless the client had set out in their request for the taxation the particular items in the bill which they did not admit. I cannot see any practical utility in such an approach, neither do I believe that it is dictated by principle. In my view, principle and policy require that where the client seeks a taxation they must for the purposes of the taxation accept the existence of the retainer. However, it is within the jurisdiction of the taxing officer to determine, according to the terms of that retainer, what the client ought properly pay to his own solicitor. That is the very essence of a taxation. The taxing officer would be unable to do his or her job if they were precluded from determining whether the practitioner was or was not retained to perform certain items contained within the bill of costs.
The practitioner submits that to permit the client to do so is, in effect, permitting the client to deny that there is a retainer between the parties because he or she may dispute in this manner the substantial part of a bill. I do not accept that such a position is contrary to the proposition that a client requesting a taxation can not deny a retainer as to the whole of the bill. The client, as I have answered in respect to question 1, must admit the retainer once he or she has requested the bill to be taxed. It is a different question as to the extent of that retainer and the terms and conditions of it.
In my view, a party charged who says that in respect to particular items that no retainer existed between him and the practitioner in respect to that work is doing no more than saying that the terms and conditions of the admitted retainer did not include those items or that work. On the basis of the authorities and the statutory powers of taxing officers, it is clear to me that a taxing officer has jurisdiction to determine the terms and conditions of the retainer. This includes the ability to determine that some work is not included in the retainer.
The practitioner submits that there is no real distinction between a client disputing that they are a chargeable party and, on the other hand, a client acknowledging that they are a chargeable party but alleging that the conditions of the retainer did not include some items of the bill. In my opinion, there is a significant distinction between those two positions. In respect to the first, the client disputes that there was a retainer at all. In respect to the second, he acknowledges that there was a retainer, but disputes the terms and conditions of it. After a request for a taxation of a bill of costs the taxing officer may determine the conditions of the retainer, but may not determine whether there was a retainer at all.
These reasons answer the two questions that have been referred to me, according to law. I have heard submissions from the parties in respect to the facts of this case. It has been put to me by the practitioner that the client, having stated in his affidavit filed in the taxation that there was no retainer between himself and the practitioner, is now precluded as a matter of fact from admitting that there was a retainer, but disputing some of the items on the bill.
It does not seem that I can or should make a determination of that issue. The answer to it depends upon the legal advice given to the client. However, there may well be ethical difficulties in the client now asserting that there was a retainer, but denying certain items in it. That is a matter for him to consider in the light of the legal advice that he now obtains following my decision in this matter.
If he maintains his view that there was no retainer, then it would seem to me that the correct procedure would be for him to apply for an adjournment of the taxation to enable the practitioner to take enforcement proceedings. In that way the liability of the client can be determined at law.