Raymond, Sherri & Associates (a pseudonym) v Wheeler (a pseudonym)
[2022] VCC 1134
•21 July 2022
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
| MALCOLM RAYMOND (A PSEUDONYM) trading as RAYMOND, SHERRI & ASSOCIATES (A PSEUDONYM) | First Plaintiff |
| and | |
| EDWARD SHERRI (A PSEUDONYM) trading as RAYMOND, SHERRI & ASSOCIATES (A PSEUDONYM) | Second Plaintiff |
| v | |
| MELVIN WHEELER (A PSEUDONYM) | Defendant |
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JUDGE: | Her Honour Judge Brimer | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF RULING: | 21 July 2022 | |
CASE MAY BE CITED AS: | Raymond, Sherri & Associates (a pseudonym) v Wheeler (a pseudonym) | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 1134 | |
RULING
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Subject:PRACTICE AND PROCEDURE
Catchwords: Plaintiffs sought summary judgment against defendant – defendant sought that proceeding by dismissed alternatively stayed – statutory interpretation – Legal Profession Uniform Law – disclosure requirements – plaintiffs acted for defendant in family law proceedings – plaintiffs did not provide costs disclosure – plaintiffs issued tax invoice which remains unpaid – whether plaintiffs were required to give costs disclosure – whether defendant is a “commercial or government client” – not disputed that defendant is the principal of an “incorporated law practice” – whether defendant is a “sole practitioner” – costs not assessed by Costs Court – proceeding stayed
Legislation Cited: Legal Profession Uniform Law (Vic) ss 6, 170, 174, 184; Legal Profession Uniform Rules (Vic) r 71
Cases Cited:Bilson v Esposito [2019] VSC 801; Re Kornucopia Pty Ltd (No 4) [2020] VSC 7
Ruling: For the defendant
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr I Percy | [Redacted] |
| For the Defendant | Mr D Snyder | [Redacted] |
HER HONOUR:
Introduction
1The publication of these reasons employs pseudonyms for the names of the plaintiffs (and their law firm) and the defendant (and his incorporated law practice) to ensure there is no identification of a party or giving of an account of a Family Law Act 1975 (Cth) proceeding contrary to s121 of that Act.
2By way of summons dated 5 May 2022, the plaintiffs sought summary judgment against the defendant (Mr Wheeler). By way of summons dated 6 May 2022, Mr Wheeler sought the proceeding be dismissed alternatively stayed.
Background
3The plaintiffs carry on legal practice under the firm name “Raymond, Sherri & Associates”[1] (the Firm).
[1] A pseudonym.
4Mr Wheeler is the sole director and principal of the incorporated law practice “Wheeler & Co Pty Ltd”[2].
[2] A pseudonym.
5It is common ground that:
(a) On or about 26 November 2015, Mr Wheeler engaged the Firm to act for him in respect of personal family law matters.[3]
(b) The Firm “did not at the time of receiving instructions or thereafter provide Mr Wheeler with any explanation as to how their costs in relation to acting for him would be calculated.”[4]
(c) From on or about 26 November 2015 to on or about 25 September 2019, the Firm performed legal services pursuant to Mr Wheeler’s instructions.[5]
(d) On 23 October 2018, the Firm received an assessment of the Firm’s solicitor client professional charges from Grace Costs Consultants (costs assessment).[6]
(e) On 9 December 2019, the Firm emailed a tax invoice to Mr Wheeler, based on the costs assessment (tax invoice).[7] The tax invoice was for the sum of $116,416.65 (after deduction of $290 held in trust), including GST and disbursements of $1,234.65.[8]
(f) The tax invoice remains outstanding.[9]
(g) The costs claimed by the plaintiffs have not been assessed, or the subject of any determination of a costs dispute, heard by the Costs Court, the Supreme Court of Victoria, the Victorian Legal Services Board or Victorian Legal Services Commissioner.[10]
(h) On 3 February 2022, the plaintiffs commenced proceedings against Mr Wheeler in this Court seeking the amount outstanding together with interest and costs.[11]
[3] Statement of Clam dated 2 February 2022, [6] (Statement of Claim); Defence dated 18 March 2022,
[6] (Defence); Affidavit of Edward Sherri dated 5 May 2022, [10] (First Sherri Affidavit).
[4] First Sherri Affidavit, [12]. Mr Sherri also deposed that ‘It was implicit in our conversation that the Firm would charge fees for its services on the appropriate Family Court scale’ and that on 9 April 2018, on the first day of trial, he handed a letter dated 6 April 2018 to Mr Wheeler setting out an estimate of his costs to that date pursuant to the requirements of r19.04(2) of the Family Law Rules 2004. At [4] of the Affidavit of Edward Sherri dated 1 June 2022 (Second Sherri Affidavit), Mr Sherri deposed ‘I cannot recall any conversations at the time of receiving instructions to act for Mr Wheeler about how fees would be charged but there was never any conversation between us to the effect that my firm would not charge for work done’. See also Affidavit of Melvin Wheeler dated 4 May 2022, [11] (First Wheeler Affidavit).
[5] First Sherri Affidavit, [11].
[6] Ibid, [22]. Mr Wheeler deposed that he was not involved in and did not authorise the costs assessment.
First Wheeler Affidavit, [10].
[7] Statement of Claim, [9]; Defence, [9]; First Sherri Affidavit, [25].
[8] First Sherri Affidavit, [25].
[9] Statement of Claim, [13]; Defence, [13].
[10] Affidavit of Melvin Wheeler dated 26 May 2022, [18] (Second Wheeler Affidavit).
[11] Writ filed 3 February 2022 together with Statement of Claim.
6In his defence, Mr Wheeler pleaded that the Firm was required to give costs disclosure under Part 4.3 of the Legal Profession Uniform Law (Uniform Law).[12] The consequence of having failed to do so is that the he is not required to pay the legal costs, and the plaintiffs cannot maintain proceedings for recovery of the legal costs, until they have been assessed or any costs dispute has been determined by the designated local regulatory authority or under jurisdictional legislation.[13]
[12] Schedule 1 of the Legal Profession Uniform Law Application Act2014 (Vic). Defence, [7(d)-(e)].
[13] Ibid, [7(f)].
The summonses
7On 5 May 2022, the plaintiffs filed a summons seeking:
(a) summary judgment against the defendant pursuant to r22.03 of the County Court Civil Procedure Rules 2018 (Rules); and
(b) an order that the defendant pay the plaintiffs’ costs of this application and of this proceeding generally.
8On 6 May 2022, the defendant filed a summons seeking:
(a) that the proceeding be dismissed pursuant to s62 of the Civil Procedure Act 2010 (Vic) (CPA) and r22.16 of the Rules;
(b) alternatively, that the proceeding be stayed pursuant to r23.01 of the Rules; and
(c) costs.
9The hearing of both summonses was listed for 23 June 2022 at 10am.
Orders made on the papers
10On 22 June 2022 at 2.54pm, my chambers emailed the parties as follows:
“Having regard to the materials filed in this application (excluding the material referred to in paragraph [7] of the Affidavit of [Melvin Wheeler] dated 26 May 2022),[14] and practitioners’ overarching obligations under the Civil Procedure Act 2010, Her Honour proposes to make the following orders on the papers unless objections are received by 5pm today.
Proposed orders:
That:
1. The plaintiff’s summons dated 5 May 2022 is dismissed.
2.Pursuant to r23.01 of the County Court Civil Procedure Rules 2018, the proceeding is stayed.
[14] In [7] of the Second Wheeler Affidavit, Mr Wheeler deposed to having never waived legal professional
privilege and objected to the plaintiffs’ use and disclosure of that documentation. The issues of statutory construction raised by the summonses and the parties’ submissions are resolved on the undisputed facts. The Court received submissions from the plaintiffs dated 9 June 2022 (Plaintiffs’ Submissions) and submissions from the defendant dated 9 June 2022 (Defendant’s Submissions) and 16 June 2022 (Defendant’s Reply Submissions).
3. Costs reserved.
Please acknowledge receipt of this email as soon as possible.”
11At 3.01pm, the plaintiffs’ solicitor replied:
“I confirm receipt of the below email.
I enquire whether her Honour has considered [Mr Sherri]’s affidavit, sans exhibit pages 16-52.”
12At 3.41pm, my chambers responded, stating:
“Yes, Her Honour has considered [Mr Sherri]’s affidavit, excluding the material referred to in paragraph [7] of the Affidavit of [Melvin Wheeler] dated 26 May 2022.”
13At 4.15pm, Mr Wheeler replied:
“We refer to your email of 2.54pm below and confirm receipt of it.
The defendant does not object to the orders proposed in that email. However, for the avoidance of doubt, in not opposing the order that costs be reserved, the defendant reserves his position to argue at an appropriate later stage that costs should follow the event and that the defendant should be awarded costs in respect of the plaintiffs’ and defendant’s summonses.”
14No objection was received from the plaintiffs by 5pm.
15At 5.10pm, I made the foreshadowed orders, which were emailed to the parties and the hearing listed on 23 June 2022 was vacated.
16On 23 June 2022 at 9.37am, the plaintiffs’ solicitor emailed chambers requesting reasons for my orders.
17These are my reasons.
Applicable law and legal principles
Summary judgment
18Pursuant to s61 of the Civil Procedure Act 2010 (Vic) (CPA):
“A plaintiff in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a defendant's defence or part of that defence has no real prospect of success.”
19Pursuant to s62 of the CPA:
“A defendant in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a plaintiff's claim or part of that claim has no real prospect of success.”
20Section 63(1) of the CPA provides:
“Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.”
21Section 64 of the CPA provides:
“Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because—
(a) it is not in the interests of justice to do so; or
(b)the dispute is of such a nature that only a full hearing on the merits is appropriate.”
22Section 65 of the CPA provides:
“The powers of a court under this Part are in addition to, and do not derogate from, any powers a court has under rules of court in relation to summary disposal of any civil proceeding.”
23The principles to be applied were recently summarised by Justice Attiwill in Ormond Supermarket Pty Ltd v Sarar Australia and NZ Pty Ltd & Anor[15] referring to Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd:
“In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd,[16] the Court of Appeal set out the test to be applied when determining whether to give summary judgment in a civil proceeding pursuant to s 63 of the Civil Procedure Act as follows:
Upon the present state of authority:
(a)the test for summary judgement under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a “real” as opposed to a “fanciful” chance of success;
(b)the test is to be applied by reference to its own language and without paraphrase or comparison with the “hopeless” or “bound to fail test” essayed in General Steel;[17]
(c)it should be understood, however, that the test is to some degree a more liberal test than the “hopeless” or “bound to fail” test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
(d)at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.”
[15] [2022] VSC 278, [85].
[16] (2013) 42 VR 27, 40 [35] (Warren CJ and Nettle JA).
[17] General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.
Stay of proceeding
24Rule 23.01 of the Rules provides as follows:
“Stay or judgment in proceeding
(1) Where a proceeding generally or any claim in a proceeding—
(a) is scandalous, frivolous or vexatious; or
(b) is an abuse of the process of the Court—
the Court may stay the proceeding generally or in relation to any claim or give judgment in the proceeding generally or in relation to any claim.”
The issue in dispute
25The issue of statutory construction central to the resolution of the summonses is whether Mr Wheeler was a “commercial or government client” within the meaning of s170 of the Uniform Law such that no costs disclosure under s174 of the Uniform Law was required.[18]
[18] In resisting the Firm’s summary judgment application, Mr Wheeler denied the quantum of costs claimed
and denied there was any account stated and set out the basis for doing so (Defendant’s Reply
Submissions). Given my findings and the orders made, it is not necessary to address these issues further.
26The plaintiffs contended that:
(a) The Firm was not required to comply with the disclosure obligations,[19] because disclosure obligations do not apply to “commercial or government clients”.[20]
[19] Legal Profession Uniform Law (Vic), s 174 (Uniform Law).
[20] Ibid, s 170(1)
(b) “Commercial or government client” is defined to include “a law practice”.[21]
[21] Ibid, s 170(2)(a).
(c) “Law practice” means “a sole practitioner”.[22] A “sole practitioner” is “an Australian legal practitioner who engages in legal practice on his or her own account”.[23]
[22] Ibid, s 6.
[23] Ibid, s 6.
(d) Mr Wheeler is caught by the definition of “law practice” because:
(i)he provides legal services as the principal of the company which is an “incorporated legal practice” within the definition of “law practice” in s6 of the Uniform Law;
(ii)as the principal of the company, Mr Wheeler is required to and does hold an Australian Practicing Certificate and is the sole director of the company;
(iii)the company has continuously conducted a law practice in Victoria; and
(iv)Mr Wheeler provides “legal services” in the ordinary course of legal practice as defined in s6 of the Uniform Law.[24]
(e) Mr Wheeler is the sole director and secretary of Wheeler & Co Pty Ltd and is therefore conducting legal practice, albeit through his company, on his “own account”.[25]
(f) In Bilson v Esposito [2019] VSC 801 (Esposito), Judicial Registrar Gourlay found that a sole practitioner holding a principal’s practising certificate came within the definition of “commercial or government client”.[26]
(g) Further, Mr Wheeler is a “person specified in… the Uniform Rules” for the purpose of s170(2)(h) of the Uniform Law, which provides:[27]
“… a “commercial or government client” is a client of a law practice where the client is a person specified in, or of a class specified in, the Uniform Rules.”
[24] Plaintiffs’ Submissions, [16].
[25] Ibid, [17].
[26] Ibid, [18].
[27] [7] of the Statement of Claim pleads that the defendant was at all relevant times a “commercial or
government client” as defined in s170(1) and s170(2)(a) only.
(h) In light of the above, judgment ought to be entered against Mr Wheeler on the ground he has no defence to the whole or part of the plaintiffs’ statement of claim.
27Mr Wheeler contended that:
(a) The Firm was required to comply with the disclosure obligations and failed to do so.[28]
(b) Mr Wheeler was not a “commercial or government client”.[29] Mr Wheeler instructed the Firm “to act in respect of family law matters to which he was a party in a personal capacity”.[30]
(c) Mr Wheeler is not a “sole practitioner”. Since 1 March 2003, Mr Wheeler has continually engaged in legal practice and provided legal services as the principle of an “incorporated law practice”, and not on his own account as a “sole practitioner”.[31]
(d) With respect to Esposito, all of the evidence in that case showed that the applicant was a sole practitioner; there was simply no evidence to the contrary.[32] Those facts stand in marked contrast with the present case where all of the evidence points to the defendant having acted only as principal of an incorporated legal practice.[33]
(e) The plaintiffs’ proceeding to recover legal costs from Mr Wheeler cannot presently be maintained,[34] therefore it is appropriate to stay the proceeding pending an assessment by the Costs Court.[35]
[28] Uniform Law, s 174.
[29] Ibid, s 170(2)(a).
[30] Defence, [6(a)].
[31] Defendant’s Submissions, [5].
[32] Defendant’s Reply Submissions dated 16 June 2022, [20].
[33] Ibid.
[34] Uniform Law, s 178.
[35] Re Kornucopia Pty Ltd (No 4) [2020] VSC 7, [294] and [297] (Sifris J).
Relevant legislation
28The relevant legislative provisions are found in the Uniform Law.
29Section 174 of the Uniform law provides:
“174 Disclosure obligations of law practice regarding clients
(1) Main disclosure requirement
A law practice—
(a)must, when or as soon as practicable after instructions are initially given in a matter, provide the client with information disclosing the basis on which legal costs will be calculated in the matter and an estimate of the total legal costs; and
(b)must, when or as soon as practicable after there is any significant change to anything previously disclosed under this subsection, provide the client with information disclosing the change, including information about any significant change to the legal costs that will be payable by the client—
together with the information referred to in subsection (2).”
30Section 170 of the Uniform Law provides:
“170 Commercial or government clients
(1) This Part does not apply to—
(a) a commercial or government client; or
(b)…
(2)For the purposes of this Law, a "commercial or government client" is a client of a law practice where the client is—
(a) a law practice…
(h)a person specified in, or of a class specified in, the Uniform Rules.”
31Section 178 of the Uniform Law provides:
“178 Non-compliance with disclosure obligations
(1) If a law practice contravenes the disclosure obligations of this Part—
(a) the costs agreement concerned (if any) is void; and
(b)the client or an associated third party payer is not required to pay the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority; and
(c)the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority or under jurisdictional legislation; and
(d)the contravention is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention.”
32Various definitions set out in s6 of the Uniform Law are relevant:
(a) “Australian Legal Practitioner” means an Australian lawyer who holds a current Australian practising certificate;
(b) “client” includes a person to whom or for whom legal services are provided;
(c) “incorporated legal practice” means a corporation that satisfies the following criteria—
(a) it is—
(i) a company within the meaning of the Corporations Act; or
(ii)a corporation, or a corporation of a kind, approved by the Council under section 114 or specified in the Uniform Rules for the purposes of this definition;
(b)it has given notice under section 104 that it intends to engage in legal practice in Australia and that notice is still operative;
(c)the legal services it provides or proposes to provide are not limited to either or both of the following services—
(i)in-house legal services for the corporation or a related entity;
(ii)services that are not legally required to be provided by an Australian legal practitioner and that are provided by an officer or employee who is not an Australian legal practitioner;
Note: The Uniform Rules under section 10(3) may provide that certain entities are exempt from the operation of section 10(1), which provides that an entity must not engage in legal practice in this jurisdiction unless it is a qualified entity.
(d)it is not excluded by the Uniform Rules from being an incorporated legal practice—
but does not include a community legal service;
(d) “law firm” means a partnership consisting only of—
(a) Australian legal practitioners; or
(b)one or more Australian legal practitioners and one or more Australian-registered foreign lawyers;
(e) “law practice” means—
(a) a sole practitioner; or
(b) a law firm; or
(c) a community legal service; or
(d) an incorporated legal practice; or
(e) an unincorporated legal practice;
(f) “principal” of a law practice is an Australian legal practitioner who—
(a) in the case of a sole practitioner—is the sole practitioner; or
(b) in the case of a law firm—is a partner in the firm; or
(c)in the case of a community legal service—is a supervising legal practitioner of the service referred to in section 117; or
(d)in the case of an incorporated legal practice or an unincorporated legal practice—
(i)holds an Australian practising certificate authorising the holder to engage in legal practice as a principal of a law practice; and
(ii) is—
(A)if the law practice is a company within the meaning of the Corporations Act-—a validly appointed director of the company; or
(B)if the law practice is a partnership—a partner in the partnership; or
(C)if the law practice is neither--in a relationship with the law practice that is of a kind approved by the Council under section 40 or specified in the Uniform Rules for the purposes of this definition;
(g) “sole practitioner” means an Australian legal practitioner who engages in legal practice on his or her own account.
Principles of statutory construction
33The relevant principles of statutory construction were set out by the Kiefel CJ, Nettle and Gordon JJ in SZTAL v Minister for Immigration and Border Protection; SZTGM v Same:[36]
“The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.” (citations omitted)
[36] (2017) 262 CLR 362, [14].
Conclusion
34Having regard to the clear words of the Uniform Law and on the undisputed facts, in my view, Mr Wheeler was not a “commercial or government client” on the basis of being a sole practitioner as contended for by the Firm.
35The Firm was required to give disclosure under Part 4.3 of the Uniform Law. Pursuant to section 178(c) of the Uniform Law, the proceeding ought be stayed until the legal costs have been assessed by the Costs Court.
Analysis
36It is undisputed that:
(a) Wheeler & Co Pty Ltd is an incorporated legal practice:
(i)Wheeler & Co Pty Ltd is a company within the meaning of the Corporations Act.[37] It was registered in Victoria on 24 January 2003.[38]
[37] Corporations Act 2001 (Cth), s 9 (definition of “company”).
[38] First Wheeler Affidavit, [5(a)], MW-1. From 24 January 2003 to 3 March 2003, the company was known
as M Wheeler & Co Pty Ltd: [5(b)], MW-1. From 3 March 2003 to present, the company has been known as Wheeler & Co Pty Ltd: [5], MW-1.
(ii)As of 1 March 2003, Wheeler & Co Pty Ltd was registered with the Legal Practice Board (as it was then known) as an “Incorporated Practitioner” pursuant to s289 of the Legal Practice Act 1996 (Vic) (the predecessor to the Uniform Law).[39]
(b) Mr Wheeler has continuously engaged in legal practice and provided legal services in his capacity as principal of Wheeler & Co Pty Ltd:
(i)Since 24 January 2003, Mr Wheeler has been the sole director of Wheeler & Co Pty Ltd.[40]
(ii)In the Legal Services Board’s (LSB) Register of Lawyers, Wheeler & Co Pty Ltd is listed as a “Law Practice”[41] and Mr Wheeler is recorded as a “Principal with Trust”.[42]
(iii)Mr Wheeler’s practising certificates issued by the LSB in 2009 and 2013-2022 state that he is authorised to engage in legal practice “as a principal of a law practice”.[43]
(iv)At all relevant times, the required professional indemnity insurance has been taken out with the Legal Practitioners’ Liability Committee (LPLC) by Wheeler & Co Pty Ltd with Mr Wheeler named as principal.[44]
(v)All legal services performed have been charged by and in the name of Wheeler & Co Pty Ltd and the revenue earned from those services has been paid into a bank account in the name of Wheeler & Co Pty Ltd.[45]
[39] First Wheeler Affidavit, [6], MW-2.There is no suggestion or evidence that any other conditions apply
such that it is not an incorporated legal practice.
[40] Ibid, [5(c)], MW-1.
[41] Ibid, [7], MW-3
[42] Ibid, [8], MW-4.
[43] Ibid, [9], MW-5. Mr Wheeler deposed that he has been unable to locate copies of his practising
certificates for 2010-2012, however he believes they were in the same terms as the practising
certificates he was able to locate: [9].
[44] Ibid, [10].
[45] Affidavit of Melvin Wheeler dated 8 June 2022, [6].
37“Sole practitioner” means an Australian legal practitioner who engages in legal practice on his or her own account.[46]
[46] Uniform Law, s 6.
38In my view, Mr Wheeler, director and principal of the incorporated legal practice is to be distinguished from an Australian Legal Practitioner who practices on their own account and is thereby a sole practitioner within the meaning of the Uniform Law. I agree with Mr Snyder’s submission that a director acting as principal of an incorporated legal practice is plainly to be contrasted with a principal as sole practitioner and is plainly not to be equated with the incorporated legal practice itself.
Principal of incorporated legal practice not a principal as sole practitioner
39In an attempt to bring Mr Wheeler within the definition of “sole practitioner,” the Firm submitted that Mr Wheeler is the sole director and secretary of the company and is therefore conducting legal practice, albeit through the company, “on his own account”.
40The circumstance that Mr Wheeler “conducts legal practice albeit through the company” as submitted by the Firm distinguishes him from a sole practitioner practicing “on his (or her) own account” which, consistent with everyday language, means on behalf of oneself rather than on behalf of a partnership, corporation, or community legal service. To find otherwise ignores fundamental notions of separate legal personality.[47]
[47] Defendant’s Submission, [14] and Defendant’s Reply Submissions, [16].
41In my view Esposito does not assist the plaintiffs:
(a) In that case, the applicant issued a Summons for Taxation.[48] The respondent disputed that the applicant had standing on the basis that she was a “commercial or government client” and consequently precluded from the provisions of Part 4.3 of the Uniform Law.[49]
(b) The applicant swore that since 2017 she held a principal’s practising certificate and exhibited her practising certificates for the years 2017-18, 2018-19 and 2019-20.[50] The 2017-18 practising certificate stated that the applicant was authorised to engage in legal practice as an employee of a law practice.[51] The 2018-19 and 2019-2020 practising certificates stated that the applicant was authorised to engage in legal practice as a principal of a law practice which bore her name.[52]
(c) The applicant also exhibited an application for a variation of a practising certificate for the year 2017-18, which was undated.[53] The form stated that the applicant resigned as an employee solicitor on 30 July 2017 and commenced practice as a sole practitioner on 31 July 2017.[54]
(d) The applicant did not attend the hearing to explain the discrepancies between her affidavit and the exhibits filed.[55] Judicial Registrar Gourlay observed that the deficiencies in her evidence were clearly against her interests.[56]
(e) Judicial Registrar Gourlay ultimately found that there were multiple indicia that she was a “sole practitioner” and that there was no evidence to show, either in the course of the retainer or at the time the Summons for Taxation was issued, the applicant was not a “sole practitioner” and therefore not a “law practice”.[57]
[48] Bilson v Esposito [2019] VSC 801, [4] (Esposito).
[49] Ibid, [5].
[50] Ibid, [10]. The applicant did not exhibit a practising certificate for the year 2016-2017: [10].
[51] Ibid, [10].
[52] Ibid, [10]-[11].
[53] Ibid, [11].
[54] Ibid, [9], [11].
[55] The respondent requested that the applicant attend the hearing for the purpose of cross-examination:
ibid, [13].
[56] Ibid, [13].
[57] Ibid, [17], [21]. The respondent submitted that the obligation was on the applicant to demonstrate
that the Court had jurisdiction as she was not a “law practice” within the meaning of the Uniform Law and that she had not, or did not, engage in legal practice on her own account as a sole practitioner: [17(a)].
42As set out above this is not the case here. It is not contended, nor is there any evidence that Mr Wheeler has engaged in legal practice and provided legal services other than as principal of Wheeler & Co Pty Ltd.
Principal not to be equated with the incorporated legal practice itself
43The distinction between a “law practice” and the principal of a law practice is a substantive one, not a technical one as contended for by the plaintiffs.[58]
[58] The plaintiffs submitted that Mr Wheeler should not be entitled to avoid, or postpone, liability for legal
fees for work he admits was undertaken by the Firm on his instructions and on his behalf by relying on a technical argument to the effect that because he conducts legal practice as the principal of an incorporated practice he is not a “legal practice” within the definition: Plaintiffs’ Submissions, [22]. In reply, Mr Wheeler submitted that whether or not the argument is “technical”, his position is correct and his defence is based on more than “technical” arguments: Defendant’s Reply Submissions, [24].
44Part 4.3 of the Uniform Law distinguishes a “law practice” from the “principal” of a law practice which is separately defined as an Australian Legal Practitioner who:
(a) in the case of a sole practitioner, is the sole practitioner; and
(b) in the case of an incorporated legal practice, holds an Australian practicing certificate authorising the holder to engage in legal practice as a principal of a law practice and if the law practice is a company, a validly appointed director of the company.
45The drafters of the Uniform Law did not include in the definition of “commercial or government client” a “principal” of a law practice, an Australian Legal Practitioner or “lawyer”. In my view, it is clear that the Uniform Law does not provide for legal practitioners — who might be employees, partners, directors (either sole or joint) or otherwise associates of a law practice — to be excluded from the protection of fee disclosure.
46The plaintiffs contended that the policy behind the exclusion of “commercial and government clients” from the consumer protection provisions of Part 4.3 is that a lawyer does not need the protection of fee disclosure because they must be taken to understand how costs will be charged or assessed.
47In my view, this submission is not supported by the words of the Uniform Law. The words in the definition of “commercial or government client” focus on the identification of the client of the law practice. It is only where the client (of a law practice) is a “law practice” that the disclosure provisions do not apply.
48“Client” is defined to include a person to whom or for whom legal services are provided.[59]
[59] Uniform Law, s 6.
49It is undisputed that the client of the Firm was Mr Wheeler, not the law practice Wheeler & Co Pty Ltd. It was Mr Wheeler to whom legal services were provided:
(a) The plaintiffs sued Mr Wheeler personally to recover their legal costs, not Mr Wheeler’s law practice;[60]
(b) The legal costs sought to be recovered arise from family law proceedings, including a “trial between the Defendant and his wife”.[61] Mr Wheeler was a party to these proceedings, not his law practice; and
(c) At paragraph 10 of his affidavit sworn 5 May 2022, Mr Sherri states:
“I was first contacted by the Defendant in or about 12 November 2015. He was aware from our previous dealings that I acted in family law proceedings and he asked me whether I would be prepared to act for him in his personal family law matter with his wife...” (emphasis added)
[60] Statement of Claim. Plaintiffs’ Submissions, [2]: “The plaintiffs…seek summary judgment for fees
charged to the defendant for acting on his behalf in connection with his Family Court proceedings.”
[61] Second Sherri Affidavit, [10].
50Mr Wheeler is not a “law practice”.
51In Esposito, counsel for the respondent submitted that:
“The section does not carve out an exemption for a sole practitioner when they are a client in respect of their own individual private interests as opposed to when they have instructed a law practice to act on behalf of the law practice.”[62]
[62] Esposito, [20]. In this case, counsel for the plaintiffs submitted that none of the matters referred to in
their submission exclude the defendant from being a “sole practitioner” and therefore caught by the definition of “law practice”: Plaintiffs’ Submissions, [17].
52Judicial Registrar Gourlay considered that:
“If I find that the applicant is a law practice and cannot have a separate entity in respect of her Family Law dispute then the operation of Part 4.3 of the LPUL is such as to exclude her from applying for a review of the costs...The section does not include an exemption for sole practitioners who engage lawyers to act in personal matters. Whether or not the exclusion of a sole practitioner who engage (sic) another law practice to act in a personal matter from relying on Part 4.3 of the LPUL is undesirable and should be changed is a matter for the legislature to act on.” (emphasis added)[63]
[63] Esposito, [19].
53With respect, in my view, the correct approach is to identify the client of the law practice. If the client of the law practice is a “law practice”, the disclosure obligations do not apply. If the client of the law practice is not a “law practice”, for example, is an individual who happens to be a principal of a law practice,[64] then the disclosure obligations apply. It is not a question of the presence or absence of an exemption for sole practitioners who engage lawyers to act in personal matters.
[64] Whether that be a sole practitioner, partner in a firm, a supervising legal practitioner of a community54The plaintiffs relied on the explanatory memorandum to the Legal Profession Uniform Law Application Bill 2013 which referred to Part 4.3 of the Uniform Law as seeking to ensure that the consumer protections in the Bill were targeted at those “consumers who need them (by excluding commercial or government clients…”.[65] in support of their submission that lawyers “especially an experienced practitioner like Mr Wheeler”, must be taken to understand, how costs will be charged or assessed.
[65] As referred to by Judicial Registrar Gourlay in Esposito.
55In my view, the outcome of the construction contended for by the plaintiffs is unsupportable. It could not be said that the rationale of targeting protection at “consumers who need them” supports the exclusion from costs disclosure protection of a sole director of an incorporated practice (on the contended for basis that he or she is a sole practitioner) but entitles a joint director of an incorporated practice, or a senior partner at a large national partnership to costs disclosure protection.
56When Part 4.3 of the Uniform Law is properly construed, in my view there is no “undesirable” exclusion of a sole practitioner from relying on Part 4.3.
A person specified in the Uniform Rules
57The plaintiffs further submitted that for the reasons Mr Wheeler is caught by the definition of “law practice”,[66] Mr Wheeler is a “person specified in… the Uniform Rules” for the purpose of s170(2)(h) of the Uniform Law, which provides:
“… a “commercial or government client” is a client of a law practice where the client is a person specified in, or of a class specified in, the Uniform Rules.”[67]
[66] As set out in [16] and [20] of the plaintiffs’ submissions: (a) the defendant provides legal services as the
principal of the company which is an “incorporated legal practice” within the definition of “law practice” as defined in s6 of the Uniform Law, he holds an Australian Practising Certificate and is the sole director of the company; the company has continuously conducted a law practice in Victoria and the defendant provides “legal services” in the ordinary course of legal practice as defined in s6 of the Uniform Law.
[67] Plaintiffs’ Submissions, [20].
58The plaintiffs did not refer to any specific section of the Legal Profession Uniform Rules (Vic) (Uniform Rules) to support this submission.
59Rule 71 of the Uniform Rules specifies only certain state owned enterprises as an additional class of “commercial or government clients”:
“For the purposes of section 170(2)(h) of the Uniform Law, and to the extent they are not commercial or government clients apart from this rule, the following classes of persons are specified—
(a)State owned enterprises within the meaning of the State Owned Enterprises Act 1992 of Victoria…”
60Mr Wheeler is not a State Owned Enterprise under the State Owned Enterprises Act 1992 (Vic).
Stay of the proceeding
61Section 178(1)(c) of the Uniform Law provides:
“If a law practice contravenes the disclosure obligations of this Part— …
(c)the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until they have been assessed or any costs dispute has been determined by the designated local authority or under jurisdictional legislation…”
62In Re Kornucopia Pty Ltd (No 4) [2020] VSC 7, Sifris J held at [294] and [297]:
“Where a company obtains leave to raise a dispute relating to a debt for legal fees, in circumstances where s 178 of the Uniform Law is engaged, the provisions of the Uniform Law may mandate that a stay be imposed or may revoke the firm’s standing as a creditor. However, where this is not the case, the presumption of insolvency continues and there is no assumption in favour of a dismissal or stay of proceedings simply because company disputes the existence or amount of a debt.[68]
…
Section 178(1)(c) provides that ‘the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs’. If engaged it would appear to require me to stay these applications, by operation of the law, as distinct from a stay arising from the exercise of my discretion. This provision calls into question whether a winding up application can properly be characterised a ‘proceeding for the recovery of legal costs’. Having reviewed the authorities, I am of the view that it cannot, with the consequence that no stay is imposed by the Uniform Law.”
[68] Lanepoint (2011) 244 CLR 1, 14 [30] (Gummow, Heydon, Crennan, Kiefel and Bell JJ).
63As the proceeding to recover legal costs cannot presently be maintained due to s178 of the Uniform Law, I considered it appropriate to stay the proceeding pending an assessment by the Costs Court.
Orders
64For the reasons set out above, I made the following orders:
(a) The plaintiffs’ summons filed 6 May 2022 and listed for hearing on 23 June 2022 is dismissed.
(b) Pursuant to r23.01 of the County Court Civil Procedure Rules 2018, the proceeding is stayed.
(c) Reserve liberty to the parties to apply by email to the Commercial Registry ([email protected]) for further directions upon giving reasonable notice to all other parties.
(d) Costs reserved.
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Certificate
I certify that these 64 paragraphs are a true copy of the ruling of Her Honour Judge Brimer delivered on 21 July 2022.
Dated: 21 July 2022
Taylah Stretton
Associate to Her Honour Judge Brimer
legal service or a principal of an incorporated legal practice or an unincorporated legal practice: Uniform
Law s 6 (definition of “principal”).
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