SAM v Paterson & Dowding (A Partnership) and Paterson & Dowding Pty Ltd - [2023] WASC 216

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
CITATION:   SAM -v- PATERSON & DOWDING (A PARTNERSHIP) AND PATERSON & DOWDING PTY LTD [2023] WASC 216
CORAM:   MASTER SANDERSON
HEARD:   3 NOVEMBER 2022 & 15 MAY 2023
DELIVERED          :   23 JUNE 2023
FILE NO/S:   CIV 1199 of 2021
BETWEEN:   SAM
Plaintiff
AND
PATERSON & DOWDING (A PARTNERSHIP) AND PATERSON & DOWDING PTY LTD
Defendant

Catchwords:

Costs - Application by plaintiff to set aside costs agreement - Turns on own facts

Legislation:

Legal Profession Act 2008 (WA)

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	P Lafferty
Defendant	:	FA Robertson

Solicitors:

Plaintiff	:	Gibson Lyons
Defendant	:	AUL Law

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

MASTER SANDERSON:

By originating summons filed 18 March 2021 the plaintiff sought relevantly the following order:
Pursuant to section 288(2) of the Legal Profession Act 2008 the costs agreement between the plaintiff and defendant dated 3 February 2014 be set aside
Section 288 of the Legal Profession Act2008 (WA) (which is no longer in force but which is the relevant legislation for the purposes of this application) is in the following terms:
288.Setting aside costs agreements
(1)In this section -
client means a person to whom or for whom legal services are or have been provided.
(2)On application by a client, the Supreme Court may order that a costs agreement be set aside if satisfied that the agreement is not fair or reasonable.
(3)In determining whether or not a costs agreement is fair or reasonable, and without limiting the matters to which the Supreme Court can have regard, the Supreme Court may have regard to any or all of the following matters -
(a)whether the client was induced to enter into the agreement by the fraud or misrepresentation of the law practice or of any representative of the law practice;
(b)whether any Australian legal practitioner or Australian-registered foreign lawyer acting on behalf of the law practice has been found guilty of unsatisfactory professional conduct or professional misconduct in relation to the provision of legal services to which the agreement relates;
(c)whether the law practice has failed to make any of the disclosures required under Division 3;
(d)the circumstances and the conduct of the parties before and when the agreement was made;
(e)the circumstances and the conduct of the parties in the matters after the agreement was made;
(f)whether and how the agreement addresses the effect on costs of matters and changed circumstances that might foreseeably arise and affect the extent and nature of legal services provided under the agreement;
(g)whether and how billing under the agreement addresses changed circumstances affecting the extent and nature of legal services provided under the agreement.
(4)The Supreme Court may adjourn the hearing of an application under this section pending the completion of any investigation or determination of any charge in relation to the conduct of any Australian legal practitioner or Australian-registered foreign lawyer.
(5)If the Supreme Court determines that a costs agreement be set aside, the Court may make an order in relation to the payment of legal costs the subject of the agreement.
(6)In making an order under subsection (5) -
(a)the Supreme Court must apply the applicable costs determination (if any); or
(b)if there is no applicable costs determination - the Court must determine the fair and reasonable legal costs in relation to the work to which the agreement related, taking into account -
(i)the seriousness of the conduct of the law practice or any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf; and
(ii)whether or not it was reasonable to carry out the work; and
(iii)whether or not the work was carried out in a reasonable manner.
(7)In making an order under subsection (5), the Supreme Court may not order the payment of an amount in excess of the amount that the law practice would have been entitled to recover if the costs agreement had not been set aside.
(8)For the purposes of subsection (6)(b), the Supreme Court may have regard to any or all of the following matters -
(a)whether the law practice and any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf complied with this Act;
(b)any disclosures made by the law practice under Division 3, or the failure to make any disclosures required under that Division;
(c) any relevant advertisement as to -
(i)the law practice's costs; or
(ii) the skills of the law practice or of any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf;
(d)the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter;
(e)the retainer and whether the work done was within the scope of the retainer;
(f)the complexity, novelty or difficulty of the matter;
(g)the quality of the work done;
(h)the place where, and circumstances in which, the work was done;
(i)the time within which the work was required to be done;
(j)any other relevant matter.
(9)The Supreme Court may determine whether or not a costs agreement exists.
(10)The Supreme Court may order the payment of the costs of and incidental to a hearing under this section.
Section 288 is found in Division 6 - Costs agreement's of the Act. Section 282 covers making costs agreements. Pursuant to s 282(2): 'A costs agreement must be written or evidenced in writing'.
That section is determinative of this application. However, it is necessary to provide some background material to explain the context in which this provision is relevant.
The defendant is a legal practice specialising in matrimonial issues. The plaintiff first sought advice from the defendant in January 2013. The plaintiff and her former husband were married in 1976 and divorced in November 2015. The husband and wife had separated in June 2013. Proceedings for property settlement and spousal maintenance were commenced by the defendant acting for and behalf of the plaintiff in the Family Court of Western Australia in August 2013. The plaintiff does not dispute she signed a costs agreement with the defendant dated 3 February 2014 and that the defendant continued to act for her until December 2018. It is also not in dispute the defendant became an incorporated legal practice as and from 1 January 2016 and the plaintiff consented to the defendant continuing to act for her in accordance to the terms of the cost agreement dated 3 February 2014.
The Family Court proceedings first went to trial in the Family Court of Western Australia before Justice Walters in July 2015. Justice Walters failed to deliver a judgment in respect of the matter and the proceedings were reheard by Justice O'Brien in November 2019. The final day of evidence was taken in July 2019. Justice O'Brien handed down his decision in August 2019. The plaintiff's former husband appealed to the Full Court of the Family Court of Australia. In August 2020, the Full Court of the Family Court of Australia remitted the proceedings for rehearing in the Family Court of Western Australia. It was anticipated the retrial would be heard before Justice Moncrief in or around mid-2022.
Between January 2013 and December 2018, the defendant rendered invoices to the plaintiff for professional fees and office costs amounting to $578,876.83 inclusive of GST. The plaintiff also received invoices amounting to $92,700 inclusive of GST from a barrister who conducted both appeals as counsel before the Family Court of Western Australia and the Full Court appeal. The plaintiff also received invoices from Pitcher Partners Accountants amounting to $75,705 inclusive of GST for providing expert advice in respect of the Family Court proceedings. The total cost of proceedings then (excluding costs incurred by the plaintiff to date and to be incurred with their present lawyers since 2019) amount to $747,281.83.
It is not in dispute that the defendant's accounts have been paid in part. However, there is still an amount owing to the defendant pursuant to the cost agreement.
The plaintiff asserts that in or about July 2015, she had discussions with Mr Eric Martino (then a partner of the defendant)[1] during which her financial position and her inability to meet her ongoing liability for legal and expert fees was discussed. The plaintiff asserts Mr Martino made representations to her during the discussions to the effect that the defendant would continue to act for her and she would not have to pay legal costs or disbursements either until judgment was delivered in the Family Court proceedings or a settlement was reached between the plaintiff and her former husband. The plaintiff asserts that acting in reliance upon the representations made to her by Mr Martino, she continued to instruct the defendant to represent her.
[1] Mr Martino has since been appointed a Registrar of the Family Court of Western Australia. It may have lead to confusion by referring to him by his judicial title in these reasons; no disrespect is intended.
It is worth pausing at this point to consider how it is, even if the representations alleged by the plaintiff were made, it could lead to the cost's agreement being set aside. Section 288(2) allows the court to set aside a cost's agreement if it is satisfied the agreement is not 'fair or reasonable'. Section 288(3) then sets out a series of matters to which the court may have regard. The plaintiff's ground for seeking to have the cost's agreement set aside do not fall within any of these matters. Of course the matters listed in the subsection are not exclusive - other matters can be taken into account. But it is somewhat difficult to frame the plaintiff's case. What she appears to be saying is that because there was an oral variation of the cost's agreement, it is now no longer fair and reasonable to enforce that agreement. This application is not directed at having the court declare the agreement between the parties was orally varied as alleged by the plaintiff. The plaintiff says there was an oral variation and that variation was enforceable, and the agreement as varied is to be set side. This difficulty with the plaintiff's case was not adequately explained during the course of the hearing.
A copy of the cost agreement appears as attachment 'SM1' to the affidavit of the plaintiff sworn 10 June 2021. The costs agreement is in what might be called 'standard terms'. That is to say it sets out clearly the rights and responsibilities of the parties. It is written in a style which is easy to comprehend. It obliges the plaintiff to pay the defendant's accounts when rendered on certain terms and conditions. The agreement is signed by the plaintiff as is required by the legislation.
The defendant proposes that the plaintiff's application fails on four grounds. Summarised these are:
1.The evidence does not establish there was an oral variation to the cost's agreement as alleged by the plaintiff;
2.if there was such an agreement, it was not supported by consideration;
3.if there was such an agreement, the terms of the variation were so uncertain as to render the alleged agreement unenforceable;
4.any oral variation to a cost agreement is not permitted under the relevant legislation and is of no force and effect.
It is convenient to begin in reverse order. The requirement that a costs agreement be in writing is quite specific. It follows any variation to that agreement must also be in writing. If that was not the case, the parties could enter into a costs agreement and one or other of the parties could then negotiate an oral variation to the agreement. So for instance, a costs agreement might specify the solicitor would act for the client at $100 per hour. Sometime later that solicitor might decide the $100 per hour is too low and negotiate the client to the effect that the charge should be $150 per hour. It may well be that $150 per hour is consistent with rates charged by other practitioners and could not be viewed as unfair or unreasonable. It may also be the case that the variations were supported by consideration - the solicitor indicated to the client he or she would not continue to act unless the higher hourly rate was agreed. The rate was agreed and the solicitor continued to act.
To allow enforcement of such an agreement would be at odds with the aim of the legislation. Both the text and the context of the section clearly establish the legislature required that the agreement - and all aspects of the agreement - be in writing. If the written variation is supported by consideration and is not rendered unenforceable for uncertainty, then the contract as varied would be enforced. But that is not the case here. True it is the example I have quoted protects the client and it is protection of the client which is the aim of the legislation. But the provision in relation to writing is clear and operates no matter who is the beneficiary by the application of the clear wording of the section.
This conclusion is enough to dispose of the plaintiff's claim. However, all matters were argued in detail and for the sake of completeness I will deal with each submission in turn. Furthermore, there was cross-examination of a number of witnesses on their affidavits. I will deal briefly with the evidence of the individual witnesses and matters which emerge in cross-examination. However, none of the cross-examination played a part in my assessment of the merits of the parties' respective positions.
The plaintiff's evidence in relation to the alleged agreement is found in pars 19 to 25 of her affidavit sworn 10 June 2021. These paragraphs read as follows:
19.In or about July 2015, I had a number of conversations, some by telephone and some in-person at the offices of the defendant, with Mr Martino, in which my financial position was discussed and the fact that I was unable to meet my ongoing liability for legal and expert fees. I was really worried because I was used to paying my bills and I did not want them to stop acting for me.
20.Mr Martino said to me words [to] the effect that 'don't worry about it, we will continue to act for you and you won't have to pay your legal costs and disbursements until after judgment is given or a settlement reached'. I also said words to the effect that I did not want to be paying interest as I had no control over the matter and I did not have any money. Mr Martino told me words to the effect that there would not be any interest charged and that he would have to check this out with the partners but he thought that it would be okay. That made sense to me because they knew I had no other means by which to pay those fees.
21.Shortly after that conversation, exactly when I cannot recall, we had another conversation in which Mr Martino said words to the effect that the arrangement was fine.
22.As a result of those conversations I was happy to continue instructing the defendant. If I had not come to that arrangement I would have found a solicitor prepared to invoice me after settlement or judgment.
23.Following our conversation, I was sent the further following invoices;
23.1invoice number 7752 dated 6 August 2015 in the sum of $11,000; and
23.2invoice number 78347 dated 7 December 2015 in the sum of $19,354.63.
24.I recall having further discussions with Mr Martino after receiving those invoices and I recall I was told words to the effect of not to worry about them, it was just the accounts staff sending out invoices, the defendant would wait until after trial to be paid.
25.The defendant continued to act for me up until the conclusion of the second trial when the retainer I had with them was terminated. I describe the circumstances surrounding the termination of the retainer later in this affidavit.
If such an agreement was reached it was never confirmed to the plaintiff in writing and the plaintiff was unable to point to any document she had produced which confirmed the agreement. In opposition to the application, the defendant relied on an affidavit of Craig Andrew Paul Taylor affirmed 22 July 2021. Attached to that affidavit is a copy of the time record prepared by various members of the firm who were dealing with the plaintiff's matter. Pages 94 through to 96 of that affidavit deal with costing entries from the month of July 2015. The only entry which might possibly relate to the conversation the plaintiff says she has had with Mr Martino was made on 22 July 2015. Under the heading 'description' there appears the following: 'telephone attendance on client including recording instructions and advice for 49 minutes'.
The entries appearing under the heading 'description' are actually reasonably informative. For instance on 28 July 2015 there is an entry that reads: 'telephone attendance on clients regarding letter to [former husband of SAM] and trial'.
No affidavit was provided by Mr Martino. He is no longer a member of the defendant firm as he has taken up an appointment with the Family Court. It was clear from both his evidence and cross-examination he had no recollection of any agreement in terms alleged by the plaintiff. In cross-examination he did concede an agreement as alleged by the plaintiff might have been concluded. But the way the question was framed allowed for no other answer given his lack of any specific recollection of events which took place some 8 years ago. However, it does seem likely that if an agreement as alleged by the plaintiff was actually reached, it would have been recorded in correspondence. If that was not the case, it might have been expected the agreement would be reflected in the time costing entries.
On balance I am not satisfied any such agreement was reached. I have reached that conclusion for a number of reasons. First, watching the plaintiff in cross-examination I was not satisfied she was an entirely reliable witness. She shifted ground a number of times and the best that could be said of her was that her recollection was not clear. While these events took place almost 8 years ago and some allowance must be made for failing memory, I was not satisfied the plaintiff's answers in cross-examination were consistent with evidence in her affidavit. Second, I am satisfied if any agreement of this nature had been reached it is likely that Mr Martino would have remembered the event. He struck me in his evidence and under cross-examination as a thorough professional. To vary the contractual arrangement embodied in the cost agreement was no small matter. I am satisfied if he had taken that step he would have remembered doing so. Thirdly, there is nothing in the documentary evidence that supports the plaintiff's position. This was such a significant departure from the agreed contractual position that had any agreement been reached, it was most unlikely it would not have been reduced to writing. Written costs agreements are so tightly regulated and so fundamental to the practice of law that to have allowed some oral variation to an agreement to bind the parties without reducing it to writing would be highly unusual.
Even if I was satisfied there had been an oral agreement to vary the written costs agreement there is no consideration passing between the parties. There might well have been a conscious decision by Mr Martino and the firm not to pursue the plaintiff for outstanding fees until her case concluded. In other words, there was a forbearance to sue. Through Mr Martino, the defendant realised the plaintiff did not have the funds to make payment of the outstanding account. But a forbearance to sue is a different matter from a concluded agreement supported by consideration. The plaintiff attempted in her affidavit to suggest the consideration was her continuing to instruct the defendant. But she was already contractually bound and she had not terminated those instructions. So her continuing to instruct the defendant was consistent with the written contract and was not further consideration for any forbearance to sue.

Furthermore the alleged agreement is so vague as to be unenforceable. It has no temporal limitation. On the plaintiff's case, the defendant was obliged to continue to act for her without payment, not only until the end of the further trial, but in relation to any appeal and presumably any enforcement proceedings which were necessary to the judgment. There was no monetary limit put on the agreement. The uncertainty is so significant that it could not be said any binding agreement had been reached between the parties.
In all of the circumstances I am not satisfied the plaintiff has made out her case. The plaintiff's originating summons will be dismissed. The parties ought confer as to the form of orders and as to costs. My view, subject to anything the parties have to say, is that the plaintiff should pay the defendant's cost of the application, including the reserved costs. Any party who moves for a different order ought file short written submissions within 7 days of the publication of these reasons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CM
Associate
23 JUNE 2023