Smirnios v Byrne (No 2)
[2009] VSC 86
•17 March 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 3535 of 2006
| PETER SMIRNIOS | Plaintiff |
| v | |
| STEPHEN PETER BYRNE | Defendant |
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JUDGE: | LASRY J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6, 13 December 2007, and 12 June 2008 | |
DATE OF JUDGMENT: | 17 March 2009 | |
CASE MAY BE CITED AS: | Smirnios v Byrne (No. 2) | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 86 | |
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Appeal from order of Taxing Master reducing the bill as taxed by 30 per cent – Appeal under s 3.4.47 of the Legal Profession Act 2004 (Vic) – Hearing de novo – Finding of breach of s 3.4.15(2) of the Legal Profession Act 2004 (Vic) – Disclosure obligations – Disclosure where client does not speak English – Seriousness of non‑compliance – Stay of proceedings under s 4.3.2 of the Legal Profession Act 2004 (Vic).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms K. Knights | Wisewoulds Lawyers |
| For the Defendant | Mr R. Berglund QC | Stephen Peter Byrne |
HIS HONOUR:
On 12 December 2007, I published a judgment in this matter on the question of whether leave to appeal from the order of the Taxing Master reducing the bill as taxed by 30 per cent was required. I concluded that leave to appeal was not required under the Supreme Court (General Civil Procedure) Rules 2005, and adjourned the further hearing of the Amended Notice of Appeal dated 7 May 2007 to a date to be fixed. That hearing was to proceed as a hearing de novo.
On 12 June 2008, the matter again came before me for directions. I ordered that submissions on behalf of the plaintiff and defendant be filed with the Court, in order that I might proceed to determine the matter on the papers. The plaintiff’s submissions were filed on 2 July 2008, the defendant’s submissions in response were filed on 8 August 2008, and the plaintiff’s submissions in reply were filed on 26 August 2008.
Background to the Appeal
The defendant, Stephen Byrne, is a barrister and solicitor of the Supreme Court of Victoria who carries on practice as a sole practitioner in Melbourne. In early April 2006, Mr Byrne commenced to act for the plaintiff, Peter Smirnios, in Supreme Court proceedings. On 17 November 2006, the plaintiff filed a Summons for Taxation of Costs under Division 7 of Part 3.4 of the Legal Profession Act 2004 (Vic) (“the Act”), seeking review of a bill of costs. The taxation was set down for 24 April 2007 before the Taxing Master.
The bill as drawn was for $6,387.20. The Taxing Master taxed and reduced the bill by the sum of $1,296.00. Items 13, 14, 15, 17 and 22 were taxed off, and items 3, 20 and 28 were reduced. The Taxing Master also concluded that a further reduction of 30 per cent in the bill was warranted, and his Honour did so, acting pursuant to s 3.4.44(2)(b) and/or (k) of the Act. In making the order the Master ruled that a breach of s 3.4.15(2) of the Act (regarding disclosure obligations) was established. The revised taxed figure was therefore $3,563.84.
In his Honour’s Brief Reasons on Taxation, dated 24 April 2007, he found as follows:
Section 3.4.15 LPA states in relation to written disclosure that if the law practice is aware that the client is unable to read, the law practice must arrange for the information to be conveyed orally to the client. There is no dispute that the client has limited English, and that he would need someone to explain the disclosure document in his first language, Greek. This was apparent to the defendant when he first obtained instructions to act. ... It was conceded [on behalf of Mr Byrne] that at the initial conference with [Mr Smirnios] that the “disability” or “disadvantage” of the plaintiff was apparent ...
The disclosure document in English was handed to the plaintiff at the initial conference. Even on the defendant’s affidavit material it was not fully explained in Greek at that time by the plaintiff’s friend Stravros Koupeloglou and the conference was concluded on the basis that someone at the Commonwealth Bank was to provide such explanation in Greek subsequent to the conference. The defendant deposes that he was contacted by someone called Arthur who “led me to believe he had explained the fee agreement” to the plaintiff (in lieu of the bank employee). The agreement was returned signed but the defendant was aware that the lack of any evidence of explanation was a problem ...
The document that was returned was the agreement endorsed on the rear “I Arthur Tsaknias ... confirm that I have explained ... the estimated cost for his case is in the range of $25,000-$40,000” ...
The plaintiff has sworn an affidavit to the effect that the first time he became aware of the contents of the disclosure material was on 4 May 2006, a month after the initial consultation, when a qualified interpreter explained it to him at a conference. He swears that up until that point in time he thought the extent of his liability for costs was confined to $2,750, the figure mentioned to him on 4 April 2006. Other affidavits filed on behalf of the plaintiff are consistent with this assertion.
The defendant has not adduced evidence to directly contradict that to which the plaintiff swears. ... The endorsement does not confirm [Mr Tsaknias] explained the complete document or that the cost range was referable to the plaintiff’s potential liability for his own costs. The endorsement is just as consistent with an explanation that this was referring to the costs of the other party if the plaintiff lost the litigation, or the cost of litigation as a whole for both parties. There is no affidavit by Mr Tsaknias.
The endorsement is of little evidentiary value. On the defendant’s own sworn material, there was no evidence that an oral translation of the disclosure document into Greek took place. There is no direct evidence that Mr Tsaknias understood all the content of the document or that the plaintiff understood what he was told. The plaintiff clearly has limited education. The defendant in the course of the hearing on 24 April 2007 conceded that it was at the 3 May 2007 conference he realised that the plaintiff could not even read Greek. The defendant had the option of providing the disclosure material in Greek ... but this may not necessarily have advanced the plaintiff’s level of understanding.
In my view there has been a breach of 3.4.15 as there is no clear, unequivocal evidence that the defendant has arranged an oral translation of all the disclosure material in the time frame required by s 3.4.11(1). These provisions in the LPA are intended to afford clients clear information in a timely fashion at the time costs are about to be incurred or as soon as practicable after the solicitors commences [sic] to act.
Section 3.4.44(2) LPA recites all the maters that can be taken into account on review. Sub paragraph (2)(b) refers to failures to make disclosures required. Sub-para (2)(k) recites that any other relevant matter can also be considered. Even assuming the disclosure on 3 May 2006 technically satisfied the provisions of the Act, I would take the delay in the provision to the plaintiff of the necessary information into account as a “relevant matter” on review, as all the costs claimed in the bill were already incurred by then. The retainer of the defendant was immediately terminated thereafter.
In my view a further reduction of 30% in the bill is warranted.
In addition, his Honour ruled that the defendant, Mr Byrne, was liable to pay the plaintiff’s costs of the review, which meant the practical result of the review was that no money changed hands between the parties.
Preliminary Issue – Stay of the Proceedings
In his outline of submissions dated 8 August 2008, the defendant submits that the Court should stay this proceeding pursuant to s 4.3.2 of the Act. Section 4.3.2 provides, in relevant part:
(1)Subject to subsection (2)– ...
(c) a complainant must not commence proceedings against a law practice or an Australian legal practitioner in relation to the subject‑matter of a civil dispute with the practice or practitioner after the complainant has made a civil complaint about the conduct of the practice or practitioner in respect of the dispute–
until the complaint is determined or dismissed and any appeal rights are exhausted.
(2)Nothing in subsection (1) prevents a law practice or an Australian legal practitioner commencing proceedings (except proceedings against the complainant) on the lawful instructions of the complainant or a person other than the complainant.
(3)A court or tribunal before which any proceedings are brought in contravention of subsection (1) must stay those proceedings on the application of a party, or on its own initiative.
Section 4.3.1 provides that Part 4.3 of the Act “applies to a complaint to the extent that it involves a civil dispute, whether or not it also involves a disciplinary complaint.” A civil dispute is defined in s 4.2.2(2):
(2)A civil dispute is any of the following–
(a) a dispute (costs dispute) in relation to legal costs not exceeding $25 000 in respect of any one matter–
(i)between a law practice or an Australian legal practitioner and a person who is charged with those costs or is liable to pay those costs (other than under a court or tribunal order for costs); ...
(c) any other genuine dispute between a person and a law practice or an Australian legal practitioner arising out of, or in relation to, the provision of legal services to the person by the law practice or practitioner.
The defendant submits that the plaintiff made a complaint against the defendant to the Legal Services Commissioner on 27 June 2006. The defendant received notice of the complaint on 10 July 2006. As I have noted above, the proceeding in this Court by way of Summons for Taxation of Costs was commenced on 17 November 2006. The defendant maintains that the complaint is a civil dispute, within the meaning of s 4.2.2 of the Act.
The complaint arises out of a refusal by the defendant to provide the plaintiff’s file to the plaintiff’s new solicitors, Wisewoulds. The refusal was apparently based on the non-payment of fees claimed to be owed by the plaintiff to the defendant. The fees claimed are the subject of this taxation. The defendant sought to maintain a lien over the file until payment of the fees. The complaint dealt, more specifically, with the failure to provide a copy of the costs agreement which formed the basis upon which the costs the subject of the taxation were calculated.
The Commissioner’s conduct with respect to the complaint against the defendant was the subject of a decision of Kaye J of this Court, on 20 March 2007.[1] The decision was appealed. The issue on the appeal was whether the Commissioner ought to have treated the complaint as a civil dispute within the meaning of s 4.2.2 of the Act. In the course of the proceedings, the Legal Services Commissioner maintained that the complaint was a disciplinary complaint within the meaning of s 4.2.3 of the Act. The Court of Appeal published its decision in the matter on 16 May 2008.[2] In the judgment of Nettle JA, with whom Dodds-Streeton JA and Coghlan AJA agreed, his Honour held that the Commissioner “had reason to believe that the complaint was a disciplinary complaint.”[3] However, the Court set aside the decision of Kaye J and declared that the decision of the Commissioner to refer the complaint to the Law Institute of Victoria was made in breach of the appellant’s right to be heard, and was therefore invalid. This declaration was made without prejudice to the ability of the Commissioner to further deal with the complaint, after affording the appellant a right to be heard. The Commissioner therefore revisited the complaint, and on 25 July 2008 afforded the defendant an opportunity to be heard. On 6 August 2008, the Commissioner notified Wisewoulds that she had decided to deal with the complaint as a disciplinary complaint.
[1]Byrne v Marles & Anor [2007] VSC 63.
[2]Byrne v Marles & Anor [2008] VSCA 78.
[3]Ibid at [91].
The defendant maintains that notwithstanding the Commissioner’s decision to treat the complaint as a disciplinary complaint, I should form my own opinion as to its characterisation, and then determine whether I must stay this proceeding. The plaintiff submits that the Commissioner’s decision as to the characterisation of any complaint is the final determinative factor in deciding whether there is a civil dispute. In addition, the plaintiff submits that even if I am of the view that the complaint does raise a civil dispute, it is apparent that the Commissioner has decided not to treat it as such and therefore any “civil dispute” component of the complaint has already been dismissed or determined, and any stay pursuant to s 4.3.2 has expired.
The plaintiff also submits that the complaint was initiated by Wisewoulds, and not the plaintiff. It is submitted that this interpretation is consistent with that of Kaye J and the Court of Appeal. Furthermore, the plaintiff submits that this proceeding is not “in relation to the subject‑matter” of the complaint. The plaintiff cites the decision of Kaye J, where his Honour noted that the letter containing the complaint referred to the defendant’s conduct as having been “unprofessional and obstructive”, and concluded:
The complaint was not, as Mr Berglund contended, a complaint about the nature or quantum of the costs claimed by the plaintiff. Rather, it was a complaint as to the nature of the conduct of the plaintiff in response to a request that he provide a copy of the fee agreement to Wisewoulds.[4]
[4]Byrne v Marles & Anor [2007] VSC 63 at [47].
The plaintiff also cites the decision of the Court of Appeal, where Nettle JA stated:
Contrary to the appellant’s contentions, the complaint was not about the nature or amount of the costs claimed by the appellant but as to the nature of the conduct of the appellant in response to repeated requests that he provide a copy of the fee agreement to Wisewoulds.[5]
[5]Byrne v Marles & Anor [2008] VSCA 78 at [60].
The plaintiff therefore submits that as this is an appeal against the orders of the Taxing Master as a result of the application for a taxation of the defendant’s bill of costs, the only issues to be determined by me are the fairness and reasonableness of the amounts charged, and whether or not the defendant has complied with his disclosure obligations. According to the plaintiff:
The communications between the defendant and Wisewoulds (that are the subject matter of the Complaint) and the failure of the defendant to provide Wisewoulds with a copy of the fee agreement, are all totally irrelevant to these proceedings. To put it another way, it simply cannot be said that these proceedings are in relation to the conduct of the defendant in communicating with Wisewoulds or in failing to provide Wisewoulds with a copy of any fee agreement.
Furthermore, the plaintiff submits that the exception in s 4.3.2(2) applies.
I agree with the plaintiff’s submissions. In my opinion, the subject matter of the complaint made against the defendant on behalf of the plaintiff was constituted by the following allegations:
· that the defendant had failed to provide a copy of the costs agreement between him and the plaintiff;
· that the defendant had “marred” the necessary communications between Wisewoulds and himself; and
· that the defendant had failed to explain or provide details of the basis on which a lien was claimed by him over Mr Smirnios’ file.
The resolution of the issues before me, which concern the requirements of disclosure under Division 3 of the Act, will have no effect on the outcome of this complaint. As appears from the issues raised in paragraph 17 (above), the complaint is primarily concerned with matters arising from the proposed termination of the professional relationship between the plaintiff and defendant and the engagement by the plaintiff of new practitioners. Whilst there is a connection between the disputes, I do not consider that s 4.3.2(1)(c) of the Act applies so as to require me to stay the Summons for Taxation of Costs until the complaint, revived on 14 July 2008 following the judgment of the Court of Appeal delivered 16 May 2008,[6] has been dismissed or the appeal rights exhausted.
[6]Byrne v Marles & Anor [2008] VSCA 78.
Nature of the Appeal
The plaintiff submitted that I should tax the bill of costs served on 23 June 2006 anew. The defendant, however, submitted that the hearing de novo should be restricted to the finding the Master made that the defendant breached s 3.4.15 of the Act.
In my view it is appropriate for me to determine the matter afresh as to the live issue in the proceedings which concerns whether the defendant has complied with the disclosure requirements under Division 3 of the Act and, if he has not done so, the extent to which his bill of costs should be reduced pursuant to s 3.4.44(2)(b) of the Act. I will deal with the matter on the basis of the affidavit material before me.
Factual Narrative
The plaintiff, Peter Smirnios, is a 71 year old Greek-Australian pensioner who came to Australia at the age of 27 years. His native tongue is Greek and he has very little understanding of the English language. The original proceedings at the centre of this matter were brought against the plaintiff by MKM Capital Pty Ltd which sought to obtain possession of the plaintiff’s home in Oakleigh. The plaintiff was served with a writ and statement of claim and he was referred by two of his friends to the defendant, Stephen Byrne. The plaintiff says that the first meeting with the defendant took place on 4 April 2006 although the defendant says it was 3 April 2006. Both agree that the plaintiff’s friend Stavros Koupeloglou was present. He was there to assist in communication but he is not a qualified Greek interpreter. It would appear that the defendant asserts that the meeting was actually an attendance on Mr Isles of counsel and that at that conference, the costs agreement was handed to Mr Koupeloglou.
The costs agreement carries a type-written date of 3 April 2006 and is signed by the plaintiff. There is no evidence from Mr Koupeloglou or Mr Isles. The plaintiff does not refer to receiving the costs agreement but deposes that he spoke to Mr Koupeloglou in Greek and Mr Koupeloglou then spoke to the defendant in English. The plaintiff then deposes:
The Defendant spoke to Stavros in the English language. Stavros told me that I needed to provide the Defendant with $2,750.00 for him to help me with the court proceeding. I believed that my legal fees would not exceed $2,750.00.[7]
The sum of $2,750.00 was paid by the plaintiff. The defendant says that sum was paid to the clerk to Mr Isles of counsel and was held on account of Mr Isles fees. There was a further conference on 4 May 2006 again with counsel. The plaintiff deposes that the sum of $2,750.00 was paid on that date.
[7]Affidavit of Peter Smirnios of 16 February 2007 at [14].
There are issues on the affidavit evidence as to when the costs agreement was handed to the plaintiff and whether it was explained to the plaintiff. The defendant says the agreement was handed to the plaintiff on 3 April 2006 and that he was told by Mr Koupeloglou that the plaintiff would have a “girl who worked at the Commonwealth Bank in Oakleigh explain the agreement and its effect to him before he executed it”.[8]
[8]Affidavit of Stephen Peter Byrne of 19 April 2007 at [4c].
Applicable Law
Under s 3.4.9 of the Act, a number of matters are required to be disclosed by a law practice to clients. Those matters include:
· the basis on which the costs are calculated;
· the right of the client to negotiate a cost agreement, request an itemised bill and be notified of any substantial change to the matters disclosed; and
· an estimate of the total costs.
The plaintiff notes that the Act has been amended since the hearing before the Taxing Master in this matter. The plaintiff concedes that the relevant law for the purpose of the hearing de novo before me is the Act, as amended by the Legal Profession Amendment Act 2007 (Vic) (“the Amending Act”). The Amending Act amended, amongst others, various sections in Division 7 of Part 3.4 of the Act, which relates to costs reviews by the Taxing Master. Section 3.4.44, Criteria for Review, now provides, in relevant part:
(1)In conducting a review of legal costs, the Taxing Master 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 manner; and
(c) the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 3.4.44A or 3.4.44B applies to any disputed costs.
(2) In considering what is a fair and reasonable amount of legal costs, the Taxing Master 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, the regulations or the legal profession rules;
(b) any disclosures made by the law practice under Division 3; …
(k) any other relevant matter. …
The defendant submits that as the plaintiff engaged the defendant as his solicitor in April 2006, the defendant’s rights and obligations under the Act are to be determined in accordance with the Act as it applied at that date.
It is correct that the provisions relating to disclosure requirements as at April 2006 should be applied when considering whether those requirements were complied with. Although this is a hearing de novo, since it concerns the issue of whether the defendant failed to comply with his obligations of disclosure under the Act, I must deal with the obligations that prevailed at the time rather than at present, to the extent that there is any significant difference. However, in reviewing the legal costs, I must have regard to the criteria for review as they now appear in s 3.4.44.
Taxation de novo
The defendant submits that by reducing the taxed bill of costs by 30 per cent, the Master effectively disciplined the defendant for breaching the Act. That disciplinary action, it is submitted, necessarily involved a finding of fact adverse to the defendant. The issues raised on appeal were therefore: (a) whether or not the Master could reduce the bill at all; and (b) whether the Master had material before him which would justify the exercise of the power to reduce the bill.
Power to Reduce the Bill on the Basis of a Breach of the Act
It is clear that the Master reduced the bill by 30 per cent on the basis that a breach of the Act had been established. No other basis for the reduction appears in the record.
The question as to whether the Master had the power to reduce the bill on the basis of a breach of the Act can really be reformulated as a question as to whether I, hearing this matter in the place of the Taxing Master, have such power.
The plaintiff accepts that the Taxing Master does not have jurisdiction under the Act to determine whether any breach of the disclosure requirements by the defendant under Division 3 amounts to unsatisfactory professional conduct or professional misconduct under the Act, which is within the jurisdiction of the Legal Services Commissioner. The plaintiff contends that reversing the Master’s orders as to taxation will not reverse the incidental ruling concerning a breach of s 3.4.15, and will not affect any decision of the Legal Services Commissioner to prosecute the defendant under the Act if the Commissioner determines to take that course.
Section 3.4.38 of the Act provides that a client may apply to the Taxing Master for a review of the whole or any part of legal costs. Section 3.4.44(1) of the Act requires the Taxing Master, when conducting a review of legal costs, to consider whether the costs were fair and reasonable. In considering what is a fair and reasonable amount of legal costs, the Taxing Master may have regard to any or all of the matters listed in s 3.4.44(2), which include any disclosures made by the law practice under Division 3 (in subs (b)) and any other relevant matter (in subs (k)).
Here, the Master purported to reduce the bill of costs by recourse to s 3.4.44(2)(b) and/or (k) of the Act. The defendant submits that s 3.4.44(2) does not empower the Master to reduce any bill of costs. The plaintiff submits that s 3.4.44(2) of the Act enabled the Taxing Master to take into account any disclosure made by the defendant under Division 3 of the Act in reaching his decision on the fair and reasonable assessment of costs.
Section 3.4.46(1) relates to the referral of matters raised during taxation to the Commissioner for disciplinary action. Part 4.4 of the Act deals with discipline. Its provisions define “unsatisfactory professional conduct” and “professional misconduct”, and set out the procedure for investigation and disciplinary action. Section 4.4.1 limits the application of Part 4.4 of the Act to conduct the subject of a complaint or investigation to the extent that the conduct, if established, would amount to unsatisfactory professional conduct or professional misconduct. The procedures for complaint and investigation do not have any application outside of that context. Thus, a factual finding that certain provisions of the Act have not been complied with (for whatever reason), as occurred here, does not require the application of Part 4.4 of the Act unless the non-compliance with the Act amounts to unsatisfactory professional conduct or professional misconduct. Thus, when conducting a review of legal costs, and having regard to any disclosures made by the law practice as provided for in s 3.4.44(2), a Master may make factual findings as to whether the provisions of the Act setting out disclosure obligations have been complied with. If the Master comes to the conclusion that those provisions have not been strictly complied with, the Master is entitled to reduce the amount of legal costs by an amount considered to be proportionate to the seriousness of the failure to disclose under s 3.4.17(4). A factual finding that there has been a failure to comply with provisions of the Act does not constitute a finding of unsatisfactory professional conduct or professional misconduct. Such a finding can only be made following the procedures set out in Part 4.4 of the Act. A Master is not the appropriate authority to make such a finding, and the Master in this case did not purport to do so. In fact, the circumstances in which a finding that there has been non-compliance with the Act might be made could involve a very minor breach of the provisions of the Act. It is left to the discretion of the Taxing Master to determine whether it would be fair and reasonable for any reduction to be made on the basis of that finding of non‑compliance.
A reduction of the amount of costs by a Master pursuant to s 3.4.44(2)(b), as permitted by s 3.4.17(4), is directed at what is fair and reasonable in all the circumstances, not at disciplining a solicitor. Only where a failure to disclose might amount to unsatisfactory professional conduct or professional misconduct does it become a matter of discipline, to be dealt with under Part 4.4 of the Act.
Whether there Is Material to Justify the Exercise of the Power to Reduce the Bill
The second issue raised on appeal is whether the Master had material before him which would justify the exercise of the power to reduce the bill. As this is a hearing de novo, the question to be posed now is whether I have material before me which would justify my exercising the power to reduce the bill. For the purpose of resolving that question, there are several issues that must be considered with respect to what the defendant was required to do in order to comply with his disclosure obligations, and whether he did those things.
Section 3.4.11 of the Act provides that the disclosure required by s 3.4.9 must be made in writing and that disclosure must occur before, or as soon as practicable after, the law practice is retained. The first factual issue to be resolved is when the proposed costs agreement was given to the plaintiff and whether this was done in compliance with s 3.4.11. This raises the question of when disclosure was made. The plaintiff’s evidence in his affidavit is that he attended the office of the defendant on 4 April 2006 with his friend Stavros Koupeloglou, who acted informally as his interpreter. On that day the plaintiff claims that he was told by Mr Koupeloglou that he would have to provide $2,750.00. The plaintiff says he believed that amount would be the total he would be required to pay, however the plaintiff does not say, in terms, that he was told that by Mr Koupeloglou. There is no reference to attending at the chambers of Mr Isles of counsel. Mr Koupeloglou is not a witness and there is no affidavit from him.
The plaintiff seems to describe his first contact with Mr Isles as being on 4 May 2006 and on that date he says he provided the defendant with $2,750.00 in cash. At some stage on that day he deposes that he was given the costs agreement. He suggests that he was not given the document until 4 May 2006 and it is put on his behalf that there was no conveyance of the information orally until that date.
There are several difficulties with that evidence. Although the defendant does not say when he first had contact with the plaintiff, the documents exhibited to his affidavit suggest the following:
· An invoice for the fees for Mr Isles of counsel was processed on 3 April 2006 by R J Howells Pty Ltd – the clerk to Mr Isles. It was for an amount of $1,650.00 and was a fee incurred for drawing a defence in the matter of “MKM Capital v Peter Smirnios”. If the fee was incurred on 3 April 2006 it can be assumed that the defendant had been retained by the plaintiff and work had commenced.
· A receipt was issued by Mr Howells’ office for the sum of $1,100.00 received in cash from the plaintiff being “fees on a/c”. That receipt is also dated 3 April 2006. This suggests that the plaintiff was present on that date and handed money to the office of the clerk to Mr Isles.
· The two transactions thus account for an amount of $2,750.00.
· The document which was ultimately signed by the plaintiff is dated 3 April 2006 and includes an estimate of costs of between $25,000 and $40,000.
· On 6 April 2006 the defendant wrote to the plaintiff informing him that it would be necessary to return the costs agreement (which the plaintiff had already signed) to the plaintiff so that the person “Arthur” could note the fact that he had explained the agreement to the plaintiff on the document.
On balance, I am of the view that the disclosure statement and costs agreement dated 3 April 2006 was given to the plaintiff on or about 3 April 2006. To the extent that I am required to determine whether or not disclosure was made in writing before, or as soon as practicable after, the law practice of the defendant was retained, I am of the opinion that it was. As appears hereunder, however, that does not resolve the matter. It simply means that I am of the view that the plaintiff was given the document on 3 April 2006.
The next significant issue concerns the ability of the plaintiff to understand the information he had been given. Under s 3.4.15 of the Act, written disclosures to a client must be expressed in clear plain language and may be in a language other than English if the client is more familiar with that language. Section 3.4.15 also requires that if the law practice is aware that the client is unable to read, they must arrange for the information required to be given to be conveyed orally to the client in addition to providing the written disclosure.
Section 3.4.15 of the Act is in the following terms:
(1) Written disclosures to a client under this Division—
(a) must be expressed in clear plain language; and
(b) may be in a language other than English if the client is more familiar with that language.
(2) If the law practice is aware that the client is unable to read, the law practice must arrange for the information required to be given to a client under this Division to be conveyed orally to the client in addition to providing the written disclosure.
In this case the plaintiff’s language is Greek. There may be some dispute on the evidence as to the level of his understanding of English but Greek is his primary language.
The plaintiff has submitted that the requirement that the disclosure be made in “clear plain language” means, in the case of a person whose language is other than English, that the disclosure must be made in that person’s primary language. To do otherwise is, according to the plaintiff, not to comply with the “clear plain language” requirement.
In my opinion when the section requires that the written disclosure be in “clear plain language” it is aimed at preventing a written disclosure to a client which is couched in terms more familiar to lawyers and which a lay person would have difficulty understanding. It does not require that, where the client does not understand English, the written disclosure be expressed in a language the client does understand. So much is evident by s 3.4.15(1)(b) which provides that such a document may be in a language other than English if the client is more familiar that other language.
With that conclusion in mind it is clear that the intention of the legislation is that there be a comprehensible disclosure. Surprisingly, the legislation does not specifically provide for a circumstance where a disclosure is made in writing in a language not understood by the client unless one employs the directive of s 3.4.15(2) and interprets that section to mean “unable to read in the language in which the disclosure is written”.
Section 3.2.1(b) identifies the purpose of this Part of the Act to be concerned with the “maintenance of high standards of professional conduct” and consistent with that and the specific provisions concerning disclosure, it is obviously intended that where a client is a person whose understanding of English is inadequate and the written disclosure is in English as it is permitted to be, arrangements must be made for the information in the document to be conveyed orally to the client in a language he understands.
It does not appear to be in contention that the plaintiff was unable to understand written English and I have proceeded on that basis. I proceed to determine the factual issues surrounding this on the basis of the conclusion I have reached in paragraph 40 (above) that the defendant complied with s 3.4.11(2) of the Act.
On the defendant’s evidence he handed the disclosure statement and costs agreement to the plaintiff on 3 April 2006. Clearly, there had been some earlier contact in their professional relationship although that is not deposed to. It would appear that Mr Koupeloglou, who was present, informed the defendant that the plaintiff “would have a girl who worked at the Commonwealth Bank in Oakleigh explain the agreement and its effect to him before he executed it”.[9] The defendant also deposes that on 4 April 2006 (the following day) he was contacted by phone by “Arthur” and during the course of that conversation “Arthur” led the defendant to believe that he had explained the document to the plaintiff, not the “girl who worked at the Commonwealth Bank”.[10] The defendant further deposes that on 6 April 2006 he again spoke to “Arthur” about ensuring that the plaintiff had understood the costs agreement and asked him to endorse on the document which the plaintiff had signed something to that effect. The document was sent back to the plaintiff and when it was returned it carried a hand-written endorsement in the following terms:
I Arthur Tsaknias ... confirm that I have explained to MR PETER SMIRNIOS the estimated cost for his case is in the range of $25,000-$40,000.
A signature then appears. The document is also signed by the plaintiff.
[9]Affidavit of Stephen Peter Byrne of 19 April 2007 at [4c].
[10]Ibid at [4f].
The last step in the process outlined by the defendant occurred on 3 or 4 May 2006. All parties agree there was a conference with Mr Isles of counsel on either of these days. The plaintiff has claimed that he saw the costs agreement for the first time on that occasion. The defendant deposes that he explained the agreement to the plaintiff with the assistance of a Greek interpreter. Even on the defendant’s evidence, there were difficulties of comprehension by the plaintiff. At all events, he claims to have paraphrased and explained parts of the agreement to the plaintiff through the interpreter. In his evidence, the plaintiff deposes that on 5 May 2006, he spoke to “Arthur” and asked him to contact the defendant to inform him that he could not afford the defendant’s services and wished to terminate his retainer.[11] Later that day, “Arthur” advised the plaintiff that he had informed the defendant of the plaintiff’s request. The defendant denies such a conversation with “Arthur” occurred.[12] No evidence from “Arthur” is before me nor is there any evidence from any employee of the Commonwealth Bank or Mr Isles of counsel.
[11]Affidavit of Peter Smirnios of 16 February 2007 at [23].
[12]Affidavit of Stephen Peter Byrne of 19 April 2007 at [4l].
In my opinion, the intention of the legislation requires several things to have occurred in this situation. First, the disclosure is required to be in “clear plain language”. It is not submitted by the plaintiff that it was not. The complaint is that it was not in the plaintiff’s native Greek language. The Act permits, but does not require, translation into another language. However, if the ability of the client to comprehend the document is compromised by a language barrier, or the law practice is concerned that it might be, the law practice “must arrange” for the information to be given to the client “orally”. In simple terms, that involves arranging a Greek interpreter to read the document to the client from start to finish permitting pauses whilst queries are either raised or noted. The proposed arrangement with the “girl who worked at the Commonwealth Bank” was not something that the defendant arranged and never occurred in any event. It would not be satisfactory to leave the explanation of the document to a person who may have no more than clerical banking qualifications. The endorsement from the person “Arthur” (assuming the admissibility of the evidence) does no more than identify the maximum amount for which the plaintiff may be liable. There is considerably more to the document and to the rights and obligations of the plaintiff than that.
Finally, the defendant relies on the conversation through the interpreter after the conference with Mr Isles on 4 May 2006. That is closer to the requirement but even assuming that it represented compliance, it could not on any view be regarded as occurring “as soon as practicable” after the law practice was retained.
It follows that I am of the view that the defendant has not complied with the disclosure requirements under the Act. I am next required to consider the seriousness of the non-disclosure. Bearing in mind my conclusion that the plaintiff received the costs agreement earlier than 4 May 2006, and contrary to the submissions of the plaintiff, I am not persuaded that between 3 April 2006 and 4 May 2006, the plaintiff believed his fees would not exceed $2,750.00. I am of the opinion that the defendant realised it was necessary for the plaintiff to understand the document he had given the plaintiff on 3 April 2006. However, the defendant had failed to grapple with the responsibility he specifically had to make arrangements to facilitate the plaintiff’s understanding by an oral presentation of the contents of the document through an interpreter. The Act does not specifically require such a process but it is the only practical way to achieve proper disclosure.
In the circumstances I consider that a reduction of 15 per cent of the bill of costs is sufficient to recognise the failure to disclose as required. Further, I do not consider the legal costs are grossly excessive for the purposes of s 3.4.46 of the Act which would require me to refer the matter to the Legal Services Commissioner. Finally, I not consider that any matter is raised which may amount to unsatisfactory professional conduct or professional misconduct and which would entitle such a referral to the Commissioner.
An issue has arisen on the written submissions of the parties as to one item of the defendant’s bill of costs in particular. The item, item 15, concerns the fee payable to Mr Isles of counsel in a sum of $275.00. In essence the defendant submitted that there was no basis for that amount to be taxed off as there was no claimed failure by him to disclose to the plaintiff the fees for counsel. As the narrative of facts indicates, payment was made in cash to the office of Mr Isles’ clerk by the plaintiff. The plaintiff has submitted that I should simply follow the Taxing Master’s assessment since that was the basis for the matter being conducted before me. As I have understood the issues before me, they concerned only the basis for a reduction for non-compliance with the disclosure provisions of the Act. In view of the state of the material, I do not see how I can deal with one item in isolation without examining all the items in the bill of costs which I do not propose to do. I therefore consider it appropriate to leave the bill as taxed by the Taxing Master save for my variation of the percentage reduction for non-disclosure.
As the other findings of the Taxing Master on the initial taxation have not been challenged by either party, I propose to allow those findings to stand. As such, the original bill of $6,387.20 is reduced by the sum of $1,296.00; items 13, 14, 15, 17 and 22 are taxed off; and, items 3, 20 and 28 are reduced. The amount which remains, being $5,091.20, will then be reduced by 15 per cent.
The orders I propose will be as follows:
1. The appeal against the order of Master Wood of 24 Aril 2007 is allowed;
2. Pursuant to s 3.4.44(2)(b) of the Act a reduction of 15 per cent is applied to the bill as taxed;
3. The bill of costs is taxed in the sum of $4327.52.
I intend to maintain the Taxing Master’s decision regarding the costs of the initial taxation. The defendant will therefore be required to pay the plaintiff’s costs of the Taxing Master’s review, which were fixed at $813.84. Taking into account this amount, as well as the amount of $2,750.00 held on account for the plaintiff, the plaintiff is left owing the defendant $763.68.
I will hear the parties further as to costs of the appeal.
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