Solomon Brothers (a firm) v WILLIAMS

[2003] WADC 85

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   SOLOMON BROTHERS (a firm) -v- WILLIAMS & ORS [2003] WADC 85

CORAM:   MULLER DCJ

HEARD:   9 APRIL 2003

DELIVERED          :   23 APRIL 2003

FILE NO/S:   CIV 1217 of 2001

BETWEEN:   SOLOMON BROTHERS (a firm) (ACN 008 667 650)

Plaintiff

AND

RUTH EILEEN WILLIAMS
GALE CURTIS WILLIAMS
MARK CURTIS WILLIAMS
Defendants

Catchwords:

Appeal from decision of Deputy Registrar striking out pleadings - Claim by solicitor for outstanding balance of legal fees - Counterclaim/Set-Off alleging overcharging - Rejection by Supreme Court of defendants' application for enlargement of time in which to tax costs - Defendants' inability to itemise excessive costs - Section 68 District Court Act - Whether claim for overcharging within jurisdiction of District Court

Legislation:

District Court of WA Act

Legal Practitioners Act (WA) 1893, Div 2 Part IV

Result:

Appeal dismissed

Representation:

Counsel:

Plaintiff:     Mr M A R Blundell

Defendants:     Mr P S Bates

Solicitors:

Plaintiff:     Solomon Brothers

Defendants:     Arns & Associates

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

Cameron v Cole (1944) 68 CLR 571

D'Alessandro v Legal Practitioners Complaints Committee (1995) 15 WAR 198

The Owners of Wellington Court v Freehill Hollingdale & Page [1989] 2 WAR 37

Case(s) also cited:

Woolfe v Snipe (1933) 48 CLR 677

1. MULLER DCJ:  This is an appeal against a decision made by the Deputy Registrar on 7 March 2003 ordering that the Defence, Set‑Off and Counterclaim be struck out to the extent that it purports to put in issue matters of overcharging by the plaintiff and/or whether the plaintiff's charges were within scale limits contrary to the provisions of the Legal Practitioners Act.

2. The plaintiff is a firm of legal practitioners practising in Western Australia. By a statement of claim dated 21 August 2001 the plaintiff sued the defendants for the balance of outstanding legal fees claimed to be due and payable to the plaintiff pursuant to an agreement made between the plaintiff and the defendants in or about July 1998. In par 5 of its statement of claim the plaintiff alleged that it was retained by the defendants to provide legal professional services to the defendants in relation to various matters. It was pleaded that pursuant to this agreement, which was partly in writing, partly oral and partly implied, the defendants agreed to pay the plaintiff for the provision of legal services pursuant to accounts that were to be rendered from time to time. It was further alleged that the plaintiff provided legal professional services to the defendants during the period July 1998 to March 2001 and rendered accounts to the defendants between 31 December 1998 and 4 August 2000 in a total amount of $94,823.40. These accounts were paid by the defendants. The statement of claim alleges that further accounts rendered by the plaintiff to the defendants during the period 11 September 2000‑12 March 2001 totalling $66,113.53 with interest claimed pursuant to s 32 of the Supreme Court Act 1935 were not paid by the defendants.  It is these costs which the plaintiff seeks to recover in this action.

3. In its Defence, Set‑Off and Counterclaim dated March 2002 the defendants admitted that the plaintiff had agreed to provide legal services to the defendants during the period referred to in the statement of claim.  It was alleged that the provision of legal services to the defendants was the subject of four separate agreements between the plaintiff on the one hand and two or more of the defendants on the other.  The first agreement was said to be between the first and second named defendants; the second between the plaintiff and the third named defendant; the third between the plaintiff and all three defendants; and the fourth between the plaintiff and the first and second named defendants.

4. The defendants pleaded that it was an implied term of each agreement that the plaintiff would be remunerated for its legal services in accordance with determinations of the Legal Costs Committee made in accordance with Div 2 of Part VI of the Legal Practitioners Act (WA) 1893.

5. It was also pleaded in the Defence that the four alleged agreements were subject to several implied terms including an obligation by the plaintiff to provide its legal services economically and efficiently and exercise the care and skill of a reasonably competent solicitor.  The defendants pleaded that the plaintiff had breached these implied terms by acting negligently and as a consequence had caused the defendants to suffer loss and damage.  In relation to the accounts submitted by the plaintiff in respect of which payment was claimed the defendants alleged that none of the accounts submitted by the plaintiffs complied with the requirements of Part VI of the Legal Practitioners Act (WA) 1893 and the determinations of the Legal Costs Committee appointed under that Act.

6. The plaintiff sought and obtained an order by the Registrar on 26 November 2002 requiring the defendants to provide further and better particulars of certain allegations in the Defence, Set‑Off and Counterclaim.  In a document filed on 17 January 2003 the defendants purported to comply with this order.  The amended pleading, however, fell far short of what was required.  In the amended pleading the defendants claimed that they could not particularise the costs charged by the plaintiff with reference to any of the matters previously pleaded because the costs charged for legal services by the plaintiff were charged on a monthly basis without any attempt having been made by the plaintiff to distinguish what specific legal action the costs were charged in respect of.  It was further claimed that this information was solely within the knowledge of the plaintiff and that the costs charged by the plaintiff were excessive and outside the relevant statutory scale for the particular matter in respect of which legal services had been provided.

7. The plaintiff was dissatisfied with what it claimed was the defendants' failure to comply with the order made by the Deputy Registrar and applied to the Registrar for judgment in the amount claimed in the statement of claim because of the defendants' failure to comply with the order.  In his reasons for decision the learned Deputy Registrar found no fault with the defence and counterclaim in relation to the claims of professional negligence.  In dealing with the issue of alleged overcharging, however, the learned Registrar referred to the proposed Minute of Amended Further and Better Particulars of the Defence, Set‑off and Counterclaim dated 19 February 2003 which, in relation to the issue of legal costs, was, in his view, simply an expression of the defendants' belief of what might reasonably have been allowed upon a taxation of the plaintiff's bill of costs.  The learned Deputy Registrar concluded that it would be inappropriate to conduct what he described as a taxation of the plaintiff's costs as part of the District Court action.  While refusing the plaintiff's application for judgment for the outstanding costs the learned Deputy Registrar ordered that all references in the Defence, Set‑Off and Counterclaim which alleged overcharging by the plaintiff, and which by implication required the Court to undertake a taxation of the plaintiff's costs, be struck out.

8. It is this decision that is appealed against.

Refusal by Supreme Court to allow extension of time in which to tax bill

1. On 25 October 2002 the Registrar of the Supreme Court refused an application by the defendants for an enlargement of time in which to tax the plaintiff's lump sum bills.  An appeal against this decision was heard by the Acting Master in the Supreme Court on 23 January 2003.  The appeal was dismissed.  In his Reasons the learned Acting Master emphasised the considerable delay on the part of the defendants in seeking an extension of time in relation to the taxation of costs.  It was this delay that appears to have persuaded the learned Master to uphold the Registrar's decision refusing the appeal. 

Exclusive jurisdiction of Supreme Court to tax solicitor and client costs

1. The plaintiff submitted that the Supreme Court has exclusive jurisdiction to tax costs as between solicitor and client:  The Owners of Wellington Court v Freehill Hollingdale & Page [1989] 2 WAR 37 at 39. The rejection by the learned Acting Master of the application for an enlargement of time within which to tax the plaintiff's costs is, the plaintiff submits, an end to the matter. Without such extension of time it was submitted that the defendants were precluded from challenging the reasonableness of the plaintiff's accounts through a request for itemisation and taxation in the Supreme Court. Given the refusal of the learned Acting Master it was submitted there is simply no other channel open to the defendants to challenge the amounts charged by the plaintiffs. The District Court simply does not have jurisdiction.

2. In the Wellington Court decision (supra) Ipp J referred to various legislative provisions which vest the taxation of solicitor and client costs exclusively in the Supreme Court. In particular he referred to s 68 of the District Court of Western Australia Act 1969 which provides that:

   "Costs and charges of proceedings as between solicitor and client may be taxed by the taxing officer of the Supreme Court."

   Reference was also made to s 66 of the Legal Practitioners Act 1893 which provided for the taxation of bills of costs by the taxing officer of the Supreme Court and made provision in s 71 for the review of such taxation before a judge in Chambers.  Having reviewed the legislative framework relating to the taxation of costs Ipp J concluded at p 39:

   "I should say that the District Court of Western Australia Act itself lends some support to the proposition that the legislature intended costs as between party and party to be dealt with in accordance with rules applicable to the District Court and costs as between solicitor and client to be dealt with in accordance with the Rules of the Supreme Court. I say this because s 67(1) provides that costs as between the parties are to be taxed by the Registrar of the District Court, while s 68 provides that costs as between solicitor and client are to be taxed by the taxing officer of the Supreme Court.

   Counsel for the owners submitted that it was a general principle of the taxation of costs that costs as between solicitor and client should not be awarded on a scale different to that as between the parties.  I accept that; but, in the face of what to me is a clear indication from the legislature, I consider that the effect of the relevant provisions of the District Court of Western Australia Act and the District Court (Appeal) Rules is that the costs as between solicitor and client of an appeal to the District Court are to be taxed according to the scale in the fourth Schedule to the Rules of the Supreme Court."

3. This decision makes it clear that the District Court of Western Australia does not have jurisdiction to examine issues relating to alleged overcharging of costs as between solicitor and client.  In some cases allegations of overcharging and professional negligence may be so closely interwoven as to be inseparable.  This does not appear to be such a case but, even if the two issues were that closely connected, this Court would probably still not have jurisdiction to enquire into the reasonableness or otherwise of the costs charged by the plaintiff.

4. Counsel for the defendants sought to overcome this difficulty by submitting that the defendants had pleaded an implied term in each of the four agreements referred to in the Defence, Set‑Off and Counterclaim that the plaintiff would be remunerated for its legal services in accordance with the determinations of the Legal Costs Committee.  In breach of this implied term it is pleaded that the costs were not in accordance with the determination of the Legal Costs Committee and were excessive.  While the defendants conceded they were unable to provide itemised accounts submitted by the plaintiff which would enable aspects of overcharging to be readily identified, they did annex to their pleadings what is referred to as a "Scale Bill of Maximum Costs" applicable to each of the four alleged agreements.  Each Scale Bill purports to reflect the maximum scale amounts that could have been charged by the plaintiff for the work the plaintiff did.  It was submitted that if the pleading as to overcharging was allowed to stand an expert could be called at the trial of the action to compare the amounts actually charged with the maximum scale amounts and, in this way, assist the Court in arriving at a conclusion as to what extent, if any, there had been overcharging.

5. I am unable to see how this could be done.  Such an exercise would be tantamount to a taxation of costs as between solicitor and client and would lie outside the jurisdiction of this Court.  Apart from this fundamental obstacle, the submission does not in itself have any merit.  At best each of the Scale Bill of Costs is little more than guess work and does not provide any meaningful guide as to what work was actually done by the plaintiff for the defendants or what charges the plaintiff could legitimately raise for such work.

6. An alternative submission made by counsel for the defendants was that the pleadings struck out by the Deputy Registrar ought to be reinstated and the matter transferred to the Supreme Court.  Mr Bates, who appeared as counsel for the defendants, referred to the decision of Ipp J in D'Alessandro v Legal Practitioners Complaints Committee (1995) 15 WAR 198 where a distinction was drawn between the statutory power of the Supreme Court to supervise fees charged by legal practitioners to their clients and the inherent jurisdiction the Court has over the ethical conduct of legal practitioners which may involve an enquiry into overcharging. At p 209 Ipp J said:

   "In my view, the appellant's argument on the costs agreement ground confuses two fundamentally different concepts, namely the legal rules governing the determination of costs payable to legal practitioners by their clients, on the one hand, and the ethical rule that excessive overcharging may constitute professional misconduct, on the other.

   This Court, by statute, is vested with the ultimate supervision of fees charged by legal practitioners to their clients. The seat of the statutory power lies in s 37(1) of the Supreme Court Act 1935 (WA), the Rules of the Supreme Court 1971 (WA) – in particular O 66, and s 59 of the Act.  In addition this Court has an inherent jurisdiction to regulate charges made for work done by practitioners: see Woolf v Snipe (1933) 48 CLR 677 at 678, per Dixon J.

   On the other hand, this Court, through s 30(2) of the Act, exercises all ultimate supervisory role over ethical conduct of legal practitioners.  Here, too, the court has inherent powers: see, eg, Harrison v Tew [1989] 1 QB 307, confirmed on appeal [1990] 2 AC 523 at 337.

   The fact the court exercises ultimate control both over costs charged by a legal practitioner to his or her client, and the ethical conduct of the practitioner (which may involve an inquiry into overcharging), does not mean that each function is the same.  They are indeed different and separate.  The court, when exercising its function of reviewing the taxation of bills of costs, and when determining whether a costs agreement is unreasonable within the s 59(5) of the Act, is not directly concerned with whether the solicitor has acted unethically.  The latter issue, however, is the sole question before the court when it reviews disciplinary proceedings involving legal practitioners.

   The standards applied under the court's duty to monitor the taxation of bills of costs and costs agreements, and the court's duty to supervise the disciplining of legal practitioners are not necessarily the same and do not serve identical purposes."

   It was conceded by Mr Bates that this Court does not have the inherent jurisdiction which the Supreme Court has.  It was submitted, however, that if the decision of the Deputy Registrar were set aside, and the pleadings ordered to be struck out were reinstated, an application to transfer the action to the Supreme Court could be made and, if successful, the issue of overcharging could be considered by the Supreme Court in the exercise of its inherent jurisdiction.

7. I am unable to accept this submission.  It would be open to the defendants to apply for the action to be transferred to the Supreme Court whether or not the pleadings ordered to be struck out were reinstated.  The whole procedure suggested by Mr Bates is, in my view, simply too uncertain.  I do not believe it is a proper basis upon which I ought to consider this appeal.

8. I agree with the submission made by counsel for the plaintiff that this Court has no jurisdiction to entertain any claim based upon alleged overcharging.

Abuse of process

1. As an alternative to his principal submission Mr Blundell, who appeared as counsel for the plaintiff, submitted that the purported re‑litigation in this Court of an issue already determined by the Supreme Court would constitute an abuse of process.  Reference was made to various authorities in support of that submission.  It was submitted that the decision of the Acting Master must stand unless and until overturned on appeal.  Cameron v Cole (1944) 68 CLR 571 at 590‑591.

2. I believe there is merit in this submission but I do not think it is necessary to make any finding on the issue when, as I have already said, this Court clearly has no jurisdiction to consider this aspect of the defendants' Defence, Set‑Off and Counterclaim.

Conclusion

1. The issue of whether the plaintiff charged costs above the allowed scale cannot be dealt with in this Court.  It is a matter that falls exclusively within the jurisdiction of the Supreme Court.

2. I would uphold the decision of the Deputy Registrar striking out the Defence, Set‑Off and Counterclaim to the extent that it purports to put in issue matters of overcharging by the plaintiff and/or whether the plaintiff's charges werne within scale limits contrary to the provisions of the Legal Practitioners Act.