Tripodi v JT Law and Tomaras
[2021] NSWLC 2
•06 August 2021
Local Court
New South Wales
Medium Neutral Citation: Tripodi v JT Law & Tomaras [2021] NSWLC 2 Hearing dates: 22 October 2020, 22 February 2021, 24 June 2021 Date of orders: 06 August 2021 Decision date: 06 August 2021 Jurisdiction: Civil Before: Antrum LCM Decision: (1) Judgment for the plaintiff as against the first defendant in the sum of $34,650.
(2) The first defendant to pay the filing and service fees of the plaintiff.
(3) The first defendant to pay the plaintiff interest on the judgment debt pursuant to s 100 of the Civil Procedure Act2005 from 7 February 2020 to the date of judgment.
(4) The claim against the second defendant is dismissed.
(5) No order as to costs.
Catchwords: CIVIL PROCEDURE – Direct access briefing – solicitor/barrister relationship – cost agreements – intention of the parties – corporate veil
Legislation Cited: Civil Procedure Act 2005
Legal Profession Uniform Law (NSW)
Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015
Trade Practices Act 1974
Cases Cited: Dimos v Hanos & Egan [2001] VSC 173
Doe d. Bennett v Hale [1850] EngR 508
Holloway v Madgwicks [2018] VSC 773
New South Wales Bar Association v Livesey [1982] 2 NSWLR 231
Peate v Federal Commissioner of Taxation (1964) 111 CLR 443
Universal Steam Navigation Company Ltd v James McKelvie and Company (1923) AC 492
Texts Cited: HHL Bellot, The Exclusion of Attorneys from the Inns of Court, (1910) 26 Law Quarterly Review 137
Working with Barristers, 3 ed., Law Society of NSW, 2017
Category: Principal judgment Parties: Riccardo Tripodi (Plaintiff)
JT Law Pty Ltd trading as Tomaras Lawyers (First Defendant)
John Tomaras (Second Defendant)Representation: Self-represented (Plaintiff)
Tsovaras Legal (First and Second Defendants)
File Number(s): 2020/29258
Judgment
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Richard Tripodi is a barrister and has commenced proceedings in the General Division of the Local Court of New South Wales against JT Law Pty Ltd trading as Tomaras Lawyers as a first defendant, and the principal and solicitor director of the first defendant, Mr John Tomaras as the second defendant.
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An Amended Statement of Claim was filed with the court on 7 February 2020 and it claims relief in the nature of a money claim for a liquidated debt and interest pursuant to s100 of the Civil Procedure Act 2005.
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The claim in principal is for a sum of $34,650 which the plaintiff claims is an amount owing by the defendants, jointly and/or severally, for work performed by the plaintiff at the request of the defendants.
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The defendants deny liability and submit that the plaintiff’s contract for the payment of fees was with a client of the defendant, Messrs Antonio and Adrian Mastronardo. More particularly, the defendants say that the Mastronardos had retained the plaintiff on a direct retainer basis to act for them in proceedings which can be described as the “Remo 97” matter.
A Cautionary Tale
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This is yet another one of those matters that should serve as a cautionary tale for all legal practitioners. It is a situation that lawyers practising in the private legal profession should never find themselves in.
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For a profession which I hope still prides itself on the articulation and expression of clear language, and the elevation of contractual certainty, disputes between solicitors and barristers over fees owed should by now be an historical curiosity. Whenever and however they occur, they do little to preserve public trust in the legal profession.
The issues for determination
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The issues can be simply stated, and reduced to three issues for determination.
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Firstly the defendants contend that the plaintiff’s services were delivered in a sub-standard manner. Accordingly, the defendants argue that even if liability falls to the defendants to pay the plaintiff’s outstanding fees, the quantum of those fees is excessive on the basis that the plaintiff did not provide the expected level of service.
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The second and principal issue for determination in these proceedings is whether or not the first and/or second defendant is liable to pay the fees sought by the plaintiff for work performed on behalf of the Mastronardos in the Remo 97 proceedings. The plaintiff says that the defendants are jointly and severally liable and the defendant says that the plaintiff had a direct retainer agreement with the Mastronardos, a third party not a party to these proceedings.
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The third issue is, should the court determine the defendants are liable to the plaintiff for the relief claimed, whether it is the first or second defendant, or a combination of both, that is liable for any judgment debt.
The Quality of the Work Performed
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There is no doubt that the plaintiff did perform work on the Remo 97 matter and issued invoices which reflected the work performed. So much appears to have been acknowledged by way of the costs assessment that was tendered into these proceedings. The findings of that assessment are not binding on this court in this matter nevertheless it is a formal process in which the work performed and costs incurred has been reviewed by an independent assessor.
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Where there is some grievance by a legal practitioner in respect of the quality of the work performed by another legal practitioner subject to a costs agreement between them then the appropriate response is to terminate the agreement and to pay outstanding costs up to that point.
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I appreciate that the defendants’ case is that the defendants had little opportunity to review the quality of that work given that, in the defendants’ view, the retainer was between a third party and the plaintiff.
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Even allowing for the efficacy of that position it is clear on the evidence that the defendants did have the opportunity, even if only on an occasional basis, to review the work performed by the plaintiff.
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If I find that the contract was between the plaintiff and the defendants, questioning the value of the work performed after a Statement of Claim has been filed is really a concession by the defendants that they have failed in their professional duty to scrutinise the work of the plaintiff on behalf of their clients. A solicitor must “act in the best interests of a client in any matter in which the solicitor represents the client”- r 4.1.1 Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015.
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There is no evidence in these proceedings that the defendants at any time requested the plaintiff to cease work. Quite the opposite is true.
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The plaintiff's claim cannot fail on the basis that the work was allegedly substandard or that the fees sought are excessive. Any dispute of that nature is one for costs assessment and the parties have already pursued that avenue.
Direct Access?
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The defendants have relied largely on the recollection of its principals given in the form of affidavit and in oral testimony during the hearing of this matter.
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The defendants submit, amongst other things, that it was the very conduct of the plaintiff in meeting directly with the clients, often without the second defendant being present, and obtaining instructions directly from them without any transmission through the defendants that establishes the agreement as between the plaintiff and the clients.
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The defendants accepted that the plaintiff would use office resources of the first defendant while preparing advices and meeting the clients.
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The defendants point out that the plaintiff’s first three invoices were addressed to the clients directly and paid directly to the plaintiff by the clients without the defendants’ knowledge. It was only after a request from the client that the plaintiff redirected his final two invoices to the first defendant.
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The “usual position” with respect to solicitor-barrister relationships was described in Dimos v Hanos & Egan [2001] VSC 173 at [66] – “In the absence of any contrary evidence, the retention of the barrister would result in a contract between the barrister and the solicitor.”
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On 21 August 2019 the plaintiff wrote to the second defendant and the clients saying "I will then be providing a written memorandum of advice to the clients on where the matter is at and seeking instructions in the matter." While this may simply be loose expression there is no doubt that the plaintiff’s conduct of his professional services was well outside the traditional tripartite client-solicitor-barrister relationship.
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There is some force to the argument that for a good part of the relationship between the plaintiff and the clients, the plaintiff preferred to operate largely on his own and sometimes to the exclusion of the defendants. In an email to the client the plaintiff wrote "John has previously told me he does not have funds, on account of my fees, in trust. So, it is not acceptable to me that I invoice John. I prefer that I continue to be paid direct.”
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The plaintiff had made it very clear that he would stop work if the clients did not pay. The plaintiff was very aware that the clients were responding directly to his requests for payment without the intercession of the solicitor. The plaintiff was aware that the defendants had not received any monies in trust and that that was the preferred position of the clients.
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The plaintiff says that notwithstanding that that was the arrangement up to a point that the solicitor was still ultimately responsible on the default of the clients.
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The relationship between the plaintiff and the clients had some of the hallmarks of a direct brief however the question is whether those indicia operated so as to shield the defendants entirely from any liability to the plaintiff.
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The defendants called Mr Antonio Mastronardo to give evidence as to the nature of that relationship but he was unable to recall much of the material events or circumstances. I formed the view that his attention at the relevant times was directed exclusively to result rather than process and his testimony added little to the evidence.
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Mr Mastronardo’s patchy oral evidence must call into question whether his affidavit could be relied upon in terms of its accuracy.
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The second defendant, Mr Tomaras, gave evidence and agreed under cross-examination that the costs agreement was not a barrister/client agreement but maintains that whatever the costs agreement might suggest the relationship was one of a direct retainer between the plaintiff and the clients.
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Mr Tomaras noted that the client did in fact pay the plaintiff something in the order of $100,000 for his legal services. Mr Mastronardo gave evidence that when the plaintiff would threaten to cease work Mr Matronardo would pay the bill directly to the plaintiff without discussing it with the defendants.
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The second defendant also said that he did ensure bills were being paid by the client because he was aware that he had a professional obligation with respect to this. I found this component of the second defendant's evidence to be quite at odds with the overall position adopted by the defendants.
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I referred earlier to the decision in Dimos which dealt with a similar tripartite arrangement. Justice Gillard noted that a legal practitioner who is a solicitor, who proposes to retain the services of a barrister, may negotiate what terms he or she thinks appropriate and may negotiate an agreement between the barrister and the client. His Honour added at [81] “He may even go further, by becoming a party to a tripartite agreement and exonerating himself from all liability for the barrister's fees."
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An example of where a law practice had excluded itself from liability through express provisions in a costs agreement was considered in Holloway v Madgwicks [2018] VSC 773. In that matter, the practice had included paragraphs such as “you will be responsible for all fees and charges made and expenses incurred by any barristers” (at [24]) and to the barrister had noted that fee slips were to be made out to the client and that no personal liability for fees would be accepted by the law practice (at [25]).
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In the present matter however there is no explicit exoneration in the costs agreement that the defendants would not be liable for any fees levied by the plaintiff.
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Like it or not, lawyers, be they solicitors or barristers, cannot divorce themselves entirely from the reality that much of their conduct will be reviewed through the prism of whether or not it maintains public confidence in the legal profession and the administration of justice.
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That confidence will be preserved where consumers of legal services appreciate and trust that lawyers will conduct themselves professionally with their fiduciary duty to the client firmly in gaze.
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None of that prohibits the entering into of agreements and other commercial relationships which modify the traditional relationships between the two branches of what was once called “the divided profession”.
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Direct briefing or “direct access” to barristers in NSW became more common in the early part of the 2000’s with recognition that it provided more choice to consumers and therefore more in accord with the competition principles espoused in the Trade Practices Act 1974.
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Prior to that, the accepted wisdom was that it was unwise for counsel to venture into the ‘badlands’ braved by solicitors. That view probably had its genesis in the class distinctions which marked the early differentiation of the English Bar [1] even though there “was no rule of law requiring that counsel, appearing in court for a party who pleads in person, should be instructed by a solicitor” - In Dimos at [40] referring to the decision in Doe d. Bennett v Hale (1850) 15 QB 171; 117 ER 423.
1. See HHL Bellot, 'The Exclusion of Attorneys from the Inns of Court' (1910) 26 Law Quarterly Review 137.
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Moffitt P echoed the sentiment in New South Wales Bar Association v Livesey [1982] 2 NSWLR 231 at [3] viewing the practice of solicitors receiving fees from clients on behalf of barristers as "directed to ensuring the benefits which flow to clients and the community from legal representation which is independent of extraneous influence and has the benefits of objective detachment."
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The objectives found in section 3 of the Legal Profession Uniform Law (NSW) (LPUL NSW) include ensuring that lawyers are competent and maintain high ethical and professional standards in the provision of legal services and enhancing the protection of clients of law practices and the protection of the public generally.
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This object is reflected in the Legal Profession Uniform Law Australian Solicitors Conduct Rules 2015. Rule 2.1 says the purpose of these rules is to assist solicitors to act ethically and in accordance with the principles of professional conduct established by the common law and these rules.
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Disputes between solicitors and barristers do not enhance the reputation of the profession and pull at the fabric of public confidence in the profession generally. It was one of the reasons why costs agreements became an essential component of the retainer of solicitors and barristers by clients and I will refer to the agreement struck in this matter shortly.
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The unusual nature of the plaintiff’s approach in seeking payment direct from the clients in the absence of an explicit direct retainer agreement is noted by the client, Mr Antonio Mastronardo in his email to the plaintiff on 16 August 2019 in which he states "as for now I would like you to send your invoices to John and I will pay you through him like I do with everyone, just so you understand you're the only one that gets paid direct."
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It is at this point when the plaintiff’s invoices are pivoted back to the defendants that the defendants deny any liability for payment to the plaintiff.
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While I doubt that the clients had any inkling of the pending dispute between the plaintiff and the defendants, the clients were of the view that the defendants were still a part of their legal team in the Remo 97 proceedings.
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While I have expressed some reservations about the evidence of or at least the recollection of Mr Antonio Mastronardo, his affidavit of 7 October 2020 records the following conversation with the second defendant:
I said "when is the meeting with Richard and Bret Walker?"
John said "I'm not sure, any day now, but I haven't been asked to attend."
I said "why? You are my solicitor, you must be there."
John said "I've asked Richard to include me and he doesn't return my calls, and he doesn't want me there for the first and second session with Mr Walker."
I said "that is not right, I want you to be there and you must be there."
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Shortly after that, the second defendant attended a conference with Mr Walker and the plaintiff.
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The exchange demonstrates that while the second defendant was having a difficult relationship at times with the plaintiff he was still seeking to remain a part of the clients’ legal team.
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According to Mr Mastronardo, the second defendant did attend a conference with the plaintiff and Mr Walker. In fact, the second defendant attended three out of the four conferences with Mr Bret Walker SC. The final conference at which the second defendant attended was only six days prior to the issuance of the two bills in dispute by the plaintiff.
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In the same affidavit Mr Mastronardo says that he asked the plaintiff to discuss the pleadings with Mr Tomaras but that the plaintiff would refuse to do this. On the one hand it might suggest that the plaintiff was actively excluding the second defendant from preparing the clients’ legal position however it also underscores that the second defendant was very much a part of the legal representation landscape for the client.
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If there were concerns about the professional relationship then they should have been addressed at the time. The defendants say that they were absent from the professional relationship between the plaintiff and the clients but the following quick review of communications tendered in these proceedings demonstrates that there was an ongoing involvement by the defendants in the preparation of the clients’ matter.
A little bit in, or a little bit out?
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On 20 May 2019 the client wrote to the plaintiff, with a courtesy copy to the second defendant as well as an employee of the first defendant, indicating that a meeting had been organised between the client and the second defendant on that date. This meeting was in relation to the proceedings that the plaintiff was briefed to advise upon.
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On the same day, the plaintiff sought to clarify a number of matters with the client again via email which included the second defendant as a recipient. The first clarification stated by the plaintiff was "the instructing solicitors are Tomaras lawyers." The plaintiff also noted to the client "you don't want to pay funds into trust because of what has occurred with other lawyers when you have done this."
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There was also a discussion in which the second defendant told the plaintiff that he would provide the necessary details to the plaintiff so that he could prepare the advice. The relevant materials were in boxes in the office of the second defendant.
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The defendants assigned, from time to time, a practical legal training student from their firm to assist the plaintiff in the preparation of his advice. In the main the student’s efforts were directed to locating relevant documents from within the defendant’s office.
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On 2 June 2019 the plaintiff emailed the second defendant indicating that he had just emailed his first bill to the second defendant in the matter.
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On 18 June 2019 there is a meeting in the offices of the defendants in relation to the matter.
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On 23 July 2019 the second defendant wrote to Mr Walker's chambers saying that "our client values Mr Walker’s opinion". There is no suggestion here that the defendants are removed or isolated from the preparation of the clients matter. The client is described as “our client".
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On 19 August 2019 the plaintiff sends a text message to the client that he did not take notes from the conference with Mr Walker, however indicated that the second defendant did - strong evidence that the second defendant was in attendance at that conference. It seems extraordinary that a solicitor would not be able to rely on his or her diary to confirm or deny such attendances with certainty however that was the state of evidence with respect to this issue from the second defendant.
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On 23 August 2019 the second defendant sends the plaintiff a copy of an affidavit prepared in the matter for consideration by the plaintiff.
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On 26 August 2019 the second defendant tells the plaintiff that a 9am meeting time in relation to the matter is acceptable to him. On the same date the second defendant advises the plaintiff that he met with the clients and explained the advice to them, and that a further meeting would be appreciated.
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On the same date the second defendant advises the plaintiff and the clients that while he is able to provide his thoughts on the plaintiff's advice he would like the plaintiff to attend the meeting and to take the clients through the advice.
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On 3 September 2019 the second defendant advises the plaintiff that an employee of the second defendant will bring some documents to the court as requested by the plaintiff.
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On 5 September 2019 the second defendant advised the plaintiff that he had spoken with the clients and discussed the plaintiff's work and bills. He adds "it is a (sic) sensitive stage now and we still don't know where we are up to with the pleadings with Bret". This email makes it very clear that the defendants are continuing to take an active role with respect to the advocacy of the clients’ interests.
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It may well have been a very hands-off solicitor’s role, and it is clear that the “heavy lifting” in terms of legal strategy was left to the plaintiff.
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Nevertheless, the question is whether a solicitor can be "a little bit in, and a little bit out" at the same time. The regulation of the profession would suggest that such a halfway house is not one endorsed by statute and the rules.
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As late as 18 September 2019 the clients communicated with the second defendant by email seeking an update on progress in relation to the Remo 97 matter.
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At no time during the relevant period was there any explicit communication by the defendants that they were not involved in the preparation of the matter for the clients. The defendants were regularly “courtesy copied” into email communications, and they would sometimes play a direct part in reviewing strategy and in the preparation for conferences. If it were the case that the defendants were not retained then the prudent and proper action would have been to advise the client that their communications should be with the plaintiff only.
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In evidence Mr Antonio Mastronardo said that his understanding of the case was sometimes communicated through the second defendant. Mr Mastronardo was aware that he had asked the plaintiff to invoice the defendants with respect to the final two invoices that were issued.
The Costs Agreement
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In evidence the second defendant agreed that the costs agreement was addressed to the first defendant.
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I reiterate that at no point did the defendants tell the plaintiff to stop work, and neither did they advise the clients that they were playing no part in the advice being prepared by the plaintiff.
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While legislation prescribes the requirement for costs agreements in certain circumstances, and regulates the relationship between clients and legal practitioners, Dimos is authority for the proposition that each case depends upon the contractual relationship established by the facts and circumstances, and the court will give effect to the contractual intention of the parties.
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The best evidence in relation to that contractual intention is the costs agreement struck between the parties in this matter. Section 180 of the LPUL (NSW) establishes the basis on which costs agreements may be made. They must be written, and can be accepted in writing or by other conduct. It is clear that such agreements may be made between a solicitor's firm and a barrister.
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The costs agreement is found at Annex C to the Statement of Claim. It is dated 28 May 2019 and is addressed in the following fashion:
Mr John Tomaras
JT Law Proprietary Limited trading as Tomaras Lawyers
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It appears to have been transmitted by way of email to the second defendant.
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The costs agreement is in relation to the Remo 97 proceedings. At page three of that agreement it is stipulated “that the solicitors propose to retain the barrister on behalf of a client or clients of the solicitors. This is a costs agreement between the barrister and the solicitors under the Legal Profession Uniform Law.”
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It is noted at paragraph two that the solicitors shall pay the barrister. At paragraph five it is noted that the solicitors obligations are personal and do not depend on there being put in funds by any person.
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Even in circumstances where the invoices are issued to the clients, it should be clear from the above cited examples that the defendants did not extricate themselves from the representation of the clients in any meaningful way.
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Even though invoices were issued directly to clients on occasion, the costs agreement makes it clear that the plaintiff was retained by the solicitors on behalf of the clients. If this position changed it was incumbent upon the defendants to enter into a new costs agreement thereby terminating the application of the agreement that was struck with the plaintiff.
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While it may appear that the plaintiff is having his cake and eating it too, it is not as if the defendants are unsophisticated parties. As lawyers, they would have been, or should have been, at all times aware of the liability they accrued to the plaintiff when they entered into that costs agreement.
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Rule 35 of the Solicitors Conduct Rules is as follows;
Contracting with Third Parties
35.1 If a solicitor instructs a third party on behalf of the client, and the solicitor is not intending to accept personal liability for payment of the third party’s fees, the solicitor must advise the third party in advance.
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There is no evidence in this matter of any such communication by the defendants to the clients.
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The Law Society of NSW has published, perhaps with the same caution that actors are urged upon in working with animals and children, Working with Barristers. It has run to three editions, the most recent being in 2017, proving, if nothing else, and the persistent need for such guidance. It contains the following advice:
When briefing a barrister as your client’s instructing solicitor, you are responsible for the payment of fees incurred by the barrister as a ‘third party’. Many disputes arise when there is not clear communication between the barrister and solicitor regarding who is responsible for payment of the fees incurred for the barristers’ professional services. If you do not intend to accept responsibility for payment of fees incurred for the barristers’ professional services, you must advise the barrister in advance. (Emphasis added).
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Gillard J, in Dimos at [96], cited Lord Parmoor with approval in Universal Steam Navigation Company Ltd v James McKelvie and Company (1923) AC 492:
That where a person signs a contract in his own name, without qualification, he is prima facie to be deemed to be a person contracting personally, and in order to prevent this liability from attaching, it must be apparent from the other portions of the document that he did not intend to bind himself as principal.
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There is nothing in the costs agreement which reflects any intention on the part of the defendants to avoid liability to the plaintiff. The second defendant accepted under cross-examination that the costs agreement was not a barrister - client direct retainer.
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The ongoing participation by the defendants in the conduct of the Remo 97 matter must dissolve any suggestion that they were “absent” in the proceedings. That very involvement reflects the legal reality that they were retaining the plaintiff on behalf of their clients.
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They were aware of the work that the plaintiff was doing for their clients. Were the court to endorse the abandonment of the client by the defendants with respect to the issuance of bills by the plaintiff it would offend the strong public interest reasons which have resulted in the robust regulation of the legal profession in NSW which includes the governance of relationships between legal practitioners.
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Ultimately it must be a decision based in contract and involve evincing the intentions of the parties – something which the costs agreement illuminates. Without in any way seeking to depart from the ratio of Dimos, a clinical contractual view must be tempered with the legislative intent found in the LPUL (NSW) and the Conduct Rules in having a strong, ethical and well-regulated legal profession.
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The relationship between the defendants and the clients endured. On 10 January 2020 the first defendant issued a letter of demand to the plaintiff on behalf of the clients in relation to Remo 97, commencing the correspondence with the following line "As you are aware, I act for Antonio Mastronardo, Adrian Mastronardo and Claudia Mastronardo."
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The defendants act for the clients. The clients were never aware of any purported professional absence by the defendants in the prosecution of their claim. The reality is the defendants were the solicitors for the clients and had contracted the plaintiff on their behalf. The liability for payment of the plaintiff’s costs ultimately rests with the defendants.
Liability
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As a result of finding that the defendants are liable for the outstanding costs of the plaintiff it is necessary therefore to determine whether the liability falls either to the first or second defendant, or a combination of the two.
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The second defendant is a solicitor-director of the incorporated legal practice which is the first defendant. As a principal, or director, the second defendant has personal obligations which exist independently of the responsibilities of the first defendant. Section 35 of the LPUL (NSW) makes this explicit.
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It is however the first defendant which is the primary vehicle by which legal work is conducted.
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The defendant suggests the need for a lifting or piercing of the fabled corporate veil, however no circumstances exist in this case to do so. There has not been any material breach of the LPUL (NSW) on the part of either of the defendants which would require personal liability to accrue to the second defendant.
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This is not a matter where there is, on any evidence before the court, a “straw man” in place of the judgment debtor. Neither can there be any suggestion of a fraud designed to evade a legal obligation. To use the language of Windeyer J in Peate v Federal Commissioner of Taxation (1964) 111 CLR 443, the first defendant is not a sham nor is it a facade – it is a legal practice authorised to carry on the business of the practice of law in New South Wales. It continues to exist as a legal entity.
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The proper defendant is the firm which is noted on the costs agreement and is the first defendant in these proceedings. The fact that it is the second defendant who is first named in the address block on the costs agreement is in keeping with stylistic convention.
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The first defendant is the proper defendant, and liable for the judgment debt.
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As the plaintiff represented himself, he is not entitled to professional costs.
Orders
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I order:
Judgment for the plaintiff as against the first defendant in the sum of $34,650.
The first defendant to pay the filing and service fees of the plaintiff.
The first defendant to pay the plaintiff interest on the judgment debt pursuant to s100 of the Civil Procedure Act 2005 from 7 February 2020 to the date of judgment.
The claim against the second defendant is dismissed.
No order as to costs.
Antrum LCM
6 August 2021
Sydney Downing Centre Local Court
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Endnote
Decision last updated: 05 November 2021
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