Urbaniak-Bak v Prail
[2015] ACTCA 39
•14 August 2015
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Urbaniak-Bak v Prail |
Citation: | [2015] ACTCA 39 |
Hearing Date(s): | 5 May 2015 |
DecisionDate: | 14 August 2015 |
Before: | Refshauge, Burns and Rangiah JJ |
Decision: | The appeal is dismissed. The applicant pay the respondent’s costs of the appeal. |
Category: | Principal Judgment |
Catchwords: | APPEAL – Jurisdiction, practice and procedure – Contract for services – Solicitor’s costs agreement – ‘no win no fee’ – Validity of agreement – Client not a native English speaker – Disbursements |
Cases Cited: | Australian Capital Territory v Crowley (2012) ACTLR 142 Beale v The Government Insurance Office of NSW (1997) 48 NSWLR 430 |
Parties: | Malgorzata Urbaniak-Bak (Appellant) Dean Alexander Prail (Respondent) |
Representation: | Counsel Malgorzata Urbaniak-Bak - Self-represented (Appellant) Mr D Shillington (Respondent) |
| Solicitors Self-represented (Appellant) Prail Lawyers (Respondent) | |
File Number(s): | ACTCA 37 of 2014 |
Decision under appeal: | Court/Tribunal: Supreme Court of the ACT Before: Mossop M Date of Decision: 18 July 2014 Case Title: Urbaniak-Bak v Prail Citation: [2014] ACTSC 171 |
The Court:
On 22 June 2010, the appellant, Malgorzata Urbaniak-Bak, signed a solicitor’s costs agreement (the Prail Costs Agreement) with the respondent, Dean Prail, who conducted a law practice under the name of Prail Lawyers.
The Prail Costs Agreement had a number of terms and, although generally the arrangements were known as “no win no fee”, it included terms which required payment of certain costs on the happening of certain defined events, even if the proceedings for which Ms Urbaniak-Bak had retained Mr Prail were not successful.
In circumstances dealt with below, Mr Prail ceased to act for Ms Urbaniak-Bak and later claimed his costs and expenses from her.
When she did not pay the claimed moneys, Mr Prail commenced proceedings in the Magistrates Court and, on 6 December 2013, an order was made by that Court that she pay him $18,067.08.
Ms Urbaniak-Bak appealed against that decision and, on 18 July 2014, Master Mossop partially upheld the appeal but still ordered Ms Urbaniak-Bak to pay Mr Prail $7,701.95, being only disbursements. See Urbaniak-Bak v Prail [2014] ACTSC 171.
Ms Urbaniak-Bak has appealed to this Court against the order of Master Mossop.
Ms Urbaniak-Bak is of Polish extraction and English is her second language. She appeared for herself, however, in the proceedings in the Magistrates Court, before Master Mossop and in this Court. Although her language was by no means perfect English, she was able to put her case to the Court in a way that it could be understood and she certainly appeared, with some small exceptions, to understand questions and comment from the Court.
The facts
In December 2009, Ms Urbaniak-Bak made a workers compensation claim arising out of her claim that she had been bullied and discriminated against in her workplace.
The claim was, at some stage, rejected by the employer’s workers compensation insurer and Ms Urbaniak-Bak sought legal advice from a solicitor, Mr David Lander. She was provided by him with a costs disclosure statement, which she signed.
At some stage, being dissatisfied with the services provided by Mr Lander, she terminated her instructions to him and retained Mr Prail. She signed the Prail Costs Agreement with Mr Prail. She understood that it was a “no win no fee” agreement.
Relevantly, the Prail Costs Agreement provided as follows:
1. Work to be Done
The work we have been instructed to do is:-to act for you as your legal representative in relation to your workplace injury occurring at work with Burrangiri Centre Rivett.
2. Successful Outcome of your Matter
The successful outcome of your matter, as agreed with you, is:-to obtain either a lump sum payment from your employer or to successfully have your workers compensation entitlements re-instated.
3. When Costs are Payable by You
Subject to our right to charge you costs if this agreement is terminated prior to the completion of the work we have been instructed to do, we will only charge you professional charges if the successful outcome as set out above is achieved. However regardless of the outcome, you must pay our disbursements as provided hereunder.
…
5. Our Disbursements
We will incur disbursements on your behalf. Disbursements may include but are not limited to, filing and other Court fees, registration fees, Counsel’s fees, medical or other report fees, document production fees, experts’ fees…
You must pay our disbursements regardless of the outcome of your matter, and regardless of whether our services are terminated by you or by us prior to the completion of the work we have been instructed to do. Further, we may at any time, require you to pay money or further monies into our trust account to cover (or we may at any time require you to otherwise secure to our satisfaction) the anticipated cost of any disbursements before they are actually incurred. We may send you a bill of costs for our disbursements at any time, which bill will be itemised.
…
6. Counsel’s Fees
Unless we have reasonable cause, we will seek your instructions and give you an estimate of Counsel’s fees before we retain Counsel. The actual amount of Counsels fees however will depend on events as they unfold, the amount of work Counsel performs, and other circumstances over which we may have little or no control. You will be responsible to pay or to reimburse us for the reasonable fees of any and all Counsel retained by us (unless we have agreed not to charge you for disbursements in circumstances where a successful outcome is not achieved).
…
15. Termination of this Costs Agreement after the Cooling-Off Period
(a)You may terminate our services at any time in writing after the cooling-off period …
(b)We may, in addition to any circumstances in which we may by law be entitled to cease acting for you, give you written notice that we intend to cease acting for you if:-
...
(iii)You fail to provide us with proper, accurate, truthful and/or timely instructions; or
(iv)You unreasonably refuse to follow our advice in relation to your matter and we believe that your refusal has caused an irretrievable breakdown in our relationship with you; or
...
(vi)A conflict of interest arises.
(c) (i) If you terminate our services or if we cease acting for you in accordance with clause 14(b) above, we will (subject to Clause 14(c)(ii)) send you an account for our professional charges and disbursements for all work performed by us and for all disbursements incurred by us up until that time, or performed or incurred since our last account to you. If we have agreed to charge you a fixed fee for our professional charges for completing your matter, we will charge you a pro rata proportion of that fee for the work done, and we will charge you in full for any disbursements incurred.
(ii)If we cease acting for you or if you terminate our services as a result of a conflict of interest which we should have reasonably foreseen, and about which we did not forewarn you, we will not charge you any professional charges.
Ms Urbaniak-Bak’s application for workers compensation was listed for hearing in the Magistrates Court for two days commencing on 9 February 2011. Mr Prail prepared the case by engaging doctors to provide expert reports and, later, counsel. Ms Urbaniak-Bak attended consultations with the doctors, as well as with doctors engaged by her former employer’s workers compensation insurer.
Before counsel was retained, Mr Prail disclosed to Ms Urbaniak-Bak the costs which counsel proposed to charge. She had a conference with counsel prior to the hearing.
Ms Urbaniak-Bak’s claim was based on a mental injury, namely an anxiety disorder, that she was said to be suffering as a result of the bullying and discrimination she said she had experienced at work and that she was incapacitated for work, having not worked since 4 December 2009.
Arrangements were made for an interpreter to be present at the hearing, but, when Ms Urbaniak-Bak was called to give evidence, counsel for the respondent objected to her giving evidence through an interpreter, though he did not object to the interpreter remaining and giving assistance if a particular issue arose. The presiding Magistrate ruled that Ms Urbaniak-Bak’s evidence would not be given through the interpreter but that, if there was any difficulty with particular words or aspects of a question asked, that could be discussed with the interpreter.
Ms Urbaniak-Bak gave evidence and was cross-examined. In her evidence, she said that, since the accident, she had undertaken house-cleaning work for which she was paid. In the light of the claim for workers compensation payments for total incapacity, that evidence was of some significance. In particular, it was inconsistent with the manner in which her counsel had, on instructions, opened the case. It was also, according to Mr Prail, contrary to her instructions to him.
After the case was adjourned at the conclusion of the first day of hearing, Mr Prail told Ms Urbaniak-Bak and her son that he did not propose to retain the interpreter for the next day of the hearing for he felt that his money was being wasted in this expense as the interpreter had not been used during the day. Ms Urbaniak-Bak expressed some dissatisfaction with that decision, as did her son.
Overnight, Ms Urbaniak-Bak’s son wrote a letter expressing concern about the absence of an interpreter and that letter was handed to Mr Prail when he arrived at court the next day. Mr Prail read the letter, had a discussion with counsel and then asked Ms Urbaniak-Bak whether she stood by the terms of the letter. When she said that she did, Mr Prail told her that he could no longer act for her. He said there was an unreasonable conflict with her.
The hearing of the proceedings then commenced and counsel announced that his instructor’s retainer had been terminated and that, as a result, he was no longer briefed in the matter.
The Magistrate adjourned the proceedings to 21 March 201,1 to allow Ms Urbaniak-Bak to obtain fresh legal representation, and then subsequently to 15 and 29 August 2011 when, finally, the proceedings were dismissed.
The claim
Mr Prail sent an account to Ms Urbaniak-Bak for services rendered, seeking payment of $20,867.28. This included an amount which was apparently agreed as the fees for Mr Lander’s work prior to the termination of his retainer.
Ms Urbaniak-Bak denied liability for the amount claimed in the bill and refused to pay.
The Magistrates Court proceedings
On 22 March 2012, Mr Prail commenced proceedings in the Magistrates Court for $18,067.08 together with interest, the amount claimed being reduced from the amount demanded to that sum because he could not himself claim the amount payable to Mr Lander in the proceedings.
The claim alleged that the Prail Costs Agreement proceedings had been breached by Ms Urbaniak-Bak, as a result of which the costs claimed were payable.
The breaches alleged were Ms Urbaniak-Bak’s failure to provide proper, accurate or truthful instructions on material facts (cl 15(b)(iii)) and a conflict of interest between Mr Prail and Ms Urbaniak-Bak (cl 15(b)(vi)) which required Mr Prail to terminate the agreement. He asserted that, as a result, he was entitled to payment under the contract.
In a lengthy (fourteen page) defence, Ms Urbaniak-Bak denied liability for the claim. The essential defence appeared to be that, although she signed the Prail Costs Agreement, she understood that it was a “no win no fee” agreement whereby she would not be liable for any costs and that, in any event, her non-English speaking background meant she did not have the capacity to understand the contract.
The debt recovery proceedings of Mr Prail were heard in the Magistrates Court on 6 December 2013. Both Ms Urbaniak-Bak and Mr Prail gave evidence and were cross-examined. A number of documents were tendered, including invoices and transcripts of the workers compensation proceedings.
The particularly relevant evidence of Mr Prail was of his meeting with Ms Urbaniak-Bak in about June 2010, following Ms Urbaniak-Bak’s wish to transfer the proceedings from Mr Lander. Mr Prail said:
At that time I provided a copy of my retainer and we discussed that term-by-term. The reason we discussed that term-by-term was because at that time I was aware that the defendant [Ms Urbaniak-Bak] wished to leave Mr Lander and we had already discussed his terms. I wanted to ensure that the defendant to these proceedings understood the nature of the agreement and understood its effect, in like terms, to the effect of breaching the agreement with Mr Lander. Ultimately, at the end of that meeting it was – the defendant insisted upon entering into the agreement, as had been discussed. We both signed and executed the last page of that document ...
There is a cooling off period with that timeframe and I reminded the defendant of that cooling off period and that she ought to raise any matters, issues, questions or anything else arising from our discussions within that timeframe. My recollection is that until the demand as a result of the failed Workers Compensation proceedings, the defendant did not raise any issues, did not raise any matters that warranted further investigation or advise or inquiry. Not in relation to the costs agreement, that is.
In cross examination, Ms Urbaniak-Bak asked Mr Prail whether he was aware that her English was not “100 per cent” and he agreed. He was asked whether he was satisfied with her English such as to permit her to sign the costs agreement and he said:
On the basis of my appreciation that English was not your first language, I spent the additional time, it is my recollection, to take you through the costs agreement. Both Mr Lander’s prior to signing the costs agreement with me and I took the time to take you through the costs agreement with me to ensure that you understood that. My recollection is on that day, and that meeting went for a prolonged period of time, I was satisfied that you had understood the nature and condition of that agreement.
He was then asked whether he had been “100% sure” that Ms Urbaniak-Bak understood the costs agreement and he answered in the affirmative. He repeated, several times, that he was satisfied that, at the time and when he gave evidence, she understood the retainer and how it applied.
The cross examination of Mr Prail by Ms Urbaniak-Bak extended over nearly an hour with some, but relatively few, interruptions from his Honour.
The learned Magistrate gave his reasons orally immediately after the evidence and the parties’ submissions. Although his Honour’s judgment extends over some twenty-four pages of transcript, his Honour was interrupted on a number of occasions by Ms Urbaniak-Bak and this led to the reasons being rather fragmented.
Nevertheless, it is somewhat difficult to identify the findings of fact that his Honour actually made. This is ordinarily required by a judicial officer. See Beale v The Government Insurance Office of NSW (1997) 48 NSWLR 430 at 443; Australian Capital Territory v Crowley (2012) 7 ACTLR 142 at 155; [57].
For the purpose of these proceedings, it is not necessary to summarise the whole of his Honour’s reasons.
As to the Prail Costs Agreement, his Honour relied on the decision of Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 181; [46], to find that Ms Urbaniak-Bak’s signature on the contract should be treated as conclusive that she was bound by it. His Honour further found that she was not under any misunderstanding that she knew exactly what she was signing when she signed it. He found that she had let her recollection of “no win no fee” control her understanding of the whole of the agreement.
His Honour found that Ms Urbaniak-Bak knew that medical reports were being prepared and that her solicitors were incurring costs and that she knew she had to meet those disbursements whether or not she was successful because the monies would have to be paid by Mr Prail. It appears that his Honour took the same view in relation to counsel’s fees.
His Honour then considered whether Ms Urbaniak-Bak was liable for Mr Prail’s solicitor’s fees as a result of the operation of clause 15 of the Prail Costs Agreement. His Honour found that she was. In particular, in the words of the Master (Urbaniak-Bak v Prail at [36]), the learned Magistrate:
(a)Rejected a contention that [Ms Urbaniak-Bak] required her son to assist her in her understanding of the costs agreement;
(b)Rejected a contention that [Mr Prail] had given [Ms Urbaniak-Bak] a false impression of the effect of the costs agreement.
For reasons that appear below, we do not have to consider this further.
In the event, the learned Magistrate entered judgment for Mr Prail with costs and interest as noted above (at [4]).
Appeal to the Master
Ms Urbaniak-Bak then appealed to the Master. She raised a number of grounds, the primary one being that she disputed any liability to Mr Prail at all.
After referring to the two findings made by the learned Magistrate to which we have referred above (at [37]), the learned Master found, at [62]:
His Honour [viz the learned Magistrate] had before him evidence that [Mr Prail] had, prior to [Ms Urbaniak-Bak] signing the agreement, reviewed its clauses in some detail with her. He also had the benefit of seeing and hearing [Ms Urbaniak-Bak] give evidence and conduct her case over the course of the day. To the extent that [Ms Urbaniak-Bak] asserted before his Honour that she had no understanding of the agreement or that what she was told led me to being misled, his Honour impliedly did not accept her evidence. Having regard to the principles identified at [53] above, I am not satisfied that there is a proper basis for interfering with his Honour’s findings.
The learned Master then went on to consider whether the termination was in accordance with clause 15 of the Prail Costs Agreement which would mean that Mr Prail was entitled to his fees. He held that he was not so satisfied and he upheld the appeal so far as the recovery of professional fees by Mr Prail was concerned but not disbursements, covered by cl 3 of the Prail Costs Agreement in any event.
His Honour also considered the question of whether the fees of counsel retained by Mr Prail were recoverable and concluded that they were not.
Accordingly, the only amounts recoverable were disbursements other than counsels’ fees, these disbursements being fees payable or paid to Ms Urbaniak-Bak’s general practitioner, a consultant psychiatrist from whom a medico-legal report was obtained, a clinical psychologist from whom a report was also obtained and the costs of an interpreter for a day.
Accordingly, his Honour entered judgement for those amounts, being a sum of $6,165.08, together with interest from 31 March 2011 in the sum of $1,536.87, making a total in the sum of $7,701.95, for which his Honour entered judgment, as noted above (at [5]).
Ms Urbaniak-Bak appeals from that judgement.
Ms Urbaniak-Bak pleaded the following grounds of the appeal:
The appellant does not agree with decision of Master Mossop. The appellant does not agree that the respondent is entitled to recover his disbursement and claimed interest.
The appellant does not owe any money to the respondent because of respondent’s negligence and breach of agreement. Master Mossop did not investigate this matter further.
Master Mossop did not consider the credibility and truthfulness of the legal documents produced by the respondent.
Master Mossop did not take any disciplinary action against the respondent relating to the respondent’s breach of his duty of care to the client although he agree that respondent was in error and the circumstances did not permit him to cease to act for appellant.
Master Mossop did not take any disciplinary action against the respondent for not disclosing the barrister costs to the appellant which could have constituted professional misconduct although he did rule that the barrister’s fees were not recoverable.
Master Mossop confirmed that there was no conflict of interest which means that the appellant did not breach the agreement. Therefore it was the respondent that breached the agreement and so the respondent is not entitled to recover his disbursement or work done (Statement of Claim – Debt or Liquidated Demand).
Master Mossop did not consider that, due to the actions of the respondent, the appellant lost her chance of a successful outcome for compensation. He also did not consider that the respondent’s unethical behaviour caused the appellant enormous stress, suffering and feeling anxious for years, unfairly and unhealthily consuming her life. Any compensation arising from appellant’s original case has been lost.
Ms Urbaniak-Bak appeared for herself and argued her appeal. She had her son sitting by her and he assisted her and the court on one or two occasions.
Consideration
The grounds of appeal rather overlapped in a number of ways and Ms Urbaniak-Bak did not address each of them, only one or two were addressed in detail.
Doing the best we can, we consider that the following issues were raised on the appeal:
(a) Ms Urbaniak-Bak claimed that, because of her inadequate understanding of English, she was not bound by the Prail Costs Agreement.
(b) As a result of Mr Prail’s alleged negligence, she was not liable for any payment to Mr Prail. This was suggested in various ways, including an alleged failure by Master Mossop to take disciplinary action against Mr Prail.
(c) Because of Master Mossop’s finding that there was no conflict of interest, the termination of the Prail Costs Agreement by Mr Prail meant that he had breached that agreement denying him any recovery at all.
(d) An issue arose out of the question of whether the costs charged by the clinical psychologist included the costs payable in fact by Ms Urbaniak-Bak’s employer’s solicitors rather than by Mr Prail because the subpoena in respect to which the costs had been charged was issued by them.
It is convenient to deal with each of these matters in turn.
Validity of the costs agreement
We have read the evidence of Mr Prail and Ms Urbaniak-Bak before the learned Magistrate. We note that Ms Urbaniak-Bak has now appeared to argue her case before three courts. Having carefully considered the matter, we consider that it was well open to the Magistrate to find on the evidence before him that Ms Urbaniak-Bak had signed the Prail Costs Agreement and in circumstances where there was no vitiating element to relieve her from the contractual liability that she accepted by signing it.
It was also open to the learned Magistrate to find that Mr Prail had explained the terms of the Prail Costs Agreement to her adequately and in terms that she understood, even though she clearly was focussed on the “no win no fee” aspects of it.
There is no doubt that Ms Urbaniak-Bak’s English is somewhat limited but there is no evidence that requires a finding that the explanation provided by Mr Prail would not have resulted in an adequate appreciation of the terms of the Prail Costs Agreement.
Negligence and disciplinary action
It must be accepted that professional misconduct or unprofessional conduct does not, of itself, render a lawyer liable at law to pay damages to a client or former client for his or her conduct. The issue of disciplinary matters raised by Ms Urbaniak-Bak is not a defence to a claim for costs payable under a contract of services into which she had entered with Mr Prail.
There was no duty on Master Mossop to conduct a disciplinary investigation into the conduct of Mr Prail. Ms Urbaniak-Bak had, and still has, the right, if she wishes, to make a complaint to the Law Society of the Australian Capital Territory which undertakes the investigation of such complaints.
So far as negligence is concerned, Ms Urbaniak-Bak did not commence a counter-claim in the Magistrates Court seeking damages for any negligence she could prove against Mr Prail. Accordingly, negligence was not an issue in those proceedings.
We have carefully read Ms Urbaniak-Bak’s defence filed in the Magistrates Court. It did not raise a claim of negligence as an answer to the debt claimed by Mr Prail. It was, as the Master properly described it, lengthy and argumentative. It alleged that Mr Prail breached his professional duties by refusing to provide an interpreter, but did not make any claim for negligence.
It is inappropriate to raise such an issue before this Court when it has not been raised in any of the courts below. No application was made to make any amendment to the proceedings for this purpose. Such an application at such a late stage and which would have required further evidence would be very unlikely to have succeeded.
Breach of contract
Master Mossop did find that the termination of the Prail Costs Agreement was not justified under Clause 15(b)(vi) which was, his Honour found, the only basis on which Mr Prail could assert he had terminated the agreement. It is not necessary to consider whether his Honour was correct in that finding or not, as the finding is not challenged in the appeal by either party.
As a result of the Master’s finding, Ms Urbaniak-Bak appears to assert in this appeal that Mr Prail wrongfully breached the Prail Costs Agreement. That would, on ordinary principles, terminate the agreement if she accepted that purported termination as a repudiation of the agreement. It is tolerably clear that she did.
It appears on this appeal that Ms Urbaniak-Bak claims that it follows that she is not bound by any of the terms of the Prail Costs Agreement and, in particular, is not required to pay the costs of disbursements otherwise payable under clause 3 of the Agreement.
While this was not an argument put to the Magistrates Court or to the Master, it may be that, as an unrepresented litigant, Ms Urbaniak-Bak should be permitted by the Court to raise that matter in the particular circumstances. See, as to the duty of a court to an unrepresented litigant, Maher v Carpenter (2012) 7 ACTLR 216 at 224; [41]. This is, however, not an argument that will avail Ms Urbaniak-Bak.
A solicitor’s contract for services, such as the Prail Costs Agreement, is generally an entire contract. See Legal Services Commissioner v Baker (No 2) [2006] 2 Qd R 249 at 254; [3]. Ordinarily, the solicitor is, apart from any agreement to the contrary, bound to do what is necessary to complete the instructions received before becoming entitled to payment of any of the professional fees due to him or her.
That, however, does not necessarily apply to what are sometimes called “outlays” or “disbursements”. Indeed, clauses 3 and 4 of the Prail Costs Agreement make that an express term of the agreement.
The wrongful termination of a contract may amount to a repudiation which may be accepted by the other party, in this case, Ms Urbaniak-Bak. It is also clear that, while both parties are, as a result, discharged from further performance of the contract, accrued rights, such as, in this case, the payment for disbursements, are not discharged. See McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476-7; Johnson v Agnew [1980] AC 367 at 396; Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129 at 1141; Nangus Pty Ltd v Charles Donovan Pty Ltd [1989] VR 184 at 192.
Accordingly, Master Mossop’s finding that Mr Prail was not entitled to terminate the Prail Costs Agreement for conflict of interest did not affect the obligation of Ms Urbaniak-Bak to pay the disbursements already incurred and which Mr Prail had, under the Prail Costs Agreement, an accrued right to recover by virtue of cl 3.
Costs of subpoena
In her account of 15 January 2011, the clinical psychologist retained by Mr Prail claimed $468.93 for responding to a subpoena on 7 April 2010 issued by Sparke Helmore, the solicitors for Ms Urbaniak-Bak’s employer.
Understandably, Ms Urbaniak-Bak objected to paying that as those costs were payable by Sparke Helmore or their client and not by Mr Prail nor Ms Urbaniak-Bak.
A careful inspection of Mr Prail’s account, however, shows that this sum was not included in the amount he claimed from Ms Urbaniak-Bak as payable to the clinical psychologist.
There is no basis for this Court to intervene in the judgment entered by Master Mossop on this account.
Conclusion
Accordingly, none of the grounds of appeal made by Ms Urbaniak-Bak have been made out.
We would dismiss the appeal with costs.
| I certify that the preceding seventy-three [73] numbered paragraphs are a true copy of the Reasons for Judgment of the Court of Appeal. Associate: Date: 14 August 2015 |
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