Urbaniak-Bak v Prail
[2014] ACTSC 171
•18 July 2014
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Urbaniak-Bak v Prail |
Citation: | [2014] ACTSC 171 |
Hearing Date(s): | 28 May 2014 |
DecisionDate: | 18 July 2014 |
Before: | Mossop M |
Decision: | See [118] |
Category: | Principal Judgment |
Catchwords: | APPEAL – conditional solicitor’s costs agreement – absence of interpreter – solicitor ceasing to act during hearing– whether solicitor entitled to recover costs and barrister fees – whether disclosure obligation in relation to barrister’s fees under Legal Profession Act 2006 complied with |
Legislation Cited: | Legal Profession Act 2006 (ACT) ss 269-272, 277, 279 |
Cases Cited: | ACT vCrowley (2012) 7 ACTLR 142 |
Parties: | Malgorzata Urbaniak-Bak ( Appellant) Dean Alexander Prail ( Respondent) |
Representation: | Counsel: Self-represented ( Appellant) Self-represented ( Respondent) |
| Solicitors: Self-represented ( Appellant) Self-represented ( Respondent) | |
File Number(s): | SCA 111 of 2013 |
Decision under appeal: | Court/Tribunal: ACT Magistrates Court Before: Magistrate Cook Date of Decision: 6 December 2013 Case Title Dean Alexander Prail t/as Prail Lawyers (ABN 28 865 165 520) v Malgorzata Urbaniak-Bak Court File Number(s): CS229 of 2012 |
The appeal
This is an appeal from a decision of a magistrate of the ACT Magistrates Court made on 6 December 2013. The proceedings before the Magistrates Court involved a claim for a sum of $18,067.08. That claim was bought by the respondent, a solicitor, to recover amounts that are said to be owing pursuant to a costs agreement with the appellant.
I will refer to the solicitor/plaintiff as the respondent and the client/defendant as the appellant.
Basic facts
The appellant had brought a claim for workers compensation under the Workers Compensation Act 1951 (ACT) against her former employer. She had changed solicitors. Her new solicitor, the respondent, negotiated an arrangement in relation to the fees of her previous solicitor. The appellant and respondent signed a costs agreement dated 22 June 2010 (the Solicitor’s Costs Agreement).
The respondent arranged for the preparation of the case for hearing by engaging doctors to provide expert reports. The respondent attended consultations with those doctors as well as consultations with doctors engaged by her former employer’s insurer.
The proceedings were listed for determination in the Magistrates Court and the case commenced on 9 February 2011. Shortly before the hearing counsel had been briefed to appear at the hearing. The costs which he proposed to charge were disclosed to the appellant after he was retained and immediately prior to the commencement of the hearing.
The appellant’s claim was opened on the basis that she suffered a mental injury, namely an anxiety disorder and that she was incapacitated for work and had not worked since 4 December 2009.
An interpreter had arranged to be present at the hearing because the appellant was of Polish extraction and English was her second language. When the appellant was called to give evidence counsel for her former employer objected to the plaintiff giving evidence through an interpreter although he did not object to the interpreter remaining standing by and giving assistance if a particular issue arose. The presiding magistrate ruled that evidence would not be given through the interpreter but if there was any difficulty with particular words or aspects of the question then that could be discussed with the interpreter. The transcript does not record the interpreter being used during the course of the hearing.
The plaintiff gave evidence and was cross-examined. She gave evidence that she had done house cleaning work since the accident for which she was paid. In the light of the claim for workers compensation payments for incapacity that was evidence of some significance. It was inconsistent with the manner in which the appellant’s counsel had opened the case.
Following the adjournment at the end of the day, the respondent told the appellant or her son that he did not propose to retain the interpreter for the next day of the hearing. That was the source of some dissatisfaction on the part of the appellant and her son.
Overnight the appellant’s son wrote a letter which was given to the respondent when he arrived at Court on 10 February 2011. The respondent read the letter, had a discussion with counsel, and then asked whether the appellant stood by the terms of the letter. When she said that she did, the respondent told her that he could no longer act for her.
The matter was then called and counsel announced to the Court:
Due to events that have occurred this morning, my instructing solicitor’s retainer with [the appellant] has been terminated. As such, I am no longer briefed in this matter and I cannot assist any further.
The appellant remained unrepresented in the proceedings which came before the court on 21 March, 15 and 29 August 2011. The proceedings were dismissed on the latter date.
The pleaded case
The respondent alleged that he was retained on 2 April 2010 and that the appellant signed a costs agreement. There is no pleading that the costs agreement was a costs agreement under the Legal Profession Act 2006 (ACT) that would entitle him to recover fees: see s 279(a). The respondent’s retainer related to a workers compensation claim. That workers compensation claim was set down for hearing commencing on 9 February 2011. An interpreter was engaged by the respondent for the first day of the proceedings. On that day the magistrate decided that an interpreter was not necessary. The claim alleged that the appellant gave evidence at the hearing which was inconsistent with her earlier instructions, namely that she had not engaged in any other work and had not obtained an income as a result. This was said to constitute “breach of” the Solicitor’s Costs Agreement.
On the morning of the second day of the hearing the respondent pleaded that the appellant had alleged in writing that the respondent had breached his fiduciary duties to the appellant because, by failing to retain an interpreter, he had not acted in her best interests. This was said by the respondent to give rise to a conflict of interest and the respondent therefore terminated the retainer and sought leave of the Court to withdraw. It is alleged that leave was granted and the proceedings were adjourned.
The manner in which the case was put was explained in the statement of claim by the particulars of the agreement and the breach, which were as follows:
[The appellant’s] omission to provide [the respondent] with proper, accurate or truthful instruction of material facts of the case was in breach of the obligations required under the costs agreement signed between [the respondent] and [the appellant] (as per cl 15(b)(iii) of the costs agreement).
The conflict of interest between [the respondent] and [the appellant] provided for in the costs agreement meant that [the respondent] had no real option but to terminate the agreement (as per cl 15(b)(vi) of the costs agreement).
As a result of the breaches of the costs agreement by [the appellant], [the respondent] is entitled to a right to payment for work done and disbursements incurred during the course of the case, despite the termination of the agreement prior to the completion of the case (as per cl 15(c)(i) of the costs agreement).
On 28 February 2011 the respondent served a letter of demand and a bill on the appellant demanding payment of $20,867.28. This amount included an amount to be paid to the appellant’s previous solicitor of $2800.20. The appellant did not pay the amount owed and denied liability to pay the debt.
The respondent’s claim in the Magistrates Court was for $18,067.08, being the amount claimed in the letter of demand less the amount said to be owed to the previous solicitor.
The appellant filed a defence. That defence was lengthy and responded argumentatively to the paragraphs of the respondent’s pleading. It alleged that the appellant entered into the Solicitor’s Costs Agreement under a mistake contributed to by the respondent. It made a variety of allegations some of which were relevant as matters of defence to the pleaded claim, some of which were not. The defence did not admit liability to pay any amount to the respondent.
The decision
The proceedings were heard in the Magistrates Court on 6 December 2013. The respondent and the appellant gave evidence and were cross-examined. A number of documents were tendered including invoices, transcripts of the workers compensation proceedings, excerpts from the Legal Profession Act and various documents on the Court file with their supporting materials attached.
The magistrate gave his reasons orally immediately following the conclusion of evidence and submissions. His judgment extends over some 24 pages of transcript. His Honour was interrupted on a number of occasions by the appellant and, as a result, the reasons were more fragmented than they otherwise might have been.
Unfortunately his Honour’s reasons do not contain any clear statement of his findings of fact in relation to the proceedings. This is clearly desirable: see Beale v GIO of NSW (1997) 48 NSWLR 430 at 443; ACT vCrowley (2012) 7 ACTLR 142 at [57]. Nor do they identify in any readily understandable way the critical legal and factual issues which he considered that he was called upon to decide.
In relation to the availability of an interpreter his Honour found that there had been no refusal on the part of the respondent to provide an interpreter when the plaintiff was giving evidence. The magistrate hearing the workers compensation proceedings had ruled that the appellant did not need an interpreter. Following that ruling the respondent said that because the Court did not permit an interpreter he was unwilling to pay for an interpreter himself and left it to the appellant to engage one directly, which she did.
In relation to the accuracy of the instructions provided by the plaintiff prior to the hearing, his Honour found that the appellant had not provided instructions that were truthful and frank because her instructions were that she had not worked since 4 December 2009. That was relied upon by counsel for the appellant when opening her case. In fact she gave evidence that she had been doing cleaning work every second week for an hour or four hours a day on two days. His Honour found that the evidence was relevant to the workers compensation claim.
His Honour relied on the decision in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [46] for the proposition that in all ordinary circumstances a signature should be treated as a conclusive ground of contractual liability. His Honour found that the respondent was not under any misunderstanding that the appellant knew exactly what she was signing when she signed the Solicitor’s Costs Agreement.
His Honour found that the appellant had let her recollection of “if I don’t win I don’t have to pay” control her understanding of the whole of the Solicitor’s Costs Agreement.
He found that she knew that medical reports were being prepared and her solicitors were incurring costs. He found that she knew she had to meet those disbursements whether or not she was successful because the monies would have to be paid by her solicitors.
In relation to counsel’s fees his Honour said:
As to counsel’s fees it is clear, on your evidence today, that in accordance with clause 6 of the agreement it says, “Unless we have reasonable [cause] we will seek your instructions and give you an estimate.”
[The respondent’s] evidence today was that in his attempts to secure-because he did not meet counsel till very late in the piece, and this is often the case to avoid costs. If matters are – suddenly an offer to settle is put in place, without having to engage in other unnecessary costs counsels are not often engaged to the very last moment.
In any event counsel is engaged because things are now down to the last moment. The pursuit of an interpreter, which is at your insistence and I will take you to your defence which, you say, you in fact insisted on an interpreter being required – counsel’s fees, you were notified as to the engagement of counsel albeit the day or a couple of days beforehand. There was no objection to that being put in place. You could have objected, but you did not. Therefore counsel’s work is approved and authorised in accordance with paragraph 6 of the agreement between you. As it says:
You shall be responsible to pay or to reimburse 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.
So if that was the basis of your agreement ‑ which it is not because of clause 3 ‑ then those were going to still be your liabilities.
I then go to the fact that within paragraph 11:
If you dispute the charges or the bills as to the item or a lump sum you have the ability to challenge that under clause 12 before the Supreme Court.
So if you did not feel that the fees were adequately or properly represented, an appropriate costing, that was open for you to challenge. And as I have indicated beforehand, none of this application or the defence deals with a challenge to the fees that were incurred as to their legality that is.
His Honour then dealt with cl 15 of the Solicitor’s Costs Agreement.
He referred back to his earlier remarks about the appellant’s failure to tell the respondent about her employment.
In relation to the operation of clause 15(b)(vi), his Honour’s discussion included the following points:
(a)the Court refused to allow the appellant to have a translator; but
(b)that refusal did not stop the translator from sitting in the back of the court and indeed attending on the second day because the appellant had paid for her to attend; and
(c)even native English speakers had difficulty in court proceedings and that her solicitor was available to assist her.
As to what occurred in court his Honour said:
You were able to take questions. You are able to provide answers. Your understanding, it may not have been the best… But it was not the worst.
His Honour referred to the fact that the situation was one which occurred quite frequently with many witnesses and was not an exceptional or unusual circumstance.
His Honour then appeared to turn to the letter that was written by the appellant’s son which was said to provide the justification for the termination by the respondent of his retainer. His Honour said:
But the language through a minor solicitor that you attacked the ethical basis upon which he advances his role to you and for you as your representative is quite significant. You, in fact, because of this document you say you read and approved and you adopted because all [the respondent] wanted to know is “Do you adopt the intent of this letter, the meaning of it?” And you said, “Yes”, because in this letter you say:
You have acted in a way that may amount to a breach of your duties as set out in the Legal Profession Act Solicitors Rules 2007.
And the author of the document drew the attention to the fiduciary nature of the relationship:
… to be free of influence of any interest which may conflict with the client’s best interests.
The basis upon which you were making that thrust was that [the respondent] rather than pay $792 for your interpreter was seeking not to pay that amount because it would come out of his pocket.
…
Now the point is that you saw that as his obligation but clearly, as I have said previously, it was not. The obligation for an interpreter had been ruled out by the court. It had nothing to do with [the respondent]. Now you make the suggestion though that [the respondent] should absorb the cost, should pay for the interpreter because that is what you want. And of the article, this letter, what the suggestion he drives at is that his inability to do that, his self interest in wanting to keep his money was something which was unacceptable to you but that is not the basis upon which [the respondent] was refusing to engage the interpreter, but that is what you have taken as the reason and that is what the author of this letter has done, and that is what you adopted on that morning when [the respondent] asked you, “Do you stand by what is in this?”, Because the moment you did then you attacked both his integrity and his honesty as your representative and he could not act for you any longer on that basis.
See that was the conflict. All that happened at that point in time, and that needed to be said, is that “No, I understand I do not need it. The court has ruled I do not need an interpreter”. But you could not see any of that. You were now clouded by your understanding of what had occurred and what had been denied use the previous day.
But that had nothing to do with [the respondent]. [The respondent], as your legal representative gave instructions to your counsel and I read those out to you and you were nodding with me as I read them to you. See language difficulty, lack of understanding, all the things you have been asserting, [the respondent] asserted through instructions to your solicitor, the same thing. And he tried to advance the best he could for you, but the court ruled against him. That has got nothing to do with [the respondent], nor your counsel.
Then to write this on top of that after a court ruling and blaming your solicitor for it was an attack on his integrity and that is why he asked you that question, “Do you stand by that?” And you said “Yes”. And he said, “Well I can no longer act”, because you now saw your legal representative putting their own self-interest ahead of yours and the moment that occurred he could not act for you.
His Honour then asked whether reasonable notice of the termination had been given having regard to the terms of clause 5.1(c) of the Legal Profession (Solicitors Rules) 2007 (ACT), a provision specifically referred to in the appellant’s defence. That clause requires that:
5.1 A practitioner must complete the work or legal service required by the practitioner's retainer, unless:
...
(c)the practitioner terminates the retainer for just cause, and on reasonable notice to the client.
His Honour said:
Well in relation to the view that you put to [the respondent], he gave you just cause, which was “You’ve attacked my honesty, my integrity, my fiduciary obligation to you, that is the reason. And it must happen now before we go into court”. And that is all the reasonable notice because you are then afforded the opportunity now not to go into court seek an adjournment and get another solicitor. Now he cannot go into court and represent your interests now because you have prevented him from doing it.
His Honour then:
(a)rejected a contention that the appellant required her son to assist in her understanding of the costs agreement;
(b)rejected a contention that the respondent had given the appellant a false impression of the effect of the costs agreement;
(c)repeated his earlier remarks that it was reasonable for the respondent to decline to pay for an interpreter when the Court had ruled she could not have one;
(d)rejected the appellant’s contention that the respondent should have at least discussed the issue arising out of her son’s letter; and
(e)rejected a contention that that a conflict of interest arose because of the desire of the respondent to maximise his fees at the expense of the appellant’s right to a fair trial.
His Honour said in conclusion:
The basis on which the judgment is made today for you, as the defendant, is based on the content of your own defence. The defence is not made out in relation to the material facts before the court which is introduced through exhibit A2 which was the transcript of proceedings which showed the removal of the interpreter was not at the behest of your legal representative, [the respondent]. Further, it shows that [the respondent] through instructions to your counsel, ... did their best to have the court allow you to have an interpreter, but the court ruled against them.
The second aspect is in line with the issue then about the employment issue, and that was a question and that was something which had caused [the respondent] a great difficulty with, especially in a workers compensation claim as I have sought to explain to you.
But more importantly it is the letter in exhibit I from your son, which you maintain was your view about [the respondent’s] conduct, which gave him the relevant reason under clause 5(i)(c) to withdraw and that he had cause and it was both reasonable.
On the basis of the evidence before the court today and in regard to those matters which have been raised within the originating summons or the originating application, the originating claim entered into court on 18 April 2012, that the relief sought, that is the liquidated damages and costs and interest claimed on and from 31 March 2011 and continuing is successful insofar as you are required to pay those amounts which are identified within the statement of claim of $18,067.08, those matters comprising the costs in relation to disbursements, counsels fees, and legal fees.
His Honour was then asked to make an award of interest and did so in accordance with an interest calculation which was handed up to him. In relation to costs the transcript records the following:
[THE RESPONDENT]: I certainly don’t seek to have costs for professional time taken into account, noting I’m representing myself but I would ask that the court make orders that the costs covered by myself in relation to the disbursements in bringing this matter to trial, be costs ordered against [the appellant], excuse me.
His Honour said:
In relation to then the costs for today, the attached material which has been provided to the defendant talks about tax invoices for work done and the lodging of applications and the like. In relation to that material, can I say that it will be dealt with in this way is that I would normally apply the same rule I had applied under 4(1)(b) that the matter be - not make any comment about costs today that they go for ‑ so in relation to costs for today in the matter of CS12/229 dated 6 December 2013 the court orders that the defendant pay the plaintiff costs of the proceedings in an amount agreed by the parties pursuant to section 4(1)(b) of the Magistrates Court Regulation 2009 or in default of the failing of an agreement under section 5 of the regulation within 14 days of the date of this order in an amount assessed by the Registrar in accordance with the scale of costs is applied under section 4(3)(b) and (c) of the regulations.
The orders of the Court that were entered by a Deputy Registrar of the Court, who purported to settle the terms of a draft order filed by the respondent, were as follows:
The Court orders that:
1. Originating claim given to the plaintiff.
2. Costs of $18,067.08 be awarded against the defendant plus interest of $3790.11.
3. Cost in accordance with s 4(1)(b) to the plaintiff are payable by the defendant.
The judgment of the Court is that:
1. Originating claim is given to the plaintiff.
2. The defendant pay to the plaintiff the sum of $21,847.19.
Two points must be made, at this stage, about the orders made by the Court and “perfected” in the form set out above.
Firstly, it is not clear how the relatively straightforward orders made orally by his Honour were “perfected” in this manner. Order 1 makes no sense. It probably should have read that “judgment to be given for the plaintiff”. To say “originating claim given to the plaintiff” is an aggregation of words which, in a legal sense, is meaningless. Order 2 is similarly erroneous. Even though the underlying claim related to a claim that could be described as “legal costs” there was no order for costs in the sum specified. Rather, judgment was to be entered in favour of the plaintiff in the sum specified. Order 3 also made no sense. To simply refer to s 4(1)(b) in the abstract was meaningless. Section 4(1)(b) of what? The order bore little relationship with the order pronounced by his Honour as recorded in the transcript.
Secondly, the order for costs made orally (as opposed to that in the “perfected” order) by his Honour was clearly not one that was appropriate in a case such as this. The order pronounced in his Honour’s reasons was one that appears to be modelled on the order described by the Full Court in Baker v Magistrates Court of the Australian Capital Territory [2013] ACTSC 73. That is an order that is based on s 244 of the Magistrates Court Act 1930 (ACT) and hence only available in criminal proceedings. That is apparent from the fact that s 244 is headed “Costs in criminal matters” and occurs in Part 3.11 which is headed “Costs in criminal matters”. Both the Part heading and the section heading form part of the Act: Legislation Act 2001 (ACT) ss 126(1), (2)(b). Given that regulations 4 and 5 of the Magistrates Court Regulation 2009 (ACT) are made for the purposes of s 244 they are also confined to criminal proceedings. In civil proceedings costs are governed by the provisions of the rules: see Court Procedures Rules 2006 (ACT) Part 2.17.
Grounds of appeal
The grounds of appeal as set out in the notice of appeal dated 16 December 2013 are as follows:
1. The Appellant does not agree with the decision made by [the magistrate] on 06/12/2013. The Appellant disagrees to pay any money to the Respondent because the Appellant doesn’t owe any money to the Respondent. [The magistrate] did not consider that the Appellant did not have sufficient understanding or comprehension of the Costs Agreement in order to be able to make an informed decision to competently signed the document in a proper legal capacity.
2. [The magistrate] did not consider that, at the time of signing with the Conditional Cost Agreement the Respondent did not offer the Appellant the services of an interpreter to allow her to understand the complex and legal nature of the Agreement in her first language, Polish. Therefore, the Appellant’s understanding of the document was confined to its “no win-no fee” nature. Appellant was misled by Respondent.
3. [The magistrate] did not consider that the Respondent lost any chance of a settlement when he withdrew from the case and breached his ethical duty to his client to continue the case and keep control over the hearing process.
4. [The magistrate] did not consider that the Respondent did not bring a successful outcome, he lost sight of the Appellant’s goals, raised conflict of interest and terminated himself.
5. [The magistrate] did not take any consideration that Respondent issued a bill to the Appellant for Barrister fees when that Barrister was briefed without the appellant’s informed consent. Fees for the barrister arrived on the first day of the hearing (09/02/2010).
6. [The magistrate] did not consider that the Appellant must be informed about the basis for the barrister’s charges, the scope of the brief, and any other relevant information that is needed so that the Appellant can be properly informed before starting of proceeding.
7. [The magistrate] did not consider liability of the Respondents produced legal documents that included an incorrect statement that wasn’t true (Attachment C ‑ Form 2.18 Reply to defence paragraph 2 and Attachment A ‑ audio script).
8. [The magistrate] asked the Appellant whether she had received the court book. Appellant stated she did not received and have not seen the court book before. [The magistrate] said that the court book was sent to the Appellant via registered post on 16 October 2013. The Respondent confirmed this (Attachment A ‑ audio script an Attachment D). On 12 December 2013, the appellant called the respondent seeking a copy of the postal receipt. The Respondent agreed to provide a copy of the receipt but stated he never said it was sent via registered post.
9. [The magistrate] ignored the fact that the Appellant did not receive the court book before the hearing and he allowed the proceedings to continue. [The magistrate] failed to consider that the Appellant did not have a chance to be prepared fairly for the hearing.
(numbering added)
The order sought by the appellant is:
That the Supreme Court reverse the decision of [the magistrate].
Issues
The issues on an appeal such as this are made more difficult to discern by the manner in which the case was run in the Magistrates Court. The pleadings were deficient. The respondent did not plead any of the material facts that would be necessary to give rise to a liability under the Solicitor’s Costs Agreement which had been pleaded. He did not, for example, plead that the respondent had incurred disbursements pursuant to his instructions or that he had retained counsel or that he had incurred professional fees in the conduct of the case. All that was pleaded was the service of a letter of demand and a bill on the appellant. Nor did he plead that the Solicitor’s Costs Agreement was a costs agreement under the Legal Profession Act – an essential ingredient of the cause of action for the recovery of legal costs having regard to s 279 of the Act.
The defence was drafted in a discursive fashion which made it more difficult to discern precisely the issues being raised in the defence. It was consistent with a defence being drafted by a non-lawyer who had a minimal idea of the rules of pleading or the legal principles to be applied to a case such as this.
The position was made more difficult by the fact that neither party was represented at the hearing and his Honour was not given significant assistance in identifying the key legal and factual issues that needed to be decided.
In dealing with the appeal it is necessary to attempt to refine the issues that are raised by the notice of appeal and address those issues in the light of the substantially imperfect pleadings and the reasons given by his Honour which, in relation to most issues, do not contain any clear findings of fact.
Doing the best I can in these circumstances, the grounds of appeal give rise to the following issues.
(a)Whether because of the absence of an interpreter or otherwise the magistrate erred in finding that the plaintiff had sufficient understanding of the agreement to be satisfied that it was enforceable against her? (Grounds 1 and 2)
(b)Whether, by reason of the termination of the retainer by the respondent he was entitled under clause 15(b)(iii) or (vi) to payment of his costs? (Grounds 3 and 4)
(c)Whether the respondent was entitled to recover barrister fees as a disbursement in the circumstances? (Grounds 5 and 6)
(d)Whether the magistrate erred in failing to give weight to the statement of the respondent in paragraph 2 of his reply to defence? (Ground 7)
(e)Whether the contentions of the appellant in relation to the Court Book provide a basis for setting aside the decision of the magistrate? (Grounds 8 and 9)
Test for appeal
The appeal is from the Magistrates Court. It is brought pursuant to s 274(2) of the Magistrates Court Act. Section 276 provides that in an appeal the Supreme Court must have regard to the evidence given in the proceeding in the Magistrates Court out of which the appeal arose and has power to draw inferences of fact and, in its discretion, to receive further evidence.
Such an appeal is by way of rehearing. The nature of such an appeal is well settled. In Fox v Percy (2003) 214 CLR 118 at 126-127 Gleeson CJ, Gummow and Kirby JJ said:
[T]he appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge's reasons. Appellate courts are not excused from the task of "weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect: Dearman v Dearman (1908) 7 CLR 549 at 564 citing The Glannibanta (1876) 1 PD 283 at 287.
In Lukatela v Birch [2008] ACTSC 99, Rares J described the nature of an appeal by way of rehearing under Division 3.10.2 of the Magistrates Court Act. Division 3.10.2 contains s 214(2) which is in similar terms to s 276. After referring to the High Court decision of Allesch v Maunz (2000) 203 CLR 172, his Honour said (at [21]–[24]):
And, although the appeal is by way of rehearing, the appellate [court] does not have a free hand. Only if, after making proper allowance for the advantages of the trial judge, it concludes that an error has been shown, then, the appellate court is authorised and obliged to exercise its appellate duties in accordance with the statute: Fox 214 CLR at 127-128 [27] per Gleeson CJ, Gummow and Kirby JJ.
Ordinarily, if there has been no further evidence admitted and no relevant change in the law, a court entertaining an appeal by way of rehearing can exercise its appellate powers only if satisfied that there was an error on part of the court below: Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203 [14] per Gleeson CJ, Gaudron and Hayne JJ. Here, the admission of evidence by consent, which simply confirmed what was before his Honour, thus required the appellant to demonstrate error in the discretionary judgment.
I am of opinion that the nature of an appeal under Div 3.10.2 is of an appeal by way of re-hearing on the evidence below, together with such further evidence as may be admitted under s 214 of the Magistrates Court Act. Such a “re-hearing” does not involve a completely fresh hearing by the Supreme Court on appeal. The Court would ordinarily proceed on the basis of the record in the court below, together with any additional evidence that is admitted under s 214.
Where no oral evidence was given below, or the trial judge’s findings based on oral evidence are not challenged, the Supreme Court on appeal is in a good a position as the Magistrate to decide the proper inference to be drawn from the undisputed facts which were in evidence. In deciding the proper inference to be drawn, the Supreme Court must give respect and weight to the conclusion of the Magistrate, but, once having reached its own conclusion, must give effect to it: Fox 214 CLR at 126-127 [25] per Gleeson CJ, Gummow and Kirby JJ, applying Warren v Coombes (1979) 142 CLR 531 at 551; see too CGU Insurance Ltd v Porthouse (2008) 248 ALR 240 at 252-253 [69]; 82 ALJR 1135 at 1144 [69] per Gummow, Kirby, Heydon, Crennan and Kiefel JJ.
In my view these remarks apply equally to an appeal under s 274(2).
Consideration
I will deal with each of the issues identified in [50] above. Before doing so it will be useful to set out the critical terms of the Solicitor’s Costs Agreement and the letter from the appellant’s son given to the respondent on 10 February 2011.
The Solicitor’s Costs Agreement provided:
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).
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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
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(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.
The reference in cl 15(c)(i) to cll 14(b) and (c)(ii) clearly should be a reference to cl 15(b) and (c)(ii) respectively.
After cl 21 the agreement concludes:
By signing this agreement, I acknowledge that I have read, understood and agree to be legally bound by this agreement, and that I am aware of my right to seek independent legal advice before entering into this costs agreement or before the expiration of the cooling off period.
The agreement was signed by the appellant and respondent and dated 22 June 2010.
The letter from the appellant’s son which was given to the respondent on 10 February 2011 was as follows:
Dear [Respondent]
I am writing because I am concerned at the way you are handling my mother’s case. As you are aware she is not a native speaker of English and has trouble communicating a lot of the time.
I was quite surprised when I heard that you had suggested that she would not need a translator while she was being questioned in court. As you will appreciate answering questions in a court is unnerving for most people, but particularly for those people who do not have such a strong grasp of the English language, who cannot understand everything that is being put to them and can often not respond in an adequate manner.
Undoubtedly you will be familiar with the concept of procedural fairness and the principles of natural justice that enshrine every person’s right to a fair trial. By denying my mother the right to access the services of a translator you have surely breached some of your ethical duties.
I am quite sure that if this were to be reviewed that someone could see that my mother would have been denied the right to a fair trial, a right afforded to everyone in the Australian legal system.
That being said, if you were to continue to suggest to my mother that she did not need the services of a translator even though it has been made expressly clear to you that she wants a translator I would be deeply concerned.
To do so would not be in the best interests of my mother, your client. When you accepted the retainer to act for my mother, you accepted the duties and responsibilities that accompany that.
I feel that the way you have acted may amount to a breach of your duties as laid out in the Legal Profession (Solicitors) Rules 2007. I would particularly like to draw your attention to the preamble of Section 1.
Practitioners should serve their clients competently and diligently. They should be acutely aware of the fiduciary nature of their relationship with their clients, and always deal with their clients fairly, free of the influence of any interest which may conflict with a client’s best interests. Practitioners should not, in the service of their clients, engage in, or assist, conduct that is calculated to defeat the ends of justice or is otherwise in breach of the law.
I sincerely hope that you will bear in mind the above when giving my mother advice in the future.
Yours sincerely
[the name of the appellant’s son]
Whether because of the absence of an interpreter or otherwise the magistrate erred in finding that the plaintiff had sufficient understanding of the agreement to be satisfied that it was enforceable against her? (Grounds 1 and 2)
As his Honour pointed out, in the absence of some vitiating factor, the appellant’s signature bound her to the terms of that document whether she had read them or not: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 180-84. The magistrate found that the appellant did understand the costs agreement and that she permitted her recollection of “if I don’t win I don’t have to pay” to control her understanding of the whole document. He impliedly rejected any claim of unilateral mistake on the part of the appellant that was contributed to or of which the appellant was aware.
His Honour had before him evidence that the respondent had, prior to the appellant signing the agreement, reviewed its clauses in some detail with her. He also had the benefit of seeing and hearing the appellant give evidence and conduct her case over the course of a day. To the extent that the appellant the asserted before his Honour that she had no understanding of the agreement or that what she was told led to her 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.
Whether, by reason of the termination of the retainer by the respondent he was entitled under clause 15(b)(iii) or (vi) to payment of his costs? (Grounds 3 and 4)
Although the respondent appeared to plead reliance on cl 15(b)(iii) of the costs agreement as a basis for the termination of the retainer, that was not a ground relied upon at the time or of which any written notice was given pursuant to the opening words of clause 15(b) (“We may… give you written notice…”). The respondent’s evidence as to what happened on the morning of 10 February 2011 did not make any reference to reliance upon that ground as a basis for ceasing to act. In his letter to the appellant written later on 10 February 2011 no reference was made to any issue related to cl 15(b)(iii). The only matter referred to is the handing to the respondent of the letter that formed the basis for the termination under cl 15(b)(vi).
In the letter from the respondent dated 28 February 2011 with which he provided his bill and demanded payment, the respondent said:
As a result of the letter handed to me by you, and your endorsement of the same, you are aware that my retainer with you, and in turn the retainer with counsel, was terminated on 10 February 2011 during the hearing of your matter.
That is consistent with the fact that as a matter of history the respondent ceased to act pursuant to cl 15(b)(vi). However, the letter subsequently includes:
As the retainer was terminated as a result of an irrevocable breakdown in our relationship, a conflict of interest, and as a result of your failure to provide all relevant information, I now provide a bill of costs to you in the amount of professional fees of $5,610 and disbursements of $12,457.08.
This appears to foreshadow the claim subsequently made in the statement of claim that apparently sought to expand the basis upon which the respondent ceased to act.
There is no evidence that the appellant was given written notice of the intention of the respondent to cease acting for her prior to his doing so. After the appellant was informed that the respondent had ceased to act, the fact of the termination of the retainer was then announced to the Court upon the commencement of the hearing at 9.28 am on 10 February 2011. The letter of 10 February was clearly written after the termination had occurred and after the proceedings had been adjourned.
In my view it was not open in the proceedings in the Magistrates Court for the respondent to rely upon grounds for termination of the agreement which were not relied upon at the time of the termination and in relation to which the process required under the Solicitor’s Costs Agreement, namely the giving of written notice of an intention to terminate, was not followed. In so far as the magistrate proceeded on the basis that it was, I consider that he was in error.
That leaves the termination said to be pursuant to cl 15(b)(vi). In my view the termination of the retainer was not in accordance with this provision.
First, no written notice of the intention to cease acting was given as required by the opening words of cl 15(b). The evidence as to what occurred given by the respondent was:
The document had been provided to me literally at the doorstep of the court. It was time for the court to reconvene. I immediately raised the issue with counsel, who had also just arrived. He was within the courtroom, actually, preparing for the second day’s worth of hearing. We had a brief discussion and it became quite clear that should the [appellant] still stand by that document and that position we simply could not continue to represent her in those proceedings. Having confirmed that with her directly and confirmed that via her translator, should there be any issue, and confirmation that she stood by the document that had been authored by her son, I advised her in words to the effect that I had no option but to terminate the retainer and that had to happen immediately because of the impending court date. [Transcript 27]
The appellant’s evidence was:
What I remember, it’s the next date, it was 10 February, I’ve got the letter from son, [appellant’s son’s name], and I hand it to [the respondent], about he was concerned that [the respondent] is not representing me like a good lawyer or something, in the best interest of the client. And [the respondent] he got so angry, I didn’t want to make him angry, but well, he just dropped the bags, and he was like furious. And then barrister came out and he said, what happened, what’s going on, what’s going on. Then [the respondent] showed him the letter, and I remember barrister said, it’s going okay, is going good. And then after that, you know, [the respondent] say that he terminate himself.
In cross-examination it was put by the respondent to the appellant that: “I told you that if you stand by the contents of that document that we are in conflict”. The appellant did not recall that, she said that she could not remember discussing the letter but could recall returning to the courtroom where the termination of the retainer was announced to the Court.
Neither person gave evidence, and there was no other evidence, that written notice had been given of the intention of the respondent to cease acting. Neither gave evidence of any discussion prior to the respondent announcing that he was ceasing to act of the meaning or intention of the letter or any advice being given about the consequences, as the respondent saw it, of the appellant adopting what was said in the letter or the consequences for the appellant if the respondent ceased to act.
The requirement for written notice required by cl 15(b) is a significant one because it means that if the solicitor ceases to act there is a degree of formality associated with that process. This is significant not only in documenting the termination of the agreement but it is also significant in making clear to the client that the issue is of some gravity. Had the process contemplated by the Solicitor’s Costs Agreement been followed it would have been open to the appellant, being faced with the suggestion that there was a conflict of interest, to expressly disavow any suggestion of a failure on the respondent’s part that had previously been expressed in her son’s letter. There is a real prospect that with the benefit of such a more formal process and some considered advice prior to the respondent ceasing to act, any suggestion of a conflict of interest would have evaporated.
Second, I am not satisfied that a conflict of interest had arisen that would enliven the operation of cl 15(b)(vi). His Honour made no specific finding as to what the conflict of interest was. In the passage from the judgment quoted above his Honour refers to there being a “conflict”, which there undoubtedly was, rather than a “conflict of interest”. This is consistent with the evidence of the respondent who referred to a “conflict” as if it was synonymous with a “conflict of interest”. He said in relation to reading the letter from the appellant’s son:
I then did so and upon reading certain allegations and confirming those from the [appellant], both directly and by her interpreter, became acutely aware that there was a conflict between myself and the defendant as to how the conduct of the case was running.
When describing his letter of 10 February 2011 he said:
I also confirmed that, on the basis that there had been a conflict of interest and that was that my advice on preparation and conduct at the hearing was now, in her view, inappropriate and in breach of my duties to her. I could not agree[,] we were in conflict on that point, that that enlivened pursuant to the cost agreement an ability to then furnish her with a bill.
If, consistently with the passages I have quoted, the respondent equated a conflict simpliciter with a conflict of interest he was clearly in error and the circumstances did not permit him to cease to act under cl 15(b)(vi).
Leaving aside that possibility, I now consider whether in fact a conflict of interest arose. The costs agreement itself contemplated the possibility of conflict of interest arising as a result of the solicitor previously having acted or currently acting for a different client which would lead to a conflict of duty and duty. Where such a conflict should have been anticipated then even where the solicitor ceased to act no obligation to pay professional fees arises: see cl 15(c)(ii). Although this was not clearly articulated by the respondent or in his Honour’s reasons, the nature of the conflict of interest that appears to have been asserted in the present case was one arising out of an allegation of professional misconduct. Such an allegation would have the potential to create a conflict of interest where the solicitor’s interest in deflecting any claim arising from that allegation created a difference between the interests of the client and the interests of the solicitor in relation to the subject matter of the retainer. That would lead to a conflict between the duty of the solicitor to properly and fully implement the solicitor’s instructions pursuant to the retainer and the interests of the solicitor in avoiding or reducing the consequences of the claim which the client may have against the solicitor.
In the present case I am not satisfied that such a conflict of interest actually existed.
Firstly, although the letter written by the appellant’s son raised the possibility of a breach of the solicitor’s ethical duties (“I feel that the way you have acted may amount to a breach ...”), there was no indication that the appellant had any intention to make any claim against the solicitor.
Secondly, the letter was clearly written on the basis that, so far as the author was concerned, the respondent would continue to act on the appellant’s behalf.
Thirdly, the suggestion that the respondent had breached his ethical duties by failing to retain an interpreter, in circumstances where the Court had ruled against the use of an interpreter and where he was entitled, in any event, under the Solicitor’s Costs Agreement to obtain payment in advance or require security to be provided for anticipated disbursements, was one that was without substance.
Therefore I am not satisfied that, at the point where the respondent ceased to act, a conflict of interest had arisen. It may have been, had the written notice required by the agreement been given and had there been some considered discussion between the respondent and the appellant as to the intention and consequences of the letter that a conflict of interest actually existed. However, no such considered discussion took place and, in my view, it is unlikely that, had such a discussion taken place, a realistic prospect of there being a conflict of interest would have emerged. Instead, what appears to have happened is that the appellant was asked whether or not she adopted the terms of the letter and, when she indicated that she did, she was informed with very little further discussion that the respondent had, against her wishes, decided to cease to act.
In reaching this conclusion I have not ignored the fact that there were clearly some difficulties in the relationship between solicitor and client. So far as the respondent was concerned, the appellant was clearly not an easy client. Nor was her case an easy one and clearly the evidence that emerged in cross-examination on the first day of the hearing did not make it any easier. However, hard cases and difficult clients are not unusual. To terminate a retainer in the middle of a hearing in circumstances such as occurred in this case is a very grave matter which has the potential to dramatically affect the interests of the client. It is therefore a matter where some strictness should be applied to the requirements set out in a costs agreement where those requirements govern the circumstances in which the solicitor may cease acting for the client and govern the process where that may occur, particularly where that process is designed to provide some protection for the interests of the client.
As a consequence, because I am not satisfied that the respondent ceased to act in accordance with the terms of cl 15(b), I am not satisfied that the respondent was entitled to charge professional fees pursuant to clause 15(c)(i). That does not affect the recoverability of disbursements which remained governed by the second paragraph of cl 5.
Was the respondent entitled to recover barrister fees as a disbursement in the circumstances? (Grounds 5 and 6)
The respondent’s statement of claim in the Magistrates Court did not plead the material facts relevant to the claim to recover unpaid barrister’s fees as a disbursement. Whether or not the respondent was entitled to claim barrister fees as a disbursement was clearly raised by paragraph 15 of the appellant’s defence to the respondent’s claim in the Magistrates Court. That was drafted in a discursive fashion by a non-lawyer. It did however clearly raise the following points:
(a)that the respondent had issued a bill including barrister fees without the appellant’s prior knowledge or informed consent;
(b)that the appellant had not been given the time or information necessary to agree and make an informed decision regarding all fees;
(c)that a practitioner who issues a bill to a client for barrister fees when the barrister was briefed without the client’s informed consent could be guilty of unsatisfactory conduct under the “Legal Practice Act 2003”;
(d)that the demand did not set out the description of the work performed;
(e)that the respondent breached paragraph 6 of the Solicitors Costs Agreement which requires counsel’s fees to be estimated and disclosed before counsel could be retained;
(f)that the letter which attached the copy of the barrister’s costs agreement was only received on the morning of the hearing;
(g)that the barrister’s costs agreement was not signed or dated.
(h)the information provided on the morning of the hearing was clearly after the barrister was retained.
The magistrate’s only reference to the issues raised by this pleading is at pages 109-110 of the transcript. His reasons were relevantly:
[The respondent’s] evidence today was that in his attempts to secure ‑ because he did not meet counsel until very late in the piece, and this is often the case to avoid costs. If matters are ‑ suddenly an offer to settle is put in place, without having to engage in other unnecessary costs counsels are not often engaged to the very last moment.
In any event counsel is engaged because things are now down to the last moment. The pursuit of an interpreter, which is at your insistence and I will take you to your defence which, you say, you in fact insisted on an interpreter being required – counsel’s fees, you were notified as to engagement of counsel albeit the day or a couple of days beforehand.
There was no objection to that being put in place. You could have objected, but you did not. Therefore counsel’s work is approved and authorised in accordance with paragraph 6 of the agreement between you.
His Honour’s finding as to when the appellant was notified (“the day or a couple of days before”) is wrong and this was conceded by the respondent on appeal. Although there had been some discussion of the likelihood of engagement of counsel the first notice of the terms on which counsel was engaged was a letter dated 7 February 2011. That was two days prior to the first day of the hearing. The parties agreed that the letter had not been received by the appellant until the date of the hearing. The letter simply annexes a document, which I will refer to as the Barrister’s Fee Agreement, sent to the respondent by the barrister entitled:
DISCLOSURE OF COSTS & COSTS AGREEMENT PURSUANT TO THE LEGAL PROFESSION ACT
The Barrister’s Fee Agreement was signed by the respondent so as to indicate his acceptance of its terms. It is therefore clear that the respondent had retained the barrister not later than 7 February 2014. The document provided an estimate or rate for the components of the fees but indicated that the estimated likely fees were “unknown”. It did that in the following terms:
ESTIMATED LIKELY FEES
Preparation $2,000 + GST
Interlocutory matters $350 per hour + GST
Hearing $2,000 per day + GST
TOTAL (based on information given to me to date) Unknown
It also included the following clause:
CONDITIONAL FEE AGREEMENT
This fee agreement is a conditional agreement. That is that fees are not payable to me unless the Applicant/Plaintiff succeeds (whether in full or in part) at a Hearing or settles the matter or discontinues the matter for a benefit. Fees are payable if the Applicant/Plaintiff decides not to proceed with the matter, or fails to provide instructions to proceed against reasonable advice that the Applicant/Plaintiff has reasonable prospects of success.
The barrister sent a tax invoice to the respondent dated the 10 February 2011 for an amount of $5200 plus GST of $520 giving a total of $5720. The description was
[Appellant’s name]-Prepare for Hearing 8 February 2010 - 4 hours; Conference with [Applicant] and Fee on Brief 9 and 10 February 2011.
The manner in which this amount appears to have been arrived at appears to be a charge of four hours at $350 per hour for preparation plus two days at $2000 per day.
On 28 February 2011 the respondent prepared a tax invoice which he sent to the appellant. In relation to barrister’s fees it included the sum of $5720 and then an additional amount for GST of $572, giving a total of $6292. On the hearing of the appeal the respondent accepted that he had made a mistake in that he would not ordinarily have charged GST on top of the GST inclusive fees of a barrister. The terms of the tax invoice indicate that the fees had not been paid and that was the respondent’s evidence.
There are two issues that arise in relation to the fees. First, whether or not the barrister was entitled to be paid any fees in the circumstances of this case and hence whether those fees constituted a disbursement that could be charged to the appellant. Second, whether or not late notice of the terms on which the barrister had been retained precludes the recovery of those fees.
Could the barrister’s fees be charged as a disbursement?
In relation to the first issue, the terms of the Barrister’s Fee Agreement makes it clear that it is a conditional fee agreement where fees are not payable unless:
(a)the appellant succeeded (whether in full or in part) at a hearing; or
(b)the client settles the matter or discontinues the matter for a benefit; or
(c)if the appellant decided not to proceed with the matter or failed to provide instructions to proceed when there was reasonable advice that the client had reasonable prospects of success.
None of those situations arose here. The appellant did not succeed at a hearing. Following the termination by the respondent of his retainer, the appellant’s workers compensation claim was ultimately dismissed. She did not settle the matter or discontinue the matter for a benefit. She did not decide not to proceed in circumstances where she was advised that she had reasonable prospects of success.
Therefore, under the terms of the Barrister’s Fee Agreement no fees were payable. The respondent invited me to find that there was an implied term that would mean that barrister fees were payable. On the hearing of the appeal, the respondent said:
[RESPONDENT]: It is my invitation for this court to expand the meaning of the termination provision within that contract, on the basis that the appellant did not provide clear, proper, truthful and timely instructions in relation to the workers compensation matter.
[The barrister] would have, in my respectful opinion and submission, provided advice to the appellant in lines with the risks that in fact [the previous solicitor] had explained to her on an earlier occasion with due regard to proceeding forward with the matter, had [the barrister] been keenly aware of the circumstances that the appellant really was in.
HIS HONOUR: Okay, well I take it from that answer that there is nothing in these words that you say gives an entitlement to charge fees, but you are inviting me to read in an implied term that says, to the effect, if the client has not provided complete instructions, then I am entitled to charge fees - or what - or entitled to charge fees upon the termination of the agreement by my solicitor?
[RESPONDENT]: That is so, in essence that is what I am inviting this Court to do.
Such an implied term would not meet the requirements that it be so obvious that it goes without saying, nor would it be necessary to give business efficacy to the contract: BP Refinery (Westernport) Pty Limited v Shire of Hastings (1994) 180 CLR 266 at [40]. In my view the Barrister’s Fee Agreement did not contain such a term.
In circumstances where the terms of the agreement with the barrister imposes no liability on the solicitor and gives rise to no entitlement in the barrister to charge fees, in my view the respondent is not entitled under cl 5 of the agreement to recover them as disbursements from the appellant.
Does the late notice of the Barrister’s Fee Agreement preclude the recovery of barrister fees
The second issue is whether or not the fact that the terms on which counsel was to be retained and the manner in which he would charge were not provided to the appellant until the hearing date affects the recoverability of those fees.
The terms of the Solicitor’s Costs Agreement required that “Unless we have reasonable cause, we will seek your instructions and give you an estimate of counsel’s fees before we retain counsel.”
The evidence was just sufficient to find that instructions were given to retain counsel. His Honour found that there was reasonable cause for failing to give an estimate of counsel’s fees before he was retained, namely the desirability of not incurring barristers fees in case an offer of settlement was made at the last minute.
In my view, his Honour erred in finding that this was a reasonable cause for failing to give an estimate of fees. Even if counsel was not to be retained until the last minute that did not provide a reasonable basis for the solicitor not giving an estimate of the likely amount of counsel’s fees. That estimate was not contingent upon the retention of counsel or the entry into a fees agreement. It could readily have been done.
The Costs Disclosure Statement which was provided to the appellant at the same time as she entered into the Solicitor’s Costs Agreement provided in relation to the engagement of another law practice:
4.3 Engagement of another law practice
In certain circumstances, we may be required to engage, on your behalf, the services of another law practice to provide specialist advice or services, including, but not limited to, the advocacy services of Counsel, or the services of another solicitor in another State to act as our agent. We will consult you as to the terms of that law practice’s engagement and you may be made an offer to enter into a costs agreement directly with that law practice. Any law practice engaged by us will disclose costs in a similar manner and we will disclose those costs to you.
These obligations are different to and more favourable to the client than those in the Legal Profession Act which I will consider below. The respondent failed to comply with the terms of Solicitor’s Costs Agreement in failing to provide an estimate of counsel’s fees prior to retaining him and there was no reasonable cause not to do so. However, I am not satisfied that a breach of this term of the agreement precludes recovery of those fees if they were otherwise recoverable. In the circumstances of this case, no particular damage has been demonstrated to flow from that breach and the Legal Profession Act does not preclude recovery where there is a breach of terms of a costs agreement. That does not, however, mean that there may not be disciplinary consequences of such a breach.
The obligations for disclosure under the Legal Profession Act were somewhat different to those in the Solicitor’s Costs Agreement. Section 270 of the Act required that if a law practice intended to retain another law practice on behalf of the client, the first law practice must disclose to the client the details mentioned in ss 269(1)(a), (d) and (e) in relation to the other law practice in addition to any information required to be disclosed to the client under s 269. Section 271(2) provided that disclosure under s 270(1) must be made in writing before or as soon as practicable after the other law practice was retained. Section 272 provided a number of exceptions to the requirement for disclosure under, relevantly, s 270 but those exceptions have no application in the present case.
Section 277 identified the consequences of a failure to disclose. At the date of the respondent’s tax invoice it provided:
277 Effect of failure to disclose
(1)If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed, the client or associated third party payer (as the case may be) need not pay the legal costs unless they have been assessed under division 3.2.7.
Note Under s 302 (Costs of costs assessment), the costs of an assessment in these circumstances are generally payable by the law practice.
(2)A law practice that does not disclose to a client or an associated third party payer anything required by this division to be disclosed may not bring a proceeding against the client or associated third party payer (as the case may be) for the recovery of legal costs unless the costs have been assessed under division 3.2.7.
(3)If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed andthe client or associated third party payer has entered into a costs agreement with the law practice, the client or associated third party payer may also apply under section 288 (Setting aside costs agreements) for the costs agreement to be set aside.
(4)If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed, the amount of the costs may, on an assessment of the relevant legal costs, be reduced by an amount considered by the Supreme Court to be proportionate to the seriousness of the failure to disclose.
(5)If a law practice retains another law practice on behalf of a client and the first law practice fails to disclose something to the client only because the retained law practice failed to disclose relevant information to the first law practice as required by section 270(2) (Disclosure if another law practice is to be retained), subsections (1) to (4) –
(a)do not apply to the legal costs owing to the first law practice on account of legal services provided by it, to the extent that the non-disclosure by the first law practice was caused by the failure of the retained law practice to disclose the relevant information; and
(b)do apply to the legal costs owing to the retained law practice;
(6)In a matter involving both a client and an associated third party payer, if disclosure has been made to 1 of them but not the other—
(a)subsection (1) does not affect the liability of the person to whom disclosure was made to pay the legal costs; and
(b)subsection (2) does not prevent proceedings being maintained against the person to whom the disclosure was made for the recovery of the legal costs.
(7)Failure by a law practice to comply with this division can be unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner or Australian-registered foreign lawyer involved in the failure.
In the present case no disclosure was provided until after the barrister had been retained. It is not possible to find that disclosure was not as soon as practicable after he was retained because it is not possible to identify precisely when he was retained and the concept of practicability involves a variety of pragmatic considerations.
The disclosure that was provided by the barrister and then repeated to the appellant did comply with the requirement of s 269(1)(a) but, contrary to s 269(1)(d) it did not provide an estimate of the total legal costs or range of estimates of the total legal costs and an explanation of the major variables that would affect the working out of the costs. It did provide details of the intervals at which the client would be billed in accordance with s 269(1)(e).
Where the failure to make disclosure by the respondent arises from a failure on the part of another law practice, that precludes recovery of only the second law practice’s fees: s 277(5). In the present case that means that even if they were otherwise payable, the barrister’s fees were not recoverable but the respondent would not be precluded from recovering the balance of his costs.
Did the Magistrate err in failing to give weight to the statement of the respondent in paragraph 2 of his defence? (Ground 7)
In paragraph 1.2 of the respondent’s statement of claim he alleged that the appellant had retained another named solicitor in relation to a workers compensation claim for a psychological injury incurred with her employer which caused her full incapacity and disability. In paragraph 2 of the appellant’s defence she indicates that she did not agree that her psychological injury caused her “full disability” she then sets out in some detail the nature and extent of her disability. In his reply to her defence at paragraph 2 of the respondent pleaded:
2.The plaintiff agrees that in relation to paragraph 2 of the defence, the defendant suffered full incapacity and pleads that it is inconsistent for the defendant to plead that she was not disabled as a result of her injury and then to make application for, and to be granted, a disability support pension. The plaintiff pleads further that the defendant did not at any time disclose any further injury or illness prior to or at the hearing of her workers compensation matter.
The commentary in paragraph 2 of the reply was unnecessary and contained the assumption that the only basis for the grant of a disability pension was the injury the subject of the workers compensation proceedings. However, in my view the matters pleaded in paragraph 2 of the defence and paragraph 2 of the reply were not matters of significance that his Honour needed to determine in order to decide the case. Therefore he did not err in failing to give weight to the matters pleaded by the respondent in paragraph 2 of his reply.
Do the contentions of the appellant in relation to the Court Book provide a basis for setting aside the decision? (Grounds 8 and 9)
Early on in the course of the proceedings before his Honour the appellant made a complaint that she had not been served with the Court Book that had been provided to his Honour. A Court Book is prepared and filed pursuant to rule 1312 of the Court Procedures Rules 2006. There was a dispute about whether or not a copy of the Court Book had been served on the appellant. There is no requirement in rule 1312 that the Court Book be served. It is, however, generally appropriate for it to be served because it will often be a useful reference document in the conduct of the proceedings.
While it is understandable that an unrepresented party, who did not understand that the individual documents in the Court Book were already in her possession, might be perturbed at the fact that the magistrate had a document that she did not, the magistrate did not in fact have any document that was not available to the appellant. The individual documents making up the Court Book were in fact tendered without objection before his Honour. The documents tendered were documents that had been annexed to either the appellant’s defence or the respondent’s reply. They were documents which the appellant already had in her possession. Therefore, although a matter of legitimate concern to the appellant, the possibility that she did not have a copy of the Court Book was not a matter of significance in the conduct of the hearing. Any failure to serve the Court Book or any non-receipt of the Court Book does not provide a basis for setting aside the decision.
Conclusion
In summary, the respondent was not entitled to recover his professional fees or the fees claimed by the barrister. He was, however, entitled to recover his disbursements. Those were an amount of $6,165.08. Interest was claimed from 31 March 2011, approximately one month after the bill was sent. Under the Solicitor’s Costs Agreement interest was chargeable at the same rate as under the Court Procedures Rules 2006 which from 31 March 2011 is $1536.87.
In relation to costs of the proceedings before the magistrate, the respondent did not claim his own professional fees in conducting the case but did seek payment of filing fees and disbursements. It appears that some documentation was provided to his Honour in relation to the nature and quantum of these amounts. In my view both because of the approach taken before the magistrate and because of the small amount recovered, the appropriate approach to costs before the magistrate is to award costs to the respondent but limit those costs to filing fees, other disbursements and expenses. I will consider making a costs order in a specified amount under r 1720(3)(c).
In relation to the costs of the proceedings in this Court, although the appellant did not succeed on all issues, she was successful in substantially reducing the judgment against her. In those circumstances she should have her costs which, having regard to the fact that she was unrepresented, are likely to be limited to filing fees and other disbursements. Once again, I will consider fixing those costs under r 1720(3)(c).
Orders
The orders of the Court are:
1.The orders of the Magistrates Court made on 6 December 2013 are set aside and in their place the following order is made: “1. Judgment be entered for the plaintiff in the sum of $7701.95.”
2.The matter is listed at 10:00am on 25 July 2014 so that the parties may be heard as to the form of the orders to be made in relation to the costs of the proceedings in the Magistrates Court and in this Court.
| I certify that the preceding one-hundred-and-eighteen [118] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Master Mossop. Associate: Date: |
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