Williamson and Williamson v Pay

Case [2020] QSC 324

SUPREME COURT OF QUEENSLAND

CITATION:

Williamson & Williamson v Pay  [2020] QSC 324

PARTIES:

KARA WILLIAMSON

(first applicant)

LEAH WILLIAMSON

(second applicant)

v
RONALD RAYMOND PAY

(respondent)

FILE NO/S:

BS No 14093 of 2018

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

27 October 2020

DELIVERED AT:

Brisbane

HEARING DATE:

8 September 2020

JUDGE:

Williams J

ORDER:

1.   The application is dismissed.

CATCHWORDS:

PROFESSIONS AND TRADES – LAWYERS – LIENS – LIENS ON FUNDS RECOVERED – PARTICULAR CASES – where, in substantive proceedings, the applicant’s costs were awarded on an indemnity basis to be paid out by the estate (‘September Costs Order’) – where counsel and the solicitor for the applicants fell into dispute regarding payment of fees owed to counsel – where counsel obtained default judgment against the solicitor in the amount of $120,474.32 – where counsel applied for a declaration by the Court that counsel had a lien over the funds the subject of the September Costs Order in the amount of $206,606.94, to be paid by the estate – where the amount included the costs of pursuing the application for such a declaration – whether the Court recognises a “barrister’s lien” – whether it is appropriate in the circumstances to do so

Legal Profession Act 2007 (Qld), s 308
Trusts Act 1973, s 96

Uniform Civil Procedure Rules 1999, r 687

Estate of Fuld (deceased) (No 4) [1968] P 727, cited
Firth v Centrelink (2002) 55 NSWLR 451; [2002] NSWSC 564, cited
Glasgow v ELS Law Ltd & Others [2018] 1 WLR 1564; [2017] EWHC 3004 (Ch), considered
Hewett v Court (1983) 149 CLR 639; [1983] HCA 7, considered
Hudson v Sigalla (No. 3) [2016] FCCA 2140, considered
Mercerv Graves (1872) LR 7 QB 499, cited
Simpson v Rowe [2011] VSC 149, considered
Trukulja v Efron [2014] VSCA 76, considered

COUNSEL:

NH Ferrett QC for the applicant (Mr Laws)
CA Brewer for Australian Unity Trustees Limited as the Administrator of the Estate

SOLICITORS:

Milner Lawyers for the applicant (Mr Laws)
McInnes Wilson Lawyers for Australian Unity Trustees Limited as the Administrator of the Estate

IB Thompson (solicitor for IBT Law) on his own behalf

  1. This is an application by Mr David Laws who was counsel acting on behalf of the first and second applicants in respect of the substantive application.

  2. Pursuant to an interlocutory application dated 21 July 2020 Mr Laws sought the following relief:

    “1. Order 4 of the orders of Boddice J dated 26 September 2019 is varied to read as follows:

    “The Applicant’s costs of these proceedings be paid from the estate of Meryl Nola Williamson, deceased, in the following manner:

    (a)the amount of $118,343.37 to David Laws of counsel in satisfaction as between the estate and the applicants of any liability for costs in respect of fees charged by Mr Laws;

    (b)     otherwise to be assessed on the indemnity basis.”

    2. Order 3 of the orders…

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AGLC
Williamson and Williamson v Pay [2020] QSC 324
Case
[2020] QSC 324
Decision Date

CaseChat Overview and Summary

The case of Williamson and Williamson v Pay involved a dispute between Mr Laws, a barrister, and Mr Ian Thompson, a solicitor, regarding the payment of fees owed to Mr Laws for his work on a substantive proceeding. Mr Laws had not been paid his fees and, after a failed attempt to resolve the dispute, obtained a default judgment in the Magistrates Court against Mr Thompson. Mr Laws then applied to the Supreme Court for a declaration that he had a lien over the funds recovered in the substantive proceeding to secure payment of his fees and the costs of the application. The primary issue before the court was whether it should recognise a "barrister's lien" and whether it was appropriate to do so in these circumstances. The court considered the principles surrounding a solicitor's lien, the nature of the equitable lien, and the specific circumstances of the case. The court ultimately decided that the application should be dismissed, noting that Mr Thompson was already liable for Mr Laws' fees and that there was no appreciable risk of the client depriving Mr Laws of his costs. The court also found that the costs claimed were unreasonable and disproportionate to the amount sought to be recovered.

The court's decision was based on the particular circumstances of the case, including the existence of a Magistrates Court judgment against Mr Thompson, the lack of evidence of unconscionable conduct by the client, and the unreasonableness of the costs claimed. The court did not need to conclusively determine whether a barrister's lien was available in general, but noted that if such a lien existed, it might be limited to situations where counsel received a direct brief from a client or where a solicitor was not directly liable for counsel's fees. The court also found that Mr Laws did not have standing to bring the application to fix the costs, as the costs awarded belonged to the clients and neither Mr Laws nor Mr Thompson were acting on their behalf in this application.

Orders

Orders of the court

1. The application is dismissed.

Background

Background to the litigation

At the hearing, counsel on behalf of Mr Laws sought orders which are substantially different to the relief as identified in the interlocutory application. The terms of the draft order provided to the Court are as follows:“The order of the Court is that:1.The amount of the costs order made in paragraph 4 of the orders of Boddice J dated 26 September 2020 (“the September Costs Order”) is fixed in the amount of $230,787.74 (“September Costs Amount”).2.Ian Thompson is to pay the costs of David Laws of the latter’s application filed 21 July 2020, fixed in the amount of $82,404.00 (“Laws’ Costs”).3.It is declared that David Laws of counsel has a lien over the September Costs Order securing payment of:(a)$120,474.32, being the total amount of the judgment obtained by him against Ian Thompson in the Magistrates Court of Queensland, Brisbane Registry, on 20 March 2020 in proceeding number M381/2020 in respect of fees charged by David Laws in respect of his acting as counsel in this proceeding;(b)Interest on that amount from 20 March 2020 until the date of this order in the amount of $3,728.62; and (c)Laws’ Costs.4.The administrator of the estate of the late Meryl Nola Williamson is to pay the September Costs Amount:(a) as to the amount of $206,606.94 to David Laws;(b)as to the remainder to Ian Thompson on trust for the applicants.5.It is further declared that upon such payments being made the administrators of the estate of the late Meryl Nola Williamson will have satisfied the September Costs Order.”Background This application arises out of a dispute between Mr Laws of counsel and Mr Ian Thompson of IBT Law, who acted for the applicants in respect of the substantive application which was heard by Justice Boddice. On 26 September 2019, Justice Boddice ordered that the applicants’ costs be paid out of the estate to be assessed on the indemnity basis. Mr Laws has not been paid his fees in respect of the work done and invoiced in relation to the application. The dispute between Mr Laws and Mr Thompson has escalated to the point that Mr Laws commenced Magistrates Court proceedings against Mr Thompson in respect of his fees and obtained default judgment. The default judgment was obtained on 20 March 2020 and as at the date of the hearing had still not been paid. The amount of the Magistrates Court judgment including interest and costs is $120,474.32.Basis of relief claimed Mr Laws seeks the orders set out in the draft order on the basis of an equitable interest in the costs order. Counsel on behalf of Mr Laws submits that a solicitor’s lien is not limited to the solicitor-client relationship but, on general principles, it would be applicable to a barrister. It is also submitted that it is not necessary to have a contractual relationship as a condition precedent to the existence of the lien. Reliance was also placed on the analogous position of a liquidator who has an equitable interest over property of the company. Mr Laws claims the amount of the Magistrates Court judgment plus interest and the costs of enforcing the lien. That is, an amount of $206,606.94 being the original Magistrates Court judgment amount of $120,474.32, plus interest on that amount since 20 March 2020 in the amount of $3,728.62, plus the costs of the application in the amount of $82,404.00.

Evidence

Evidence Before The Court

In relation to the costs sought of this application in the amount of $82,404.00, reliance is placed on the power of the Court to fix costs under r 687(2) of the Uniform Civil Procedure Rules 1999 (Qld) (‘UCPR’) as the basis for the claim for costs on an indemnity basis in the amount of $82,404.00.Affidavit evidence The affidavit of Ms Milner sworn on 21 July 2020 (‘First Milner Affidavit’) exhibits correspondence between Mr Laws and Mr Thompson in relation to the costs issue. Included in the exhibits is a copy of the retainer agreement between Mr Laws and Mr Thompson dated 13 August 2018. The letter is addressed to Mr Thompson of IBT Law and refers to the letter constituting disclosure under s 308 of the Legal Profession Act 2007 (Qld) and an offer to “enter into a costs agreement with you”. Further, at page 4 of the retainer letter, it states:“Your liability for my fees under this agreement is personal. It is not dependent upon you/ your firm being put in funds by the late client. You unequivocally accept personal liability and responsibility for the whole of the Fees set out in the face of each Memorandum of Fees (and in the event of protest or formal assessment, for such of those fees as shall be found to be proper) issued under this Cost Disclosure.” There are also references in the letter to the “instructor” being a “sophisticated client”. This is consistent with the “instructor” being Mr Thompson, as opposed to the individual applicants. Exhibited to the affidavit are also copies of the various invoices issued in relation to the work undertaken by Mr Laws. The invoices are addressed to Mr Thompson of IBT Law. Consistent with the terms of the retainer, a letter dated 20 January 2020 from Milner Lawyers to Mr Thompson[1] makes a demand for the outstanding fees addressed to Mr Thompson.[1]Exhibited at page 95 of the First Milner Affidavit. Further, when Magistrates Court proceedings were commenced by Mr Laws against Mr Thompson trading as IBT Law, the claim and statement of claim[2] is pleaded on the basis that the liability for the unpaid fees is personally with Mr Thompson. [2]Exhibited at page 97 to 107 of the First Milner Affidavit. The statement of claim sets out the relevant provisions of the retainer agreement including those which have been referred to earlier in these reasons. The Magistrates Court proceedings claim the amount of $115,366.50 as a debt or liquidated amount due and owing by the Mr Thompson to Mr Laws pursuant to the retainer agreement together with interest in the sum of $1,771.67 as at 31 December 2019 and accruing per day. The statement of claim also claims the amount of $1,824.10 for the costs of issuing the claim and statement of claim, being the filing fee of $402.10 and an amount for instructions to sue and service of $1,422. Following further correspondence and attempts to resolve the costs claim, default judgment was entered on 20 March 2020 in the amount of $120,474.32, including $2,906.07 for interest to that day and the sum of $2,201.75 for costs.[3][3]See page 121 of the exhibits to the First Milner Affidavit.

Decision

Reasons for decision

GE Dal Pont in his book “Law of Costs”[22] considers the authorities in respect of what is commonly described as a “solicitor’s lien”; and which he describes as a “particular lien”. Prof. Dal Pont helpfully summarises the nature of the “particular lien” as follows:“27.3Instead of being possessory ‒ such as the retaining lien, which entitles a solicitor to retain the client’s property for the purpose of securing an entitlement to fees[23] ‒ the particular lien is a solicitor’s claim or right to ‘ask for the intervention of the court for his protection, when, having obtained judgment for his client, he finds there is a probability of the client depriving him of his costs’.[24] This reference to ‘probability’ does not mean that ‘this has to be shown more probable than not’, but as requiring no more than proof of a ‘significant’ or ‘appreciable’ risk. [25] In Johns v Cassel,[26] for example, that the client would not admit that anything was due to the solicitor, would not give an undertaking to pay the solicitor and had no other significant assets from which to satisfy the solicitor’s demand, was sufficient, according to Hodgson J, to substantiate ‘an appreciable risk’. Conversely, in Doyles Construction Lawyers v D’Jamirze, where the client paid into court the sum in dispute, Michael Grove J refused a lien, reasoning as follows:[27]In the present case the money is, as a result of payment into Court, under the control of the Court. It is true that payment in was rejected until there was litigation on foot. However, on the very day of receipt by the defendants’ new solicitors of the settlement money the plaintiff was invited to specify where it was acceptable to it for the money to be held … In my view, the intervention of the Court needs to be attracted by demonstration of a requirement for protection or, put another way, an appreciable risk that the plaintiff may be unable to recover his costs from the settlement monies. There needs to be genuine utility (and dispute, other than simply whether or not the plaintiff’s contention can be endorsed) in order to attract the discretionary remedy of declaratory relief.27.4To obtain the benefit of the particular lien, the solicitor must make an interlocutory application, in the proceedings in which the client’s monetary entitlements arise, for a declaration both of the existence of the lien and for ancillary orders to facilitate the protection of the moneys its subject.[28] This is what is meant when it is said that, unlike the retaining lien, the particular lien can be ‘actively enforced’.[29] No order for payment of unpaid costs direct to the solicitor will ensue unless there is agreement as to their quantum. Lacking such an agreement, an order that moneys representing the value of the lien be paid into court will be made pending the ascertainment of quantum by way of taxation or assessment.[30] Accordingly, the lack of a formal costs agreement does not oust the availability of the particular lien.[31]” (emphasis added)[22]4th Edition 2018.[23]As to the retaining lien, see Ch 26.[24]Mercer v Graves (1872) LR 7 QB 499 at 503 per Cockburn CJ. See also Rutherford v Powell (1878) 4 VLR (L) 384 at 387 per Stawell CJ; Re Suttor (1890) 11 LR (NSW) L 401 at 405 per Darley CJ; Mills v R (1907) 9 WALR 167 at 169 per Burnside J; Sewell v Hampel (1910) 13 WAR (L) 44 at 46 per Parker CJ (FC); Puddephatt v Leith (No 2) [1916] 2 Ch 168 at 176-7 per Younger J; Ex parte Patience (1940) 40 SR (NSW) 96 at 100 per Jordan CJ; North West Construction Co Pty Ltd (in liq) v Marian [1965] WAR 205 at 212 per Nevile J; Re a Barrister and Solicitor (1979) 40 FLR 26 at 39‒40 (FC(ACT)); Johns v Cassel (1993) FLC ¶92‒364 at 79,819; BC9301999 per Hodgson J (SC(NSW)).[25]Ex parte Patience (1940) 40 SR (NSW) 96 at 108 per Jordan CJ; Johns v Cassel (1993) FLC ¶92-364 at 79,818‒9; BC9301999 per Hodgson J (SC(NSW)); Clifford Harris & Co v Solland International Ltd [2005] 2 All ER 334; [2005] EWHC 141 (Ch) at [23] per Christopher Nugee QC.[26](1993) FLC ¶92-364 at 79,819; BC9301999 (SC(NSW)).[27][2004] NSWSC 507; BC200403516 at [17]‒[18].[28]For this purpose, it has been suggested that the solicitor should provide the court with a detailed affidavit showing the nature and period of the retainer, a brief description of the work undertaking [sic] on the (former) client’s behalf, the costs rendered to the (former) client, the amount of unpaid costs, and evidence linking the work undertaken to the result of the litigation: see D H Katter , ‘A Solicitor’s Enforcement Right over Settlement Funds’ (August 2002) 22 Proctor 19 at 22.[29]Re Meter Cabs Ltd [1911] 2 Ch 557 at 559 per Swinfen Eady J; Re a Barrister and Solicitor (1979) 40 FLR 26 at 39‒40 (FC(ACT)).[30]M Graham, ‘Solicitor’s Equitable Charges’ (November 1997) 17 Proctor 17 at 18‒19.[31]Lashansky v Legal Practice Board [2006] WASC 247; BC200609172 at [72] ‒[73] per Templeman J.

Ratio Decidendi

Legal Principle Established

Quick on Costs refers to the decision of Campbell J in Firth v Centrelink[47] in support of the principle that equitable liens carry interest and also the costs of proceedings to enforce a judgment. [47](2002) 55 NSWLR 451; [2002] NSWSC 564 at [113]-[120].Consideration Following consideration of the above principles, in the particular circumstances of this case I consider that the application should be dismissed. In arriving at this decision I have taken into account the following particular circumstances:(a)Mr Thompson is liable for the costs of Mr Laws and this is reflected in the Magistrates Court judgment that has already been obtained by Mr Laws. Mr Laws has the usual enforcement options available to him to enforce the judgment against Mr Thompson. (b)A fundamental feature of the “equitable lien” (to use a neutral term) is that a court may intervene when there is a “probability of the client depriving him of his costs”. [48]Here there is no evidence that this is a significant or appreciable risk. Nor is there any evidence of “unconscionable conduct” by the client. The relevant “client” is not Mr Thompson, but rather Kara and Leah Williamson.(c)Another fundamental feature of the “equitable lien” is that the relief is discretionary and is only to “the extent necessary”.[49] Here, the administrator of the estate has obtained orders from the Court that will facilitate the payment of the amount of Mr Laws’ fees contained in the short form assessment of Mr Malcomson directly to Mr Laws. To the extent of any difference between that amount and the Magistrates’ Court default judgment amount, Mr Laws has recourse directly against Mr Thompson.(d)As a result of the above matters it is not necessary to conclusively determine whether a solicitor’s lien is available in respect of a barrister. However, to the extent that there is some support in the authorities for a barrister’s lien, it appears it may be limited to where counsel receives a direct brief from a client or where a solicitor was not directly liable for counsel’s fees. This is to be contrasted to the current circumstance, where the retainer agreement expressly makes the solicitor directly liable for counsel’s fees and counsel has obtained a court judgment on that basis.(e)The applicant’s proposed orders seek to have the Court fix the costs in the amount of the short form assessment. The costs awarded under the costs order belong to the client i.e. Kara and Leah Williamson. Neither Mr Laws nor Mr Thompson were acting on behalf of Kara and Leah Williamson in respect of this application. It is not apparent on what basis Mr Laws has in effect standing to bring such an application. Rule 687 UCPR provides that the court may order a party to pay to another party an amount fixed by the court. The application to fix costs is made by the party – or on behalf of the party. Mr Laws’ application is on his own behalf: as counsel who previously acted on behalf of a party.(f)Even if the amount of Mr Laws’ invoices could be the subject of an equitable charge for the costs of work performed on the client’s behalf in obtaining the money, the costs claimed of $82,404.00 are unreasonable and the full amount would not be recoverable as costs of an application to “enforce” the equitable lien. Any amount in respect of the costs of the application would be limited to the reasonable costs of making such an application. The costs claimed are out of all proportion to the amount sought to be recovered and include items that relate to general debt recovery steps in respect of the costs dispute between Mr Laws and Mr Thompson.[48]Mercer v Graves (1872) LR 7 QB 499 per Cockburn CJ at 503. [49]Estate of Fuld (deceased) (No 4) [1968] P 727 per Scarman J at 737.