Alexiou v Alexandra White and ors t/as HWL Ebsworth Lawyers

Background

1. In 2014 the plaintiff was employed by ANZ. He was one of a number of employees who received a summons to appear at examinations in connection with an ASIC investigation concerning manipulation by ANZ of the bank bill swap rate.
2. In November 2014 the plaintiff retained HWLE to assist him in relation to the ASIC examination and other related matters.
3. On 18 November 2014 the plaintiff entered into a standard costs agreement with HWLE.
4. The work that HWLE agreed to do was described as: "advise and represent you in relation to the ASIC Examination, any further ASIC Examination and in relation to meeting with the Australia and New Zealand Banking Group Limited (ANZ) concerning the subject matter of ASIC's Investigation. ANZ has agreed to pay our reasonable costs for acting for you (the Work)."
5. As specified in the costs agreement, although the plaintiff entered into the costs agreement with HWLE, ANZ agreed to pay his costs.
6. HWLE acted for the plaintiff in respect of the matters arising out of the ASIC investigation. As submitted by the plaintiff, ASIC ultimately brought proceedings against ANZ but no findings of misconduct were made against the plaintiff.
7. In September 2015, ANZ terminated the plaintiff's employment. The plaintiff is pursuing proceedings against ANZ in the Federal Court arising out of that termination.
8. ANZ initially sought to be heard as an interested party but consent orders were filed at the commencement of the hearing finalising any issues which may have arisen between ANZ and the plaintiff in these proceedings.
9. HWLE acted for the plaintiff from November 2014 to August 2016. All bills of costs were sent by HWLE to ANZ. The plaintiff did not receive copies of the bills.
10. On 31 July 2019 the plaintiff requested that HWLE release its file to his new solicitors, Levitt Robinson, being the solicitors acting for him in these proceedings. Suffice to say, not all of the documents sought by the plaintiff were produced. Initially, HWLE declined to provide copies of the itemised bills but, subsequent to the commencement of these proceedings, copies were provided to the plaintiff.
11. There has been ongoing correspondence between the parties in respect of the production of all of the documents sought under para 1(b) of the summons.
12. I do not know why the plaintiff seeks the file notes, other than that his current solicitors seek them as part of advising the plaintiff in the Federal Court proceedings. I do not know why HWLE does not wish to provide them to the plaintiff. It may be pursuing a point of principle.
13. It hardly matters for the purposes of my determination. The rather simple point is that the plaintiff says that he is entitled to the file notes from HWLE, his former solicitors. HWLE says that as a matter of law he is not so entitled.
14. I emphasise that the plaintiff is not seeking every file note held on the file. He is only seeking a particular type of file note as described in the summons.

The principles to be applied

1. Both parties referred to the decision of the New South Wales Court of Appeal in Wentworth v De Montfort and Others [1] . Reference was also made to the recent decision of Parker J in Touma v Maroulis [2] .
2. There is no suggestion in these proceedings that HWLE did not act appropriately for the plaintiff or that it failed to comply with any of the regulatory or procedural obligations imposed upon a solicitor.
3. The single issue for determination is whether the file notes must be delivered up.
4. There was general agreement as to the principles to be applied. They are conveniently summarised and discussed in Wentworth.
5. The appellant (Ms Wentworth) sought delivery up of documents from her former solicitors, then known as Sly & Russell. There were other orders including orders for the provision of bills of costs in taxable form. The case before the Court of Appeal was merely another case in a long running saga between Ms Wentworth and her former husband.
6. One of the issues that the Court was required to consider was the entitlement of a client to documents held by her former solicitors.
7. As observed by the Court [3] , "if a solicitor is acting only as agent for a client who is his principal in the doing of some act, the ordinary rules of agency apply to him, and documents brought into existence or received by him when so acting belong to the client."
8. In Wentworth [4] Hope JA makes reference to the text of Cordery on Solicitors, 8th ed, (1988), in which a number of principles are propounded.
9. In Cordery, the author says that documents which come into existence during the course of a retainer fall into four broad categories as follows: 1. documents prepared by the solicitor for the benefit of the client and which may be said to have been paid for by the client, belong to the client; 2. documents prepared by the solicitor for his own benefit or protection the preparation of which is not regarded as an item chargeable against the client, belong to the solicitor; 3. documents sent by the client to the solicitor during the course of the retainer, the property in which was intended at the date of despatch to pass from the client to the solicitor, belong to the solicitor; and 4. documents prepared by a third party during the course of the retainer and sent to the solicitor (other than at the solicitor's expense), belong to the client [5] .
10. The plaintiff submits that the file notes sought from HWLE fall within category 1. HWLE submits that the file notes fall within category 2.
11. Again, as observed in Wentworth, notes made by a solicitor of conversations with persons other than his client but relating to the client's affairs may fall into an almost indefinite number of classes [6] .
12. Although the author of the learned text suggests that documents such as copies of letters written to the client, entries of attendances, tape recordings of conversations and proofs of evidence, inter-office memoranda, entries in diaries, time sheets, computerised records, office journals and books of accounts belong to the solicitor, that view did not find favour completely with the Court in Wentworth.
13. In particular, Hope JA observed [7] : "As I have indicated Cordery suggests that both that 'entries of attendance' and 'proofs of evidence' are the property of the solicitor. No authority is cited for these suggestions, and I would have thought that they both fell squarely within the first of the four categories described by Cordery and that they each belonged to the client. The 'Guide to the Professional Conduct of Solicitors' issued by the (English) Council of the Law Society (1974) states (at 39) that a memorandum of a telephone conversation with a third party made by a solicitor is the property of the client, and is accordingly to be handed over on a change of solicitors. On the other hand, a solicitor may well make a note of a telephone conversation which he has with a person relating to the work he is doing for a client, but the conversation may be solely for the benefit of the solicitor and not be chargeable to the client."
14. As his Honour went on to say, each case involves questions of degree and a consideration of the predominant purpose for which the document was created.
15. The issue was most recently considered by Parker J in Touma. Those proceedings arose out of personal injury proceedings brought by the plaintiff in that case against the Maronite Church. The plaintiff terminated his instructions to his former solicitors and sought delivery up of the file. His Honour summarised the proper approach to such an issue as follows [8] : "13. First, Mr Maroulis' only obligation was to hand over the 'client's documents'. Not every document which comes into the hands of a solicitor, for the purpose of conducting litigation on the client's behalf, is necessarily a document which belongs to the client. 14. The solicitor is the client's agent in conducting litigation. Accordingly, documents generated in the course of the solicitor's dealings with the Court, with other parties, and with others who are retained or communicated with by the solicitor as agent for the client, are held by the solicitor as agent and belong to the client. But documents which are prepared for the solicitor's own internal purposes (including copies of correspondence between the solicitor and the client) are not generally documents belonging to the client and are not held by the solicitor as agent. It will, of course, be otherwise if the solicitor has charged the client for the making of such copy documents. See generally Wentworth v De Montfort (1988) 15 NSWLR 348 at 355-356."
16. Both parties maintain that the principles and observations set out in both cases support their positions.

The evidence

1. In order to determine the issues it is necessary to have regard to the nature of the documents sought and the evidence about those documents. As I have said, HWLE resisted production on the basis that the file notes were not prepared for the benefit of the client and that the client was not charged for such work.
2. The plaintiff relied on an affidavit from his solicitor, Mike A Gutzinger sworn 25 February 2021, two affidavits sworn on 26 February 2021 and an affidavit sworn on 23 March 2021. Mr Gutzinger was not required for cross-examination. The purpose of his affidavits was really to annex documents and provide some explanation as to the background of the dispute.
3. HWLE relied on affidavits of its solicitor, Neil Martin Wallman, affirmed on 8 March, 11 March and 13 April 2021. Mr Wallman was cross-examined.
4. Mr Wallman is a partner at HWLE, although he did not assist in the provision of services to the plaintiff back in 2014. As revealed in the bills of costs, those services were generally provided by another partner, Robert Schneider, and an employed solicitor, Alexandra White (who is now a partner at HWLE).
5. Neither of those solicitors gave evidence, although exhibited to Mr Wallman's affidavit of 8 March 2021 is correspondence from Ms White in which she expresses her views as to the general purpose and practice of HWLE in preparing file notes.
6. Mr Wallman's evidence was really just a recitation of the facts as he understood them, general statements relating to the way in which the work might be performed and the way in which bills are generated and an expression of his own views or summary of the documents.
7. For example, in para 49 of his affidavit affirmed on 8 March 2021 he says: "From a review of the Itemised Schedules, I can see that: (a) HWLE has not charged ANZ to prepare an(y) of its file note(s); and (b) HWLE charged ANZ to prepare notes and/or transcripts of its file notes of various meetings for the benefit of Mr Alexiou."
8. Mr Wallman was cross-examined on the proposition that HWLE did not charge in respect of the preparation of the file notes sought. Mr Wallman was directed to items in the invoices. For example, on 5 December 2014, both Ms White and Mr Schneider recorded and charged for their time (at 3.3 hours each) for attendance at a meeting at the ANZ with the bank's general counsel and the barrister retained on behalf of the plaintiff, Mr Silver.
9. It was put to Mr Wallman that, as the file notes sought were made at the meeting, for which both Mr Schneider and Ms White charged their attendance, then contrary to his view, HWLE did charge for the preparation of the file notes.
10. Mr Wallman maintained that it was the attendance at the meeting and not the preparation of the file notes for which both Mr Schneider and Ms White had charged. There is no reference to any charge for making any file notes.
11. He did not concede that HWLE had charged for the making of the file notes in respect of that meeting. I hasten to add that there is no evidence that the file notes in relation to this meeting were made at some later stage which is not recorded in the bill of costs. I infer that file notes of meetings and conversations were made during the time spent and charged for as attendance at the meetings or telephone conversations.
12. Although Mr Vincent rather faintly submitted that the onus was on the plaintiff to prove that HWLE had charged for the file notes, it must be that if HWLE wished to assert that it had made any file notes at some different time which was not the subject of any time recording for the purposes of translation into a bill, it could have adduced that evidence. As has often been stated [9] all evidence is to be weighed according to the proof which was in the power of a party to have produced and in the power of the other party to have contradicted.

Determination

1. The plaintiff emphasises that the documents sought by para 1(b) of the summons do not include all file notes which might be on the HWLE file. It accepts that there may be some file notes prepared by HWLE which could not be the subject of an order for production to the plaintiff. The plaintiff does not put its case so highly that a solicitor must deliver up its whole file on request by a former client.
2. However, the plaintiff emphasises that the only file notes he seeks are those, as described in the summons, recording or referring to communications by any person with: 1. any employee or representative of ANZ; 2. any partner or employee of Clayton Utz (who acted for ANZ); 3. counsel retained by HWLE on behalf of the plaintiff; and 4. any representative of ASIC.
3. I understand that HWLE may have provided some transcripts of meetings but the plaintiff continues to seek the file notes. Again, provision of transcripts is not an answer to a request for production if the documents fall within a category which should be produced.
4. In my view, the plaintiff is entitled to the file notes.
5. I do not agree with HWLE's submission at para [12] of their submissions that the evidence establishes that the file notes were prepared for HWLE for internal purposes only and were not charged to the plaintiff. The evidence does not establish that at all.
6. In para 49 of his 8 March affidavit (to which I have already referred), Mr Wallman only refers to his view about the charges. He says nothing about the purposes of making the file notes.
7. General statements about HWLE's purposes and practices in his affidavit of 11 March 2021 were the subject of objection and not pressed on behalf of HWLE.
8. Para 10 of his affidavit of 11 March 2021, was admitted without objection as follows: "10. It is also my experience at HWLE, that: (a) …. (b) The Firm, by its lawyers and Partners, does not charge for the creation and preparation of file notes and as such there is no code on the billing system at HWLE to record the time taken by a person in creating a file note so that the client could not be charged for the creation and preparation of file notes."
9. Whilst that may be his general view, on the evidence before me I am unable to accept the general proposition that file notes made at meetings with solicitors representing the ANZ or with ASIC or even counsel retained on behalf of the plaintiff or file notes of conversations with representatives of those entities would have only been made for the internal purposes and protection of the solicitors and not the client.
10. The evidence does not disclose why it was necessary for more than one solicitor to attend the meetings. Experience might suggest that in circumstances in which more than one solicitor from a law firm attends meetings or sits in on telephone conversations, the more junior solicitor might be there primarily to make notes.
11. The proposition that he or she is there making notes only for the benefit of the solicitors as if to protect the solicitors or only in the solicitors' own interests rather than the client's interests is somewhat difficult to accept, absent direct evidence.
12. This is particularly so when the attendance of both solicitors at the meetings was charged to the client's account. By way of example at the meeting of 5 December 2014, both solicitors charged in full for their attendance at the meeting.
13. HWLE could have adduced evidence from either solicitor who attended the meetings or conversations as to their purpose in preparing any file notes. HWLE could have adduced evidence from Ms White that her purpose in making notes at the meetings was only to protect HWLE's interests and not for the benefit of the plaintiff. Evidence could have been adduced that when making notes at a conference with counsel (if such notes exist) she was not doing so for the benefit of the client.
14. I would not take her general statement in correspondence about this dispute as establishing why file notes were taken at a particular meeting or during a particular conversation.
15. It is hardly necessary that I list all of the uses to which such file notes might be put. The purpose of making contemporaneous file notes at meetings with third parties may include so as to later confirm statements made in the meeting or conversation by way of follow-up letter or email or subsequent written request for clarification of matters raised in the meeting. The purpose of making notes at a conference with counsel may be to record counsel's view about the matter. I do not take anything said in either Wentworth or Touma as suggesting that such notes would ordinarily be taken for the benefit of the solicitors.
16. I am not satisfied on the evidence before me that these file notes were prepared only for HWLE's own internal purposes or are of a type that would only fall within category 2 as referred to in Wentworth being documents prepared by the solicitor for his or her own benefit or protection.
17. Further, whilst Mr Vincent frankly acknowledged there is a risk of engaging in semantics when looking at what may have been the subject of charges (and endeavoured not to do so), in reality, the cross-examination of Mr Wallman tended to indicate that the idea that HWLE had not charged for the file notes was more technical than substantive or real.
18. The costs agreement between the plaintiff and HWLE allowed HWLE to charge according to the time it spent providing services to the plaintiff. Whilst HWLE provided itemised bills of costs, not every task performed by it makes its way into those bills.
19. Again, this is exemplified by the entries for those attending the meeting on 5 December 2014. Both solicitors recorded their time with reference to attendance at the meeting and the time spent at the meeting. HWLE thus says that they have charged for their attendance at the meeting.
20. However, what the client has really paid for is what they do at the meeting. The client pays the solicitor for the time spent at a meeting because the solicitor is undertaking work at the meeting on the client's behalf to the best of the solicitor's skill and ability. Having regard to the solicitor's skill, expertise and experience, the client pays more for a partner's attendance at a meeting than an employed solicitor because the partner may be assumed to have a greater level of experience and expertise. The work of taking notes is usually delegated to the less senior solicitor.
21. This may seem like I am merely stating the obvious but it is HWLE's position that it did not charge for and there was no payment for the making of the file notes primarily because there is no entry to that effect in the bills, its billing or coding system does not permit it and it is the firm's practice not to charge for the file notes. Of course according to its own costs agreement, it could not charge extra for making file notes during a meeting as its billing system is time rather than task based.
22. HWLE's position might come as a surprise to those many members of the legal industry who have attended meetings with more than one solicitor attending from a firm with the most junior solicitor seemingly being there just to make notes and say nothing. The proposition that such notes (when taken by a HWLE solicitor ) are not being taken for the benefit of the client and are not the subject of any charges to the client, might give rise to a question as to why there should be any charge to the client in respect of the second solicitor's attendance.
23. In my view, again, using the example of 5 December 2014, the solicitors have charged for the work that they have done while attending the meeting. That would include engaging in dialogue with the other persons, making statements and representations on behalf of the client and making file notes of what was said by all involved. The work is conveniently summarised in the bill as attendance at the meeting, but that which was paid for was the substantive work performed.
24. I do not think that I should determine an issue such as this based on the HWLE billing system.
25. The documents sought by the plaintiff are limited to file notes of the communications referred to in paras 1(b)(i)-(iv) of the summons
26. For the reasons I have set out, I am satisfied that the plaintiff is entitled to the file notes referred to in paras 1(b)(i)-(iv).
27. I thus make the orders sought by the plaintiff in the terms set out in para 1(b) of the summons.
28. HWLE submits that I should make an order that the plaintiff pay the costs of complying with any orders I might make in respect of delivery up of the documents to the plaintiff. It is submitted that HWLE should be entitled to charge reasonable costs for complying with a request for the file.
29. Mr Wallman estimates that it might take 20 hours to review the file in order to comply with the requirement to deliver up the documents.
30. Mr Vincent does not point to any specific contractual entitlement to recover such costs or to any case in which this Court has previously ordered payment of such compliance costs. He says that the costs that are sought are not costs associated with the retrieval of the file but costs in reviewing the file. He says that the documents are sought by the plaintiff for the purposes of pursuing Federal Court proceedings and if they were sought by way of a subpoena or discovery, the client's costs would be recoverable.
31. Mr Kidd opposes such an order on the basis that: 1. the costs agreement does not provide for a solicitor charging for returning the client files to the client; 2. the documents that are sought are documents that belong to the client. Absent some agreement to the contrary, an agent spending time returning documents belonging to the principal ought not be entitled to be paid for the costs in doing so; and 3. Rule 14 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) ("Solicitors' Rules") specifies that on completion of the engagement, the client or former client is to be given any client documents as soon as reasonably possible when requested to do so by the client unless there is an effective lien. There is nothing in the Solicitors' Rules that suggests that the solicitors can charge for providing client documents to the client. Further, Rule 16 of the Solicitors' Rules specifies that a solicitor must not charge for storage of documents on behalf of clients or for retrieval from storage of those documents unless the client or former client has agreed in writing to such a charge being made.
32. I prefer the plaintiff's contentions.
33. Most solicitors are paid for the work that they do. The costs agreement sets out the charges that might be made and the basis of such charges.
34. HWLE are unable to point to anything in their costs agreement which would entitle them to charge for such compliance costs. This is unsurprising because the time spent by a solicitor, such as HWLE in this case, is really in the nature of administrative time. Solicitors are certainly familiar with the concept of chargeable and non-chargeable time. Attending to administrative matters might be generally viewed as non-chargeable.
35. A solicitor might assert, as does HWLE in this case, that he or she might need to spend a considerable amount of time going through the file in order to sort out which documents must be provided to the client. That may be so, but the time spent must necessarily be a reflection of the volume of documents and might also be reflective of the size of the matter and the size of the bills previously rendered.
36. Mr Wallman says it might take 20 hours to go through the file but that could only be because the file is quite large, given that HWLE have charged a significant sum for the work done.
37. A solicitor has professional obligations. The Solicitors' Rules guide solicitors in the conduct of their practice. The obligations of a solicitor include returning client documents to the client when requested to do so. It seems to me that this is an ordinary function of operating a professional practice. A request by a client to return client documents to him should not be met with a further costs agreement allowing the solicitor to charge an hourly rate for returning client documents to the client.
38. Of course, if the position be to the contrary, and a client is unable to afford the solicitor's fees in respect of going through the file in order to return the file to the client, they may not be able to recover the documents because of the client's impecuniosity.
39. The costs of these proceedings may be a matter for argument but I decline to impose a condition on the orders sought by the plaintiff that the plaintiff pay the so-called compliance costs claim by HWLE.
40. I thus make the orders sought in paragraph 1(b) of the summons as follows. I order that the defendant provide the plaintiff with: 1. All of the plaintiff's documents held by the defendant in relation to the legal services provided by the defendant under the costs agreement, including but not limited to: 1. All documents, including memoranda, emails, and files notes, recording or referring to communications by any person with any employee or representative of Australia and New Zealand Banking Group Ltd; 2. All documents, including memoranda, emails, and file notes, recording or referring to communications by any person with any partner or employee of Clayton Utz; 3. All documents including memoranda, emails, and file notes recording or referring to communications by any person with Peter Silver of counsel or any other counsel briefed by the defendant; and 4. All documents, including memoranda, emails, and file notes, recording or referring to communications by any person with any representative of the Australian Investment and Securities Commission.

But excluding the documents previously provided to the plaintiff on 23 August 2019.

1. In my view, costs should follow the event. I thus order that HWLE pay the plaintiff's costs. If the parties seek some different orders, I grant leave to the parties to relist the matter on 3 days' notice should either party seek a variation of that order.

Endnotes

1. (1988) 15 NSWLR 348.
2. [2021] NSWSC 34.
3. Wentworth at 353F (Hope JA).
4. Wentworth at 355C (Hope JA).
5. Wentworth at 355 (Hope JA).
6. Wentworth at 358E (Hope JA).
7. Wentworth at 358-359.
8. Touma at [13]-[14].
9. Blatch v Archer (1774) 98 ER 969 (Lord Mansfield). DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 May 2021