Allwood v Peter Vivian Benjafield t/as Benjafield & Associates Lawyers

Court of Appeal (NSW)|2014-10-16|Before: McColl JA, Ward JA, Emmett JA, As Emmett JA, Coll JA

Judgment 1McCOLL JA: I agree with Emmett JA's reasons and with his Honour's proposed orders. I also agree with Ward JA's observations. 2WARD JA: I have had the advantage of reading in draft Emmett JA's reasons. I agree that for those reasons the appeal should be allowed and the judgment of the District Court set aside. I also agree with the orders his Honour proposes. 3I should add that the course that the Solicitor has followed in this matter causes me concern. It is not consistent with his duties as the executor appointed under Mrs Allwood's will and does not reflect well on the legal profession. 4As Mrs Allwood's legal personal representative, one of the Solicitor's essential duties was to get in the assets of the estate. The Solicitor was aware that the application made by the Protective Commissioner for assessment of the Invoices that he had rendered to Mrs Allwood had not been determined. He must have been aware that if such an assessment resulted in a reduction of the amount that had been charged by him then there would be an obligation to refund that amount and that this would form part of Mrs Allwood's estate. He was, and should have realised that he was, in a clear position of conflict in relation to the dispute as to the reasonableness of the legal costs he had charged. 5As Emmett JA notes, the Solicitor chose not to make submissions as to the substance of the complaints that had been made as to the disputed legal costs. That was a matter for him. However, in effect, the attitude he adopted seems to have been that if the Beneficiaries wished to pursue an assessment of the reasonableness of his charges, they should incur the costs of having him removed as executor in order to do so. That does not in my opinion demonstrate a proper appreciation of what his duties as an executor involved in relation to the proper administration of the estate. In circumstances where he had a clear conflict in relation to this matter, the appropriate course would have been for the Solicitor to ensure that steps were taken to enable the costs issue to be properly resolved. Instead, the course adopted was to take an obstructionist stance based on the lack of standing of the Beneficiaries to act in his place. 6EMMETT JA: These proceedings arise out of certain invoices for legal fees (the Invoices) rendered to the late Roslyn Allwood (Mrs Allwood), who died in April 2009 aged 102 years. The Invoices were rendered from March 2006 to October 2006 and were paid by Mrs Allwood prior to her death. They were rendered by Mr Peter Benjafield, who practises as "Benjafield & Associates" (the Solicitor), and who is the first respondent in the proceedings. The Solicitor is the executor of the will of Mrs Allwood. The applicants, Mr Peter Allwood and Mrs Judith MacDonald (the Beneficiaries), who are beneficiaries under Mrs Allwood's will, are children of Mrs Allwood. 7Costs assessments in relation to the Invoices were made under the Legal Profession Act 2004 (NSW) (the Legal Profession Act) by an assessor and a review panel, and the Solicitor brought an appeal to the District Court under s 384 of the Legal Profession Act in relation to the assessments. Section 384 relevantly provides that a party to an application for a costs assessment who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may appeal to the District Court against the decision. The District Court set aside the assessments, and the Beneficiaries now seek orders under s 69 of the Supreme Court Act 1970 (NSW) (the Supreme Court Act) setting aside the decision of the District Court.

The Procedural History 8In September 2006, the Guardianship Tribunal of New South Wales (the Tribunal) ordered that the management of the estate of Mrs Allwood be committed to the Protective Commissioner of New South Wales (the Protective Commissioner). Section 350 of the Legal Profession Act provides that a client may apply to the Manager, Costs Assessment for an assessment of the whole or any part of legal costs. In December 2008, the Protective Commissioner caused applications to be made to the costs assessment section of the Supreme Court in respect of the Invoices. 9In January 2009, the Manager, Costs Assessments referred the assessment applications to Mr Peter Rosier, costs assessor (the Assessor). It appears that both the Solicitor and the Protective Commissioner considered that the leave of the Supreme Court was required because the assessment applications were out of time. All parties at that time apparently held the view that the Legal Profession Act, as in force from 1 July 2007, governed the costs assessment applications. Section 350(4) of the Legal Profession Act, as in force from 1 July 2007, relevantly provided that an application for a costs assessment must be made within 12 months after the bill was given. However, under s 350(5), an application that was made out of time could, relevantly, be dealt with by a costs assessor if the Supreme Court determined that it was just and fair for the application for assessment to be dealt with after the 12-month period. Accordingly, Mr Rosier returned the papers to the Manager, Costs Assessments, noting that he would be able to accept the referral again when the Supreme Court had resolved the matter. 10In November 2008, the Protective Commissioner had caused proceedings to be commenced on behalf of Mrs Allwood in the Supreme Court seeking, amongst other things, an order that the time for the making of an application for assessment of the Invoices be extended (the Extension Proceedings). The Protective Commissioner had apparently commenced the Extension Proceedings in anticipation that it would not be possible to deal with the assessment applications prior to the granting of an extension by the Supreme Court. While it is curious that the assessment applications were lodged before any order in the Extension Proceedings had been made, nothing appears to turn on that fact. 11In July 2009, following the death of Mrs Allwood, an order was made by consent, pursuant to r 7.10 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), substituting the Beneficiaries as plaintiffs in the Extension Proceedings. On 25 November 2009, Mathews AJ, sitting in the Common Law Division, concluded that the Supreme Court had no jurisdiction to deal with the Invoices because they were governed by the provisions of the Legal Profession Act as in force up to 30 June 2007 (see The Estate of Rosalind Allwood v Peter Vivian Benjafield [2009] NSWSC 1383). That conclusion appears to have been supported by a concession by both parties' counsel (see at [14]-[16]). 12Section 350(4) of the Legal Profession Act, as in force up to 30 June 2007, relevantly provided that an application for an assessment of the whole or any part of legal costs must be made within 60 days after the bill was given or after the costs were paid in full, whichever was earlier. However, s 350(5) provided, at that time, that a costs assessor must deal with an application made out of time unless the costs assessor considered that the relevant law practice had established that to do so would, in all the circumstances, cause unfair prejudice to the law practice. For the purposes of s 350(5), the Solicitor was the law practice. There was no provision in that section for the Supreme Court to extend the time for the application of a costs assessment. 13Clearly enough, Mrs Allwood was the client of the Solicitor in respect of the Invoices and therefore had standing, albeit acting through her tutor, the Protective Commissioner, to make an application under s 350. Thus, the applications made in December 2008 were competently made. 14The Extension Proceedings, which came before Mathews AJ, were, in effect, an application under s 350(5) of the Legal Profession Act as in force from 1 July 2007. Her Honour concluded that that provision had no application in the circumstances. Hence, as I have indicated, her Honour concluded that the Supreme Court did not have jurisdiction to extend the time for making the assessment application. Rather, that was a matter for the Assessor. 15On 13 May 2011, Messrs Taperell Rutledge (Taperell Rutledge), the solicitors for the Beneficiaries, wrote to the Manager, Costs Assessment, saying that they acted for the Beneficiaries. They erroneously said that the Beneficiaries were the executors of the estate of Mrs Allwood. That error was subsequently corrected. Taperell Rutledge referred to the assessments that had been returned by the Assessor pending the outcome of an application to the Supreme Court for leave to proceed, being a reference to the Extension Proceedings. They said that the Beneficiaries wished to proceed with the assessment and requested that the applications be referred back to the Assessor for determination. They included further submissions in relation to the assessment of the Invoices. 16In the submissions, Taperell Rutledge referred consistently to "the cost applicant", although the cost applicant of course was Mrs Allwood, and the Solicitor was her legal personal representative. The submissions summarised the complaints made in respect of the Invoices as follows:

The amounts charged were in some cases rendered at $300/hour;
The whole of one of the Invoices was said to overlap the work claimed and charged for in another of the Invoices;
GST had been included;
There was no evidence of any disclosure or fee agreement in relation to the retainer covered by the Invoices. 17In August 2011, the applications for assessment were referred back to the Assessor. The Assessor accepted that, notwithstanding the view that he had expressed at an earlier time, he was then in a position to proceed with the determination of the assessments, unless the Solicitor established that to do so would, in all of the circumstances, cause unfair prejudice to the Solicitor. The Assessor concluded that the Solicitor had not discharged the onus of establishing that there was prejudice to him and therefore proceeded with the assessment of the Invoices. 18At that stage, of course, the only person who had any standing to prosecute and deal with the costs assessments was the Solicitor, as the legal personal representative of Mrs Allwood, following the grant to him of probate of her will. However, the Beneficiaries sought to prosecute the applications for assessment, since it was apparent that the Solicitor was hardly in a position to do so. 19On 3 August 2011, the Assessor wrote to the Solicitor asking him to provide any submissions that he wished to make no later than 31 August 2011. The Assessor said that, if he did not hear from the Solicitor by that date, he would assume that the Solicitor did not have any submissions that he wished the Assessor to consider. 20On 15 August 2011, the Solicitor forwarded to the Assessor submissions in response to the submissions forwarded under cover of Taperell Rutledge's letter of 13 May 2011. After referring to the Extension Proceedings and the orders made in those proceedings, the Solicitor dealt with time limits in relation to the assessment applications, submitting that the assessment applications were out of time in respect of the Invoices. That submission was made on the basis that, contrary to the conclusion of Mathews AJ, the applicable version of s 350 of the Legal Profession Act was that in force from 1 July 2007. The Solicitor then pointed out that the submissions had been made by the Beneficiaries, claiming to be executors. The Solicitor said that that was incorrect and submitted that the Beneficiaries had no standing in "the present assessment process". The Solicitor also addressed the question of GST, pointing out that the Invoices had been paid and that the GST had been remitted by him. 21On 17 August 2011, Taperell Rutledge wrote to the Assessor confirming that they acted for the Beneficiaries. They also pointed out that, in their letter of 13 May 2011, they wrongly advised that the Beneficiaries were executors of the estate of Mrs Allwood. They confirmed that the Beneficiaries were the sole beneficiaries of the estate of Mrs Allwood and that the Solicitor was the executor of her will. 22In response to a letter from the Assessor of 23 August 2011, on the following day Taperell Rutledge forwarded submissions in reply to the Solicitor's submissions of 15 August 2011. Relevantly, for present purposes, those submissions confirmed that the Solicitor is the executor of the estate of Mrs Allwood, which circumstance, they said, "highlights the difficulty faced by the Beneficiaries where the executor is in effect the payer and the payee". They said that the Solicitor was not going to assess his own costs and that they had "every right to do so and this submission by him is not appropriate". Finally, the Beneficiaries submitted that they were entitled to assessment "as they are non-associated third party payers and, in any event, it is inappropriate to submit that [the Solicitor] is the only person (as executor) able to assess his own costs". 23On 15 September 2011, Taperell Rutledge wrote to the Assessor saying that they had been instructed by the Beneficiaries to obtain counsel's advice in relation to, relevantly for present purposes, an application to the Supreme Court for the substitution of the Beneficiaries as trustees of the estate of Mrs Allwood in lieu of the Solicitor. They said that they considered that that application was necessary, given that the Solicitor was in a position of direct conflict, in that he had submitted that the applications for assessment were flawed because the executor is the only person with standing to bring the applications. Taperell Rutledge asked if the Assessor would allow some further time before completing his assessments so that urgent advice could be obtained and any consequent action could be taken. 24On 13 October 2011, Taperell Rutledge provided to the Assessor and to the Solicitor a copy of a memorandum of advice of Mr AR Lakeman of counsel. The memorandum addressed questions of time limits in relation to the assessment of the invoices. It did not address the question of whether or not an application should be made for the substitution of the Beneficiaries for the Solicitor in relation to the administration of the estate of Mrs Allwood. 25On 14 October 2011, the Solicitor wrote to the Assessor. After referring to Mr Lakeman's memorandum of advice, the Solicitor said that Mrs Allwood had freely and voluntarily signed authorities and consent accepting all fees and charges in relation to the costs being considered by the Assessor. The Solicitor said that, at that stage, he had nothing further to submit that would not amount to repeating what had already been submitted. 26On 2 November 2011, the Assessor wrote to the Solicitor again, saying that he was prepared to proceed with the assessment of the Invoices and that, when he had done so, he would issue an interim certificate of determination. He said that, since the discourse up to that point had concentrated on questions of entitlement to assessment, he considered that he should give the Solicitor a short opportunity to put any material that he may want the Assessor to consider when making the assessment. The Assessor said that, if he had not heard from the Solicitor by 23 November 2011, he would assume that the Solicitor had nothing further that he wished to put and would proceed with the determination on the basis of the material that he then had, without further reference to either party. 27The Assessor wrote to the Solicitor again on 24 November 2011, saying that it did not appear that the Solicitor had made any substantive submission in relation to the assessment of the Invoices and that, lest there was a misunderstanding as to the nature of the submissions sought, he would allow another seven days for the Solicitor to put anything to him. The Assessor said that, if he had not heard from the Solicitor by 2 December 2011, he would assume that the Solicitor had nothing further that he wished to put to the Assessor and would proceed with the determination on the basis of the material that he then had. 28The Solicitor responded on 25 November 2011, saying that he considered that all charges were fair and reasonable and that proper details had been given. The Solicitor said that the work was done in accordance with the instructions of his client and was approved in writing by his client. He said that no objection had raised any issue other than to claim that it was not reasonable to carry out the work, that it was not done in a reasonable manner, and that the charges were not fair and reasonable. The Solicitor said that that was contrary to the specific instructions of the client and the approval by the client of the charges. The Solicitor said that he was not aware of any issue that required any further substantive submission. 29The Assessor wrote to the Solicitor again on 30 January 2012, saying that the only submission that he had received from the Solicitor was that the Assessor could not assess the bills in their present form. He referred to a letter that he had written on 19 January 2009 seeking:

The Issues 37The application under s 69 of the Supreme Court Act for judicial review of the decision of the District Court was brought out of time. On 19 July 2013, the Beneficiaries lodged a notice of intention to appeal from the orders of the District Court. The Solicitor wrote to Taperell Rutledge on 26 July 2013 pointing out that any such appeal would be incompetent. On 2 August 2013, the Beneficiaries received advice from counsel that judicial review was the appropriate procedure. Counsel advised that it was first necessary to obtain a transcript of the reasons of Gibb DCJ. A transcript of the reasons was applied for, but was not received until 30 September 2013. On 22 October 2013, counsel gave advice on the prospects of success in an application under s 69 of the Supreme Court Act. 38On 28 November 2013, Taperell Rutledge wrote to the Solicitor, saying that the Beneficiaries had received advice from counsel that there were reasonable prospects of success in an application under s 69 to set aside the orders of the District Court. The letter said that the argument was that, regardless of the standing or lack of standing of the Beneficiaries, the application for assessment was properly made before the death of Mrs Allwood and was still available to be determined by assessment. Taperell Rutledge said that they were instructed to explore the possibility of resolving all outstanding matters in dispute with the Solicitor. There was apparently no response to that letter. On 23 December 2013, the Beneficiaries finally commenced the present proceedings under s 69 of the Supreme Court Act. Thus, there was considerable delay for which there is no satisfactory explanation. 39As I have said, it is now common ground that the Legal Profession Act as in force up to 30 June 2007 governed the assessment of the Invoices. That follows from the fact that all of the invoices were rendered during 2006 and all were paid prior to 1 July 2007. The right to have the Invoices assessed was not abrogated in any way by the amendments that came into force on 1 July 2007. 40It is clear that the right to have the Invoices assessed survived the death of Mrs Allwood, such that her legal personal representative could have enforced the right. The question whether a statutory right, such as that enshrined in s 350 of the Legal Profession Act, survives death depends on the intention of the legislature (see Managing Director, NSW Technical and Further Education Commission v Fines (1993) 32 NSWLR 385 at 388). Neither party submitted that there is any indication in the Legal Profession Act to suggest that that right does not survive death. In any event, the Solicitor accepted that the right to have the relevant invoices assessed survived the death of Mrs Allwood and was, in effect, an asset of her estate, which vested in her legal personal representative. 41While the Solicitor did not make submissions to the Assessor or the Review Panel as to the substance of the complaints made both by the Protective Commissioner and by the Beneficiaries, he was invited several times by the Assessor to make submissions, but declined to do so. The only question raised by the Solicitor was whether the Beneficiaries should have been permitted to advance the objections that could have and, perhaps, should have, been advanced on behalf of the estate of Mrs Allwood. No contention has been advanced on behalf of the Solicitor that the participation of the Beneficiaries in the costs assessment process resulted in any unfairness or denial of procedural fairness to him. While the Beneficiaries had no standing in relation to the assessment applications, there has been no challenge to the validity of the initial assessment application, nor has there been any challenge to the substantive disposition of the application. 42The substantive complaint now made to this Court by the Beneficiaries is that, while the substantive question before the District Court was the standing of the Beneficiaries to be heard in relation to the costs assessments and to the prosecution of the costs assessments, that ground, even if made out, was not a basis for setting aside the determinations made by the Assessor or the Review Panel. The stance consistently adopted by the Solicitor is that the appropriate course would have been for the Beneficiaries to apply to have him removed as executor of the will of Mrs Allwood and the substitution of the Beneficiaries, who could then have prosecuted the assessments. During the hearing of the appeal to the District Court, Gibb DCJ raised the possibility of adopting that course. That suggestion was rejected by the Beneficiaries. As I have said, Taperell Rutledge had also raised the possibility of that course, but it was not pursued. 43The essential dispute between the parties appears to be whether the Beneficiaries should have taken steps for the removal of the Solicitor or whether he, as executor, should have taken some steps himself to put in place a procedure whereby the costs assessment could be prosecuted on behalf of the estate, in circumstances where he, as the legal personal representative, could not, or would not, prosecute the costs assessment as against himself. The only matter left in the administration of the estate of Mrs Allwood is the question of the costs assessments. One possibility may have been the appointment of a receiver of the relevant right under s 67 of the Supreme Court Act. That course has been taken in similar cases in which an executor is in a position of conflict (see Donowa v Caddell (Court of Appeal (NSW), 2 June 1980, unrep); see also See v Hardman [2002] NSWSC 287 at [18]). No such course was suggested. 44The fact that the Assessor and the Review Panel both erroneously concluded that the Beneficiaries had standing to advance the objections that could have been advanced on behalf of the estate of Mrs Allwood had no bearing on the substantive determination made by the Assessor, as corrected by the Review Panel, which would have resulted in the repayment by the Solicitor to the estate of Mrs Allwood of the sum of $5,504.67. However, it is clear that counsel who appeared for the Beneficiaries in the District Court appeal (who did not appear for the Beneficiaries in this Court) accepted that, if the question of standing was decided in favour of the Solicitor, the relief sought by the Solicitor should be granted by the District Court. 45Counsel certainly made no submission that, even if the question of standing was decided against the Beneficiaries, that of itself was not a basis for setting aside the determinations made by the Review Panel and the Assessor. In fact, counsel continued to appear and participate in the appeal notwithstanding an exchange with Gibb DCJ concerning the standing of the Beneficiaries in the appeal, in which it was suggested that counsel could apply to represent the estate of Mrs Allwood under r 7.10 of the UCPR. Counsel accepted that, by doing so, he would in effect be conceding that the question of law raised by the appeal would be decided in favour of the Solicitor. For that reason, counsel expressly declined to make such an application. Nevertheless, he continued to participate in the hearing until after Gibb DCJ gave judgment. 46The substantive question that was argued before the District Court was whether the Beneficiaries had standing before the Assessor or the Review Panel in relation to the costs assessments. It is now accepted that they did not. However, the determinations of the Assessor and the Review Panel cannot be impugned by reason only of the fact that the Beneficiaries did not have standing, although the Beneficiaries did not resist the making of orders on those grounds. In my view, the District Court erred in setting aside the costs assessment made by the Review Panel simply on the ground that the Beneficiaries had no standing to agitate the objections that were open to the estate of Mrs Allwood. As I have said, the right that Mrs Allwood had to have the Invoices assessed was one that survived her death and became, in effect, an asset of her estate. 47That leads to the question of whether or not, as a matter of discretion, this Court should interfere with the orders of the District Court, particularly where the amount in question is less than $6,000. Had the Beneficiaries made the submissions to the District Court that have been made to this Court, there may well have been a different result in the appeal to the District Court. Further, the present proceedings were brought out of time and there has been no satisfactory reason advanced for the delay. 48Both parties have been at fault. The Solicitor has taken a very technical, albeit correct, stance in relation to the standing of the Beneficiaries. Nevertheless, that stance led the District Court into error. While the Solicitor succeeded on the technical legal argument raised in the appeal, that argument was simply not a ground, of itself, for setting aside the determinations of the Assessor and the Review Panel. While the Solicitor has asserted at all times that his invoices represented reasonable and fair fees, he did nothing to persuade the Assessor or the Review Panel that his fees were fair and reasonable. 49The Beneficiaries have been at fault insofar as they failed to take some step so that they would have standing to pursue the costs assessments. They were at fault in failing to point out to the District Court that upholding the legal contentions as to standing would not, as a matter of law, justify setting aside the determinations of the Assessor and the Review Panel. 50In all of the circumstances, I consider that the appropriate course is to order that the Beneficiaries have leave to bring these proceedings out of time. The orders of the District Court should be set aside. In lieu of those orders, there should be orders that the appeal to the District Court be dismissed and that the determination of the Review Panel be confirmed. 51As I have said, both parties have been at fault. However, unlike the Beneficiaries, the Solicitor, as executor, owed a clear duty to the estate (and to the Beneficiaries in particular) to ensure its proper administration. Notwithstanding that a clear conflict existed between the Solicitor's personal interests and his duties to the estate, the stance that he adopted did not assist in the proper resolution of the issues at hand. For those reasons, the Solicitor should pay the costs of these proceedings, but there should be no order as to the costs in the District Court.

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Legal Profession Act 2004(NSW)

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