Appellant v Respondent

1 The appellant, Mr Julian Rohan Hamilton, has appealed[1] against orders made by Lansdowne AsJ on 29 March 2012 striking out his proposed notice of appeal dated 15 March 2010 and refusing him leave to re-plead or to re-open his case. Her Honour's orders also included a number of orders relating to costs incurred in the appeal and below.

2 The orders made by Lansdowne AsJ were made in the context of an appeal from the order of the Victorian Civil and Administrative Tribunal by which the Tribunal struck out summarily an application made by the appellant for an order in the following form:

The professional fees agreement dated 17 October 2006, entered into by Ross Hodgens on behalf of Russell Kennedy, solicitors, with Alan Hamilton, is null and void.

3 The professional fees agreement in question (the 'RK fees agreement') was entered into in October 2006 by Mr Alan Hamilton, the appellant's brother. Mr Alan Hamilton entered into the RK fees agreement to enable the respondent, Russell Kennedy, to provide legal services in respect of a dispute between his mother, Mrs Beryl Kathleen Hamilton, and her neighbours.

4 Mr Alan Hamilton and the appellant had been appointed as joint administrators of their mother's estate under the Guardianship and Administration Act 1986 (Vic) (the 'Guardianship Act') on 3 October 2005, and were joint administrators when the RK fees agreement was entered into by Mr Alan Hamilton in October 2006.

5 In February 2008, Mr Alan Hamilton made an application to the Tribunal seeking to reduce the costs charged by the respondent for acting in relation to Mrs Hamilton's neighbourhood dispute (the 'first Tribunal proceeding').[2]

6 At the commencement of the hearing of the first Tribunal proceeding, the appellant applied to be joined as an applicant to the first Tribunal proceeding. The Tribunal ordered that he be joined as an applicant on the basis that the Tribunal (incorrectly) believed him to be a joint administrator of his mother's estate.

7 The first Tribunal proceeding, before Senior Member Howell, resulted in a small reduction in the professional fees that were payable to the respondent. On 14 February 2008, the Tribunal ordered that the combined amount of the three tax invoices rendered by the respondent be reduced by $409.20 to $16,723.96 and that:

The applicants are to pay $16,723.96 to the respondent.

8 The appellant and Mr Alan Hamilton were also ordered to pay interest on the tax invoices as reduced, and the Legal Services Commissioner was ordered to pay $17,133.16 that Mr Alan Hamilton had deposited with the Commissioner pending resolution of the dispute to the respondent in partial satisfaction of the previous orders.

9 In fact, although the Tribunal treated Mr Alan Hamilton and the appellant as joint administrators of their mother's estate, they had been removed as administrators of Mrs Hamilton's estate on 27 November 2007. State Trustees was appointed administrator of Mrs Hamilton's estate in lieu of her sons.

10 Accordingly, when the first Tribunal proceeding was heard and determined, neither Alan Hamilton nor the appellant were administrators of their mother's estate. Not much turned on this fact at the time, as State Trustees allowed the legal costs to be paid from Mrs Hamilton's estate.[3]

11 On 20 June 2008, despite the fact that he was no longer an administrator of his mother's estate, the appellant commenced a further proceeding in the Tribunal seeking to have the RK fees agreement declared null and void, apparently on the basis that it had not been entered into by both him and his brother as joint administrators of their mother's estate (the 'second Tribunal proceeding').[4] The appellant alleged breaches of duty by the respondent to his mother and to him and his brother as joint administrators. The appellant alleged that:

[The respondent] knew, or ought to have known, that Joint Administrators need to share responsibilities and that all important decisions made on behalf of the represented person must be made with the informed consensus of both. Russell Kennedy, acting through Ross Hodgens, breached its legal obligations to the represented person, as well as the Joint Administrators, by purporting to contract with Alan Hamilton alone, then by failing to ensure that all subsequent decision making by the administrators represented the informed and demonstrably unanimous decisions of both Joint Administrators.[5]

12 In December 2008, Senior Member Vassie dismissed the second Tribunal proceeding on the basis that there was both an issue estoppel and an estoppel based on the principle in Anshun,[6] the Tribunal having dealt with the costs charged pursuant to the RK fees agreement in the first Tribunal proceeding.

13 On 23 February 2009, the appellant issued an originating motion and summons seeking leave to appeal the Tribunal's decision to summarily dismiss the second Tribunal proceeding. Proposed questions of law were set out in a draft notice of appeal exhibited to the appellant's affidavit of 2 March 2009.

14 On 26 November 2009, Lansdowne AsJ considered the application for leave to appeal and identified significant problems with the questions of law that had been formulated by the appellant. However, her Honour held that the way in which the issue estoppel and Anshun estoppel had been dealt with by the Tribunal raised arguable grounds of appeal and granted leave to appeal the Tribunal's order 'in respect to questions of law in accordance with my reasons for judgment of today's date [26 November 2009]'.[7] Leave was given to file and serve a new notice of appeal by 10 December 2009.

15 Thereafter, two further notices of appeal were prepared. On 23 February 2010, Lansdowne AsJ struck out a second notice of appeal but gave leave to the appellant to apply in writing for leave to re-plead. A third proposed notice of appeal was filed on 15 March 2010. After a very long delay, on 29 March 2012, Lansdowne AsJ published her reasons for decision striking out the third proposed notice of appeal and refusing leave to re-plead.[8] Orders to this effect were made by her Honour on 29 March 2012, and those are the orders from which the appellant now appeals.

16 Since the grant of leave to appeal in November 2009, it has come to the respondent's attention that the appellant was not in fact an administrator of his mother's estate when the first Tribunal proceeding was heard or determined or when the second Tribunal proceeding was instituted, heard or determined.

17 In February 2010, while the appellant was still endeavouring to formulate his notice of appeal from the second Tribunal decision, the respondent informed the appellant that it would rely on an argument that the second Tribunal proceeding (commenced in June 2008) was a nullity because the appellant was not a 'client' for the purposes of s 3.4.32 of the Legal Profession Act 2004 (Vic) when he made application to the Tribunal to set aside the RK fees agreement. Accordingly, it would be submitted that no leave to appeal should be granted.

18 On 15 March 2010, the appellant sought leave to re-plead and to file a further proposed notice of appeal. The respondent's jurisdictional argument was duly raised before Lansdowne AsJ when she came to consider whether to allow the appellant to file and serve the further proposed notice of appeal. Both the respondent and the appellant filed written submissions dealing with the jurisdictional question.

19 In her reasons for decision for the orders that are now appealed,[9] Lansdowne AsJ dealt with the respondent's jurisdictional argument in considerable detail and concluded that the Tribunal lacked jurisdiction to hear the application made by the appellant to set aside the RK fees agreement (the second Tribunal proceeding) because the appellant:

(a) was not a 'client' who could enliven the jurisdiction of the Tribunal to set aside a costs agreement under s 3.4.32(1) of the Legal Profession Act; and

(b) was not a legal personal representative of his mother at the time he made application to the Tribunal and was therefore not able to make application on her behalf.

20 Her Honour refused the appellant leave to file and serve his proposed notice of appeal dated 15 March 2010 on the basis that any appeal would be futile.

21 The argument on appeal from the orders of Lansdowne AsJ centred on the 'jurisdictional question', on the basis that if the Tribunal lacked jurisdiction to hear and determine the second Tribunal proceeding, then any appeal from the Tribunal's determination in the second Tribunal proceeding would be futile.

22 The respondent was given leave to file further material as to the appellant's position with respect to his mother's estate at relevant times. That material discloses that Mrs Hamilton died on 28 July 2008, approximately five weeks after the appellant commenced the second Tribunal proceeding. The appellant was named as a co-executor under his mother's will but he did not obtain a grant of probate until 14 July 2010. The appellant is currently the sole executor of his mother's estate.

23 The respondent submits that, as the appellant was neither an administrator nor an executor of his mother's estate when he commenced the second Tribunal proceeding on 20 June 2008, he was not a 'client' for the purposes of s 3.4.32 of the Legal Profession Act and was incapable of making application to the Tribunal to set aside the RK fees agreement. There was therefore no application by a 'client' to enliven the Tribunal's jurisdiction to set aside the RK fees agreement under s 32.4.32 of the Legal Profession Act.

24 The respondent further submits that as the appellant did not obtain a grant of probate until more than 1½ years after the second Tribunal proceeding, he was at no time during the second Tribunal proceeding legally capable of actually obtaining the relief he sought in the proceeding. While a named executor may issue proceedings relying on the will alone, the executor cannot bring the proceeding to fulfilment and obtain judgment without first obtaining a grant of probate.[10]

25 As a result, so the respondent says, the Tribunal had no jurisdiction to hear and determine the application made by the appellant and the second Tribunal proceeding was a nullity. Any appeal from that proceeding would be fruitless, irrespective of what the proposed notice of appeal might say about other matters.

26 The appellant disputes that the Tribunal lacked jurisdiction to hear and determine the second Tribunal proceeding and/or that any lack of jurisdiction could not be remedied. He argues that the then administrator of his mother's estate, State Trustees, could have brought the application on behalf of his mother or allowed him to bring the proceeding in its stead. He was well qualified to bring the proceeding as the representative of his mother. Apart from his qualifications, he would not have charged for the legal services he provided.

27 Moreover, the appellant submits that the definition of 'client' in the Legal Profession Act is very broad, being a person to whom or for whom legal services are provided. He argues that he was a 'client' for the purposes of the RK fees agreement. He contends that as a beneficiary under his mother's will, he had a relevant interest in the provision of the legal services to his mother's estate and he 'plainly' had an interest in the outcome of the second Tribunal proceeding.

28 In the alternative, the appellant relies on the fact that in the first Tribunal proceeding, the Tribunal ordered him and his brother Alan to pay to the respondent the legal costs that the Tribunal found were payable. The appellant submits that the Tribunal's order placed him under a legal obligation to pay the legal costs, and he was therefore a third party payer and/or an associated third party payer under the Legal Profession Act and a 'client' for the purposes of s 3.4.32 of that Act.

29 The appellant further contends that becoming a party to a proceeding in the Tribunal is relatively straightforward, as is being allowed to represent a party in a Tribunal proceeding. He refers to the relatively liberal terms of ss 59 and 62 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (the 'VCAT Act').

30 Finally, the appellant submits that Senior Member Vassie must be taken to have known that he was no longer an administrator of his mother's estate because he filed an affidavit referring to his mother as 'the late Beryl Kathleen Hamilton'. Nonetheless, Senior Member Vassie proceeded on the basis that the second Tribunal proceeding had been lawfully commenced. The appellant also told the Court that he had been informed that his application in the second Tribunal proceeding had been referred to the President of the Tribunal, Ross J. He submitted that the Court should infer that Ross J had allowed the application to go forward.

31 In my view, the appellant's submissions based on ss 59 and 62 of the VCAT Act and on the conduct of Senior Member Vassie and Ross J have no merit.

32 Neither ss 59 or 62 of the VCAT Act enable the Tribunal to confer jurisdiction upon itself by identifying or joining a party to a (purported) proceeding or allowing representation in a (purported) proceeding. These powers presuppose the existence of the Tribunal's jurisdiction - they do not confer it. Jurisdiction must be enlivened by other means.

33 Moreover, whether or not he understood Mrs Hamilton to have died, Senior Member Vassie was not able to confer jurisdiction on the Tribunal by allowing the appellant to bring a proceeding on her behalf or by deeming him to be a client for the purposes of s 3.4.32 of the Legal Profession Act. It is unclear why the appellant's application was referred to Ross J, but he too was unable to confer jurisdiction on the Tribunal merely by allowing the application to go forward.

34 The Tribunal only has such jurisdiction as is conferred upon it by statute. Section 43 of the VCAT Act provides:

The original jurisdiction of the Tribunal is invoked-

(a) by a person who is entitled by or under an enabling enactment to do so applying to the Tribunal in accordance with section 67; or

(b) by a matter being referred to the Tribunal under an enabling enactment in accordance with section 69; or

(c) in any other way permitted or provided for by the enabling enactment.

35 It is common ground that the enabling enactment in this case must be the Legal Profession Act. The jurisdiction of the Tribunal to set aside a legal costs agreement is conferred by that Act.

36 Pursuant to s 3.4.32(1) of the Legal Profession Act, the person who is entitled to invoke the jurisdiction of the Tribunal to set aside a legal costs agreement is a 'client'. This is a person 'to whom or for whom legal services are or have been provided': s 3.4.32(10).

37 However, the definition of 'client' in s 3.4.32 is extended by s 3.4.26(6). Section 3.4.26(6) provides:

A reference in section 3.4.32 and in any prescribed provisions of this Part to a client is, in relation to a costs agreement entered into between a law practice and an associated third party payer as referred to in subsection (1)(d) and to which a client of the law practice is not a party, a reference to the associated third party payer.

38 A 'third party payer' is a person who is not the client but is under a legal obligation to pay all or any part of the legal costs for the legal services provided to the client. A typical third party payer might be a mortgagee or lessee who is bound to indemnify the lender or landlord in respect of legal costs. An 'associated third party payer' is a third party payer who owes the legal obligation to pay the costs directly to the law practice.[11] A typical associated third party payer would be a person who guarantees the payment of a client's legal costs.

39 The Court was not taken to the RK fees agreement. It appears to be the case, however, that the RK fees agreement was entered into by Mr Alan Hamilton using his own name. In this context, I note that s 58B(1)(c) of the Guardianship Act provides an administrator may in the name and on behalf of a represented person generally do all acts and exercise all powers with respect to the estate as effectually and in the same manner as the represented person could have done if the represented person were not under a legal disability.

40 Even if Mr Alan Hamilton entered into the RK fees agreement using his own name, it does not necessarily follow that he did not enter into the agreement for or on behalf of Mrs Hamilton. The reasons for decision of Senior Member Howell in the first Tribunal proceeding set out the background to the RK fees agreement and shed light on how it came to pass that Mr Alan Hamilton and the appellant were ordered to pay the legal costs owing under that agreement.

41 The Tribunal's reasons record that in 2001, Mrs Hamilton was in dispute with her neighbours in relation to a proposed construction that would block light to one of her living rooms.[12] The dispute was resolved when the parties signed terms of settlement providing for the neighbours to register on their land a restrictive covenant designed to protect the light to the relevant room. However, in 2006, the neighbours constructed a wall and Mrs Hamilton apprehended a possible breach of the restrictive covenant. Mr Alan Hamilton went to see Mrs Hamilton's solicitor on her behalf. Mrs Hamilton's solicitor felt that he could not act, as he may have been negligent in advising on the terms of the restrictive covenant. He recommended that Mr Alan Hamilton consult Mr Ross Hodgens of the respondent.[13] Mr Alan Hamilton first consulted Mr Hodgens on 17 October 2006. He terminated his instructions to the respondent some three months later on 18 January 2007.[14] There then arose a dispute as to the professional fees that the respondent had charged for the services provided to Mrs Hamilton.

42 The Tribunal's reasons also record that the appellant applied to be joined as an applicant to the first Tribunal proceeding relying on the fact that he was joint administrator of his mother's estate.[15] Although the respondent objected to the joinder on the grounds that it had entered into a costs agreement only with Mr Alan Hamilton, the Tribunal ordered that the appellant be joined, 'partly because Mr Rohan Hamilton [the appellant], as joint administrator of his mother's estate, ought to be bound or have the benefit of any order made in the proceedings'[16] and 'partly because Mr Rohan Hamilton [the appellant] has an obligation to protect his mother's estate, which would be affected by the outcome of the proceedings'.[17]

43 In my view, the legal services that were charged under the RK fees agreement were not provided to or for the appellant. They were provided to or for his mother, or to his brother. Even though he was ordered to pay the legal costs for services provided pursuant to the RK fees agreement, the appellant was not a party to the RK fees agreement and at no time agreed or intended to become personally liable to pay any of the legal costs incurred by or for his mother or by his brother.

44 I do not consider that the appellant's interest in his mother's estate (or in the outcome of proceedings involving his mother's estate) as a beneficiary under her will or by reason of some amorphous obligation to protect her estate is sufficient to make him a 'client' for the purposes of s 3.4.32 of the Legal Profession Act.

45 The question remains, however, whether the appellant fell within the extended definition of 'client' for the purposes of s 3.4.32(1) of the Legal Profession Act as an 'associated third party payer' because the Tribunal ordered him to pay the disputed legal costs in the first Tribunal proceeding.

46 The appellant contends that he is an associated third party payer because he:

(a) was under a legal obligation to pay all or part of the legal costs for the legal services provided to his mother; and

(b) owed the legal obligation to pay the costs directly to the respondent law practice.

47 The legal obligation to pay the legal costs for the relevant legal services is at the heart of the definitions of 'third party payer' and 'associated third party payer'. Section 3.4.2A(2) provides that the legal obligation can arise by or under contract or legislation 'or otherwise'. According to the appellant, the legal obligation imposed upon him arose by order of the Tribunal.

48 It is true that by the Tribunal's order in the first Tribunal proceeding, the appellant and Mr Alan Hamilton were placed under a legal obligation to pay to the respondent the legal costs (or most of them) incurred under the RK fees agreement. However, even if the appellant became an 'associated third party payer' for that reason, the extended definition of 'client' in s 3.4.26(6) only applies to an associated third party payer 'in relation to a costs agreement entered into between an associated third party payer and the law practice'. While a person may become an associated third party payer by reason of a legal obligation to pay costs that arises by order of a court or tribunal, the extended definition of 'client' requires there to be a costs agreement to which 'an' associated third party payer is a party.

49 I have considered whether a person can fall within the extended definition of 'client' if the person was an associated third party payer, but not the associated third party payer that entered into the relevant costs agreement. Section 3.4.26(6) refers to 'an' associated third party payer in relation to the costs agreement, but finishes by referring to 'the' associated third party payer as the client. In my view, the plain meaning of s 3.4.26(6) is that the associated third party payer that is the 'client' is the associated third party payer that is a party to the costs agreement with the law practice. An associated third party payer may apply to have the costs agreement set aside if he or she is a party to the costs agreement.

50 This construction is consistent with an intention to limit the entitlement to make application under s 3.4.32 to set aside costs agreements to the person to or for whom the legal services were provided, and/or the person who entered into the agreement for the provision of those services and is obliged by the agreement to pay for those services. This prevents interlopers from seeking to set aside agreements to which they are not parties.

51 The appellant did not enter into the RK fees agreement or, indeed, any costs agreement with the respondent law practice. Until he put himself forward to the Tribunal as a joint administrator in the first Tribunal proceeding, the appellant was not under any obligation to pay for the legal services provided for his mother's benefit under the RK fees agreement. Because of his intervention in the first Tribunal proceeding in his (purported) capacity as a joint administrator of his mother's estate, the Tribunal sought to bind the appellant to orders disposing of the proceeding, and he and his brother (most likely as their mother's representatives) were ordered to pay the legal costs that the Tribunal held were owed to the respondent.

52 In June 2008, it was for Mrs Hamilton or persons appointed to act on her behalf (and/or or Mr Alan Hamilton if he was an associated third party payer and a party to the RK fees agreement), to apply to the Tribunal to have the RK fees agreement set aside on the grounds of unfairness or unreasonableness. The appellant might have made an application on Mrs Hamilton's behalf, had he remained an administrator of her estate. However, he had been removed and replaced by State Trustees by the relevant time.

53 I conclude that in June 2008, the appellant was not a 'client' who was able to invoke the Tribunal's jurisdiction under the Legal Profession Act to set aside the RK fees agreement. This is so, despite the appellant having been ordered by the Tribunal to pay the legal costs payable to the respondent under the RK fees agreement.

54 The position could not be remedied when the second Tribunal proceeding was heard and determined. The appellant's mother was no longer alive. The appellant and Mr Alan Hamilton were named as joint executors in her will, but there had been no grant of probate. I accept the respondent's submission that the appellant was therefore not legally capable of obtaining the relief he sought in the proceeding, even had he been entitled to bring the proceeding in the first place.

55 In my view, Lansdowne AsJ correctly analysed the legal effect of the appellant's attempt to invoke the jurisdiction of the Tribunal to set aside the RK fees agreement when he was no longer an administrator of his mother's estate. The Tribunal lacked jurisdiction to hear and determine the appellant's application to set aside the RK fees agreement. It follows that any appeal from the Tribunal's order would be fruitless.

56 Although the appellant has, on one view, been prevented from appealing the Tribunal's decision because of the very thing that he seeks to complain about before the Tribunal - the fact that he was not made a party to the RK fees agreement - that is a function of the limited jurisdiction conferred on the Tribunal to set aside costs agreements for unfairness or unreasonableness under the Legal Profession Act.

57 The appeal from the orders of Lansdowne AsJ must be dismissed.

I certify that this and the 13 preceding pages are a true copy of the reasons for judgment of the Honourable Justice Emerton of the Supreme Court of Victoria delivered on 4 May 2012.

[1] Pursuant to r 77.06 of the Supreme Court (General Civil Procedure) Rules 2005.

[2] Hamilton v Russell Kennedy (Legal Practice) [2008] VCAT 317.

[3] Appellant's submission to re-plead notice of appeal and addressing jurisdictional issues dated 15 March 2010, [10].

[4] Hamilton v Russell Kennedy Pty Ltd (Legal Practice) [2009] VCAT 79.

[5] Application for Order made in the Tribunal on 20 June 2008.

[6] Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589.

[7] Order of Lansdowne AsJ made 26 November 2009.

[8] Hamilton v Russell Kennedy Pty Ltd (No 3) [2012] VSC 189.

[10] The respondent relies upon the statement to this effect in Ross Sundberg, Griffith's Probate Law and Practice in Victoria (Law Book Co, 3rd ed, 1983).

[11] Legal Profession Act 2004 (Vic) s 3.4.2A(1).

[12] Hamilton v Russell Kennedy (Legal Practice) [2008] VCAT 317, [4]. Described as a library.

[15] Ibid [10]. The Tribunal had noted that on 3 October 2005, Mr Alan Hamilton and the appellant were appointed joint financial administrators of their mother's estate.