Appellant v Respondent

2 Mr Tatarka's fee for the third appearance has not been paid. He brought proceedings in the Magistrates' Court claiming the amount of his fee as a debt owed to him by Mr Petselis. A magistrate found for Mr Tatarka and ordered that Mr Petselis pay him the amount of the claim, interest and costs.

3 Mr Petselis appeals from the order of the Magistrates' Court pursuant to s 109 of the Magistrates' Court Act 1989 (Vic) on grounds summarised as follows:

(a) it was not open to find that there was a contractual relationship between Mr Petselis and Mr Tatarka;

(b) it was not open to find for Mr Tatarka in the absence of a contractual relationship between the parties; and

(c) if the magistrate found a contractual relationship, he erred by failing to find that the contract was void because Mr Tatarka did not comply with provisions of the Legal Profession Uniform Law[1] ('LPUL').

4 In 2016 Mr Petselis retained Evans Ellis to act for him in two proceedings brought in this Court which arose from his purchase of a property at auction ('the property dispute'). Evans Ellis arranged for Mr Tatarka to appear for Mr Petselis at a hearing on 27 October 2016 and a judicial mediation on 14 December 2016. Mr Petselis paid Mr Tatarka's fees for these two appearances. The property dispute resolved at mediation. Settlement was to be effected on 10 February 2017. The proceeding was listed on 14 February 2017 lest any issues arose with settlement.

5 By 13 February it was clear settlement of the property dispute had not been effected, and there was to be a contested hearing the following day. On the morning of 13 February there were discussions involving Mr Tatarka, his instructor at Evans Ellis, Ms Weiner, and Mr Petselis to arrange for Mr Tatarka to appear on 14 February. Evans Ellis would not agree to be responsible for payment of Mr Tatarka's fee and suggested Mr Petselis should retain him directly. An email from Ms Weiner to Mr Tatarka sent late on the morning of 13 February reads, in part:

We confirm our client has engaged you directly relation your [sic] briefing to appear tomorrow, with payment due within 30 days.

Mr Tatarka said he was not prepared to accept a direct brief from Mr Petselis, and unless Evans Ellis briefed him, he was not prepared to appear. Just after noon on 13 February Mr Tatarka sent the following email to Ms Weiner:

I confirm that you will brief me at a fee of $3500 (if finished by 1) or $5000 if the case extends beyond 1 payable in 30 days.

I will not look to Evans Ellis if George fails to pay you for my legal fees and you will do what you can to ensure that he honours his obligations.

Mr Tatarka said he reached agreement with Evans Ellis to appear for Mr Petselis on 14 February on the basis set out in his email.

6 Mr Tatarka said he commenced work preparing for the hearing on the afternoon of 13 February 2017 by engaging in negotiations with counsel for the other party. Mr Petselis attended court with Mr Tatarka on the morning of 14 February. Negotiations continued and before 1.00 pm the parties agreed on new terms of settlement and the property dispute resolved.

7 Mr Tatarka said he had a discussion with Mr Petselis on 14 February about what fee he would charge for his appearance. He was asked:

What was that discussion? --- Well, I told Mr Petselis that I had spent a number of hours the day before negotiating with Mr Stark, who was counsel appearing on behalf of the plaintiff in the proceeding, and that the morning had been hard going, effectively, and I asked - - -

And then what, sorry? --- The morning, it had been a long process to get from the initial instructions which came at noon on the day before to a settlement on just before 1 pm on the 14th. So I asked Mr Petselis whether he was happy to effectively vary our agreement and pay the full $5,000 fee in consideration of the work that had gone into getting the matter resolved.

Did he agree to that? --- He did.

On the same day Mr Tatarka sent an email to both Evans Ellis and Mr Petselis in which he stated:

I confirm that George has agreed to a fee of $5,000 and that I have asked my clerk to send you a fee slip in that amount. George has indicated his intention to pay the account directly to my clerk and when that happens I will advise you.

The fee slip issued by Mr Tatarka's clerk was directed to Evans Ellis. Mr Tatarka was asked why he had not sued Evans Ellis for his fee, and he said because the agreement was that Mr Petselis alone would be liable to pay, and that suing Evans Ellis for the fee would be contrary to the undertaking he gave them.

8 Mr Petselis was asked about the email Mr Tatarka sent to him and Ms Weiner on 14 February 2017:

So can I suggest to you, you must have seen that email? --- I don't recall.

And if you were, as you claim, very dissatisfied with Mr Tatarka's service on 14 February, that you would have quickly replied to that email and said, "I don't believe I owe Mr Tatarka anything"? --- Not at all. I would have just ignored it.

9 The fee was not paid within 30 days of the invoice dated 14 February 2017. On 17 March, Mr Tatarka and Mr Petselis engaged in the following exchange via text message:

Mr Tatarka: Hi George. Could you please arrange to pay my bill on Monday?

Many thanks

Sam

Mr Petselis: Wednesday?

Mr Tatarka: Latest. Ok?

Mr Petselis: All good. At the latest. If you feel like coffee I'll even deliver it.

Mr Petselis was asked why he didn't take issue with Mr Tatarka's request via text message to pay his bill on 17 March 2017:

Why didn't you say in response to Mr Tatarka's text message on 17 March, "What bill, Sam? I haven't seen any bill yet"? --- At the time - at the time of this I was getting a lot of phone calls from Amy Weiner who was not pressuring me but wanting me to keep a good relationship with Sam Tatarka because they love him at Evans Ellis and they didn't want the relationship soured and affected. As a prudent businessman the thought was then, well, let's just pay him anyway. I wasn't happy with his service. I actually think that Sam did a horrible job from the get go, but I didn't want to ventilate that at the time.

...

Thank you. So sometime between 17 March and 2 April you've changed your mind? --- No. I was on the phone literally the day of that hearing with Evans Ellis expression [sic] my disapproval. I almost made the comment to Evans Ellis I will never engage Sam Tatarka again. I was quite vocal with Evans Ellis. Maybe it would have been better if Sam Tatarka brought Evans Ellis here also. It's not a case of changing my mind. I offered to pay his half day rate simply to keep my solicitors happy who I use extensively.

10 Mr Tatarka was not paid by Mr Petselis the following Wednesday as he had indicated. Over the next two months Mr Tatarka continued to contact Mr Petselis via text message to pursue payment of his fee. In reply texts sent on 2 April 2017 Mr Petselis indicated to Mr Tatarka some dissatisfaction with his representation for the first time. In evidence he said by that time he decided he was not going to pay Mr Tatarka anything.

11 Mr Petselis was asked by the learned magistrate:

You're obviously a businessman, is that right? Now, would you say its good business practice to not challenge somebody if they're saying you're liable for something that you're not? It's not good business practice. I mean, good business practice would be, "I take issue with your fees. I take issue", and set it out quite clearly? --- Yeah.

Is that what you have to deal with, with your clients or whoever you deal with? --- No. No, look, I - my legal bill runs each year in the mid to high six figures. This is a nominal amount of money.

I appreciate that but - - - ? --- It is that - - -

All I'm saying is good business practice would be raise the dispute early? --- I'm a busy person and something like this is just - just not even worth the attention that - - -

Well, it must be, because you're here in court today. It must be - - - ? --- Because Mr Tatarka sued me.

12 On 29 May 2017, after further unsuccessful attempts to recover the fee, Mr Tatarka issued a complaint against Mr Petselis in the Magistrates' Court claiming the outstanding bill as a debt, plus interest and costs. The statement of claim recited:

1. The Plaintiff is an Australian Legal Practitioner and in practice as a barrister.
2. The Defendant is indebted to the Plaintiff in the sum of $5,000 together with interest thereon for professional services provided by the Plaintiff for and on behalf of the Defendant pursuant to invoice number 1143375 dated 14 February 2017 for $5,000.00.
3. Notwithstanding demand on 9 May 2017, the Defendant has failed and/or refused to make payment to the Plaintiff of the sum claimed or at all.

13 Mr Petselis filed a defence on 8 September 2017. At the time he was represented by the solicitors acting for him on this appeal. The pleaded defence reads:

1. The Defendant admits the allegations contained in paragraphs 1 of the Plaintiffs Statement of Claim
2. The Defendant denies allegations in paragraph 2 and being indebted to the Plaintiff for the sum of $5000. The Defendant says that he did not retain the Plaintiff directly to perform the professional services.
3. The Defendants says as follows

(i) That the Plaintiff agreed to represent the Defendant at a hearing in Supreme Court of Victoria Proceeding SCI 17 00449 on the basis that he would seek to challenge their application that Defendant could settle and the Plaintiff and advised and agreed that this would be submitted to the Court. Contrary to the Defendants instructions the Defendant refused to make the submission and threatened to withdraw unless the Defendant agree to pay $20,000 as part of agreed terms to the other party. The Defendant would not have engaged the Plaintiff to appear if the Plaintiff did not intend to make the submission on the Defendant's behalf.

(ii) That the amount of $5,000 is not a fair and reasonable charge for the services purported to have been rendered by the Plaintiff. The Plaintiff agreed with the Defendant that $2500 would be charged for a half day appearance.

1. Save that a demand was made, the Defendant denies the allegations in paragraph 3.
2. The Defendant admits that the claim arose in Melbourne.
3. The Defendant denies being indebted for the sum claimed.

14 The matter was heard by way of arbitration on 9 November 2017, at which Mr Petselis appeared unrepresented. Evidence was given by Mr Tatarka and Mr Petselis, and various documents were tendered. No one from Evans Ellis was called to give evidence. On 21 November 2017 the presiding magistrate delivered oral judgment in favour of Mr Tatarka and made orders requiring Mr Petselis to pay the $5,000 fee, along with interest of $314.91 and costs of $4,389.23.

15 The learned magistrate first identified the basis upon which he understood Mr Petselis was defending the claim:

Mr Petselis defends the claim on the basis that (a) he is not liable for the account. He says the engagement of Mr Tatarka to act on his behalf was by the law firm Evans Ellis and accordingly they ought to be liable; (b) there's been no disclosure by Mr Tatarka to Mr Petselis of the fees to be charged for the work undertaken by Mr Tatarka; (c) if properly engaged, Mr Tatarka was negligent for not acting in Mr Petselis's interests on the day of the hearing; and (d) if liable he is only liable for a half day rate which is $3,500.

16 His Honour considered the credibility of Mr Tatarka and Mr Petselis, and concluded:

In my view the credibility of Mr Tatarka has not been impugned. His evidence was clear and consistent. On the other hand, I have also heard and watched Mr Petselis give evidence. He denies liability of the debt. In the course of evidence he was personal towards Mr Tatarka. He by his own evidence is an experienced businessman who spends large sums of money on legal fees each year. His evidence is in stark contrast to both his experience as a businessman who has experience with solicitors and the evidence produced by Mr Tatarka, particularly, the email sent to Evans Ellis Lawyers ... on 14 February 2017. The same date Mr Tatarka gives evidence about an agreement on the fee of $5,000 ... Mr Tatarka also raised an invoice for $5,000 on that date which is part of the email.

17 In relation to Mr Petselis' defence that he was not liable for Mr Tatarka's fee, his Honour concluded:

Mr Tatarka had confirmed with Mr Petselis that Mr Petselis was liable both in conversation and via email to him on 14 February, ... being the date of resolution in the matter ...

Through a series of text messages as between Mr Tatarka and Mr Petselis, Mr Petselis had never taken issue with him not being personally liable. His actions have been opposite of what he now says in court. Given those matters, the answer to that question as to his liability is yes ... Mr Petselis and not Evans Ellis are liable.

The learned magistrate accepted Mr Tatarka's evidence that on 14 February 2017 Mr Petselis agreed to the fee of $5,000.

18 In relation to the issue of disclosure his Honour concluded:

Given the fact that Mr Petselis has previously been aware of the fees that Mr Tatarka charges, and I find that the credibility of Mr Tatarka not being impugned, I find that the requirement for disclosure was not in writing before rendering of the invoice, it was certainly communicated to Mr Petselis by Mr Tatarka on 13 and 14 February 2017.

19 The appeal before me is brought by Mr Petselis pursuant to s 109 of the Magistrates' Court Act 1989 (Vic):

(1) A party to a civil proceeding in the Court may appeal to the Supreme Court, on a question of law, from a final order of the Court in that proceeding.

20 The grounds upon which Mr Petselis brings this appeal are:

1. The Magistrate erred in law in deciding that the respondent was entitled to recover his fees from the appellant, pursuant to a claim in contract or a claim in debt arising from a contract, in the absence of a contractual relationship between the parties.
2. Alternatively, if the Magistrate found that there was a contractual relationship between the parties, the Magistrate erred in so finding, as there was no evidence to support that finding.
3. Alternatively, if the Magistrate found that there was a contractual relationship between the parties, and was entitled to so find:
   1. the Magistrate erred in deciding that the respondent was entitled to succeed on his claim without first deciding that the respondent had complied with:
      1. s 174(2) (additional information to be provided in costs disclosure);
      2. s 174(3) (requirement that law practice take all reasonable steps to satisfy itself that the client has understood and given consent to the proposed course of action for the conduct of the matter and the proposed costs);
      3. s 174(6) (a costs disclosure under s 174 must be made in writing);
      4. s 178 (if a law practice contravenes the disclosure obligations of Part 4.3, the cost agreement concerned is void; and the client is not required to pay the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority; and the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority or under jurisdictional legislation);
      5. s 180(2) (a costs agreement must be written or evidenced in writing); and/or
      6. 185(1) (a costs agreement that contravenes, or is entered into in contravention of, any provisions of Division 4 of Part 4.3 is void);

of Part 4.3 of the Legal Profession Uniform Law;

("the Relevant Provisions")

1. alternatively, if the Magistrate decided that the respondent had complied with the Relevant Provisions, that finding was in error;

1. alternatively, if the Magistrate decided that the respondent had not complied with the Relevant Provisions, the Magistrate erred in deciding that the respondent was entitled to succeed on his claim despite failing to comply with the Relevant Provisions.

21 The relationship between Mr Petselis as client and Mr Tatarka as the barrister briefed to appear on his behalf is governed by the Act. The LPUL is sch 1 to the Act and applies as a law in Victoria as if it were an Act.[2]

22 Disclosure obligations of law practices to clients and costs agreements are governed by pt 4.3 of the LPUL. That part does not apply to a commercial client. A commercial client is defined to include a financial services licensee.[3] Both Evans Ellis and Mr Tatarka are a law practice for the purposes of the LPUL.

23 Disclosure obligations of a law practice are dealt with in div 3 of pt 4.3 of the LPUL. Clause 174 relevantly reads:

A law practice -

(a) must, when or as soon as practicable after instructions are initially given in a matter, provide the client with information disclosing the basis on which legal costs will be calculated in the matter and an estimate of the total legal costs; and

(b) must, when or as soon as practicable after there is any significant change to anything previously disclosed under this subsection, provide the client with information disclosing the change, including information about any significant change to the legal costs that will be payable by the client -

together with the information referred to in subsection (2).

Information provided under -

(a) subsection (1)(a) must include information about the client's rights -

(i) to negotiate a costs agreement with the law practice; and

(ii) to negotiate the billing method (for example, by reference to timing or task); and

(iii) to receive a bill from the law practice and to request an itemised bill after receiving a bill that is not itemised or is only partially itemised; and

(iv) to seek the assistance of the designated local regulatory authority in the event of a dispute about legal costs; or

(b) subsection (1)(b) must include a sufficient and reasonable amount of information about the impact of the change on the legal costs that will be payable to allow the client to make informed decisions about the future conduct of the matter.

If a disclosure is made under subsection (1), the law practice must take all reasonable steps to satisfy itself that the client has understood and given consent to the proposed course of action for the conduct of the matter and the proposed costs.

A disclosure under this section must be made in writing, but the requirement for writing does not affect the law practice's obligations under subsection (3).

24 Where a law practice intends to retain another law practice on behalf of a client, the disclosure obligations of each practice are governed by cl 175:

(1) If a law practice (the first law practice) intends to retain another law practice (the second law practice) on behalf of a client, the first law practice must disclose to the client the details specified in section 174(1) in relation to the second law practice, in addition to any information required to be disclosed to the client under section 174.

(2) If a law practice (the first law practice) retains or intends to retain another law practice (the second law practice) on behalf of a client, the second law practice is not required to make a disclosure to the client under section 174, but must disclose to the first law practice the information necessary for the first law practice to comply with subsection (1).

(3) This section does not apply if the first law practice ceases to act for the client in the matter when the second law practice is retained.

25 Clause 178 deals with the consequence of non-compliance with disclosure obligations:

(1) If a law practice contravenes the disclosure obligations of this Part -

(a) the costs agreement concerned (if any) is void; and

(b) the client or an associated third party payer is not required to pay the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority; and

(c) the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority or under jurisdictional legislation; and

(d) the contravention is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention.

26 Costs agreements are dealt with in div 4 of pt 4.3 of the LPUL. Clause 180 relevantly reads:

(a) between a client and a law practice retained by the client; or

(b) between a client and a law practice retained on behalf of the client by another law practice; or

(c) between a law practice and another law practice that retained that law practice on behalf of a client; or

(d) between a law practice and an associated third party payer.

(2) A costs agreement must be written or evidenced in writing.

(3) A costs agreement may consist of a written offer that is accepted in writing or (except in the case of a conditional costs agreement) by other conduct.

The effect of a costs agreement is that, subject to compliance with the LPUL, it may be enforced in the same way as any other contract.[4] There is no definition of 'costs agreement' in the LPUL.

27 Clause 185, which provides that certain costs agreements are void, relevantly reads:

(1) A costs agreement that contravenes, or is entered into in contravention of, any provision of this Division is void.

Note

If a costs agreement is void due to a failure to comply with the disclosure obligations of this Part, the costs must be assessed before the law practice can seek to recover them (see section 178(1)).

(2) A law practice is not entitled to recover any amount in excess of the amount that the law practice would have been entitled to recover if the costs agreement had not been void and must repay any excess amount received.

28 In Dimos v Hanos & Egan,[5] Gillard J, dealing with relevant predecessor legislation,[6] said:

69. Nothing in either ss.93 or 96 bears on the question of the nature and terms of a contract. Clearly, the sections contemplate and permit a costs agreement being made between barrister and solicitor, and a barrister and client.

70. In my opinion, the question of who the contracting parties are and the nature and terms of the contract are to be determined in accordance with the common law.

71. The provisions of ss.93 and 96 establish that, contrary to the common law, a barrister may recover his fees from a legal practitioner, practising as a solicitor, or the client. In this respect, the law is the same as the law enacted in 1891. But the new Act does not establish a statutory contract between the barrister and solicitor, or the barrister and the client. Who the contracting parties are depends on the circumstances.

The parties agree that his Honour's rationale applies to the current statutory regime. Dealing with whether there were limits on contractual terms to which parties can agree, Gillard J said:

81. A legal practitioner who is a solicitor, who proposes to retain the services of a barrister, may negotiate what terms he thinks appropriate and may negotiate an agreement between the barrister and the client. He may even go further, by becoming a party to a tripartite agreement and exonerating himself from all liability for the barrister's fees.

...

88. But having said that, it is open to the solicitor to negotiate a contract which is solely between the barrister and the client. Also, the solicitor may be a party to an agreement and exonerate himself from any liability to pay the fees. In the end, it is a matter for negotiation.

89. Whether a contract has come into being, whether the parties intend to make a concluded and binding contract, the terms and who the contracting parties are, are all questions of fact to be determined on an objective basis.

29 Mr Petselis argued that it was not open for the magistrate to find a contract between he and Mr Tatarka, or to allow Mr Tatarka's claim in the absence of a contract. In State of Victoria v Subramanian,[7] Cavanough J said:

In S v Crimes Compensation Tribunal, Phillips JA said that ordinarily a determination of fact will not give rise to an error of law "unless it is shown that the fact-finding tribunal arrived at a finding that was simply not open to it". Phillips JA extended this language to cover not only a finding of fact derived from the acceptance of direct evidence to that effect but also "an inference of fact drawn by the tribunal from other facts found by it". Phillips JA went on to say:

"In what I have said I have spoken of whether a particular finding (including an inference) was open to the fact-finding tribunal. Sometimes the question is posed as whether there was any evidence to support the finding which is under challenge, but that expression is perhaps ambiguous when it comes to inferences. It may question whether there were the primary facts from which an inference might be drawn or, there being no doubt about the primary facts, it may question whether the inference could be drawn from those facts. In this area the relevant question in relation to a fact is always whether the finding (including an inference) was open, and so I think that that is the better formulation."

Was it open to the magistrate to find there was a contract between Mr Petselis and Mr Tatarka?

31 Mr Petselis accepted that it was not enough for him to establish that it was 'not reasonable' or 'not reasonably open' for the magistrate to find a contract between he and Mr Tatarka, but that he must satisfy the high hurdle that the conclusion was not open either on direct evidence or by inference. Mr Petselis made the following written submission:

It [the finding of a contract between he and Mr Tatarka] was not open primarily because both parties were in heated agreement that [Mr Tatarka] had been retained by Evans Ellis, and that [Mr Petselis] had not directly briefed [Mr Tatarka].

He submitted that, while there might have been an agreement of sorts between the current parties, there was simply no evidence to indicate a direct brief. All parties denied it. Nor was there any other evidence upon which such a finding could be made. Such a finding was therefore not open.

32 Mr Petselis submitted that the following evidence supported that conclusion. First, Mr Tatarka directed the bill for his fee to Evans Ellis. Second, Mr Tatarka repeatedly stated he would not accept a direct retainer. Mr Petselis submitted that whilst a distinction could be made between a retainer and a contractual agreement to pay fees or a costs agreement, there cannot be a costs agreement without there being a retainer. Mr Tatarka's insistence that he was not directly retained by Mr Petselis was inconsistent with the existence of a contract or costs agreement between them. Third, as much was confirmed by Mr Tatarka's answers about disclosure, in which he stated that his obligation as a barrister was to disclose his fees to the solicitor, and it was for the solicitor to disclose to the client. Mr Petselis submitted that the cl 174 disclosure obligations fell on the legal practice which was contracting or in a costs agreement with the client. Mr Tatarka's evidence that the cl 174 obligations did not fall on him should be understood as evidence that he did not perceive any costs agreement to exist between himself and Mr Petselis. Fourth, Mr Tatarka's evidence was, in effect, that he was retained by Evans Ellis and was only pursuing Mr Petselis because he gave an undertaking to Evans Ellis that he would not pursue the firm for fees. It was submitted the undertaking to Evans Ellis is revealing because, if Mr Tatarka had not perceived that the costs agreement existed between he and Evans Ellis, the undertaking would not have been necessary.

33 Mr Tatarka submitted that the learned magistrate was well able to base his decision on a contractual promise Mr Petselis made personally or through his agents, Evans Ellis. He submitted it was open to the magistrate to conclude either that a contract was made on 13 February and varied on the afternoon of 14 February, or that the contract simply consisted of the discussion and agreement on the afternoon of 14 February. Mr Tatarka relied on the following evidence. First, Mr Petselis was directly involved in the discussions and arrangements on 13 February to brief Mr Tatarka, and was aware of Mr Tatarka's fees. Second, on 13 and 14 February Mr Petselis continued to instruct Mr Tatarka without objecting to his fees. Third, the magistrate was entitled to and did accept Mr Tatarka's evidence of the discussion between he and Mr Petselis which resulted in the agreement on a $5,000 fee, confirmed shortly afterward by Mr Tatarka's email to Mr Petselis and Ms Weiner.

34 Mr Tatarka argued that Mr Petselis' submissions confused the concepts of retainer, brief and costs agreement, and assumed incorrectly that in the absence of a direct brief there could be no contract for fees between the parties. Mr Tatarka's evidence that he would not accept a direct retainer from Mr Petselis should be taken in context to mean that he would not accept a brief to appear which did not involve instructing solicitors playing the traditional role of instructors. The magistrate understood it this way by summarising Mr Tatarka's evidence for Mr Petselis as follows:

He said 'I am coming to you because at the end of the day I've had the agreement with you to pay the bill.'

35 Mr Tatarka submitted the best characterisation of the contractual relationships of the protagonists is that he, Mr Petselis and Evans Ellis entered into a tripartite agreement whereby Mr Petselis, not Evans Ellis, promised to pay his fee, Mr Tatarka would bill Evans Ellis, they would do their job as solicitors of having Mr Petselis pay (directly or via them) and they would otherwise act as traditional instructors. Mr Tatarka submitted an arrangement of that nature was contemplated by Gillard J in Dimos.[8]

36 Mr Tatarka submitted that addressing the bill to Evans Ellis was consistent with them being the agent. The notice of rights included with the bill was directed to the client, which was documentary evidence that the bill was directed to Mr Petselis. Mr Tatarka's evidence of his undertaking not to sue Evans Ellis was consistent with there being a term of his retainer with Evans Ellis that he would not look to them for his fee.

37 The following findings were open on the evidence. First, there were discussions on the morning of 13 February to arrange for Mr Tatarka to appear for Mr Petselis the following day. Second, Mr Petselis was a party to those discussions and was aware of the fees Mr Tatarka would charge. Mr Petselis gave the following evidence in relation to those discussions:

So my understanding - so what was clear from the get go was that he would render a half-day or an all-day bill. An all-day bill would arise if the matter went all day. There was no talk about additional billings for prep work or anything like that. And Mr Tatarka was given this brief the day before. I don't recall the exact amount for the half day to be honest with you. I thought it was two and a half. It could be three. It could be three and a half. I don't recall. But there was a half-day quote. The amount Mr Tatarka was chasing has always been above the half-day amount.

Third, the terms on which Mr Tatarka was briefed were agreed just after noon on 13 February. That agreement was summarised in the email from Mr Tatarka to Evans Ellis. Fourth, the agreed terms included that Evans Ellis would brief Mr Tatarka and act in the traditional role of instructing solicitor, and that Mr Petselis, not Evans Ellis, would be responsible for Mr Tatarka's fee. Fifth, Mr Petselis was aware of the terms on which Mr Tatarka agreed to appear. Sixth, Mr Petselis, by his conduct of attending court on 14 February and providing instructions to Mr Tatarka to settle the property dispute, accepted those terms. Seventh, on 14 February, after the property dispute settled, Mr Petselis agreed with Mr Tatarka to increase his fee to $5,000 and to pay that fee directly to Mr Tatarka's clerk. On those facts it was open to conclude there was a contract between Mr Tatarka and Mr Petselis which included terms that Mr Tatarka appear on 14 February for the agreed fee, which Mr Petselis would pay.

38 Evans Ellis played the traditional role of instructing solicitor, retaining Mr Tatarka to appear, negotiating the terms of his appearance and briefing him. The terms negotiated by Evans Ellis meant they were exonerated from liability for Mr Tatarka's fee, but would do what they could to ensure Mr Petselis paid the fee. Consistent with these terms, Mr Tatarka directed the bill for his fee to Evans Ellis, and undertook not to look to the firm for payment.

39 Mr Petselis submitted that, because Mr Tatarka was retained by Evans Ellis and not directly briefed by him, there could be no contract between them. That submission is inconsistent with the observation of Gillard J in Dimos that 'persons can contract to do anything'.[9] In Dimos,[10] Gillard J contemplated a tripartite agreement between client, solicitor and barrister of the type which it was open to conclude was made between the protagonists in this case, in which the solicitor retains and briefs the barrister, but the contractual obligation to pay the barrister's fee is borne solely by the client. I also note that cl 180(1)(b) of the LPUL permits a costs agreement to be made between a client and a barrister retained to appear for the client by a solicitor. I reject Mr Petselis' submissions.

Was it open to find for Mr Tatarka in the absence of a contractual relationship between the parties?

41 Given the conclusion I have reached in relation to ground 2 it is not necessary that I determine ground 1. However, I will consider the arguments advanced by the parties in relation to this ground.

42 It is convenient to commence with Mr Tatarka's submissions.

43 Mr Tatarka submitted, first, that it was open to the learned magistrate to find in a summary fashion that the fee charged by him was fair and reasonable, especially because the magistrate had known Mr Tatarka across 30 years, and the scale fee for junior counsel at trial was $5,614. Mr Tatarka relied on the criteria for assessing fair and reasonable fees in cl 172(2) of the LPUL. Second, cl 185(2) of the LPUL limits the amount a law practice may receive by way of remuneration to the amount it could have received under the costs agreement had it not been void. It was submitted that provision implicitly recognises the entitlement of a law practice to receive fair and reasonable remuneration in the case of a void costs agreement.

44 Mr Petselis submitted, first, that no reliance was placed on cls 172(2) and 185(2) at first instance, and there was no finding made by the learned magistrate pursuant to those provisions. It was submitted the question on appeal is confined to whether the court below made an error of law, and this Court is not entitled to simply affirm the judgment on a different basis.

45 Second, cl 185(2) simply imposes a cap on recoverable fees, and does not confer on a court the power to award fees in summary fashion in the absence of a costs agreement.

46 I agree with Mr Petselis' submission that no reliance was placed on cls 172(2) and 185(2) of the LPUL at first instance. No mention was made of those provisions, and there was no attempt to lead evidence which was obviously directed to the considerations relevant to fair and reasonable costs. There is no indication that the learned magistrate considered cls 172(2) and 185(2) of the LPUL, and no reason why he would have done so. Had Mr Tatarka put a case relying on cls 172(2) and 185(2) at first instance, Mr Petselis would have had the opportunity to challenge evidence led by Mr Tatarka, put relevant evidence of his own, and make submissions. I note Mr Tatarka first made the argument in supplementary written submissions filed shortly before the hearing of the appeal. Mr Tatarka cannot seek to succeed on appeal on an entirely different case to that run below.

47 Had it been necessary I would have found for Mr Petselis on ground 1.

Did the magistrate err by failing to find the contract was void because Mr Tatarka did not comply with the provisions of the LPUL?

48 Mr Petselis submitted, first, that if there was a contract or costs agreement between them then Mr Tatarka was obliged to disclose information to him in accordance with cl 174 of the LPUL. It was submitted this was because the disclosure scheme provided by div 3 of pt 4.3 of the LPUL placed the cl 174 disclosure obligation on the law practice which had the entitlement to sue the client for fees. Mr Petselis submitted that if there was a contractual relationship between he and Mr Tatarka then, in effect, he had retained two law practices, not by tripartite agreement, but by two bilateral agreements. It was submitted that it would lead to an anomalous and unintended result if Mr Tatarka could sue on the costs agreement with Mr Petselis, while relying on the benefits of the limited disclosure obligations in cl 175(2) in circumstances where no disclosure may have been given under cl 174.

49 Second, although non-disclosure was not pleaded as a defence, it was raised during cross-examination of Mr Tatarka, and in argument at first instance. The learned magistrate understood Mr Petselis raised failure of disclosure as a defence, and determined that issue. In those circumstances he was entitled to raise the issue on appeal.

50 Third, for the following reasons, the legal burden of proving disclosure rested on Mr Tatarka. First, the proper construction of cl 178 is that it makes disclosure an essential ingredient of a claim for costs. Second, the LPUL provides that, if a law practice contravenes the disclosure obligations in cl 178(1)(c), it must not commence or maintain proceedings for the recovery of legal costs until they have been assessed or any costs dispute has been determined. Placing the burden of proving non-disclosure on the client is inconsistent with the prohibition on the law practice commencing a claim where there has been a failure to make proper disclosure, and is incongruent with cl 178(1)(c). Third, placing the legal burden of proving proper disclosure on the law practice would be more consistent with the LPUL's object of requiring a costs assessment or determination in the absence of proper disclosure, because it would prevent the anomalous result of a second law practice being able to make full recovery of costs in the absence of proof of proper disclosure by the first law practice. Fourth, because the burden of disclosure is on Mr Tatarka, he should also bear the burden of proving that disclosure has been made. Fifth, a law practice has obligations to maintain proper client files and is therefore better placed to prove disclosure. Sixth, placing the burden on the law practice enhances the LPUL's consumer protection aims. Seventh, there is nothing in the LPUL that creates a presumption that disclosure has been provided. Eighth, placing the burden on the client of proving that proper disclosure had not been made would require a party to prove a negative.

51 Fourth, the learned magistrate erred in finding for Mr Tatarka in the absence of a finding that the costs agreement complied with cl 180(2) by being in writing or evidenced in writing.

52 Mr Tatarka submitted, first, that disclosure default was not pleaded in defence and the arguments put on appeal were not developed by Mr Petselis in the Magistrates' Court. Mr Petselis should not be allowed to run a different case on appeal in circumstances where Mr Tatarka was robbed of the opportunity to call evidence to meet the case, for example, that Mr Petselis waived his right to disclosure from Mr Tatarka; Mr Petselis already knew that which he said he did not receive written disclosure of; Mr Petselis was a commercial client and was not owed disclosure obligations; or that any contravention of the disclosure obligations was not substantial and was subsequently rectified. It was submitted that at first instance Mr Petselis simply asserted that Mr Tatarka owed him a disclosure obligation, but did not allege a particular breach of the obligation or develop argument as to the consequences of a breach.

53 Second, the evidence did not make out the alleged non-disclosures. Relying on the judgment of Rothman J in Nunzio Berardi v Salvatore Russo t/as Russo and Partners,[11] Mr Tatarka submitted that if Mr Petselis wanted to rely on a defence that there was a relevant non-disclosure he must plead the allegation adequately and call evidence.

54 Third, there is no evidence that proper disclosure was not given to Mr Petselis by Evans Ellis, or that Mr Petselis was unaware of the information which he now seeks to argue was not disclosed. It was submitted it was inherently likely that Mr Petselis well knew all these things. Mr Petselis' own evidence was that he engaged solicitors very frequently, and was often in dispute with those solicitors in relation to costs, including by taxations in the Costs Court. Mr Tatarka submitted there was no obligation to disclose to Mr Petselis information he was already aware of.[12]

55 Fourth, Mr Tatarka was retained by Evans Ellis. Consequently, Mr Tatarka's disclosure obligations were governed by cl 175 of the LPUL. Those obligations were met. The cl 174 disclosure obligations were owed by Evans Ellis to Mr Petselis.

56 Fifth, it is open to conclude that the oral agreement made between the parties on the afternoon of 14 February was an agreement to which the disclosure obligations did not apply.[13]

57 Sixth, it was open to conclude that Mr Tatarka's email to Ms Weiner on 13 February 2017 was evidence in writing of a costs agreement between the parties, or that it was an offer which Mr Petselis accepted by continuing to instruct Mr Tatarka, and that there was an oral variation of the costs agreement on 14 February, which was evidenced by Mr Tatarka's email to Ms Weiner and Mr Petselis that afternoon, in which case the requirement of cls 180(2) and 130 were met. Alternatively, it was open to conclude the agreement made between the parties was not a costs agreement for the purposes of cl 180, so that the requirements of that provision did not apply.[14]

58 The case Mr Petselis seeks to run on appeal was not run at first instance. Mr Petselis did not plead failure to provide disclosure as a defence. To the extent it was raised during the Magistrates' Court hearing the question was whether Mr Tatarka made disclosure of his fees. Mr Petselis did not argue at first instance that Mr Tatarka failed to comply with disclosure requirements in cls 174(2), (3) and (6), or that these matters were not disclosed to him. Mr Petselis did not argue that the costs agreement was void because of a contravention of disclosure requirements or because of non-compliance with cls 180(2) and (3) of the LPUL. I agree with Mr Tatarka's submission that, had these arguments been made, he would have had the opportunity to call evidence to meet the case put against him. It would offend well-established principles if Mr Petselis were permitted to run a case on appeal which he did not seek to run at first instance.[15] On this basis alone ground 3 fails.

59 Mr Petselis retained Evans Ellis to act on his behalf in relation to the property dispute. Evans Ellis retained Mr Tatarka to appear for Mr Petselis on 14 February 2017. In my view cl 175 of the LPUL provides that where a first law practice, in this case Evans Ellis, intended to retain or retained a second law practice, Mr Tatarka, Evans Ellis had the obligation to make disclosure of information under cl 174 and Mr Tatarka was obliged to make the more limited disclosure required by cl 175(2). That construction accords with the plain meaning of the words in cl 175. Clause 180(1)(b) provides helpful context by demonstrating the difference between the relationship of one law practice retained by another, and a costs agreement. The disclosure obligations are not determined by which law practice had a costs agreement with the client. Mr Petselis did not allege, and made no attempt to prove, that Evans Ellis contravened its disclosure obligations. It is inherently likely that Mr Petselis well knew the things he now argues were not disclosed to him by Mr Tatarka. Mr Petselis does not allege that Mr Tatarka failed to make disclosure to Evans Ellis under cl 175(2). In fact it is plain on the evidence that he did make that disclosure. I do not accept that the outcome of this analysis is anomalous having regard to the consumer protection objects of the LPUL disclosure provisions. Mr Petselis entered a tripartite agreement with Evans Ellis and Mr Tatarka. When he did so he was aware of Mr Tatarka's fees. There is little doubt he understood and gave consent to the proposed course of action for the conduct of the property dispute proceedings. In the circumstances of this case there is no reason why it should be Mr Tatarka, rather than Evan Ellis, who had to disclose the additional information under cl 174(2).

60 Mr Petselis submitted, relying on cl 178(1)(c) of the LPUL, that a law practice bears the legal burden of proving that it made proper disclosure as a precondition to claiming fees, and that establishing proper disclosure is an essential ingredient or element of a claim for costs. There are two responses to this submission. First, it was open to conclude that Mr Tatarka satisfied the disclosure obligations he bore. Second, I do not accept that cl 178(1)(c) of the LPUL has the effect for which Mr Petselis contends. Pursuant to cl 184 a costs agreement may be enforced in the same way as any other contract. Clause 178(1)(c) only applies if there has been a contravention of disclosure requirements, and will only require consideration to the extent that compliance of a law practice with disclosure obligations is put in issue.

61 Finally, I agree with Mr Tatarka's submission that it was open to conclude that the costs agreement satisfied the requirements of cls 180(2) and (3) because it was evidenced in Mr Tatarka's emails sent on 13 and 14 February 2017, and by the conduct of Mr Petselis attending court on 14 February and providing instructions to Mr Tatarka in relation to the property dispute.

63 I have found against Mr Petselis on grounds 1 and 3. Accordingly the appeal will be dismissed. I will hear from the parties in relation to costs.

[1] Legal Profession Uniform Law Application Act 2014 (Vic) ('the Act') sch 1.

[2] Legal Profession Uniform Law Application Act 2014 (Vic) s 4.

[3] Ibid sch 1, cls 170(1)(a), 170(2)(b)(iii).

[5] [2001] VSC 173 (29 May 2001) ('Dimos').

[7] [2008] VSC 9 (5 February 2008) [32] (citations omitted).

[8] [2001] VSC 173 (29 May 2001) [81], [88].

[11] [2015] NSWSC 1520 (16 October 2015).

[12] Dennis v Cameron [2007] NSWCA 228 (5 September 2007) [46] (Hoeben J, with whom McColl JA and Handley AJA agreed).

[13] Beba Enterprises Limited v Gadens Lawyers [2013] VSCA 136 (6 June 2013) [73]-[75] (Ashley JA, with whom Redlich and Priest JJA agreed).

[15] Whisprun Pty Ltd v Dixon [2003] HCA 48 (3 September 2003); Martin v Hendersons Industries Pty Ltd [2004] VSCA 19 (3 March 2004) [22]-[26]; Elliott v Australian Securities and Investments Commission [2004] VSCA 54 (7 April 2004) [97]-[98].