Athanasiou v Ward Keller

Supreme Court of the NT|1998-06-04|Before: Mildren J

This application by originating motion by the plaintiff seeks an order pursuant to s130 of the Legal Practitioners Act declaring that a costs' agreement made between the plaintiff and the defendant is not binding on the parties, or such other order as the Court deems appropriate.

The defendant company carries on a legal practice under the style of Ward Keller, whose offices are situated at Level 7, Northern Territory House, 22 Mitchell Street, Darwin. No evidence was led to prove the incorporation of the defendant but it was not disputed that the defendant could properly carry on the practice of a legal practitioner, and I assume therefore that the defendant was incorporated under the Legal Practitioners (Incorporation) Act 1989 (or its predecessor the Legal Practitioners (Incorporation) Ordinance 1974 ) with the consequence that the defendant is, for the purposes of the relevant provisions of the Legal Practitioners Act which I have to consider, deemed to be a partnership comprised of its directors each of whom hold unrestricted practising certificates: see the Legal Practitioners (Incorporation) Act 1989, ss7(2) and 11.

The plaintiff is a client, or former client, of the defendant which the plaintiff instructed to act in relation to four separate matters. The defendant was instructed in relation to the first matter - a criminal matter - on 11 August 1994. The defendant was instructed in relation to the second matter - a local court action - on 19 August 1994. On that date, the plaintiff signed a document headed "Ward Keller Standard Terms and Conditions of Engagement - SC" which the defendant asserts is a costs' agreement which complies with the provisions of s129 of the Legal Practitioners Act (hereinafter referred to as "the Act"). The defendant was instructed at a later time to act for the plaintiff in respect of a third matter in respect of which he signed a further document purporting to be a costs' agreement. The fourth matter is of no relevance. The only agreement of relevance to these proceedings is the document signed on 19 August 1994. The defendant asserts that that document applied to both the criminal matter and the local court matter. For ease of reference I will hereafter refer to that document as "the costs' agreement". Accounts were sent to the plaintiff in 1994, 1995 and 1996 in relation to both matters. The plaintiff did not pay them and in late November 1996 the defendant threatened the plaintiff with legal proceedings. Thereafter on 16 December 1996 the plaintiff's son spoke to Ms Syann Williams, a solicitor in the defendant's employ, who had been instructed to recover the outstanding fees, at that stage, amounting to $18,421.60. The plaintiff's son, who acted on behalf of his father from time to time, indicated to Ms Williams that he was not happy with the conduct of the local court matter (for which 3 separate accounts had been rendered totalling $11,775.10) but that he would arrange for payment of the other matters, which totalled $6,649.50. On 24 December, the plaintiff paid $6,700 in relation to those matters.

On 27 December 1996, the defendant issued a summons in the Local Court against the plaintiff to recover its fees. The statement of claim pleaded that the defendant's claim was for:

professional costs and disbursements rendered in the sum of $11,721.60 for professional legal services provided to the Defendant by the Plaintiff at the request of the Defendant between 19 August 1994 and 29 March 1996 plus interest calculated pursuant to Rule 38(2) of the Local Court Rules on outstanding amounts from the date each was rendered until 22 December 1996 at the rate prescribed from time to time by Rule 59.02 of the Supreme Court Rules.

The particulars as provided referred to three invoices. The defendant took into account $53.50 (the excess of the $6,700 paid on 24 December 1996) in reduction of its claim. The pleading made no reference to the costs' agreement. No copy of the costs' agreement had ever been given to the plaintiff.

By letter dated 6 February 1997 the defendant wrote to the plaintiff enclosing a copy of the costs' agreement.

At some stage the defendant prepared bills of costs for taxation by the Master. The bills relied upon the costs' agreement. The plaintiff apparently sought to challenge the costs' agreement before the Master who apparently held that he had no jurisdiction to entertain that challenge which had to be brought before a Judge. On 13 March 1997 the plaintiff instituted these proceedings.

On 17 June 1997 the defendant filed an amended statement of claim in the Local Court pleading the costs' agreement for the first time.

Mr Riley QC for the defendant raised as a preliminary point that before the relief sought by the plaintiff could be entertained, the leave of the Court was required pursuant to s130(4) of the Act which provides that

except by leave of the Court, a person is not entitled to make an application under [s130]...after the institution of proceedings for the recovery from that person of the amount payable under the agreement.

After hearing submissions, I ruled that no leave was required; alternatively, that if I was wrong I would grant leave, and would provide reasons in due course. I then proceeded to hear the plaintiff's application for relief.

As can be seen, at the time the originating motion was filed, the defendant had already commenced proceedings to recover its fees, but the statement of claim in the Local Court made no reference to the costs' agreement at that time, the relevant amendment to plead reliance upon the costs' agreement not having been made until some months afterwards.

The form of pleading contained in the original statement of claim was not based on a costs' agreement, but on "professional legal services provided to the Defendant by the Plaintiff at the request of the Defendant." Mr Riley QC submitted that this form of pleading was sufficient to qualify as a proceeding "for the recovery...of the amount payable under the agreement." In my opinion, it is not; the form of pleading utilised is appropriate not for an express contract, but for one formerly implied by law, where the plaintiff seeks to recover, not an amount due under the contract, but upon a quantum meruit. The form of words used is classical indebitatus assumpsit : see generally, Cheshire & Fifoot's Law of Contract, 7th Aust. Edn., Seddon and Ellinghous Butterworths, Sydney, 1997, para 26.20; Hall v Busst [1960] HCA 84; (1960) 104 CLR 206 at 241-244; Bullen & Leak and Jacob's Precedents of Pleading , 12th Edition, Sweet & Maxwell, London, 1975, Forms 531, 562, 563 &569 ; Odgers on Pleading and Practice , B. A. Harwood, 16th Edn., p 178 and Form 29. If the defendant had wished to sue on the terms of a written agreement, it was necessary to plead it specifically: see Bullen & Leak and Jacobs, supra, p 345; Odgers , supra , p 178. Since Pavey & Matthews Proprietary Limited. v Paul [1987] HCA 5; (1986-1987) 162 CLR 221 the modern law of restitution has subsumed all claims previously classified as quasi-contractual: see Cheshire & Fifoot, supra , para 25.1. A claim of this character is not an action to enforce a contract at all: see Pavey v Matthews Proprietary Limited. v Paul, supra, at 227, 256-7, 269. In those circumstances it is difficult to see how the original pleading could be classified as an action "for the recovery...of the amount payable under the agreement." Consequently leave was not required.

If I am wrong in this conclusion, I consider that leave should be granted. The plaintiff was not provided with a copy of the costs' agreement until after the action had been commenced. The statement of claim did not specifically refer to the costs' agreement. The invoices sent to the plaintiff made no reference to the costs' agreement. The letter of 11 November 1996 demanding payment made no reference to the costs' agreement. The amount of the invoices total $11,775.10; of this sum a little over $11,500.00 is for professional costs. The work done was in defending a local court action for $7,681.00. The action has never proceeded to trial. There is a counterclaim for damages which at the most could not exceed $5,000.00. Even though the claim involved a building dispute, prima facie the costs appear to be very high.

In my opinion one of the factors going to the question of whether or not leave should be granted is guided by the purposes for which s130(4) exists, so far as that may be discerned from the Act considered as a whole. Leave is only required once the solicitors have sued on the costs' agreement. If a costs' agreement is set aside, the action upon the agreement will be rendered futile. The Act permits a solicitor to sue on a costs' agreement at any time. There are no preconditions concerning the need to even render an itemised account, as by virtue of s129(1), ss119 to 128 do not apply. The effect of an order setting aside an agreement is that the solicitor may not be able to sue for his fees at all until the practitioner has complied with s119(2) (which requires a statement of the costs to be sent, signed by a partner in the firm), and one month has elapsed after delivery thereof (s119(4)). In the meantime, the solicitor can be required to have his bill taxed by the Master (s120) and any proceedings brought are stayed (s127). Once taxed, the amount so taxed is recoverable as a debt (s128) and is conclusive of the amount due to the legal practitioner (s125(3)). These provisions do not prevent a solicitor from recovering something for his fees, but obviously the likely result is delay and expense, as well as the probability that the solicitor will receive less. Obviously a significant consideration will be the loss of the action, but this could be remedied by a term for the payment of costs thrown away. In the present case the action would not be lost as the defendant has in fact complied with s119(2)(b) and more than one month had expired before the action was brought. The defendant could therefore seek to again amend its statement of claim. Further, no significant delay or additional expense is involved. The defendant has already prepared bills of costs in taxable form, and is not unwilling to have costs taxed by the Master. There is therefore no need for there to be an itemised statement of costs vide the procedures contemplated by ss119 & 120 of the Act, that requirement having been waived. In any event this Court as a superior court has jurisdiction to ascertain by taxation, moderation or fixation the costs charges and disbursements of a solicitor from his client: Baalman (JS & JH) v Dare Reed (1983-84) 52 ACTR 3 at 17. I consider that it is relevant also that the defendant did not make it plain by its pleading that it was suing on the agreement. Other matters relevant to the discretion are that if leave is granted, I consider that the plaintiff has an arguable case. Mr Riley QC urged upon me that the plaintiff at no time expressed dissatisfaction with the bills, but complained only about the way the matter was handled, and paid the other accounts which had been prepared on the basis of the costs' agreement, or one like it. I do not think that much weight can be given to those matters. At that stage, the plaintiff did not have a copy of the costs' agreement. The accounts rendered were in short form in which a lump sum was claimed. The plaintiff was not then legally represented. The plaintiff is of Greek extraction, and although he speaks English conversationally, cannot read or write in the English language. I consider that the weight of the relevant factors going to discretion favour the granting of leave.

I turn now to consider the agreement itself, and the relief sought in the originating motion.

The first question is whether the agreement complies with s129, the relevant provisions of which are as follows:

(2) A legal practitioner may make an agreement with a person that the amount of the costs (excluding disbursements) payable, or to be payable, by the person to the legal practitioner for work of a professional nature already undertaken, or to be undertaken, for the person by the legal practitioner shall be the amount specified in, or ascertainable in accordance with, the agreement.

(3) An agreement referred to in subsection (2) is not enforceable unless a note or memorandum containing the terms of an agreement is signed by the person liable to pay the costs to which the agreement relates.

It was submitted by Mr Davis, counsel for the plaintiff, that the costs' agreement in this case was so vague as to be void for uncertainty. But it seems to me that the proper question is whether the agreement complies with s129(2). If it did, it could not be void for uncertainty.

The costs' agreement did not in fact specify an amount payable for the defendant's costs. What it provided for was, in broad terms, rates of charges. Clause 1 of the costs' agreement provided:

The fees chargeable by Ward Keller and payable by the client are in accordance with the Scale of Fees shown overleaf...

On the next page, there are then a number of items each dealing with different topics. For example, item 2 provides:

$14.PER 6 MINUTE UNIT for the time a solicitor is engaged on your matter and which time is not included in the items set out below.

So far as these items are concerned, generally speaking, there is no difficulty or room for doubt. If the work was performed, the item identifies the rate at which the work is to be charged. The amount payable for these items in my opinion is "ascertainable in accordance with the agreement."

However, some items are chargeable either at a fixed rate or alternatively at a minute unit rate: see items 6(c) & 7(d). The costs' agreement does not specify in what circumstances the alternative rate is to apply. Item 14 of the scale is an alternative, apparently, to items 1 to 13. It provides "we may instead choose to charge for appropriate work as follows." Then there is set out a number of items, (a) to (g), dealing with such matters as "From the receipt of instructions to sue to the Notice of Trial $1,023.00"; "For the process of providing and producing a List of Documents $294.00" etc. Mr Riley QC submitted that the costs payable depended upon an election being made by the solicitor, but once the election was made, the costs were ascertainable. The wording of item 14 clearly confers an election on the solicitor, but there is no similar wording to items 6(c) and 7(c). Applying what reasonable business persons in the position of the parties would take those items to mean, I consider that the intention was to confer a right of election upon the solicitor. After all, the solicitor is the person who prepares the claim for the charges, not the client. I do not consider that a right of election given to one party has the effect that the charges are not ascertainable: see Weiss v Barker Gosling (1993) 114 FLR 223 at 248-9.

A more substantial objection was raised to Clause 2 of the agreement, which provides as follows:

There will also be an additional allowance (referred to overleaf) by way of a percentage of the total professional and clerical fees calculated in accordance with the itemised scale or lump sum scale. This will usually be between 30% and 50%. Having regard to the circumstances of the particular matter, higher percentages may apply.

In addition to the fees claimed under any other heading, a lump sum may be charged which will be an allowance for the complexity, novelty, difficulty of the questions involved, the nature and importance of the matter, the skills and specialised knowledge brought to the matter by your solicitor, the responsibility assumed by your solicitor, the number of documents involved in the matter, whether or not the work was done during usual office hours, the other circumstances in which the business was transacted the labour and time spent, the value of the money or property and any other relevant circumstances involved in conducting your matter. This extra percentage is charged in accordance with the Supreme Court Cost Rules and Practice Directions.

It is clear that clause 2 does not merely provide a range of between 30% to 50%. Had it done so, it may not have been objectionable: see Lewandowski v Mead Carney-BCA Pty Ltd [1973] 2 NSWLR 640; Weiss v Barker Gosling, supra . The contract may have been construed either as conferring an option on the solicitor to claim any amount not more than 50%, or it may have been construed contra proferentum the defendant as involving a promise to pay 30%. However, clause 2 does not fix an upwards ceiling, and nor does it amount to a promise to pay 30%, because it is clear that the second and third sentences in clause 2 are not intended to be promissory but merely indicative. The promise is to be found in the first sentence: and the quantum of the percentage is to be found in the words of the last sentence of item 15; but the difficulty is that no-where in the Supreme Court Cost Rules or in the Practice Directions is there any statement which fixes what percentage, or even what range of percentages may be allowed. The actual amount allowable is dealt with in item 5 of Part 2 of the Appendix to Order 63 and is expressed as

a charge, being a percentage of the amount allowed for that preparation, which, in his opinion , ought to be allowed for general care and conduct, having regard to all the relevant circumstances,

The words "in his opinion", of course, refer to the opinion of the Taxing Officer. Clearly the actual amount he may allow is discretionary.

In those circumstances it seems to me that, whilst it may be argued that the plaintiff has promised to pay a reasonable amount, the amount is not "ascertainable in accordance with the agreement," within the meaning of s129(2). I consider that, for an amount to be "ascertainable", it must be able to be calculated with precision, assuming one had knowledge of the work in fact done. An amount which is discretionary, and not limited by any maximum, is not in my opinion, "ascertainable". Clearly the indication given by clause 2 is that the amount to be claimed will be a substantial part of the total bill. In these circumstances, I do not consider that the item can be ignored as being de minimus . I therefore conclude that the costs' agreement is not an agreement where the amount of the costs payable is ascertainable in accordance with the agreement, within the meaning of s129(2) of the Act.

However, that does not necessarily resolve this matter for several reasons. First, even if the agreement does not comply with s129(2) it may still be binding at common law. S129 provides only for non-enforceability where there is no note or memorandum containing the terms signed by the party to be charged, and says nothing about the enforceability or otherwise of agreements which do not comply with s129(2). At common law, a costs' agreement is enforceable if it is made to appear to the Court that the agreement is "fair and reasonable", the burden of proof resting on the solicitor seeking to uphold the agreement: see generally Weiss v Barker Gosling, supra, at 254-258; McInnes v Twigg (1993) FLC 92-345 at 79,660 - 79,661; (1992) 109 FLR 96 at 103-105; Twigg, P and Twigg, MA trading as Adrian Twigg & Co v Kung S

[1994] FamCA 10; (1994) FLC 92-456 (Full Court), at 80,714-80, 715. The second point is that the Court has an inherent power as part of its general disciplinary function in relation to legal practitioners to supervise such agreements, whether or not they comply with s129(2): Burslem v Roberts [1995] NTSC 31; (1994-1995) 123 FLR 411 at 422 per Kearney J. Thirdly, it may be argued that s130(1) of the Act applies to agreements made under s129, whether or not the agreement fully complies with s129(2). If this is so, a question arises as to whether the burden of proof as to whether or not the agreement is fair and reasonable rests with the solicitor or with the client. In Burslem v Roberts , supra , at 422 Kearney J said:

Section 129(2) of the Legal Practitioners Act permits a legal practitioner to agree with his client on the amount of costs for the professional work he is to undertake for the client. Theirs is a fiduciary relationship; accordingly such an agreement is enforceable only if it is just, fair and reasonable in the circumstances: see Clare v Joseph [1907] 2 KB 369 and Weiss v Barker Gosling (1993) 114 FLR 223.

Counsel for the defendant, Mr Riley QC, contended that the burden rested, vide s130(1) of the Act, upon the plaintiff to show that the costs' agreement was "not fair and reasonable", as a matter of the construction of that subsection. Mr Davis contended that it was upon the solicitor to show that the agreement was both fair as well as reasonable.

130. POWERS OF COURT WHERE CONTRACT NOT FAIR AND REASONABLE

(1) Where, on an application by a person who has made an agreement with a legal practitioner under section 129, the Court is satisfied that the agreement is not fair and reasonable, the Court may, by order -

(a) direct that the amount payable under the agreement be reduced to an amount specified in the order; or

(b) declare that the agreement is not binding on the parties to the agreement.

(2) Where, under subsection (1), the Court directs that the amount payable under an agreement be reduced, the agreement is enforceable as if the amount specified in the order of the Court were specified in the agreement as the amount payable under the agreement.

(3) Where, under subsection (1), the Court declares that an agreement is not binding on the parties to the agreement -

(a) the Court may make such further orders as it thinks necessary to restore the parties to the agreement to the position in which they would have been if the agreement had not been made; and

(b) the provisions of this Part (other than section 129) apply as if the agreement had not been made.

(4) Except by leave of the Court, a person is not entitled to make an application under this section in respect of an agreement after the institution of proceedings for the recovery from that person of the amount payable under the agreement.

In my opinion s130 is a procedural provision which is intended to broaden the powers of the Court so as to enable the Court to do justice to the parties where it finds that an agreement is not fair and reasonable, and requires leave before an agreement can be challenged after the agreement has been sued upon. However I consider that it applies only to agreements which fully comply with s129(1) which excludes the provisions of ss119-128 of the Act from "costs to be paid to a legal practitioner for work to which an agreement under this section relates." I think "an agreement under this section' or "an agreement... under section 129" must mean an agreement which complies in all respect with s129. If this is correct, it follows that as the agreement in question does not comply in all respects with s129, that s130 does not apply to it, and the burden is upon the defendant to prove that the costs' agreement is both fair and reasonable, otherwise the agreement is unenforceable.

Nevertheless, in case I am wrong, and since the matter of the burden of proof under s130 has been fully argued and is of general importance to the legal profession, I consider the I should indicate my views as to where the burden of proof does lie in respect of agreements to which s130 applies. It is clear that s130(1) contemplates that the application is to be made by the client. It is also inherent in the scheme of the provisions of the Act that an agreement made in accordance with s129 is enforceable until it is set aside or varied under s130. In this respect, an agreement made under s129 is given greater effect than a costs' agreement at common law which is enforceable only if the solicitor shows that the agreement is fair and reasonable: see the authorities referred to above.

On the other hand, the expression "fair and reasonable" in relation to costs' agreements in Acts relating to legal practitioners has been the subject of considerable judicial decision both in England and in this country. The leading authorities are discussed in Weiss v Barker Gosling, supra at 254-267 and in McInnes v Twigg, supra , at 104-105. The concept of "fairness" deals with the circumstances under which the agreement was entered. Thus an agreement has been held to be unfair if the solicitor used undue pressure on his client to sign it, or if the solicitor did not explain the agreement to his client: see the cases referred to by Fogerty J in Weiss v Barker Gosling, supra , at 255-6. The concept of 'reasonableness', on the other hand relates to the terms of the agreement itself. So if the fees to be charged under the agreement are excessive the agreement is not reasonable: In Re Stuart. Ex parte Cathcart [1893] 2 QB 201 at 204-205. In the light of these authorities, I consider that the draftsman of s130(1), when he used the expression "the Court is satisfied that the agreement is not fair and reasonable," could not have intended that an agreement had to be both unfair as well as unreasonable before relief could be granted by the Court. The expression "fair and reasonable" is a composite expression, as Fogerty J points out, in Weiss v Barker Gosling , and this suggests that the burden of proof was intended to rests with the solicitor. The reasons for this rests in the nature of the relationship between solicitor and client, which is a fiduciary one, and which gives rise to a rebuttable presumption of undue influence in respect of dealings between a solicitor and his client: see Weiss v Barker Gosling, supra , at 253-4, and cases therein cited. After carefully considering the authorities, Fogerty J concluded at p 258 that:

The conclusion which I draw is that in relation to costs' agreements which provide for costs which are greater than the established or understood scale, the presumption of undue influence applies and the onus rests on the solicitor to rebut it. In the ultimate it is a question of degree. Where the deviation from the established or understood scale is relatively minor the evidential onus may be readily satisfied. Where the gap is significant then the evidential onus of persuasion is, and should be, greater.

His Honour concluded that the onus in relation to fairness, in such a case, also rested with the solicitor.

Moss J, in McInnes v Twigg , supra , at 104 observed, in relation to the common law, that:

The requirement that the solicitor should carry the relevant onus no doubt reflects the fact that when the agreement was made the solicitor owed to the client a fiduciary duty. No doubt the placing of the onus on the solicitor also reflects the fact that the nature of the proceeding has always been seen as a safeguard for the protection of the client:..."

Part of Fogerty J's reasoning in Weiss v Barker Gosling in limiting the onus only to those cases where the agreement provided for above-scale costs rested upon a passage in Cordery's Law relating to Solicitors , Federic T. Horne 7th Ed (1981) Butterworths London, at 9, that:

In his dealings with his client the solicitor must exercise the utmost good faith, and in any financial transaction with his client ( save as to costs for work done ) there will be a presumption that such transaction should not be upheld unless the solicitor can establish that it was effected by the free exercise of the client's will without any influence on the part of the solicitor. (emphasis added)

The same statement is repeated in the 8th Edn., at p 10, but none of the authorities cited by the authors support the exception. In principle, I do not see why a costs' agreement should be subject to the exception suggested. Obviously, if the costs' agreement reflects the appropriate scale, and no unusual benefit is conferred upon the solicitor, the solicitor will have no difficulty in establishing that the agreement was reasonable. But a costs' agreement may go a lot further than merely providing for the payment of fees; it potentially could confer considerable benefits on a solicitor in addition to his remuneration. I consider that there is no basis for drawing the distinction suggested. In my opinion the result is that the burden of proof rests upon the solicitor in respect of both fairness and reasonableness.

In the present case the plaintiff cannot read English. Mr Clift, the solicitor for the defendant who was representing the plaintiff, has sworn that on 19 August 1994, the day the agreement was signed by the plaintiff, a conversation ensued between the plaintiff and another solicitor from Ward Keller, John Tsoukalis, during a conference at which he was present. Mr Clift said that he was informed by Mr Tsoukalis during the conference that he had advised the plaintiff in the Greek language of the nature of the costs' agreement and its meaning and that the plaintiff understood that the agreement related to both the local court matter and the criminal matter. Mr Clift made a note on the file to this effect (see Ext "A" to his affidavit of 3 April 1998). Mr Tsoukalis signed an affidavit to the effect that he could not recall what his involvement was with the plaintiff at that conference, but that he believed he "advised the plaintiff of the contents of the document in the Greek language" because "I was aware that the plaintiff experienced difficulties in reading documents in the English language". Neither Mr Clift nor Mr Tsoukalis were cross examined. The plaintiff in his affidavit swore that on this occasion he was requested by Mr Clift to sign what he described as "a standard cost agreement". He asked Mr Clift how much the legal expenses would be, and was told "the charge was between $130.00 and $170.00 per hour and necessary out of pocket expenses he described as disbursements." The plaintiff swore that "I signed the cost agreement dated the 19th August, 1994 without reading the document. I accepted and relied upon the information provided to me by Geoff Clift that I was signing a standard cost agreement." The plaintiff was not cross-examined on his affidavit.

I consider it more probable that the contents of the cost agreement were explained to the plaintiff in the Greek language, primarily because of the file note made by Mr Clift. Mr Clift in his affidavit stated that he may have "at some time" have informed the plaintiff that the hourly rate would be $140.00, excluding "any additional allowance". I think that what is clear is that, whilst the plaintiff may have been told what the costs' agreement provided, he was told little else. In particular, I infer that he was not told that the consequences of signing the costs' agreement would be that if the plaintiff were to be successful in the local court litigation, the plaintiff would probably not recover more costs than that allowed for by the Local Court Rules, and that this would probably be significantly less than that provided for by the costs' agreement. I infer also that the plaintiff was not told that he would lose his right to require the defendant's bill to be taxed, nor of the consequences of losing the benefits provided for by subsections 119(2) and

(4) of the Act. The appellant does not say in his affidavit what his attitude would have been if those matters had been drawn to his attention. He understood that he would be charged between $130 to $170 per hour plus disbursements. Whether that is because Mr Tsoukalis failed to interpret the agreement correctly, or because the applicant misunderstood the explanation given to him by Mr Tsoukalis or by Mr Clift, or whether the applicant's memory is faulty, I cannot say. In any event, I consider that these matters should have been explained to him, and the fact that they were not can be inferred from the failure of the defendant's deponents to suggest that they were, and the fact that I gave the defendant an opportunity to submit further evidence on this topic at the hearing, which opportunity was declined. In Weiss v Barker Gossling , supra , at 256 Fogarty J referred to a number of authorities which establish the proposition that the failure of a solicitor to explain fully the degree and impact of the difference between the proposed fees and the relevant scale is fatal to the agreement being held to be fair: see also Brown & Others v Talbot & Olivier (1992-1993) 9 WAR 70 per Ipp J. The position was summarised by Evatt CJ and Fogarty J in In Marriage of S ; Re S and P (1982-1983) 66 FLR 315 at 328:

The ultimate question is whether the solicitor affirmatively establishes that the contract was entered into by the client freely, making an independent and informed estimate of the matter. The essential nature of the proposed agreement and the degree and impact of its difference from the prescribed fees must be explained and understood and accepted. It must be a real and genuine choice, that is, a free exercise of an independent mind.

I would further add that it was never at any time suggested that the plaintiff should obtain independent legal advice before signing the agreement. Although I do not suggest that this is fatal to the defendant, it is obviously of great assistance to a solicitor if this is in fact done.

As to whether the charges were reasonable, I am satisfied that the solicitor has failed to establish that they were reasonable. I take into account the various factors mentioned by Fogerty J in Weiss v Barker Gosling , supra , at 267-288. The amount at stake was very small. The difference between the scale costs and the costs payable under the agreement was potentially significant: see Local Court Rules r36.10(1) and Schedule 1; rr 36.12(1) and 36.13(2). I have already found that these differences were not explained to the plaintiff. I bear in mind that the defendant is a medium to large well-established firm, located in the prime central business district, and that Mr Clift is a partner of the firm. There is nothing to suggest (other than an allegation of fraud) that the case was one of particular difficulty or complexity, either legally or factually, or raised some issue of principle which was of importance to the plaintiff. The charges were not fixed by reference to those factors, but applied arbitrarily to all work done by the firm to which the contract related. I note that the hourly rates are more for solicitors than for non-professional staff, only a few items are in fact in excess of the Supreme Court Scale, and that those items are identified in the agreements. I bear in mind the subjectivity of time costing, the difficulty of objectively checking this method of charging, and the difficulty of the plaintiff in knowing what he could realistically have expected to have had to pay.

On the other hand time costing is now a common method of charging in the profession. The agreement nevertheless provides the same hourly rate regardless of the experience of the individual solicitor, and it is relevant that some of the work at least, if not most of it, could have been delegated to a very junior practitioner. I consider that the factors overall suggest that the charges are unreasonable for this matter; if the burden of proof had fallen the other way I am satisfied that the contract is not reasonable.

Accordingly, I declare that the costs' agreement between the plaintiff and the defendant dated 19 August 1994 is not binding upon the parties. I consider that the proper course is for the defendant's costs to be taxed, and as the defendant is willing to have its costs taxed, there will be an order accordingly, such costs to be taxed in accordance with the Local Court Scale contained in Schedule 1 of the Local Court Rules, or, if the Master is satisfied that the Scale is insufficient to cover the work performed by the solicitors, in accordance with Rule 36 of the Local Court Rules. The defendant is to pay the plaintiff's costs of these proceedings to be taxed.

Legal Practitioners (Incorporation) Act 1989

Legal Practitioners (Incorporation) Ordinance 1974

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