Baker & Anor v Kearney

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11084 of 2002 Alan Howard Baker & Anor v James Aloysius Kearney

JUDGMENT 1 Master: The defendant is a barrister. He provided legal services for the plaintiffs in and about certain proceedings brought in respect of a claim under an insurance policy. A number of costs agreements were made between the parties. Certain arrangements were made to secure payment of fees. Memorandum of fees were rendered. The arrangements enabled part payment of the fees rendered. The plaintiffs had success in the proceedings and that payment was effected from moneys thereby recovered. 2 The defendant has taken steps to recover the balance of his fees. Firstly, he brought proceedings in the District Court to recover the sum of $59,088. The proceedings were heard by Rolfe DCJ and resulted successfully for the plaintiffs. Secondly, the defendant made an application for assessment of costs. The assessment came before a Costs Assessor (Mr Castle). The Costs Assessor made a determination in an amount of $29,339.52. It was issued on 21 March 2002. He gave detailed written reasons for the determination. 3 The plaintiffs have brought an appeal from that determination pursuant to s 208L of the Legal Profession Act 1987 (the Act). The grounds of the appeal are as follows:- "1. The Costs Assessor erred in law in that he was precluded from making a practitioner (barrister)/Client costs assessment by reason of the judgment of Judge Rolfe given in the District Court on 4 September 2000 in proceedings 9853 of 1997 between the plaintiffs and the defendant.. 2. The costs assessor erred in failing to consider whether the principles of res judicata or issue estoppel precluded him from making a barrister/client costs assessment. 3. The Costs Assessor erred by failing to have regard to the effect of sections 208 J (3) and 208 JA (4) in holding that a practitioner was entitled to have his or her costs assessed even if the respondents were under no obligation to pay such costs. 4. The plaintiffs were denied procedural fairness in that in the circumstances of the cost assessment the costs assessor should not have proceeded to determine the amount of costs until after determining the threshold issue of law relating to the judgment of Rolfe DCJ in circumstances where

(a) the plaintiffs were not legally represented (b) the plaintiffs had not made any submissions as to the quantum of costs." 4 In the proceedings before Rolfe DCJ, the defendant relied on five costs agreements and four memoranda of fees delivered purportedly pursuant to the costs agreements. 5 There may be debate as to the actual findings made by the Judge on certain matters and these findings are matters relevant to the submissions of res judicata and issue estoppel. Fortunately, this appeal can be disposed of without entering into that debate. 6 Certainly, it seems clear that there were what may be described as technical matters which sufficed to defeat the defendant's claim. One was a failure to address any of the memoranda to each of the defendants. The Judge was not satisfied that any of the memoranda of fees were sent by post to the plaintiffs. The case was then said to fail by reason of non-compliance with the provisions of s 192 and s 195 of the Act. 7 The Judge then dealt with other matters relied on by the defendant in order to defeat the claim. After considering the arguments, the Judge came to the view that the various memoranda failed for other reasons. I shall mention certain of them by way of example. A memorandum of fees dated 15 July 1995 failed inter alia because services had been provided prior to the relevant costs agreement, it charged for disbursements which were not provided for in the costs agreement and the rates charged were higher than those provided in it. It was also said "that the billing arrangements referred to in the cost agreement were not in compliance with s 175 because they related to fees payable in advance and the plaintiff is suing the defendant for past fees". A memorandum dated 2 January 1996 failed because at the time it was sent there was no cost agreement in place. A memorandum dated 13 November 1996 failed inter alia because it contained amounts not referable to any costs agreement. A claim for interest contained in a memorandum of fees dated 13 November 1996 failed inter alia because the referable costs agreement did not contain requisite billing arrangements. 8 In addition, there were findings made concerning competing evidence given as to a conversation said by the defendant to have been had between himself and the first plaintiff (inter alia it was said that he was prepared to act on a "do and charge" basis). There were observations made as to the awareness of the defendant that his prospects of getting paid depended on the outcome of the case and that in reality he was not proceeding to act on the said "do and charge" basis. 9 The application for assessment of costs was founded on four bills of costs (each of which was dated 3 October 2000) purportedly given pursuant to four costs agreements. 10 The plaintiffs were not represented during the assessment. The first plaintiff (on behalf of both plaintiffs) submitted that the matters arising on the costs assessment had already been determined in the District Court proceedings. The Costs Assessor sought to bring to the attention of the first plaintiff certain matters (inter alia that he should not labour under a false impression that the District Court Judgment negatived the right of the defendant to claim the fees referred to in the four new memoranda and that it was unnecessary to object to the application). His letter dated 19 February 2002 told the plaintiffs that he was now dealing with the assessment and gave a further opportunity to make submissions. Further submissions were made on behalf of the plaintiffs. These submissions expanded upon what had been earlier said about final adjudication. The submissions made it clear that the first plaintiff did not consider that he was under any wrong impression. 11 The views had by the Costs Assessor in respect of the judgment of Rolfe DCJ and his task as a Costs Assessor can be found under the headings of "Judgement of Rolfe J" and "Comments on Judgment of Rolfe J" in the written reasons. The former do not need to be repeated in this judgment. However, the latter were the subject of relevant argument. 12 The Costs Assessor expressed the view that he was fully entitled to assess the fresh memoranda on their merits under and pursuant to the provisions of the Act. He further said that the defendant was entitled under the Act to have his costs assessed, even though the plaintiffs can prove (as a matter of contract or agreement) that they are under no obligation to pay them. 13 Before proceeding further, I should mention that the defendant placed stress on provisions of the Act which enable an application for assessment to be made. In my view these provisions do not assist on the question of whether or not an assessment should proceed in cases where there is no liability to pay the costs. 14 I have not been referred to any authority on this point. However, for a number of reasons, it seems to me that a Costs Assessor should not proceed with an assessment of costs where there is no liability to pay those costs. As a practical matter, it could be expected that any such assessment would be an exercise in futility throwing away costs. There are provisions in the Act which support the view that a task of the Costs Assessor is to quantify the costs payable under a bill or an order. A determination of an amount payable may place the applicant in a position to file the certificate pursuant to s 208J (3). It is then taken to be a judgment of the court in which it is filed. The applicant is then at liberty to take enforcement action. I do not consider that the legislature intended that such a result should follow in a case where there is no liability to pay the costs. 15 For completeness, it may be added that the certificate issued in this case expressed a determination that the amount of $29,339.52 was "To Be Paid To The Practitioner". 16 Prior to 1 July 1994, barristers were not able to bring legal proceedings to recover counsel's fees. Legislative changes have altered that position. Section 38I enables a barrister to enter into a contract (which is called a costs agreement) for the provision of services with a client or with another legal practitioner and may sue and be sued in relation to the contract. Provisions governing such a contract may be found in s 184 and elsewhere. One of those provisions is that a costs agreement is void if it is not in writing or evidenced in writing.

17 In this case, there were costs agreements in writing with the clients. A copy of each agreement may be found in Exhibit A. Each of the agreements presents a similar problem for the defendant. Each agreement provides an amount mentioned therein as the "Total Estimate". Further, it is provided that this amount is to be paid by the client four weeks in advance of the provision of the agreed legal services. Unfortunately for the defendant, none of the agreements contain any other provision obliging the payment of fees. 18 In this case, it is common ground that the defendant did not render memoranda for advance payments in accordance with the agreements. The memoranda were rendered on what has been called a "do and charge basis" for past services. 19 These matters suffice to dispose of this appeal. It is unnecessary to proceed with any further consideration of matters concerning res judicata and issue estoppel. 20 For completeness, it may be helpful to make some observations in relation to the fourth ground of appeal. It seems to me that the plaintiffs were given a reasonable opportunity to make submissions to the Costs Assessor in relation to the application. It may be observed that Rolfe DCJ took the view that the first plaintiff was a very sophisticated person who had a very good understanding of matters such as the "legal system, security documents, finance transactions and so on". Accordingly, I do not accept that there was any denial of natural justice or lack of due process. 21 I order that the determination of the Costs Assessor be set aside. The defendant is to pay the costs of the Summons. The Exhibits may be returned. **********

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