(4) Any failure referred to in this section does not of itself amount to a breach of this Act. However, the failure is capable of being unsatisfactory professional conduct or professional misconduct."
12 The object of the disclosure provisions contained in Division 2 has been said to require an assessment of costs (where there has been a failure to make the requisite disclosure) at the practitioner's expense, before the solicitor from the client can recover the costs.
13 In essence, s 182 provides that if there is a failure to make a disclosure the client need not pay the costs of the legal services unless the costs have been assessed under Division 6 and that the solicitor may not maintain proceedings for the recovery of the costs unless that assessment has taken place.
14 Section 182 makes it clear that there is no obligation to pay the costs and that the solicitor cannot maintain proceedings for their recovery unless the assessment of costs has taken place.
15 It was not in dispute that there had been a failure to make the requisite disclosure and that there had not been an assessment of costs. It was not in dispute that a solicitor may still recover costs even though there was either no costs agreement or any costs agreement was void.
16 The learned Magistrate appears to have had regard to what was said by Levine J in Ipper v Myer Solomon Associates & Ors [2002] NSWSC 1141 and what was said by Barrett J in Wentworth v Rogers [2002] NSWSC 709. In the latter case, it had been observed that where there is no costs agreement or any such agreement is void, a solicitor may still recover costs for legal services and that quantum meruit was a means of recovery available where the agreement was void.
17 He appears to have come to the view that "maintaining" as used in s 182 did not disentitle the solicitor from commencing an action for recovery of costs where there has been a failure to make the requisite disclosure, but that he may not continue, persevere, carry on, keep up, prosecute the proceedings unless the costs have been assessed. He took the view that the defendants were entitled to a stay of proceedings until the statutory obligations imposed by s 182 had been complied with.
18 In my view, the reasoning abounds with misconception. It is difficult to see what assistance was gleaned from Ipper, and it appears that Wentworth has been misunderstood. Further, I consider that there has been a failure to properly construe s 182. The end result saw a vital question of whether s 182 applies to non-contractual claims being at least not fully addressed.
19 Section 182 does not disentitle a solicitor from recovering costs for legal services performed by him, but what he may recover as costs will be determined by assessment under the Act. It takes away both the obligation to pay and the entitlement to maintain proceedings for the recovery of the costs until there has been an assessment of costs. Until that has been done, there is no obligation to pay and consequently no actionable debt upon which proceedings can be maintained.
20 At the time of the commencement of the proceedings in the Local Court, the defendant was not entitled to be paid for the legal services or to maintain the proceedings to recover costs (Hereward v State Rail Authority of New South Wales (1989) 17 NSWLR 260).
21 The Act makes a distinction between a contract for the provision of legal services and an agreement as to the costs of the provision of legal services (which s 184 says is to be called a costs agreement). The latter may form part of the former. Section 182 may have application to the enforcement of rights under inter alia the latter (see s 208C). It may have application where the latter is void. It also may have application where there is no costs agreement.
22 It is the failure to make the requisite disclosure that gives it application to the recovery of costs of legal services by a barrister or solicitor (whether the claim be founded on quantum meruit or otherwise)
23 It appears that the learned Magistrate has erroneously taken the view that Wentworth was authority for the proposition that the section did not have application to cases where the claim was founded on quantum meruit. Counsel was unable to identify any passage in the judgment of Barrett J which lent support to that view. Indeed, a reading of the judgment reveals that it contains observations which are to the contrary.
24 Whilst these considerations are determinative of all the questions concerning the claim for costs, I shall briefly deal with other matters raised during argument.
25 The defendant sought to take comfort in the language used by subs (2) of s 182. In particular, he sought to take comfort from the fact that there was no prohibition on the commencement of proceedings. He pointed to other provisions in the Act (such as s 192) which prohibit both the commencement and the maintaining of proceedings. This provision had influence also on the learned Magistrate.
26 In my view, the absence of any prohibition on commencement of proceedings does not assist the defendant. The inconsistencies in language may simply be due to oversights by the draftsman. Be that as it may, it seems to me that such a prohibition on the maintenance of proceedings has to be read in its context as extending to the commencement of proceedings.
27 The power to strike out the Statement of Claim may be exercised where it inter alia discloses no reasonable cause of action or is otherwise an abuse of the process of the court.
28 The authorities make it clear that the discretionary power to strike out should be exercised only in what might be described as clear cases. The applicant for relief bears the onus of demonstrating that the case falls within that category. In my view, this is one of those clear cases and the onus has been discharged.