1. Disciplinary charges were brought against Mr Beling arising from his professional conduct during that period, and those charges were heard in VCAT proceeding Victorian Legal Services Commissioner v Beling [2017] VCAT 1022 ("the disciplinary proceeding") [2].

1. It is agreed by the parties that Mr and Mrs Hanna have paid Mr Beling $8,954.55 on account of his fees, and that Mr Beling has rendered an account claiming a further $42,600.00 in fees. Mr Beling claims the fees under a Conditional Costs Agreement, alleging that the criterion for that entitlement has been satisfied. He claims the amount as a lump sum, as distinct from claiming the fees by calculating the amount and value of the work performed (for example, by reference to hourly rates applied to items of work).

1. In proceeding J82/2013 Mr Beling sues Mr and Mrs Hanna for that $42,600.00 plus interest and in proceeding J130/2013 Mr and Mrs Hanna counterclaim for $10,982.75. That sum is comprised of $4,477.28 (which is calculated as one-half of the $8,954.55 paid on account); $5,995.00 in legal fees paid or payable to the law firm that they engaged after Mr Beling's retainer ended; and $510.00 made up of four small amounts.

1. Whilst the issues in these civil proceedings are different in nature to those in the disciplinary proceeding, there is obviously some overlap because they concern the legal services performed by Mr Beling, and where appropriate I will set out relevant matters from the disciplinary proceeding.

1. In the hearing, Mr Beling gave evidence but did not call other witnesses.

1. Mr Beling served a summons to witness on the firm Marshall Dent Wilmoth compelling it to produce its file. That firm had acted for Mr and Mrs Hanna after Mr Beling's retainer ended. That firm did not attend in person to answer the Summons, but sent documents to the Registrar in a sealed bundle, under cover of a letter objecting to the file being made available for inspection unless Mr and Mrs Hanna expressly waived their claim for legal professional privilege. Mr and Mrs Hanna did not waive that privilege, and I did not allow the documents to be inspected[3]. I did not examine the sealed bundle's contents.

1. Mrs Hanna gave evidence. The Hannas called evidence from psychologist Mr Gary Stockton, but his evidence was brief. The Hannas required the attendance of Ms Belinda Randazzo, legal practitioner, by serving upon her a summons to witness but Ms Randazzo's evidence was of no assistance[4]. The Hannas required the attendance of Mr Joshua Kohn of Counsel, who had been briefed by Mr Beling for the Hannas, and Mr Kohn gave evidence. Mr Hanna attended the hearing but did not give evidence.

1. Both sides alluded to the voluminous documents filed in the proceeding which included documents that had been filed in the disciplinary proceeding, and referred to some of the documents specifically.

1. At the end of the hearing on 31 July 2019 the parties asked for an opportunity to file written submissions. I gave the parties 28 days, until 28 August 2019, and both sides filed submissions by that date.

1. I have read the submissions. In several respects the submissions are irrelevant to the issues for determination in the proceedings, and are directed at matters about which no evidence was given in the hearing.

1. I note that the Hannas' submissions are entitled, "Application to Set Aside Conditional Agreement", and that during the morning of 28 August 2019 they had emailed the Tribunal suggesting that because their proceeding had been commenced in another List of the Tribunal before being transferred to the Legal Practice List many years ago, they had to file an amended Application. The Registry advised them that the transfer from List to List made no difference to their Application, and that in practical terms the only effect of the transfer was that their proceeding had been given a different case number, J130/2013.

1. I should say for the record that it would be quite inappropriate for the Hannas to purport to amend their Application some six years after issuing the proceeding and, of course, a month after a three day long hearing.

1. In the event, though, for the reasons that are set out below, it is unnecessary for the Hannas to consider amending their Application because their arguments about the invalidity of the Conditional Costs Agreement on which Mr Beling relied had already been exposed in the two proceedings.

1. Mr Beling's written submission says, in paragraph 1, that "all fees charged were derived from the costs agreement".

1. Mr Beling goes on to make submissions to the effect that the Hannas understood the Conditional Costs Agreement before they signed it, and that Mrs Hanna's evidence should not be believed in several respects. In paragraph 4 he submits that because the Hannas signed the Conditional Costs Agreement they are bound by its express terms, and at paragraph 5 that the Tribunal ought not imply terms into it. With respect, paragraph 4 disregards the law on vitiating elements in contract and the effect of the Legal Profession Act 2004.

1. As one of the issues in the proceeding was the adequacy of a draft statement of claim drawn by Mr Beling, I note that in paragraphs 7 and 8 he submits that the document was "valid", because whilst a pleading must only contain allegations that had a proper basis, it is a very low threshold and that, when one analyses the document, it is apparent that all of its contents were arguable.

1. Mr Beling also makes submissions in which he criticised the evidence of Mr Khon, and that the evidence established that the Hannas had achieved a "successful outcome" within the meaning of the Conditional Costs Agreement.

1. Similarly to the situation where the Hannas inappropriately referred to amending their application, I should say that in paragraph 15 Mr Beling submitted that he was seeking a review of the Hannas' decision to maintain privilege in the file of Marshall Dent Wilmoth. This point is misconceived, but as the hearing has been completed there is no role for such a review in any case.

1. Mr Beling also made submissions in defence to the Hannas' claim. The tenor of his submissions on estoppel is that the Hannas' failure to pay fees to Mr Beling prevented him from performing legal services, and that the Hannas' complaints about the quality of the services he performed were brought about by those failures to pay. A related submission was that because the Hannas had complimented Mr Beling on the quality of his services during his retainer, they cannot now complain to the contrary.

1. Mr Beling's claim is essentially for payment for services rendered. It is therefore a claim for payment under a contract, being the contract of retainer ("retainer"). The retainer must be construed in accordance with the law of contract. The legal profession is highly regulated and the Legal Profession Act 2004, as in force when the retainer was entered into on 29 August 2012, contained provisions obliging legal practitioners to make costs disclosures[5].

1. Mr Beling drafted the retainer. The document was signed by Mr Beling and by Mr and Mrs Hanna, and was hand dated 29 August 2012.

(a) The first three pages are extracts from a standard form entitled "Disclosure Statement pursuant to section 3.4.9 of Legal Profession Act 2004 for litigious matters" which appears to have been published by a professional association such as the Law Institute of Victoria[6]. It contains 13 numbered paragraphs.

(b) The next two pages begin with the heading "Conditional Costs Agreement Pursuant to s 3.4.27 of the Legal Profession Act 2004". It contained 10 numbered paragraphs, and ended with handwritten text under the heading "payment schedule".

(c) The last page contains one unnumbered paragraph, concerning Mr Beling's right to cease work, and the consequences. In handwriting it stated the BSB and Account number of Mr Beling's Trust Account at a bank. The handwritten "payment schedule" sets out 10 dates by which sums of $5,000.00 were to be paid. There is a separate line for each date. So, the first line says "$5,000.00 upfront to be paid by 6 September 2012". The second line says "$5,000.00 to be paid by 24th September 2012". The subsequent eight lines are in the same form as the second line, but with different dates for payment: 12 October, 30 October, 18 November, 6 December, and 24 December 2012 and 12 January, 30 January and 18 February 2012. The last sentence on this page says, "The above payment (sic) only cover (sic) professional fee's (sic) and do not include GST. GST is to be paid on top of legal fees".

1. Mr Beling did not issue bills of costs in the usual way. He says that the Conditional Costs Agreement entitled him to be paid $50,000.00 if there was a "successful outcome", which was defined as a result in the Hannas' favour greater than $50,000.00. He says that because some months after he ceased acting for the Hannas they entered into a settlement with ANZ Bank under which they received value of $52,000.00, there has been a successful outcome and accordingly he is entitled to fees of $50,000.00 in total, thus justifying his claim for $42,600.00 taking into account the money he had received on account.

1. Because of Mr Beling's analysis, it is appropriate to examine the Legal Profession Act 2004 at this stage. In the community it is still common for people to refer to "solicitors" and "barristers" (which words appear in the retainer), and for them to understand, broadly, that:

(a) "solicitors" are engaged by members of the public (the "client") and perform a broad range of legal work such as preparing wills, acting in the conveyancing of property, and acting in litigation; and that

(b) "barristers" are specialist advocates who primarily act in litigation by appearing in Courts and by drafting Court documents, and who also provide legal advice.

1. It is also understood by the community that "clients" do not engage "barristers" directly, but that instead "solicitors" engage them on behalf of the client, by delivering a "brief"[7].

1. I mention this because, in the context of Mr Beling's engagement, Mr and Mrs Hanna understood that he was a solicitor and that there would be a need to engage a barrister.

1. Those roles, of solicitors and barristers, have evolved over the last few decades for many reasons, including the deregulation of the Australian economy which has promoted international and intra-state trade, with the resulting influx of lawyers from other jurisdictions; the proliferation of alternative dispute resolution schemes[8] which in some ways have challenged the Courts' "monopoly" on dispute resolution and which has encouraged solicitors and clients to appear for themselves rather than necessarily engaging barristers for appearances; competition from other professions such as accountants; and the improvements in computers and the internet which have significantly changed the way documents are created.

1. The legislation which regulates the legal profession has had to cope with these changes and has become much more complex over the years. The Legal Profession Act 2004 uses the words "legal practitioners" and "law practice" rather than "solicitors" and "barristers".

1. An important aspect of this evolution relates to the calculation of legal costs. There was a time when all legal costs were set by "Scales" published under subordinate legislation, including in the procedural rules of Courts in relation to litigation. These Scales essentially saw legal work as items of activity - for example, "attendances" by the legal practitioner which could include meetings, physical attendances at Court, and conferring on the telephone; "drawing" documents, which referred to the literary creation of the document; and "engrossing" documents, which referred to the administrative act of typing the document. The Scales set charges for each item. The Scales recognised degrees of difficulty, so that for example a simple letter that merely enclosed something would be charged at a much lower fee than a special letter which required legal skill. The Scales also included an item known as "instructions for brief" or "care skill and attention" which only a theologian could understand, but which again sought to allow the legal practitioner to be paid for legal work that was not really captured by the items. Finally, because each Court had its own Scale, and in recognition of the fact that the superior Courts deal with more difficult legal disputes, the Scales of the higher Courts set out higher fees than those in the lower Courts.

1. These Scales operated for decades, and were updated from time to time, largely in line with movements in the consumer price index. The advent and rapid improvement in computers put the design of these Scales under siege: it makes little sense to have a set fee for engrossing a document - pictured as a secretary typing the document on a typewriter - when the document may have been downloaded from the internet and adapted. The Courts still have Scales, but the number of individual items have been substantially reduced and one is far more likely to see a range of fees for a range of activities rather than the old approach of a set fee for a specified item.

1. Legal practitioners have been able to "contract out of" the Scales, by entering into contracts with clients which provide for a different method of charging. For many years the most common method has been time costing, where the focus is on the amount of time spent on providing legal work. Typically, hours are divided into 6 six minute 'units', and an amount is charged per unit. There is little emphasis on defining the type of work done in the time: the charge could be the same for 30 minutes spent on preparing a document, undertaking research, or attending a meeting.

1. The Legal Profession Act 2004 allows legal practitioners to "contract out of" the Scales, but affords clients consumer protection by requiring the practitioner to disclose information to the client before the contract of retainer is entered into. The philosophy of the legislation is that the client should be in a position to give informed consent to being charged fees which are calculated in some way other than the Scale[9]. I would emphasise that this is not an exercise in legal practitioners seeking to charge more than they could under the applicable Scale, but is really focused on simplifying the process of assessing fees. It is much easier, of course, to calculate the amount of time spent on a matter rather than going through the arcane process of identifying how a piece of legal work fits within an item in the Scale.

1. Turning to Mr Beling's retainer, three issues emerge:

(a) whether Mr Beling disclosed to the Hannas all of the information required by the Legal Profession Act 2004;

(b) if not, whether that invalidates the Conditional Costs Agreement and thus requires his fees to be assessed under the applicable Scale; and

(c) if the disclosure requirements do not invalidate the Conditional Costs Agreement, the meaning of that agreement when properly construed.

1. I should say at this stage that there have been many references in the hearing before me, and in the disciplinary proceeding, to the Hannas having certain psychological and medical conditions and, as Mrs Hanna put it, to them being "impaired". In the disciplinary proceeding VCAT described the Hannas as being vulnerable persons. Nevertheless, there would be no basis for saying that the Hannas were not bound by the Conditional Costs Agreement because they did not have the legal capacity to enter into it.

Disclosure under the Legal Profession Act 2004

1. The following provisions of the Legal Profession Act 2004 are relevant to this case[10].

1. Section 3.4.9 sets out the information which "a law practice must disclose to a client", and Mr Beling has sought to do this in the first three pages of his retainer, headed Disclosure Statement. As set out in the table below, it is clear that Mr Beling has not made all necessary disclosures:

Section of the Legal Profession Act 2004

the basis on which costs will be charged including whether a Scale applies

Clause 1 of the Disclosure Statement does not say whether a Scale applies in the Federal Magistrates Court. Nor does it say the basis on which costs will be charged under the Conditional Costs Agreement, although clause 1 of the 4th page - the Conditional Costs Agreement - sets out some hourly rates and other charges on an item basis and introduces the concept of a "successful outcome"

the client's right to negotiate a costs agreement with the law practice, to receive a bill, to request an itemised bill within a time limit, and to be notified of any substantial change to matters relating to their legal costs

Clause 2 of the Disclosure Statement does not say that the client has the right to receive a bill, as required by s3.4.9(1)(b)(ia)

an estimate of the total legal costs or, if that is not reasonably practicable, a range of estimates and an explanation of the major variables

Clause 3 has some text deleted, and the words "See pp 4-5", which take the reader to the Conditional Costs Agreement. However, those pages do not contain an estimate of the total legal costs. Whilst they say that "legal costs ... will be capped at $50,000.00", a "cap" only sets a maximum and there ought be no expectation that the costs would necessarily reach that high a sum. There are also problems with the Conditional Costs Agreement which I discuss below.

There is some attempt at an explanation of the major variables, but it is inadequate because it is too simple. It only lists three factors: whether the matter proceeds "to a contested hearing" (which Mr Beling probably intended to mean the final trial, but which is quite ambiguous because a directions hearing could be a contested hearing); the complexity of "the hearing" (which seemingly excludes the complexity of other matters carried out under the retainer); and the number of Court appearances necessary. A significant part of the work performed by Mr Beling was legal research, the necessity for which was disputed by the Hannas. Another aspect was his drafting of a Statement of Claim, which was the subject of considerable criticism in the disciplinary proceeding and in the hearing before me. Neither of these are mentioned as variables affecting the costs.

details of the intervals at which the client will be billed

Clause 4 is broad and uninformative. It might technically comply with s3.4.9(1)(e) but it would be unhelpful to an intending client

the rate of interest charged on overdue legal costs

in a litigious matter, an estimate of the range of costs that may be recovered if the client is successful in the litigation, and the range of costs the client may be ordered to pay if the client is unsuccessful

3.4.9(2) provides that the disclosure under section 3.4.9(1)(g) must include a statement that an order by a Court for the payment of costs in favour of the client will not necessarily cover the whole of the client's legal costs, and that disbursements may be payable by the client even if the client enters into a conditional costs agreement

Clauses 6 and 7 purport to deal with this subject matter, but they do not. They allude to the fact that the Courts can award costs to or against a party, but they say nothing of the range of costs.

The matters which are compulsory by section 3.4.9(2) are not covered

details of the person whom the client may contact to discuss the legal costs

Page 1 defines the legal practice as "Joel Beling", which seems to comply. As Mr Beling was a sole practitioner, the absence of this information in another form is irrelevant.

the various avenues open to a client if there is a dispute about legal costs

any time limits applicable to the taking of action under 3.4.9(1)(j)

that the law of Victoria applies to legal costs in relation to the matter

1. I note here that section 3.4.10 also requires "a law practice (which) intends to retain another law practice" - in other words, a solicitor who intends to brief a barrister - to give the client details of the barrister's fees. Mr Beling would not have been called upon to do this in August 2012, but only at the point where he was proposing to brief a barrister.

1. Section 3.4.12 provides that disclosure under section 3.4.9 is not required in some circumstances, but none of them are relevant.

1. Section 3.4.14 requires additional disclosure if a "costs agreement involves an uplift fee". That is defined in s3.4.2: "uplift fee means additional legal costs (excluding disbursements) payable under a costs agreement on the successful outcome of the matter to which the agreement relates". Clearly, Mr Beling's Conditional Costs Agreement does provide for an uplift fee, because it has a definition of "successful outcome" and because the "cap" of $50,000.00 is a substantial sum which appears to be quite high having regard to the fact that the Federal Magistrates Court was the lowest Court in the Federal sphere, whose Scale of fees was far lower than that of the Federal Court of Australia.

1. Section 3.4.14(1) required Mr Beling to disclose to the Hannas his "usual fees", the uplift fee or the basis of calculation of the uplift fee, and the reasons why the uplift fee is warranted. Mr Beling did not do so.

The consequences of inadequate disclosure under the Legal Profession Act 2004

1. Section 3.4.17(1) says that if a law practice does not disclose to a client "anything required by this Division to be disclosed", the client need not pay the legal costs unless they have been reviewed under Division 7. The word "anything" is an absolute, as is its opposite "nothing". You cannot say, for example, that a bottle which contains one grain of rice does not have anything in it, that it has nothing in it, or that it is empty. Similarly, if Mr Beling omits to disclose even one thing required, he has not complied with the disclosure obligation. The use of the word "anything" in section 3.4.17 means that any omission by the legal practitioner to disclose renders the costs agreement - which might for example provide for fees to be calculated by hourly rates - inapplicable and requires the fees to be assessed under Division 7, of Part 3.4.

1. The availability of costs review under Division 7 is one of the matters which must be disclosed under section 3.4.9(1)(j), and which Mr Beling disclosed under clause 10.

1. Significantly, in a cost review under Division 7, the fees are not necessarily assessed under the costs agreement but may in effect be assessed using criteria similar to a Scale.

1. I say this because of section 3.3.44 to which I refer below.

1. The costs review may be triggered by either the Hannas or by Mr Beling: sections 3.4.38(1) and 3.4.40(1). Accordingly Mr Beling need not fear that the Hannas could avoid ever paying fees by never having the costs reviewed. Mr Beling could bring about the costs review.

1. A time limit applies to an application by the Hannas, but section 3.4.38(6) allows the time limit to be extended if a Judge of the Costs Court determines that it is just and fair to do so. If the Hannas sought the costs review, VCAT would have to "stay" (freeze) Mr Beling's proceeding.

1. There is no equivalent time limit to an application by Mr Beling: section 3.4.40(3) is only concerned to ensure that a legal practitioner does not seek a cost review prematurely.

1. Section 3.4.42 of the Legal Profession Act 2004 permits a client to seek an order from VCAT that a costs agreement be set aside. The Hannas have not made such an application. In a cost review, section 3.4.44A(1)(b) provides that the Costs Court must review the costs by reference to the costs agreement if the agreement has not been set aside under section 3.4.42 "unless the Costs Court is satisfied that ... the agreement does not comply in a material respect with any applicable disclosure requirements of Division 3". In this way the Legal Profession Act 2004 ensures that the Hannas are not disadvantaged by their omission to seek an order that the costs agreement be set aside.

1. As I have said, Mr Beling did not comply with disclosure requirements. Whilst I say that on behalf of VCAT, and I do not purport to make that decision on behalf of the Costs Court, I would anticipate that the Costs Court would not review the costs by reference to the costs agreement. Instead, I would expect the Costs Court would use the criteria set out in section 3.4.44 - which includes consideration of such matters as the complexity, novelty and difficulty of the matter, which are criteria used in Court Scales - or use the Scale of the Federal Magistrates Court in reliance on section 3.4.44B.

1. In the interests of fairness to the parties, I draw their attention to section 3.4.45, which provides that the Costs Court must determine the costs of a cost review.

1. A practical difficulty facing legal practitioners and clients where costs are disputed, is the expense of having that dispute determined by the Costs Court. If the Hannas sought the costs review, they would have to apply to the Costs Court for an extension of time. If the Hannas or Mr Beling sought the costs review, both sides could become engaged in a contested hearing in the Costs Court on the question of whether the cost review was to be done by reference to the costs agreement, section 3.4.44 or the Federal Magistrates Court Scale. If the Scale was to be used, Mr Beling may be required to prepare an itemised bill of costs, and the manner in which the Scale is expressed might require him to engage a costs consultant to prepare that document.

1. The parties may well consider that their interests would best be served by negotiation.

1. Whilst I am quite certain that the Conditional Costs Agreement is rendered irrelevant by Mr Beling's failure to comply with his disclosure obligations under the Legal Profession Act 2004, I make these comments on the Conditional Costs Agreement. As I said, it is primarily contained in the 4th and 5th pages of the retainer, but as a contract must be read as a whole the other pages are somewhat relevant.

1. The first point is that even though it attempts to explain a time costing mechanism, its main point is to purport to entitle Mr Beling to a lump sum of $50,000.00 plus GST if the Hannas achieve a "successful outcome". The document is poorly drafted and fails to achieve that purpose.

1. On the beginning of the first page of the Disclosure Statement, just under where the parties' names are set out, is the line, "Matter: Credit/Mortgage Dispute with ANZ". You could not call that line a "definition section", but it has some significance because the word "matter" is related to the concept of "successful outcome".

1. By the time the Hannas first consulted Mr Beling, they had commenced a proceeding in the Federal Magistrates Court against ANZ Bank. They had prepared their own documents and the Court had recognised them as being flawed. The Court ordered the Hannas to file and serve an Amended Statement of Claim. They engaged Mr Beling to act in that Federal Magistrates Court proceeding. So properly understood, that proceeding was the "matter".

1. Clause 1 of the Conditional Costs Agreement attempts to explain a time costing mechanism, but it is a hybrid of hourly rates, and set fees for some items. Relevantly it says:

Legal costs in this matter ... at the following rate (sic) :

$350.00 per hour to be billed in 6-minute increments;

$1,200.00 per day for attendance (sic) at Directions Hearings or other non-substantive[11] hearing types (eg subpoenas, adjournments etc) and $2,000.00 per day for attendance at Court for substantive appearances;

1. Clause 1 is misleading and unworkable. One would accept that an item of work which was specifically referred to in clause 1 - say a telephone call - would have to be charged at the set rate and not according to the hourly rate. There is a degree of risk allocation there, in the sense that - if the clause is read literally - Mr Beling could only charge $50.00 for a telephone call that lasted 2 hours, but he could charge $50.00 for a telephone call that lasted one minute. This suggests that the clause could not be read literally.

1. The clause also leaves out many activities which are in the nature of legal work, and tends to throw them into the hourly rate. Yet there is a distinction between real legal work and mere administrative tasks. If Mr Beling spent an hour photocopying documents, a literal reading of the clause would suggest that he was entitled to $350.00, independently of any disbursement for the photocopier.

1. Describing a subpoena as a "non-substantive hearing" is very misleading. It cannot mean the work of drafting a subpoena and having it issued and served. It could mean appearing for the Hannas in a hearing concerning the compliance by the Hannas or their opponent with a subpoena served upon them. Even then, there is a lot more to supplying those services than an appearance. The clause seems to contemplate that Mr Beling would charge

$1,200.00 "per day" for appearing at Court on the Hannas' behalf to answer a subpoena. Unless the subpoena was properly objectionable, rarely would that entail one whole day of appearing. If Mr Beling spent 20 minutes on his feet answering the subpoena, there is a question as to whether, for the purposes of clause 1 of the Conditional Costs Agreement, those few minutes count as a "day", or whether it must be apportioned.

1. These are the sorts of issues that confront taxing officers when performing an assessment of legal costs in the Costs Court, and they illustrate that the poor drafting of clause 1 renders it unworkable.

1. However, Mr Beling argues that the point of clause 1 is that it "caps" the Hannas' legal costs at $50,000.00, which is to their benefit. That is a nonsense argument because it could only be to their benefit if the value of Mr Beling's legal services exceeded $50,000.00. A "cap" sets a maximum.[12] To illustrate: in the unlikely event that Mr Beling had sent one letter of demand to ANZ Bank to which the bank replied with an offer which amounted to a "successful outcome", the value of the letter under the Court Scale might be $1,000.00.[13] It could not be suggested that a costs agreement that forced the Hannas to pay $50,000.00 for that letter and perusing the bank's reply was to their benefit.

1. In addition, the attempt in the Conditional Costs Agreement to define a "successful outcome" for the purpose of entitling Mr Beling to $50,000.00 fails as a matter of drafting. It is possible to draft contractual clauses which trigger entitlements. Liquidated damages clauses in building contracts are a common example. Remembering that the "matter" was the Federal Magistrates Court proceeding in which the Hannas were the applicants, claiming compensation from the bank but arising from secured loans which were in arrears, these clauses deal with the "successful outcome":

Clause 1, which I quoted above in relation to the rates, says:

Legal costs in this matter are to be capped at $50,000.00, at the following rate (sic) : ...

All remaining legal costs are to form part of the Conditional Costs Agreement and will become payable in the event of a successful outcome in this matter.

A successful outcome in this matter is defined as any judgment, financial settlement or award in the Hanna's (sic) favour greater than fifty thousand dollars (>$50,000.00).

Apart from the first $50,000.00, Mr Beling will not seek his remaining legal costs unless the Hannas receive a settlement or award greater than $50,000.00. If the Hannas receive a settlement or award greater than $50,000.00, and Mr Beling is entitled to be paid his remaining costs from the Hanna's (sic) settlement or award money.

Uplift fees under section 3.4.28 of the Legal Profession Act 2004 of 25% of the legal costs incurred apply to this case if you receive a settlement or award greater than $200,000.00. Under s 3.4.14 of the Act, this means that the Hannas will have to pay Mr Beling twenty five (25) per cent of the legal costs extra to Mr Beling, in addition to his legal costs, if they receive a settlement or award greater than $200,000.00.

1. First, Mr Beling asserts that the Conditional Costs Agreement entitles him to a lump sum of $50,000.00.00 plus GST if the Hannas achieved a "successful outcome". However, the first line of clause 1 is to the effect that Mr Beling cannot charge more than $50,000.00 (which implies that he might do legal work that objectively was worth more than $50,000.00) and the last sentence says "All remaining costs ..." - meaning those legal costs above $50,000.00 - will become payable in the event of a successful outcome.

1. The effect of clause 1, then, is that if Mr Beling performed legal work to the value of $75,000.00 but the Hannas did not achieve a "successful outcome", Mr Beling could only charge $50,000.00. If the Hannas achieved a "successful outcome" Mr Beling could charge that additional $25,000.00.

1. That is quite different from Mr Beling's assertion that the clause automatically entitles him to $50,000.00 if the Hannas achieved a "successful outcome".

1. Secondly, to the extent that it was possible when the retainer was entered into on 29 August 2012 that Mr Beling could perform legal work whose value was less than $50,000.00, the so-called "capped" amount of $50,000.00 could itself be a very significant "uplift" and the clauses do not address that issue. Clause 7 refers to 25% as the "uplift". But if Mr Beling's interpretation was correct, and the Conditional Costs Agreement entitled him to be paid $50,000.00 when the value of his work was only $10,000.00, the uplift would be 400%.

1. Thirdly, whilst the clauses refer to $50,000.00, elsewhere the document states that the Hannas are to pay GST. This would expose them to an additional $5,000.00 in liability, according to Mr Beling.

1. Fourthly, "successful outcome" is expressed in terms of the Hannas "receiving" a settlement or award. As the Hannas were indebted to the bank, there is a question as to whether an offer by the bank not to pursue, or to write off, a debt owing by the Hannas would be a receipt by them.

1. To conclude on this part of the decision, if the Conditional Costs Agreement was enforceable, despite Mr Beling's failure to comply with his disclosure obligations under the Legal Profession Act 2004, its clauses would not entitle Mr Beling to $50,000.00 if indeed the Hannas had received a "successful outcome" as defined.

1. I do not propose to spend very long on this topic, because of my firm view that the Conditional Costs Agreement is ineffective, which would make any lengthy analysis otiose. Mr Beling must have his costs assessed under Division 7 of the Legal Profession Act 2004 if he is to pursue his claim for payment, and the quality and value of his legal services will be the subject matter of that assessment.

1. I also note that in both the disciplinary proceeding and the subsequent VCAT decision on penalty, Senior Member Smithers set out a detailed analysis of the deficiencies in Mr Beling's services.

1. I would simply refer here to the evidence of Mr Khon of Counsel in the hearing before me. Mr Beling had prepared a document that he considered to be an Amended Statement of Claim in the Federal Magistrates Court proceeding, and he submitted it to Mr Khon.

1. There was a lot of debate in the hearing, between Mr Beling and Ms Hanna, about whether Mr Beling had the Hannas' instructions to brief Counsel to "settle" the draft Amended Statement of Claim, or whether Counsel was to be briefed to do a far lesser task of "checking and polishing" the document. Mrs Hanna's perspective was that checking and polishing would be a minor task which could be done at little expense - which was significant to the Hannas because they were liable to pay disbursements - whereas settling a pleading was a more expensive exercise.

1. Clearly, a barrister can be briefed to settle draft pleadings, and there is no real concept of "checking and polishing" a pleading. A solicitor might use an expression like that to explain to a client the process of a barrister settling a pleading, particularly if it was a simple case and the solicitor was confident that the draft pleading was all but perfect. However because a barrister owes a duty to the client, even though the brief is received from the solicitor, and of course owes a duty to the Court, the barrister must see the task as a serious one. So again, even if the barrister made a few changes to a draft pleading prepared by a solicitor, the barrister would still have settled that pleading.

1. Mr Khon considered that he had been briefed to settle the draft Amended Statement of Claim, but I must say that it would be open on the evidence to conclude that he was given documents to examine for the purpose of giving an estimate of his fees to a potential instructing solicitor. I say this because not only did Mr Khon say - without contradiction I might add - that he received a bundle of documents from Mr Beling in a plastic bag, which were not in any order, but that he did not receive a Memorandum to Counsel. Mr Khon spent several hours putting the documents into chronological order, and in considering them, and he promptly concluded that the draft Amended Statement of Claim could not be settled and that instead a fresh pleading would have to be drawn. Mr Khon was not referring to matters of drafting style, but to the far more important matter that the draft Amended Statement of Claim was in the form of a hysterical diatribe replete with accusations of fraud on the part of ANZ bank officers, without any evidentiary basis for the accusations. Whilst Mr Khon referred to rules of professional conduct applicable to members of the Bar, it would be plain to any legal practitioner that one cannot make accusations of fraud in a pleading without having a firm basis for doing so.

1. It seems that Mr Khon returned the "brief" without marking a fee, and his involvement went no further. Mr Beling gave evidence that he made enquiries of other barristers' clerks to identify other junior barristers who might "check and polish" or "settle" the document and that he advised Mrs Hanna of their possible fees. Mrs Hanna denied that she received this advice. There is no need for me to go into this any further.

1. In conclusion on this point, the task of analysing the quality and value of Mr Beling's legal services will rest with the Costs Court if either party seeks a cost review under Division 7.

1. The main focus on the Hannas' side has been to defend Mr Beling's claim for $42,600.00 under the Conditional Costs Agreement of 29 August 2012.

1. Even though it is possible that Mr Beling's claim for fees could be reviewed under Division 7 of the Legal Profession Act 2004, and result in an assessment that some amount is due to him, it is appropriate to determine the Hannas' counterclaim.

1. The Hannas' claim for $4,477.28 is calculated as one-half of the $8,954.55 that they paid Mr Beling on account. Unless and until Mr Beling's claim for fees is reviewed under Division 7 of the Legal Profession Act 2004, section 3.4.17(1) provides that the Hannas need not pay Mr Beling's fees. It follows that the Hannas are entitled to an order that Mr Beling pay them $4,477.28[14].

1. It would be inappropriate to defer ruling on the Hannas' claim for $4,477.28 pending a review of Mr Beling's claim for fees under Division 7 of the Legal Profession Act 2004, because no such review may ever take place . If such a review does take place, and it is assessed that Mr Beling is entitled to more than $4,477.27,[15] he can seek the assessed sum from the Hannas at that time.

1. The Hannas' claim for $5,995.00 in legal fees, paid or payable to the law firm that they engaged after Mr Beling's retainer ended, was barely raised by the Hannas in the hearing. Significantly, Mrs Hanna conceded that they have not paid that law firm its fees. She gave that evidence in the context of demonstrating to the Tribunal their difficult financial position, but the result of the concession - given that the law firm ceased acting in mid 2013 - is that the firm's right to be paid those fees is now apparently statute barred. As the firm can no longer sue the Hannas for payment, the Hannas cannot claim the $5,995.00 as damages from Mr Beling.

1. There are other issues concerning that part of their claim.

1. First, Mr Beling's attempt to inspect that firm's file was not made, objectively, for legitimate purposes because it was clear that his intent was to use the legal work performed by that firm as some sort of comparison to the legal work performed by him, and to allow him to argue that his legal work was proven to be appropriate, in the context of his claim for fees. That exercise could never succeed because even if Mr Beling and the other firm did some work of the same character - for example, writing letters and attending meetings - the work of the second firm simply could not establish that Mr Beling's work was appropriate. For example, if both Mr Beling and a legal practitioner in the second law firm had attended on the Hannas in a conference, that might suggest generically that a legal practitioner should confer with the client, but it could not provide a useful guide to whether the conference with Mr Beling lasted for the appropriate duration or covered the right subjects. Mr Beling could certainly not have used the contents of the second law firm's file or documents as "expert evidence" in relation to the quality of his own legal services.

1. Secondly, the quality of Mr Beling's work was central to the disciplinary proceeding and expert evidence was given in the hearing of that proceeding, and Mr Beling was found to be guilty of two charges. Whatever impression might have been gleaned from the second firm's file would be superficial at best to the expert evidence given in the disciplinary proceeding.

1. Thirdly, by maintaining their privilege in the second firm's file and preventing it from being examined in the hearing, the Hannas elected not to present that file as evidence in support of their claim for $5,995.00. They could only have substantiated that claim by proving that the second solicitors had to "do again" the work performed by Mr Beling. If they did not do so, then their liability to pay that firm its fees would simply be a reflection of the apparent fact that that firm performed legal work for them for a period from February 2013.

1. For all of those reasons, the Hannas' claim for $5,995.00 must be dismissed.

1. The Hannas' claim for $510.00 was made up of four small amounts: three sums of $150.00 for ink, legal manuals, and petrol used to meet and engage the second solicitor; plus $60.00 for paper. The Hannas did not give evidence about any of these matters in the hearing, probably in my view because they realised that there was no merit in them. The four items are at best in the nature of "costs", and as self-represented litigants they may be in no position to recover those sums at all.

1. For the reasons set out above, Mr Beling's claim for $42,600.00 in J82/2013 under the Conditional Costs Agreement of 29 August 2012 must be dismissed. However, that claim is dismissed because Mr Beling failed to disclose information under the Legal Profession Act 2004. Section 3.4.17(1) says that if a law practice does not disclose to a client "anything required by this Division to be disclosed", the client need not pay the legal costs unless they have been reviewed under Division 7.

1. The dismissal, therefore, is not a ruling that there is no debt owing to Mr Beling. Instead, it is a ruling that Mr Beling is not entitled to payment under the Conditional Costs Agreement.

1. It follows that the dismissal of his claim in J82/2013 does not affect the right of either Mr Beling or the Hannas to seek a review of the legal costs claimed by Mr Beling under Division 7 of the Legal Profession Act 2004 subject, if the Hannas seek the review, to them obtaining an extension of time under section 3.4.38(6). If a review of the legal costs took place, the quality and value of Mr Beling's legal services would be assessed by the Costs Court and, as I have said, that Court could award costs in respect of the review. The parties would be well advised to seek independent legal advice before embarking on a review of Mr Beling's legal costs under Division 7 of the Legal Profession Act 2004.

1. For the reasons set out above, the Hannas' counterclaim in J130/2013 is allowed to the extent of $4,477.28, but the claim for $5,995.00 is dismissed and their other claim for $510.00 is a claim for costs which at this stage costs are reserved.

1. At the end of the hearing on 31 July 2019 the parties asked me to include an order for the reservation of costs when making an order on the claim and counterclaim. On 1 August 2019 I made an Order setting out the time by which the parties were to file and serve written submissions, and I recorded the parties' request for costs to be reserved.

1. I have now made an Order that costs be reserved.

1. I note for the parties' assistance that both sides were self-represented. Whilst Mr Beling is a legal practitioner, the Tribunal's Order on penalties in the disciplinary proceeding, reported at [2017] VCAT 1576, requires Mr Beling to only practice as an employee of a law firm. My examination of

the documents filed in this proceeding strongly suggests that no law firm acted for Mr Beling in this proceeding. If Mr Beling were to apply for costs, he would have to address this point.

1. The Hannas are self-represented. No documents have been filed in this proceeding for them by a legal practitioner. It is possible that they paid for legal advice for the purposes of this proceeding, but to date there has been no suggestion that this has occurred. If the Hannas were to apply for costs, they would have to address this point.

1. Obviously both sides have incurred some filing fees which could be addressed if an application for costs was made. It is also possible that the Hannas incurred some witnesses' expenses.

[1] On the basis that payment of his fees was in arrears, during January 2013 Mr Beling gave the Hannas notice that he would withdraw as their practitioner unless these were paid, and on 30 January 2013 he filed and served a notice of ceasing to act.

[2] The Order on penalties and costs is reported at [2017] VCAT 1576

[3] In view of the issues raised in Mr Beling's 'pleadings', the file did not appear to be relevant to Mr Beling's claim. Questions put by Mr Beling to Mrs Hanna on the third day of the hearing, designed to cause her to waive privilege in the file, only confirmed that it was irrelevant to his claim. The Hannas did not seek to rely on that file in relation to their claim against Mr Beling.

[4] Ms Randazzo had acted against Mr and Mrs Hanna in their Federal Magistrates Court proceeding, as an employee of HWL Ebsworth, the firm engaged by ANZ Bank. Whilst Ms Randazzo could have been expected to claim that the bank's legal professional privilege prevented her from answering some questions, as it happened the questions put to her did not raise matters which would have raised issues of legal privilege, and Ms Randazzo's evidence was generally to the effect that the matters had occurred so long ago that she could not recall.

[5] Legislation is published by the Government on line. "Version 043" is the Legal Profession Act 2004 as in force at 1 July 2012.

[6] Section 3.4.9(3) of the Legal Profession Act 2004 deemed a law practice to have complied with the requirement to make a costs disclosure if it gave a written statement in or to the effect of a form prescribed by the regulations. The disclosure statement provided by Mr Beling is not in the form of Form B3 to the Legal Profession Regulations 2005 then in force, Version No. 010.

[7] Whilst barristers also take direct briefs in some situations, that is irrelevant to this case.

[8] Mediation is the most obvious form of ADR, but I also refer to industry ombudsman schemes including "FOS" which Mr and Mrs Hanna accessed.

[9] The idea is that when considering whether to retain a legal practitioner, the potential client should be able to ask themselves, "Why should I pay $X per hour when the Scale says ... ?".

[10] Section 3.4.3 provides that the provisions apply, because this was the first time the Hannas had instructed (retained) Mr Beling. This section allows lawyers and clients who have many cases together - for example, insurance companies defending many claims - to escape the many provisions in Part 3.4 of the Legal Profession Act 2004.

[11] In the hearing Mr Beling gave evidence to the effect that the two directions hearings he appeared in were very significant. Quite the opposite of "non-substantive".

[12] Just as, in similar parlance, a "floor" sets a minimum.

[13] At a stretch, taking into account the significance of the letter and the care skill and attention required to draft it.

[14] The Hannas chose to claim $4,477.28 in this respect, and not the whole $8,954.55. Their proceeding J130/2013 has been on foot for six years. They have not sought to amend the claim for $4,477.28 and I conclude that had their reasons for limiting the claim in that way.

[15] That is, the sum that he has in effect retained out of the $8,954.55, given my Order that he must pay the Hannas $4,477.28.