" 45 Particulars in bill of costs
(1) For the purposes of section 193 (1) of the Act, the following particulars are to be included in a bill of costs:
…
(c) any intended claim for interest under section 190 of the Act if the costs are not paid (including the rate of interest),
(d) a statement:
…
(ii) in a case where the bill of costs is given by a barrister or solicitor who was retained by another barrister or solicitor to act on behalf of a client and the bill of costs is given to that other barrister or solicitor - that the barrister or solicitor who is given the bill of costs may apply to have the costs assessed under Part 11 of the Act within 30 days after the bill of costs is given …"
44 Section 182(2) makes it clear that where a barrister has not made disclosure of the matters required to be disclosed by s 176 and reg 45 (including such matters as the basis of calculating costs, billing arrangements, any intended claim for interest, and notice of the solicitor's right to apply for an assessment of costs) proceedings for recovery of the costs may not be maintained unless the costs have been assessed ( Kelly v Hogan [2004] NSWSC 238, par 35). The provision operates as a bar to recovery pending assessment. Further, in Wentworth v Rogers [2002] NSWSC 709, (" Wentworth 2") Barrett J said (par 21) " … The consequence of failure by a lawyer to comply with the disclosure requirements is that the lawyer has no right to recover costs (and the client has no obligation to pay them) unless the costs have been assessed under Div 6 of Pt 11. This is the effect of s 182".
45 Interest on unpaid costs may not be charged unless the bill of costs contains a statement, presumably under reg 45(1)(c), that interest is payable and of the rate of interest (s 190(2)).
46 The effect of s 192(1) was considered in Conder v Silkbard [1999] NSWCA 459 in which Beasley JA (par 27) held that it required a barrister or solicitor to deliver a bill of costs to a client at least 30 days before commencing action for the recovery of legal costs charged to the client. Her Honour said:
"29 … The terms of s 192(1) are mandatory. Proceedings for the recovery of legal costs must not be commenced unless a bill is given to the client at least 30 days beforehand. Failure to comply with s 192(1) is a defence to an action brought by a solicitor to recover legal costs claimed to be owing to the solicitor: Zizza v Seymour [1976] 2 NSWLR 135 … There is nothing in the (Act) (apart from s 192(2) which does not apply here) which excuses the failure to give a bill at least 30 days before the commencement of proceedings for the recovery of costs. Moffitt P in Zizza v Seymour at 137 is very much in point:
'The defect in [the solicitor's] case, by reason of the absence of a proper bill, could, not be corrected by delivery of a bill after the commencement of proceedings. The client or party to be charged is entitled to have the proper bill before the proceedings against him are commenced.'"
(See also Fitzgerald JA pars 42, 43 and Wentworth 2, par 28.)
47 In Zizza v Seymour [1976] 2 NSWLR 135 Moffitt P (p 139) said:
"… The relevant provisions are designed to make the client or person to be charged, properly aware of, and have time to consider, the amount of the solicitor's charges. He is then better able to make decisions as to payment of the bill, or having it taxed …
The defence under (the section) does not depend upon the client claiming the solicitor's charges are excessive. The requirements of the section are designed to provide the client with the material and time to enable him to form an opinion, with or without advice, whether the bill is excessive before he is faced with legal proceedings."
48 A costs agreement is void if not in writing (s 184(4)). A costs agreement may be made under which payment is contingent on the successful outcome of the matter in which the legal services are provided (s 186(1)), and may provide for the payment of a premium on those costs otherwise payable (s 187(1)).
49 A client who is given a bill of costs may apply to the proper officer of the court for an assessment of those costs (s 199(1)). A similar application may be made by an instructing practitioner for an assessment of the bill of costs given by the barrister or solicitor retained (s 200(1)).
Determination
50 Analysis of the documents shows, and it appeared to be common ground, that there was no costs agreement between the plaintiff and the defendant, and no disclosure of fees was made by the plaintiff to the defendant, and no bill of costs for his services was given by the plaintiff to the defendant as provided by the Act, or at all. As stated in his letter of 25 October 2004 to Johns, the plaintiff's contractual arrangements for fees were made with Johns, and he looked to the firm for payment.
51 The plaintiff gave Johns memoranda of fees dated 17 April 2003, 29 March and 15 July 2004. He sent accounts rendered to Johns in May, June and July 2004, and on 15 March 2005. A copy of the memoranda of 17 April 2003 and 29 March 2004 was sent to the defendant by Johns on 13 July 2004. The plaintiff accepted (T pp 39, 40) that none of these included the statement required under reg 45(1)(d)(ii) to the effect that Johns may apply to have the costs assessed under Pt 11 of the Act within 30 days after the bill of costs (or memorandum) is given.
52 Under s 192(1), the question is whether a bill for the costs which are sought to be recovered in these proceedings was given to the defendant in accordance with Div 4 of Pt 11. Such a bill must include the particulars required by reg 45 (s 193(1)). The authorities say that compliance is mandatory and strict. By reason of the omission of the statement under reg 45(1)(d)(ii) from the plaintiff's memoranda to Johns none was a bill of costs capable of complying with s 192(1). The defendant submitted that the inevitable consequence is that the plaintiff is barred from recovering the costs he claims in these proceedings.
53 Also omitted from the plaintiff's memoranda was a notice that interest would be charged on unpaid costs, a particular required under reg 45(1)(c). Accordingly, the defendant is not liable to pay interest (s 174(1)(b), s 190(2)).
54 Although irrelevant, I observe that none of the bills of costs given to the defendant by Johns included a statement required under reg 45(1)(c) and reg (d)(i), and was, therefore, non-complying.
55 An additional ground of challenge to the plaintiff's entitlement to maintain these proceedings was based on the provisions of Div 2 of the Act relating to the disclosure of matters relating to costs.
56 By s 176(1) the plaintiff was under a mandatory requirement to disclose to Johns, as the instructing solicitor, the basis of the costs of the legal services to be provided to the defendant. The matters for disclosure include those required by reg 45 (s 176(2)(d)). The disclosure must be in writing and made separately, or in a costs agreement (s 179).
57 The defendant submitted that as neither the plaintiff's letter of 3 December 2002 nor his memoranda included the reg 45(1)(d)(ii) statement, s 182(2) operated to bar the plaintiff from maintaining these proceedings unless the costs had been assessed. It was submitted that the consequence of failure by a practitioner to comply with the disclosure requirements is that the practitioner has no right to recover costs unless the costs have been assessed under Div 6 of Pt 11 ( Wentworth 2 , par 21; Kelly , par 35; Wentworth v Rogers (2006) 66 NSWLR 474, pars 112, 137). Further, if there has been relevant non-disclosure, a client need not pay the practitioner's bill until it has been assessed (s 174(1)(b)).
58 In response, the plaintiff submitted that compliance with reg 45 had been waived. Reliance was placed on the following statement in his letter of 3 December 2002 to Johns:
"It is my view that s193 and reg.45 do not have any operation in respect of bills of costs rendered by a practitioner to another practitioner. Should you wish any further detail within a reasonable time after receipt of my memorandum of fees, (say 3 weeks) I shall be happy to provide it. In the absence of any such request, any obligation to comply with reg.45, should it exist, will be deemed to be waived."
59 Reliance was also placed on evidence that Johns had been instructed to retain the plaintiff after a draft costs proposal of 26 November 2002 containing a similar statement had been provided to the defendant. It was put that, in the circumstances, the defendant and Johns, as her solicitor, knew of the statement and, by their silence, should be taken to have accepted what it proposed.
60 In my opinion, the plaintiff's submission fails. Let it be assumed, without deciding, that the defendant and/or Johns agreed to waive the plaintiff's obligation to comply with reg 45. Plainly such an agreement was one by which he would be relieved from compliance with his statutory obligations under s 176(2)(d) to disclose the matters required by reg 45, or to give a bill of costs in the required form. In my opinion any such agreement was void under s 189(1) because inconsistent with Div 3, and void under s 189(2) because it purports to waive the right to receive a bill of costs in the form required for assessment. In any event, the evidence relied upon by the plaintiff does not support a finding that the defendant, in the circumstances, had given up her statutory rights and immunities which would be enlivened by non-compliance with reg 45.
61 For these reasons, I accept generally the defendant's submissions. I hold that the plaintiff has no right to take these proceedings for the recovery of costs against the defendant, and, absent assessment, the defendant is under no obligation to pay them.
62 My conclusion makes it unnecessary to determine whether the plaintiff's claims are otherwise well founded. Nevertheless, in deference to the parties' submissions I make some brief observations about them.
63 I have referred earlier (par 38) to the circumstances in which the trust is said to arise. The negotiations for the defendant's costs commenced with the letter of 2 June 2004 from Johns to Ebsworth which included a detailed assessment of costs and disbursements in the sum of $440,829.79, including the plaintiff's fees according to his memoranda of 17 April 2003 and 29 March 2004 in the total sum of $186,063.75. On 4 June 2004 the defendant instructed Johns not to make any payment of these costs pending agreement and assessment. Then followed correspondence in which Ebsworth sought, and were given, further information for the purposes of assessment. On 31 August 2004 Ebsworth's costs assessors offered the sum of $310,000 in settlement of the claim. In response, on 23 September 2004, Mr Klinger proposed settlement in the sum of $395,000. In support, he invited consideration of a number of matters which included the reference to the plaintiff's fees in the context of the statement: "[it] is clear that the bulk of the costs in the proceedings are costs for Counsel, totalling $278,650.75".
64 Agreement was reached in the sum of $350,000 of which, on about 26 November 2004, $250,000 was paid to the defendant and $93,000 to Mr Klinger. From the sum held by him Mr Klinger settled Johns' claim for payment of fees which included those claimed by the plaintiff, by the payment of $40,000.
65 The documents show that, at least, from 4 June 2004 the defendant did not accept liability to pay the plaintiff's, and other, fees, unless assessed and agreed. In the circumstances, there is nothing which shows that costs were paid or received with the intention that the amount claimed by the plaintiff, or any amount, would be held by the defendant on the plaintiff's behalf. The payments to the defendant and to Mr Klinger did not identify any amount as referrable to the plaintiff's fees. The only conclusion open is that the amount was paid and received for the defendant's use. Her entitlement to spend it as she saw fit was unqualified. In my opinion, there is simply no evidentiary basis for finding the existence of a trust, constructive or otherwise, as alleged by the plaintiff, or that the defendant owed a fiduciary duty to the plaintiff to pay the fees claimed by him.
66 The claim to be a beneficiary under a trust was essentially based on the notion of "unconscionability". In his written submissions (par 7) the plaintiff put: "… the circumstances by which the Plaintiff received payment of an amount from the Insurer, including the Plaintiff's outstanding fees, which the Defendant now denies owning, are such that a court of equity will regard it as unconscionable for the Defendant to continue to assert that the Plaintiff has no interest in monies received by her from the Insurer to satisfy her obligations to the Plaintiff".
67 The concept of "unconscionability" in the way it was raised as an issue in these proceedings was considered in Rahnam Investments Pty Ltd v Esplin [2004] NSWSC 529 by Barrett J who said:
"61 Similarly the assertions made by Rahnam that a constructive trust arises fails for lack of 'proximity', for want of a better term, between the parties. Rahnam seeks to bring its claim under the general rubric of "unconscionability". But to say, in isolation, that particular conduct is "unconscionable" leads nowhere. As the High Court has emphasised most recently in Australian Broadcasting Commission v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 and Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 77 ALJR 926, "unconscionability" is a characteristic of action or inaction which may preclude assertion of or reliance on legal rights in circumstances where equity has the capacity, in any event, to intervene. It is not itself a cause of action or an independent basis for intervention. In the present case, the capacity of equity upon which Rahnam seeks to rely is the capacity to find or impose a constructive trust under Guimelli v Guimelli principles as an instrument for redressing unconscionability. For reasons I have given, Rahnam's attempt in that direction fails."
68 Unconscionability of itself provides no basis for equity to intervene. As I have found, the costs were paid and received for the defendant's own use. The plaintiff's claim on this ground cannot succeed.
69 For the same reasons the claim based on the notion of unjust enrichment must fail. The plaintiff submitted that in circumstances where the defendant denied the existence of any binding agreement to pay the plaintiff's outstanding costs it was unconscionable for her to enjoy the payments in circumstances in which it was not specifically intended or specially provided that she should so enjoy them.
70 In Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 the High Court held:
"150 First, whether enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable: recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category[124]. In David Securities Pty Ltd v Commonwealth Bank of Australia [125], Mason CJ, Deane, Toohey, Gaudron and McHugh JJ gave as instances of a qualifying or vitiating factor mistake, duress or illegality. No such factor was identified in the present case by the Court of Appeal beyond what was identified as the breach of fiduciary duty by Mr Elias and by Farah[126]. But Mrs Elias and her daughters owed no fiduciary duty to Say-Dee. Further, principles respecting fiduciary duty have been said to be foreign to unjust enrichment notions because the unjust factors are commonly concerned with vitiation or qualification of the intention of a claimant[127].
151 Unjust enrichment is not a "definitive legal principle according to its own terms" …"
(See also Coshott v Lenin [2007] NSWCA 153, par 8.)
71 The plaintiff does not rely on a claim in contract. As I understood the particulars pleaded in the amended statement of claim and the plaintiff's submissions, what was asserted was, in effect, a free standing cause of action based on the matters relied upon in support of the claim under a trust, and for the intervention of equity on the ground of unconscionability. As no independent basis has been propounded for restitution under this head, in my opinion it is entirely without foundation and cannot succeed.
The defendant's notice of motion
72 The defendant's notice of motion of 22 September 2006 was but briefly referred to during the hearing (T pp 25-27). Orders sought included an order extending time for the institution of an appeal from the decision of McLaughlin AsJ on 30 June 2006, that the appeal be determined at the same time as the hearing of these proceedings, and that the orders made be set aside. Senior counsel for the plaintiff indicated the claims were opposed. The motion was then put aside. Counsel for the defendant was invited to return to it at the end of the hearing (T p 27), but this did not happen. No further mention was made of the matter by counsel for either party. As the notice of motion did not proceed the proper order to make is that it be dismissed.
Conclusion
73 For the above reasons I propose to order that the proceedings, and the defendant's notice of motion, be dismissed. I direct the parties to bring in short minutes of orders to give effect to these conclusions, and for disposal of the proceedings.
74 Failing agreement, the parties should have the opportunity to put submissions on any issues as to costs. Arrangements for re-listing of the matter should be made with my associate before 4pm 22 February 2008.