The issues for judgment.
44 What were the issues on this material? To set aside the judgment, Mr and Mrs Cameron had to provide an arguable defence on the merits and an explanation for their delay in filing that defence (Cohen v McWilliam (1995) 38 NSWLR 476). In Cohen v McWilliam, Priestley JA said this: (at 477)
"The case seems to me to be a plain one. The appellant wished to raise a defence. In her affidavit supporting her application to Bryson J to be allowed to do so she deposed to facts which, if accepted at trial, gave her, at the least, distinctly arguable prospects of success. Bryson J did not say there would not be a triable issue. It was plain the appellant was not personally responsible for her very late application to rely on the defence."
45 Later his Honour added: (at 481)
"It is, however, another question whether concern about the extent of delays, either in a particular case or generally, should, in the absence of prejudice in the particular case, be taken into account in exercising a discretion to set aside a default judgment. The fundamental duty of the court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case, of the party upon whom the limitation is sought to be imposed."
46 Cole JA (diss) drew attention to an alternative formulation, used in some cases, which incorporated the composite phrase, "bona fide defence". His Honour referred to Ritchie's Supreme Court Procedure, where the following was said: (at 497)
"Nevertheless the court must be satisfied that the defence is asserted bona fide: Grimshaw v Dunbar ... "
47 The reference to Grimshaw v Dunbar ([1953] 1 QB 408) was a reference to the following passage from the judgment of Jenkins LJ, where his Lordship said this: (at 416 )
"No doubt the judge is entitled to satisfy himself that the party applying has a bona fide intention of defending the action, and that there is some possibility of his doing so with success. For example, I apprehend that if an admitted and self-confessed trespasser allowed judgment for possession to go in default in his absence, the judge would be entitled, on an application for a new trial, to refuse on the ground that he was palpably a trespasser and could not, whatever evidence he gave, possibly justify his presence in the house. But, short of cases of that kind, I think that a new trial should seldom, if ever, be refused merely on the ground that the applicant's case appears to be a weak one. ... "
48 Cole JA also referred to the District Court Practice (1985) which encapsulated the question the Court must address in these words:
"The Court must look to the whole of the relevant circumstances, including, inter alia, the existence of a bona fide defence on the merits, an adequate explanation for the failure to defend, and any delay."
49 Cole JA drew attention to the judgment of Hope JA in Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503, where his Honour identified the correct approach when considering whether sufficient cause had been shown to set aside a judgment in the District Court: (at 506)
"A court exercising jurisdiction under this sub rule has to look at the whole of the relevant circumstances and decide whether or not sufficient cause has been shown. The existence of a bona fide ground of defence and an adequate explanation for the failure to defend and any delay are the most relevant matters to consider, but there may be other matters: ... "
50 His Honour added:
" ... The absence of an adequate explanation, particularly if it is coupled with prejudice, may justify the denial of relief, but only when considered with the other relevant circumstances of the case, bearing in mind what Lord Wright said in Evans v Bartlam [1937] AC 473 at 489:
'If merits are shown the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication.'"
51 Here, there were three distinct phases in the proceedings:
· First, there were the committal proceedings. Mr and Mrs Cameron believed that they were clients of the solicitors (together with Matthew). Counsel for the solicitors, on this appeal, acknowledged that the solicitors also believed that Mr and Mrs Cameron were their clients.
· Secondly, there were the criminal proceedings against Matthew in the District Court. Campbell Paton & Taylor, solicitors, acted for Matthew Cameron in those proceedings. As mentioned, the matter was funded by Legal Aid. Mr and Mrs Cameron were not involved. It was accepted that they were not clients. No account was ever sent to them in respect of that phase.
· Thirdly, the Crown appealed to the Court of Criminal Appeal against Matthew's sentence. In their affidavit, Mr and Mrs Cameron said that they were not involved in the appeal. They were not, for the purposes of that appeal, clients of the solicitors. Further, they had since been told by Legal Aid that their son, Matthew, was entitled to Legal Aid, had he applied. However, no such application was made.
52 So, on the material before his Honour, Phases 1 and 2 were uncontroversial. All parties believed that Mr and Mrs Cameron were clients of the firm in respect of the committal (Phase 1). All accepted that they were not involved in the criminal proceedings against Matthew (Phase 2). I have referred already to the submission by counsel for the solicitors, on this appeal, raising the issue whether, as a matter of law, all (including the solicitors) were mistaken in believing that Mr and Mrs Cameron were clients of the firm in Phase 1. I will return to that issue below.
53 The real controversy his Honour had to address concerned Phase 3, the proceedings before the Court of Criminal Appeal. The Camerons, in their joint affidavit, in substance asserted two things:
· First, that they were not involved in the Court of Criminal Appeal proceedings. They were not the clients. Matthew Cameron was the client.
· Secondly, they assumed, and were entitled to assume, that the costs of Matthew in respect of the Court of Criminal Appeal proceedings would be funded by Legal Aid, just as they had been funded in the District Court proceedings. They said that they raised the issue of Legal Aid with the solicitors.
54 His Honour obviously was not obliged to determine the truth of the matters asserted in respect of Phase 3. What he had to determine was whether, if the facts deposed by Mr and Mrs Cameron were accepted, they provided an arguable defence.
55 The material before his Honour was contradictory. There was no affidavit from the solicitor who had acted. Rather, an affidavit had been filed, annexing correspondence from that solicitor. That correspondence was not, of course, sworn evidence. Nonetheless, it was evidence, and it was capable of being read as supporting the view that Mr and Mrs Cameron had agreed to fund the Court of Criminal Appeal proceedings, quite apart from the committal proceedings. It will be remembered that, without specifying when the assurances were given, the solicitors asserted in their letter to Mr and Mrs Cameron of 14 June 2007, the following: (supra [17])
"3. Throughout the proceedings you continually indicated that you would pay all our costs and disbursements when the matter came to an end."
56 As against that material, there was evidence which supported the sworn assertions of Mr and Mrs Cameron that they were not involved in the appeal. The evidence may be summarised as follows:
· First, in the committal proceedings, when they and their solicitors believed that they were clients of the firm, an estimate of costs was sent by letter dated 6.4.04 (supra [4]). That was done in compliance with a belief by the solicitors as to their obligations under the Legal Profession Act 1987. Section 175(1) of that Act required a solicitor to disclose to his client "the basis of the costs of legal services to be provided to the client". The term "costs" included disbursements, such as counsel's fees (s 173(1)). Their letter included a recital of the obligations they believe they owed and were fulfilling to Mr and Mrs Cameron, as their clients under the Act (para [13] letter 6.4.04) (supra [6]).
· Secondly, no such letter had been sent to Mr and Mrs Cameron in respect of the criminal proceedings in the District Court, where it was common ground that they were not clients.
· Thirdly, nor was such a letter sent in respect of the Court of Criminal Appeal proceedings. The inference is open that you would expect such a letter, had they been clients, that being the obligation which the solicitors believed they had under the Act, which they had fulfilled in the context of the committal.
· Fourthly, the tax invoice sent to Mr and Mrs Cameron after the appeal did not include any reference to either of them. You would have expected, perhaps, consultation had they been clients. On the other hand, counsel for the solicitors pointed out that the affidavit of the Camerons included the following:
"13. Following the District Court proceedings the prosecution lodged an appeal. We were never involved in the appeal beyond the fact that we talked to Mr Dalla about it from time to time. ... "
· Finally, Legal Aid having been provided in the District Court matter, the inference was open that it was reasonable for Mr and Mrs Cameron to have assumed that Legal Aid had also been provided on the appeal. They have since been informed it was available.
57 Before going to the judgment, I should say something more concerning the obligations of a solicitor to a client under the Legal Profession Act 1987. As mentioned, the obligation is to provide "an estimate of the likely amount of costs" (s 177(1)). The disclosure must be made before the solicitor is retained (s 178(1)), or, if that is not reasonably practicable, as soon as practicable thereafter. Section 178(4) is in these terms:
" s178 When disclosure to be made
(4) A disclosure under this Division as to any significant increase in the estimated costs of legal services is to be made as soon as practicable after the barrister or solicitor becomes aware of the likely increase in costs."
58 Where there is a failure to meet these obligations, the client need not pay the solicitor's costs until they have been assessed in accordance with Division 6 of the Act. The Act also made the following provision:
" s182 Effect of non-disclosure of matters related to basis of costs
(2) A barrister or solicitor who fails to make a disclosure in accordance with this Division of the matters required to be disclosed by section 175 or 176 in relation to costs may not maintain proceedings for the recovery of the costs unless the costs have been assessed under Division 6."
59 Here, the solicitors disclosed their estimate of the likely costs before they were retained (letter 8.4.04) (supra [4]). Thereafter, the costs significantly increased without further disclosure. Prima facie there was a failure to comply with the obligation under s 178(4) of the Act. When the statement of claim was issued, the costs had not been assessed in accordance with Division 6 of the Act.
60 I have referred already to the submission by Counsel for the solicitors that, at all times, Matthew Cameron was the client and the only client, and that the solicitors were mistaken in thinking otherwise. The argument raises the issue of "who is the client?". Counsel pointed to the definition of "client" in s 199(4) of the Act, which was in these terms:
"s 199 Applications by clients for assessment of costs in bills
(4) In this section, client includes:
(a) any person who is a party to a costs agreement relating to legal services for which the bill of costs is given (other than the barrister or solicitor who gave the bill or provided the services), and
(b) any person, being a lessee under a lease, who is given a bill of costs, concerning legal services relating to the preparation of that lease, by a barrister or solicitor acting on behalf of the lessor, and
(c) any person, being a mortgagor under a mortgage, who is given a bill of costs, concerning legal services relating to the preparation of that mortgage, by a barrister or solicitor acting on behalf of the mortgagee."
61 It was important, according to counsel for the solicitors, that the definition (which forms part of Division 6: Assessment of Costs) is expressed to operate only for the section. The legislation, he suggested, provided a wide definition of "client" to broaden the scope of those who might seek an assessment of costs under Division 6. But the word "client" in the context of the sections which defined the obligations of a solicitor (Part 11, Legal Fees and Other Costs) had a narrower meaning. It did not extend to all parties to a costs agreement. Here, it was submitted, the solicitors were appearing for Matthew. He was the client. The obligations under s 177 and s 178 were owed to him. The parents were not the client and no obligations were owed to them. They had simply agreed to pay the fees.
62 There is surprisingly little authority on the meaning of the word "client". Such authority as there is usually considers the meaning in the context of particular legislation. In Apple v Wily [2002] NSWSC 855, Barrett J was confronted by a problem in respect of access to documents where a claim was made for legal professional privilege. Having referred to the definition of "client" in s 117(1) of the Evidence Act 1995, his Honour said this:
"[7] ... In ordinary parlance, a 'client' vis-a-vis a lawyer is a person for whom the lawyer performs legal services. Whether a relationship of that kind exists is to be determined by reference to the intentions of the parties objectively ascertained. ... "
63 His Honour added:
"[7] ... This is, I think, recognized in the judgment of Mahoney JA (with whom Priestley and Powell JJA agreed) in Maxwell v Chittick (unreported, NSWCA, 23 August 1994):
'It is, of course, to be accepted that persons in the relationship that existed between Mr Maxwell and the plaintiffs may also undertake the relationship of solicitor and client. Whether that relationship existed depends essentially upon whether it was the intention of the parties that it should be created. I am of the opinion that, having regard to the circumstances, no such relationship was intended to be created ... what occurred between them at each of these times did not constitute in terms the making of a contract of the accepting of a retainer so as to create the relationship of solicitor and client. And I do not think that the circumstances require it to be implied that such a relationship was intended to be created between them.'"
64 Later in the same judgement, Barrett J said this:
"[11] 'Client', in its ordinary signification, must therefore be regarded as referring to a person who, in respect of some legal matter within the scope of professional services normally provided by lawyers, has, with the consent of a lawyer, come to stand in a relationship of trust and confidence to the lawyer entailing duties of the lawyer to promote the person's interests, to protect the person's rights and to respect the person's confidences. The privilege exists so that a person may consult his legal adviser in the knowledge that confidentiality will prevail."
65 The issue surfaced again in a similar context in Hawksford v Hawksford [2008] NSWSC 31, where White J, having referred to paragraph [11] of Barrett J's judgment set out above, said this:
"[18] Counsel for the Brett Hawksford parties submitted that this description of what was required to bring into existence a relationship of lawyer and client omitted an essential ingredient, being that the client had retained the lawyer to act for him or her. In the present context, this meant, according to the submission, that there must have been a valid contract of retainer.
[19] I do not agree. It is clearly established that privilege can exist in respect of communications where there is no valid retainer of the lawyer because the lawyer lacked statutory authority to act ( Grofam Pty Limited v Australia & New Zealand Banking Group Limited (1993) 45 FCR 445 at 455-456; Health Insurance Commission v Freeman (1998) 88 FCR 544 at 566-567). Communications between a person who seeks to secure the services of a solicitor and the solicitor are privileged notwithstanding that the solicitor refused the retainer ( Minter v Priest [1929] 1 KB 655 at 666, 675; Cromack v Heathcote (1820) 2 Brod & Bing 4; 129 ER 857). In Global Funds Management (NSW) Ltd v Rooney (1994) 36 NSWLR 122 Young J (as his Honour then was) held (at 130) that:
'At least in a situation where the client thought that the lawyer was his or her solicitor and that thought was contributed to by the action of the solicitor or by the person who is seeking to tender the statement, the privilege will exist. In my view the authorities go further to support the proposition that if the client bona fide believes on reasonable grounds that the other is his or her solicitor, then the privilege exists up to the time when that belief is exploded.'"
66 Here, I believe the solicitors were lawyers performing legal services for both Mr and Mrs Cameron and their son at the committal stage. The parents were paying, they plainly wanted to be involved and were involved. To adopt the test of Mahoney JA in Maxwell v Chittick, it was the intention of the parties, at that point, that the relationship of solicitor and client should be created. That was, as mentioned, the belief shared by all. The statement of claim asserted such a relationship and was expressed in these terms (omitting particulars):
"1. The Defendants are indebted to the Plaintiff to the sum of $25,187.87 being the balance outstanding for work done and labour performed by the Plaintiffs, their servants or agents on behalf of the Defendants following their instructions to so act, details of which were supplied to the Defendants in tax invoices rendered by the Plaintiff dated 9 March 2005 and 23 June 2006, and described below as 'the invoices'. ...
2. The Invoices were charged in accordance with a Fee Agreement."
67 At the conclusion of the committal the solicitors, in accordance with the undertaking given at the outset, rendered an account (supra [6]). That was the end of Phase 1. According to Mr and Mrs Cameron, it was the end of their involvement.
68 The material before his Honour raised two significant issues which need to be addressed in order to determine whether Mr and Mrs Cameron had a defence on the merits to the claims made by the solicitors. The two issues were:
· First, whether, in respect of the committal proceedings (where they were clients), their solicitors were arguably in breach of obligations under the Legal Profession Act 1987 (in not providing a revised estimate of costs once they had significantly increased) and, if so, the consequence in respect of the action.
· Secondly, whether in respect of the Crown appeal to the Court of Criminal Appeal, Mr and Mrs Cameron were clients of the solicitors, who had given an undertaking that they would pay the costs.