Citation : SOIA -v- BENNETT [No 5] [2012] WASC 289

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : SOIA -v- BENNETT [No 5] [2012] WASC 289 (S)

Appeal - Contract - Whether trial judge failed to take into account post-contract conduct Fair Trading Act 1987 (WA) - Whether trial judge erred in dismissing application at end of trial to amend pleadings to rely on s 9 of the Fair Trading Act

Fiduciary duties - Whether any relevant fiduciary relationship existed between the parties

Costs - Whether successful litigant in person who is a lawyer is entitled to costs - Chorley exception - Whether Dobree v Hoffman should be overruled

Fair Trading Act 1987 (WA), s 9

A & D Douglas Pty Ltd v Lawyers Private Mortgages Pty Ltd [2006] FCA 690

Atlas Corporation Pty Ltd v Kalyk [2001] NSWCA 10

Brott v Almatrah [1998] 2 VR 83

Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403

Coleman v Power [2004] HCA 39; (2004) 220 CLR 1

Dobree v Hoffman (1995) 14 WAR 408

Dobree v Hoffman (1996) 18 WAR 36

Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89

Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395

Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478

Guss v Veenhuizen (No 2) [1976] HCA 57; (1976) 136 CLR 47

Khera v Jones [2006] NSWCA 85

London Scottish Benefit Society v Chorley, Crawford & Chester (1884) 13 QBD 872

Lord Buddha Pty Ltd (in liq) v Harpur [2013] VSCA 101

Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449

McIlraith v Ilkin [2007] NSWSC 1052

Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [2011] WASCA 65

Pantorno v The Queen [1989] HCA 18; (1989) 166 CLR 466

Pilcher v H B Brady & Co Pty Ltd [2005] WASCA 159

Ricochet Pty Ltd v Equity Trustees Executors & Agency Co Ltd [1993] FCA 99; (1993) 41 FCR 229

Soia v Bennett [2011] WASC 59

Soia v Bennett [No 2] [2011] WASC 133

Soia v Bennett [No 3] [2011] WASC 361

Soia v Bennett [No 5] [2012] WASC 289

Soia v Bennett [No 5] [2012] WASC 289 (S)

Strachan Thomas v Clough [1999] SASC 298

Waller v Freehills [2009] FCAFC 89; (2009) 177 FCR 507

Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514

Watts v Turpin [1999] WASCA 216; (1999) 21 WAR 402

Winn v Garland Hawthorn Brahe (a firm) [2007] VSC 360

Worchild v Peterson [2008] QCA 26

1 PULLIN JA: This is an appeal by the appellants against the dismissal of a claim for damages for breach of contract and for alleged misleading or deceptive conduct contrary to the Fair Trading Act 1987 (WA).

2 The relevant background is set out below. All references in these reasons to paragraph numbers are references to paragraph numbers in the trial judge's reasons in Soia v Bennett [No 5] [2012] WASC 289 unless otherwise indicated.

3 The first appellant, Mr Soia, ran a business through his company, the second appellant, Personalized Tuition Services Pty Ltd (PTS). The business involved tutoring school children. The respondent, Mr Bennett, took his son to be tutored by Mr Soia and met Mr Soia on 13 May 1998. Mr Bennett was and is a lawyer, and on 28 October 1998, Mr Soia first attended Mr Bennett's office seeking legal advice about an employee who had left PTS and taken students with him. Mr Bennett was instructed to issue a writ against the employee, which he did. On 22 January 1999, Mr Soia signed a retainer agreement in relation to that matter (the employment matter).

4 Mr Bennett was impressed by Mr Soia's teaching methods, and late in 1998, he suggested to Mr Soia that they establish an internet tuition business together. Mr Soia was initially circumspect about the proposal, but he soon embraced the idea. He suggested, and Mr Bennett accepted, that the business should involve prerecording educational lectures which would then be marketed online [231]. Mr Bennett was enthusiastic about the business and led himself to believe that the business would have the potential to make millions of dollars [230]. He said so to Mr Soia.

5 At a meeting on 23 February 1999, Mr Soia and Mr Bennett discussed the proposal on the basis that Mr Soia would provide the educational content for the business and Mr Bennett would provide funding for the development of the business [233]. They both became very excited about the prospects for the business, which they believed would be the first of its kind on the internet [234].

6 On 5 March 1999, the two men agreed that the proposal to conduct the internet tuition business should be via a joint venture using two companies, one controlled by Mr Bennett and one controlled by Mr Soia, and that the two companies would be shareholders in a third company which would conduct the business. They agreed on Internet Tuition College as a name for that company. Later, Internet Tuition College Pty Ltd (ITC) was incorporated. Mr Bennett and Mr Soia were directors of ITC and their companies each held 50% of the shares in ITC. Although the parties proceeded on the understanding that Mr Bennett would provide funding for the development of the business, the extent of such funding was not defined and remained throughout the dealings between Mr Soia and Mr Bennett a 'nebulous concept' [236].

7 On 30 March 1999, the two men agreed that a technology consultant should be retained to obtain information about what was necessary to establish the business because both Mr Soia and Mr Bennett were largely ignorant about what technology would be required [239]. By 11 June 1999, Mr Bennett had prepared a draft shareholders' agreement, but Mr Soia rejected that draft [247].

8 On 14 June 1999, Mr Soia and Mr Bennett met to discuss a report received from a technology consultant. Having received the advice, Mr Soia and Mr Bennett agreed that they should proceed in three phases.

(a) phase 1 - preparation and testing of a feasibility prototype;

(b) phase 2 - the development of the business by streaming seminars to Western Australian students; and

(c) phase 3 - the further development of the business by streaming seminars to students throughout Australia [248].

10 The first phase, being the preparation and testing of a 'feasibility prototype', was necessary to ascertain whether video recorded lectures could be streamed to students on the internet. This was fundamental to the operation of the joint venture, and progression to further phases of the business was dependent upon the successful completion of the feasibility prototype [251].

11 Mr Soia and Mr Bennett met on 30 June 1999. In terms of Mr Soia's and PTS' pleaded case, this was a critically important meeting. The trial judge found that the primary purpose of the 30 June 1999 meeting was to discuss what was necessary to complete the feasibility prototype phase [256(d)]. His Honour found that it was in the contemplation of the parties that if the feasibility prototype was successful, then ITC would proceed to the second phase. ITC would then become operational and Mr Soia would need to become fully engaged in ITC. It was contemplated also that, in the second phase of the business, the business would produce income and Mr Soia would be paid a management fee [256(f)]. A budget document was presented by Mr Bennett. It was in the form of a proposed cash flow table for a 12 year period showing projected revenue and expenditure. It showed as one item of projected expenditure 'Management Fees Soia PL'. Against that item appeared $200,000 for year 1, $300,000 for year 2, $400,000 for year 3 and $650,000 for each of years 4 through to 12. The budget document was discussed at the meeting. Mr Soia and PTS claimed that a contract was entered into at this meeting. Details of the alleged contract are set out below. It is only necessary to say at this point that Mr Soia claimed that it was agreed at the meeting of 30 June 1999 that he would be paid a management fee of $200,000 for the first year and then the increasing amounts in the following years as shown on the budget document.

12 Both Mr Soia and Mr Bennett discussed the need for Mr Soia to 'eventually' close down PTS and devote himself fully to the joint venture, but Mr Bennett did not encourage Mr Soia to close down PTS immediately [237]. However, Mr Soia became so intoxicated with the proposed joint venture that he jumped ahead in his thinking beyond a prudent investigation of the viability of the venture [245]. Mr Soia's optimism led him to wind down PTS by placing properties from which he conducted the PTS business on the market [253]. One property at Claremont was sold on 4 August 1999, and by 1 August 1999, PTS had ceased tuition from a second property at Joondalup and had placed it on the market. Mr Soia assumed that the feasibility prototype and the joint venture would succeed, and Mr Soia's 'assumptions and blind enthusiasm' caused him to take the steps of closing down the PTS business [253].

13 In August 1999, Mr Soia and Mr Bennett agreed not to proceed to complete the feasibility prototype phase due to concerns that someone might steal the concept. They agreed to proceed directly to the second phase [258]. Mr Soia then had an expectation that because the feasibility prototype phase had been abandoned, he should be paid a management fee, but there was no agreement to that effect. Mr Bennett recognised that Mr Soia should be paid something for his work with ITC and paid Mr Soia $10,000 on 25 August 1999 [262]. Numerous other payments were made by Mr Bennett to Mr Soia until 28 September 2000. He paid Mr Soia a total of $177,650.60 [210]. The payments were made to Mr Soia 'to alleviate Mr Soia's financial situation' that resulted from devoting many hours to the development of ITC to the detriment of the tuition business conducted by PTS [261], [264]. By February 2000, both men realised that it would take ITC two years to become productive of income [267]. As a result, the decision was made to approach outside investors [268]. Approaches were made but came to nothing.

14 The relationship between Mr Soia and Mr Bennett began to deteriorate. Mr Soia's financial position became desperate. He sent letters of demand to Mr Bennett which became offensive in tone. By 28 September 2000, the relationship had fractured. The cause of the fracture was primarily the dispute over management fees which Mr Soia claimed Mr Bennett should have been funding [272].

15 On 28 September 2000, Mr Bennett gave notice to Mr Soia that his company would cease to provide further funding to ITC [270]. ITC could no longer operate once Mr Bennett's company withdrew funding [271].

16 On 10 February 2003, Mr Soia and PTS issued a writ claiming damages from Mr Bennett. Leading up to the trial there were numerous amendments to the pleadings. On 14 February 2011, Mr Bennett applied for leave to amend the defence, which was granted on 1 March 2011: Soia v Bennett [2011] WASC 59. The defence was amended further pursuant to O 21 r 3(2) of the Rules of the Supreme Court 1971 (WA) as a consequence of amendment to Mr Soia's and PTS' statement of claim, described below. The reamended defence was dated 12 May 2011.

17 Also before trial and on 19 April 2011, Mr Soia and PTS applied for leave to amend the statement of claim, which was granted by the trial judge: Soia v Bennett [No 2] [2011] WASC 133. The amended statement of claim was dated 11 May 2011. This was the version of the statement of claim current at the start of the trial and described below. An earlier version of the statement of claim alleged that the representations pleaded in pars 3, 5 and 6 related to future matters for the purposes of s 9 of the Fair Trading Act, but in the version on foot at the beginning of the trial, no reference was made to s 9 of the Fair Trading Act.

18 The amended statement of claim as it stood at the commencement of the trial and during the evidence given at the trial pleaded that Mr Bennett was guilty of misleading and deceptive conduct entitling Mr Soia and PTS to damages under the Fair Trading Act. It also pleaded that Mr Bennett breached a contract with Mr Soia to 'provide for payment' of management fees. More details of these causes of action are set out in the following subparagraphs:

(a) In par 3, Mr Soia and PTS pleaded that between 23 February 1999 and 30 June 1999, Mr Bennett orally represented that:

(i) if Mr Soia entered into a joint venture with Mr Bennett, the internet tuition business would 'provide tuition to thousands or millions of students and the financial and professional rewards for Mr Soia and Mr Bennett would be enormous';

(ii) if Mr Soia joined Mr Bennett in the joint venture, PTS would have to cease carrying on its business as Mr Soia would have to concentrate solely on the development of the ITC tuition business; and

(iii) Mr Bennett would fund the development of the business, which funding would include provision of management fees for Mr Soia.

(b) In par 5, Mr Soia and PTS pleaded that at the meeting of 30 June 1999 between Mr Bennett and Mr Soia, Mr Bennett provided a budget for ITC which included:

(i) expenditure for each of the next 12 financial years commencing on 1 July 1999, the expenditure for 1999/2000 ('the first year') and 2000/2001 ('the second year') being respectively $1,765,765 and $1,986,080 (an increase in each year thereafter); and

(ii) management fees for Mr Soia of $200,000 for the first year and $300,000 for the second year, $400,000 for the third year and $650,000 for each of the next nine years

and thereby represented expressly or impliedly that he would fund the development of the business in accordance with the budget and that Mr Soia would be paid management fees in accordance with the budget.

(i) in July 1999, Mr Bennett provided to Mr Soia a document called 'Corporate Structure' which, inter alia, provided for Mr Soia to be remunerated by payment of $250,000 for the first year; and

(ii) Mr Bennett thereby represented to Mr Soia expressly or impliedly that he would cause Mr Soia to be paid $250,000 for the first year.

(d) Paragraph 7 of the amended statement of claim pleaded that, on 14 June 1999, in reliance on the representations pleaded in pars 3, 5 and 6, Mr Soia and PTS listed the property on which its Claremont tuition centre was located for sale, which property was sold and settled on 4 August 1999; on 8 June 1999, listed the property on which PTS' Joondalup tuition centre was located for sale and ended tuition there on 1 August 1999; ran down the other activities of PTS until its activities wholly ceased by in or about November 1999; and Mr Soia devoted his time, energy and expertise to development of the business for ITC.

(e) In par 15, it was pleaded that the representations pleaded in pars 3, 5 and 6 constituted conduct in trade or commerce and had been falsified in that:

(i) [Mr Bennett] failed duly to fund the joint venture and abandoned it in September 2000;

(ii) [Mr Bennett] failed to pay or cause to be paid to [Mr Soia] management fees in accordance with the budgeted figures; and

(iii) no, or no significant, financial or professional rewards were derived by [Mr Soia] from entering upon the joint venture with [Mr Bennett] in respect of the business and in the premises must be deemed to have constituted misleading or deceptive conduct.

(f) In par 19, it was also pleaded that Mr Soia entered into a contract with Mr Bennett between 4 May 1999 and 30 June 1999 in terms that:

[I]f [Mr Soia] joined [Mr Bennett] in operating the business, and in consideration of [Mr Soia] doing so and devoting his time, energy and expertise to the development of the business, [Mr Bennett] would fund the development of the business including providing for payment of management fees to [Mr Soia].

(g) As part of the contract plea or perhaps as an alternative to par 19, it was pleaded in par 20 of the amended statement of claim that at the 30 June 1999 meeting, Mr Bennett orally agreed that the budget would be adopted and implemented and expressly or impliedly agreed that he would fund the development of the business in accordance with the budget, and that Mr Soia would be paid management fees as listed in the budget in consideration of Mr Soia participating in the development of the business.

(h) In par 22, it was pleaded that in breach of contract, Mr Soia was not paid management fees for 1999/2000 or pro rata for July to September 2000; that Mr Bennett failed to fund the development of the business in 1999/2000 in accordance with the budget; and that Mr Bennett ceased funding the development of the business at the end of September 2000.

19 In the prayer for relief, Mr Soia and PTS claimed damages for misleading or deceptive conduct under the Fair Trading Act, and Mr Soia claimed damages for breach of contract.

20 On 25 May 2011, during the opening of the defence case, counsel for Mr Bennett made submissions about the pleadings and, in particular, submitted that the pleading of misleading or deceptive conduct was bad in law because a falsification of a promissory representation about future funding (including payment of management fees) could not amount to misleading or deceptive conduct within the meaning of the Fair Trading Act merely because the funding was not provided. This is because the misleading or deceptive conduct had to exist at the time that the representation was made. This point was also made in Mr Bennett's reamended defence at par 15. During the presentation of Mr Bennett's case, no application to amend the amended statement of claim was made.

21 On 5 October 2011, during closing submissions, counsel for Mr Soia and PTS submitted that Mr Bennett had no reasonable basis for making the representations pleaded and referred to s 9 of the Fair Trading Act. The trial judge expressed the view that such a submission was not open on the pleadings as they then stood. Counsel for Mr Soia and PTS foreshadowed further amendments to the amended statement of claim. His Honour made orders requiring a written application for leave to amend the amended statement of claim.

22 Mr Soia and PTS made such an application. The application sought leave to amend four paragraphs of the amended statement of claim, to insert a new paragraph into the amended statement of claim, and to amend further and better particulars in relation to par 3 of the amended statement of claim. There was a hearing concerning this application on 15 December 2011. The trial judge reserved his decision and on 22 December 2011, delivered his reasons for decision: Soia v Bennett [No 3] [2011] WASC 361. The application to amend was allowed in part. Some of the amendments were allowed. Some were not.

23 It is not necessary to describe the amendments which were allowed by the trial judge. It is necessary to refer to the proposed amendment which was not allowed. The application proposed to introduce a new par 16 which read:

1. To the extent that the representations in paragraphs 3, 5 and 6 herein related to future matters they were made without reasonable grounds in contravention of s 9 of the Act.

[Mr Bennett] at the time he made the representations had no intention of funding the business or did not have reasonable grounds for saying he was going to fund the business to the extent required for its development for the first two years as set out in the budget of $1,765,765 for the first year and $1,980,000 for the second year or the management fees listed therein as $200,000 for the first year and $300,000 for the second year or to pay any management fee until the business had its own income.

24 His Honour said that the proposed amendment created a 'major shift in the nature of the claim made by [Mr Soia and PTS]'. The trial judge noted that Mr Bennett's counsel had submitted in opening that the pleading of misleading or deceptive conduct was bad in law because it pleaded that the promissory representations about future funding were false because the represented future events did not occur. His Honour said that misleading or deceptive conduct 'must exist' at the time of the representation. His Honour referred to Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [2011] WASCA 65 where Newnes JA noted at [59] that a representation that something will be done in the future will not be shown to be misleading or deceptive at the time it was made simply by showing that when the time came to do that thing, the representor did not do it. Newnes JA observed that a representation would be misleading or deceptive if at the time it was made, the representor did not have reasonable grounds for making that representation.

25 The trial judge decided that the proposed amendment should not be allowed for three reasons, namely:

(a) the proposed amendment raised a new cause of action based on the allegation that Mr Bennett did not have reasonable grounds for making the alleged representations at the time of the representations. His Honour said that this new cause of action would be statute barred;

(b) that the onus of proof in showing reasonable grounds for making a representation was on Mr Bennett, and if the proposed amendment were allowed, it would be grossly unfair to him given that the evidence was closed; and

(c) such amendment would give rise to a new factual issue as to whether Mr Bennett engaged in misleading or deceptive conduct at the time of the representations, and that to allow such amendment after the close of evidence would create 'obvious unfairness' to Mr Bennett.

26 Subsequently, on 16 August 2012, the trial judge delivered his reasons for dismissing the action brought by Mr Soia and PTS: Soia v Bennett [No 5].

27 It is not necessary to detail every finding of fact made by the trial judge. However the following, critical findings were made:

(a) no contract was entered into on 30 June 1999 [256(b)];

(b) the budget document presented by Mr Bennett on 30 June 1999 was, as the trial judge found, a 'concept document for discussion and was not meant to be a rigid prescription of either anticipated income or expenditure' [256(a)].

(c) the representations pleaded in pars 5 and 6 were not made [279] - [281]; and

(i) any representation by Mr Bennett as to the potential profitability of the joint venture was pure speculation, and Mr Soia made his own 'independent assessment of the potential profitability and did not rely upon Mr Bennett's statements' [278];

(ii) although Mr Bennett represented that Mr Soia would eventually need to close down PTS and devote himself to the joint venture, it was not represented that he should immediately do so because, at the time, the joint venture was still in 'concept stage' [276]; and

(iii) Mr Bennett did not represent that, as part of the funding of the development of the joint venture, he would fund the payment to Mr Soia of a management fee. This was because payment of the management fee was to be made 'when the business was operational and earning income' [277].

28 Being the successful party, Mr Bennett applied for an order for costs. The trial judge made orders that Mr Soia and PTS pay 50% of Mr Bennett's costs of the action to be taxed if not agreed and, on the basis of a concession made by Mr Bennett, ordered that no allowance be made for time spent for legal services by Mr Bennett and Mr Colin Chenu of Mr Bennett's firm. The trial judge published reasons for the costs order: Soia v Bennett [No 5] [2012] WASC 289 (S). Although there is an appeal and cross-appeal concerning costs, which is dealt with later, it is necessary to refer to the trial judge's reasons for reducing Mr Bennett's costs by half because it may be inferred that the reasoning inspired Mr Soia and PTS to formulate ground of appeal 6 in the substantive appeal. The trial judge's reasons for reducing the costs payable to Mr Bennett by half were to the following effect:

(a) the usual order for costs would be for costs to follow the event unless there was misconduct, including misconduct relating to the circumstances leading up to the litigation;

(b) there was misconduct on the part of Mr Bennett because, according to the trial judge, it was 'common ground' that Mr Bennett owed a fiduciary duty which included an obligation to recommend that Mr Soia seek independent legal advice;

(c) it was possible to reach that conclusion even though no claim had been brought in the action based on breach of fiduciary duty and even though the extent of Mr Bennett's 'duty' that he ought to have advised Mr Soia to seek independent legal advice had not been canvassed; and

(d) there was 'no unfairness' in taking into account on the question of costs the fact that Mr Bennett failed to recommend to Mr Soia to seek independent legal advice.

[T]he failure of Mr Bennett to recommend to Mr Soia that he obtain independent legal advice, in circumstances that Mr Bennett had assured Mr Soia it was unnecessary for the shareholders' agreement to contain provisions as to the respective roles of Mr Soia and Mr Bennett in the joint venture, constituted misconduct that contributed to a state of uncertainty as to the respective entitlements and obligations of the parties. This uncertainty significantly contributed to the action being commenced and unnecessary costs being incurred. Whether Mr Soia would have responded to the recommendation to get independent legal advice is largely speculation. However, he was denied the opportunity to consider such a recommendation [19].

30 The costs appeal is dealt with later, but it is necessary to say at this point that it was not 'common ground' that Mr Bennett breached any fiduciary duty.

31 The judgment of the trial judge dismissing the damages claim by Mr Soia and PTS is the subject of appeal CACV 108 of 2012, and the costs orders are the subject of appeal CACV 8 of 2013.

32 Mr Soia's and PTS' grounds of appeal may be summarised as follows:

(a) Ground 1 alleges that the trial judge erred in finding that Mr Soia and Mr Bennett did not enter into a contract whereby Mr Bennett was bound to pay a management fee to Mr Soia.

(b) Grounds 2 to 5 allege error by the trial judge in concluding that claims based on alleged misrepresentations should be dismissed.

(c) Ground 6 alleges that the trial judge erred in failing to find that Mr Bennett breached fiduciary duties owed to Mr Soia and PTS as their solicitor, even though no such claim was made at trial.

(d) Ground 7 alleges that the trial judge erred in his provisional finding that if damages should be awarded, then interest should be allowed on such damages up until judgment at only 3%.

33 The ground as formulated was ambiguous and had to be construed before it could be addressed. Upon hearing counsel for Mr Soia and PTS at the appeal, it became clear that the ground consisted of two aspects. They were:

(a) first, that the trial judge erred in failing to consider the conduct of Mr Soia and Mr Bennett post 30 June 1999 when determining whether Mr Bennett was contractually bound to pay a management fee to Mr Soia; and

(b) secondly, that the trial judge erred in failing to determine that some contract, not pleaded, could be gleaned from the conduct of the parties after 30 June 1999.

34 The first aspect of the ground has no merit. The trial judge did not fail to consider the conduct of Mr Soia and Mr Bennett post 30 June 1999.

35 The trial judge observed in his reasons for decision:

Evidence of conduct after an alleged contract, partly oral and partly in writing, can be taken into account both to ascertain whether a contract was entered into and the terms of that contract. The authorities on this issue were reviewed by Owen J in The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 [2664] - [2672] wherein his Honour concluded that the law does permit access to extrinsic evidence of the conduct of the parties for the limited purpose of ascertaining whether a contract, with the terms contended for, existed [324].

In this case it is not disputed by any party to the action that the conduct of the parties should be taken into account in deciding whether the parties had entered into contractual arrangements as at 30 June 1999 in terms as contended by [Mr Soia and PTS]. All parties rely upon subsequent conduct one way or the other to submit that a contract did exist or did not exist [325].

36 The contract alleged in this case was said to have come into existence on 30 June 1999. The trial judge referred to all of the evidence of events after 30 June 1999 which Mr Soia and PTS contended in their written submissions to this court should have been taken into account.

37 This aspect of ground 1 must therefore be dismissed.

38 As to the second aspect of the ground, it became clear that Mr Soia and PTS contended that the conduct post 30 June 1999 should be examined in order to have this court find that there was a different contract from that which was pleaded. This was to try and overcome the trial judge's finding that no agreement was reached on 30 June 1999 that Mr Soia would be paid a management fee. The submission put to this court was that his Honour should have found some contract whereby Mr Bennett agreed to pay management fees in circumstances where the feasibility prototype phase was abandoned. That is a submission which relies upon a contract not pleaded at trial, not the subject of any proposed amendment to the pleadings, never alleged by Mr Soia at trial, and not the subject of any evidence to support it.

39 That aspect of ground 1 must therefore be dismissed.

41 These grounds allege, in effect, that the trial judge erred in Soia v Bennett [No 3] by refusing to allow further amendments to the amended statement of claim to refer to and rely upon s 9 of the Fair Trading Act.

42 There is no doubt, as counsel for Mr Soia and PTS submitted, that in an appeal from a final order, an appellate court may correct interlocutory orders made before judgment which affect the final result: Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478, 482 - 484 (Gaudron, McHugh & Hayne JJ), 494 - 497 (Kirby & Callinan JJ).

43 By these grounds of appeal, Mr Soia and PTS argue that the trial judge erred by disallowing the proposed amendments to allow Mr Soia and PTS to plead reliance on s 9 of the Fair Trading Act. That section provides that a person who makes a representation with respect to any future matter without reasonable grounds for doing so is deemed to have engaged in misleading conduct, and that the onus of establishing that there were grounds for making such a representation is on the person who made the representation.

44 To deal with these grounds of appeal, it is not necessary to discuss the correctness or otherwise of the trial judge's reasons, or Mr Soia's and PTS' submission that the trial judge erred in referring to s 9 of the Fair Trading Act as creating a cause of action, or Mr Soia's and PTS' submission that the cause of action is found in s 10 and not s 9 of the Fair Trading Act. Nor is it necessary to discuss the controversy about what has to be pleaded in cases alleging representations as to future matters.

45 This is because issues about whether there were reasonable grounds for representations about future matters only arise if the pleaded representations were found to have been made and were otherwise actionable.

46 The trial judge found that the representations in pars 5 and 6 were not made. Counsel for Mr Soia and PTS acknowledged that to be so. In relation to par 3, Mr Soia and PTS rely (and only rely) on the 'representation' that Mr Bennett 'believed the business would have the potential to make millions of dollars' [230]. In fact, the word 'represented' in that paragraph is used somewhat loosely by the trial judge. What the trial judge meant was that Mr Bennett 'said' that he 'believed the business would have the potential to make millions of dollars'. However, even if such puffery from a man who, like Mr Soia, did not have much technical knowledge about how to go about making tutorials and publishing them online was a 'representation', it was a representation not relied upon. The trial judge found that 'Mr Soia formed his own independent opinion that potentially the business could make millions of dollars' [232] and that any representations by Mr Bennett about the potential profitability of the joint venture was not relied upon by Mr Soia [278].

47 The result is that none of the pleaded representations were found to have been made, or alternatively, if made, were not relied upon. Mr Soia and PTS submitted that notwithstanding the trial judge's finding that Mr Soia formed his own independent opinion of the joint venture's prospects of success, the trial judge ought to have found that Mr Bennett's representations were at least 'a' factor on which Mr Soia relied in winding down PTS' business, which caused him to suffer loss. The trial judge's findings do not leave open the conclusion that any reliance at all was placed upon the representation about making millions of dollars. The mere possibility that a misrepresentation might have induced a course of action by the representee can never, of itself, attach liability for damages because of the making of the representation: Ricochet Pty Ltd v Equity Trustees Executors & Agency Co Ltd [1993] FCA 99; (1993) 41 FCR 229, 235; Lord Buddha Pty Ltd (in liq) v Harpur [2013] VSCA 101 [149]. Thus, questions about onus of proof and about whether there were reasonable grounds for the representations are irrelevant. The need to plead or not to plead s 9 of the Fair Trading Act, to plead or not to plead that there were no reasonable grounds for the pleaded representations, and whether a reference to s 9 of the Fair Trading Act introduced a new cause of action or not, therefore become moot.

49 As mentioned above, this ground picks up on the trial judge's conclusion in the costs decision that Mr Bennett owed a fiduciary duty to Mr Soia and PTS.

50 Mr Soia and PTS applied to this court to amend the statement of claim as it stood at the end of the trial to allege that:

2A. At all material times, [Mr Bennett] was a certificated legal practitioner practising in partnership as a partner at the firm Bennet & Co.

2B. From in or about October 1998 until in or about July 2001, [Mr Bennett], via his firm Bennett & Co, was retained as a solicitor by [Mr Soia and PTS] for the purpose of providing advice and acting in proceedings relating to disputes between [Mr Soia and PTS] and employees of [PTS].

2C. In the premises, at all material times, [Mr Bennett] owed [Mr Soia and PTS] fiduciary duties whereby [Mr Bennett] would:

(a) serve [Mr Soia and PTS] honestly and in good faith;

(b) act bona fide in the interests of [Mr Soia and PTS]; and

(c) avoid an actual potential conflict between the above duties to [Mr Soia and PTS] and [Mr Bennett's] own interests.

...

6A. In the circumstances pleaded at paragraphs 3, 4, 5 and 6 above, Mr Bennett's self-interest in respect of the business venture being developed by [Mr Soia] and [Mr Bennett] conflicted, or could potentially have conflicted, with his fiduciary duties pleaded in paragraphs 2C(a) and (b) above, and [Mr Bennett] was thereby in breach of his fiduciary duties owed to [Mr Soia and PTS] pleaded in paragraph 2C(c) above at all material times.

...

1. By reason of [Mr Bennett's] breaches of fiduciary duty, [Mr Soia and PTS] have suffered loss and damage.

Had [Mr Soia] not commenced a business venture with [Mr Bennett] then [Mr Soia] would not have caused [PTS] to terminate its business, and

(i) [PTS] would not have lost profits of $450,000; and

(ii) [Mr Soia] would not have lost income from [PTS] of $62,000.

Had [Mr Bennett] not permitted there to exist a conflict or potential conflict between his self-interest and the best interests of [Mr Soia and PTS] in the circumstances of the execution of the Shareholders' Agreement, [Mr Soia] would have had an opportunity to consider a recommendation to obtain independent legal advice before executing the Shareholders' Agreement, with the consequence that [Mr Soia] lost an opportunity of documenting in a written agreement an obligation by [Mr Bennett] to pay management fees to [Mr Soia], which would likely have avoided these proceedings.

51 Particulars were given of the proposed par 6A in terms that Mr Soia's interest was in maximising payment of management fees, whereas Mr Bennett's interest was in minimising or deferring payment of management fees; that Mr Soia's interest was in maximising financial contributions from Mr Bennett, and Mr Bennett's interest was in minimising his financial contribution to the development of the business; and that Mr Soia's interest was in formalising and documenting a binding obligation by Mr Bennett to pay management fees and to fund the business venture, whereas Mr Bennett's interest was in not assuming a binding legal obligation. Finally, it was said that PTS' interest was a continuation of its private tuition business, and Mr Bennett's interest was in the development of the business venture with Mr Soia.

52 It may be observed that although Mr Soia and PTS were represented by senior counsel when the action was commenced and the statement of claim first filed in 2003, and then represented by two counsel at trial, neither Mr Soia nor PTS formulated any claim for equitable compensation for breach of fiduciary duty before, at or after the trial. It may be reasonably inferred that counsel did not detect any basis for such a claim. During the course of Mr Bennett's cross-examination, counsel for Mr Soia and PTS asked Mr Bennett whether he had advised Mr Soia to obtain independent legal advice when the shareholders' agreement was signed on 29 October 1999. The transcript records that question and the subsequent interchange. It reads:

Did you advise [Mr Soia] to get independent legal advice at the time?---No, I didn't, no. I should have, but I didn't.

He was your client at the time?---I had essentially ceased to do - Mr Fairweather had taken over some of his matters and Mr Piere had prepared the document, but no, you're quite right, I should have.

In fact, you were - when you say you had ceased to do the work, you were still on bills for Mr Soia, we have seen, until 2001?---The work that I (indistinct) doing as 2001 is settling documents to ensure that Bennett & Co got off the record when Mr Galic's firm refused to get on the record but had taken over the file relating to Baludis (indistinct).

Prior to that?---And it may have been that I settled other work in relation to that, but no, I accept you're right, and I should have asked Mr Soia to go away and get independent advice.

And you know that Mr Soia was relying on your advice during at least 1999 and, I suggest 2000, in relation to legal matters?---I knew that Mr Soia had quite independently formed his own view of the shareholders' agreement and was not relying upon my advice at all. We were debating the clauses that went into the agreement. Mr Piere was drafting them to give effect to what we debated.

Well, Mr Piere didn't come and give advice to Mr Soia about the shareholders' agreement before he signed it, did he?---I don't know (ts 2172).

Those questions and answers were irrelevant to any issue in the case given the state of the pleadings. Despite the questions and despite the answers, no claim of the sort that Mr Soia and PTS now seek to raise was raised during the trial.

53 The application to amend must be dismissed for the following reasons. It is necessary to refer again to the trial judge's reasons on the question of costs when his Honour said that Mr Bennett was to be awarded only half his costs on the basis that he had been guilty of 'misconduct', which inspired Mr Soia and PTS to seek to amend the statement of claim as set out above. The trial judge said in Soia v Bennett [No 5] (S) that it was 'common ground' that Mr Bennett was under a fiduciary duty which included an 'obligation to recommend Mr Soia seek independent legal advice' [14]. It was not common ground. What the trial judge appears to be referring to was Mr Bennett's agreement in evidence that he should have recommended that Mr Soia obtain independent legal advice.

54 Precisely why Mr Bennett acknowledged that he should have asked Mr Soia to obtain independent legal advice was never disclosed. It may be that he, like the trial judge, thought that there was a fiduciary 'duty' requiring him to recommend or require the obtaining of independent legal advice. However, as revealed below, there was no fiduciary relationship which arose in relation to the negotiations of the proposed joint venture and no such concession was made by Mr Bennett.

55 The trial judge erred in his conclusion that Mr Bennett was under a fiduciary 'duty' for two reasons. First, it is incorrect to speak of a fiduciary 'duty' to recommend or require a beneficiary to obtain independent legal advice. The existence of independent legal advice will be relevant if there is a fiduciary relationship, if there is a conflict of duty and interest, and if the fiduciary defends a claim against him on the basis that the beneficiary, being fully informed, consented to the transaction. In some cases (but not all) the beneficiary will not be fully informed unless he has obtained independent legal advice. In Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449, 466, Brennan CJ, Gaudron, McHugh and Gummow JJ said that if the appellants were to 'escape the stigma of an adverse finding of breach of fiduciary duty with consequent remedies', it was for them to show, by way of defence, informed consent by the respondents to the appellants acting in relation to the transaction in question 'with a divided loyalty'. The majority went on to say:

What is required for a fully informed consent is a question of fact in all the circumstances of each case and there is no precise formula which will determine in all cases if fully informed consent has been given. The circumstances of the case may include ... the importance of obtaining independent and skilled advice from a third party (466 - 467).

However, it should be noted that, contrary to what appeared to be suggested by the respondents in argument, there was no duty as such on the appellants to obtain an informed consent from the respondents. Rather, the existence of an informed consent would have gone to negate what otherwise was a breach of duty (467).

56 The trial judge therefore erred in concluding that Mr Bennett breached a fiduciary 'duty' to recommend or require that Mr Soia and PTS obtain independent legal advice.

57 Secondly, and more importantly, there was no relevant fiduciary relationship between Mr Bennett and Mr Soia and PTS. Just because Mr Bennett was a solicitor and was retained to give advice to Mr Soia and PTS about the employment matter did not mean that fiduciary duties which Mr Bennett owed in relation to his conduct in the employment matter pervaded all other dealings between the parties.

58 As the authors of Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (4th ed, 2002) say:

It [would] be a mistake to assume that any dealing between a fiduciary and his principal is affected by rules ... [concerning dealings between a fiduciary and his principal being dealings on behalf of the principal in which the fiduciary is interested]. It is always a question of the scope of the fiduciary character of the particular relationship ... Thus there is no reason why, for instance, a trustee should not buy from a beneficiary property which is not part of the trust estate and as to which the trustee has not acquired, in that capacity, any special knowledge. Nor is there any reason to suppose that an agent whom a principal employs for the purpose of selling a particular property is thereby subjected to a fiduciary obligation if he seeks to buy some other property which the principal owns. Each case is outside the scope of the trust or agency [5-180].

59 The amendment now proposed to the statement of claim reflects this mistake, and the trial judge erred in the same way by assuming that just because Mr Bennett provided advice to Mr Soia and PTS about the employment matter, any fiduciary obligations arising out of that relationship had relevance to the independent arms-length transaction between the parties concerning the joint venture. There is no allegation that Mr Bennett obtained any confidential knowledge about the business of tutoring students as a result of acting for Mr Soia and PTS in the employment matter which might have benefited Mr Bennett concerning the proposed joint venture. Mr Bennett was not acting as Mr Soia's or PTS' solicitor in relation to the joint venture. The negotiations about the new business did not give rise to any fiduciary relationship between Mr Bennett and Mr Soia and PTS.

60 The application to amend the pleadings must therefore be dismissed and ground 6 must be dismissed.

61 The trial judge provisionally assessed damages which would have been awarded to PTS if it had succeeded in the action at $450,000, this representing a loss of PTS's income. PTS claimed it lost income over a 10 year period, but his Honour held that he was not satisfied that a loss calculated over that period was appropriate. His Honour did not specify over what period this figure was calculated, but described the loss of income as 'closure losses'. Interest was provisionally allowed at 3% from 1 July 1999 [365].

62 The trial judge also provisionally assessed damages for breach of contract which would have been awarded to Mr Soia if he had succeeded at $322,349.40. His Honour provisionally allowed interest at 3% from 1 July 2000 [381].

63 As to damages under the Fair Trading Act, his Honour provisionally assessed damages which would have been awarded to Mr Soia at $62,000 and provisionally assessed interest at 3% from 1 July 2000 [412]. There is no dispute about the dates from which interest should run.

64 The trial judge explained why interest was allowed at only 3%. His Honour said:

Pursuant to s 32 of the Supreme Court Act 1935 (WA) the court may include in any judgment sum interest at a rate it thinks fit, but the section does not authorise the granting of interest upon interest. Apart from this statutory discretion, there is no common law power to make an order for payment of interest to compensate for delay in obtaining payment of compensation except where such interest forms a part of damages for wrongful and foreseeable loss arising from the loss of use of money which the plaintiff ought to have received: Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125; (1989) 84 ALR 119. No evidence was presented that the loss of profit suffered by PTS as a result of its wind down resulted in any additional loss by way of a loss of investment opportunities or other losses that might arise from the loss of use of profits. In the absence of such evidence, it is inappropriate to engage in speculation and include interest for compensation for loss of opportunities: Duke Group Ltd v Pilmer [1999] SASC 97; (1999) 73 SASR 64. In such circumstances the usual approach adopted by the courts in this State is to allow 3% simple interest from the commencement of the loss period until judgment on the accumulated loss suffered and not an accruing interest calculation as used by Mr Barton: see Watts v Turpin [1999] WASCA 216; (1999) 21 WAR 402, 422 - 423 [359].

65 Mr Soia and PTS allege by ground 7 that the trial judge erred by misdirecting himself that the 'usual approach adopted by the courts in this State is to allow 3% simple interest from the commencement of the loss period until judgment' based on what was said in Watts v Turpin [1999] WASCA 216; (1999) 21 WAR 402.

66 This ground must be upheld. The court in Watts v Turpin referred to the fact that the purpose behind the award of prejudgment interest was to compensate a plaintiff for being kept out of or deprived of money. The court went on to deal with circumstances where loss occurs over a period of time, as in the case of loss of earnings in a personal injury case. In Watts v Turpin, damages were assessed for past loss of earnings. Malcolm CJ, Ipp and Steytler JJ agreeing, said:

Where the loss occurs over a period of time, as is the case with loss of earnings, an appropriate formula is: Interest = Half Interest Rate x Principal x Time: Riddle v McPherson (1995) 37 NSWLR 338, 324. If the interest rates have varied over that time it is appropriate to adopt an average, or it may be necessary to shift the 'centre' one way or the other: Bennett v Jones [1977] 2 NSWLR 355; Simonins Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322, 338; and Cullen v Trappell at 19 per Gibbs J.

67 The trial judge in this case erred by applying that reasoning and arriving at a 3% interest rate. His Honour said that 30 June 2000 was the date when Mr Soia's cause of action in misleading or deceptive conduct accrued [308], and that PTS' cause of action for misleading or deceptive conduct accrued on 1 July 1999 [310]. If PTS and Mr Soia had succeeded in the action, then it would have been appropriate to award interest from the dates when the causes of action accrued, but there was no reason to reduce interest rates by 50%.

68 Ground 7 should therefore be upheld. However, because the assessment of interest was provisional, it does not result in any disturbance of the judgment entered after trial.

69 The reasons given above, particularly in relation to ground 1, make it unnecessary to deal with Mr Bennett's notice of contention in CACV 108 of 2012 concerning the issue of contract. By ground 2 of the notice of contention, Mr Bennett seeks to uphold the trial judge's finding in Soia v Bennett [No 3] at [45(1)] that Mr Soia's claim for damages based on a contravention of s 9 of the Fair Trading Act was statute barred. The limitation period for a cause of action in misleading or deceptive conduct under the Fair Trading Act is three years: s 79(2) of the Fair Trading Act. The cause of action accrues when loss or damage is suffered as a result of contravention of s 9 of the Fair Trading Act: see, for example, Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 and s 79(1) of the Fair Trading Act.

70 The trial judge did not make a finding as to when Mr Soia's cause of action against Mr Bennett for contravention of s 9 of the Fair Trading Act might have accrued. Mr Bennett submits that the cause of action accrued around August or September 1999 when Mr Soia started to complain that he was not being paid management fees. Mr Soia refers to the running down of the business of PTS, but submits that the cause of action accrued in August 2000 when Mr Bennett ceased to make payments to Mr Soia. The submissions of the parties refer more to when there was a failure to fulfil the representation, rather than concentrating on when it was that Mr Soia became worse off financially by relying on the representation. It is arguable that a shareholder in a company that closes down its business in reliance on a representation first suffers loss when the value of the shares that he holds in that company decreases. If that were so, then it would follow that Mr Soia suffered loss in August 1999 when the Claremont property from which the PTS tuition business operated was sold and PTS ceased to produce income from its operations at the Claremont property. However, Mr Bennett did not advance this argument. In the absence of any submissions, it is inappropriate to decide whether Mr Soia's claim for damages under s 9 of the Fair Trading Act is statute barred on that basis. In any event, it is not necessary to deal with ground 2 because the appeal should be dismissed on the basis that Mr Soia did not rely on the representation about the likely success of the joint venture. As a result, no loss was suffered.

71 The trial judge ordered that Mr Soia and PTS pay Mr Bennett's costs, and in doing so, dismissed the submission by Mr Soia and PTS that the reasoning of the Full Court in Dobree v Hoffman (1996) 18 WAR 36 should be applied to preclude such an award of costs.

72 Mr Soia and PTS relied on two grounds of appeal in the costs appeal. At the hearing of the appeal, counsel for Mr Soia and PTS abandoned ground 1. Ground 2 alleges that the trial judge erred in not applying the reasoning in Dobree v Hoffman. Mr Bennett has filed a notice of contention to the effect that the trial judge's order should be upheld because Dobree v Hoffman was, in any event, wrongly decided and was contrary to High Court authority and should be overruled.

73 Mr Bennett has a cross-appeal in which he alleges that the trial judge erred in reducing the costs awarded to him because there was 'misconduct' on Mr Bennett's part. In the alternative, Mr Bennett argues that if there were 'misconduct' then the trial judge erred in his conclusion that if Mr Bennett had required Mr Soia and PTS to obtain independent legal advice, Mr Soia would not have sued Mr Bennett.

74 It is relevant for the purposes of this appeal to note that for the period that Mr Bennett claimed costs, Mr Bennett was represented by Bennett + Co, which was an incorporated legal practice under the Legal Profession Act 2008 (WA). At all relevant times, the practice of Bennett + Co was owned by Lawfirst Pty Ltd. Up until 24 January 2012, Mr Bennett was the sole director, secretary and shareholder of that company: Soia v Bennett [No 5] (S) [32].

75 Pursuant to s 37 of the Supreme Court Act 1935 (WA) read with s 49, a commissioner of the Supreme Court is entitled to exercise discretion in awarding costs.

76 Rules of practice guide the court in the exercise of the discretion. One such rule, which is now embodied in the rules of court, is that a successful litigant should be entitled to an order that the unsuccessful party pay the successful litigant's costs. So much is not controversial.

77 However, what is controversial is whether a successful litigant who is a solicitor representing himself can be awarded costs other than for disbursements. The law in this State is out of step with the law elsewhere in Australia. This is revealed below:

(a) The general rule is that a successful litigant in person who is not a solicitor may not recover costs for the time spent in conducting the litigation: Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403. That was the law in England until 1975 when The Litigants in Person (Costs and Expenses) Act 1975 (UK) was introduced to give successful litigants in person the right to recover some costs to cover time spent in conducting litigation.

(b) However, in England in the 1800s, an exception to the general rule was introduced by London Scottish Benefit Society v Chorley, Crawford & Chester (1884) 13 QBD 872 (the Chorley exception). That case held that where the successful litigant in person was a solicitor who acted on his or her own behalf, then, with certain exceptions, the solicitor was entitled to obtain an order for costs and to recover by way of costs the same costs as if the solicitor had employed another solicitor to represent him or her.

(c) In 1976, a majority of the High Court in Guss v Veenhuizen (No 2) [1976] HCA 57; (1976) 136 CLR 47 referred with approval to the Chorley exception in a case where a successful solicitor litigant in person sought and obtained a costs order.

(d) In Western Australia, by reason of a decision of the Full Court of the Supreme Court of Western Australia in Dobree v Hoffman, the Chorley exception does not apply in State courts in Western Australia. Thus, in Western Australian State courts, a successful litigant in person who is a solicitor may not recover costs for time spent doing legal work representing himself or herself. Furthermore, if a firm of solicitors acts for the successful solicitor litigant and the solicitor litigant is a partner in that firm, then the costs charged by that firm cannot be recovered: Dobree v Hoffman (53). The Full Court decision affirmed a decision of Ipp J in Dobree v Hoffman (1995) 14 WAR 408.

(e) In the Federal Court, the Chorley exception does apply: Waller v Freehills [2009] FCAFC 89; (2009) 177 FCR 507 [99] (Finn, Dowsett & Siopis JJ); A & D Douglas Pty Ltd v Lawyers Private Mortgages Pty Ltd [2006] FCA 690 [10] (Dowsett J).

(f) In Victoria, the Chorley exception does apply: Brott v Almatrah [1998] 2 VR 83, 86 - 87 (Batt J); see also Winn v Garland Hawthorn Brahe (a firm) [2007] VSC 360 [7] (Kaye J).

(g) In New South Wales, the Chorley exception does apply: Atlas Corporation Pty Ltd v Kalyk [2001] NSWCA 10 [9] - [12] (Handley JA), [13] (Meagher JA), [14] (Sheller JA); Khera v Jones [2006] NSWCA 85 [6] (Mason P & Ipp JA); McIlraith v Ilkin [2007] NSWSC 1052 [25] - [26] (Brereton J).

(h) In Queensland, the Chorley exception does apply: Worchild v Peterson [2008] QCA 26 [9] (Mackenzie AJA), [1] (McMurdo P), [2] (Holmes JA).

(i) In South Australia, the Chorley exception does apply: Strachan Thomas v Clough [1999] SASC 298 [16] (Williams J).

(j) If the decision of the trial judge in this case applies, then Dobree v Hoffman does not apply in this State to a successful solicitor litigant in person if that solicitor is represented not by himself or herself or by a firm in which he or she is a partner, but by an incorporated legal practice, even though that solicitor is the sole director and shareholder in the company.

(k) In Cachia v Hanes, the majority made comments which were critical of the Chorley exception and somewhat dismissive of Guss v Veenhuizen (No 2). However, Guss v Veenhuizen (No 2) was not overruled and no decision was made in Cachia v Hanes that the Chorley exception should not be applied.

78 This court may overturn one of its earlier decisions or a decision of the Full Court if it is convinced that the earlier decision is wrong or if there is some other compelling reason why the previous decision should not be followed: Pilcher v H B Brady & Co Pty Ltd [2005] WASCA 159 [24] - [25].

79 The Full Court decision in Dobree v Hoffman was wrong and should not be followed. The Full Court said it would not follow the Chorley exception because, although it was referred to with approval in Guss v Veenhuizen (No 2), no issue was raised in the latter case about whether the Chorley exception applied and so the approving reference to it was obiter dictum, which the Full Court did not have to follow. However, the Full Court should have applied the Chorley exception because even if the reference to it in Guss v Veenhuizen (No 2) was obiter, it was seriously considered obiter. In any event, it is questionable whether it was merely obiter for the following reasons.

80 According to McHugh J in Coleman v Power [2004] HCA 39; (2004) 220 CLR 1 [79], if no issue is raised about a point of law, then the application of such point of law does not form part of the ratio decidendi. However, courts do not apply the law as the parties agree it if the court thinks that the parties have a wrong view of the law. The parties' wrong view of the law does not bind the court: Pantorno v The Queen [1989] HCA 18; (1989) 166 CLR 466, 473 (Mason CJ & Brennan J). In Guss v Veenhuizen (No 2), it was necessary that the successful litigant be a lawyer if he was to recover costs. The court decided that because he was a lawyer litigant in person, then, based on the Chorley exception, he was entitled to his costs, subject to the resolution of an issue about whether he was a lawyer if his name was not on the High Court roll of practitioners. A necessary material fact in Guss v Veenhuizen (No 2) was that the successful litigant was a lawyer. The decision was that because he was a successful litigant and a lawyer, he was entitled to his costs because of the Chorley exception. On that reasoning, the reference to the Chorley exception formed part of the ratio of the case. In Atlas, Handley JA, Meagher and Sheller JJA agreeing, said that the decision in Guss v Veenhuizen (No 2) and the statements of the majority in that case when applying the Chorley exception 'were not dicta' [11]. However, even if what was said by the majority in Guss v Veenhuizen (No 2) should be characterised as obiter, it was, as already mentioned, 'seriously' considered obiter of the High Court and it should have been followed by the Full Court in Dobree v Hoffman: see Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 [134]. In Atlas, the New South Wales Court of Appeal refused to follow Dobree v Hoffman, citing Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395 where the majority in that case said:

It should be emphasised that it is for this Court alone to determine whether one of its previous decisions is to be departed from or overruled (403).

81 Other judges have refused to follow Dobree v Hoffman: see, for example, Khera v Jones; Brott v Almatrah.

82 There is also a compelling additional reason why Dobree v Hoffman should not be followed. It is highly desirable that the same rule of practice should apply in all jurisdictions until the High Court decides otherwise. The unsatisfactory situation has developed in this State that the Chorley exception does apply to litigation conducted in the Federal Court in this State (see Waller v Freehills), but if the same litigation is conducted in the State courts, the Chorley exception does not apply. As outlined above, in New South Wales, Victoria, Queensland and South Australia, the Chorley exception applies.

83 If the law is to be changed, it will have to be changed by a decision of the High Court or by legislative intervention as occurred in England.

84 Sentiments have been expressed in some cases that it would be preferable if the Chorley exception were abolished: see Khera v Jones; McIlraith v Ilkin. Even the majority in Cachia v Hanes said that if the reasons for the Chorley exception are unconvincing, 'the logical answer may be to abandon the exception in favour of the general principle rather than the other way round' (412). In my view, there should not be a rush to accept that view without further considered debate on the subject.

85 True it is that courts would like to have lawyers involved in litigation rather than litigants in person. The majority said in Cachia v Hanes that it would be 'mere pretence' to regard the work done by most litigants in person in the preparation and conduct of their cases as the equivalent of work done by qualified legal representatives. The court added that all too frequently, the burden of ensuring that the necessary work of a litigant in person is done falls on the court administration or the court itself (415). While those comments provide a reason why the court might like lawyers to be involved, that reason provides no justification for denying a successful litigant in person compensation for losses they might suffer in spending a reasonable amount of time in bringing proceedings to a successful conclusion. A litigant in person, particularly a defendant faced with a frivolous claim pursued by a vexatious, persistent and impecunious plaintiff, may not want to engage a lawyer. However, as the law stands in Australia, when the defendant eventually has the proceedings dismissed, he or she will not be able to recover costs from the plaintiff. As mentioned above, in England, legislation has been introduced to permit

successful litigants in person to recover some costs for work done. This is a topic the Law Reform Commission might consider.

86 The trial judge in this case decided the costs issue on the basis that Dobree v Hoffman could be distinguished because Mr Bennett was not represented by himself or by a firm in which he was a partner, but by a corporate legal practice, albeit a corporation in which Mr Bennett was the only director and shareholder. The trial judge said, in effect, that because the incorporated legal practice was a separate legal entity, the 'corporate veil' could not be lifted to deny Mr Bennett his costs. That reasoning does not have to be examined further given the conclusion that Dobree v Hoffman should be overruled and the Chorley exception applied. As a result, Mr Soia's and PTS' ground of appeal should be dismissed and the notice of contention should be upheld.

87 It is now necessary to turn to the cross-appeal which concerns the trial judge's decision to reduce Mr Bennett's legal costs by half because of 'misconduct' on his part. For the reasons given earlier (see above [56] and [57]) there was no 'misconduct'. Mr Bennett did not breach any fiduciary 'duty' of the kind that the trial judge said amounted to misconduct.

89 Mr Soia's and PTS' appeal in CACV 108 of 2012 should be dismissed.

90 Mr Soia's and PTS' appeal in CACV 8 of 2013 should be dismissed, and Mr Bennett's cross-appeal should be upheld.