Evans & Ors t/as Shaw McDonald v Loxley [1999] NSWSC 593 | Case summary

JUDGMENT 1 HIS HONOUR: Disputes over solicitors' costs can get very heated and this is no exception. The first defendant was suing the second defendant and others for professional negligence. She had a series of solicitors. In between April 1997 and November 1997 she indicated she would retain the plaintiffs as her solicitors in the professional negligence proceedings. 2 The first defendant was sent a costs agreement on or about 9 April 1997 which suggested that the plaintiffs would charge at the rate of $250 per hour for a partner and $190 per hour for a senior solicitor plus disbursements, photocopying, et cetera. They also estimated that collating information relating to her claim would be in the vicinity of $6-12,000 and phase 2, being pursuit of the court action, another $6-12,000. 3 The plaintiffs say that they received back the executed costs agreement on 5 September and only then did they get on to the record of the professional negligence proceedings, which were pending in the District Court of New South Wales. They stayed on the record until November 1997. 4 The first defendant denies that she ever signed the agreement. She says that the plaintiffs were too expensive for her and she just could not afford to be locked into a situation with such expensive legal services. 5 It is more likely than not in my opinion that the plaintiffs did receive back the agreement signed on 5 September. Their action in changing from merely appearing on the record as an agent to preparing a notice of change of solicitor and the different role they assumed after that date is just inexplicable, unless something such as the return of the signed agreement made them change their position. 6 The plaintiffs sent to the first defendant a series of what they felicitously call "bills". The first was on 16 May 1997. This was on any view of the matter, before the costs agreement was signed. The second was on 30 September 1997 and there was a third bill dated 13 April 1999. 7 The first bill of May could not refer to a costs agreement because there was not any. However, the covering letter referred to the "copy costs agreement that I provided to you" in the first paragraph, and in the last paragraph mentioned that the client was only required to pay half the amount by reason of the arrangement set out in that letter. 8 The bill itself did not contain any reference to the draft costs agreement. The bill was addressed to Mrs J S Loxley. It was on letterhead. It was headed "Re Medical Negligence Claim" and it concluded with the words "Yours faithfully, SHAW McDONALD". 9 Mr Burke, who appeared for the plaintiffs, said that under regulation 22A of the Legal Profession Regulation 1994 one could read the covering letter with the bill because a bill of costs may comprise more than one document. However, where one has a completely self-contained bill one cannot or does not do this. There being no reference to the costs agreement or other disclosure document the exemption in regulation 22A(2) does not apply to the "bill" of 19 May 1997. Again the "bill" of 30 September 1997 does not do this. 10 Accordingly, there were no bills which came within ss 192 or 199 of the Legal Profession Act 1987. Thus, most of the orders sought in the summons by the plaintiffs, which focussed on the plaintiffs being paid moneys by the first defendant, could not be obtained. 11 A notice of motion was issued about the time the summons was filed for an order setting up and imposing a lien on the moneys that the present first defendant was found entitled to from the present second defendant by the District Court. 12 Last week Brownie AJ granted some relief in respect of such a lien. Today Mr Burke indicated that the only final relief he sought was to continue that as a final order. He submitted that the form in which Brownie AJ made the order it continued even after the disposal of the suit, but that just cannot be right. 13 Accordingly, I have to examine whether the plaintiffs are entitled to a lien until their bill is properly assessed in accordance with law. 14 There have been a series of cases over the last two hundred years to the effect that if a solicitor expends labour or incurs disbursements, which, at least in a significant way, contributes to a fund of money being recovered by the client, then the solicitor is entitled to a lien over that fund until paid what is properly due to him or her. 15 The solicitor must establish a number of matters in order to qualify for that lien. First the solicitor must show that his or her work did substantially contribute to the bringing about of the fund. I have dealt with that matter at some length in Kelso v McCulloch, 24 October 1994, unreported and more recently in Abdul-Karim v Attorney General's Department [1999] NSWSC 79. 16 Secondly, the solicitor is only entitled to have a lien in respect of so much of the fund as the court considers reasonable between the parties and will have regard to what is likely to be allowed on taxation and what is attributable to the production of the fund as opposed to collateral matters, such as advising the client generally (Johns v Cassel (1993) 6 BPR 13134, 13136). 17 In the instant case, it seems to me that the solicitors did contribute in a significant way to the judgment, in that from what is before me, when these solicitors took over the first defendant's case was not in a particularly ready state and the defendants in the District court proceedings had moved to strike it out. It would seem that the learned District Court Judge declined to strike the matter out but ordered the present first defendant to pay the costs of the motion which would suggest that it was the efforts of the present plaintiffs that secured a merciful result. 18 The plaintiffs did do much more than acquaint themselves with all the facts of the case. They also worked out what medical examinations, et cetera, the first defendant needed to submit to, and obtain reports about her health, but by November 1997 they had ceased to be involved. 19 Some of the work that was done by the solicitors was work which was properly done within their retainer, but that is not the question that I have to consider. I have to consider what work helped produce that fund over which the solicitors are now seeking a lien. 20 Clearly the motion, in fact the two motions before the District Court were in that category, as were the disbursements paid to Miss Foord, barrister, to appear on them. 21 However, the work done by the solicitors in acquainting themselves with the facts of the case and generally in becoming au fait with the matter, insofar as they did not directly relate to the motions, was work properly done, but not work which helped produce the fund. 22 There was a considerable amount of argument about the form and content of the bills. Mr Evatt, appearing for the first defendant, questioned whether a draft costs agreement sent to the client was a "disclosure document" within Regulation 22A. He asked whether a costs agreement specifying an hourly rate permitted the solicitors unilaterally to charge a rate of 10% of the hourly rate for each 6 minute unit with a minimum charge of 1 unit. There were particular queries about a fee of $875 for a "conference" over a cup of coffee in a hotel with the client; a fee of $76 for walking 2.5 blocks from the solicitors' offices to the District Court and back and a fee of $750 for "reviewing file and documents". However these are really matters to be considered by the costs assessor in due course. 23 Going through the bill, it would seem as a rough estimate that only about $2,500, plus the fee owing to Miss Foord, is work which helped to produce the fund. It may well be that when things are looked at more thoroughly than I have had the time to do today, some more should be permitted. 24 If one adds on another $1,000 for that possibility one gets to $4,300. 25 So far as the $4,300 is concerned, it seems to me that that work went towards obtaining the fund and that there is a danger, quite obviously from the rest of the evidence, that unless a lien is imposed the plaintiffs will never receive that sum. 26 I have assumed that the plaintiffs have either paid Miss Foord her $800 or will in due course undertake so to do. Therefore I will assume that they are entitled to the disbursements as well as the costs. 27 Accordingly, a proper order is that the second defendant is to retain $4,300 of any moneys for verdict or costs otherwise due to the first defendant pending assessment of a proper bill of costs between the first defendant and the plaintiffs. I reserve liberty to apply so that final orders can be made. 28 So far as costs of these proceedings are concerned, I think that really the matter was a bit of a draw. The plaintiffs sought far too much in their original summons, yet on the other hand I have accepted the plaintiffs' case on the question of fact and the question of the lien. 29 However, the second defendant has been brought to court more or less as a submitting party and the plaintiffs should pay the second defendant's costs as on a submitting appearance.

Evans & Ors t/as Shaw McDonald v Loxley

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (7 paragraphs)

Parties

Cases Cited (1)