Frontier Law Group Pty Ltd v Robert Glenn Barkman

The Caveat and the Costs Agreement

1. The evidence in the case presents a mixed picture. The appropriate starting point is the solicitor/client relationship that gives rise to the present application and to the alleged costs agreement that is said to govern the rights between these parties.
2. Caveat number AJ556868Y records the plaintiff/solicitor, Frontier Law Group as caveator. The caveat was lodged in June 2015 over the client's Oatley property ("the land"), which is registered in the name of the client and his wife.
3. The estate or interest claimed in the land is described in the caveat as an "Equitable lien and charge in the amount of $14,823.60". This caveatable interest is said to arise by virtue of an instrument, which the caveat describes as "Retainer and costs agreement dated 7 September 2012", to which the parties are said to be as follows: on the side of the solicitor, the Frontier Law Group Pty Ltd; and on the side of the client, Koala Group Pty Ltd and Robert Glenn Barkman.
4. The facts stated in the caveat to give rise to the estate or interest claimed are "The Parties have an agreement that provides at clauses 22 and 27(b) that upon accepting the terms of the agreement the Registered Proprietor grants an Equitable interest to the Caveator with respect to Property mentioned in [caveat section] (a)". Section (a) of the caveat is the title particulars. The caveat otherwise contains the required statutory information, including the statutory declaration that a person on behalf of the caveator swears to the best of their information, knowledge and belief that the caveator "has a good and valid claim to the estate or interest claimed."
5. The plaintiff contends that the solicitor/client relationship is governed by the costs agreement of 7 September 2012 entitled "Retainer & Costs Agreement", made between Frontier Law Group and "The client listed in schedule 1" that appears in the solicitor's evidence. In schedule 1 the client is described by the names of the two persons mentioned, "Koala Group Pty Ltd, Robert Glen Barkman."
6. The Koala Group and Mr Barkman, were identified separately in this costs agreement as clients under the agreement. But just what the agreement establishes and for what legal services it is said to justify the levying of charges for legal services are matters of some conjecture to which I will come. But a number of parts of the agreement are of present importance.
7. The costs agreement, clause 1 sets out the parties' mutual understanding that the client requires the solicitor to provide legal services "which are described in the annexure schedule 1" and which are defined as the "Required work."
8. The agreement relevantly further provides that "if you require me to provide other legal services the basis of calculating professional fees for that work are set out in schedule 1 unless another costs agreement is made". Schedule 1 sets out various charge out rates for different types of legal services that may be provided by the solicitor.
9. The costs agreement further provides: for a solicitor, Mr Thomas Feerick, having primary responsibility for delivery of the relevant legal services (clause 4); for the charging of professional fees (clause 5); for the payment of out-of-pocket expenses (clause 6); and, for the possibility of special charges being levied in the event of litigation (clause 7).
10. The costs agreement contemplates billing arrangements including the rendering of tax invoices on a regular basis (clause 8), which will become due and payable within 14 days after tax invoice delivery (clause 9). The costs agreement provides for the making of payments against invoices (clause 12), and for the consequences of failing to pay any overdue bills (clauses 13, 14 and 15).
11. Clauses 21, 22 and 23 of the costs agreement provide that liability of the clients under the costs agreement is joint and several, and that if there is more than one person recorded as a client (as there is here), the liability of any corporate client is guaranteed by any signatories on behalf of the corporation. And importantly these provisions further create a charge over real property held by the client in favour of the solicitor. Those provisions are as follows: "21. If the client under this Costs Agreement consists of more than one person or entity, then the liability of each person or entity is joint and several. 22. If this firm provides services for a client who is or includes a company, then every person who signs this Costs Agreement hereby guarantees the due and punctual payment of all monies owing by the client to this firm, and all such guarantors are jointly and severally liable to this firm in all respects as if they were the client and debtor of this firm and they shall not claim the law of surety as a defence to delay or abrogate such liability in any way. 23. In consideration of this Costs Agreement and to better secure payment of all moneys owing by the client to this firm, the client hereby irrevocably charges in favour of this firm all of their right, title and interest in all personal property and real property that the client now holds or acquires in the future, and the client also authorises this firm to cause a caveat to be lodged in respect of all real property charged by this clause."
12. Mr Guede submitted to the Court that clause 23 is the foundation of the solicitor's claim for a caveat against the defendant/client in this case.

Problems with the Solicitor's Case

1. In many cases, provided the proof of the solicitor's case was appropriately constructed, clause 23 might well provide a basis for a caveat to be lodged against a client's property and later extended. But in this case in my view, it does not, because of deficiencies in the evidence.
2. There is an essential problem with this case. It fails to come to grips with the obligations that lie upon legal practitioners before they bring proceedings for the recovery of legal fees due under a costs agreement.
3. The failures here are fundamental. The solicitor fails even to establish the elementary matter that the legal services which have been allegedly provided were provided pursuant to the costs agreement, which has been tendered.
4. To understand these failures it is necessary to look more closely at the evidence adduced on behalf of the plaintiff. The solicitor propounds the case which is reflected in the caveat: that the sum of $14,823.60 is due by the client to the solicitor. It is also contended for the solicitor that the costs agreement put into evidence is the basis for the charging and recovery of this amount. But the evidence falls well short of proving that this particular amount is due by the client, or that any amount is due under the costs agreement.
5. The only evidence adduced in support of the plaintiff's case is the affidavit of Peita Lee Savage of 26 October 2016. That affidavit deposes that the costs agreement in evidence "was issued to the defendant". But the affidavit then goes on to depose that "I confirm that our office did in fact issue multiple retainers and costs agreements to the defendant as he was a regular client of the solicitor over several years and instructed our office to perform work on various matters".
6. The affidavit then explains that the solicitor does not hold an executed retainer and costs agreement. Instead the affidavit explains that to establish a binding costs agreement the solicitor relies on clause 27(b), which is set out below: "27. You may accept the terms of this Costs Agreement - (a) in writing - by signing this document and returning it to us; and / or (b) by your conduct - by giving us further instructions, without first notifying us in writing that you do not accept the terms herein."
7. Clause 27(b) is a reasonably standard form clause, which would ordinarily permit a solicitor to assert that a costs agreement is binding, on the basis that the client has accepted legal work under the agreement. It will be effective in a case where the solicitor proves that some legal work was done under a particular costs agreement.
8. But the plaintiff's evidence here never achieves this. Instead it becomes very discursive about the legal work done. The plaintiff explains the client continued to instruct the solicitor "over a period from 2008 to 2012 with over 20 files opened on his instructions and from his actions" and that "the defendant appears to be a sophisticated client". But then the plaintiff's evidence leaps directly to the point in time in June 2015 that that the solicitor took out the caveat and blandly asserts, "The caveat is in accordance with the terms of our costs agreement".
9. The plaintiff's evidence proceeds to record the course of correspondence passing between the solicitor's firm and the defendant/client about the amount owing. The material so recorded does contain evidence of negotiations between the parties about how much might be due from the client to the solicitor. But it is also evident from this correspondence that despite Mr Guede on behalf of the solicitor providing to the client a form of acknowledgement of debt and requesting that the defendant execute the same, he did not. And it is evident from the client's affidavit that he disputes the debt that the solicitor claims, partly because of lack of definition in the solicitor's fee notes. That brief summary is as far as the relevant evidence goes.
10. There is no evidence before the Court that the solicitor issued any tax invoices pursuant to the costs agreement. There is no evidence before the Court of the service of tax invoices on the client pursuant to the applicable provisions of the costs agreement. There is no evidence before the Court that the legal services recorded in any tax invoices were the legal services provided pursuant to this costs agreement, as distinct from any other costs agreements that are said to exist for the multiple matters in which legal services were provided between the parties.
11. The plaintiff's evidence is in such a state of uncertainty that the Court cannot be confident that he may eventually establish that the amount set out in the caveat of $14,823.60 is due from the defendant in respect of services provided under this costs agreement. The plaintiff does not seem to have attended to proof of compliance with any of the applicable obligations under Legal Profession Uniform Law 2014 (NSW) and its predecessors.
12. In the current busy duty list the Court has not been referred to the relevant legislation by either party. But the Court has raised the issue of applicable legislation with the plaintiff solicitor.
13. The Legal Profession Act 2004 (NSW) was repealed by Legal Profession Uniform Law Application Act 2014 (NSW), s 167(a), and in turn replaced by Legal Profession Uniform Law 2014 (NSW) with effect from 1 July 2015. The Court notes the provisions of the current Legal Profession Uniform Law 2014 (NSW), ss 174, 178, 185 and 194, substantially reproduce those of its predecessor Legal Profession Act 2004 (NSW), ss 309, 317, 326 and 331 respectively. It is also fairly clear to the Court that the costs agreement was made in 2012, although it is undated. The affidavit does not in fact say when it was given to the defendant, which makes the Court believe that the plaintiff is not even sure of that itself. However, the Court is prepared to infer on the available evidence that the costs agreement was probably made in 2012. In those circumstances it is likely that the old legislation, Legal Profession Act 2004 (NSW) applies. However for completeness the Court will also make reference to the equivalent sections which currently exist in Legal Profession Uniform Law 2014 (NSW).
14. Briefly summarised, the structure of the legislation is as follows. A law practice such as that of this plaintiff solicitor is required to disclose various matters to a client, concerning the basis on which legal costs will be calculated and an estimate of the total legal costs, together with certain ancillary matters (Legal Profession Act, s 309; Legal Profession Uniform Law, s 174). If the law practice does not do that and contravenes the legislation, the costs agreement may be set aside (Legal Profession Act, s 317(3); see also Legal Profession Uniform Law, s 178, which provides that a failure to disclose would render the costs agreement void). Costs agreements that contravene the legislation and are set aside have the consequence that the client is not required to pay the legal costs incurred under them, until those costs have been assessed or any costs have been determined (Legal Profession Act, s 317(a); Legal Profession Uniform Law, s 178(1)(b)). Finally, a law practice must not commence legal proceedings to recover legal costs from a person unless a bill has been given for the legal costs and the bill complies with the requirements of this law and the Legal Profession Uniform Law (Legal Profession Act, s 331; Legal Profession Uniform Law, s 194).
15. There are so many failures to comply with these requirements that, in my view, on the evidence before the Court, it can confidently be said that this claim has no demonstrated prospects of success.
16. Let me illustrate just three of the problems. First, there is the issue of proof of the costs agreement. In my view, the solicitors have not proved, even to the prime facie level, that they have made adequate disclosure in compliance with Legal Profession Act, s 309 (Legal Profession Uniform Law, s 174) in respect of the legal services the subject of the charges for legal services claimed in these proceedings. The costs agreement, on its face, appears to comply with Legal Profession Act, s 309(1)(b) (Legal Profession Uniform Law, s 174(2)). But, in the absence of any bill or invoice, which connects the costs agreement in question with some legal services provided, it is not possible to say whether disclosure complying with the legislation in respect of those legal services and those costs has been provided.
17. Secondly, even if one were to assume the costs agreement before the Court is the one that applies to the legal services for which the solicitor's charges have been claimed, the disclosure contained in the costs agreement is, in my view, incomprehensible. The costs agreement takes the extraordinary step of providing a "total estimate of costs and disbursements" in a purported attempt to comply with s 174(1) (see Legal Profession Act, s 309(c)) by asserting that the total legal costs will be "between $2,200 - $55,000". In other words, the upper limit of the amount claimed is more than twenty times the lower limit. In my view, that is on its face, so wide a range as to provide no guidance to any client and is not, on any rational basis to be described as an "estimate of the total legal costs" that complies with the legislation.
18. The third problem is that the costs agreement in question does not appear to relate to the amount claimed in the caveat, given there are some twenty files for work done between this solicitor and this client. This is important because in order to sue upon this costs agreement, a law practice must be able to surmount the prohibition in Legal Profession Uniform Law, s 194 (Legal Profession Act, s 331) that it must not commence legal proceedings unless a bill has been given for legal costs and the bill complies with the requirements of "this Law and the Uniform Rules". It seems impossible for the solicitor to be able to establish a right to commence these legal proceedings, unless a memorandum of costs is tendered, which, on its face, complies with the law and the Uniform Law. In this case that at least requires the bill to relate to the costs agreement for which disclosure has been given.
19. Because no bills have been tendered, the Court is not in a position to examine whether the law and the Uniform Law have been relevantly satisfied. The Court cannot assume compliance in the plaintiff's favour. If these provisions have not been satisfied and the costs agreement is void, then the consequence is that the legal costs are not payable until they have been assessed. There is no evidence that any bills of costs in respect of this client have been referred by either the solicitor or the client for assessment.

Conclusion and Orders

1. For all these reasons, in my view, in this case the plaintiff has not established that the caveator's claim has or may have substance. There is no basis to extend the caveat and I decline to do so. I will not make an order for costs. The defendant, a litigant in person, does not have any legal costs. The Court's orders are as follows: 1. Summons dismissed; 2. The Court makes no order for costs for the successful defendant.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 November 2016