Gaweda v Shaw [1999] VSC 474

The background to the review may be summarised as follows.

12. The defendant to the review is a member of Holding Redlich, a firm of solicitors practising in Melbourne.

15. In June 1996 the plaintiff retained Holding Redlich to act for him in relation to two matters in which he was then involved, an unlawful termination of employment claim in the Australian Industrial Relations Commission (the unfair dismissal claim) and an unlawful discrimination claim under the Equal Opportunity Act (the discrimination claim).

18. Both claims were handled on his behalf by the defendant. At the time, the plaintiff, so it is said, entered into a costs agreement with Holding Redlich. The costs agreement consisted of a letter of 6 June 1996 written by Holding Redlich to the plaintiff and countersigned by the plaintiff. The passages in the letter relevant for present purposes read:

"Before we do any further work we would like you to confirm the terms on which we are engaged. Further, we wish to advise you of the further likely costs of the Industrial Relations Court proceedings. Work done by this firm on your behalf is charged at an hourly rate. Work done by David Shaw is charged at the rate of $240 per hour. You should note that this includes all letters, telephone attendances, meetings and preparation. In addition, any out of pocket expenses, or disbursements, incurred by us on your behalf will be charged to you. This includes barrister's fees, fees for filing documents at court and conducting searches, photocopying and facsimile transmissions. We estimate that the future costs involved in representing you in relation to your unlawful dismissal application up to and including the 2 day hearing will be between $2,000 and $2,800. This estimate is based on a 2 day hearing only. Should the hearing proceed beyond that time we estimate the costs to be between $800 and $1,200 per day depending upon the seniority of the barrister briefed to represent you. In addition to being liable for counsel's fees at the hearing you may also be liable for the expenses and loss of wages of any witnesses that may be called on your behalf. You should note that in the Industrial Relations Court the parties bear their own costs, whatever the outcome. With regard to the equal opportunity claim it is difficult to assess the future costs at this stage. However, if the matter is referred straight to the Anti-Discrimination Tribunal to be listed for trial we expect the future costs to be similar to those in the Industrial Relations Court. This estimate is based on a 2 day hearing. Please note that this figure may increase depending upon the issues involved and the amount of preparation required. If this matter proceeds, we should be able to provide a more accurate assessment closer to a hearing date. Once you have read this letter, please sign, date, and return the enclosed copy to indicate your agreement to our costing terms. On receipt of this letter we will discuss with you the future of each of your cases."

Then there is at the foot of the letter in the plaintiff's handwriting:

25. The plaintiff was successful in his unfair dismissal claim and was awarded compensation equivalent to six months wages.

28. Following the successful conclusion of the unfair dismissal claim, the defendant formed the view that by reason of that success there would be little point in the plaintiff pursuing the discrimination claim. I should say that that view was based on a number of grounds, not the least of them being that a psychiatrist the plaintiff had consulted had expressed the view to the defendant that the plaintiff was not then suffering from a mental illness of a type which would bring him within the provisions of the Equal Opportunity Act.

31. At all events, the plaintiff was not satisfied with the advice given him by the defendant, and in due course the defendant terminated the solicitor/client relationship between them.

34. By letter of 27 March 1998 a detailed account of Holding Redlich's legal costs was forwarded to the plaintiff, together with two outstanding accounts which had been previously submitted to the plaintiff. The account totalled $8699.70.

37. On 16 July 1998 Holding Redlich transferred the sum of $8,699.70 from moneys held in its Trust Account in the name of the plaintiff to its office account. The transfer was done with the approval of Professional Standards, Victorian Lawyers RPA Limited. The plaintiff was advised of the transfer by letter from Holding Redlich of that same date.

40. By letter of 22 August 1998 the plaintiff made a complaint to Professional Standards about a number of matters, including the legal costs he had been charged by Holding Redlich.

43. As part of its investigation of the plaintiff's complaint, Professional Standards referred the complaint in respect of the legal costs to the Costing Service of the Law Institute of Victoria.

46. The Costing Service calculated the costs Holding Redlich would have been entitled to recover in respect of the work performed by it for the plaintiff at $9,888, that is over $1,000 more than the plaintiff had been required to pay to Holding Redlich.

49. On 28 January 1999 the plaintiff caused his dispute with the defendant to be referred to the Legal Professional Tribunal pursuant to the provisions of s.128 of the Legal Practice Act 1996. Section 128 reads:

"128. What happens if dispute is not settled? (1) If having made reasonable attempts to settle a dispute, an RPA or the Board is satisfied that the parties cannot reach agreement, it may give written notice to that effect to each party and the Legal Ombudsman. (2) Within 30 days after receiving a notice under sub-section (1), a party may refer the dispute to the Tribunal by lodging with the registrar a written referral and the prescribed fee (if any). (3) The registrar must give written notice of a referral to the other party, the Legal Ombudsman and the RPA or Board as the case may be as soon as practicable after lodgment. (4) The registrar must refer a dispute to a conciliator as soon as practicable after a referral in relation to the dispute has been lodged under sub-section (2)."

54. On 23 February 1999 the plaintiff filed a summons for taxation of costs in the court pursuant to the provisions of s.115 of the Legal Practice Act.

57. The sub-sections of that section relevant for present purposes read:

"115. Person may apply for an assessment of the bill of costs. (1) Any of the following may apply to the Taxing Master for the assessment of a bill of costs of a legal practitioner or firm - (a) a person who has been given the bill of costs by the practitioner or firm; (b) a person who has paid the legal costs the subject of the bill of costs; (2) an application under sub-section (1) must be made - (a) within two months after the bill of costs was given or the costs were paid (whichever is earlier) or (b) if the legal practitioner or firm consents in writing outside that time."

61. On 27 July 1999 the Taxing Master dismissed the plaintiff's summons on the ground that there was in existence a costs agreement which by reason of s.101 of the Legal Practice Act precludes the taxation of the defendant's costs. Section 101 reads:

"101. Effect of costs agreement. (1) Subject to this Division and Division 4, a costs agreement may be enforced in the same way as any other contract. (2) To the extent that it provides for legal costs to be paid according to a practitioner remuneration order or scale of costs of a court or tribunal, a costs agreement is subject to an assessment under Division 5. (3) The procedure in Division 1 of Part 5 may be used to resolve a dispute over an amount claimed to be payable to a legal practitioner or firm under a costs agreement unless the practitioner or firm has commenced proceedings for recovery of the disputed amount."

65. By notice of 16 August 1999 the plaintiff sought to review the Taxing Master's order.

68. On 11 October 1999 the Taxing Master dismissed the review on the ground that he had no jurisdiction to tax the plaintiff's bill of costs by virtue of the provisions of s.121 of the Legal Practice Act. Section 121 reads:

"121. Legal costs subject to a costs dispute are not assessable. Despite anything to the contrary in this Division, legal costs that are or have been the subject of a costs dispute under Division 1 of Part 5 are not assessable under this Division."

72. It is argued by the defendant that the plaintiff's dispute which was referred to the Legal Professional Tribunal on 28 January 1999 is a costs dispute under Division 1 of Part 5 of the Act.

75. The Taxing Master's reasons for judgment read:

"On the return of the taxation, after a number of adjournments, I held that I had no jurisdiction to tax the Bill of Costs by reason of the fact that there was a cost agreement in existence between the parties. The Defendant took the further objection to the taxation that the Plaintiff having referred the dispute between the parties to the Legal Profession Tribunal the Taxing Master had, by reason of section 121 of the Legal Practice Act 1996, no jurisdiction to tax the bill. I held that by reason of the existence of a costs agreement there was no jurisdiction to tax at the time. It seemed sufficient to dispose of the matter. The question of whether or not there was an application before the tribunal was also fully argued before me and I was satisfied that there was, notwithstanding the efforts of the Plaintiff to withdraw or explain away such an application, in existence or had been at the time the summons for taxation was filed in existence a costs dispute before the tribunal in connection with the Defendant's costs, the subject matter of the summons for taxation (sic). As far as the evidence before me is concerned, I accept the evidence of Mark Richard Champion in his affidavit affirmed 11 June 1999. The Plaintiff's complaints are many and varied and difficult to understand, but certainly include the complaint of the Defendant acting without 'assessment of bills' see page 8 of exhibit 'MRC10' to the affidavit of Mark Richard Champion sworn 11 June. The Plaintiff put in evidence a letter from Anthony Muir, Legal Practitioner assisting the Legal Profession Tribunal dated 21 July 1999 which is in the following relevant terms: 'Your fax states that you do not wish the Tribunal to entertain any cost dispute you have with the legal practitioner. As you are aware, the draft particulars of dispute I have sent you are only my understanding of what your dispute with the legal practitioner is. Apart from today's fax saying that you do not want the Tribunal to deal with any cost dispute you may have with the legal practitioner, I have not received your response to the draft particulars with the result that the particulars have not been finalised. In any subsequent draft of the particulars I will therefore not include any cost dispute with the legal practitioner. I have placed your file on hold pending the resolution of the Supreme Court Taxation. I await your reply as to the outcome of the Supreme Court Taxation.' In my view having regard to the specific provisions of section 121 viz. 'legal costs that are or have been (my emphasis) the subject of a costs dispute under division 1 of part 5 are not assessable under this division. The Plaintiff cannot undo what he has done. During the course of the review of taxation the Plaintiff submitted that 'at the moment there is no costs dispute before the tribunal and if the Taxing Master does not give me what I want I can go back to the Tribunal'. The Plaintiff went on to say 'there is a claim for negligence against the Solicitors before the Tribunal ... I intend to make a complaint to the Tribunal for the return of my documents.' For the foregoing reasons I confirm my order dismissing the Summons and reserve the question of costs. There were a number of matters referred by the Plaintiff to the Tribunal and he cannot now seek to remove one of them. Dated: 11 October 1999 T.P. Bruce Taxing Master.".

79. I turn then to the Notice of Review presently before me.

82. The competence of the plaintiff to give such a Notice of Review or the applicability of Rule 63.57 in the circumstances of this case was not challenged by the defendant.

85. As the plaintiff appeared in person, and although I have grave reservations about both those aspects, in the circumstances I determined to deal with the matter as best I could on the merits.

88. I use the words "as best I could" advisedly because at times I found great difficulty in determining what it was that the plaintiff was really complaining about.

91. The plaintiff spent a considerable period of time talking about what he contended was the illegal behaviour of the defendant in taking its costs out of his money in the defendant's trust account, of the fact that there was a conspiracy between the defendant and the various branches of the Law Institute (regrettably now called Victorian Lawyers RPA Limited - a most inappropriate and unattractive title, if I may say so) which had dealt with the matter, of how the defendant had failed to take on appeal the decision made in his favour by the Australian Industrial Relations Commission, and how he had been left in limbo, as it were, concerning his discrimination claim.

94. Such matters did nothing but cloud the issues in the present application and upon which the plaintiff should have been concentrating.

97. However, by dint of a degree of perseverance, I think I finally identified the following three issues which may be relevant to the dispute. They can be identified in the form of questions.

(1) Was the plaintiff's original application under s.115 of the Legal Practice Act out of time? (2) Was there a costs agreement between the plaintiff and the defendant? (3) Was the plaintiff's dispute with the defendant concerning his legal costs referred to the Legal Professional Tribunal under Division 1 of Part 5 of the Act?

101. I deal with the questions in the order in which I have identified them.

104. The defendant's bill of costs was rendered to the plaintiff on 27 March 1998. The costs were paid when the sum of $8,699.70 was transferred from the defendant's trust account to its office account on 16 July 1998.

107. The plaintiff's application to tax the costs, which was filed on 1 February 1999, was therefore hopelessly out of time.

110. The fact that on 18 November 1998, and to comply with a request made by Professional Standards, the defendant forwarded two new itemised accounts to Professional Standards is, in my opinion, beside the point. By then the costs had been well and truly paid. Further, it is strongly arguable that those itemised accounts were prepared and forwarded on a "without prejudice" basis. I say that having regard to the following statement which appeared in Professional Standards' letter of 20 October to the defendant:

"It may be that his complaint can be very quickly settled by the prompt provision of an itemised account."

114. It was in response to that request that the further itemised accounts were prepared and sent to Professional Standards.

117. In my opinion, there was a costs agreement between the parties. See Exhibit MRC9 to the affidavit of Mark Richard Champion sworn 11 June 1999.

120. Finally, in my opinion, the plaintiff's dispute concerning his legal costs was referred to the Legal Professional Tribunal under Division 1 of Part 5 of the Act. That much is clear from the following paragraphs in Mr Champion's affidavit, sworn 11 June 1999:

"6. In its relevant part the letter dated 15 September, 1998 of Professional Standards reads:

'On reading Mr Gaweda's complaint, I have been able to discern the following allegations against your firm:-

1. Failure to advise of costs. 2. That you have overcharged. ...' 7. At page 8 of the Plaintiff's letter dated 22 August 1998 he says: 'I do not understand how legal practitioner who enter into case and pursue this case very slowly for 3 years, suddenly 3 months before hearings, can say: "Sorry Eugene, but I do not believe to win to much!" You already win 2 partial compo. "You must pay me now, and I am not prepared to go further!"' For the past 3 years he was certain, but now is not! In addition he is asking $6,000.00. But I have the evidence in writing, the ADT will be paid after completion. This is pure example: rip off clients Opportunity to take money by force and deception. And finally he has done that, without cost assessment of bills, without fair go for client.' " 8. At page 3 of the Plaintiff's letter of 9 September 1998 he said: 'The client was disputed the amount of charge and was demanding explanation. The client was demanding that solicitor should produce the itemised bill. Such bills never was produced to client to make him understand that the charges and total. It is very unfair to start the case, expose the client to the costs for the period of 3 years very slow action and finally charge the client $5,000.00 for nothing. Why should I pay him at all for such "representation"? What has been achieved by client apart the great cost?...' 9. In addition, in the letter of 15 September 1998 Professional Standards requested the following: 'Kindly also forward your file, collated chronologically and free from any confusion duplication so that I may have it costed in an attempt to settle the dispute concerning your professional costs'."

126. It was that dispute that was referred to the tribunal.

129. The answer to the three questions posed, therefore, is Yes.

132. In my opinion, there is no basis for attacking the decisions of the Taxing Master made on 27 July 1999 and 11 October 1999.

135. The plaintiff's application for review is dismissed with costs to be taxed, including any reserved costs, and paid by the plaintiff.