Gemstar Corporation Pty Ltd v Barwicks Wisewoulds [2000] QSC 143

Supreme Court of Queensland|2000-05-19|Before: Mackenzie, J

[1] MACKENZIE J: This is an application pursuant to s48F(1) of the Queensland Law Society Act 1952 (QLS) Act for a declaration that a client agreement dated 7 December 1998 between the applicant and the respondent is void for non-compliance with s48(2), (3)(b) and (4) of the QLS Act. An order pursuant to s48I(1)(b) that the maximum amount of fees and costs that the respondent may recover from the applicant for work done is an amount calculated in accordance with the Magistrates Court scale of fees is also sought.

[2] The respondent's solicitors began to act for the applicant in an action which concerned remuneration for the applicant's part in the sale of a vessel. It was commenced in the Supreme Court some time before the respondents began to act for the applicant. The monetary sums sought significantly exceeded the jurisdictional limit of the District Court and also sought a Mareva Injunction. It was therefore appropriate to commence the action in the Supreme Court. However the action eventually settled at mediation for a sum within the jurisdiction of the Magistrates Court.

[3] One of the complaints made by Mr Marks, the human voice of the applicant, is that he was never advised of the risk that the amount recoverable may be under the jurisdictional limit of the Magistrates Court and that therefore the costs recoverable by the respondent should be only on that scale. The allegation that the applicant was not aware of the risk is hotly contested by the respondent's material which includes an affidavit from Queens Counsel who appeared for the applicant at mediation. The picture painted is of a litigant who was determined to take the risk of failure in expectation of achieving a favourable outcome.

[4] As is observed in the respondent's material the real complaint seems to be that there was negligence in that the applicant was not advised at an early stage of the risk the amount recoverable may only be within the jurisdictional limit of the Magistrates Court. The true situation depends on disputed questions of fact which cannot be resolved satisfactorily be reference to affidavits. To the extent that the application, particularly the second aspect of it, may, in the end, invite the court to declare that the Magistrates Court scale of fees is appropriate, it is inappropriate that it be taken up. To make such a declaration is essentially a discretionary matter and for the reasons stated, I do not propose to embark upon that exercise.

[5] The period with which relevant events are concerned straddles the date upon which the provisions of Part 4 A of QLS Act came into force, 2 July 1998. There are two relevant transactions relating to the issues. The first is that on 20 April 1998 a letter concerning confirmation of the respondent's retainer was sent to Mr Marks. A request was made for written confirmation of acceptance of the costs agreement set out in an attached costs brochure by signing a form enclosed. The confirmation document was not signed until 30 July 1998 when it was returned with an added clause limiting responsibility for fees to the amount held in the respondent's trust account and authorising it to cease work if no money to cover fees remained.

[6] On the face of it since s23 of the Legal Practitioners Act 1995 (LP Act) permits the fixing of payment for services by agreement in writing with a client the document returned to the respondent with the variation did not qualify as a written agreement entered into prior to 2 July 1998. However, Mr Londy, the partner of the respondent with responsibility for the matter, deposes that on 23 April 1998 the sum of $10,000 was deposited in the trust account by an entity inferentially related to another person, McQuade, who was to be jointly and severally liable for costs and who signed the document on 30 July 1998. Ten thousand dollars was a different sum from that referred to in the letter of 20 April 1998.

[7] The respondent submitted on the basis of that transaction that there was a written agreement prior to 1 July 1998. I do not think that that is correct. While it appears that the parties proceeded on the basis that the respondent was retained and work was done, as evidenced by schedules of itemised details of professional services rendered included in Exhibit A to Mr Marks' affidavit of 2 February 2000 and accounts which were rendered monthly, there was no agreement in writing inforce immediately before the commencement of the amendment to Q_LS Act._ This conclusion is consistent with Dowsett J's opinion in Re: Walsh Halligan Douglas' Bill of Costs (1990) 1 QdR 288 at 289-292.

[8] Had there been a written agreement within the meaning of s23 LP Act the transitional provision in s56(1) of QLS Act would have deemed it to be a costs agreement under s48 of QLS Act. However, s56(2) QLS Act provides that "another retainer", i.e. a retainer other than an agreement made under Part 4 Division 3 of LP Act (which includes s23) that was inforce immediately before the commencement of s56 QLS Act and legally binding under LP Act 1995 continued to be legally binding for work done before the commencement of s56 and for three months after its commencement.

[9] There is very clear evidence that the applicant had retained the respondent on the facts stated. It can be inferred from the payment of money into the respondent's trust account, the rendering of accounts from time to time for work done, without demur, and the subsequent confirmation of the retainer inherent in the return of the signed document on or about 30 July 1998, that the applicant acknowledged that there was.

[10] The second relevant event is that on 4 November 1998 a letter was written to Mr Marks concerning a new client agreement in connection with the present action and other litigation being conducted by the respondent involving one or more of the three signatories of the document dated 30 July 1998. The enclosure refers to an "important notice to client" and the client agreement, amongst other things. Mr Marks disputes that he received the document "important notice to client" before he signed the agreement on 7 December 1998 on behalf of himself and the applicant.

[11] Mr Londy cannot swear positively that the document was enclosed, having to rely upon office practice to establish that it was sent. However, he points out that Mr Marks made no complaint about not receiving the enclosure in conversations between the delivery of the letter of 4 November 1998 and the date of return of the agreement after Mr Marks had signed it on 7 December 1998. It is noted that the letter explaining the reason for the new retainer advises the client to "carefully read the important notice to client and the costs agreement". The significance of the complaint is that s48(4) of the QLS Act provides that the notice in the schedule which sets out the terms of the "important notice to client" must be completed by the practitioner or firm and given to the client together with a copy of any scale for the work provided under the Act before the client signs the client agreement. Section 48F of QLS Act provides that if a client agreement to which s48 applies does not comply with that section the client agreement is void. Because of the conclusion reached later, it is not necessary to decide finally whether the respondent's submission that a distinction should be drawn between the contents of the agreement and the sending of the notice when the operation of s48F is being considered is correct.

[12] Neither deponent was subjected to cross-examination. However on the state of the evidence, I am not satisfied that the "important notice to client" was not provided. The absence of complaint and the undisputed and unexplained acknowledgment in par 18 of the agreement that the applicant had received copies of the agreement and important notice to client lead me comfortably to that conclusion. The result is that I am not satisfied that there was non-compliance with the requirements of s48(4).

[13] The next issue concerns compliance with s48(2) QLS Act. It is submitted that the client agreement was not entered into within a reasonable time after starting work for the client. The argument was conducted on the basis that s48(2) is apt to cover a case where there had been ongoing work and, inferentially, where there was an existing retainer which had expired by virtue of s56(2) QLS Act, notwithstanding that s48(2) refers to "starting work for a client". It may be that the attempt to render the section in plain English has made it more difficult to interpret but presumably the intention is that once work is embarked on which is not covered by either a deemed agreement or "another retainer" under s56(1) or (2) a written agreement complying with s48 must be made within a reasonable time. I will proceed on the assumption that this is the correct interpretation.

[14] What is a reasonable time depends on the circumstances of the case. In the present case the respondent had been acting in the matter, having succeeded three other firms of solicitors, since about 20 April 1998. The question of execution of a client agreement was immediately pursued by the firm and money was paid into the trust account promptly and considerable work done over the succeeding weeks. For reasons which are not explained, the applicant did not return the signed document for over three months. The effect was that the respondent did not have the benefit of a costs agreement the efficacy of which was continued by s56 QLS Act, although it is not suggested that the delay was deliberate in that regard. Nevertheless, the retainer continued to be legally binding for work done before the commencement of s56 and for three months after its commencement by virtue of s56(2). The respondent relied on it, mistakenly as has been held, as an agreement protected by s56(1). About two months after the three month period expired documents were forwarded to Mr Marks with a view to executing a client agreement conforming with s48. About a month later the executed agreement was returned to the respondent.

[15] I am satisfied that on the facts of this particular case the agreement was made within a reasonable time after "starting work for the client" on the interpretation of the section which has been acted on.

[16] A further submission was made that there was non-compliance with s48(3) of the QLS Act in that the basis upon which fees and costs would be calculated is not specified in the agreement. Section 48(2) and (3) must be read together in this regard. The client agreement must according to s48(2) specify the work the practitioner or firm is to perform and the fees and costs payable by the client for the work. Section 48(3) requires further particularisation in that the fees and costs payable by the client for work must specify the basis upon which fees and costs will be calculated. The relevant passage in the client agreement is as follows:

The following people may perform the work on this matter on your behalf.

From time to time it may be necessary to utilise the skills of other Barwicks Wisewoulds personnel, in which case you will be notified in writing.

If you have any concerns about the performance of the work Charles Londy should be contacted.

* In Queensland time charging is used by many firms but is not necessarily used by all firms.

* There is a potential that time charging might result in a higher bill than charging for the tasks performed on the basis provided for in the relevant court scales as attached (if any).

* Barwicks Wisewoulds' professional fees are charged on a time basis at the rates specified below.

Barwicks Wisewoulds' hourly rates apply to professional time for drawing and engrossing of documents, reading of documents, conferences, travelling, telephone calls, court appearances, research and any other attendances or tasks which we may perform. The hourly rates incorporate and no separate charge is rendered for secretarial and word processing services, administrative and accounting services.

Barwicks Wisewoulds will charge its time on the basis of a six minute unit. Each unit or part thereof is therefore charged at one-tenth of the hourly rate applicable."

[17] There is a separate section with respect to "costs" which itemises some specific charges for services and describes categories of outlays for which the client is responsible. The sufficiency of this description is, as I understand the argument, not in dispute.

[18] It is apparent from the quotation from the client agreement that the tenor of the information is that if work is done in categories stated by a person of a particular description the cost will be the amount set out. To predict in advance, as the applicant's submission seems to require, who will do particular work is unrealistic. The object of ss48(2) and (3) is to identify the kind of fees and costs payable and the basis of calculating. I am satisfied that the client agreement sufficiently complies with the requirements of s48 in that regard.

[19] The outcome is therefore that the application for a declaration that the client agreement dated 7 December 1998 is void fails. I have previously indicated that I decline for the reasons stated to make a declaration concerning the appropriate scale of fees for the reason expressed in par 4 of the reasons. The orders are that the application is refused with costs to be assessed.

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