Victorian Civil and Administrative Tribunal|2006-10-23

Heaton QC v Burlock (Legal Practice) [2006] VCAT 2196 (23 October 2006)

Fair Trading Act 1999; claim by counsel for fees; defence raising conduct of trial by counsel; counsel entitled to make decisions contrary to instructions; immunity from suit.

Fair Trading Act 1999; counter-claim for loss flowing from outcome of trial; loss not caused by counsel; immunity from suit.

1 The respondent Mr. Burlock is to pay $59,574.23 to the applicant Mr. Heaton.

2 The counter-claim is dismissed.

3 The applicant Mr. Burlock is to pay costs of $4150.00 to the respondent Mr. Heaton.

For the Applicant, and Respondent in counter-claim:

For the Respondent, and Applicant in counter-claim:

1 Mr. Michael Heaton QC commenced proceedings under the Fair Trading Act 1999 seeking an order that Mr. Alan Burlock pay to him professional fees for conducting a trial in the Supreme Court, photocopying expenses, and interest thereon.

2 Mr. Burlock defended Mr. Heaton's claim. He contended that he was not required to pay for three reasons. The first was that there is no contractual basis for the claim. The second was that Mr. Heaton failed to provide him with information about legal costs. The third was that Mr. Heaton failed to comply with an instruction to make an application to the judge to disqualify herself from presiding over the Supreme Court trial.

3 Mr. Burlock also brought a counter-claim in which he claimed that he suffered loss because of the alleged failure by Mr. Heaton to make an application to the judge to disqualify herself.

4 Mr. Heaton gave evidence that he was contacted on Friday 29 July 2005 by Mr. Issac Brott, a solicitor. He was asked by Mr. Brott to appear for the plaintiff in the trial of a commercial matter to commence in the Supreme Court on Tuesday 2 August 2005. Mr. Heaton added that he was informed by Mr. Brott that the plaintiff, Aussie Invest Corp Pty Ltd, was not able to pay legal costs but that security would be provided. Mr. Heaton accepted the brief.

5 Mr. Heaton said that Mr. Brott sent an agreement to him by facsimile. The agreement is in evidence. There are four parties to the agreement, including Mr. Heaton and Mr. Burlock. The agreement purports to provide security for Mr. Heaton's fees, including a provision that Mr. Burlock "personally guarantees the payment of the QC fee to QC". Mr. Heaton said the agreement already had been signed by the other three parties, and that he signed the agreement and returned it to Mr. Brott.

6 The agreement provides that Mr. Heaton may charge up to $6,000 per day for five days, being two days preparation plus three days for the trial, which was expected to run from 2 to 4 August 2005. The agreement refers to "a maximum of $30,000.00". The trial ran from 2 to 4 August 2005, but it did not conclude on 4 August 2005.

7 On 5 August 2005 Mr. Heaton wrote a letter to Mr. Brott. The letter pointed out that "the agreed amount of fees has been exhausted", and stated that a further four days of work would be required, being preparation for two days over the weekend, plus two further days of hearing on 8 & 9 August 2005. The letter concluded with the following paragraph:

I should be pleased to receive written confirmation of a copy of this letter signed on behalf of Clarendon City Developments Pty Ltd by Mr. Alan Burlock director and on behalf of Aussie Invest Corp Pty Ltd by Mr. Alan Burlock as director and by Mr. Alan Burlock in his own behalf as guarantor under the agreement acknowledging the liability for such additional amount not exceeding $24,000 and any amount for photocopying.

8 A copy of the letter was not signed by Mr. Burlock in any capacity. However, Mr. Heaton gave evidence that "Mr. Brott said Mr. Burlock would agree to the substance of the letter". He also gave evidence that this assurance led him to believe that he would be paid for the additional work.

9 Mr. Brott did not ask Mr. Heaton to withdraw, and Mr. Heaton continued to appear until the end of the trial.

10 Mr. Burlock continued to attend the trial and give instructions to Mr. Heaton. However, he said that Mr. Brott asked him about additional fees for Mr. Heaton. He told Mr. Brott that he was not prepared to pay, thus giving rise to his present contention that there is no contractual basis for Mr. Heaton's claim.

11 No fees were paid to Mr. Heaton, not even the original $30,000, so he entered into correspondence with Mr. Brott about payment of fees. On 2 September 2005, during the course of that correspondence, Mr. Brott sent to Mr. Heaton a copy of a letter that Mr. Brott had sent to Mr. Burlock. Mr. Brott stated in the letter that "It is our view that the fees charged are in accordance with the agreement made between yourself and counsel".

12 It is common ground that the terms of engagement of Mr. Heaton were negotiated solely between Mr. Heaton and Mr. Brott, but Mr. Brott did not give evidence at this hearing.

13 The amount claimed by Mr. Heaton pursuant to the terms of engagement is $59,574.23 calculated as follows:

Three days further preparation plus two days further

agreement as varied or extended charged as 23,000.00

Interest on the professional charges to 23 October 2006 6,481.23

14 I make the following findings as to the engagement of Mr. Heaton:

a

Mr. Heaton was briefed by Mr. Brott to represent Aussie Invest at the trial;

b

Mr. Brott negotiated a fee for five days, being two days preparation plus an appearance for the three days that the trial was expected to run. The negotiated fee was up to $6,000 per day, to a maximum of $30,000;

c

Mr. Burlock guaranteed payment of fees to a maximum of $30,000;

d

When the trial did not conclude within three days, Mr. Heaton wrote to Mr. Brott seeking further fees of $24,000, and seeking to extend or vary the guarantee given by Mr. Burlock;

e

Mr. Brott responded to Mr. Heaton's letter by informing Mr. Heaton that the arrangements sought in the letter would be acceptable to Mr. Burlock. In so doing, Mr. Brott acted as Mr. Burlock's agent and, in substance, agreed that Mr. Burlock would pay the additional fees;

f

In allowing Mr. Heaton to continue to appear in the trial, Mr. Brott as Mr. Burlock's agent also allowed Mr. Heaton to believe that he would be paid the additional fees.

15 I conclude that there is a proper contractual basis for the claim. Furthermore, by allowing Mr. Heaton to believe that he would be paid the additional fees, Mr. Burlock is estopped from maintaining that he is not required to pay additional fees for Mr. Heaton's completion of the case. In reaching that conclusion, I have relied upon the decision of the High Court in Waltons Stores (Interstate) Ltd v Maher[1], to the effect that a person giving an assurance, which he or she knows will cause another person to act in a particular way, cannot retreat from the assurance after the other person has acted in that way to their detriment.

The provision of information about legal costs:

16 Mr. Burlock relied upon s.86 of the Legal Practice Act 1996 which provides that a legal practitioner must give information to a client, mainly about legal costs, before being retained or as soon as practicable after being retained. Mr. Burlock did not identify the information that should have been provided, but was not provided. Furthermore, he did not give evidence that he was disadvantaged in some way because of a lack of information.

17 The application of s.86 to this case is not free from doubt. Information needs to be given to a "client", defined in s.3 as "a person who retains a legal practitioner or firm to provide legal services for fee or reward". Under the agreement, Aussie Invest was the client and Mr. Burlock was a guarantor of legal costs to be charged under the agreement. There is nothing in s.86 which indicates to me that information needed to be given to a guarantor.

18 Even if there was an obligation to provide information to Mr. Burlock, the agreement and the letter of 5 August 2005 from Mr. Heaton to Mr. Brott did provide detailed information about Mr. Heaton's fees, although not about other matters referred to in s.86.

19 The effect of a failure to provide information as required by s.86 is set out in s.91. The first effect is that on an assessment of costs carried out under the Legal Practice Act 1996 the taxing master can reduce costs in proportion to the seriousness of the failure to give information. The second effect is that when hearing a dispute about legal costs under the Legal Practice Act 1996 the Victorian Civil & Administrative Tribunal also can reduce costs in proportion to the seriousness of the failure to give information.

20 This hearing was conducted by the Victorian Civil & Administrative Tribunal, but both the claim and the counter-claim were brought under the Fair Trading Act 1999, not the Legal Practice Act 1996. I conclude that s.91 of the Legal Practice Act 1996 does not apply in these proceedings. In any case, there was no evidence which indicated to me that a serious consequence flowed from a failure to provide information to Mr. Burlock.

The instruction to ask the judge to disqualify herself:

21 During the course of the trial Mr. Burlock was late in paying a daily fee to the court. The judge declined to resume until the fee was paid, with the result that the trial was delayed for about 30 minutes.

22 Mr. Burlock gave evidence that he was informed by Mr. Brott and Mr. Levine, junior counsel to Mr. Heaton, that the judge commented that she would "punish" Mr. Burlock for the delay. Mr. Burlock acknowledged that he was not present in court at the time. Mr. Burlock said that he was present when Mr. Brott asked Mr. Heaton to apply to the judge to disqualify herself from proceeding with the trial. The trial proceeded.

23 Mr. Burlock also said that he was walking away from the court with Mr. Heaton during the luncheon recess on the same day, and that he asked Mr. Heaton to make an application to the judge to disqualify herself. No such application was made.

24 Mr. Heaton gave evidence that the judge did not say that she would "punish" Mr. Burlock. He added that he has read the transcript of the hearing for the day in question, and that no such comment appears in the transcript. Mr. Heaton also said that neither Mr. Brott nor Mr. Burlock asked him to make an application to the judge to disqualify herself. He added that he would have made a note of any such instruction, and that he did not make a note.

25 Mr. Burlock gave most of his evidence in a powerful and forceful manner, but his evidence as to these matters gave me the impression that he had little conviction in his own evidence. I accept the evidence of Mr. Heaton, and find that the judge did not make the comment that she is alleged to have made, and that Mr. Heaton was not asked to make an application to the judge to disqualify herself.

26 Even if I am wrong in these findings, which is most unlikely, there are other reasons why any failure on the part of Mr. Heaton to follow the alleged instruction would not entitle Mr. Burlock to refrain from paying Mr. Heaton's fees:

a

Mr. Heaton gave evidence that, even if the instruction had been given, he would not have made the application because it was not warranted. Mr. Heaton as counsel was entitled to make decisions, even decisions contrary to instructions, as to how the case was to be run: Attorney-General (NSW) v Spautz[2] where the following passage appears:

Barristers are not mere mouthpieces for their clients. They owe a duty to the court which transcends their duty to their clients. It is not a breach of the duty which barristers owe to their clients to exercise independent forensic judgment even contrary to the wishes of their clients.

b

Mr. Heaton as counsel was entitled to immunity from suit, which he claimed, in accordance with the principles confirmed by the High Court in Giannarelli v Wraith (1988)[3] and D'Orta-Ekenaike v Victoria Legal Aid (2005)[4].

27 I reject the defences put forward by Mr. Burlock, and make an order that Mr. Burlock pay to Mr. Heaton the amount claimed of $59,574.23.

28 In the Supreme Court proceedings, Aussie Invest sought specific performance of a contract for the sale of land. It was not successful. One consequence of the decision, according to Mr. Burlock, was that Aussie Invest lost the opportunity to make a profit of $303,240.

29 In the present proceedings, Mr. Burlock seeks to recover the $303,240 from Mr. Heaton. His counter-claim is based solely upon the alleged instruction to Mr. Heaton to ask the judge to disqualify herself, and the alleged failure by Mr. Heaton to comply with the instruction. There are several reasons why the counter-claim must fail:

a

Any loss of profits was suffered by Aussie Invest, not by Mr. Burlock. Mr. Burlock sought to overcome this problem by stating that he is a beneficiary in a trust of which Aussie Invest is trustee and, therefore, that he suffered loss personally. A beneficiary can sue on behalf of a trust in exceptional circumstances: Ramage v Waclaw (1988)[5]. There was nothing in the evidence which indicated to me that exceptional circumstances exist in this case (such as the trustee being unable to commence proceedings);

b

I have found that Mr. Heaton was not instructed to make an application to the judge to disqualify herself. Furthermore, there was nothing in the evidence which indicated to me that an application would have had any chance of success;

c

There was nothing in the evidence which indicated to me that Aussie Invest might have succeeded in its claim in the Supreme Court if the trial had been conducted by another judge;

d

I have ruled that Mr. Heaton was entitled to make his own decisions as to how the trial was to be run, and that he is entitled to immunity from suit.

31 Counsel for Mr. Heaton sought an order that Mr. Burlock pay the costs of the claim and the counter-claim.

32 I am not prepared to make an order that Mr. Burlock pay the costs of the claim. Mr. Burlock raised an arguable defence, and the usual rule that each party pay their own costs should apply: Victorian Civil & Administrative Tribunal Act 1998 s.109(1).

33 On the other hand, the counter-claim was without merit. To use the language of s.109(3)(c) of the Victorian Civil & Administrative Tribunal Act 1998 it had "no tenable basis in fact or law". Consequently, I order that Mr. Burlock pay to Mr. Heaton his costs of the counter-claim.

34 After hearing submissions, I fixed Mr. Heaton's costs of the counter-claim at $4,150.

[5] 12 NSWLR 84 @ 91 to 94

Administrative Tribunal_ Act 1998

Heaton QC v Burlock

At a glance

Court

Decision date

Source

Judgment (33 paragraphs)

Heaton QC v Burlock (Legal Practice) [2006] VCAT 2196 (23 October 2006)

Parties

Legislation Cited (1)

Cases Cited (1)