HOGARTH & ORS v GYE & ANOR

IN THE SUPREME COURT OF NEW SOUTH WALES equity division BRYSON J. TUESDAY 12 FEBRUARY 2002 3721/2001 ROBERT MARTIN HOGARTH & ORS v. CLEMENT ANTHONY GYE AND ANOR JUDGMENT

1 HIS HONOUR: These proceedings relate to claims by the first defendant Mr Gye and the second defendant, a service company associated with his practice, for solicitors' costs against the first plaintiff Mr Hogarth, and 21 other entities which are also plaintiffs. Mr Gye practices as a solicitor and is the only principal of the firm Gye Associates Lawyers in which he employs several solicitors and other staff. Mr Hogarth and the other plaintiffs were involved in various ways as parties to about seven different lawsuits which were vehicles for a large controversy between Mr Hogarth and interests related to him on the one part and interests associated with Walker Corporation Limited and Mr Langley Alexander Walker; the controversy was elaborate but it arose out of the Carrington Development at Alison Road, Cronulla, a joint venture development between Walker Corporation and Lakatoi Universal Pty Ltd, the second plaintiff. These lawsuits began with proceedings commenced in the Commercial Division by Walker Corporation Limited against Lakatoi in September 1997. About October 1997 Mr Hogarth on behalf of Lakatoi gave Mr Gye instructions to act in those proceedings, and also gave him instructions to commence other proceedings which became proceedings 50035 of 1998 in the Commercial Division commenced on 20 March 1998. Later there were two further proceedings in the Commercial Division relating to a mortgage, and further proceedings in the District Court relating to obligations under the Helensburg Unit Trust Agreement of 6 April 1994 referred to as HUTA. There was a lengthy hearing in the Commercial Division before Einstein J from 21 September 1999 to 9 December 1999, his Honour gave judgment on 10 March 2000, and there were a number of further applications and orders and two separate appeals by unsuccessful parties to the Court of Appeal. Mr Gye acted for Mr Hogarth and the related interests throughout, but at some time in or after April 2001 Mr Hogarth retained other solicitors who negotiated overall arrangements to resolve the controversy and also arranged for the proceedings in the Court of Appeal to be disposed of by consent orders in July 2001. Although Mr Hogarth says in an affidavit that he withdrew Mr Gye's instructions on behalf of Lakatoi Universal about April 2001 it is in my finding clear that the instructions were not withdrawn and Mr Gye's retainer was not terminated until after the proceedings in the Court of Appeal were disposed of, and that Mr Hogarth retained other solicitors who acted concurrently with Mr Gye's retainer and arranged for the disposal of the controversy and the appeals without Mr Gye's involvement or knowledge. 2 On 2 August 2001 Mr Hogarth and three of the plaintiffs commenced proceedings 91355 in the Common Law Division against Mr Gye in which they objected to Bills of Costs delivered to them by Mr Gye and applied to have them referred to a Costs Assessor. The first bill was dated 2 August 2000 and the last was dated 2 July 2001. The total was $611,436.28. In his Application Mr Hogarth made a number of assertions about the state of the rights of the parties which are closely related to issues raised in the present proceedings. On 3 October 2001 the Court's Manager, Costs Assessment assigned the application for assessment to Mr Marcus Campbell and the assessment is now pending. Objections to bills of costs and references to Costs Assessors are subject to the limitation period of 12 months under subs 199(2) of the Legal Profession Act 1987 and cl 25 of the Legal Profession Regulation 1994; the prescribed period for making an application for assessment is 12 months after the bill was given to the client. Referral to the Costs Assessor relates only to Bills of Costs given to one or more of the plaintiffs on or after 2 August 2000. The plaintiffs accepted that this is so and the application for assessment was limited accordingly. In the Summons and cross-claim in the present proceedings each party seeks declaratory orders relating to matters which are regarded as important for the assessment of costs. 3 The claims in the Summons are to this effect: 1. A declaration that a document dated 7 April 1999 signed by Mr Hogarth and Mr Gye is void as being in breach of the provisions of s 188 of the Legal Profession 1987;

2. A declaration that cll 3(a) and 4 of the document entitled "Charge over Proceeds of Proceedings" dated 6 July 2000 is void; and

3. A declaration to the effect that certain letters prepared by Mr Gye and executed by Mr Hogarth on behalf of the second plaintiff Lakatoi Universal Pty Ltd, which purport to be Costs Agreements, are not costs agreements for the purposes of the Legal Profession Act 1987; and for that reason they are not enforceable. 4 In the cross-claim the defendants claimed: (1) Declarations to the effect that the confirming letter of 21 February and the confirming letter of 6 June 2001 evidenced Costs Agreements for the purposes of s.184 of the Legal Profession Act 1987 and constitute Costs Agreements for the purpose of s.208C of the Legal Profession Act 1987.

(2) A declaration that the Costs Agreements are binding on the parties.

(3) A declaration that the plaintiffs are not entitled to have assessed under Pt.11 Div.6 of the Legal Practitioners Act 1987 any bill of costs delivered and paid wholly or in part more than 12 months before the application for assessment is made.

(4) A declaration "that for the purpose of s.190 of the Legal Profession Act 1987 the former clients paid the bill of costs wholly or in part when they or any of them paid to Mr Gye a lump sum on account of outstanding fees under bills previously rendered." 5 A fifth claim in the cross-claim relating to security for outstanding costs was not pressed. 6 The document dated 7 April 1999 mentioned in claim 1 in the Summons is set out below at para [21]. On behalf of the defendants it was conceded, at an early point in argument, that the provision in the document dated 7 April 1999 for payment of a success fee calculated at 5% of the amount allocated as damages was unenforceable. In my opinion this concession was correct, and obviously so. There is no sign in the evidence that there has ever been any claim or attempt by Mr Gye to rely on that provision or to recover a proportion of damages as a success fee. If the document of 7 April 1999 is a Costs Agreement within the meaning of s.188 of the Legal Profession Act 1987, the provisions of s.188, taken with s.189, make that part of the Costs Agreements void to the extent of the inconsistency with s.188; of course there is an entire inconsistency. 7 It is not an effect of the prohibition in s 188 that any provision of a Costs Agreement is unenforceable other than the provision which is contrary to s 188. There is no reason why avoiding the provision relating to the success fee has any impact on other provisions relating to the fee structure. As subs.189(2) provides, the provision is void to the extent of the inconsistency: it is not void to any greater extent. 8 If the provision for the success fee were not void for that reason, a common law principle prevents a solicitor from purchasing the subject matter of a lawsuit, and of course from purchasing a proportion of it. The principle is old and was acted on in Simpson v Lamb (1857) 7 Ellis and Blackburn 84, 119 ER 1179, which was accepted by the Court of Appeal of England as establishing the law in Davis v Freethy (1890) 24 QBD 519. The principle was said by Lord Coleridge CJ at 521-522 to be: "… that the purchase of the subject matter of a suit by an attorney having the conduct of the suit is void, as against the policy of the law." See too Glegg v Bromley [1912] 3 KB 474 at 490 (Parker J). The Maintenance and Champerty Abolition Act 1993, which abolished the common law offence of maintenance (including champerty) and the corresponding action in tort, preserved the principle so stated by s.6 in these terms: "This Act does not affect any rule of law as to the cases in which a contract is to be treated as contrary to public policy or as otherwise illegal, whether the contract was made before, or is made after, the commencement of this Act." This preserves the rule of law which avoids an agreement for remuneration by payment of the damages or a proportion of them as contrary to public policy. Some complexities and uncertainties have developed with respect to the law relating to funding litigation, particularly in insolvency, in return for shares in the proceeds; see the note by Mr Adrian Walters at (1996) 112 LQR 560; and in Australia the cases were reviewed in re William Felton & Co Pty Ltd The Application of Anthony Sims (1998) 145 FLR 211. However the lack of effect of an agreement to assign a proportion of damages to a solicitor as remuneration is not open to any doubt. 9 As the matter was the subject of argument I will state my opinion that the common law principle would operate to avoid only the three paragraphs of the letter of 7 April 1999 which related to the success fee and not to avoid the earlier paragraphs relating to the fee structure. On a whole view of the terms of the letter the parties intended that the provision relating to the fee structure should be effective whether or not the provision relating to the success fee was effective or was void. The intention of the parties as expressed in the letter does not make the two interdependent in any way. The terms of the letter clearly show that the provision relating to success fee was in addition to and separate from the provision relating to costs in accordance with the fee structure. An intention to the contrary effect, in which the provision relating to fee structure was not effective if the provision relating to success fee was not effective, could not be fitted into any rational scheme of arrangements which could be attributed to the parties; there is no reason why the agreed basis for the fee structure should fail if the agreement for a success fee fails. A clear expression of intention would be needed if I were to conclude that the parties intended that if the success fee arrangements were void the solicitor would not be entitled to be paid for his work, or that there would be no arrangement establishing what it was entitled to be paid. Evidence relating to the preliminary negotiations leading to the letter of 7 April 1999 shows that consideration was given to adopting a different and lower rate of charging if a higher proportion had been adopted as a success fee; but in my opinion the evidence of the preliminary negotiations does not assist in establishing the meaning and effect of the document which the parties produced, the terms of which make it obvious that they intended to express all their agreement in it. In any event the evidence about what was considered at the negotiating stage does not tend to establish what the parties intended to arrange with respect to severability and the continuing effect of part in the event of avoidance of another part. 10 The plaintiffs' counsel contended that the provisions of subs.127(3) of the Legal Profession Act 1987 have a bearing on the question whether a Costs Agreements which does not comply with s.188 is illegal. By subs.127(3) maintenance or champerty may constitute professional misconduct. In my opinion however the Act spells out in subs.189(1) the effect which failure to comply with s.188 is to have, and it is not correct to regard the legislation as showing an intention to produce any other effect on contractual obligations. 11 The question whether the arrangements established by the letter of 7 April 1999, including the arrangements relating to fee structure for time billed on or after 1 March 1999, were effective does not appear to have any real importance which could justify granting declaratory relief, as Mr Gye has never claimed a success fee and the second confirmation letter of 12 April 2000 established a different fee structure, in most cases higher than that in the letter of 7 April 1999, for charging for work done on or after 1 January 2000; the claim to have bills assessed relates only to bills rendered on or after 2 August 2000 and it is very unlikely and I have not been shown that any of those bills relate to work done before 1 January 2000. No reason was suggested in argument and I see no reason why avoidance of part or all of the provisions of the agreement recorded in the letter of 7 April 1999 could have any effect upon agreements relating to costs evidenced in confirmatory letters dated earlier or later than 7 April 1999, none of which contained or incorporate any arrangement relating to a success fee. 12 There was no formal Costs Agreement for the Walker litigation. The arrangements relating to costs are evidenced by a series of letters. The first is a letter from Mr Hogarth to Mr Gye's firm dated 18 March 1999, refers to the Equity Division matter in which the plaintiff was Walker Corporation and Lakatoi was the only defendant, and confirms a number of matters relating to 14 bills of costs from 19 September 1997 to 2 February 1999, which had already been paid. Each bill related to an identified period during which work had been performed. In the letter Mr Hogarth for himself and Lakatoi made a number of statements which confirmed that the accounts were correct and undisputed and the payments were appropriate, and confirmed satisfaction with the rates of costing. For the time of Mr Gye and Ms Steinessen the rates up to 28 February 1998 were the same as in the Costs Agreement of 11 August 1997 to which I will refer at para [18]; thereafter the rate for Ms Steinessen's time was increased. Other rates were given for persons whose services were not referred to in that Costs Agreement, or varied from rates in it. 13 A similar letter also dated 18 March 1999 dealt in much the same way with 24 bills of costs which had been rendered and paid for work done in Commercial Division proceedings for the period 30 October 1997 to 28 February 1999. Mr Hogarth signed this letter for himself and also for Lakatoi Universal, Ensile Pty Ltd and Highfield Grove, three companies related to him, all of which are plaintiffs in these proceedings. 14 Mr Hogarth also signed two generally similar letters dated 12 April 2000. One confirms seven bills of costs then unpaid, for work done in the period from 18 October 1999 to 22 November 1999. The letter confirmed that the accounts for the period from 31 July 1999 to 23 December 1999 were not disputed and also confirmed the amounts of money unpaid, due and owing at the time of the letter. The charging rates were set out and confirmed. The second letter dated 12 April 2000 deals in a similar way with accounts for the period 1 January 2000 until 12 April 2000; particulars are given of ten bills of costs and it was confirmed that the moneys claimed in those bills were not disputed and were due and owing. Again Mr Hogarth signed this letter on behalf of himself and the same companies. 15 The last of this series is a similar letter of 21 February 2001 confirming bills totalling $312,323.47 which were not disputed, were unpaid and due and owing. These related to work done between 1 July 2000 and 31 January 2001. The letter included rates of costing, which for some individuals named were higher hourly rates than had been charged in respect of work done to 31 December 1999. 16 None of the letters in the series contained any express notification relating to there being an interval of 30 days between giving a bill of costs and taking proceedings for recovery, or relating to the right to have a bill assessed, such as had been set out in the Costs Agreement of 11 August 1997. 17 On 7 June 2001 Mr Gye sent Mr Hogarth a letter closing a further confirming letter in similar form to signature and for return of the original. The letter and the related to proceedings in two appeals and if signed would have acknowledged 34 Bills of Costs from 8 November 2000 to 9 February 2001 totalling $398,064.83 as being undisputed and due and owing. Mr Hogarth was not prepared to give those acknowledgments or to sign the letter and did not do so. 18 A number of documents were put into evidence which record or relate to agreements on the basis of calculating costs payable to Mr Gye's firm. The first in date is a Costs Agreements dated 11 August 1997 between Gye Associates Lawyers and Ensile Pty Ltd which is one of the plaintiffs, and relates to professional legal services in relation to the grant by Ensile Pty Ltd of a drainage easement over its land at Helensburg involved in dealings with Mrs Butto and with the Helensburg Workmen's Club. Mr Hogarth executed this Costs Agreement on behalf of Ensile Pty Ltd. The business relating to a drainage easement has no real relation to the litigation and controversies with Walker Corporation, the first instructions for which were given about September 1997. The Costs Agreement dealt fully with the rights and obligations of solicitor and client for the relatively modest work involved in the retainer, establishing in a general way what work was to be performed, and establishing hourly charging rates for various named persons who were to do the work, identifying those persons by name as well as hourly charging rates, and designating Ms Steineissen a senior associate as the responsible solicitor. There were detailed provisions dealing with times for rendering bills and times for paying bills, termination of the retainer, entitlement to documents and other matters. 19 The Costs Agreement of 11 August 1997 included the following provisions. 7. Recovery of Costs by the Firm 7.1 The Firm hereby notifies the Client that the Legal Profession Act 1987 provides that a legal practitioner cannot take action for recovery of legal costs until thirty (30) days after a bill of costs has been given to the person charged with their payment. At the expiry of thirty (30) days after a bill of costs is given to the client, interest, at the rate specified in the Act, may be charged on any amounts unpaid.

10. Assessment of Bill of Costs 10.1 The Client is hereby notified of the following: (a) that the Legal Profession Act 1987 gives the Client the right to have the charges made in a Bill of Costs issued by the Firm assessed for their fairness and reasonableness by an Assessor appointed by the Supreme Court of New South Wales. (b) that the right referred to in clause 10.1(a) is not available in certain circumstances where there is a costs agreement which complies with the Act, unless the agreement is determined by a Costs Assessor to be unjust. 20 Although the confirmation letters could well have contained more information (and the agreement of 11 August 1997 relating to Ensile Pty Ltd is a model for some provisions which they could well have contained) they do evidence in writing Costs Agreements, and there is no reason why their provisions about rates of charge for legal work and times to which they relate do not have the consequences which the Act gives to Costs Agreements. If there is a Costs Agreement its provisions can have impacts on the process of assessment as provided by Pt 11, Div.6, Subdiv.(2), ss.208A and following. The confirmation letters constitute evidence in writing of the terms of a series of Costs Agreements. 21 Costs and remuneration were also dealt with in another letter, or message, sent by fax from Mr Hogarth to Mr Gye on 7 April 1999. This message was headed "Arrangements as agreed between us for your ongoing work on our dispute with all Walker employees and entities." This message was as follows: "Further to our discussions on March 24th 1999, we confirm that all of your future work on these Walker matters, as described above, will be undertaken in accordance with the following: The following Fee Structure will apply for all time billed on & after March 1st 1999. Gye $250.00 per mhr. Stienissen $225.00 per mhr. Schiff $160.00 per mhr. Turner $150.00 per mhr. Badaoui $90.00 per mhr. In addition to, and separate from, the monthly accounts calculated using the above charges & rates, a "Success Fee" will be paid, the calculation of which will be 5% of the amount allocated as to "Damages" in our favor by the judgement of the Court. This fee will be solely calculated as a part of the separate "Damages" component in favor of the Hogarth Entities and does not relate to any undoing of the HUTA, the reinstatement of the Helensburg Land or the settlement of the Carrington Joint Venture. Should a negotiated settlement be entered into outside of the Court process, both parties (RMH & CAG) would rely on Senior Counsel to determine the breakup of the settlement amount, to enable the Success Fee to be determined to the satisfaction of both parties. If the above accurately reflects the agreement, please sign and return it to me for signing." 22 Underneath the text appeared positions for signature by Mr Hogarth and Mr Gye under the word "Agreed;" and each later signed the document. 23 It is not clear to me that what the letter of 7 April 1999 says about the fee structure is relevant to bills which have been referred to the Costs Assessor. One of the confirming letters dated 18 March 1999 and signed by Mr Hogarth recorded the charging rate for time cost charges up to 28 February 1999; the rates of charges were higher than the charges set out in the letter of 7 April 1999. A similar letter of 12 April 2000 set out time cost charges which would operate from 1 January 2000, again higher than those in the letter of 7 April 1999; Mr Hogarth again signed this letter on behalf of himself and others. Mr Gye prepared another letter containing a similar acknowledgment dated 21 February 2001, which set out time costs charges for work done to 31 January 2001; this too was signed and returned. It appears to me then that it is unlikely that any bills of costs calculated according to the time cost charges in the letter of 7 April 1999 are now the subject of assessment. Bills of costs calculated on that basis (and it is not clear to me that any were) may have been brought into account in calculating the amount now claimed by Mr Gye. 24 The plaintiffs' counsel observed that the Bills of Costs subject to the application for assessment do not comply with Regulation 22A(1) of the Legal Profession Regulation 1994 and hence he contended that it is necessary for Mr Gye to be able to show that the bills fall within subc.22A(2) in that the costs charged are calculated on the basis set out in a Costs Agreement, relevantly a Costs Agreement made under Pt.11 Div.3 of the Legal Profession Act, in accordance with (among other things) s.184 and s.188. He contended that the confirmation letters were not Costs Agreements of that kind because there had not been compliance with s.175 which, taken with 184, required that there be disclosure of the basis of costs. Counsel contended that this disclosure must be made in the Costs Agreements, that is to say, must appear in writing in the Costs Agreements. In my view it appears clearly from the terms of subs.179(2) that the disclosures required by Div.2 including s.175, although they must be made in writing, are not required to be made in the relevant Costs Agreements. Subordinate legislation may make provision under s.185 for or with respect to the information to be included in Costs Agreements, but no regulation has prescribed that all the information referred to in Div.2, including disclosure of the client's rights in relation to a review of costs, must be made in the Costs Agreement. 25 Counsel alleged that Mr Gye had not complied with a number of provisions in subs.175(2) subpara.(d) which relates to disclosing the client's rights under Div.6 in relation to a review of costs and subpara.(e) which relates to the client's rights under Div.4 to receive a Bill of Costs. Counsel contended that the solicitor is obliged to go on making disclosure, and that no matter how repetitious the process, repeated disclosure is a requirement of the Act. I do not accept this contention because there is no provision which makes the solicitor's entitlement to render a bill of costs and to recover his costs interdependent with compliance with these provisions of subs.175(2). There is a clear difference between the provisions of the Act in Pt.11 Div.3 which relate to Costs Agreements and those in Div.2 relating to disclosure; no provision makes enforcement of Costs Agreements, or of the entitlement to costs, or a solicitor's right to be paid for his work, dependent on his compliance with the provision of Div.2 relating to disclosure. In any event it is quite clear that, in another context, Mr Gye did disclose the relevant matters to Mr Hogarth in August 1997 in unrelated business of Ensile Pty Ltd, Mr Hogarth being the channel for instructions and the controlling mind of the companies to which the bills of costs were rendered. An obligation to make a disclosure does not require the communication of any information to a person who is aware of the matter supposedly to be disclosed. Mr Hogarth was made aware of these rights in August 1997 before any costs in the Walker litigation were incurred. 26 There is no evidence that Mr Hogarth did not, at later times, know of the matters which had been disclosed to him in August 1997 and the ordinary and obvious inference is that he continued to know of those rights. The concept of disclosure was referred to in Attorney General v. Associated Newspapers Limited [1994] 2 AC 238 at 255 by Lord Lowry, who there showed, expounding the ordinary meaning of "disclosure" and related expressions, that a mere republication of already known facts is not a disclosure, with exceptions relating to elapse of long periods or change in the identity of the persons managing the relevant business which are not relevant here. The obligation to make a disclosure of a client's rights in respect of bills is satisfied if the disclosure has been made at any time, and in particular was satisfied in relation to Mr Hogarth and his companies by the terms of the Costs Agreements of 11 August 1997. 27 There was also a contention to the effect that Mr Gye was in breach of s.187, which creates an obligation to disclose estimated costs. The effect of non-disclosure is spelt out by s.183 in terms which do not include any impact on the solicitor's entitlement to receive remuneration. It has not been shown to my satisfaction that Mr Gye was in breach of this provision.. Mr Gye in evidence explained his not having disclosed an estimate of the likely amount of costs of the conduct of the proceedings by a reference to the impossibility of making a pre-estimate in relation to elaborate commercial proceedings; and this explanation of his conduct was obviously correct. 28 It was contended that Mr Gye obtained Mr Hogarth's agreement to execution of the agreement of 7 April 1999 by duress. Evidence on this issue led to a subsidiary question whether the term of the letter were drawn up by Mr Gye or by someone on the part of Mr Hogarth; this question cannot be satisfactory resolved on the evidence and is of no importance. There is no substance in the claim that any duress was applied by Mr Gye to Mr Hogarth in negotiations leading to the agreement of 9 April 1999. There was no element of duress or coercion in Mr Gye's stipulating for named rates of remuneration for the time of himself and of his staff. My experience in hearing proceedings in this Division shows me that, while the rates stipulated for were certainly not modest, they were not unusually high in relation to heavy commercial litigation attended to by the principal of a firm and engrossing most of the resources of the firm. It is important too that Mr Gye was attending to the work of Mr Hogarth and related interests at the sacrifice of opportunities to obtain instructions from other clients which could produce difficulties when Mr Hogarth's work came to an end, and also that Mr Gye had incurred large obligations, including obligations to counsel and experts, as well as his own fees which were unpaid, and in effect he was in part financing the litigation. It could not reasonably be expected that Mr Gye would continue to conduct Mr Hogarth's legal business in this way, without establishing clear arrangements. 29 By indicating that he would not continue to act unless arrangements satisfactory to him were made Mr Gye did not act in any improper way, or in any way other than he or any other free agent could reasonably be expected to act. It is important, in relation to Mr Gye's willingness to continue to act, that payment of his costs and of charges which he had incurred was then in arrear. If Mr Hogarth decided not to accept the terms on which Mr Gye would act, he could have taken his business to one of the many firms in and near Sydney which have experience in conducting large commercial litigation. Continuing to retain Mr Gye had advantages flowing from the acquaintance of Mr Gye and his staff with the business of Mr Hogarth and the parties related to him in the earlier course of the litigation, but Mr Hogarth had not obtained any commitment from Mr Gye to act for him for any particular period or until the completion of any particular business, Mr Gye was in a position to withdraw from the retainer on giving reasonable notice, and, with notice, it was true, as Mr Gye said to Mr Hogarth, that Mr Hogarth had plenty of choices as to solicitors whom he could retain to act. Mr Hogarth was a man who had or controlled considerable wealth. Making an agreement relating to costs, and making an agreement to create a charge to secure large obligations for costs which he had incurred and contemplated incurring was business of a kind which was well within Mr Hogarth's grasp, and did not present him with any particular difficulties or need for advice or explanation. Mr Hogarth was not in any sense a person in a state of dependence or in a weak position; he was a very experienced businessman and in no way at any disadvantage in dealing with professional people and conducting serious commercial business. The claim that any duress was exercised against Mr Hogarth, either in the negotiations for the agreement of 7 April 1999 or at any other time, was without substance. 30 Another document to which issues in the proceedings relate is a Charge, referred to in its terms as "Equitable fixed and floating charge", dated 6 July 2000 and granted by Mr Hogarth and the same three companies Lakatoi Universal, Ensile Pty Ltd and Highfield Grove to the defendants. This document charged the proceeds of five pending lawsuits in favour of Mr Gye and his interests with all moneys due, defined in a way which included all bills of costs and interest, and also charged with all moneys due to barristers. The Charge was expressed to be irrevocable and to continue until all moneys were paid, and its terms show that it was to be registered with the Australian Securities and Investment Commission. 31 Clause 3(a) of the Charge was in these terms: The AG Interest shall be entitled to deduct from the proceeds of the proceeds: (a) All moneys due to the AG Interest;

…." 32 Clause 4 sets out a definition of inclusion of "Moneys due to the AG Interest" to include Bills of Costs rendered, accounts incurred with contractors (meaning, presumably, expert witnesses) and paid for by the AG Interest and interest on amounts outstanding. 33 Counsel contended that Mr Gye acted unconscionably in relation to preparing the terms of the Charge, which were settled by junior counsel who was instructed by Mr Gye to act for Mr Hogarth and entities related to him in the litigation; in respect of settling the charge it should I suppose be understood that counsel acted in the interests of both, and properly so as there was no state of conflict. The complaint related not to the terms of the Charge themselves but to the fact that Mr Gye did not particularly point out to counsel the existence and terms of the letter of 7 April 1999 or the lack of effect of the provision relating to a success fee. In my opinion there was nothing unconscionable in any respect in Mr Gye's conduct in relation to what he told counsel, or in relation to taking a Charge over the proceeds of the litigation. In all reasonableness he could hardly have been expected to require anything less. If there had been any element of unconscionability in not pointing out to counsel that part of the arrangements under which moneys might appear to become due to Mr Gye and to be supported by the Charge were void, the highest equitable remedy which could be appropriate would be to restrain reliance on the charge in respect of the success fee; but there could be no purpose in granting that relief, as the provision for the success fee is void. No attempt has been made to enforce it and its lack of effect has been conceded. It could not be just to go further and grant any equitable relief against reliance on the Charge in respect of any obligation which is not void. 34 The first claim in the Summons seeks a declaration which would mean in substance that the document was wholly void. That is not a correct proposition. Some provisions of the document are void, but their lack of effect is very clear and was conceded, and no purpose would be served by making a declaration establishing it. The plaintiff is not entitled to a declaration in terms of claim 2. The confirmation letters which were in fact executed are Costs Agreements for the purpose of the Legal Profession Act and the plaintiffs are not entitled to a declaration in accordance with claim 3. 35 Only a small number of the plaintiffs are referred to in the Costs Agreements or are the subject of claims in Bills of Costs; those are Mr Hogarth, Lakatoi, Ensile and Highfield Grove. I have been left to suppose that the other plaintiffs are parties to some or all of the many litigations in which Mr Gye acted for Mr Hogarth in related interests; however evidence does not establish whether this is so. I am unable to see why those of the plaintiffs who did not incur contractual liability to Mr Gye for costs, even though they may have been parties for whom he acted, were joined the present proceedings. 36 With respect to the Cross-claim the letter dated 21 February 2001 referred to in the first claim does in my opinion evidence a Costs Agreement and a declaration as claimed should be made in respect of it. However the letter of 6 June 2001, which Mr Hogarth did not sign, is not and is not evidence in writing of a Costs Agreement, and the cross-claimants are not entitled to a declaration in respect of it. The second letter of 12 April 2000 which among other things established in cl.(6) the rates of costing for work done after 1 January 2000 is also evidence of a Costs Agreement and it may well affect rates of charging for work charged for in the bills which have been referred to assessment; those bills include bills dated on and after 2 August 2000 and may well relate back to the early part of that year. Declarations should be made in terms of claims 1(a) and 2 of the Cross-claim, but not in terms of claim 1(b). Declarations in terms of claims 3 and 4 in the Cross-claim cannot be considered without evidence in detail of the times and manner of making payments, and in any event the declarations claimed appear to be academic as there has been no attempt to refer bills earlier than bills delivered on 2 August 2000, twelve months before the application for assessment was made. In my view I should decline to give declaratory relief on claims 3 and 4. Claim 5 was abandoned during the hearing. 37 Orders: (1) The Summons is dismissed with costs.

(2) Declarations in terms of claim 1(a) and claim 2 in the Cross-claim.

(3) Dismiss claims 1(b), 3, 4 and 5 in the Cross-claim.

(4) Order that the Plaintiffs Cross-defendants pay the defendants' cross-claimants' costs of the Cross-claim. ********

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