(2001) 51 NSWLR 333
Herbert v Tamworth City Council (No. 4) [2004] NSWSC 394
(1965) 114 CLR 164
Sanderson
Source
Original judgment source is linked above.
Catchwords
(2001) 51 NSWLR 333
Herbert v Tamworth City Council (No. 4) [2004] NSWSC 394(1965) 114 CLR 164
Sanderson
Judgment (3 paragraphs)
[1]
Solicitors:
Ms A J Lumby (plaintiff)
Mr S P Yang (defendant)
File Number(s): 2017/00291268
[2]
Judgment
IFW Global Pty Ltd (hereafter the plaintiff) has brought an action for breach of contract against Phil Seung Yang trading as Youngs Attorneys (hereafter the defendant).
The plaintiff seeks relief in the sum of $92,988.12 plus interest. The plaintiff conducted a global investigation business which included investigating serious fraud activity. It provided what it describes as "investigative services" to the defendant. The defendant is a solicitor. He is the registered owner of a business known as Young Attorneys which is conducting the litigation in the Federal Court. It is the plaintiff's case that the defendant is personally liable for its fees pursuant to a written agreement. In order to determine the issues before the court it is necessary to set out the relevant portion of the plaintiff's pleadings and particulars concerning the agreement, the defendant's response and the course of the litigation.
So far as the agreement is concerned the plaintiff claims that around 23 May 2017, at the defendant's request, the plaintiff agreed to provide services to investigate fraudulent activity for a client of the defendant. On 23 May 2017 the plaintiff sent an email to the defendant setting out the work proposed and the terms of the plaintiff's retainer. Paragraph 4 of the Statement of Claim sets out particulars of the "proposals and terms" of the agreement numbered from (i) to (xiv). I note that the numbering in [4] of the Statement of Claim jumps from (xii) to (xiv) and there is in fact only thirteen items listed. The plaintiff's case is that the "proposals and terms" included:
1. The plaintiff begins further investigation immediately;
2. The expectation that the plaintiff would need to provide affidavit evidence and pleadings surrounding the claim may need amending with consultation between the plaintiff, defendant and the defendant's Counsel in the matter;
3. The bulk of the work would involve the production of the plaintiff's evidence;
4. The preparation of a chronology and suspect charts to properly investigate the matter and prepare evidence;
5. To conduct searches and identify assets and other information relevant to interests of those subject of the fraud investigation;
6. The plaintiff's professional fees would be charged at an hourly rate as set out in the table of fees included in the email;
7. Professional rates were not inclusive of GST;
8. The rates could vary during the course of the work provided;
9. Disbursements incurred would be passed on to the defendant;
10. The plaintiff's invoices would need to be paid within 14 days of being issued with the invoice;
11. Invoices pass [sic] the due date would incur interest;
12. An estimate of the total costs could not be provided;
13. A payment of $55,000 in advance was required to retain the plaintiff's services
The plaintiff claims that in or around the same date of the email of 23 May 2017 the defendant confirmed acceptance of the plaintiff's agreement.
The particulars relied upon by the plaintiff in support include a telephone conversation between the plaintiff and the defendant. The plaintiff relies upon the fact that it commenced work on or around 25 May 2017. It says that on 30 May 2017 the defendant sent an email to the plaintiff thanking the plaintiff for the work performed to that point and provided further information in relation to those the subject of investigations. The plaintiff relies upon an email sent on 5 June 2017 sent to the defendant with the document attached titled Standard Terms.
The Statement of Claim at [9] sets out various terms of the written agreement relied upon: clause 2 - Unless expressed otherwise professional fees will be charged on an hourly rate; clause 3 - Expenses incurred during the course of the services would be charged to the defendant; clause 4 - Where services were subject to GST they would be charged at the applicable rate of 10%; clause 5 - Invoices would be sent on a monthly basis, at the completion of the matter, where a substantial expense was incurred, were payable within 14 days of the date of the invoice and interest would accrue after 30 days of non-payment; and clause 9 - The plaintiff could be contacted regarding any complaints as to conduct and/or costs in relation to the services provided.
The plaintiff claims the defendant accepted the terms on 5 June 2017 and signed the terms accordingly on that day. The plaintiff acknowledges in paragraph 11 of the Statement of Claim that the defendant made three payments in respect of the services provided pursuant to the agreement totalling $40,000.
The plaintiff claims that in or around 28 July 2017 it issued an invoice to the defendant for the payment of the balance of the plaintiff's services in the sum of $91,339.12. The plaintiff claims the defendant breached the contract by failing to pay the invoice; the defendant failed to comply with the terms of the agreement; and that the defendant has refused to pay the invoice.
For reasons explained below it is not necessary to set out in detail the defendant's filed Defence. The matter was listed for hearing on 31 July 2018. Counsel for the defendant indicated that an agreement had been reached between the parties that there would not be any cross-examination of any witnesses in the case (Transcript of 31 July 2018 (hereafter "Transcript") at 1). The affidavits relied upon by each party were tendered after the resolution of evidentiary objections. Counsel for the defendant then indicated to the court that he was "running" the "case on a much narrower basis" than the filed Defence (Transcript at 17). He said there were "a discrete number of issues in dispute" and he handed up a list of five issues which he said were in dispute (See Transcript at 17). Counsel submitted that the five issues narrowed what is in dispute and "leads to a final resolution of these proceedings one way or the other." (Transcript ay 18). I will return to the five issues.
Given the manner the issues crystallised in the case it is only necessary to make brief reference to the matters no longer relied upon by the defendant in his filed Defence. The matters include a defence that he was not the proper defendant; that monies were to be paid directly by his client ([11(a)] of the Defence); that work done was outside the scope of the agreement ([16(c)] of the Defence); and that the plaintiff overcharged and failed to complete various agreed tasks ([16(h)] of the Defence) are no longer relied upon. Paragraph 16(f) of the filed Defence is still relied upon.
The five issues identified and framed by Counsel for the defendant in the hearing on 31 July 2018 were as follows:
1. Whether any part of the monies claimed by the Plaintiff in these proceedings relate to, or arise in respect of, the provision of services in the nature of legal services, being services ordinarily undertaken by a legal practitioner.
2. If the answer to sub-paragraph (1) above is "Yes" whether the Plaintiff is entitled to bring these proceedings by reason of the operation of s 178 of the Legal Profession Uniform Law (NSW) No 16a (hereafter "Uniform Law").
3. Even if the Plaintiff is entitled to bring these proceedings, whether it is entitled to seek recovery of amounts relating to the provision of services in the nature of legal services.
4. Whether Mr Yang was personally liable for payment of the Plaintiff's fees and expenses prior to 19 June 2017, being the date of Mr Yang's acceptance of the Plaintiff's "Standard terms" document.
5. In the event that the Plaintiff is entitled to bring these proceedings, but Mr Yang is only personally liable from 19 June 2017, what items or amounts claimed by the Plaintiff arose after 19 June 2017?
The essence of Counsel's submission is that a substantial portion of the work performed was not investigative work but rather legal work. Therefore the plaintiff cannot commence proceedings and maintain the action because there was no costs disclosure agreement and a lack of compliance with the Uniform Law.
Counsel for the plaintiff supplied the court with written submissions on the day of the hearing which addressed all the issues raised by the defendant in his filed Defence. Counsel for the plaintiff also made submissions in response to the five issues that had been identified by Counsel for the defendant set out above. He requested an opportunity to file further written submissions after the hearing. I granted that request and directed that the plaintiff file submissions by 18 August 2018. Counsel for the defendant filed submissions in reply on 27 August 2018.
On 24 September 2018 I directed the parties via the Civil Registry to file written submissions addressing the following two questions:
1. Does legal professional privilege as referred to in s 119 of the Evidence Act 1995 attach to any of the work done by the plaintiff for the defendant? If yes, upon what basis? If, no why does it not attach?
2. The parties filed written submissions concerning the concept of "legal services". The following cases were not cited in argument: Legal Services Commissioner v Walter [2011] QSC 132; Legal Practice Board v Giraudo [2010] WASC 4; Orrong Strategies Pty Ltd v Village Roadshow Ltd [2007] VSC 1; and Council of the Law Society of NSW v Australian Injury Helpline (2008) 71 NSWLR 715. Do any of these cases inform the issues before the court?
Counsel for the plaintiff and Counsel for the defendant filed written submissions addressing those two questions on 11 October 2018 and 25 September 2018 respectively.
On 27 September 2018 the matter was mentioned. The court requested the parties to file further submissions addressing the issue of apportionment in the event the court finds that any of the work performed by the plaintiff is characterised as "legal services" as that expression is used in ss 6, 178 of the Uniform Law. The plaintiff filed submissions on 17 October 2018 and the defendant on 25 October 2018.
I turn to the resolution of the first issue:
Whether any part of the monies claimed by the Plaintiff in these proceedings relate to, or arise in respect of, the provision of services in the nature of legal services, being services ordinarily undertaken by a legal practitioner.
Counsel for the defendant did not concede that the defendant had the onus of showing whether the monies claimed arose in respect of legal services. However, he appeared to accept that he had to convince the court that s 178 of the Uniform Law applied.
In the filed Defence at [16(f)] the defendant sets out the basis upon which he says the Uniform Law applies with the consequence that the plaintiff cannot commence and maintain these proceedings. The defendant set out this part of the Defence as follows. The plaintiff's retainer as alleged in [4] and [5] of the Statement of Claim is a costs agreement within the meaning of Division 4 of Part 4.3 of the Uniform Law. The plaintiff failed to comply with its disclosure obligations under sections 174 and 175 of the Uniform Law. Therefore the Agreement is void under s 178(1)(a) of the Uniform Law. The defendant submits that the plaintiff has failed to obtain a costs assessment or to refer the dispute to the Law Society of New South Wales or the Legal Services Commissioner. The plaintiff commenced these proceedings in contravention of s 178(1)(c) of the Uniform Law, and is prohibited from maintaining these proceedings under that provision. In response the plaintiff maintains its pleaded case that the nature of the work done was investigative work and not the provision of legal services.
Counsel for the defendant developed this part of the Defence during the course of the hearing by reference to the communications between the plaintiff and defendant. Mr Gamble of the plaintiff emailed the defendant on 23 May 2017 (Annexure "C" to affidavit of Mr Gamble dated 2 May 2018 admitted as Exhibit 1). Mr Gamble says, inter alia, "I have now consulted with our internal investigative and legal team and I propose the following". Counsel for the defendant argued that this is evidence that there was a legal team. He also relies upon other parts of the email including the fact that Mr Gamble states at p 2 of the email under the heading "Our proposal":
The pleadings may, as a result, need to be amended and we will need to liaise with you and Counsel to decide what evidence needs to be gathered, in priority stop the work in and around preparing my affidavit is likely to comprise the bulk of the work. If we find assets, freezing orders may need to be obtained and we would expect to furnish you with an affidavit in support of any such orders.
Counsel for the defendant argued that the work proposed involved deciding upon evidentiary issues. In the same email of 23 May 2017 under the heading "Our terms" Counsel relies upon the table which identifies the people who would be providing the services, their description and their cost (both the hourly and daily rate). The email contains a table with the following: Mr Gamble - Lead investigator with an hourly rate of $300 and a daily rate of $2,100; Ian Taylor - Senior Lawyer with an hourly rate of $650 and a daily rate of $4,500; Michelle Huntsman - Lawyer with an hourly rate of $350 and a daily rate of $2,450 and finally Alan Watson - Investigator with an hourly rate of $300 on a daily rate of $2,100. These rates do not include GST. Counsel for the defendant argued that it is clear that Ian Taylor and Michelle Huntsman are corporate lawyers who are in-house. He submitted that although Mr Gamble is described as the lead investigator because of the charge out rates it cannot be said that they are subservient to him or subordinate to him.
Counsel for the defendant took the court to the invoices in Exhibit 4 at 95. Ms Huntsman is described as "Investigator/In house Legal" and at 97 the invoice sets out the tasks that she undertook. These include Item 1 "consideration of amended statement of claim"; Item 2, "consideration of issues material provided by previous legal representatives"; Item 3, "consideration of issues"; Item 9 "Preparation of schedule of evidence, review of amended statement of claim in affidavits, review of client material"; Item 10 "identification of issues for further investigation based on evidentiary weaknesses"; Item 13 "consideration of issues"; Item 14 "review of evidence and material"; Item 18 "preparation of summary of Yen Chen Chang" (a witness in the case); and Items 20-24, 26 and 26 which makes reference to the preparation of an affidavit for a witness in the proceedings called Batten. Counsel for the defendant argued that what was being undertaken were tasks by a legal practitioner including preparation of witness's affidavit, together with consideration of evidentiary issues and pleadings.
Counsel for the defendant did not limit his argument concerning the provision of legal services to Ms Huntsman. He referred to the Schedule of Hours and Expenses of Mr Gamble found at page 100 of Exhibit 4. He made reference to the entry for 26 May 2017 "Review Federal Court material including evidence…" (a reference to various witnesses) and the entry "Send briefing to Michelle Huntsman". Counsel also made reference to the entry of 29 May 2017 "brief MH [Michelle Huntsman] on case, review case pleadings and evidence listed in amended statement of claim…" and later in the item "review affidavit of Mark Secivanovic". Counsel referred to page 104 in the entry for 21 June 2017 where there is reference to "Discuss Batten affidavit with MH [Michelle Huntsman]." In the hearing Counsel for the defendant submitted that:
Mr Gamble himself was spending time and charging for time preparing the content of a witness's affidavit. Now, Mr Gamble is not a lawyer, so he can't act to provide legal services but nevertheless, clearly in amongst these items, are the works of a legal services nature. [Transcript, 25]
Counsel for the defendant also referred to the entry for 7 July 2017 "…review affidavit draft, prepare notes and changes, discuss with Michelle Huntsman." Counsel made a related point that the entry is for a period of five hours and that because of the lack of detail provided it is not possible to ascertain the precise components that were for legal or non-legal services and the time spent on each.
In written submissions filed on 27 August 2018 Counsel for the defendant submitted that the proposition put by the plaintiff that Ms Huntsman was put forward as an investigator with legal qualifications should be rejected. He submitted the plaintiff did much more than this by:
identifying Ms Huntsman as "In-house Legal" (Exhibit 4 (PY-1) at 95, 97) and as a "Lawyer" including at a rate of charge higher than the so-called "lead investigator" (Annexure "C" to affidavit of Mr Gamble admitted as Exhibit 1 particularly "Our terms")
Ms Huntsman signed off her email communications as "Lawyer IFW Global" (See PY-1 admitted as Exhibit 4 at 67 which was an email from Ms Huntsman to the defendant and Mr Gamble dated 2 June 2017).
Mr Gamble's "proposal" email of 23 May 2017 (Annexure "C" to affidavit of Mr Gamble admitted as Exhibit 1 particularly "2. Our proposal" and "3. Our terms") itself identified work of a legal nature that would be undertaken by the plaintiff including:
liaising with counsel regarding pleadings, amendments to pleadings and the further evidentiary requirements of the case (second bullet point under "2. Our proposal")
providing advice as to the evidentiary adequacy of materials, compiled to date (third bullet point under "2. Our proposal")
providing advice concerning the issuing of subpoenas and notices to produce in order to gather further evidentiary materials (fourth bullet point under "2. Our proposal")
collating such further materials as would be required in order to allow "the client to make a fully informed decision" (fourth bullet point under "2. Our proposal")
preparation by Ms Huntsman (not a non-lawyer) of affidavit materials annexure's and exhibits (third bullet point under "3. Our terms")
the provision by Mr Ian Taylor ("Senior Lawyer") of strategic input (third bullet point under "3. Our terms").
Mr Gamble's selling point for the services of the plaintiff was, as identified at the conclusion of his 23 May 2017 email that he had "assembled [a] team, which have [sic] extensive experience in these types of cases". It was a full service team, including both investigative and legal services (Annexure "C" email of 23 May 2017).
In further written submissions addressing the first issue Counsel for the defendant made reference to the definition of "legal services" found in s 6 Legal Profession Uniform Law (NSW):
"legal services" means work done, or business transacted, in the ordinary course of legal practice.
Counsel for the defendant submitted that there is no known authority that comprehensively lists those matters that are, or are not, legal services. He submitted these matters are addressed by a cost assessor not the courts. He relied on the authority of Lewis v Doran [2008] NSWSC 186 at [44] ff where Hammerschlag J refused an application for declarations regarding matters pertaining to a costs assessment. Counsel for the defendant submitted that the task of identifying amounts which are, or are not, recoverable legal costs is a matter now left exclusively to the cost assessor process. The courts will not undertake that process in advance of a costs assessment and it will not lightly interfere with a cost assessments outcome. He further submitted that for the plaintiff to seek judgment from the court in respect of amounts which comprise legal costs and disbursements is to usurp the function and jurisdiction of the cost assessor. He posed the question as being whether there are portions of the plaintiff's claim which are capable of comprising legal costs and disbursements. He submitted that guidance can be obtained from Weingart and Johnson, Legal Costs Handbook: A guide to the preparation taxation of legal costs (1995, LBC Information Services at 27-32). The types of costs that can be charged by solicitors include attendances, documentation, correspondence and instructions. The discretion given to a cost assessor is apparent by the terms of s 200(2)(d) of the Uniform Law which provides that a cost assessor may have regard to "any other relevant matter" in determining whether costs are fair and reasonable. Counsel for the defendant emphasised that matters he relied on in terms of the resolution of the first issue should not be viewed as undertaking a costs assessment process. He then cited examples of items claimed by the plaintiff which the defendant says are plainly legal costs or capable of being classed as legal costs in the invoice and supporting details at 95 -111 of Exhibit 4.
In support of his argument Counsel for the defendant made specific reference to the items referred to in Exhibit 4 at 97-99 charged by Michelle Huntsman of considering pleadings and issues, including identification of further issues to be pursued and identification of issues for further investigation based on evidentiary weaknesses (for example, items 1, 2, 3, 9, 10 and 13 in the itemised invoice setting out Ms Huntsman's work). He also referred to items which referred to the work of reviewing affidavits, analysis of documents and clients materials, review and consideration materials supplied by previous lawyers, considering issues for affidavits, and drafting affidavits (for example, items 2, 4, 6 ,7,9,10, 12, 14, 15 16, 18, 20, 21 22, 24, 26, 27 and 28). Items which referred to work involving attendances with lawyers for the purposes of discussing, presumably, legal and evidentiary matters (for example, items 5, 11,19 and 25). Finally, items which referred to work on correspondence (for example items 26 and 27).
Counsel for the defendant made specific reference to the items charged by Mr Gamble of the plaintiff referred to in Exhibit 4 at 100-108. He referred to Mr Gamble's work undertaking a review of case documents, review of other materials on evidence filed with the Federal Court, review of pleadings and analysis/discussions regarding evidentiary issues. Counsel also referred to Mr Gamble's work in briefing/instructing other investigators in respect of work that they were undertaking and/or communicating with other experts/consultants; Mr Gamble's work communicating with proposed witnesses; all work in preparation for communicating with proposed witnesses; Mr Gamble's work upon the preparation affidavits, including affidavits other than his own; and Mr Gamble's work in undertaking correspondence which would ordinarily be undertaken by a lawyer. In addition to the above Counsel for the defendant submits that the plaintiff purports to charge various items by way of disbursements, which at least part of would ordinarily be disbursements incurred by solicitors and thus part of the costs that are recoverable by legal practitioners.
I now set out the submissions of Counsel for the plaintiff for the first issue. For completeness I will first refer to the written submissions dated 31 August 2018 prepared for the hearing by Counsel for the plaintiff. In response to the filed Defence paragraph 16(f), which asserted that Ms Huntsman was performing legal work, the plaintiff submitted that the Defence was "groundless" for two reasons:
First, Ms Huntsman was not performing legal work within the meaning of the Legal Profession Uniform Law (NSW) 2014 and this Act does not apply in this case. Second, though a person has a legal qualification it does not necessarily mean the work they do is that of a legal practitioner. Indeed Ms Huntsman worked as an investigator. Being admitted as a solicitor or barrister does not make one a monk to the law. People with legal qualifications perform a variety of work in society and their conduct is not covered by the Uniform Law.
Counsel for the plaintiff set out section 10 of the Uniform Law headed "Prohibition on engaging in legal practice by unqualified entities". Counsel submitted at [42] of the submissions dated 31 August 2018 that the evidence discloses that the work done by Ms Huntsman did not fall within the definition of a legal services as defined in the Uniform Law. Rather Ms Huntsman was carrying out investigative work for the plaintiff.
After the hearing Counsel for the plaintiff filed further written submissions concerning the first issue dated 15 August 2018. Counsel submitted that the evidence of Mr Gamble in his affidavit indicates that the plaintiff was running a business conducting investigations on behalf of the client on an expert basis. Annexure C of Mr Gamble's affidavit discloses that the investigation was required to be underway immediately. It detailed the services that the plaintiff provided. Counsel for the plaintiff listed the services that the plaintiff provided at [15] of the submissions:
1. Preparation of a list of suspects;
2. Investigations of ASIC documents;
3. Reviewed previous investigation reports;
4. Drafted case briefing regarding Korea, Singapore, Hong Kong and Malaysia;
5. Travelled overseas to conduct interviews and investigations;
6. Engaged foreign expert consultants;
7. Conducted interviews with potential witnesses.
Counsel for the plaintiff submitted that the list of expenditure supports that the work conducted was of an investigative nature. Overseas travel, kilometre expenses, conducting discreet field enquiries and other expenses for agents are monies expended towards an investigation. He also relied upon what Mr Gamble said in his email of 23 May 2017, at Annexure C of his affidavit, under the heading '2. Our Proposal':
We expect that you will require an affidavit from me as the lead Investigator evidencing the fraud, addressing the matters mentioned above. The pleadings may, as a result, need to be amended and we will need to liaise with you and Counsel to decide what evidence needs to be gathered, in priority. The work in and around preparing my affidavit is likely to comprise the bulk of the work. If we find assets, freezing orders may need to be obtained and we would expect to furnish you with an affidavit in support of any such orders.
Counsel for the plaintiff submitted that the defendant was aware that he had contracted the plaintiff to conduct an investigation. Annexure C, setting out the work, included a wide variety of other tasks that the plaintiff would be undertaking which included an asset search, suspect chart and ASIC searches which were not legal in nature.
Counsel for the plaintiff relied upon the decisions and discussions in the cases of The Legal Practice Board v Adams [2001] WASC 78; Van der Feltz v Legal Practice Board [2017] WASC 2; Legal Practice Board v Giraudo [2010] WASC; and Kekatos v The Council of The Law Society of New South Wales [1999] NSWCA 288. The latter case made specific reference to Felman v Law Institute of Victoria [1998] 4 VR 324.
The following sets out Counsel's written submissions:
The Plaintiff submits that the work carried out was of investigative nature, which does not fall within the definitions discussed above.
While the cases above consider the circumstances of people that perform legal work who are not solicitors, Mr Yang, as a solicitor, could not have been fooled by the role of the Plaintiff. He knew the firm included investigators with legal qualifications as this was disclosed to him. He even emailed the Plaintiff to state he was concerned about costs and doubling up of work.
The case that the Plaintiff submits is critical to the resolution of this matter is Felman. To recap, the Supreme Court of NSW adopted what the Victorian Supreme Court held in that case:
16 In Felman v Law Institute of Victoria (1998) 4 VR 324 it was emphasised that a person who, in the lawful pursuit of an occupation other than law, gives advice for reward on matters lying within his or her area of occupational expertise does not necessarily act as a solicitor or a legal practitioner simply because the advice involves the expression of an opinion about the requirements of relevant legislation, statutory rules or the like. The expression "engage in legal practice" was said to mean "engage in legal practice as a legal practitioner". (emphasis added)
This is precisely the situation the Court faces in this case.
The Plaintiff submits that the employees and the agents engaged in the investigative work were engaged in a lawful occupation of conducting an investigation ordered by the Defendant.
Felman is authority for the proposition that any work that expresses an opinion about the requirements of relevant legislation (and in this case involves expressing an opinion about what may be necessary to continue the Federal Court proceedings successfully) is not to engage in legal practice as a legal practitioner.
The evidence is clear that the Defendant was a solicitor himself and did not expect non-lawyers to carry out legal work. He expected documents to be produced for settling by himself and counsel.
The Plaintiff submits that the definitions in the Uniform Law do not amend or detract from the case law that has been quoted extensively.
Counsel for the defendant submitted in reply that the case of The Legal Practice Board v Adams [2001] WASC 78 cited by the plaintiff in fact supports the defendant's position. Counsel relied on the underlined passage below in the judgment of Hasluck J. I will quote the full passage at [28] (emphasis added):
In Barristers' Board v Palm Management Pty Ltd [1984] WAR 101 Brinsden J reflected on the meaning of the expression "administration of law". He was of the view (at 107) that the expression "administration of law" is to be read as meaning "the practice of law" or "the practice of the law" and this meaning should be given to the phrase in s 77. He went on to suggest that the practice of law also includes the giving of legal advice and counsel to others as to their rights and obligations under the law and the preparation of legal instruments, including contracts, by which legal rights are either obtained, secured or given away, although such matters may not then or ever be the subject of proceedings in a court. If the giving of such advice and performance of such services affect important rights of a person under the law, and if the reasonable protection of the rights and property of those advised and served requires that the person giving such advice possess legal skill and a knowledge of the law greater than that possessed by the average citizen, then the giving of such advice and the performance of such services by one for another as a course of conduct constitutes the practice of the law.
Counsel for the defendant submitted that the reference to Ms Huntsman in the correspondence as "lawyer" and "in-house legal" by the plaintiff was clearly providing legal services. She was under the supervision of Mr Ian Taylor who was described as "Senior Lawyer" and that the legal team was providing a review of pleading and evidentiary issues. This included the "strategic" input of Mr Taylor in the pursuit of Federal Court proceedings which were aimed at the recovery of USD 80 million. Counsel for the defendant submits that that is work which readily falls within the test posed by Hasluck J in The Legal Practice Board v Adams - the protection of important rights and requiring legal skill and knowledge greater than that possessed by the average citizen.
Counsel for the defendant submitted that the case of Van der Feltz v Legal Practice Board [2017] WASC 2 in fact assists the defendant because of the emphasis given not only to the description of the work but also the implications of the work. Counsel for the defendant submitted that here services were being provided with the benefit of legal skill and training and that those skills would be beneficial in the pursuit of the Federal Court litigation. Further Van der Feltz confirms that drafting affidavits is legal work. Both Ms Huntsman and Mr Gamble were involved in drafting affidavits and taking instructions from witnesses. Counsel for the defendant submitted that the decision of the Court of Appeal in Kekatos v The Council of The Law Society of New South Wales [1999] NSWCA 288 also assists the defendant on the basis that the court approved the passage of Cussen J in In re Sanderson; ex parte The Law Institute of Victoria [1927] VLR 394. Cussen J said (at 369) that:
… if a person does a thing usually done by a solicitor, and does it in such a way as to lead to the reasonable inference that he is a solicitor - if he combines professing to be a solicitor with action usually taken by a solicitor - I think he then does act as a solicitor.
Counsel for the defendant submitted that in this case Ms Huntsman and Mr Taylor held themselves out in the agreement to be lawyers. Ms Huntsman made herself available to provide services in the nature of legal services, actually provided legal services and charged at rates that reflect the professional skills and training of a lawyer.
I have considered the competing submissions as to whether any part of the work done by the plaintiff including the work of Ms Huntsman and the proposed work of Mr Taylor should be characterised as legal services. I find the first issue should be determined against the plaintiff. An analysis of the proposal, the express terms of the agreement and the invoices submitted by the plaintiff all lead to an unassailable conclusion that part of the monies claimed by the plaintiff related to the provision of services in the nature of legal services.
This conclusion is based on the use of the expression by Mr Gamble in his proposal email of 23 May 2017 "investigative and legal team," the fact that Ms Huntsman and Mr Taylor were described in the proposal as "Senior Lawyer" and "Lawyer" respectively, the higher hourly and daily rates charged by the plaintiff for Ms Huntsman ($350 and $2,450) and Mr Taylor ($650 and $4,500) compared to the investigators Mr Gamble ($300 and $2,100) and Mr Watson ($300 and $2,100), the fact that the rates charged were comparable to professional legal fees and the substance of the tasks that were proposed and performed by Ms Huntsman as set out in [22], [25], [28] and finally the proposed "strategic" advisory role of Mr Taylor. The fact that it was agreed that the defendant would discuss the work completed by the plaintiff with Counsel retained in the Federal Court litigation does not change the nature and quality of the work performed. So far as the tasks performed by Mr Gamble set out at [29] - which the defendant also claims are legal services - it is not necessary for the court to determine whether they are in the nature of legal services given that the first issue is framed as "any part of the monies claimed" are "legal services". The list of services cited by the plaintiff (see [30] of this judgment) is incomplete in light of the "legal team" offered in the agreement.
The cases in this area the law often concern people who are not qualified doing tasks which the courts sometimes characterise as legal work. But in the case of Ms Huntsman it involves a legally qualified person performing legal work. In the case of Mr Taylor he was held out as the role of "Senior Lawyer" making "strategic" decisions. The work of Ms Huntsman itself could not simply be regarded as only investigative work. The plaintiff's reliance on Felman v Law Institute of Victoria [1998] 4 VR 324 is misplaced. This is not a case where it is necessary to distinguish the work of a person in a specialised area from work involved in legal practice. The cases of The Council of the NSW Bar Association v Davison [2006] NSWSC 65 per Hall J at [143] and Law Institute of Victoria Ltd v Maric [2008] VSCA 46 at [102] are examples. Ms Huntsman's role within the plaintiff cannot realistically be described as "the lawful pursuit of an occupation other than law" as that expression is used in Felman. Ms Huntsman was explicitly described in the proposal as a "Lawyer." In the invoice she is described as "Investigator/In- house Legal" (Exhibit 4 at 95). Nor could it be said that she was, in accordance with the passage in Felton, expressing "an opinion about the requirements of relevant legislation, statutory rules or the like". Ms Huntsman's work was far more involved than that description. Her work involved the application of legal expertise in the preparation of legal proceedings in the Federal Court. The knowledge and skill held and exercised by Ms Huntsman for the performance of the tasks described at [22], [25], [28] above, are, in the words of Hall J in The NSW Bar Association v Davison [2006] NSWSC 65 at [145], "plainly not" that of an investigator. The answer to the first issue is "Yes."
I turn now to the second issue. It was framed as follows:
If the answer to sub-paragraph (1) above is "Yes" whether the Plaintiff is entitled to bring these proceedings by reason of the operation of s 178 of the Legal Profession Uniform Law (NSW).
Section 178 provides:
(1) If a law practice contravenes the disclosure obligations of this Part--
(a) the costs agreement concerned (if any) is void; and
(b) the client or an associated third party payer is not required to pay the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority; and
(c) the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs.
Although the second issue is directed to s 178 its resolution requires consideration of other parts of the statutory scheme. It is necessary to set out some of the definitions in s 6 of the Uniform Law:
"law practice" means -
(a) a sole practitioner; or
(b) a law firm; or
(c) a community legal service; or
(d) an incorporated legal practice; or
(e) an unincorporated legal practice;
"legal costs" means -
(a) amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services; or
(b) without limitation, amounts that a person has been or may be charged, or is or may become liable to pay, as a third party payer in respect of the provision of legal services by a law practice to another person -
including disbursements but not including interest;
"legal services" means work done, or business transacted, in the ordinary course of legal practice;
"corporate legal practitioner" means an Australian legal practitioner who engages in legal practice only in the capacity of an in-house lawyer for his or her employer or a related entity, but does not include a government legal practitioner;
"Engage in legal practice" includes practise law or provide legal services, but does not include engage in policy work (which, without limitation, includes developing and commenting on legal policy).
Section 194 is also headed "Restriction on commencing proceedings to recover legal costs". It provides:
(1) 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 Uniform Rules.
(2) A law practice must not commence legal proceedings to recover legal costs from a person who has been given a bill until -
(a) where the legal costs are the subject of a costs dispute before the designated local regulatory authority - the authority has closed or resolved the dispute; and
(b) at least 30 days after the later of -
(i) the date on which the person is given the bill; or
(ii) the date on which the person receives an itemised bill following a request made in accordance with section 187.
So far as the second issue is concerned the plaintiff's written submissions were brief. The plaintiff argues that s 178 does not provide a bar to bringing proceedings. It emphasises what it says is the narrow ambit of the expression "any or all of the legal costs" in s 178(1)(c). The plaintiff submitted that the proceedings are not barred "but should the court find that legal services were provided, those costs must be identified and quarantined." The plaintiff maintained that:
…the costs arise from its investigative work and it is up to the Defendant to demonstrate which costs cannot be claimed in these proceedings and potentially struck out.
In its submissions on apportionment filed on 18 October 2018 the plaintiff made further submissions which touch on the second issue:
...the Uniform Law only governs legal costs. Legal costs are defined at section 4 of the Uniform Law. The balance of the claim are not legal costs as defined by the Act. As such there is no legislative prohibition on awarding the claim.
8. Third, the legislative prohibition on not commencing proceedings until costs have been assessed only relates to legal costs. There is no prohibition in a circumstance such as this in non-legal costs claims being commenced.
9. Fourth, costs to be paid to a law practice for legal costs incurred are governed by the above provisions. The Court must make a finding as to whether the Plaintiff is a law practice or not a law practice in order to make a finding as to whether the proceedings should have been commenced. It is a jurisdictional fact, in other words.
10. The Plaintiff submits that neither it, nor Ms Hunstman [sic], are a legal practice (a proposition put by the Defendant at [42] of its submissions filed on 28 August 2018).
11. If the Plaintiff is a law practice, the Uniform Law applies. If it is not a law practice then the Uniform Law does not apply and the normal contractual principles apply.
12. The Plaintiff submits that the Court would find that the costs of legal services can be excised and treated separately. It is for the Court to determine what is a legal service and proceed from there as to what costs are subject to the Uniform Law.
Counsel for the defendant submits that a starting point of the resolution of second issue is s 194. A law practice cannot commence legal proceedings to recover legal costs unless a bill has been given for the legal costs and the bill complies with the Uniform Law and Uniform Rules. Counsel submits that it is not in dispute that neither the plaintiff nor Ms Huntsman provided any bill of costs which complied with either the Uniform Law or the Uniform Rules. Therefore these proceedings have been commenced contrary to the prohibition in s 194 and consequently the proceedings should be dismissed with costs.
A clear point of contention between the parties is whether either the plaintiff or Ms Huntsman is a "legal practice" for the purposes of ss 178 and 194. Counsel for the plaintiff submitted that neither the plaintiff nor Ms Huntsman is a legal practice. Counsel for the defendant submitted in reply that there is no evidence advanced by the plaintiff to show that it is not a law practice. Further, if the plaintiff wished to establish that it has never been registered or recognised a law practice it would have filed affidavit evidence to that effect. It has not done so.
Counsel for the defendant submitted that there is evidence before the court that Ms Huntsman is a law practice. Exhibit 5 was tendered by the defendant in the proceedings. It is a search of Law Society of NSW records. It shows Ms Huntsman is registered as a legal practitioner holding a practising certificate as a "Corporate Legal Practitioner (Supervised)". Counsel for the defendant submitted that there is no evidence on behalf of the plaintiff as to who is supervising Ms Huntsman but he assumed it is Mr Taylor, the Senior Lawyer employed by the plaintiff. There is no evidence of Ms Huntsman having any other employment. In any event Counsel for the defendant submitted the position of Ms Huntsman was not explained or addressed by the plaintiff in the proceedings. Counsel for the defendant submitted that Ms Huntsman cannot be only described as a "corporate legal practitioner" defined in s 6 (see definition above) who engages in legal practice only in the capacity of an in-house lawyer for her employer. This is because there was evidence that Ms Huntsman was providing services for the benefit of third-party clients in respect of Federal Court proceedings. Counsel for the defendant relied the decision of Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333 at 338-39 in support of the proposition that corporate in-house legal practitioners are to be treated the same as any other legal practitioner in relation to the obligations of costs disclosure.
The second issue is framed specifically in terms of s 178, that is, whether a law practice has contravened disclosure obligations with the consequence that "the client or an associated third-party" is not required to pay the legal costs. There is no doubt that there is a statutory relationship between s 178 and s 194 concerning the prohibition of the commencement and maintenance of proceedings. The expression "legal costs" is defined in s 6 to mean "the amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services."
The court is presented with a difficult task in determining the second issue. The submissions of the parties illustrate that in order to determine whether s 178 applies in this case the court must necessarily determine whether the plaintiff or Ms Huntsman are legal practices. The plaintiff casts the question as a "jurisdictional fact" that the court must determine (see submissions quoted at [49] above). But even if the issue is cast as a "jurisdictional fact" its resolution nevertheless involves a factual finding based on an assessment of the specific evidence in the case relied upon by the parties. In this case the plaintiff has maintained from beginning to end that the services it offered were only of an investigative nature and therefore none of the provisions of the Uniform Law apply to its contractual claim. The plaintiff did not file any affidavit evidence to show that it and Ms Huntsman is not a legal practice. The plaintiff merely asserted the proposition in its submissions without reference to evidence. The only evidence before the court concerning the professional status of Ms Huntsman came from the defendant in the form of Exhibit 5 which showed that Ms Huntsman is registered as a corporate legal practitioner. There was no evidence from Mr Taylor.
After consideration of the competing submissions and the evidence I find that the second issue must also be resolved against the plaintiff. It is not in dispute that neither the plaintiff nor Ms Huntsman provided any bill of costs which complied with either the Uniform Law or the Uniform Rules. I accept the submission of Counsel for the defendant that a party seeking to bring a claim has the onus of establishing the existence of any jurisdictional fact necessary for the success of the claim. The plaintiff has failed to supply any evidence to show that it was, or was not, a law practice. Further, I accept the submissions of Counsel for the defendant that there was sufficient evidence to prove that Ms Huntsman was a registered corporate legal practitioner who was providing services for the benefit of third-party clients in respect of Federal Court proceedings. That is clear from the terms of her invoice and her correspondence with the defendant. Therefore I find at least so far as the plaintiff is seeking to recover monies for the legal services performed by Ms Huntsman that she is a law practice.
That brings the court to the question whether by reason of the operation of s 178 the plaintiff is not entitled to bring these proceedings. The plaintiff submits the proceedings are not barred and that legal costs "must be identified and quarantined" by the court (see [48] above). Counsel for the defendant submits that the prohibition in both s 178 and 194 is against the commencement of legal proceedings to recover costs. He submits that these provisions must be read to mean that if any component of the claim comprises legal costs, then the entire proceedings are prohibited. In short the prohibition is against the commencement of proceedings and not merely a prohibition against recovery of legal costs. Counsel for the defendant submitted that there are strong practical and policy reasons for this approach including that in proceedings for the recovery of fees for part legal and part non-legal services would compel the court to become a costs assessor. This, he submitted, was the point emphasised by Hammerschlag J in Lewis v Doran [2008] NSWSC 186 at [44] ff (see discussion at [25] above).
The plaintiff's submission that "the Court would find that the costs of legal services can be excised and treated separately" (see [49] above - emphasis added) should be rejected on the basis of the operation of s 178 and the decision of Lewis v Doran. In addition to the decision of Lewis v Doran there are also the decisions of Herbert v Tamworth City Council (No.4) [2004] NSWSC 394 at [32]; 60 NSWLR 476 at 481 and Abdul- Rahman v Workcover Authority of NSW (No 2) [2015] NSWSC 1900 at [42] which hold that it is not for a court to embark upon a costs assessment.
I accept the submission of Counsel for the defendant that the plaintiff is effectively seeking a judgment from the court in respect of amounts which comprise legal costs and disbursements and it usurps the function and jurisdiction of the cost assessor. I accept the interpretation advanced of s 178 by Counsel for the defendant. I find that contrary to the plaintiff's submission it is not for the court to identify and quarantine the costs for the legal services in this case. As Counsel for the defendant points out a person providing legal services is obliged to provide a bill of costs in order for the client to properly understand the items of work which make up the bill and to allow a costs assessor to determine what items are properly recoverable and in what amounts. In this case there is no bill of costs and it is not for the defendant to embark upon the itemisation process or the court. Section 178 would apply to prohibit the commencement of proceedings for the whole of the claim. Strictly I leave to one side s 194 for the purposes of determining the second issue. The second issue as framed is answered "Yes".
Even if I am incorrect about the operation of s 178 there is a very compelling reason why the plaintiff has not established its claim. In Orrong Strategies Pty Ltd v Village Roadshow Ltd [2007] VSC 1, a case I referred to the parties, the court made reference at [919] to the argument of Village Road Show, that:
…based on authorities such as Watts v Rake [1960] 108 CLR 158 and Purkess v Crittenden [1965] 114 CLR 164 that if Village Road Show established that there was some material showing charges were made for legal work the evidentiary onus shifted to Orrong to show how much of the amount charged was for non-legal work.
The plaintiff has failed to meet its evidentiary onus on the balance of probabilities to establish its contractual claim for services other than legal services. The court made a specific request on 27 September 2018 for the plaintiff to file submissions addressing the issue of apportionment in the event the court found any of the monies claimed was for legal services. In the submissions filed the plaintiff has not identified a distinct portion of its claim which relates to services other than legal services. It has not discharged the onus referred to in the passage in Orrong. This includes any of the tasks performed by Mr Gamble. The invoice relied upon by the plaintiff is insufficient and inadequate to determine a distinct and identifiable portion which relates only to services other than legal services. The plaintiff has simply left it to the court to calculate what portions of its services were, or were not, legal services. Fundamentally the plaintiff has not met its evidentiary onus in proving its claim on the balance of probabilities.
Given the answers to the first and second issue and the evidentiary problem referred to above it is not necessary to answer the remaining issues for the purpose of determining the dispute before the court. This includes determining whether an offence has been committed under s 10 of the Uniform Law.
The plaintiff's claim has not been established and judgment is entered for the defendant.
Magistrate H Donnelly
Downing Centre Local Court
6 December 2018
[3]
Note: on 29 July 2019, an appeal by the plaintiff to the Supreme Court was dismissed (IFW Global Pty Limited v Seung Phil Yang t/as Youngs Attorneys [2019] NSWSC 953).
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Decision last updated: 18 September 2019