Lyons v Wende

CATCHWORDS : Leave to appeal under s 208M Legal Profession Act 1987

LEGISLATION CITED : Legal Profession Act 1987 ss 208M and 208N Supreme Court Act 1970

CASES CITED : Wentworth v Rogers [2006] NSWCA 145

PARTIES : James Lyons trading as Lyons & Lyons v Herbert Wende & 4 Ors

F Austin - Plaintiff COUNSEL : In person - First Defendant In person - Third Defendant K Richardson - on behalf of Attorney General of NSW

Lyons & Lyons - Plaintiff SOLICITORS : Self - First Defendant Self - Third Defendant IV Knight - Crown Solicitor

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

13627/05 JAMES W LYONS TRADING AS LYONS & LYONS v HERBERT WENDE & 4 ORS

JUDGMENT 1 HIS HONOUR: By his further amended summons filed on 13 December 2005 the plaintiff claims that leave be granted to join the fourth and fifth named defendants pursuant to s 208NA of the Legal Profession Act 1987. I dealt with this yesterday. 2 Secondly, that insofar as it is required, pursuant to s 208M of the Legal Profession Act leave be granted to appeal the decision of the Costs Review Panel of 29 July 2005. He also seeks that the appeal be allowed and that the decision of the Costs Review Panel be set aside. He also seeks costs.

3 At the hearing of this summons the plaintiff was represented by Mr Austin of counsel. The defendants Mr Wende and Mr Lloyd appeared in person. The defendant Mrs Wende did not appear; however, Mr Wende explained that his interests and hers were identical and I accept this. Indeed, she does not appear to have taken an active part in the arrangements between the parties in dispute. 4 The Attorney General had been given leave to intervene and was represented by Ms Richardson who confined her very helpful submissions to matters of principle. 5 To understand the nature of the present application it is necessary to give a brief summary of the background which I take from the reasons of the Assessor.

6 The practitioner plaintiff claimed $52,099.46 for costs, including counsel's fees and disbursements, as set out in a tax invoice dated 20 November 2003. Those costs were claimed for work performed by the plaintiff from 15 October to 12 November 2003 in respect of District Court proceedings. Those proceedings related to a dispute between the defendants and their neighbour from whose property trees fell on to the clients' nursery causing damage and loss. The costs have not been paid. Consequently, the plaintiff applied for an assessment of them. 7 The defendant raised objections before the Assessor and in particular raised a threshold issue which, if established, was fatal to the application for costs. This objection was made on the basis that the retainer of the plaintiff was a "no win/no fee" arrangement entered into at the initial conference with the plaintiff on 15 October 2003 and, there having been no successful outcome the plaintiff has no entitlement to any costs. The plaintiff denied having agreed to a "no win/no fee" arrangement at that conference or ever. 8 On 15 May 2000 the defendants commenced the District Court proceedings, acting on their own behalf at Gosford as self represented litigants. In August 2001 the defendants instructed a local solicitor, Mr Finney, to act for them in the proceedings. Some preparations for trial were undertaken. 9 The proceedings were transferred to the commercial list in Sydney and a hearing date appointed for 10 November 2003 for three days. 10 Some 25 days prior to the hearing, the retainer of Mr Finney came to an end. Given the imminence of the hearing the defendants needed to find a new solicitor urgently. Contact was made with the plaintiff and a conference appointed for 15 October 2003. 11 Before the costs Assessor and also the Review Panel material from the plaintiff claimed that Mr Wende on behalf of the defendants was told, right at the beginning, that he, the plaintiff would not accept the retainer on a "no win/no pay" basis and that he charged $300 per hour plus disbursements. 12 The defendants, on the other hand, contended that the plaintiff accepted the retainer on the basis that he would bill them at the end of the matter but only if they were successful. In that event the basis of his fees would be $300 per hour plus counsel's fees for a Queen's Counsel and a junior. 13 Numerous documents were before the Assessor and the Review Panel. These included a letter from the defendants to the plaintiff in these terms: "I refer to our meeting of yesterday 15 October 2003. We are pleased and thank you for your offer to supply legal services in our case, number 2644 of 2003 at the District Court in Sydney. We accept the terms you have offered which are, in brief, that you charge $300 per hour plus GST, only payable if our case succeeds, and that you intend to employ Mr Glen Miller SC".

14 On the other hand, the plaintiff sent to the clients an email on about 24 October 2003 enclosing a form of unconditional costs agreement and asking them to obtain independent advice and to sign it. That costs agreement was not signed until about 5 November 2003 when it was signed by Mr Wende and Mr Lloyd at a conference. 15 There were many other documents before the Assessor and the Panel but I mention these two because they demonstrate the stark conflict between the parties. 16 The issues for determination by the Assessor and the Review Panel were: first, what were the terms of the agreement between them; secondly, the meaning or interpretation of those terms; and, thirdly, if the agreement was conditional upon the clients being successful, was that condition fulfilled in the light of their later compromise of their action by a consent judgment in their favour for $95,000 inclusive of costs.

17 The plaintiff withdrew from acting for the defendants on about 12 November 2003, and the settlement occurred later whilst the defendants were represented by other solicitors. 18 Under 208(3)(b) of the Legal Profession Act 1987 the Costs Assessor and the Review Panel had the power to determine whether a costs agreement exists and, if so, its terms. This Assessor and the Review Panel proceeded to do. 19 However, it must be noted that the Assessor and the Panel are limited in the classes of material they can entertain in order to make such a determination. Under s 207 of the Legal Profession Act 1987 their powers are limited to requiring the production of documents and the furnishing of particulars which may be required to be verified. There is no power to conduct an examination of witnesses under oath with cross-examination. There is no power to subpoena witnesses or documents. 20 Thus, in paragraph 30 of his reasons for determination the Assessor said: "I can only make the determination on the basis of the material before me. In this regard the practitioner's version does not accord with the documents, whereas the clients' version is consistent with those documents". 21 In relation to the costs agreement signed at the conference the Assessor held that it was inconsistent with the "no win/no fee" retainer and signed only under duress. He held that Mr Lyons had not satisfied him as to the retainer on which he relied for his claim to costs. He further held that the retainer was a "no win/no fee" arrangement as to which there was no successful outcome. He then found that the practitioner has no entitlement to costs and, consequently, assessed the cost at nil.

22 The reasons of the Review Panel dated 29 July 2005 are quite brief. The Panel considered the same material plus further material and confirmed the determination of the Assessor. The Panel held that the basis of the retainer was "no success/no pay", that there was no success and that no costs or disbursements, including counsel's fees, were payable to Mr Lyons.

23 Under s 208N of the Legal Profession Act a party to an application relating to a bill of costs may seek the leave of this court to appeal to it against the determination of the application made by the Assessor. 24 Under subsection 3 the Supreme Court may, in accordance with its rules, grant leave to appear and may hear and determine the appeal. 25 Subsection 4 provides that an appeal is to be by way of a new hearing and fresh evidence or evidence in addition to or in substitution for the evidence received at the original proceedings may be given. 26 Subsection 5 provides that after deciding the questions the subject of the appeal the Supreme Court may, unless it affirms the Costs Assessor's decision, make such determination in relation to the application as in its opinion should have been made by the Costs Assessor. This section equally applies to an appeal from the Review Panel: see s 208KI. 27 The resolution of the issues between these parties can best be determined not only by consideration of documents but by hearing and seeing the respective witnesses give evidence under oath and subject to cross-examination. The ultimate decision, involving as it does the credibility of individuals, can affect detrimentally the reputation of one or more of the parties and in this case one of them is a solicitor of the Supreme Court. 28 In my view, this is an issue which is too grave and significant to be decided by consideration only of documents and that justice requires it be determined after hearing sworn evidence subject to cross-examination. 29 I am fortified in this view by the decision of the Court of Appeal in Wentworth v Rogers [2006] NSWCA 145. The facts in that case are quite complex. At the risk of oversimplifying them, one of the questions was whether leave to appeal should be granted from the decision of an Assessor and the Review Panel determining the terms of an agreement between a solicitor and a client. 30 Santow JA said at paragraph 36: "I consider that this question in the present case is only able to be determined definitively by a court upon oral evidence from the principals able to be tested in cross-examination for reasons elaborated later".

"It will be self-evident that determining the terms of the retainer necessarily entails determining both the content of the costs agreement as well as its proper interpretation. The costs Assessor is unconstrained by the rules of evidence, but a costs Assessor does not have judicial powers such as to summon those involved, whether barrister or solicitor, to give evidence or to submit them to cross-examination. What a costs Assessor can do is require the applicant to produce any relevant documents and require by a notice further particulars as to the basis of which costs were ascertained".

32 At paragraph 61, his Honour points out that the expression "no win no pay" does not, itself, elaborate on what the term "win" means, and at paragraph 62 he says: "Whether the apparent meaning is the actual one and whether the agreement as written contains all its material terms can best be clarified by a common law judge by resort to oral evidence tested in cross-examination from those directly involved".

33 Basten JA at paragraph 190 said: "Assuming that the costs Assessor has power to decide whether or not there is an agreement not to charge or to recharge at a reduced rate, any decision that the Assessor might make is open to reconsideration by leave pursuant to section 208M. If there is disputed evidence which, in substance, the costs Assessor does not have power to deal with in the manner usually considered procedurally fair with respect to contractual disputes and absent countervailing considerations, it would seem generally desirable that leave would be given to allow those matters to be agitated in a relevant court or tribunal".

34 It is appreciated that the system of costs assessment provided in the Legal Profession Act 1987, and in the Act which recently replaced it, provides a speedy and reasonably economic way of resolving issues as to the quantum of costs by experts in that field. Accordingly, this court should not too readily grant leave to appeal from their determinations. However, the issue in this case is not limited to the quantification of costs. The issue in this case is the very existence of the retainer agreement and its terms. 35 In my view, supported as it is by the dicta of the Court of Appeal in Wentworth v Rogers to which reference has been made, leave to appeal should be granted. 36 The plaintiff argued that the Review Panel and the Assessor committed errors of law by failing to give adequate reasons for some of the findings. In the light of the granting of leave to appeal, it is not necessary for me to consider these questions. 37 Under section 208M(4) an appeal is to be by way of a new hearing and fresh evidence or evidence in addition to or in substitution for the evidence received at the original proceedings may be given. 38 I should mention here that not only the plaintiff but also the Attorney General submit that leave to appeal should be granted. Indeed, this course of action was not opposed by Mr Wende and Mr Lloyd. 39 Subsection 3 of section 208M provides that the Supreme Court may, in accordance with its rules, grant leave to appeal and determine the appeal. The term "Supreme Court" means a judge of the Supreme Court (see s 40 of the Supreme Court Act 1970). Consequently, I do not consider myself bound to determine the appeal itself. This can be determined by any judge of this court. 40 Consequently, I make the following orders:

1. In accordance with s 208M of the Legal Profession Act 1987, I grant leave to appeal from the decision of the Costs Review Panel of 29 July 2005.
2. I direct that the matter of the appeal be listed before the Registrar to make appropriate procedural directions for the expeditious hearing of the appeal.
3. I reserve the question of costs of this summons to abide the outcome of the appeal.

41 There is also before the court a notice of motion filed by the defendants seeking orders that the plaintiff's request for an appeal be refused and that he be punished for his deception of the court and that certain costs orders be made.

42 I have already given leave to appeal and that part of the notice of motion fails. Furthermore, this is not the appropriate procedure for punishing a party to a case and, in any event, the evidence does not establish the claim. Accordingly, the notice of motion is dismissed.

COSTS 43 Application has been made on behalf of the plaintiff for an order that the defendant should pay the plaintiff's costs of the summons before me in which it has been successful. The plaintiff says that it made the application and that it was successful, therefore, the normal rule is that the costs should follow the event. There is, undoubtedly, much force in this submission, but each case has to be decided in the light of its own circumstances. 44 The application before me is, in effect, the first step in a two-step process. The second step is the actual hearing of the appeal. If the appeal is successful then I would consider it appropriate, subject to what may occur in the meantime, that the plaintiff get the costs of the application for leave and the hearing of the appeal. If he is unsuccessful then it would be the defendants that would get the costs of both the application for leave to appeal and the appeal. 45 I consider the two steps so inextricably tied up with each other that, in effect, the appropriate order is, as I have envisaged earlier, that the question of costs of this application be reserved to abide the outcome of the appeal.

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