Malvina Park Pty Ltd v Johnson

BACKGROUND FACTS

1. The defendant, Benjamin Johnson, was injured in a motor vehicle accident on 22 May 2016. He made a claim for compensation under the Motor Accidents Compensation Act 1999 (NSW) ("MACA"). Initially, he was represented by another law practice, Brydens. He entered into a costs agreement with that firm on 2 June 2016.
2. On 22 August 2016, the defendant contacted the principal of the plaintiff, Mr Firth.
3. On 22 September 2016, the plaintiff sent to the defendant documents disclosing the basis upon which the plaintiff would propose to charge, together with a proposed costs agreement. The costs agreement proposed a lump sum fixed fee of $80,000 plus GST, with a discount depending on how long it took to resolve the matter, which was expressed in the following terms: 6.1 Professional fees - Lump Sum Fixed Quote We will charge you professional fees for the work we do as follows: 6.1.1 (a) the lump sum of: $80,000 (c) GST $8,000 TOTAL (GST inclusive) $88,000

6.2 Reductions in professional fees Our lump sum fixed fee quote gives you security. That way you know in advance what the professional fees will be regardless of how long your matter takes and how complicated it may become. We are, however, conscious that if your matter should resolve fairly quickly, and we were required to carry out substantially less work than anticipated, that could result in some unfairness. For that reason, in the event that your matter is completed in less than 9 months from the date we first started investigating your claim, which according to our records was 22/08/2016, the following reductions will be applied to the lump sum fixed fee quote contained in clause 6.1: If it completes in less than 1 month a 70% reduction If it completes in less than 2 months a 60% reduction If it completes in less than 3 months a 50% reduction If it completes in less than 4 months a 40% reduction If it completes in less than 5 months a 30% reduction If it completes in less than 6 months a 20% reduction If it completes in less than 9 months a 10% reduction

Please note that these reductions only apply to our professional fees as set out in clause 6.1 and do not apply to other charges or disbursements as set out in clause 6.3 and 6.4 below. This provision is designed to provide fairness whilst at the same time affording you the protection of the lump sum fixed fee quote.

1. The defendant signed the costs agreement on 4 October 2016 ("the costs agreement"). Two days later, the defendant sent an email to Mr Firth, in which he said he had been advised by other law firms that the plaintiff's basis for charging was excessive. The defendant said he would take his case to another law firm. Nevertheless, on 12 October 2016 the defendant decided he wished to retain the plaintiff.
2. On 14 December 2016, the defendant accepted an offer to settle his compensation claim for $500,000 inclusive of costs.
3. The settlement proceeds were received from the insurer on 23 January 2017. On that day, the plaintiff provided the defendant with an accounting of how the proceeds would be allocated, including the plaintiff's fee. The defendant signed an authority to disburse the funds, however, on 10 February 2017, Brydens announced that they were again acting for the defendant and sought an itemised bill. Subsequently, Brydens made an application for costs assessment on behalf of the defendant.
4. By a statement of reasons dated 23 January 2018, a costs assessor found that in relation to the costs agreement sent on 22 September 2016, the plaintiff complied with the disclosure obligations imposed by the Legal Profession Uniform Law (NSW) ("the Uniform Law") s 174(1), (2)(a) and (6). Those provisions will be set out later in this judgment but, in substance, required the plaintiff to disclose to the defendant in writing information about the basis upon which legal costs would be calculated and an estimate of such costs as well as disclosing certain rights (there is no dispute in these proceedings as to those findings).
5. The costs assessor also found that the plaintiff complied with regs 8(b)-(e) of the Motor Accidents Compensation Regulation 2015 (NSW) ("the Regulation"). Those provisions set out various requirements that must be met for a law practice and client to contract out of the cap on legal fees for claims under the MACA.
6. However, the costs assessor found that the plaintiff did not comply with s 174(3) of the Uniform Law. That provision required the plaintiff to take all reasonable steps to satisfy itself that the client understood and consented to the costs agreement. The consequence of that finding was that reg 8(a) of the Regulation was not satisfied and the maximum costs recoverable by the plaintiff were capped in accordance with reg 6 and Sch 1.

LEGISLATION AND RULES

1. Sections 58 and 59 of the MACA is in the following terms: 58 Application (1) This Part applies to a disagreement between a claimant and an insurer about any of the following matters (referred to in this Part as medical assessment matters): (a) whether the treatment provided or to be provided to the injured person was or is reasonable and necessary in the circumstances, (b) whether any such treatment relates to the injury caused by the motor accident, (c) (Repealed) (d) whether the degree of permanent impairment of the injured person as a result of the injury caused by the motor accident is greater than 10%. (e) (Repealed) (2) This Part also applies to any issue arising about such a matter in proceedings before a court or in connection with the assessment of a claim by a claims assessor. 59 Appointment of medical assessors (1) The Authority is required to appoint medical practitioners and other suitably qualified persons to be medical assessors for the purposes of this Part. (2) The terms of any such appointment may restrict a medical assessor to disputes of a specified kind. (3) The Authority is to ensure that, as far as reasonably practicable, there are medical assessors appointed in the regional areas of the State.
2. Section 63(1) of the MACA provides: 63 Review of medical assessment by review panel (1) A party to a medical dispute may apply to the proper officer of the Authority to refer a medical assessment under this Part by a single medical assessor to a review panel of medical assessors for review.
3. Regulation 5 of the Regulation provides: 5 Application of Division (1) This Division is made under section 149 of the Act and applies to the following costs payable on a party and party basis, on a practitioner and client basis or on any other basis: (a) legal costs, (b) costs for matters that are not legal services but are related to proceedings in a motor accidents matter. Note. Section 149 (2) of the Act provides that a legal practitioner is not entitled to be paid or recover for a legal service or other matter an amount that exceeds any maximum costs fixed for the service or matter by regulations under section 149. (2) This Division does not affect costs recovered before 17 December 1999 or for which a bill of costs was issued before that day. Note. Section 147 (2) of the Act provides that expressions in Chapter 6 (Costs) of that Act (and consequently expressions used in this Part) have the same meaning as they have when used in relation to legal costs in the legal profession legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014).

The Uniform Law

1. As the plaintiff was first instructed after 1 July 2015, the applicable law is the Uniform Law, the Application Act and the regulations made thereunder (see cl 18, Sch 4 of the Uniform Law).
2. The Uniform Law is not an Act of the New South Wales Parliament. The Uniform Law was enacted as law in Victoria as Sch 1 to the Legal Profession Uniform Law Application Act 2014 (Vic). It is applied as a law of NSW by s 4 of the Application Act.
3. One consequence is that, in undertaking the task of statutory construction, the Court is required to apply the Interpretation of Legislation Act 1984 (Vic) ("Victorian Interpretation Act") rather than the Interpretation Act 1987 (NSW) (see s 7(1) of the Uniform Law).
4. Section 36 of the Victoria Interpretation Act provides: 36 Headings, Schedules, marginal notes and footnotes (1) Headings to - (a) Chapters, Parts, Divisions or Subdivisions into which an Act or subordinate instrument is divided; or (b) Schedules to an Act or subordinate instrument - form part of the Act or subordinate instrument. (1A) Headings to Parts, Divisions or Subdivisions into which a Schedule to an Act or subordinate instrument is divided form part of the Act or subordinate instrument if - (a) the Act is passed, or the subordinate instrument is made, on or after 1 January 2001; or (b) the heading is inserted into an Act passed, or subordinate instrument made, before 1 January 2001 by an Act passed, or subordinate instrument made, on or after that date. (2) A Schedule to an Act or subordinate instrument forms part of the Act or subordinate instrument. (2A) Headings to - (a) sections, clauses, regulations, rules or items into which an Act or subordinate instrument, or a Schedule to an Act or subordinate instrument, is divided; or (b) tables, columns, examples, diagrams, notes (being notes at the foot of provisions and not marginal notes, footnotes or endnotes) or forms in an Act or subordinate instrument - form part of the Act or subordinate instrument if - (c) the Act is passed, or the subordinate instrument is made, on or after 1 January 2001; or (d) the heading is inserted into an Act passed, or subordinate instrument made, before 1 January 2001 by an Act passed, or subordinate instrument made, on or after that date. (2B) Headings to - (a) Orders into which a subordinate instrument containing rules or orders regulating the practice and procedure of a court or tribunal is divided; or (b) Parts into which an Order referred to in paragraph (a) is divided - form part of the subordinate instrument if - (c) the subordinate instrument is made on or after 1 January 2001; or (d) the heading is inserted into a subordinate instrument made before 1 January 2001 by a subordinate instrument made on or after that date. (3) No marginal note, footnote or endnote in an Act or subordinate instrument and no heading to a provision of an Act or subordinate instrument (not being a heading that forms part of the Act or subordinate instrument by force of subsection (1), (1A) or (2A)) shall be taken to form part of the Act or subordinate instrument. (3A) An example (being an example at the foot of a provision under the heading "Example" or "Examples"), diagram or note (being a note at the foot of a provision and not a marginal note, footnote or endnote) in an Act or subordinate instrument forms part of the Act or subordinate instrument if - (a) the Act is passed, or the subordinate instrument is made, on or after 1 January 2001; or (b) the example, diagram or note is inserted into an Act passed, or subordinate instrument made, before 1 January 2001 by an Act passed, or subordinate instrument made, on or after that date. (3B) Punctuation in an Act or subordinate instrument forms part of the Act or subordinate instrument if - (a) the Act is passed, or the subordinate instrument is made, on or after 1 January 2001; or (b) the punctuation is inserted into an Act passed, or subordinate instrument made, before 1 January 2001 by an Act passed, or subordinate instrument made, on or after that date. (3C) A provision number in an Act or subordinate instrument (whether passed or made before, on or after 1 January 2001) forms part of the Act or subordinate instrument. (3D) An explanatory memorandum or table of provisions printed with an Act or subordinate instrument before the title of the Act or subordinate instrument does not form part of the Act or subordinate instrument. (3E) An index or other material printed with an Act or subordinate instrument after the endnotes to the Act or subordinate instrument does not form part of the Act or subordinate instrument. (4) Nothing in subsection (3) shall be construed as preventing in the interpretation of a provision of an Act or subordinate instrument, the consideration pursuant to section 35(b) of any marginal note, footnote, endnote or heading not forming part of that Act or subordinate instrument.

The Application Act

1. Section 89 concerns appeals and is in the following terms: 89 Appeal on matters of law and fact (1) A party to a costs assessment that has been the subject of a review under this Part may appeal against a decision of the review panel concerned to: (a) the District Court, in accordance with the rules of the District Court, but only with the leave of the Court if the amount of costs in dispute is less than $25,000, or (b) the Supreme Court, in accordance with the rules of the Supreme Court, but only with the leave of the Court if the amount of costs in dispute is less than $100,000. (2) The District Court or the Supreme Court (as the case requires) has all the functions of the review panel. (3) The Supreme Court may, on the hearing of an appeal or application for leave to appeal under this section, remit the matter to the District Court for determination by that Court in accordance with any decision of the Supreme Court and may make such other order in relation to the appeal as the Supreme Court thinks fit. (3A) The Supreme Court may, before the conclusion of any appeal or application for leave to appeal under this section in the District Court, order that the proceedings be removed into the Supreme Court. (4) An appeal is to be by way of a rehearing, and fresh evidence or evidence in addition to or in substitution for the evidence before the review panel or costs assessor may, with the leave of the Court, be given on the appeal.

Legal Profession Uniform General Rules 2015 (NSW) ("the General Rules")

1. In the discussion of the issues in this matter below, a principal tenet of the plaintiff's contentions is that, even if the review panel could, in law, substitute s 178 for s 185 in its decision, it was wrong in law to find the costs agreement void under s 178 because s 174(3) was not a disclosure obligation under Pt 4.3 of the Uniform Law and the plaintiff had satisfied all applicable disclosure obligations.
2. Nonetheless, the plaintiff raised another issue that, if a practice failed to meet the requirement of s 174(3) (and that the provision was a disclosure obligation), the review panel failed to consider the disapplication of s 178(1) as effected by s 178(3) and r 72A of the General Rules.
3. Rule 72A of the General Rules provides as follows: 72A Non-compliance with disclosure obligations - disapplication of section 178 (1) and (2) of the Uniform Law (1) This rule applies where a law practice has contravened the disclosure obligations of Part 4.3 of the Uniform Law in relation to a particular matter. (2) Section 178 (1) and (2) of the Uniform Law do not apply in relation to the law practice (so far as they would otherwise apply to the matter concerned) in circumstances where the relevant authority, a costs assessor, a court or a tribunal is satisfied that: (a) the law practice took reasonable steps to comply with the disclosure obligations of Part 4.3 of the Uniform Law before becoming aware of the contravention, and (b) the law practice, no later than 14 days after the date on which it became aware of the contravention, rectified the contravention, as far as practicable, by providing the client with the necessary information required to be disclosed under Division 3 of Part 4.3 of the Uniform Law (including, where relevant, an estimate or revised estimate of the costs), and (c) the contravention was not substantial and it would not be reasonable to expect that the client would have made a different decision in any relevant respect. (3) Subrule (2) (b) applies even though the information or estimate is not provided at the times required by the disclosure obligations of Part 4.3 of the Uniform Law. (4) In this rule: client includes (where relevant) an associated third party payer. relevant authority means the designated local regulatory authority for section 178 of the Uniform Law.

THE ISSUES

1. The plaintiff identified four issues for the appeal which were successive, each requiring, in the submission of the plaintiff, determination before the other. The issues so stated by the plaintiff were as follows (with some modifications with respect to Issues 1 and 2): 1. Is s 174(3) of the Uniform law a "disclosure obligation" within the meaning of s 178(1)? The plaintiff submitted that it was not. 2. If, contrary to the plaintiff's submission, the answer to (1) is "yes", did the plaintiff take reasonable steps to satisfy itself, for the purposes of s 174 (3)? The plaintiff submitted that it did. 3. If, contrary to the plaintiff's submission, it failed to reasonably satisfy itself under s 174(3), should the Court be satisfied that the contravention was not substantial and that it would not be reasonable to expect that the client would have made a different decision in any relevant respect? The plaintiff submitted that the Court should be so satisfied. 4. If a valid costs agreement provides for a fixed fee for the conduct of a personal injury claim, is it appropriate to determine whether the fee is fair and reasonable by retrospectively calculating the value of the work on an hourly basis following an early settlement? The plaintiff submitted that it was not, and that a proper assessment of the fee should take into account the value of the certainty that a fixed fee agreement provided.
2. Issue 3 invited consideration of r 72A of the General Rules. Issue 4 concerned the question of relief if the Court were to find the costs agreement to be valid.
3. The defendant's submission consisted of two elements.
4. The defendant's primary submission was that leave to appeal should be refused.
5. The defendant, nonetheless, engaged in submissions regarding the above issues both with respect to the question of leave and as to specific issues raised. As to the specific issues raised by the plaintiff, the defendant contended (by reference to the numbered issues raised by the plaintiff above): 1. The defendant gave its answer in two parts: 1. The defendant accepted the appeal raises a matter of statutory construction. The primary ground is whether s 174(3) of the Uniform Law is a "disclosure obligation" and if so whether the plaintiff contravened that requirement such that s 178 operates to render the costs agreement void. Nonetheless, he contended the obligation under s 174(3) constituted a disclosure obligation for the purposes of s 178 of the Uniform Law. 2. Secondly, it was submitted as follows: [6] An alternate finding made by the costs assessor (with which the review panel agreed) was that if she was wrong about s. 174(3) then s.199 of the Uniform Law gave her "the power to assess the costs in any event to ensure that the legal costs charged are no more than fair and reasonable in accordance with the Act' The alternate finding is not challenged by any ground of the Amended Summons. If that finding is not disturbed, the Court cannot grant the relief sought. Consequently, the appeal lacks utility; a determination of it by this Court would amount to an advisory opinion: see, eg, Firth v Yang [2014] NSWCA 92 at [4]. 1. The plaintiff failed to comply with s 174(3) and, hence, the costs agreement was void. This contention corresponded to the Contention filed by the defendant on 3 August 2018. 2. The plaintiff should not be entitled to raise, for the first time on appeal, the operation of r 72A of the General Rules. Alternatively, r 72A was not engaged by the circumstances of the matter. 3. This issue does not constitute a valid ground of appeal, does not arise in the proceedings and any judgment in relation to the same would amount to an advisory opinion: Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; [1999] HCA 9 ("Bass").

Submissions for the Plaintiff

1. As to the first issue, the plaintiff submitted: 1. The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 ("Project Blue Sky") at [69]-[71]. 2. Section 178(1)(a) of the Uniform Law provides that a costs agreement is void if a law practice contravenes the "disclosure obligations" of Pt 4.3. The only disclosure obligations relevant to this case are contained in Div 3, s 174. Section 174(1), (2) and (6) impose disclosure obligations on the law practice. They require the law practice to disclose information to the client in writing. Section 174(3) does not require the disclosure of information to the client. Rather, it imposes a duty on the law practice to satisfy itself that the client has understood and consented to, in this case, the proposed costs agreement. 3. "Disclosure" is a noun related to the verb "disclose". The natural meaning of "disclose" is to reveal, make known, divulge, tell, impart, communicate or pass on information by one entity to another. The expression "disclosure obligation" is inapt to describe a duty to satisfy oneself of another's state of mind. The expression "disclosure obligation" naturally describes the provision of information by a law practice to a client as required by s 174(1) and (2). 4. A strong indicator of the meaning to be ascribed to "disclosure obligation" is found in r 72A of the General Rules, which provides for disapplication of s 178(1). Rule 72A(1) provides that the rule only applies where the law practice has contravened a disclosure obligation. To be relieved from the consequence of the contravention, the Court must be satisfied that the law practice took reasonable steps to comply with the disclosure obligation: r 72A(2)(a). It would be incoherent to find a contravention of s 174(3) on the basis that the law practice did not take reasonable steps to satisfy itself about the client's understanding, then allow for relief from that contravention by a finding under r 72A(2)(a) that the law practice did take reasonable steps to comply. Section 174(3) could not be a disclosure obligation because "it produces an incoherent result where one has to find a contravention of a requirement to take reasonable steps and then the possibility of being satisfied that reasonable steps were taken to disapply that". This points to a conclusion that the disclosure obligations contemplated by s 178(1) and r 72A are the obligations in s 174(1), (2) and (6), but not the duty in s 174(3). 5. While not a "disclosure obligation", contravention of the duty imposed by s 174(3) is capable of having consequences that are harmonious with the object of the Uniform Law. Contravention of s 174(3) is capable of being an offence (s 39) and is capable of constituting unsatisfactory professional conduct or professional misconduct (ss 34, 35, 178(1)(d) and 298(a) of the Uniform Law). 6. The only decision to have considered the correct construction of ss 174(3) and 178(1) is Frigger v Madgwicks [2018] VSC 281 ("Frigger"). In that matter, Gourlay JR decided at [28] and [43] that s 174(3) did not impose a "disclosure obligation" on the law practice. Rather, it required the law practice to reach a state of self-satisfaction. Accordingly, the Court held that any failure to comply with s 174(3) could not engage s 178(1). 7. The defendant's argument that the headings of both Div 3 and s 174 indicate that s 174 contains disclosure obligations and therefore that s 174(3) is a disclosure obligation should be rejected. Other subsections of s 174 are clearly not disclosure obligations. The plaintiff submitted that s 174(4) is not a disclosure obligation as it simply provides an exception to the obligations under s 174(1). Subsection (5) similarly provides an alternative to s 174(1). The plaintiff submitted that subs (6) is not a disclosure requirement as it governs the way in which information, the subject of other disclosure obligations, is to be provided to a client. In the light of the other subsections of s 174, the heading of the Division and the section are not determinative of the contents of each subsection.

Submissions for the Defendant

1. As to the first issue, the defendant submitted: 1. The plaintiff's contention that the word disclosure is inapt to describe requirements imposed by s 174(3) and, therefore, that section could not be a "disclosure obligation" was at odds with the overall structure of the Act. It was also contrary to the second reading speech of the Uniform Law, in which it was stated that: "Section 174 deals with the disclosure obligations of law practices regarding clients" (Victoria, Parliamentary Debates, Legislative Council, 16 April 2015, 1006, (Sue Pennicuik)). 2. The plaintiff's characterisation of the obligation imposed by s 174(3) is also in error. It is not merely an obligation that the law practice is satisfied that the client has understood and consented to the proposed "costs agreement" in the sense that the client understood the contractual terms presented by the law practice. The provision required the law practice to be satisfied that the client both understood and gave consent to the proposed costs. Consent means informed consent, in the provision and concerned information important to a client regarding a cost agreement and a solicitor's state of satisfaction regarding the client's understanding and consent as to the proposed course of action in a matter and proposed costs. It is entirely possible, if not likely, that attendant on this obligation will be a requirement that a lawyer actively engage with and discuss the proposed costs with a client. Such an obligation fits squarely within the concept of "imparting, communicating or passing on information by one entity to another". 3. As to the construction of the Act, in particular the headings within the Uniform Law, it was submitted that, unlike the provisions of the Interpretation Act 1987 (NSW) applied, the Victorian Interpretation Act deems that headings to individual sections and clauses form part of the Act. Accordingly, the sections of the Uniform Law are not merely to be "interpreted by the light" of their headings - those headings form part of the operative text of the Act and inform the meaning to be given to the words under them: Inglis v Robertson (1898) 25 R (Ct of Sess) 70; [1898] AC 616 ("Inglis"). Headings in the Uniform Law must therefore inform the maxim noscitur a sociis whereby words in a statute take their colour from the context in which they appear. 4. Section 178(1) of the Uniform Law does not state: "If a law practice contravenes any obligation arising under this Part to disclose information to a client". The section imposes sanctions for conduct that "contravenes the disclosure obligations of this Part". 5. The defendant did not dispute that the word "disclosure" has a natural and obvious meaning. However, the words 'disclosure obligations' when paired together must be construed as a composite phrase. The meaning of that phrase cannot be arrived at by simply defining its constituent elements. As Mahoney JA observed in Provincial Insurance Australia Pty Ltd v Consolidated Wood Products (1991) 25 NSWLR 541 ("Consolidated Wood") at 560: The meaning of the words used in a statute or document is not merely the sum of the individual meanings of the words used, ascertained from dictionaries. To adapt the much cited comment of Holmes J, a word is the skin of a living thought, and it is the thought which the court must ascertain and apply. 1. This is consistent with the majority statement in Project Blue Sky at [78] that: [78] ... the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. 1. Section 178 is placed at the conclusion of Div 3 of Pt 4.3 of the Uniform Law. Section 178(1) contains consequences of contravention. The first is that any costs agreement will be void. That gives strong support to the proposition that it is a condition of validity of a costs agreement that the obligations under the heading "Disclosure of law practice regarding clients" are complied with. This is reinforced by a consideration of the nature of the obligation in s 174(3), being to take reasonable steps to satisfy itself that the client "has understood and given consent to the proposed course of action for the conduct of the matter and the proposed costs". That state of understanding may well not be achieved by the client merely by being given information about costs such as would satisfy the obligations in s 174(1) and (2). It is not difficult to accept that a client - especially one who is unsophisticated - to whom s 174(1) and (2) information has been imparted may nevertheless still not understand and consent to the course of conduct of the matter and the proposed costs. Disclosure under subss (1) and (2) is capable of giving the client information but not understanding. 2. It is submitted that the framework of Div 3, taken with the headings therein, reveal an intention of Parliament to enumerate "the disclosure obligations of [Part 4.3]" as referred to in s. 178(1). In effect, the headings of the statute point to where one will find a "disclosure obligation". 3. In Saunders v Borthistle (1904) 1 CLR 379; [1904] HCA 13 the High Court considered the scope of the phrase "travelling stock" found in s 97 of the Pastures Protection Act 1902 (Cth). In doing so, regard was had to the principle laid-down in Inglis, namely, that where sections of an Act are collected by headings they must be read in connection with those headings. 4. In essence, the defendant contended that s 174(3) is an ancillary "disclosure obligation" that attaches to the "main disclosure requirement" in s 174(1). Hence, the opening words of s 174(3), "If a disclosure is made under subsection (1)", merely concerns the ancillary operation because a solicitor cannot reasonably assure a state of satisfaction without there being disclosed information. The purpose of the section is to ensure that a law practice cannot merely engage in perfunctory mechanical compliance with ss 174(1) and (2). In practice, s 174(3) will impose additional obligations on a law practice to impart information that will vary from client to client. The scope and nature of those precise obligations is to be objectively measured by the "reasonable steps" taken by the practice. This approach to s 174(3) is consistent with a stated object of the Act, namely, "to ensure that clients of law practices are able to make informed choices about their legal options and the costs associated with pursuing those options". A choice which is not informed by understanding and consent is not an "informed choice". 5. The defendant contended that the decision of Gourlay JR in Frigger is wrong and should not be followed. The Court appeared not to have had the benefit of full argument on the matter, and in any event the clients conceded that they "understood and gave consent to the course of action as outlined in the Disclosure Statement and pursuant to the oral and written instructions of the applicant": at [6].

Plaintiff's Reply Submissions

1. In reply, the plaintiff submitted: 1. The defendant correctly observed that the headings form part of the text of the Act, however, this provides little assistance in deciding whether the requirement in s 174(3) to reach a personal state of satisfaction should be characterised as a disclosure obligation. 2. The defendant submitted that s 174(3) imposes an obligation on the lawyer to actively engage with and discuss the proposed costs agreement with a client. Even if that is correct, an obligation to engage is not the same thing as an obligation to disclose information.

Consideration

1. The principles of statutory construction were outlined by French CJ and Hayne J (with whom Kiefel J agreed in this respect) in Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross (2012) 248 CLR 378; [2012] HCA 56 at [23]-[26] as follows: [23] It is as well to begin consideration of this issue by re-stating some basic principles. It is convenient to do that by reference to the reasons of the plurality in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue: "This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy." [24] The context and purpose of a provision are important to its proper construction because, as the plurality said in Project Blue Sky Inc v Australian Broadcasting Authority, "[t]he primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute" (emphasis added). That is, statutory construction requires deciding what is the legal meaning of the relevant provision "by reference to the language of the instrument viewed as a whole", and "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". [25] Determination of the purpose of a statute or of particular provisions in a statute may be based upon an express statement of purpose in the statute itself, inference from its text and structure and, where appropriate, reference to extrinsic materials. The purpose of a statute resides in its text and structure. Determination of a statutory purpose neither permits nor requires some search for what those who promoted or passed the legislation may have had in mind when it was enacted… [26] A second and not unrelated danger that must be avoided in identifying a statute's purpose is the making of some a priori assumption about its purpose… [Footnotes omitted.]

Conclusion

1. It follows that I reject the plaintiff's submissions with respect to issue 1 and answer the question raised at [42(1)] of the judgment in the affirmative. The review panel was correct in the conclusion reached that s 174(3) was a disclosure obligation for the purposes of s 178(1) of the Uniform Law.

Relevant Principles

1. In Ackerman v Morgan [2019] NSWSC 1250, the Court considered principles concerning leave to appeal, with respect to an issue of costs, albeit in a different statutory context, namely, an appeal under s 40(2)(c) of the Local Court Act 2007 (NSW) as follows (at [49]-[53]): [49] The principles to be considered in deciding whether leave to appeal should be granted have been the subject of enunciation in a number of cases in the Court of Appeal: Zelden v Sewell Henamast Pty Ltd [2011] NSWCA 56 ("Zeldon") at [22] per Campbell JA (with Young JA agreeing); Be Financial Pty Ltd v Das [2012] NSWCA 164 ("Be Financial") at [32]-[36] per Basten JA (Tobias AJA agreeing); Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 ("Jaycar") at [46] per Campbell JA (with Young and Meagher JJA agreeing); Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69 ("Carolan") (per Sheller and Cole JJA). [50] In Be Financial, Basten JA set out the principles relevant to leave applications (at [32]-[39]). That summary is extracted below: [32] The principles governing cases such as these have recently been restated in Zelden v Sewell; Henamast Pty Ltd v Sewell [2011] NSWCA 56. As Campbell JA noted (with the agreement of Young JA) at [22]: "It is of some importance to reiterate the principles that were stated in Carolan v AMF Bowling Pty Limited [1995] NSWCA 69, where Sheller JA said that an applicant for leave must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at. Cole JA relied on a principle that where small claims are involved, it is important that there be early finality in determination of litigation, otherwise the costs that will be involved are likely to swamp the money sum involved in the dispute." [33] In Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Campbell JA, with the agreement of Young and Meagher JJA, expanded on his summary of Carolan, noting that Kirby P had recognised "that ordinarily it was appropriate to grant leave to appeal only concerning matters that involve issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond [what is] merely arguable": at [46]. [34] Kirby P in Carolan set out a number of reasons for the constraint on rights of appeal in such cases. Not all of them have been repeated in later cases. Not all are universally relevant. Thus, the delay in obtaining a hearing in this Court appears to have been greater at that time than is the case presently, although an overly liberal approach to leave applications might well result in an increase in the period between filing and hearing. [35] In Coulter v The Queen [1988] HCA 3; 164 CLR 350, dealing with a challenge to a refusal of the South Australian Full Court to grant leave to appeal in a criminal matter, the majority noted that a leave requirement was a preliminary procedure "recognised by the legislature as a means of enabling the court to control in some measure the volume of appellate work requiring its attention": at 356 (Mason CJ, Wilson and Brennan JJ). That statement is clearly applicable to civil, as well as criminal, appellate jurisdiction. [36] As the High Court has noted, an application for leave is not a proceeding in the ordinary course of litigation but a preliminary procedure: Collins v The Queen [1975] HCA 60; 133 CLR 120 at 122; Coulter at 356. On the other hand, there is no reason to doubt that s 58 of the Civil Procedure Act 2005 (NSW), requiring a court to act in accordance with "the dictates of justice" when making an order or direction "for the management of proceedings", applies in respect of a leave application. One of the factors to be taken into account pursuant to s 58 is "the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction": s 58(2)(b)(vi). That provision, like s 56, identifying the overriding purpose of the Civil Procedure Act as being to facilitate the just, quick and cheap resolution of the real issues in the dispute, recognises that questions of injustice are relative. Similarly, the requirement that this Court not order a new trial unless it appears that "some substantial wrong or miscarriage" has been occasioned, also reflects a principle of parsimony in requiring that the parties be put to the expense of a second trial: UCPR, r 51.53. [37] The idea that injustice may be measured on a scale reflects a number of underlying considerations. First, the ability to assess the existence of an injustice in a preliminary proceeding, such as a leave application, is limited. In assessing the merit of a proposed appeal, the Court may well apply a vague criterion, such as whether the judgment below is attended by "sufficient doubt". Secondly, injustice involves a balancing exercise. The delay and cost of further litigation will constitute a form of injustice to the successful party below, whatever the outcome of the appellate process. Thirdly, the entitlement of the parties to justice is not unconditional, but is dependent upon the resources of the court made available by the government and the appropriate allocation of resources by the parties, which may depend upon their individual assessments of the importance of the issues in dispute. The parties may well make disparate assessments in a particular case. [38] The last point is reflected in the terms of s 60 of the Civil Procedure Act: "60 Proportionality of costs In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute." [39] This direction has an important operation in respect of leave applications involving amounts below the statutory threshold. Where, as in the present case, the costs of the trial are disproportionate to the amount in dispute, the incurring of additional costs, for a potentially uncertain return, will be a factor weighing heavily against a grant of leave. Particularly is that so where there is a real prospect that, if successful, an appeal will not resolve the matter but will require a new trial. [51] In Chapmans Ltd v Yandell [1999] NSWCA 361 ("Chapmans"), Fitzgerald JA (with whom Mason P and Davies AJA agreed) said: [11] On the other hand, it is important to keep in mind the purpose of a requirement of leave to appeal. It is intended to act as a filter to ensure that unsuitable appellant proceedings which are not able to be brought with the demands which that places upon the resources of the Court and the burden which it places upon other parties and the delays which it causes to other litigants. See for example Coulter v Regina (1988) 166 CLR 350 about 359. [12] It is also in my opinion important to keep in mind that s 208M must be considered in the context of s 208L, which restricts an appeal as of right to matters of law. In considering whether or not leave to appeal is granted, it must be decided whether or not, there not being a matter of law arising in the proceeding and there being an appeal as of right only as to a matter of law, there is some other matter which in justice requires that leave to appeal be granted to allow that matter to be relitigated. The party seeking leave to appeal obviously bears the burden of establishing that justice does require that leave to appeal be granted. Further, the master when considering whether to grant leave to appeal obviously has a very wide discretion: see CDJ v VAJ [1998] HCA 67 per McHugh, Gummow and Callinan, JJ. [52] The High Court in Coulter v The Queen (1988) 164 CLR 350; [1988] HCA 3 ("Coulter"), Deane and Gaudron JJ said (at 359): The requirement that leave or special leave be obtained before an appeal will lie is a necessary control device in certain areas of the administration of justice (e.g. appeals to a second appellate court) in this country. As a filter of the work which comes before some appellate courts, it promotes the availability, the speed and the efficiency of justice in those appeals which are, in all the circumstances, appropriate to proceed to a full hearing before the particular court. It also represents a constraint upon the overall cost of litigation by protecting parties, particularly respondents, from the costs of a full hearing of appeals which should not properly be entertained by the relevant court either because they are hopeless or, in the case of a civil appeal to a second appellate court, because they do not possess special features which outweigh the prima facie validity of the ordinary perception that the availability of cumulative appellate processes can, of itself, constitute a source of injustice. [53] The relevant principles may be summarised as follows: (1) An applicant for leave must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at, and that where small claims are involved, it is important that there be early finality in determination of litigation, otherwise the costs that will be involved are likely to swamp the money sum involved in the dispute: Carolan. (2) Ordinarily it is appropriate to grant leave to appeal only concerning matters that involve issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable: Jaycar at [46]. (3) The leave requirement is a preliminary procedure "recognised by the legislature as a means of enabling the Court to control in some measure the volume of appellate work requiring its attention": Coulter at 356 (Mason CJ, Wilson and Brennan JJ). Whilst that was a criminal matter, the statement is clearly applicable to civil, as well as criminal, appellate jurisdiction: Be Financial at [32]-[36] (per Basten JA, with Tobias AJA agreeing). (4) A requirement of leave to appeal is intended to act as a filter to ensure that unsuitable appellant proceedings are not able to be brought, with the demands they place upon the resources of the Court and the burden they place upon other parties and the delays which they cause to other litigants: Chapmans at [11] per Fitzgerald JA (with whom Mason P and Davies AJA agreed). (5) An application for leave is not a proceeding in the ordinary course of litigation but a preliminary procedure: Collins v The Queen (1975) 133 CLR 120 at 122; [1975] HCA 60. (6) Section 58 of the Civil Procedure Act applies and requires the Court to consider "the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction": s 58(2)(b)(vi). Leave should be granted only where there are substantial reasons to allow an appellate review (Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564; [2000] FCA 1572, such as where there is an error of principle which, if uncorrected, will result in substantial injustice.

Submissions for the Defendant

1. The defendant advanced the following submissions in favour of leave being refused: 1. The clearly expressed legislative intention is for appeals involving amounts less than $100,000 to be heard in the District Court, unless leave is granted. In this matter the amount of costs in dispute is $46,152.70. Relative to that amount, the costs of the appeal are likely to be substantial. There is no compelling reason why leave should be granted in this Court. Consideration should be given to ss 56 and 60 of the Civil Procedure Act, and particularly the issue of proportionality. 2. The District Court has had jurisdiction in relation to appeals from review panels since 2004 (under the Legal Profession Act 2004 (NSW) (since repealed) and continues to have jurisdiction under the Application Act, including in appeals where the amount in dispute is over $100,000. The District Court is the more appropriate forum. Thus, there has been a general repository of jurisdiction in the District Court since 2004 in exercising the jurisdiction to deal with appeals from review panels. 3. The giving of leave in this Court would encourage parties in future to skip the jurisdiction of the District Court in matters under $100,000 and would subvert the legislative intention for such appeals to be heard there. There has been a general reluctance in the Court of Appeal to grant leave when the matter is under the jurisdictional limit unless there is a good reason to do so, particularly when, as in this case, the Court would then exercise the powers of the review panel (see s 89(2) of the Application Act). 4. The plaintiff contends that leave should be granted because, inter alia, the District Court does not have power to grant order 3 of the Amended Summons. The implication is that the Supreme Court would have the power to make order 3, That is incorrect: neither the District Court nor the Supreme Court has power to make order 3; to do so would be to act in excess of jurisdiction. Both the Supreme Court and the District Court have the same power as a costs assessor and a review panel: s 89(2). The Supreme Court has additional powers to remit a matter to the District Court: s 89(3) or to remove a matter from the District Court into the Supreme Court: s 89(3A). Accordingly, the reason given in the Amended Summons as to power does not provide a cogent reason why leave should be granted. 5. The combination of those factors against the grant of leave is illustrated by issue 4. This would require the Court to examine the line by line determination made by the costs assessor to determine whether they are fair and reasonable because it was submitted by the plaintiff that the costs assessor erred in conducting a line by line determination.

Submissions for the Plaintiff

1. In written submissions in reply, the plaintiff made the following submissions in favour of the grant of leave 3. The plaintiff may appeal as of right to the District Court, but needs leave to appeal to this Court due to the amount involved. The defendant did not oppose this matter being set down for final hearing in this Court, nor did he seek a separate determination of the application for leave. It would be waste of public and private resources to refuse the application for leave, only for the parties to reconvene in the District Court on the same issues: cf s 56 of the Civil Procedure Act. 4. The parties agree that an important issue in this case is the proper construction of s 174(3) of the Uniform Law: DS [5]. That legislation applies in New South Wales and Victoria, which covers about 70% of the Australian legal profession. Section 174(3) is a provision which will be engaged in the overwhelming majority of cases where a client engages a solicitor. Given its importance and general application, it is desirable for this Court to give an authoritative ruling on the construction of s 174(3). 5. There is presently only one decision analysing s 174(3), namely, Frigger v Madgwicks [2018] VSC 281. That decision favours the plaintiff, however, the defendant submits that it is wrongly decided and should not be followed: DS [43]. As a matter of judicial comity, it would be preferable for that issue to be resolved by this Court. 6. There is also a controversy between the parties over the construction of rule 72A of the Legal Profession Uniform General Rules 2015 (NSW) (LP General Rules). There is presently no authority on that issue. For the reasons given above, it is desirable for this Court to give an authoritative ruling on that issue. 7. The costs assessor determined that even if the fixed fee costs agreement was enforceable, it was open to her under s 199 of the Uniform Law to assess whether the fee was fair and reasonable by reference to hourly rates. Again, that raises an important issue of general application on which it would be desirable for this Court to rule. [Footnotes omitted.]
2. In oral submissions, Mr D McLure SC, for the plaintiff, contended that it was consistent with s 56 of the Civil Procedure Act for the Court to fully resolve all controversies between the parties. If there is a legal error by the review panel then the question of proportionality does not support the refusal of leave because the issue arising as to the construction of s 174(3) will have to be dealt with "elsewhere" with the further expedition of costs and time. This would be contrary to the proper administration of justice.

Consideration

1. I consider that leave should not be granted under s 89(1)(b) to bring the appeal for the following reasons.
2. First, the principal basis for the grant of leave advanced by the plaintiff was that there was an error of law by the costs assessor and the review panel (whether explicitly or implicitly made) in the construction of s 174(3) and, in particular, finding that s 174(3) was a disclosure obligation for the purposes of s 178(1) of the Uniform Law.
3. The issue raised by the plaintiff in that respect by issue 1 (as it appears at [42(1)] of the judgment) has been answered in the affirmative, contrary to the contentions advanced by the plaintiff.
4. Secondly, the grounds arising out of issues 2, 3 and 4 raise no error of principle, matters of public importance or injustice and certainly none which are reasonably clear in the sense of going beyond what is merely arguable. The plaintiff raised an issue of law with respect to issue 3, but the plaintiff's contention as to the disapplication effect of r 72A in the present case lacks merit and the contention that there was an error of law in that respect is weak and may be doubted.
5. As to issue 2 and as a matter of principle, the following contention by the plaintiff as to the nature of the requirements imposed by s 174(3) may be accepted: The legislation does not prescribe how a law practice must discharge the duty under s 174(3). This reflects the reality that what will be necessary to discharge the duty will vary according to the circumstances of the case and the client. The steps a law practice may need to take will be influenced by the attributes of the client and what the client communicates before and after receiving the disclosure documents.
6. However, that description immediately confirms the absence of the factors of the kind referred to in this second reason.
7. Further, the contentions of the plaintiff as to why that obligation had been met essentially concerned the nature and quality of the information provided to the defendant: the disclosure obligations under s 174(1), (2) and (6) had been met; the information, so supplied was clear and concise; the defendant acknowledged he had read understood and agreed to the costs agreement; he had an opportunity to seek legal advice and did so (including querying the rates); he had previously entered into a costs agreement and that there was evidence that he recognised the lump sum he was to be paid. Part of the contested evidence is that Mr Firth satisfied himself that the defendant understood what the cost agreement entailed (the affidavit of Mr Firth at paras 30 and 38-39).

Conclusion

1. In all of the circumstances, leave to appeal under s 89(1)(b) of the Application Act is refused.

ORDERS

1. The Court makes the following orders: 1. Leave to appeal is refused. 2. The defendant shall have costs of the appeal as agreed or as assessed.

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