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[2015] VSC 210
Supreme Court of Victoria
2015-06-30
ELLIOTT J
Original judgment source is linked above.
COSTS - Costs judgment in previous proceeding - Taxation of costs part-heard - Taxation adjourned - Solicitors' entitlement to obtain funds paid into court as security for costs in previous proceeding - Retainer terminated - Solicitors' entitlement to complete taxation of costs - Solicitors' entitlement to have costs taxed in own name - Solicitors' entitlement to enforce costs order against third parties pursuant to undertakings given in previous proceeding - Supreme Court Act 1986 (Vic), ss 17C(1), 17D(1)(a) and 24(1).
EQUITY - Whether solicitors have equitable lien over fruits of costs judgment in client's favour in previous proceeding - Declaratory relief - Court's discretion.
CONTRACT - Whether agreement between solicitors and client to cap costs and disbursements - Solicitors' authority to engage counsel in previous proceeding.
1 The plaintiff, Oakley Thompson & Co Pty Ltd ("Oakley Thompson"), seeks relief to allow it to pursue a taxation of costs in the Costs Court[1] against an unsuccessful plaintiff in an earlier proceeding[2] ("the Bodycorp Proceeding"). Oakley Thompson seeks to do so on behalf of Oakley Thompson's former client, the first defendant, Anunziato Enzo Maisano ("Maisano"), alternatively in its own right.
2 In the Bodycorp Proceeding, the second defendant in this proceeding, Bodycorp Repairers Pty Ltd ("Bodycorp"), was the unsuccessful plaintiff. Bodycorp is also the defendant to a proceeding in the Costs Court commenced by Maisano[3] ("the Costs Court Proceeding"). The Costs Court Proceeding remains on foot, but has been adjourned, part heard, to await the outcome of this proceeding.
3 Both Maisano and Bodycorp oppose the relief sought. Amongst other things, they contend Oakley Thompson has already been paid more than it was entitled to be paid. In contrast, Oakley Thompson contends Bodycorp is liable to pay a further $172,000 (approximately) to Maisano for costs, which funds, if paid, should be used to pay Oakley Thompson for outstanding fees and disbursements that have not been paid to Oakley Thompson by Maisano.
4 For the reasons below, Oakley Thompson will be granted relief to enable Oakley Thompson, itself, to prosecute the taxation in the Costs Court Proceeding to conclusion.
6 The Bodycorp Proceeding was commenced in the Federal Court of Australia in 2002. Maisano was the first defendant. Bodycorp's claims against Maisano concerned allegations of breaches of a franchise agreement and inducing breach of contract. In 2005, the Bodycorp Proceeding was transferred to this court.[6] It was not fixed for trial until 2012, for hearing in 2013.
7 Before trial, a number of orders were made for security for costs. On 19 April 2012, $14,400 was ordered to be paid by Bodycorp as security for Maisano's costs up to and including mediation. On 15 November 2012, a further $30,000 was ordered as security for Maisano's costs up to and including the first day of trial. On 24 April 2013, a further amount of $12,000 by way of security for Maisano's costs was ordered, which provided security up to the end of the third day of trial. With respect to Maisano, the total amount of security ordered before trial was $56,400.[7] The amounts ordered were duly paid by Bodycorp.[8]
8 The trial of the Bodycorp Proceeding commenced on 6 May 2013. On 8 May 2013, a further application for security for costs was made by certain defendants, including Maisano. In dismissing those applications, the court accepted an undertaking previously proffered by the sole director of Bodycorp, Antonio Murdaca ("Murdaca"):[9]
[Murdaca] undertakes to the court to be personally liable to pay any costs that [Bodycorp] becomes liable to pay in respect of costs ordered against [Bodycorp] from the end of day 3 of the trial to its conclusion in the event an order for costs is made against [Bodycorp] in the proceeding.
As a result of this undertaking, Murdaca continues to be exposed in respect of costs ordered against Bodycorp on 4 September 2013.
9 Yet further applications for security for costs were made on 21 May 2013 (being the tenth day of the trial of the Bodycorp Proceeding). For reasons that are not necessary to refer to, the application was deferred until 30 May 2013, the last day of trial. Based on the further evidence put before the court at that time, an issue arose as to whether a company, namely Repose Nominees Pty Ltd ("Repose"), also held a beneficial interest in assets held by Bodycorp as trustee.[10] In light of that issue being raised, Repose also gave an undertaking to the court,[11] in similar terms to the undertaking given by Murdaca previously. On 31 July 2013, the further applications for security for costs were dismissed on the acceptance by the court of the undertaking from Repose.[12]
10 In summary, the total security for costs ordered in favour of Maisano was $56,400. In addition, Maisano had, and continues to have, the benefit of undertakings given by Murdaca and Repose to be liable for the costs that Bodycorp is liable to pay to Maisano after day 3 of the trial of the Bodycorp Proceeding.
11 Between 2004 and 2010, Oakley Thompson acted for Maisano in the Bodycorp Proceeding. Sometime in 2010, Oakley Thompson ceased to act for Maisano. This proceeding is not concerned with the terms of any retainer for the period from approximately 2004 to 2010.[13]
12 On or about 2 March 2012, Oakley Thompson accepted instructions to recommence acting for Maisano in the Bodycorp Proceeding. Some evidence was given by Maisano to the effect that a partner at Oakley Thompson, Jeremy Broadbent ("Broadbent"), actively pursued the instructions and strongly encouraged Maisano to retain Oakley Thompson again. Broadbent denied this. It matters not which version of events is correct on the issue of the evidence of a retainer. Whichever account is accepted, there is no controversy that Maisano duly retained Oakley Thompson again in early 2012.
13 As a result of accepting those instructions, on 26 March 2012, Oakley Thompson sent a letter to Maisano, enclosing a costs agreement.[14] The costs agreement provided that its terms could be accepted either by the signing and returning of the document or by continuing to give instructions to Oakley Thompson in the Bodycorp Proceeding after receipt of the costs agreement. The costs agreement was never signed by Maisano.
14 The costs agreement also annexed a disclosure statement, which contained estimated legal costs. Those estimated legal costs included various items which were said to potentially total up to $120,000. The items included barristers' fees at a range between $2,500 to $3,500 per day. As to barristers' fees, clause 16 of the disclosure statement provided:
In respect of the appointment of barristers to appear on your behalf or to give advice [Oakley Thompson] will not incur a liability on your behalf with such barristers and you will need to enter specific arrangements with any such barristers as to the payment of their fees which may include a payment of some or all in advance or some other arrangement entered into personally with the barrister.
15 Maisano denied receiving the costs agreement and the disclosure statement. The covering letter of 26 March 2012 was addressed to PO Box 4027, Mount Eliza, Victoria, 3930. Maisano acknowledged that this was (and remains) his correct postal address and that it was the address he gave to Broadbent to which correspondence was to be forwarded. When asked in cross-examination whether he received the covering letter, Maisano said he did not recall it.[15] When pressed as to whether he received the costs agreement, Maisano answered: "Unless there's 1 with my signature that I don't recall, but I've never seen the document, other than, when it arrived in a big packet, up until last year".
16 There was no dispute the letter dated 26 March 2012 was sent; nor that it contained the enclosures it said it did. There was also no dispute that it was sent to the correct postal address and that Maisano checked his post office box from time to time. Given those facts, and also the qualified manner in which Maisano gave his evidence on the issue, I find, on the balance of probabilities, that Maisano received the letter dated 26 March 2012, together with the enclosures, shortly after it was sent.[16]
17 Maisano continued to give instructions to Oakley Thompson after March 2012. Interlocutory steps in the Bodycorp Proceeding were attended to on his behalf by Oakley Thompson.
18 On 20 March 2013 (that is, after the Bodycorp Proceeding had been set down for trial), Oakley Thompson sent a letter informing Maisano that Oakley Thompson was owed $32,270.70 in fees. Although Maisano could not recall the letter, he accepted that it was possible that he received it.
19 The letter stated that the necessary preparation and trial costs would be in the order of $94,000 to $114,000 (12 day estimate) or $106,000 to $126,500 (15 day estimate). The letter discussed the intention to retain counsel; stating that a senior barrister ought to be engaged, which would cost in the range of $3,500 to $4,000 per day for 15 days (including 3-4 days' preparation). The requirements of Oakley Thompson were specified, being payment of $120,000 to be held in trust, alternatively adequate security. The letter further stated that the issue of funding was required to be resolved by 5 April 2013, otherwise Oakley Thompson would give immediate attention to terminating its retainer and making an application to be removed as the solicitors on the record for Maisano. For like reasons to those set out in paragraph 16 above, I find that Maisano received the letter dated 20 March 2013.
20 Negotiations between Maisano and Oakley Thompson ensued. Maisano involved his 2 sisters, Rose Rocca ("Rose") and Franka Maisano ("Franka"), in the discussions. It was common ground between the parties in this proceeding that Rose had authority to negotiate with Oakley Thompson on behalf of both Maisano and Franka in April and early May 2013.
21 Maisano gave instructions to Oakley Thompson to the effect that he had equity in a property ("the Property"), although the Property was registered in the name of Franka. Maisano stated the equity in the Property was approximately $680,000. In response, Maisano was reminded that Oakley Thompson was owed $32,270, and was also told that a further $120,000$150,000 was required for trial.
22 Oakley Thompson sought security in relation to the Property. On 4 April 2013, Broadbent stated to Maisano in a telephone call that the funding issue needed to be resolved urgently and that the only real option was to take a charge over the Property. Broadbent said it was necessary to get Maisano's sister, who was the "owner on paper" to agree.
23 A meeting was held on 11 April 2013 between Broadbent, Maisano and his 2 sisters, Rose and Franka. At that meeting a draft of a charge over the Property, fixed in the amount of $150,000, was presented by Oakley Thompson. Maisano gave oral evidence that, at this meeting, Broadbent said that Oakley Thompson's fees would be capped at $80,000.
24 Prior to giving this evidence, Maisano had not alleged in this proceeding an oral agreement to this effect, either on 11 April 2013 or at any other time.[17] Further, in an affidavit sworn 3 October 2014 in the Costs Court Proceeding, Maisano referred to and exhibited an email sent by Broadbent on 29 April 2013 (see paragraph 30 below) and another email from Broadbent of the same date (which was not exhibited), and swore that the contents of the emails were his "understanding as to how the $80,000 fixed costs was reached". According to Broadbent, during the meeting, Franka said she wanted her liability capped (rather than Maisano's liability). I accept this evidence. It is supported by the documents that were exchanged shortly after the meeting held on 11[18]pril 2013.18
25 After the meeting of 11 April 2013, Oakley Thompson engaged in correspondence concerning the terms of any charge that might be given. That correspondence included an email sent by Broadbent on 12 April 2013 to Rose, copied to Maisano.[19] The email expressly referred to the meeting of the previous day. It attached a charge with a cap of $150,000. The email stated:
As discussed this Charge is essential "insurance" for the firm. When the Mount Martha property [ie the Property] is sold (or refinanced) [Maisano] can simply pay all of his outstanding legal fees from the equity he is to receive from the sale. The Charge will then cease to have any effect (as Franka would then no longer be the owner of the [Property]).
As discussed I have capped the Charge to a limit of $150,000.
This firm will not register it until any imminent re-finance application has been completed (if this is what you decide to do).
After explaining how the charge would operate and describing the 2 legal proceedings referred to in the draft charge, the email continued:
If we are to remain as solicitors on the record for [Maisano] and prepare this matter for trial (and engage a barrister) I need to urgently receive the executed charge ...
26 An email from Rose was sent to Broadbent on 22 April 2013, which responded to an email from Broadbent sent 16 April 2013, and stated:
Franka is concerned about her exposure in relation to risk. Is it possible for you to confirm your costs will be capped at no more than 100k.
Obviously, such a request is entirely inconsistent with Maisano's evidence that, at the meeting on 11 April 2013, Broadbent said Oakley Thompson's fees would be capped, or that any agreement had already been reached to cap the fees, at $80,000.
27 In response, on 23 April 2013, Broadbent sent an email to Rose, which included the following:
Further, it is [Maisano] who will be paying our legal fees, not Franka. The charge is just "insurance". We will not cap our costs but for the sake of getting this sorted out I have reduced the "cap" on the charge to $100,000. And the costs estimate also includes barrister's fees, which if the trial runs for 15 days will total about $70,000-ish (including several days' preparation). That is why the cap was set at $150K.
The email attached a draft deed of charge. As suggested in the email, the charge was limited to the maximum of $100,000. It made reference not only to fees referable to the Bodycorp Proceeding, but also to another proceeding concerning an application for reinstatement of a company. The operative words of the draft charge stated that the $100,000 was for "the payment of all legal costs, fees and disbursements (inclusive of any counsel's fees) which have been incurred, or are to be incurred relative to, or in connection with, the Work".
28 The emails of 22 and 23 April 2013 (between Rose and Broadbent), were sent to Maisano, amongst other matters, on 23 April 2013, at the email address he had provided to Oakley Thompson.[20]
29 After the email of 23 April 2013, a discussion took place between Broadbent and Rose. An email dated 30 April 2013 from Broadbent to Franka (copied to Maisano, Rose and others) makes it clear that, during those discussions, the possibility of a charge of $20,000 was discussed. It appears that Broadbent agreed that a signed charge capped at $20,000 could be proffered on the basis it would be considered by the managing partner of Oakley Thompson.
30 On 29 April 2013, Broadbent sent an email to Rose attaching a revised charge and guarantee. The email was copied to Franka and Maisano. It included the following:
I confirm that it is not only the security for our costs and those of any barrister that we might be able to brief that is in issue, but also the timing of such payment. As we can't pay a barrister up front (as there are no funds held in trust) the barrister is going to want to know when the firm will pay him.
I confirm your proposal and agreement to guarantee that the $20,000 will be paid within "a month". I have put the due date by 31 May 2013.
...
As we only have $20,000 with which to negotiate with a barrister I will have to try and engage a junior barrister. I had wanted to brief a senior commercial barrister (who would have been ideal for the job), but his fee is $4,000-$4,500 per day. He will not agree to cap his fee at $20,000, particularly if there is a prospect the trial could run for say up to 10 days.
I do not warrant that the provision of the signed charge will ensure this firm will continue to act. Ultimately, it will be the managing partner's decision. I shall promptly let you and [Maisano] know either way.
I also note there is presently approximately around $50,000 in legal fees owing. If the trial did progress for 4 days I estimate the further legal fees would approximate $40,000 (barrister 7 days including 3 days involving appearances, conferences, drawing documents and preparation) $3,000 = $20,000 and solicitor - approximately $2,500 per day instructing at trial (total $10,000) and a further approximate $8,000-$10,000 in work required in the lead up to trial.
...
The present "feel" of the defendants is the trial might take 3-4 days. However, the trial estimate remains 10-15 days. And the plaintiff did NOT agree with the 3-4 day estimate.
...
(Original emphasis in bold, emphasis added in italics.)
31 On 30 April 2013, Oakley Thompson received a signed charge from Franka in the sum of $20,000. The covering facsimile simply stated "Deed of Charge as requested" and referred to an amendment that had been made. There was no suggestion in the facsimile that there was any attempt to cap Oakley Thompson's costs.
32 On the same day, Oakley Thompson sent an email to Maisano and his sisters (amongst others) stating that the security that had been offered was not acceptable. That email attached a proposed deed by which Franka would guarantee the payment of Maisano's legal fees. The legal fees in the draft deed were not the subject of any limit. Franka never agreed to sign such a deed.
33 The email from Oakley Thompson also attached the costs agreement and disclosure statement that had been sent to Maisano in March 2012.[21] In that regard, the email sent on 30 April 2013 stated:
In the disclosure statement you will observe (at clause 3) we provided [Maisano] with an estimate of likely legal costs of this proceeding running to trial. Consequently [Maisano] has been aware since March 2012 of the expected litigation costs he will incur in running this matter to trial. When we took this matter back on we did so upon an assurance from [Maisano] that he would pay legal accounts and disbursements promptly. It is unacceptable to this firm that costs have escalated to their current amount (approximately $51,000 - file will be billed later this day so exact sum owing can be determined) and be without funds in trust to cover the trial costs (including barrister fees).
When we met in conference in this office approximately 3 weeks ago you agreed that [Maisano] is the owner and/or effective beneficiary of the bulk of the expected equity (after sale costs and mortgage repayment) in the [Property]. I was informed such equity is expected to be in the vicinity of $300k-$400k. Consequently it would seem entirely appropriate that [the Property] be charged with the complete payment of [Maisano]'s legal costs.
...
... the managing partner is simply not prepared to have this firm be [Maisano]'s de-facto litigation funder.
...
On the basis of the evidence that we now have it is highly unlikely that Bodycorp could succeed on any part of their claim against [Maisano].
However, if we are forced to withdraw and [Maisano] is unable to then engage alternate representation, we do not expect any of this information to be put before the court. In such circumstances we expect there would be a moderate to high risk that Bodycorp might succeed against [Maisano] on the breach of contract claim (which they assess at approximately $50,000). If this occurred [Maisano] would almost certainly be ordered to pay some of Bodycorp's costs ...
(Original emphasis.)
34 As a result of the inability to reach an agreement on the terms of any charge to be given to Oakley Thompson, on 1 May 2013 Oakley Thompson informed Maisano via email that an application would be made to seek leave to withdraw from acting as Maisano's solicitors. Negotiations as to the basis upon which Oakley Thompson would act continued.[22]
35 Ultimately, the negotiations resulted in a deed of charge and guarantee ("the Deed of Charge") in favour of Oakley Thompson being executed on 2 May 2013. The Deed of Charge was addressed to Oakley Thompson and included the following preamble:
36 Franka was the only person to execute the Deed of Charge, which was signed by her in the presence of a witness. The operative clause of the Deed of Charge read as follows:
IN CONSIDERATION of [Oakley Thompson], at my request and also the request of [Maisano], providing to [Maisano] legal assistance and professional legal services in respect of [the Bodycorp Proceeding] (collectively "the Work") I, [Franka] ("the Chargor"), HEREBY IRREVOCABLY AND UNCONDITIONALLY CHARGE in favour of [Oakley Thompson] against the Property the amount of $80,000 (eighty thousand dollars) ($80,000), for the payment of all legal costs, fees and disbursements (inclusive of any counsel's fees and GST) which have been incurred, or are to be incurred relative to, or in connection with, the Work.
37 The Deed of Charge also contained a guarantee that $20,000 would be paid by 15 June 2013 and $60,000 would be paid by 1 October 2013. Finally, a warranty was given that Franka, as "the Chargor", understood the meaning and effect of the Deed of Charge.
38 The terms of the Deed of Charge were negotiated between Oakley Thompson and Rose, who had authority to act in that regard.[23] It was common ground that the limit of $80,000 was included in the Deed of Charge because Franka insisted that she not be exposed to any costs over and above the agreed amount.
39 Upon receipt of the Deed of Charge, Broadbent sent an email to Franka, copied to Maisano and Rose, stating that he would "now [try] to engage suitable counsel" (emphasis added).
40 On 3 May 2013, the barrister retained by Broadbent sent an email to Broadbent attaching a letter, a disclosure statement and an offer to enter into a costs agreement. The disclosure statement was said to be provided pursuant to s 3.4.10(1) of the Legal Profession Act 2004 (Vic). The disclosure statement recorded the barrister's fees as $450 per hour and $4,500 per day (both inclusive of GST). Oakley Thompson agreed to the barrister being retained.
41 Later on 3 May 2013, Broadbent met with the barrister and Maisano for approximately 2 hours. During this meeting, Broadbent said he provided Maisano with a copy of the barrister's disclosure statement. Although Maisano agrees that the meeting at the barrister's chambers was held on 3 May 2013, he repeatedly denied that he was given a copy of the barrister's disclosure statement. Maisano also said the barrister's fees were never discussed with him. The barrister appeared at the commencement of the trial on 6 May 2013.
C.4 Work done by Oakley Thompson and the barrister
42 In 2012, when Oakley Thompson agreed to again act for Maisano, Maisano was yet to file a defence in the Bodycorp Proceeding. Consequently, a defence was prepared upon Oakley Thompson agreeing to act again, and was filed and served on or about 29 March 2012. From this point onwards, until the conclusion of the Bodycorp Proceeding, Oakley Thompson was the only firm of solicitors acting for Maisano. Except for a period of approximately 2 hours on 8 May 2014, which was the third day of trial, when Maisano appeared for himself, Oakley Thompson acted for Maisano throughout. The reason for the 2 hours of self-representation was a costs dispute between Maisano and Oakley Thompson.
43 Around midday on 8 May 2013, Broadbent and Maisano met with counsel. At this time, the dispute concerning costs continued. The barrister asked Broadbent to take detailed notes of the meeting. During the course of that meeting, counsel informed Maisano that 5 days had already been spent in preparation and that his fees to date were $22,500 (based on his daily fee being $4,500). The notes Broadbent took, relevantly, recorded the following:
4500
x 5
$22,500 fees so far
[The barrister] may agree to resuming on the pre-termination basis
(Original emphasis.)
Later that day, issues concerning the funding of counsel were resolved and counsel was re-engaged with Maisano's agreement. The barrister appeared for Maisano for the remainder of the trial.
44 Based on what was discussed in the barrister's chambers on 8 May 2013, as corroborated by the contemporaneous notes of that meeting, it follows that, when the barrister resumed acting for Maisano after that meeting, Maisano knew the barrister's fees were $4,500 per day, and that the barrister had been charging those fees prior to 8 May 2013. There was no suggestion by Maisano (or Broadbent) that, when the barrister's fees were discussed on 8 May 2013, Maisano said it was contrary to an agreement that had allegedly been put in place between himself and Oakley Thompson on 11 April 2013.
45 Accordingly, I reject the evidence of Maisano that the barrister's fees were never discussed with him (see paragraph 41 above). I also find it is more likely than not that on 3 May 2013 Maisano was informed of the barrister's fees, either by the disclosure statement or otherwise, as the discussion on 8 May 2013 made express reference to "the pre-termination basis" of the barrister's retainer in the context of daily fees of $4,500 and total fees[24]f $22,500.24 Further, I accept Broadbent's evidence that the barrister's disclosure statement was provided by him to Maisano on 3 May 2013.
46 On 17 May 2013, during the second week of the trial, there were settlement discussions between Maisano and Bodycorp. Murdaca stated he was willing to settle with Maisano on the basis that the funds in court of $56,400 be released to Maisano, but Oakley Thompson and Maisano's barrister waive all fees.
47 A file note of Broadbent records a discussion between Broadbent, Maisano and Murdaca on 17 May 2013. After noting Bodycorp's offer as conveyed by Murdaca, the file note recorded that Murdaca was told that Oakley Thompson and the barrister would never agree to waive their fees. There was nothing in the extensive file note to suggest there was any cap on Oakley Thompson's fees. Further, Maisano gave no evidence to suggest that he asserted at that time that a cap of $80,000 existed.
48 For the purpose of these settlement discussions, Broadbent asked counsel to forward details of his fees to that time, which counsel duly did. Broadbent also had a bill prepared as at 17 May 2013 for Oakley Thompson's costs. Having compiled the relevant information, Broadbent sent a text message to Maisano in which he stated that the legal costs to date, including counsel's fees, totalled $158,371. Later on 17 May 2013, Broadbent met with Maisano and provided Maisano with a copy of Oakley Thompson's account.[25]
49 The discussions between Maisano and Bodycorp were unsuccessful in resolving the issues between them. The trial continued.
D. Events after trial and before this proceeding commenced
50 The $80,000 the subject of the Deed of Charge was not provided to Oakley Thompson in accordance with the agreed terms. However, upon Maisano succeeding in the Bodycorp Proceeding, Oakley Thompson initially decided to pursue Maisano's costs against Bodycorp rather than seeking to enforce the terms of the Deed of Charge.
51 On 20 January 2014, Oakley Thompson sent a letter to Bodycorp's solicitors providing an estimate of Maisano's total party/party costs in the sum of $296,565.34. Those costs included $107,000 for counsel's fees. In February 2014, Bodycorp made an offer to pay $56,400 in full settlement of Maisano's costs claim. Upon being informed of this, Maisano instructed Broadbent to reject Bodycorp's offer. Maisano stated a counter offer of $260,000 should be put. Broadbent informed Maisano that, if the issue could not be resolved by agreement, it would be necessary to proceed to taxation in order to finalise the quantity of the costs order against Bodycorp. Maisano instructed Broadbent that, if that counter offer were not accepted, the matter should proceed to taxation.
52 Maisano's instructions were confirmed in a letter to Maisano dated 28 February 2014 (which was sent to Maisano's post office address). The letter stated that the barrister's fees totalled $109,110 and asserted that the barrister had only agreed to act based on Maisano's promise that $80,000 would be paid (in accordance with the terms of the Deed of Charge). The letter also recorded that a letter had been sent to Bodycorp's solicitors making a counter offer in accordance with Maisano's instructions. The counter offer was not accepted.
53 On 22 April 2014, Oakley Thompson filed a "summons for taxation costs" on behalf of Maisano. Subsequently, on 23 April 2014, a bill of costs was filed, which claimed costs on behalf of Maisano in the sum of $300,158.78. This amount was increased to $300,500.88 by an amended bill of costs dated 9 May 2014.
54 On 26 May 2014, Oakley Thompson sent a letter to Maisano informing him that the summons for taxation of costs had been issued, and enclosed the first few pages of the amended bill of costs. The letter included the following:
As you know the promised payments of $20,000 (due 15 June 2013) and $60,000 (due 1 October 2013) have not been paid. This is extremely upsetting to this firm. It has caused a significant souring of our relationship with ... counsel, who is owed $109,110.00 and who only agreed to act for you in the trial of this matter in reliance upon your promise to pay the $80,000 sum. In order to placate [counsel] this firm has been required to pay some $$$ to [counsel]. We are continuing to be pressured by [counsel] for the payment of the debt you owe him.[26]
The letter also referred to the fact that Oakley Thompson paid $7,472.54 for transcript, together with interest (for late payment).
55 The following day, Maisano contacted Broadbent. Immediately after the discussion, Broadbent made a file note of what was discussed. That file note recorded that Maisano accepted there was a need to proceed with the taxation. Maisano also informed Broadbent that he had not heard from his sisters for months. The file note recorded that the discussion with Maisano went for 25 minutes.
57 On 5 and 6 August 2014, a hearing of the taxation of costs occurred. At the conclusion of the second day of hearing, an interim order for assessed costs was made in the sum of $70,000 in favour of Maisano. The hearing of the Costs Court Proceeding was adjourned for further hearing on 25 and 26 August 2014.
58 After the interim order had been made by the Costs Court, Oakley Thompson made an application for the release to Oakley Thompson of the security for costs previously paid by Bodycorp in the sum of $56,400. By a letter dated 14 August 2014, Oakley Thompson requested that the funds be paid directly into an account held by Oakley Thompson.
59 On 22 August 2014, Oakley Thompson received an email from Murdaca. The email attached a summons and an affidavit sworn by Murdaca. That affidavit exhibited a typed letter addressed to Oakley Thompson dated 28 July 2014, signed by "Michael Mason".[27] The letter stated that Maisano had been trying to contact Oakley Thompson in the previous week.[28] It also recorded that Maisano wished to cancel "any services" with Oakley Thompson. After giving some explanation as to why he was cancelling Oakley Thompson's services, Maisano asked that his files be forwarded to his post office box or otherwise be made available for collection. The affidavit also exhibited a handwritten letter from Maisano to Murdaca, dated 18 August 2014, stating that the letter dated 28 July 2014 had been sent to Broadbent to have him "stop acting on my behalf".
60 Prior to receiving the email from Murdaca, Broadbent had no knowledge himself of, or of Oakley Thompson receiving, a letter from Maisano dated 28 July 2014. Broadbent had the conduct of Maisano's file for the Bodycorp Proceeding. He said any correspondence received by Oakley Thompson concerning the Bodycorp Proceeding would, as a matter of course, be forwarded to him.
61 Broadbent said if he had received the letter of 28 July 2014 earlier than he did, he would have raised the issues the subject of the letter with Maisano. Having had the letter drawn to his attention on 22 August 2014, Broadbent attempted to contact Maisano. On each such occasion Maisano's telephone was not answered by Maisano or anyone else. Indeed, since 22 August 2014, Maisano has not returned Broadbent's calls. That said, on 22 August 2014, Broadbent received a text message from Maisano's phone terminating the retainer. Broadbent said he had some uncertainty at the time whether the message was sent by Maisano himself. Subsequently, a number of text messages were sent. Broadbent was unable to confirm the authorship of the text messages directly, given Maisano's failure to take any of Broadbent's calls. Broadbent also sent text messages asking Maisano to call, but to no avail.[29]
62 On 25 August 2014, Broadbent appeared before the Costs Court. Broadbent informed the court that there was an issue concerning the retainer of Oakley Thompson.[30] The taxation was adjourned.
63 On 26 August 2014, Broadbent had a discussion with the solicitor for the senior master concerning the $56,400 held by Funds in Court. Broadbent told the solicitor Maisano had terminated the retainer of Oakley Thompson. Broadbent also provided the details of Bodycorp's solicitors.
64 On 28 August 2014, settlement of the sale of the Property occurred. In accordance with the Deed of Charge, Oakley Thompson received $80,000 from the proceeds of the sale.
65 On 3 September 2014, the solicitor to the senior master of Funds in Court sent a letter to the solicitors for Bodycorp. This resulted in a discussion between them. It also resulted in a letter being sent by Bodycorp's solicitors on 8 September 2014 to the solicitor to the senior master in which, amongst other things, it was stated that Maisano was no longer the client of Oakley Thompson. The letter contained a request that the funds held in court with respect to Maisano's costs not be released to Oakley Thompson. The letter also annexed, amongst other things, the affidavit of Murdaca referred to in paragraph 59 above.
66 On 10 September 2014, the judicial registrar of Funds in Court of the Supreme Court made an order that the sum of $56,400 be paid to Oakley Thompson directly into a specified account. As a result of that order, the funds were transferred directly to Oakley Thompson.
67 Following Maisano's non-response to his telephone calls, on 15 September 2014 Broadbent sent a letter to Maisano in which he asked about the authenticity of the letter dated 28 July 2014. No response has been received by Broadbent in relation to this letter.
68 Both Maisano and Murdaca gave evidence that no arrangement, "collusive" or otherwise,[31] had been made between Bodycorp and Maisano concerning the costs payable by Bodycorp to Maisano. Although Oakley Thompson invited the court to infer an arrangement, including by reason of the conduct of Maisano in seeking to obstruct the taxation of the costs, I draw no such inference. Not only is there no evidence of any such arrangement, but the position adopted by Maisano and Bodycorp is consistent with each of them acting solely in their own self-interest.
69 As to Maisano, he was, until around 22 August 2014, incurring further liability to Oakley Thompson for its professional services relating to the Costs Court Proceeding. If Maisano were successful in resisting the relief now sought on the basis that Oakley Thompson's fees were capped at $80,000, he would no longer have any further exposure concerning the Bodycorp Proceeding (either to Oakley Thompson or to Bodycorp by reason of any adverse costs order in the Costs Court Proceeding). As to Bodycorp, in supporting Maisano's position it is seeking to avoid having to pay anything further to Maisano (or Oakley Thompson) by way of costs.
70 In short, I do not find there was any arrangement between Maisano and Bodycorp arising from the costs ordered on 4 September 2013.
71 Faced with the termination of its retainer and the inability to act on behalf of Maisano in the Costs Proceeding, on 30 October 2014 Oakley Thompson filed and served an originating motion between parties. When this proceeding commenced, the only parties were Oakley Thompson and Maisano. That originating motion sought declaratory relief in the following terms:
72 Upon an application made to the Practice Court by Bodycorp, on 17 November 2014, the court ordered that Bodycorp be joined as the second defendant to this proceeding.
73 Subsequently, the parties were ordered to file and serve affidavits upon which they intended to rely at trial. Those affidavits having been filed, the matter was listed before me to be set down for trial. In light of the contents of the affidavits, it was directed by the court that a list of issues for hearing and determination be prepared. By agreement between the parties,[32] in consultation with the court, that list was settled before the trial commenced.
74 For the sake of clarity, I note that what is not in issue before me is the amount properly payable on a taxation of Oakley Thompson's costs; that remains a matter for the Costs Court, if and when the taxation in the Costs Court Proceeding resumes. Accordingly, any enforcement of Oakley Thompson's right based on any findings made in this proceeding remains dependent upon orders made by the Costs Court upon any resumption of the hearing in the Costs Court Proceeding.[33]
75 Further, this proceeding is not concerned with whether or not the Earlier Judgment ought to be set aside. In closing submissions, Bodycorp submitted that the Earlier Judgment was unable to be enforced because it was based on untrue evidence. In this regard, reliance was placed upon an affidavit sworn by Maisano on 17 November 2014 ("Maisano's Further Affidavit") and relied upon in a proceeding before the Court of Appeal.[34] Not only was the status of the Earlier Judgment not identified as 1 of the questions for the court to determine, but, in any event, the Earlier Judgment remains a judgment of the court. An appeal by Bodycorp against the Earlier Judgment was dismissed.[35]
G.1 Does Oakley Thompson have an equitable lien (fruits of litigation) over the costs judgment awarded in favour of Maisano in the order of the court made on 4 September 2013 in the Bodycorp Proceeding ("the Costs Judgment")?
76 There was no dispute between the parties that the judgment in favour of Maisano in the Bodycorp Proceeding was based on the exertions of Oakley Thompson. In any event, I find on the evidence before me that the work performed by Oakley Thompson as Maisano's solicitor with respect to the interlocutory steps in the Bodycorp Proceeding, and of and incidental to the trial, were carried out on behalf of Maisano for the purpose, which was achieved, of obtaining judgment in favour of Maisano.
(1) At common law, a solicitor has a general possessory lien for all professional costs due by her or his client. This entitles the solicitor to keep in her or his possession all property of the client which comes into the solicitor's possession during the course of her or his professional employment until the solicitor's costs have been paid.[38]
(2) A solicitor has no lien for costs over any property which has not come into her or his possession.[39]
(3) If a client obtains a judgment for the payment of money (including a judgment for costs),[40] the solicitor acquires a right to have her or his costs paid out of the money payable, such right being an equitable right to be paid. This right is not dependent upon an order having been made to recognise the right,[41] or upon a taxation having occurred.[42]
(4) If the solicitor gives notice of the right to the person who is liable to pay the money, only the solicitor, and not the client, can give a good discharge to that person for an amount of the money equivalent to the solicitor's costs.[43]
(5) If the person liable to pay has notice of the solicitor's right, but refuses to pay the solicitor, the solicitor may obtain a "rule of court" directing that the costs be paid to the solicitor and not to the client.[44] (In this context, a rule of court is a reference to an order or a direction of the court.[45])
(6) If the client and a judgment debtor make a collusive arrangement in order to defeat the solicitor's right, the court will enforce that right against the judgment debtor notwithstanding the arrangement and notwithstanding that no notice of the solicitor's claim has been given to the judgment debtor prior to the arrangement.[46]
78 By reason of the work performed by Oakley Thompson as Maisano's solicitors, upon the Costs Judgment being given in favour of Maisano, an equitable right immediately arose in favour of Oakley Thompson to have its costs paid out of the moneys payable by Bodycorp to Maisano. Given this right is disputed by both Maisano and Bodycorp, the court will grant declaratory relief in respect of the existence of such a right.
79 As I understood it, Bodycorp submitted the only proper way for any right against Bodycorp to be enforced by reason of the Costs Judgment was for Maisano to enforce that right. It was submitted that, in the absence of instructions from Maisano to do so, Oakley Thompson was required to pursue Maisano for its costs and, if required, have the costs taxed, and then, if necessary, bankrupt Maisano so that his trustee in bankruptcy would, if so advised, give instructions to pursue any entitlement to costs. No authority was cited for this proposition. Indeed, it is contrary to the relevant authorities. Accordingly, the submission is rejected.
G.2 Whether Oakley Thompson agreed with Maisano to cap its claim for costs and disbursements (inclusive of counsel's fees) in the amount of $80,000.
80 As the facts set out in paragraphs 20 to 41, 43 to 45, 47 and 48 above demonstrate, there was never any agreement between Oakley Thompson and Maisano to cap the costs and disbursements (inclusive of counsel's fees) in the amount of $80,000. The contemporaneous documents show that Oakley Thompson was acting on the basis that the entirety of its reasonable costs and disbursements in conducting Maisano's defence in the Bodycorp Proceeding would be payable. To the extent that Maisano gave evidence that there was an oral agreement capping the fees at $80,000, I do not accept his evidence.
81 Further, the submission by the defendants that the terms of the Deed of Charge itself gave rise to such a cap is problematic for a number of reasons.
82 First, Maisano is not a party to the Deed of Charge. On its face, the Deed of Charge does not purport to govern or affect any arrangement as between Oakley Thompson and Maisano.
83 Secondly, the words in the Deed of Charge "for the payment of all legal costs, fees and disbursements (inclusive of any counsel's fees and GST) which have been incurred, or are to be incurred relative to, or in connection with, the Work" are clearly referable to what is to be the subject matter of the charge. In my view, there is no ambiguity.[47]
84 Thirdly, if I am incorrect about the absence of ambiguity, the surrounding circumstances make it clear that those words were not intended to be a cap in relation to Maisano's legal costs, but rather were confined to the cap for the Deed of Charge. The email sent on 23 April 2013, including to Maisano,[48] enclosed a draft deed, which contained almost identical words to the relevant wording ultimately used in the Deed of Charge. The covering email on 23 April 2013 made it plain that those words were not intended to give rise to a cap on the fees of Oakley Thompson. That email stated in plain language that the subject matter of the draft deed was only concerned with a cap on the proposed charge. The remaining surrounding circumstances (see paragraphs 25, 26 and 29 to 33 above) are entirely inconsistent with an intention on the part of Oakley Thompson or Maisano (and also Rose or Franka), to limit Oakley Thompson's costs and disbursements to $80,000.
85 In short, there is no merit to the suggestion by the defendants that Oakley Thompson agreed to cap its costs and disbursements at $80,000.[49]
G.3 Did Oakley Thompson have the authority to engage counsel (for an amount of more than $20,000) on behalf of Maisano in the Bodycorp Proceeding?
86 As set out above,[50] on 3 May 2013, being the last business day before the commencement of the trial in the Bodycorp Proceeding, Maisano attended at counsel's chambers. At or about that time, he was given a disclosure statement, prepared by counsel, informing Maisano of counsel's fees at $450 per hour and $4,500 per day.[51] Maisano then had counsel appear on his behalf until the end of the trial, except for a period of approximately 2 hours on 8 May 2014.[52]
87 Further, the fact that Maisano had agreed for counsel to be retained in the terms that he was, including the daily fee of $4,500, was repeatedly affirmed.[53]
88 Reliance was placed by the defendants on clause 16 of the disclosure statement originally provided by Oakley Thompson (set out in paragraph 14 above). It was submitted that if, as Oakley Thompson contended, clause 16 formed part of the costs agreement, then that clause precluded Oakley Thompson from retaining a barrister for the purpose of conducting Maisano's defence. On a proper construction of clause 16, it did no such thing.
89 Clause 16 effectively provides that, absent some further arrangement, Maisano would be required himself to enter into a specific arrangement with any barrister retained. In short, the clause does not operate as a bar to alternate arrangements being made to those contemplated by clause 16. Indeed, the submissions put by the defendants, in asserting a limit of $20,000, implicitly accepted that no such bar existed.[54]
90 Reliance was also placed on the email dated 29 April 2013.[55] It was submitted that that email was an agreement that Oakley Thompson would engage a barrister for an amount of no more than $20,000. The email did not say that. It expressed an intention "to try" to engage a barrister on such a basis. Further, and in any event, that email was premised on the assumption that a guarantee of only $20,000 would be acceptable to Oakley Thompson. The very next day, that premise was rejected by Oakley Thompson: see paragraphs 31 and 32 above.
91 It follows that the suggestion now made that Oakley Thompson's authority to engage counsel was limited to no more than $20,000 is groundless.
G.4 Did Oakley Thompson provide costs disclosure to Maisano in accordance with the provisions of the Legal Profession Act 2004 (Vic)?
92 The dispute between the parties was whether or not the letter sent that day (with enclosures) had been provided to Maisano. For reasons stated above,[56] I have found that written disclosure was made.
93 Section 3.4.15 of the Legal Profession Act[57] requires written disclosures to a client to be expressed in clear plain language. There was no submission to the effect that what was disclosed by Oakley Thompson under cover of the letter dated 26 March 2012 (see paragraph 13 above) was other than in clear plain language. Further, there was no submission to the effect that s 3.4.9 of the Legal Profession Act, which sets out what must be disclosed to a client concerning costs, was not complied with. It is plain the disclosure requirements were met.
94 With respect to the disclosure required by a law practice if it intends to retain a barrister,[58] there was no submission to the effect that the letter sent on 20 March 2013 (see paragraphs 18 and 19 above) did not comply with s 3.4.10 of the Legal Profession Act. [59]he findings made above59 indicate that the letter dated 20 March 2013 was received by Maisano. Maisano was given updates from that time on as to the position of counsel's fees.
G.5 Did Oakley Thompson provide a bill to Maisano in accordance with the Legal Profession Act?
96 Under the Legal Profession Act a bill may be in the form of a lump sum bill or an itemised bill.[61] Such a bill must be signed on behalf of the law practice.[62] A bill may be delivered by sending it by post.[63] Interim bills may be given covering only part of the legal services provided.[64]
97 Broadbent gave evidence that Oakley Thompson rendered accounts for legal services to Maisano in the sum of $312,864.90, which included counsel's fees in the sum of $109,110. Each of the accounts, commencing on 26 March 2012 and provided progressively until 18 September 2014, were exhibited to an affidavit of Broadbent and duly tendered at trial without objection. In response to this evidence, Maisano simply stated that he did not recall receiving most of the documents. Maisano also said that the documents were of no interest to him. Consistent with my previous findings concerning documents posted to Maisano, I find that these documents were received by Maisano.[65]
98 Accordingly, the evidence establishes Oakley Thompson provided bills to Maisano in accordance with the Legal Profession Act.
G.6 The Legal Profession Act - further matters
99 The questions raised as set out in sections G.4 and G.5 of this judgment were raised by Bodycorp to seek to establish non-compliance with the Legal Profession Act. They were further raised to submit that that alleged non-compliance would prevent Oakley Thompson from recovering any of its costs against Maisano; and, therefore, would result in Maisano not having a claim against Bodycorp. As I understood the submission, reliance was placed upon ss 3.4.17, 3.4.33 and 3.4.38 of the Legal Profession Act. I will deal with each of these in turn.
100 Section 3.4.17 provides that if a law practice does not disclose anything required to be disclosed under Division 3 of Part 3.4 of the Legal Profession Act, the client or associated third party payer[66] need not pay the legal costs unless the legal costs have been reviewed under Division 7. In short, s 3.4.17 provides a prerequisite to recovery, rather than a bar from recovery because of non-disclosure.[67] In any event, I have found that the requisite disclosure was made by Oakley Thompson.
101 Section 3.4.33 precludes a law practice from commencing legal proceedings to recover legal costs from a person until at least 65 days after the law practice has given a bill to the person in accordance with ss 3.4.34 and 3.4.35 of the Legal Profession Act. As stated above,[68] a bill of costs was filed in April 2014 and amended in May 2014. These bills were served upon Bodycorp around that time.[69] There can be no suggestion that this prerequisite to commencing a legal proceeding to recover legal costs has not been met with respect to Bodycorp.
102 Section 3.4.38, which appears in Division 7 of Part 3.4 of the Legal Profession Act, provides a client or a third party payer may apply to the Costs Court for a review of the whole or any part of legal costs payable by the client or the third party payer.[70] Such a review may be sought even if the legal costs have been wholly or partly paid.[71] A review of the costs of Oakley Thompson has already occurred in part, and will be likely to continue to occur as part of the taxation in the Costs Court if Oakley Thompson is substantially successful in its relief in this proceeding. It is not readily apparent how it is said that this provision would preclude the relief being granted as sought by Oakley Thompson.
103 For completeness, I refer to s 3.4.19 of the Legal Profession Act. This section provides that legal costs are recoverable under (1) a costs agreement made in accordance with Division 5 of Part 3.4, or (2) in accordance with an applicable practitioner remuneration order or scale of costs, or, if neither of these 2 alternatives apply, "according to the fair and reasonable value of the legal services provided". It follows that the disclosure obligations under the Legal Profession Act do not provide an absolute bar to the recovery by a solicitor of the fair and reasonable value of legal services provided.[72]
G.7 Did Oakley Thompson have the right to obtain the sum of $56,400 that was being held as security for costs, when Oakley Thompson was not retained by Maisano?
104 Yes. The equitable right may be exercised with respect to funds held in court.[73]
105 Oakley Thompson was not acting for Maisano at the time the funds were received on 10 September 2014.[74] This fact is not material (see paragraph 114 below) to the question posed. In any event, full disclosure of the termination of the retainer had been made to the court before the funds were released. Further, at that point in time, Oakley Thompson had prepared a bill in taxable form in the sum of [75]00,158.78.75 Given that, before 10 September 2014, only $80,000 had been paid to Oak[76]y Thompson76 and Oakley Thompson had incurred disbursements for counsel's fees in the sum of $109,110, there can be no doubt that there were costs and disbursements outstanding to Oakley Thompson at least in the sum of $56,400. It follows that the retention of this sum by Oakley Thompson was in accordance with the equitable right that arose upon delivery of the Cos[77] Judgment.77
G.8 Does the court have the power in equity to make orders to regularise a common law contractual claim?
106 It is unclear to me how the question put relates to any of the relief sought. Bodycorp submitted the relationship between Oakley Thompson and Maisano is contractual. So much is uncontroversial.
107 But the court is concerned with the nature and extent of any equitable right Oakley Thompson has in the Costs Judgment and its ability to enforce that right. The relief sought is not concerned with regularising a common law contractual claim. In the circumstances, I will not address this question.
G.9 In the circumstances of this case, should the court provide equitable relief to Oakley Thompson in the exercise of the court's discretion?
108 Yes. Subject to considerations that concern the exercise of the court's jurisdiction in granting declaratory relief as sought (see paragraphs 116 to 119 below), it is appropriate that the court provide relief to Oakley Thompson. In light of the position now adopted by Maisano, unless relief is granted, Oakley Thompson will not be appropriately remunerated for their efforts in Maisano obtaining the Earlier Judgment, including the Costs Judgment, which judgment, when enforced, will bring into existence a fund to meet the co[78]s incurred by Maisano.78
G.10 Does the court have the capacity to supervise Oakley Thompson in the exercise of its functions as a solicitor to Maisano?
109 Generally speaking, the court does have the capacity to supervise a firm of solicitors, its members being officers of the court. That said, ordinarily, it is not the role of the court to supervise all of the day to day dealings between a firm of solicitors and its client. This fact will be taken into account in formulating the relief to be granted.
G.11 Does Oakley Thompson have the capacity to meet a substantial judgment against it? If not, is that fact relevant to any exercise of the court's discretion?
110 This question was raised by Bodycorp on the basis that, if Oakley Thompson were to prosecute the Costs Court Proceeding in the future, there was a prospect that a costs order or some other judgment might be made against Oakley Thompson. Bodycorp submitted the court should be satisfied Oakley Thompson would have the financial capacity to meet any such order or judgment.
111 However, no submissions were made on behalf of the defendants in closing concerning the capacity or otherwise of Oakley Thompson to meet a substantial judgment against it.[79] Further, there was no evidence before the court as to the current financial position of Oakley Thompson.
112 Accordingly, the court is not in a position to find 1 way or the other as to whether or not Oakley Thompson presently has the capacity to meet any substantial judgment against it.
113 That said, the history of both this proceeding and the Bodycorp Proceeding has demonstrated a capacity on the part of Oakley Thompson to advance its own case and Maisano's case respectively from its own resources. There is no suggestion that Oakley Thompson does not have the financial capacity to prosecute a proceeding to enforce its equitable right as it seeks to do. Equally, there is no basis to conclude that Oakley Thompson would not be able to meet any costs order or other possible judgment that might be made against it in the future in the Costs Court Proceeding.
G.12 Is there a relationship of mutual trust and confidence between Oakley Thompson and Maisano? If not, is that fact relevant to any exercise of the court's discretion?
114 Any prior relationship of mutual trust and confidence between Oakley Thompson and Maisano no longer exists. There has been a complete falling out. Indeed, in Maisano's submissions to the court, he stated that he did not trust Oakley Thompson. However, the absence of an ongoing relationship is, in itself, no bar to Oakley Thompson seeking to enforce its rights arising from the Costs Judgment against Bodycorp.[80]
115 Accordingly, while it will be necessary to take into account the fact that there has been a breakdown in the relationship between Oakley Thompson and Maisano in formulating any relief which might be granted, such a breakdown does not axiomatically provide a proper basis for the defendants to successfully oppose the motion.
G.13 If yes to issue G.1 above, and in light of the answers to issues G.2 to G.12 above, does the lien entitle Oakley Thompson to:
(a) complete the part-heard taxation in the Costs Court Proceeding (and to adopt what has occurred so far in that taxation); or
(b) have the Costs Judgment taxed in its own name?
116 In light of the answers to the questions above, it is entirely appropriate for the court to permit Oakley Thompson to complete the part-heard taxation in the Costs Court Proceeding against Bodycorp (and adopt what has occurred so far). The long line of authorities demonstrate that, in appropriate circumstances, courts will grant relief to facilitate solicitors being duly remunerated from the proceeds of a judgment obtained based on the exertions of the solicitor. Such relief may be granted whether or not the solicitor is a party to the proceeding.[81] I do not accept Bodycorp's submission that relief can only be granted when the former client and the judgment debtor are in a collusive arrangement. There is nothing in the established principles to support such a restricted approach. That said, generally speaking, the court should do no more than is necessary to safeguard the solicitor's equitable right.[82]
117 However, given the complete breakdown in the relationship between Oakley Thompson and Maisano, it would not be appropriate for Oakley Thompson to continue to prosecute the Costs Court Proceeding on behalf of Maisano. Such a position would be entirely unsatisfactory and could give rise to many issues, including the inability of Oakley Thompson to obtain satisfactory instructions from Maisano concerning issues which may arise in the Costs Court Proceeding.
118 Accordingly, any relief granted by the court must be confined to Oakley Thompson assuming responsibility in its own right for the prosecution of the part-heard taxation in the Costs Court Proceeding. That will have the result that Oakley Thompson, itself, will be exposed to the possible consequences of Oakley Thompson being a litigant.
119 Furthermore, given the manner in which the issues have arisen in this proceeding, it is appropriate that the relief granted by the court includes declaratory relief. By reason of the adversarial position adopted by Maisano and Bodycorp, Oakley Thompson has "a real interest"[83] in the determination of the legal controversies that have arisen in this proceeding. Of course, such legal controversies do not extend to abstract or hypothetical questions.[84]
120 By way of preliminary observation, it appears appropriate that, if Oakley Thompson were to apply to be added as a plaintiff in the Costs Court Proceeding as a result of the declaratory relief granted in this proceeding, then rather than seeking to have Maisano cease to be a party, he ought to be joined as a defendant, as a necessary party. If that course were adopted, it would be a matter for Maisano as to whether he wanted to take any active part in the further hearing of the taxation. Of course, it would also have the consequences that: (1) Maisano will be bound by the outcome of the Costs Court Proceeding; and (2) the Costs Court Proceeding could not be finally settled on all issues without the agreement of Maisano. The parties can be heard as to this issue in due course.
G.14 If yes to issue G.13 above, and after any taxation of the Costs Judgment has been completed, what steps is Oakley Thompson entitled to take to enforce the quantified costs order against Bodycorp, and Murdaca and Repose, pursuant to the respective undertakings as to costs given by them in the course of the Bodycorp Proceeding?
121 Upon a query being made to Oakley Thompson about the ability of the court to grant any declaratory relief against Murdaca and Repose in circumstances where they are not parties to the proceeding, Oakley Thompson informed the court that it did not pursue any relief against Murdaca or Repose. In the circumstances, it is unnecessary to answer question G.14 in this regard. As to the question of Bodycorp, that issue has already been addressed.[85]
H.1 The debt recorded in Oakley Thompson's records
122 As already stated,[86] it was no part of the court's determination in this proceeding to make any findings concerning the amount of costs payable to Oakley Thompson on a taxation. That is a matter for the Costs Court.
123 However, for the sake of completeness, I will address the submission made by Maisano concerning the debit trust balance of $145.85 referred to in a document entitled "Debtor Transactions for all dates", which was tendered in this proceeding. The document is a ledger of Oakley Thompson with respect to Maisano and the Bodycorp Proceeding. Based on this document, Maisano submitted that there were no moneys owing to Oakley Thompson beyond $145.85. This submission was misconceived.
124 As is apparent from the exhibit, a large number of the credits are concerned with writing off the amounts outstanding to Oakley Thompson from Maisano as bad debts. It was explained that this was because Oakley Thompson used an accrual method of accounting, and the amounts were written off for taxation purposes. There was no evidence to suggest that Maisano, or anyone else on his behalf, had met the outstanding payments. In short, the writing off of the debts for taxation or other accounting purposes does not mean that the funds are still not owing by Maisano.
125 With respect to the trust account records of Oakley Thompson, a submission was made by Bodycorp that, although Broadbent stated that the trust account was true and accurate, he conceded that when Oakley Thompson proceeds against Maisano there will be a proper accounting of what has been received. Reference was also made to Broadbent's evidence that he was unsure if the records of Oakley Thompson recorded all receipts received from Maisano. Although such matters may be relevant at any subsequent taxation, or any challenge by Maisano to bills remitted to him, this evidence is simply not relevant to the questions to be determined in this proceeding.
126 As to issues of credit, much evidence was given to attack the credit of both Maisano and Broadbent. There was also an attack on the credibility of Murdaca.
127 The findings made above largely do not depend upon credit issues, but have been made based primarily on contemporaneous documentation. In the circumstances, I will deal briefly with the submissions made by Maisano and Bodycorp to attack the credibility of Broadbent.
128 First, it was submitted that Broadbent gave unsatisfactory evidence because he could not recall important matters and was vague and imprecise at times. In response to this general submission, I did not find Broadbent to be an unsatisfactory witness. Although he could not recall some events that occurred in 2012 and 2013, that is not surprising given the lapse of time and the extent to which he was asked to recall various matters.
129 Secondly, a submission was made concerning a paragraph in an affidavit sworn by Broadbent on 19 September 2014 to seek to establish that evidence given by Broadbent at this trial was inconsistent with the evidence he gave in that affidavit. However, there was no such inconsistency. Broadbent gave evidence in this proceeding that he previously stated Oakley Thompson would sue for its fees if they were terminated by Maisano, that there would be a higher risk of Maisano losing the Bodycorp Proceeding, which would expose Maisano to damages and costs, which would, in turn, expose Maisano to recovery proceedings which could include bankruptcy. This evidence is fundamentally different to any admission that Broadbent had previously said "I will come after you" or "you will be made bankrupt" and, accordingly, is consistent with Broadbent's denial in the affidavit that he said no such thing to Maisano.
130 Thirdly, it was suggested that Broadbent's file notes were unsatisfactory because they were a summary of events rather than recording "all of the conversation". I do not see how this observation, to the extent it was correct, is adverse to the credibility of Broadbent.
131 Fourthly, it was suggested that reliance by Oakley Thompson upon Maisano's Further Affidavit[87] was improper and breached the implied undertaking to keep documents in another proceeding confidential.[88] The implied undertaking applies to discovered documents and also documents produced under a rule of court or court order.[89] However, Maisano's Further Affidavit was not produced under compulsion in another proceeding, but was provided voluntarily. Given this fact, this submission was misconceived.
132 Finally, it was submitted an adverse inference should be drawn by reason that the person responsible for creating the trust ledgers at Oakley Thompson was not called as a witness. The accuracy or otherwise of the trust ledgers was not a matter for determination in this proceeding.[90] There is no substance to this submission.
133 With respect to Maisano, there are serious issues as to his credibility which immediately arise from the contents of Maisano's Further Affidavit. By reason of the contents, either his sworn evidence in that affidavit was truthful (which necessarily means the evidence he gave in the Bodycorp Proceeding was untruthful), or his evidence in Maisano's Further Affidavit was untruthful. On either scenario, Maisano must have given untruthful sworn evidence.[91]
134 The evidence given by Murdaca was peripheral at best. In those circumstances, it is not necessary to make any findings in relation to his credibility.
H.3 Undertakings to the court by Oakley Thompson
135 In response to submissions made by Maisano and Bodycorp, Oakley Thompson proffered the following undertakings to the court, which undertakings it said it would give in the event that it were successful in obtaining relief as sought in this proceeding:
(1) Except with the agreement of Maisano or with the approval of the court, in taxation of the Costs Court Proceeding, Oakley Thompson will prosecute the taxation of the bill of costs (being exhibit JSB9 to the affidavit of Broadbent sworn 30 October 2015 in this proceeding ("the Bill of Costs")) to completion in the ordinary course and seek, in the taxation assessment, to recover all of the items claimed in the Bill of Costs.
(2) In the Costs Court Proceeding, Oakley Thompson will confine the costs of the taxation that it will charge to Maisano to the amount of any costs award made in favour of Oakley Thompson (or Maisano) in the Costs Court Proceeding.
(3) Should Bodycorp make any offer to settle the Costs Court Proceeding, which offer is less than the full amount of the claimed sum in the Bill of Costs but is acceptable to Oakley Thompson, Oakley Thompson will not accept such offer unless Maisano agrees to such settlement or the settlement is approved by the court.
(4) If costs are awarded against Oakley Thompson (or Maisano) in the Costs Court Proceeding, Oakley Thompson will not seek payment of any such amount from Maisano but will confine itself to setting-off that amount against the substantive amount ordered in the taxation assessment.
136 In response, written submissions were filed by Maisano and Bodycorp submitting reasons as to why the court should not accept these undertakings. These submissions were made in seeking to oppose any relief being granted in this proceeding. In light of these reasons, and the relief that will be granted substantially as set out in paragraph 137 below, upon delivering judgment I will invite the defendants, particularly Maisano, to reconsider whether they oppose these undertakings being given.
137 For the reasons stated above,[92] no orders will be made reflecting paragraphs 3 or 5 of the originating motion.[93] Further, to the extent the relief sought goes beyond the issues directly raised in this proceeding or seeks to deal with matters that are yet to transpire, that relief will not be granted.[94] However, I propose to grant the following relief:
138 It may be the most convenient and efficient way to progress the Costs Court Proceeding is for a directions hearing in that proceeding to be held before me. This would enable the parties to make submissions as to all the necessary orders that ought to be made, in light of these reasons, before the taxation recommences. I will hear submissions as to the appropriateness or otherwise of such a course being adopted.
[1] The Costs Court was established within the trial division of the court, effective 31 December 2009: Supreme Court Act 1986 (Vic), s 17C(1). The powers and functions of the Costs Court include jurisdiction to hear and determine the assessment, settling, taxation or review of costs in all proceedings of the court: Supreme Court Act, s 17D(1)(a).
[2] Supreme Court proceeding number S CI 2005 9071.
[3] Supreme Court proceeding number S CI 2014 1914.
[4] Bodycorp Repairers Pty Ltd v Maisano (No 8) [2013] VSC 472.
[6] For a more extensive history of this proceeding, see Bodycorp Repairers Pty Ltd v Maisano [2013] VSC 220, [10].
[8] Bodycorp Repairers Pty Ltd v Maisano (No 4) [2013] VSC 247, [4].
[10] Bodycorp Repairers Pty Ltd v Maisano (No 7) [2013] VSC 345, [27].
[13] There are some costs sought to be recovered from Bodycorp with respect to this period, but no issue has been raised in this proceeding as to the retainer of Oakley Thompson pursuant to which those costs were incurred.
[14] Without referring to the detail, the agreement addresses each of the requirements contained in s 3.4.9 of the Legal Profession Act 2004 (Vic).
[15] Maisano gave evidence that he received the costs agreement much later, and after the Earlier Judgment had been delivered.
[17] In a written outline of submissions dated 27 April 2015, together with affidavits sworn in this proceeding on 26 and 27 March 2015, Maisano referred to the Deed of Charge and certain emails in seeking to establish a limit of $80,000 on the fees of Oakley Thompson.
[19] Maisano did not have a computer at the time. Maisano provided an email address to Oakley Thompson which Maisano's son could access from his computer.
[22] An application was foreshadowed and the court was informed. An affidavit was filed in support of the application. However, the application was not pursued: Bodycorp Repairers Pty Ltd v Maisano (No 2) [2013] VSC 235.
[24] For completeness, I note that there was open disclosure in court of the barrister's fees during the course of the security for costs applications made on 8 May 2013 and 21 May 2013: see pars 8 and 9 above. On the first of those occasions, $77,000 security for costs was sought by Maisano based on $7,000 per day. On the second occasion, $111,500 was sought, which included 16 days for counsel. (I have not included these facts in the body of the judgment as it was not put to Maisano during the course of this trial that he was aware of the details of the affidavits relied upon in the security for costs applications.)
[25] A file note of discussions between Maisano and Broadbent was taken on 17 May 2013. It is not a note of what was actually said, but records figures that were discussed. The note commences with the words "Discussion with [Maisano] about costs position". The recording of these figures (which include amounts of $145,000, $175,000 and $180,000) appear to be entirely inconsistent with either Broadbent or Maisano having any understanding that Oakley Thompson's fees were capped at $80,000.
[26] At the time of the trial of this proceeding, Oakley Thompson had paid counsel's fees in full.
[27] Maisano also goes by the name of Michael Mason.
[28] Maisano gave evidence that he telephoned Oakley Thompson on 3 occasions. Maisano said he spoke with a gentleman by the name of Brendan or Brandon and he left a message each time. Maisano said the gentleman told Maisano that he had given Broadbent the messages. When this was put to Broadbent, Broadbent stated there was no one employed at Oakley Thompson called Brendan or Brandon at that time, and there was a male receptionist at some point in time, but Broadbent could not remember when. Broadbent said the only person he could remember working at Oakley Thomson with the name Brendan was an office manager, and that was about 10 years ago. There was no call by Maisano or Bodycorp for Oakley Thompson to produce any record of the discussions Maisano says he had at this time.
[29] Detail of various communications between Broadbent and Maisano are set out in affidavits of Broadbent. It is unnecessary to elaborate on what is set out above.
[30] At a later hearing in the Costs Court on 31 October 2014 the judicial registrar confirmed that Broadbent had brought to the court's attention the fact that the text messages had been sent from Maisano's phone.
[32] Agreement was reached, though Oakley Thompson submitted a number of the issues sought to be raised by Bodycorp were not relevant to the issue of whether the relief sought ought to be granted.
[33] Trkulja v Efron [2014] VSCA 76, [38] (Warren CJ and Santamaria JA).
[34] For further detail concerning that affidavit, see Oakley Thompson & Co Pty Ltd v Maisano [2015] VSC 209, [9]-[12], [15].
[35] Bodycorp Repairers Pty Ltd v Australian Associated Motor Insurances Ltd [2015] VSCA 73 (Warren CJ, Beach JA and Ginnane AJA). There was no appeal by Bodycorp against the dismissal of its claims against Maisano.
[36] The use of the word "lien" in the question put may not be strictly apposite: see Ex parte Patience; Makinson v The Minister [1940] NSWStRp 11; (1940) 40 SR (NSW) 96, 100.9 (Jordan CJ, Davidson and Halse Rogers JJ); but also see Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451, 467 [42] (Campbell J) and the cases referred to.
[37] In addition to the authorities referred to in fnn 38-46 below, see Trkulja v Efron [2014] VSCA 76, [34] (Warren CJ and Santamaria JA).
[38] Ex parte Patience; Makinson v The Minister [1940] NSWStRp 11; (1940) 40 SR (NSW) 96, 99.10-100.2 (Jordan CJ, Davidson and Halse Rogers JJ).
[40] Worrell v Power & Power [1993] FCA 551; (1993) 46 FCR 214, 224.3 (Wilcox, Ryan and Gummow JJ).
[41] Ex parte Patience; Makinson v The Minister [1940] NSWStRp 11; (1940) 40 SR (NSW) 96, 100.3. See also Twigg v Keady [1996] FamCA 115; (1996) 135 FLR 257, 265.4, 272.2 (Finn J, with whom Fogarty J agreed); see also 258.6 (Fogarty J), 289.5 (Kay J).
[42] Ex parte Patience; Makinson v The Minister [1940] NSWStRp 11; (1940) 40 SR (NSW) 96, 100.4. See also Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451, 463 [35(b)], 464 [35(f) and (g)] (Campbell J); Worrell v Power & Power [1993] FCA 551; (1993) 46 FCR 214, 224.4 (Wilcox, Ryan and Gummow JJ). Contrary to this proposition, Bodycorp submitted that the equitable right only arose "where property has been recovered". In support of this submission, Bodycorp referred to Trkulja v Efron [2014] VSCA 76, [31] where this language was used. But it is plain the paragraph referred to did not indicate that the right did not arise before the property had been recovered. So much is clear from the specific observation later in the judgment that the right exists through the obtaining of judgment and was not dependent upon a taxation having occurred: [34(a), (e) and (f)]. Equally, the use of the words "upon the recovery of the moneys" in Carew Counsel Pty Ltd v French [2002] VSCA 1; (2002) 4 VR 172, 186-187 [33] (Winneke P, with whom Buchanan and Vincent JJA agreed) must be understood in this light. In this earlier case, which was also relied upon by Bodycorp, such language was used because moneys were recovered by way of settlement before any judgment and remained in the hands of the Transport Accident Commission pending resolution of competing claims: at 174 [2].
[43] At 100.5, citing Welsh v Hole (1779) 1 Doug 238 [99 ER 155] (Lord Mansfield).
[45] See the definition of "rule" in Encyclopaedic Australian Legal Dictionary, which includes: "3. An order or direction made by a court during proceedings ...".
[47] Bodycorp relied upon Jaha v Defteros [2012] VSC 512 (Pagone J) in support of the submission that the costs were capped. Whilst the approach to construction taken in that case (namely, to interpret words and actions of the parties objectively as would be determined by a reasonable person: see also, for example, Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 179 [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ)) was plainly correct, the facts are clearly distinguishable: see at [11]-[12].
[49] Further, there is no merit to the suggestion, made by Bodycorp in written submissions after the trial was completed, that Oakley Thompson made "a binding representation that was relied upon by [Maisano]" which bound Oakley Thompson to a cap of $80,000 (pursuant to s 18 of the Australian Consumer Law in Schedule 2 of the Competition and Consumer Act 2010 (Cth)).
[54] Although no reference was made to cl 13 of the costs agreement in submissions, that clause makes it plain the costs agreement permitted Oakley Thompson to engage counsel after consulting with Maisano. Clause 13 provided:
We may need to engage on your behalf a barrister or other lawyer to provide specialist advice or services. We will consult you about the terms of this engagement and provide you with a statement setting out the details of this person's fee before incurring the expense."
[57] The Legal Profession Uniform Law Application Act 2014 (Vic) ("the Uniform Law Application Act") was enacted in 2014. Section 157 of the Uniform Law Application Act repeals the Legal Profession Act. Further, the Uniform Law Application Act replaces the provisions of the Legal Profession Act with the Legal Profession Uniform Law ("the Uniform Law"). The Uniform Law is set out at schedule 1 of the Uniform Law Application Act. Presently, neither s 157 of the Uniform Law Application Act, nor the relevant provisions of the Uniform Law are in force. Accordingly, the relevant provisions of the Legal Profession Act remain operative.
[58] A barrister being a "law practice" for the purposes of s 3.4.10, such a person being an Australian legal practitioner who is a sole practitioner: see the definition of "law practice" in s 1.2.1 of the Legal Profession Act.
[60] The word "substantially" is used as it is not an issue in this proceeding whether, as between Oakley Thompson and Maisano, all costs claimed are payable by Maisano, or the precise basis upon which they might be payable. Further, there was no issue for determination which requires the court to definitively find as to what precisely comprised the agreement between Oakley Thompson and Maisano.
[65] I note that the bills dated 20 July 2012, 19 November 2012, 20 March 2013 (though not the covering letter), 1 May 2013, 17 May 2013 and 31 December 2013 are addressed to a residential address rather than Maisano's post office box address. As no issue was taken on this point by Maisano or Bodycorp, I also raise no issue in that regard.
[66] Associated third party payer is defined in s 3.4.2A(1)(b).
[67] Bodycorp sought to rely upon Rudstein Kron Lawyers v Pisanelli [2003] VSCA 166 (Phillips JA, with whom Buchanan and Chernov JJA agreed), based on a submission that s 115(3) of the Legal Practice Act 1996 (Vic) was similar to s 3.4.17(1) of the Legal Profession Act. However, there is an equivalent provision, namely s 3.4.41. Further, that case was concerned with the recovery of legal costs by solicitors against their client; an application made by the client to have the costs sought by the solicitors reviewed; and the preservation of settlement proceeds for that purpose: see orders sought at [4]. Its facts bear no resemblance to the issues at hand.
[72] Cf Chakera v Kuzamanovic [2003] VSC 92, [8], [13], [21] (Nettle J) dealing with provisions under the Legal Practice Act 1996 (Vic). See also Walter v Buckeridge (No 5) [2012] WASC 495, [46] (Le Miere J).
[73] Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451, 463 [35(c)] (Campbell J); In re Meter Cabs Ltd [1911] 2 Ch 557, 562.7 (Swinfen Eady J).
[77] Cf Boz One Pty Ltd v McLellan [2015] VSCA 145, [52]-[56] (Whelan, Santamaria and Kyrou JJA).
[78] Cf Worrell v Power & Power [1993] FCA 551; (1993) 46 FCR 214, 222.4-223.1 (Wilcox, Ryan and Gummow JJ).
[79] For completeness, I note reference was made to the absence of evidence of "substantial assets" of Oakley Thompson in Bodycorp's submissions filed 20 May 2015 with respect to the undertakings offered by Oakley Thompson.
[80] See, for example, Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451, 463 [35(d)], 464 [35(h)] (Campbell J) and the cases there cited; Ross v Buxton (1889) 42 Ch D 190, 193.3, 202.4 (Stirling J).
[81] Roam Australia Pty Ltd v Telstra Corporation Ltd [1997] FCA 980, 2-3 (Lehane J). See generally, Supreme Court Act 1986 (Vic), s 24(1).
[82] In the Estate of Fuld, dec'd (No 4) [1968] P 727, 737F (Scarman J).
[83] Forster v Jododex Aust Pty Ltd [1972] HCA 61; (1972) 127 CLR 421, 437.10 (Gibbs J).
[84] Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564, 581.9-582.3 (Mason CJ, Dawson, Toohey and Gaudron JJ), 595.10-596.8 (Brennan J). See also, for example, Khoury v Gonzales [2006] NSWSC 1290, [15] (Barrett J); Abbott v Pilot Development Corporation Pty Ltd (in liq) [2006] NSWSC 1178, [17] (Bergin J); Akki Pty Ltd v Marin Hall Pty Ltd (1994) 35 NSWLR 470, 483G (Windeyer J).
[88] See, for example, Home Office v Harman [1983] 1 AC 280, 304G-305A (Lord Diplock), 308F (Lord Keith), 326G (Lord Roskill).
[89] Mischel Holdings Pty Ltd (in liq) v Mischel [2013] VSCA 375, [106] (Ashley, Priest and Santamaria JJA) and the cases there cited.
[91] I only refer to this matter for completeness, as I have reached my conclusions in relation to the questions raised in this proceeding independent of any consideration of Maisano's Further Affidavit.
[96] It was contended that Oakley Thompson appeared on 5 and 6 August 2014 in circumstances where its retainer had already been terminated by Maisano. There was no substance to this submission. Although the letter purporting to terminate the retainer was dated 28 July 2014, no notice was given of that letter (or any other notice to the effect that the retainer was terminated) until 22 August 2014: see pars 59-61 and 67 above.
[97] Such order will need to be supplemented with wording to acknowledge the fact that $80,000 has already been paid to Oakley Thompson from sources other than Bodycorp and that if the award of costs by the Costs Court results in a surplus to Oakley Thompson beyond the taxed costs, there may be a right for Maisano to receive some of the proceeds.
Oakley Thompson & Co Pty Ltd
Maisano
(2002) 55 NSWLR 451
(1993) 46 FCR 214
(1996) 135 FLR 257
(2002) 4 VR 172
(2004) 219 CLR 165
(1972) 127 CLR 421
(1992) 175 CLR 564
(1994) 35 NSWLR 470