[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
Judgment
THE COURT: The applicant (the solicitor) seeks leave to appeal from a judgment delivered on 19 March 2015 in which the primary judge (Button J) dismissed the solicitor's appeal from orders made in the Local Court by Magistrate Wahlquist on 19 September 2013 in proceedings between the respondent (the barrister) as plaintiff and the solicitor as defendant: Russo v Desiatnik (No 2) [2015] NSWSC 256. In a further judgment delivered on 20 May 2015, the primary judge dealt with costs and made orders: (a) amending the orders of Magistrate Wahlquist on 19 September 2013, by giving a verdict for the barrister for $28,086.50 plus filing fees of $424.00, service fees of $50.00 and interest of $28,560.50 pursuant to s 100 of the Civil Procedure Act 2005 (NSW) from 24 August 2006; and (b) that the solicitor pay the barrister's costs assessed, on a gross sum basis, of $24,000: Russo v Desiatnik (No 3) [2015] NSWSC 606. As the matter at issue involves an amount less than $100,000, the solicitor requires leave to appeal: Supreme Court Act 1970 (NSW), s 101(2)(r).
The subject matter of the dispute concerns the barrister's fees that have not been paid by the solicitor. In the Local Court, the barrister made a claim to recover his fees from the solicitor in respect of invoices for work claimed to be carried out on the instructions of the solicitor between January and August 2006 in respect of District Court proceedings involving Mr Minh Tran and Ms Phan Nguyen.
The solicitor raised various defences in the Local Court including that there was no contractual obligation to pay; that the barrister's claim was statute barred; that the amount claimed was not fair and reasonable; and that the barrister had failed to comply with various provisions of the Legal Profession Act 1987 (NSW) (the 1987 Act) and the Legal Profession Regulation 2002 (NSW) (the 2002 Regulation). As to this last matter, the solicitor contended that the barrister had failed to disclose the matters set out in Div 2, Pt 11 of the 1987 Act; that the barrister was precluded from seeking interest because his invoices did not contain a statement that interest is payable and the rate of interest (reg 45(1)(c) of the 2002 Regulation); and that the barrister was prohibited by s 192(1) from commencing proceedings to recover costs because he had not given a bill of costs in accordance with Div 4 of Pt 11 of the 1987 Act. In particular, it was contended that the barrister's invoices did not contain the particulars required by regs 45(1)(d)(i), 45(1)(g) and 45(2)(b) of the 2002 Regulation, made pursuant to s 193 of the 1987 Act.
The magistrate held that three of the barrister's invoices were statute barred and otherwise rejected the solicitor's defences, except that relating to the barrister's claim for interest. The magistrate gave judgment for the barrister for the sum of $28,086.50 plus $424.00 filing fees, $50.00 service fees and interest pursuant to s 100 of the Civil Procedure Act from 5 April 2012 (being the date on which the Local Court proceedings were commenced).
The solicitor appealed against the magistrate's decision to the Supreme Court pursuant to s 39(1) of the Local Court Act 2007 (NSW). The appeal was based on asserted errors of law, namely, whether the magistrate's test of "substantial compliance" with the particulars required in a bill of costs by reg 45 was a sufficient answer to the solicitor's reliance on the prohibition in s 192(1) on commencing proceedings for recovery of costs. The barrister cross-appealed against the magistrate's refusal to order interest on each bill of costs, relying upon s 190(3) of the 1987 Act. The primary judge dismissed the solicitor's appeal and allowed the barrister's cross-appeal and gave judgment in the amount already indicated.
Although the solicitor's appeal grounds before the primary judge challenged the magistrate's finding that the solicitor had a contractual liability to pay the barrister (ground 5), it seems that this challenge was not pursued before the primary judge. Importantly, the solicitor did not challenge the magistrate's rejection of the solicitor's contention that the barrister's fees were not fair and reasonable. Nor was it suggested before the primary judge that the solicitor was not liable to the barrister for some amount of the barrister's invoices.
[3]
The statutory scheme
Reference should be made to the relevant provisions of the 1987 Act and the 2002 Regulation. Section 192(1) of the 1987 Act provides, relevantly, that proceedings for the recovery of costs by a barrister for providing legal services must not be commenced or maintained against any person unless at least 30 days have passed since a bill for those costs was given to the person in accordance with Div 4 of Pt 11.
Section 193 of the 1987 Act provides that the regulations may make provision for or with respect to the form of, and the particulars to be included in, bills of costs.
Regulation 45(1) of the 2002 Regulation provides that for the purposes of s 193(1) of the 1987 Act, certain particulars are to be included in a bill of costs. Relevant to the present application are subparas (d)(i) and (ii) and (g). These require the inclusion in a bill of costs of the following particulars:
(d) a statement:
(i) in a case where the bill of costs is given to a client - that the client may apply to have the costs assessed under Part 11 of the Act, but that if the costs have been wholly or partly paid, the application must be made within 12 months after the client is given the bill of costs, or
(ii) in a case where the bill of costs is given by a barrister or solicitor who was retained by another barrister or solicitor to act on behalf of a client and the bill of costs is given to that other barrister or solicitor - that the barrister or solicitor who is given the bill of costs may apply to have the costs assessed under Part 11 of the Act within 30 days after the bill of costs is given,
…
(g) the identity of the persons who did that work (including the position of the persons, for example, partner, associate) … .
Regulation 45(2)(b) provides that particulars referred to in subcl (1)(e)-(i) need not be included in the bill of costs if the bill of costs refers to the relevant costs agreements or disclosure document.
Section 189(1) provides that any provision of a costs agreement or other agreement that is inconsistent with Div 3 of Pt 11 is void to the extent of the inconsistency. Section 189(2) provides that any provision of a costs agreement or other agreement that purports to waive rights to an assessment of costs under Pt 11, or the right to receive a bill of costs in the form required for assessment under Pt 11, is void.
The 1987 Act and the 2002 Regulation were repealed with effect on 1 October 2005 and replaced by the Legal Profession Act 2004 (NSW) (the 2004 Act) and the Legal Profession Regulation 2005 (the 2005 Regulation). It was common ground that the 1987 Act and the 2002 Regulation governed the present dispute: see cl 18(2) of the transitional provisions in Schedule 9 to the 2004 Act. In turn, the 2004 Act and the 2005 Regulation were repealed on 1 July 2015, and replaced by the Legal Profession Uniform Law (NSW) (Uniform Law).
Brief reference should be made to some of the provisions of the replacement legislative schemes, having regard to the submission of counsel for the solicitor that the proposed appeal raises a question of public importance. Section 331 of the 2004 Act provided for the circumstances in which legal costs could not be recovered unless a bill had been served and 30 days had elapsed. It was in similar terms to s 192(1) of the 1987 Act except that the prohibition on commencing legal proceedings to recover legal costs from a person was expressly conditioned on first giving a bill to the person in accordance with ss 332 (Bills) and 333 (Notification of client's rights). The form in which a bill may be given was dealt with in s 332, not in the regulations as under the 1987 Act.
The Legal Professional Uniform Law (NSW) provides in s 194(1) that a law practice must not commence legal proceedings to recover legal costs from a person unless a bill has been given for the legal costs and the bill complies with the requirements of the Uniform Law and the Uniform Rules. The relevant requirements of the Uniform Law include the form of the bill, which may be either a lump sum bill, or an itemised bill (s 186) and the notification of client's rights which is to be either included in the bill or a written statement accompanying the bill, setting out the avenues that are open to the client in the event of a dispute in relation to legal costs and any applicable time limits to taking action with respect to such dispute (s 192). A bill is to be given to the client in accordance with the Uniform Rules (s 189), relevantly r 73 of the Legal Profession Uniform General Rules 2015 which deals with the manner in which a bill may be "given" by a law practice to a client.
[4]
The primary judge's reasons
The solicitor contended before the primary judge that the magistrate erred in not finding that the failure of the barrister to comply with the relevant regulations in the 2002 Regulation disentitled the barrister from commencing and maintaining proceedings to recover costs based on his invoices: s 192(1) of the 1987 Act. The regulations identified in the solicitor's pleaded contentions in the Local Court were regs 45(1)(d)(i), 45(1)(g) and 45(2)(b) (Judgment at [14] and [22]).
The first of these regulations, reg 45(1)(d)(i), only concerns bills given to lay clients. It was common ground before the primary judge that it had no application in the present case (Judgment at [21]). His Honour rejected the solicitor's contention that the magistrate had made a slip in referring to this regulation in her reasons rather than reg 45(1)(d)(ii). This finding is not sought to be challenged.
Against the possibility that he was wrong in concluding that the magistrate's reference to reg 45(1)(d)(i) was not a slip, his Honour proceeded to address the solicitor's reliance on reg 45(1)(d)(ii). His Honour concluded that the magistrate did not err in law in failing to conclude that reg 45(1)(d)(ii) precluded reliance by the barrister upon his invoices (Judgment at [40]).
His Honour rejected the solicitor's contention that the magistrate erred with regard to reg 45(1)(g). In particular, the bills of costs were not rendered non-compliant by the absence of identification of the typists (Judgment at [31]).
His Honour also rejected the solicitor's contention based on reg 45(2)(b). That regulation was of no assistance to the solicitor because it addressed the mechanism whereby the barrister could overcome any deficiency in his bills of costs that pertained to reg 45(1)(e) to (i) (inclusive). As no relevant deficiency within these regulations had been identified, his Honour found that reg 45(2) was irrelevant (Judgment at [41]).
Against the possibility that the whole of his analysis of reg 45 was wrong, his Honour dealt with the barrister's alternative submissions based on waiver and estoppel. Having regard to the findings of the magistrate that the solicitor had billed the "clients" for the barrister's fees as a disbursement and had initiated proceedings against the clients in the District Court in which he sued them for the barrister's fees, the primary judge found that the solicitor was precluded by either the doctrine of waiver or estoppel from denying his indebtedness to the barrister (Judgment at [46]-[47]).
In reaching that conclusion, the primary judge considered that s 189 of the 1987 Act could not avail the solicitor because it was directed to waiver by agreement, not by unilateral conduct. His Honour referred to Dennis v Cameron [2007] NSWCA 228, where the availability of waiver of non-compliance with the regulations was recognised (in that case, reg 22A of the Legal Profession Regulation 1994 (NSW), the predecessor to reg 45 of the 2002 Regulation). It should be noted that no express consideration was given in Dennis v Cameron to s 189 of the 1987 Act.
[5]
Proposed grounds of appeal
Proposed grounds 1 and 3 of the draft notice of appeal challenge the primary judge's contingent analysis that non-compliance with reg 45(1)(d)(ii) would not, in the circumstances, disentitle the barrister from commencing proceedings for the recovery of his costs. The solicitor's essential contention is that the primary judge erred in upholding the magistrate's approach that "substantial compliance" with reg 45(1) was sufficient to enable the barrister to sue the solicitor, without first having to undergo an assessment of costs.
Proposed ground 2 of the draft notice of appeal asserts that the primary judge erred in holding, in the alternative, that the solicitor was precluded either by way of waiver or estoppel from denying his indebtedness to the barrister. The solicitor contended that the availability of waiver or estoppel was precluded by s 189 of the 1987 Act.
Notably, there is no challenge in either the draft notice of appeal, or the solicitor's written submissions, to the primary judge's decision to allow the barrister's cross-appeal with respect to the award of interest relying upon s 190(3) of the 1987 Act.
[6]
Disposition of application
Ordinarily, it is only appropriate to grant leave where there is an issue of principle, a question of general importance, or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable: Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46]. It is well established that it is not sufficient merely to show that the trial judge was arguably wrong: see Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32].
Here counsel for the solicitor submitted that there was a question of general importance as to whether compliance with reg 45(1) was mandatory or directory only. To speak in terms of mandatory or directory is to assert a conclusion. Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [91]-[93] establishes that in deciding whether an act done in contravention of a statute renders the act invalid, it is necessary to ask whether it is a purpose of the legislation that invalidity should be the consequence of the contravention. In answering that question, regard must be had "to the language of the provision and the scope and object of the whole statute": at [93].
Contrary to the submissions of the solicitor, there are some textual differences between the relevant comparable provisions in the 1987 Act and the 2004 Act: see eg s 190 (1987 Act) and s 321 (2004 Act) dealing with interest; and s 192 (1987 Act) and s 331 (2004 Act) dealing with recovery of legal costs. This tends against the proposed appeal raising a question of general importance, in circumstances where the legislative scheme was replaced in 2005.
Next it may be observed that the primary judge's analysis of the effect of non-compliance with reg 45(1)(d)(ii) was not essential to his reasoning. Nor was his finding with respect to waiver and estoppel essential to his reasoning. It follows, in our view, that there is no issue of principle or question of general importance in the present case.
Further, the amount in issue in the present case is a relatively small sum of money. Counsel for the solicitor did not dispute the barrister's summary of the hearing days already spent on this dispute. The hearing in the Local Court involved five days, and a further three days hearing on three notices of motion between the parties, and other hearing days were spent on a motion relating to a subpoena issued by the solicitor. The hearing in the Supreme Court involved three hearing days as well as a number of directions hearings. In his costs judgment, the primary judge recorded that the barrister had incurred counsel's costs in the Local Court of well over $30,000. His Honour made a gross sum costs order with respect to the Supreme Court proceedings in an amount of $24,000. Plainly the legal costs involved are disproportionate to the amount in dispute, being a little over $28,000 plus interest.
Where small claims are involved, it has been said that 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 v AMF Bowling Pty Ltd [1995] NSWCA 69 (Cole JA); Zelden v Sewell [2011] NSWCA 56 at [22] (Campbell JA, Young JA agreeing); Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [37]-[39] (Basten JA). The present case falls into that category.
Section 56 of the Civil Procedure Act requires this Court to give effect to the overriding purpose of that Act, which is to "facilitate the just, quick and cheap resolution of the real issues" in proceedings. Here there is no dispute that reg 45(1)(d)(i) did not apply. This was dispositive of the alleged relevant error of law by the magistrate concerning the absence from the barrister's invoices of a statement that a client may apply to have the costs assessed under Pt 11 of the 1987 Act.
The solicitor's proposed appeal is directed to the two alternative bases for his Honour's decision dismissing the solicitor's appeal from the Local Court. It is arguable that non-compliance with reg 45(1)(d)(ii) might engage the prohibition on the commencement of recovery proceedings in s 192(1) of the 1987 Act. Whether that consequence would follow depends, in part, on whether the requirement in s 192(1) that a bill of costs be "given in accordance with this Division" refers to s 195 which deals with the permitted ways in which a bill of costs may be "given" in Div 4 and possibly s 194, which deals with signing of bills of costs, or also includes the requirement as to the form and content of bills of costs provided for in reg 45(1) of the 2002 Regulation, made pursuant to s 193(1) of the 1987 Act.
We do not consider that there would be an injustice to the solicitor in refusing leave to appeal in respect of this issue in circumstances where reliance on reg 45(1)(d)(ii) was not pleaded in the Local Court, it is not essential to the primary judge's reasoning, and the relatively small sum in dispute means that the costs of an appeal would likely be disproportionate to the amount in dispute and, as already indicated, it is not suggested that the solicitor is not liable to the barrister for some amount of his invoices.
As to the proposed appeal directed to the primary judge's findings of waiver or estoppel, his Honour's reasoning was based on the conduct of the solicitor, not any provision of a costs agreement or other agreement between the barrister and the solicitor that would engage s 189 of the 1987 Act. The solicitor's contention requires reading additional words into s 189. No compelling argument was advanced why the statute should be read in the manner contended by the solicitor. Of course, whether a waiver or estoppel can arise in the face of a statute may be contentious. It may also be accepted that in Dennis v Cameron this Court did not expressly consider the effect of s 189 of the 1987 Act. Nonetheless, this ground of the proposed appeal (like the other grounds) is directed to an issue which is merely an alternative basis for his Honour's primary conclusions. In the circumstances, the solicitor has not demonstrated an injustice which is reasonably clear, in the sense of going beyond what is merely arguable: Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46].
Accordingly, in our view, leave to appeal should be refused with costs.
[7]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 24 September 2015