Shaw v Rigby Cooke Lawyers (Legal Practice) [2009] VCAT 319

1. The Tribunal not having jurisdiction to hear and determine the counterclaim which the respondent purported to make under the Legal Profession Act 2004, the Tribunal is to treat the counterclaim as an application under the consumer and trader dispute provisions in the Fair Trading Act 1999, subject to the respondent giving an undertaking to the Tribunal [which was given] that the respondent would pay to the Tribunal the application fee payable upon a Fair Trading Act application.
2. The application by the applicant for an order that the Tribunal treat his application under the Legal Profession Act 2004 as an application under the consumer and trader dispute provisions in the Fair Trading Act 1999, and to allow the applicant to amend his application by making allegations under sections 8, 9 & 12 of the Fair Trading Act 1999, is dismissed.

1. This final hearing has occupied five days, and is scheduled to resume on 18 March 2009.
2. The respondent requested that I provide written reasons for two rulings made on 11 February 2009 and 18 February 2009 respectively.
3. It is necessary to set out, as briefly as possible, the events that led to the rulings.

1. Mr. Shaw is dissatisfied with the way in which Rigby Cooke, a firm of lawyers, acted for him in Supreme Court proceedings. He complained to the Legal Services Commissioner. The Commissioner treated the complaint as a civil dispute, but was unable to assist the parties to resolve the dispute. She authorised them to apply to VCAT to enable the dispute to be heard and determined: see generally Parts 4.1, 4.2 & 4.3 of Chapter 4 of the Legal Profession Act 2004.
2. Mr. Shaw lodged an application to VCAT on 25 May 2007. Mr. Shaw alleged in his application that Rigby Cooke acted negligently and failed to follow instructions. He sought compensation of $25,000.00, which is the maximum compensation that VCAT can award under the Legal Profession Act. He also sought other remedies.
3. Following a mediation, and a directions hearing which worked out a time table for the conduct of the proceedings, Rigby Cooke lodged a defence and counterclaim on 7 May 2008.
4. The counterclaim sought payment of legal costs of $29,851.55, alleged to be the balance owing by Mr. Shaw to Rigby Cooke for legal services provided in the Supreme Court proceedings.

1. On the third day of hearing, before any evidence had been given in support of the counterclaim, I asked Mr. Tatarka of counsel, who appeared for Rigby Cooke, to explain how VCAT came to have jurisdiction to hear and determine the counterclaim.
2. Mr. Tatarka submitted that s.4.3.17 of the Legal Profession Act, which sets out the orders that VCAT can make in a "civil dispute", includes "any other order the Tribunal thinks fit". I rejected that submission for the following reason.
3. A "civil dispute" is defined by s.4.2.2(1) as a costs dispute, a claim for pecuniary loss, or a genuine dispute arising out of the provision of legal services. A party to a civil dispute may make an application to the Tribunal within 60 days after being notified by the Commissioner that she could not resolve the dispute: s.4.3.15(2). Mr. Shaw made an application within 60 days seeking compensation for pecuniary loss. Rigby Cooke did not lodge an application seeking payment for its services. Indeed, it could not have done so.
4. A "costs dispute" is defined by s.4.2.2(2)(a) as "a dispute in relation to legal costs not exceeding $25,000 in respect of any one matter". The costs charged by Rigby Cooke far exceeded $25,000.00, as the $29,851.55 sought in the counterclaim is the balance said to remain unpaid.
5. I informed Mr. Tatarka that it is a common practice at VCAT for lawyers, against whom a claim for pecuniary loss has been made under the Legal Profession Act, to issue an application under the "consumer and trader dispute" provisions in the Fair Trading Act 1999, seeking payment for legal services. I also mentioned that there was no monetary limit in the Fair Trading Act provisions.
6. Mr. Tatarka indicated that Rigby Cooke wanted to follow that course. I stated that all Rigby Cooke needed to do was walk to the front counter at VCAT, fill in a printed form, attach the counterclaim, and pay an application fee. I stated, however, that I would be prepared to treat the counterclaim as an application under the Fair Trading Act if Rigby Cooke undertook to pay the fee payable on a Fair Trading Act application.
7. I explained these events to Mr. Shaw, who replied by saying in substance that he was not able to respond because he was not familiar with the Fair Trading Act provisions.
8. Mr. Tatarka gave an undertaking to pay the application fee. I ruled that I would treat the counterclaim as an application under the consumer and trader dispute provisions in the Fair Trading Act, and the hearing proceeded.
9. [I record that Rigby Cooke subsequently lodged an application under the consumer and trader dispute provisions in the Fair Trading Act, annexed the same defence and counterclaim to the application, and paid the application fee. I propose to hear that application concurrently with Mr. Shaw's application under the Legal Profession Act.]

1. On the fifth day of hearing, Mr. Shaw sought to file a document headed "Defence to Respondents Counterclaim lodged 11 Feb 2009 and Applicants amended claims".
2. Mr. Shaw sought to file the document at a time when he had concluded his evidence in chief (but not been cross-examined), after he had called a witness Mr. O'Rafferty (who had been interposed and who had concluded his evidence), and during the course of his cross-examination of Mr. McPhee (the lawyer who handled the matter at Rigby Cooke and who had been interposed).
3. The document ran to 14 pages. It appeared to me to be designed largely to overcome the $25,000 limit to the compensation that can be awarded under the Legal Profession Act, and designed to supplement the claims for pecuniary loss by making claims that relied upon the "consumer and trader dispute" provisions, the "unconscionable conduct" provisions, the "misleading or deceptive conduct" provisions, and the "false representation" provisions in sections 108, 8, 9 & 12 respectively of the Fair Trading Act.
4. There is nothing to prevent a client from claiming compensation in excess of $25,000 in an application under the Legal Profession Act, but the Tribunal cannot award compensation exceeding $25,000. In his application under that Act, Mr. Shaw sought compensation that I calculate to be about $393,000, plus a refund of legal fees charged by Rigby Cooke and by counsel. On page 12 of his particulars of claim, Mr. Shaw stated "On this basis set out in the particulars above, I seek compensation of $25,000, which is the maximum available in this jurisdiction".
5. The document by which Mr. Shaw sought to amend his claim, by bringing it under the Fair Trading Act, made claims for compensation well in excess of $500,000, plus compensation for loss of use of money expended by him in the Supreme Court proceedings. In fairness to Mr. Shaw, he foreshadowed at the commencement of this hearing that he would provide more detailed and up to date calculations for his claims under the Legal Profession Act. As far as quantum is concerned, the pecuniary losses that Mr. Shaw wanted to recover under the Fair Trading Act in substance were the same pecuniary losses that he wanted to recover under the Legal Profession Act, although made in more detail and brought up to date.
6. Mr. Shaw submitted that Rigby Cooke had been allowed to change its counterclaim to a counterclaim under the Fair Trading Act, so he should be allowed to change his claim to a claim under the Fair Trading Act. However, I referred to other factors that I had taken into account, and rejected the submission.
7. The first factor was that Mr. Shaw chose to follow the Legal Profession Act course, not the Fair Trading Act course, with knowledge that the maximum amount of compensation that could be awarded under the Legal Profession Act was $25,000. On the other hand, Rigby Cooke was not entitled to make a counterclaim under the Legal Profession Act, at least because the legal costs charged by Rigby Cooke exceeded $25,000. Rigby Cooke had no choice but to make its counterclaim under legislation other than the Legal Profession Act.
8. The second factor was that, although Mr. Shaw sought to recover the same pecuniary losses, he sought to do so by re-casting his allegations to take advantage of the provisions in sections 8, 9 & 12 of the Fair Trading Act relating to unconscionable conduct, misleading or deceptive conduct and false representations, a quite different claim. [I acknowledge that Mr. Shaw also wanted to take advantage of the consumer and trader dispute provisions in s.108 of the Act, but I would see a claim under those provisions as being identical to the claim made under the Legal Profession Act, and in reality not a new claim.] On the other hand, Rigby Cooke made exactly the same claim under the Fair Trading Act, namely that it had provided legal services and should be paid for them.
9. The third factor is that, although Mr. Shaw claimed at least $393,000 under the Legal Profession Act, the reality is that the highest amount of compensation that Rigby Cooke might be called upon to pay is $25,000. The highest amount that Rigby Cooke might have been called upon to pay if Mr. Shaw succeeded with his proposed claim under the Fair Trading Act was at least $500,000, a much larger amount. On the other hand, Rigby Cooke claimed $29,851.55 under both the Legal Profession Act and the Fair Trading Act.
10. The fourth factor was that the dispute between the parties, from lodgment of the application on 25 May 2007 until the fifth day of hearing on 18 February 2009, was primarily about negligence and a failure to follow instructions, and secondarily about payment for legal services, not about allegations of unconscionable conduct, misleading or deceptive conduct, or false representations. It really was too late to allow Mr. Shaw, without penalty, to re-cast his allegations.
11. I explained to Mr. Shaw that he could withdraw his application under the Legal Profession Act, and bring a new application under the Fair Trading Act, but that such a course was likely to lead to the making of an order that he pay to Rigby Cooke the costs thrown away as a result of his withdrawal of the Legal Profession Act application. Mr. Shaw replied that he did not want to follow that course.