Recovery of Counsel's Fees
11The first basket of issues, is whether or not $356,675 is recoverable, or whether the sum to be used as the starting point is $356,675 less $131,341, namely $225,334.
12The submissions exchanged between counsel have identified the problem with simplicity. It appears that the problem was drawn to the attention of an expert witness Suzanne Maree Ward, from whom affidavit evidence on the subject of costs has been adduced by the defendants.
13After he gave fee disclosure in accordance with the Legal Profession Act 2004 a costs agreement was made between Mr Benson and interests associated with the plaintiff for this proceeding.
14But it was a conditional costs agreement involving an uplift fee. It was a costs agreement which therefore came within the Legal Profession Act , s 324, which provides:-
"324 Conditional costs agreements involving uplift fees
(1) A law practice must not enter into a conditional costs agreement in relation to a claim for damages that provides for the payment of an uplift fee on the successful outcome of the claim to which the fee relates.
(2) Except as provided by subsection (1), a conditional costs agreement may provide for the payment of an uplift fee.
(3) The basis of calculation of the uplift fee must be separately identified in the agreement.
(4) The agreement must contain an estimate of the uplift fee or, if that is not reasonably practicable:
(a) a range of estimates of the uplift fee, and
(b) an explanation of the major variables that will affect the calculation of the uplift fee.
(5) If a conditional costs agreement relates to a litigious matter, the uplift fee must not exceed 25% of the legal costs (excluding disbursements) otherwise payable.
(6) A law practice must not enter into a costs agreement in contravention of this section.
Maximum penalty: 100 penalty units."
15Section 324 provides a prohibition, in s 324(1) followed by exceptions to that prohibition.
16It is not in contest that these proceedings include a claim for damages by the plaintiff. The issue identified by Ms Ward and the defendants is that Mr Benson's costs agreement is one which, "Provides for the payment of an uplift fee on the successful outcome of the claim to which the fees relate" and therefore is made in contravention of s 324(1).
17Mr Benson seeks recovery of his fees from the plaintiff but the defendants submit that the legislation prohibits this course. I agree with the defendant's analysis of the way the legislation works. Although I have found this somewhat surprising, it is nevertheless in my view the law.
18The applicable provisions are contained in Division 4 of Part 3.2 and chapter 3 of the L egal Profession Act 2004. Mr Benson concedes that the costs agreement that he entered into was in contravention of s 324(1) of the Legal Profession Act.
19He submits that his fees are nevertheless recoverable on the basis of Legal Profession Act , s 319(1)(c), and that he is entitled to recover the fair and reasonable value of the legal service provided. Legal Profession Act , s 319 provides:-
" 319 On what basis are legal costs recoverable?
(1) Subject to the provisions of this Part, legal costs are recoverable:
(a) in accordance with an applicable fixed costs provision, or
(b) if paragraph (a) does not apply, under a costs agreement made in accordance with Division 5 or the corresponding provisions of a corresponding law, or
(c) if neither paragraph (a) or (b) applies, according to the fair and reasonable value of the legal services provided.
(2) However, the following kinds of costs are not recoverable:
(a) the costs associated with the preparation of a bill for a client,
(b) the costs associated with the making of disclosures for the purposes of Division 3,
(c) the costs associated with the making of a costs agreement with a client."
20Mr Benson says that unless his fee agreements are regarded as exceptional or excessive, that his fee agreements should be regarded as some evidence of what is the fair and reasonable value of the legal service provided under s 319(1)(c).
21But for the provision to which I am about to come, I would agree with that submission. And I would agree that having seen the proceedings conducted, having seen the work that has done in them on the part of counsel on both sides, I would regard the contents of Mr Benson's fee agreements to be prima facie evidence of what was fair and reasonable value for the legal service he has provided without an uplift fee.
22Mr Benson submits that recovery is possible under Legal Profession Act, s 319(c), notwithstanding the voidness of the costs agreement under s 324, by reason of s 327(2). Legal Profession Act , s 327 provides:-
" 327 Certain costs agreements are void
(1) A costs agreement that contravenes, or is entered into in contravention of, any provision of this Division is void.
(2) Subject to this section and Division 11, legal costs under a void costs agreement are recoverable as set out in section 319 (1) (a) or (c) (On what basis are legal costs recoverable?).
(3) However, a law practice is not entitled to recover any amount in excess of the amount that the law practice would have been entitled to recover if the costs agreement had not been void and must repay any excess amount received.
(3A) A law practice that has entered into a costs agreement in contravention of section 324 (2)-(5) (Conditional costs agreements involving uplift fees) is not entitled to recover the whole or any part of the uplift fee and must repay any amount received in respect of the uplift fee to the person from whom it was received.
(4) A law practice that has entered into a costs agreement in contravention of section 324 (1) (Conditional costs agreements involving uplift fees) or 325 (Contingency fees are prohibited) is not entitled to recover any amount in respect of the provision of legal services in the matter to which the costs agreement related and must repay any amount received in respect of those services to the person from whom it was received.
(5) If a law practice does not repay an amount required by subsection (3) or (4) to be repaid, the person entitled to be repaid may recover the amount from the law practice as a debt in a court of competent jurisdiction."
23But the difficulty for Mr Benson's argument is that Legal Profession Act, s 327(4) provides that where one law practice, relevantly in this case Mr Benson, has entered a costs agreement with another law practice, relevantly his instructing solicitors, has entered into a costs agreement in contravention of Legal Profession Act, s 324, Mr Benson, as a law practice, "...is not entitled to recover any amount in respect of the provision of legal services in the matter to which the costs agreement related...".
24In my view this statutory language is quite intractable. It wholly excludes, in my view, the possibility of recovering fees on a quantum meruit or any other restitutionary basis outside the costs agreement itself.
25I say that for two reasons. First, Legal Profession Act, s 327 (2) expressly contemplates that fees may be recoverable under a void costs agreement under Legal Profession Act, s 319(1)(c). Thus to a limited extent the legislation expressly preserves restitutionary remedies. But then in the same section, s 327, in the limited case of contravention of s 324, the legislation uses language that on any view covers and removes such restitutionary remedies.
26Also the words "any amount" and "in respect of" in s 327(4) are apt to cover any kind of restitutionary claim. The words "...the provision of legal services in the matter to which the costs agreement related..." clearly encompass any kind of work associated with the subject matter of these proceedings to which Mr Benson's costs agreement relates, whether or not under the costs agreement itself.
27The second reason for my conclusion is that the words "and must repay any amount received in respect of those services to the person from whom it was received" in s 327(4) leave no room to doubt that the legislation intends that restitutionary claims be wholly excluded. The maintenance of a restitutionary claim for services is inconsistent with requiring the repayment of moneys already paid for those services.
28It can only be inferred from this statutory language that the Legislature wished in the strongest possible terms to deter the making of costs agreements, which included uplift fees, for the conduct of damages claims. The Legislature has succeeded in producing that result in this case.
29That is the law and effect must be given to it. But it is unfortunate, at least for Mr Benson, who I will observe has conducted these proceedings with professionalism, with attention to detail and with determined effort in his client's interests. A mistake appears to have been made here by the inclusion of the uplift fee in the costs agreement, leading to a contravention of s 324(1). The benefit of that mistake will redound to a limited extent to the benefit of the plaintiff and to a major extent to the benefit of the defendants in these proceedings.
30The result of this reasoning is that I should approach the gross sum costs order on the basis that the headline figure to be used in the calculations is $225,334, which is, the total of the fees charged to the plaintiff minus Mr Benson's fees.
31I have not been referred to any specific authority on s 327 that deals precisely with this problem in the way it has arisen in this case. This matter may go on appeal. So I propose to at the conclusion of these reasons give an assessment not only in accordance with these reasons but one in the alternative in the event that another Court were to disagree with my views. It is desirable that I do this. As the trial judge I am the person most familiar with the way the case has been conducted.