1 In each of these proceedings, relief is sought in relation to an assessment of costs carried out by a costs assessor under Division 6 of Part 11 of the Legal Profession Act 1987. The plaintiff in 13492/01 seeks relief in respect of the determination of costs evidenced by a certificate issued on 24 October 2001 by costs assessor Mr I F Dwyer (91247/00). The plaintiffs in 13494/01 seek relief in respect of the separate determination of the same assessor in his certificate issued on the same date (91248/00).
2 The costs in question were awarded by orders made by the court. In each case, there was an order that the present plaintiff (or plaintiffs) pay costs of the present defendant. Each of the proceedings now before me raises the same issues. I dealt with them together.
The plaintiffs' principal contentions
3 The allegation central to the plaintiffs' challenge to each assessment is that, before the relevant costs order was made in favour of the defendant, there existed an agreement between him and his lawyers that no costs would be charged. For that reason, the plaintiffs say, the correct assessment of costs was effectively zero.
4 Each of the challenged costs assessments referred to the terms of the agreement between the defendant and his lawyers, being a solicitor (Mr Licardy) and two barristers (Ms Lydiard and Ms Preston), although all three did not act throughout the whole period covered by the assessment. The assessor concluded that each of the three was retained on a "no win/no pay" basis, that is, generally speaking, on terms that, should the defendant be successful in the proceedings (as he eventually was, in each case), there would be remuneration but if he was unsuccessful the lawyer would not be remunerated.
5 The plaintiffs say that the assessor misconstrued the nature of the retainer and that it was, in reality, on a basis entailing the consequence that there was to be no remuneration of the lawyers in any circumstances, regardless of the result of the proceedings. That characterisation forms the basis for the contention that the assessor should have assessed costs at effectively zero.
6 The plaintiffs also say that there was no written record of the "no win/no pay" fee arrangement between the defendant and his lawyers before 10 February 1997, which was after the work in question had been done. That being so, they rely on s.184(4) of the Legal Profession Act for the proposition that the supposed "no win/no pay" agreement cannot be relied upon.
The relief sought
7 By the further further amended summons in each proceeding, there is sought, first, an order, in so far as it is necessary, that the plaintiff (or plaintiffs) be granted leave to appeal against part of the determination of the costs assessor; second, an order that, to the extent that each assessment proceeded on the basis that each lawyer was acting on a "no win/no pay" basis and not on a "pro bono" basis, it be set aside; and, third, a declaration that the defendant was represented on a "pro bono" basis and was not entitled to any costs for his representation.
8 In advancing these claims, the plaintiffs rely on ss.208L and 208M of the Act. Those sections are in the following terms:
" 208L Appeal against decision of costs assessor as to matter of law
(1) A party to an application who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the Supreme Court, appeal to the Court against the decision.
(2) After deciding the question the subject of the appeal, the Supreme Court may, unless it affirms the costs assessor's decision:
(a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or
(b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application.
(3) On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given.
208M Appeal against decision of costs assessor by leave
(1) A party to an application relating to a bill of costs may, in accordance with the rules of the Supreme Court, seek leave of the Court to appeal to the Court against the determination of the application made by a costs assessor.
(2) A party to an application relating to costs payable as a result of an order made by a court or a tribunal may, in accordance with the rules of the court or tribunal, seek leave of the court or tribunal to appeal to the court or tribunal against the determination of the application made by a costs assessor.
(3) The Supreme Court or court or tribunal may, in accordance with its rules, grant leave to appeal and may hear and determine the appeal.
(4) An appeal is to be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given.
(5) After deciding the questions the subject of the appeal, the Supreme Court or court or tribunal may, unless it affirms the costs assessor's decision, make such determination in relation to the application as, in its opinion, should have been made by the costs assessor."
9 It is also pertinent to set out s.208NC:
" 208NC Court may refer unreviewed determination to review panel
(1) If an appeal is made under section 208M against a determination of a costs assessor and the determination to which the appeal relates has not been reviewed by a panel in accordance with Subdivision 4A, the court or tribunal to which the appeal is made may refer the appeal to the Manager, Costs Assessment for a review by a panel under that Subdivision.
(2) For the purposes of Subdivision 4A, the referral of an appeal by a court or tribunal under subsection (1) to the Manager, Costs Assessment is taken to be a duly made application for a review under that Subdivision."
10 Section 208NC needs to be read in the light of s.208KC which describes the review function assigned to a review panel consisting of two costs assessors:
" 208KC General functions of panel in relation to review application
(1) A panel constituted under this Subdivision may review the determination of the costs assessor and may:
(a) affirm the costs assessor's determination, or
(b) set aside the costs assessor's determination and substitute such determination in relation to the costs assessment as, in their opinion, should have been made by the costs assessor who made the determination that is the subject of the review.
(2) For the purposes of subsection (1), the panel has, in relation to the application for review, all the functions of a costs assessor under this Part and is to determine the application, subject to this Subdivision and the regulations, in the manner that a costs assessor would be required to determine an application for costs assessment.
(3) However, the review is to be conducted on the evidence that was received by the costs assessor who made the determination that is the subject of the review and, unless the panel determines otherwise, the panel is not:
(a) to receive submissions from the parties to the assessment, or
(b) to receive any fresh evidence or evidence in addition to or in substitution for the evidence received by the costs assessor.
(4) If the costs assessors who constitute the panel are unable to agree on a determination in relation to an application, the panel is to affirm the determination of the costs assessor who made the determination that is the subject of the review."
11 The plaintiffs say that two questions of law capable of being dealt with under s.208L are raised by the costs assessments, namely, whether agreements were void pursuant to s.184(4) of the Act and whether the costs assessor failed to comply with clause 26IJ of the Legal Profession Regulation 1994 (and, in particular, clause 26IJ(2)(d)(i) and (ii)) in that he failed to give adequate reasons for his decision. The question whether the lawyer's retainers were "pro bono" or on a "no win/no fee" basis is said by the plaintiffs to be a mixed question of law and fact, as is an additional question to which they advert, namely, whether the lawyers are estopped from departing from representations allegedly made by them to the plaintiffs and the court that they were acting "pro bono". Questions of law and questions of fact alike may be agitated upon a s.208M appeal. Determination of the questions said to be mixed questions of law and fact is accordingly seen by the plaintiffs as something which can be pursued only under s.208M with the leave of the court.
12 By consent, argument before me on 1 August was confined to the question whether leave to appeal should be granted under s.208M.
13 The propositions upon which the plaintiffs rely call for an examination of several parts of the Legal Profession Act concerning the charging and assessment of legal costs.
Costs agreements and fee disclosure
14 Division 3 of Part 11 of the Act deals with "costs agreements". Section 184(4), upon which the plaintiffs rely, is located in Division 3. That section declares that a "costs agreement" is void if it is not in writing or evidenced in writing. The expression "costs agreement" is defined by s.173(1) as meaning "an agreement referred to in section 184 as to costs for the provision of legal services", that is, according to another definition in the same section, "work done, or business transacted, in the capacity of a barrister or solicitor".
15 Two kinds of agreement are "referred to in section 184". For present purposes, I am concerned only with the kind referred to in s.184(1)(a):
"An agreement as to the costs of the provision of legal services may be made with a client by:
(a) the barrister or solicitor who is retained by the client to provide the services …"
16 Section 184(1)(a) thus contemplates that an agreement "may be made" by a barrister or solicitor with his or her client "as to" the costs of the provision of legal services. Lawyer and client are not compelled to enter into such an agreement. The choice is theirs. If they decide to make an agreement, they will achieve their intended objective only if they cause that agreement to be in writing or to be evidenced in writing. If they fail to take that step, they have, in reality, not entered into any agreement at all since their purported agreement is rendered void by s.184(4):
"A costs agreement is void if it is not in writing or evidenced in writing."
17 A "costs agreement", as defined, is not the same as a contract for the provision of legal services. This is evident not only from the description and definition of "costs agreement" in ss.173(1), 184(1) and 184(3) but also from s.184(5):
"A costs agreement may form part of a contract for the provision of legal services."
18 A contract for the provision of legal services may thus exist independently of a costs agreement. It follows that there can be a contractual obligation on the part of a lawyer to provide legal services and a contractual right on the part of a client to the rendering of such services even if there are no express terms as to costs. Putting this in perhaps more familiar terminology, there can be a retainer despite there being no agreement of the kind the Act designates a "costs agreement".
19 The purpose behind s.184(4) is clear enough. If there is to be reliance on the terms of a contract as to the quantum or manner of computation of, or other matters "as to", a lawyer's costs, that contract must either be a written contract or a contract evidenced in writing. This ensures that the terms are set down in tangible form so that any doubt about the way in which they are expressed is avoided. If, because of the lack of writing, there is room for speculation or argument about what was agreed as to costs, then the legislative policy is that any agreement should be treated as non-existent and rights and obligations on the subject of the lawyer's remuneration should be determined without regard to the supposed agreement.
20 A particular kind of costs agreement contemplated by the Act is one under which the payment of all the lawyer's costs is contingent on the successful outcome of the matter in which the lawyer provides the legal services - a concept summed up, in general terms, in the "no win/no pay" label. This kind of agreement (a "conditional costs agreement") is provided for in s.186. Section 187 allows a conditional costs agreement to provide for a premium on the costs provided for in the case of successful outcome. Section 188 refers to certain provisions which may not be included in a costs agreement, namely, provisions that costs are to be determined as a proportion of, or are to vary according to, the amount recovered in any proceedings to which the agreement relates.
21 Other provisions to which reference should be made are those in Division 2 of Part 11 (ss.175 to 183) which place upon a lawyer an obligation to disclose to a client certain matters with respect to costs at a time and in a way specified in the provisions. The consequence of failure by a lawyer to comply with the disclosure requirements is that the lawyer has no right to recover costs (and the client has no obligation to pay them) unless the costs have been assessed under Division 6 of Part 11. This is the effect of s.182.
Assessment of lawyer-client costs
22 I turn now to Division 6 of Part 11, noting immediately that, while it is concerned with the general subject of "assessment" of costs, it approaches that general subject from two quite different perspectives. The first involves costs claimed by a lawyer from his or her client. The second is concerned with costs which a court or tribunal has awarded to one party to proceedings as against another. (I leave to one side the case where one practitioner retains another to act on behalf of the first's client.)
23 The provisions in Divisions 2 and 3 concerned with fee disclosure and costs agreements respectively are most directly relevant to the first of these matters. So far as Division 2 is concerned, there is the express provision that, in the absence of compliance with the disclosure requirements, Division 6 assessment is the only way in which a right to recover costs can arise in the lawyer: s.182. The Division 6 process, in so far as it is concerned with costs to be paid by a client to a lawyer, works on the basis that the lawyer will deliver to the client a "bill of costs", defined by s.173 as meaning "a bill of costs for providing legal services" and as including "a memorandum of fees". A client to whom a bill of costs is given may apply to have the whole or any part of the costs assessed, as may the lawyer who gave the bill. The assessment process occurs under Subdivision 2 of Division 6. A costs assessor may confirm the bill of costs or, if satisfied that the disputed costs are unfair or unreasonable, substitute what he or she considers to be a reasonable amount.
The role of costs agreements in assessment of lawyer-client costs
24 The relevance of costs agreements to the assessment process in relation to lawyer-client costs under Subdivision 2 of Division 6 emerges from ss.208C and 208D. Those sections lay down rules to be observed by assessors in cases where there is a costs agreement complying with Division 3. The first of these rules compels an assessor to decline to assess a bill of costs where the agreement specifies the amount of the costs or the dispute relates only to the rate specified in the agreement for calculating costs. In those cases, the agreed amount or rate prevails and there is no assessment. The second rule applies where the agreement specifies a rate at which the costs are to be calculated but the dispute relates to some other matter. In a case of that kind, the costs are to be assessed at the agreed rate. The third rule is that the costs assessor must give effect to a provision of the agreement for the payment of a premium unless the premium is determined to be unjust under s.208D. The fourth rule comes from s.208D itself: the assessor may determine that any term of the costs agreement is unjust.
25 These provisions with respect to the part played by a costs agreement in the process of costs assessment as between lawyer and client emphasise the essential nature of such an agreement. While it may have contractual force between its parties, its effect may be varied or overridden by the assessment process. Specifically, content of certain kinds will cause an attempt to resort to assessment to be unsuccessful; content of another kind will be treated as conclusive when an assessment is undertaken; and any term may be determined to be unjust. Of course, if a costs agreement is made void by s.184(4), it will not produce any of these consequences, since an agreement which is void must be regarded as non-existent so far as the efficacy of any of its terms is concerned.
26 The important point here is that where assessment of lawyer-client costs occurs under Division 6, it is the result of the assessment, not the costs agreement, that defines the rights and obligations of the parties; and that any costs agreement plays no more than the role I have described.
The lawyer's right to remuneration
27 In saying this, I do not suggest that lawyer and client cannot enter into a binding contract concerning the provision of legal services or that such a contract cannot contain terms fixing the lawyer's remuneration and giving a contractual right to recover it. Clearly, they can and, as s.184(5) recognises, the terms of any such contract as to remuneration will themselves be a costs agreement. The real point is that terms as to remuneration are susceptible to being overtaken by the costs assessment process in such a way that, in the final result, the remuneration actually applying differs from that agreed.
28 Where there is no "costs agreement" or any such agreement is void (because not in writing or evidenced in writing), it does not follow that the lawyer has no right to remuneration and the client has no obligation to pay for legal services provided. Where a lawyer does work and the client has the benefit of it, an entitlement to remuneration generally arises. But the lawyer is precluded from taking proceedings for recovery until after a bill of costs complying with the statutory requirements has been delivered to the client: s.192. It is the delivery of the bill of costs that secures to the client or the lawyer (or both) access to the costs assessment process. If there is no assessment, the lawyer will recover according to ordinary contractual principles, subject always to the effect of s.184(4) in making void any terms constituting a "costs agreement", in which event there is no apparent reason why there should not be recovery upon a quantum meruit.
29 It is important to emphasise that the only effect of s.184(4) is to obliterate an agreement, which is unwritten, and not evidenced in writing. Because the law regards it as non-existent, the agreement itself cannot be the source of rights and obligations. But nothing in the Act prohibits, expressly or by implication, the making of unwritten costs agreements. Nor does the Act prohibit, expressly or by implication, the recovery of remuneration in the absence of a written agreement - the most it does is to say that if the fee disclosure requirements have not been observed (a quite distinct matter), the right to recover remuneration is dependent upon costs first having been assessed under Division 6 of Part 11. No illegality flows from an unwritten costs agreement or from the provision of legal services in the context of such an unwritten agreement or without any costs agreement at all; it is just that remuneration cannot be claimed under an unwritten agreement because the agreement the parties attempted to make never eventuated, being void from the moment of its supposed inception. The situation is thus one in which services are lawfully provided and lawfully received but in the absence of any contract for payment.
30 In such a case, principles of restitution countering unjust enrichment allow recovery of reasonable remuneration. The relevant principles were authoritatively established by the judgments in v Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221. The right of recovery proceeds from the requirements of justice as distinct from any implied contract, there being, in the present context, no room left by s.184(4) for the existence of an implied contract or implied term for the payment of remuneration. The matter was put thus by Murray J (with whom Templeman J and Einfeld AJ agreed) in ABB Power Generation Ltd v Chapple (2001) 25 WAR 158:
"[T]he basic concept provides a capacity for the law, by drawing on principles of the common law and equity to provide compensation to a plaintiff in a case where, at the plaintiff's expense in a material sense, the defendant has been provided with and has accepted a benefit of a material kind which, in the circumstances of the case, it would be unjust to permit the defendant to receive without making reasonable recompense to the plaintiff for it. A variety of factual situations will give rise to the obligation but, in my opinion, a classic example of the application of these principles arises in circumstances where the benefit has been provided and taken outside the ambit of a contractual relationship but nonetheless in a commercial context where the plaintiff can be seen to be more than a mere volunteer."
31 In separate observations, Templeman J said:
"[I]f the defendant, as a reasonable person, did not appreciate that the plaintiff would look to him for payment, it would probably be difficult to make out a case of unjust enrichment. That is why Byrne J in Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221 said that 'the appropriate enquiry" was whether the recipient of the relevant services should have realised that he would be expected to pay for them."
32 The aptness of general restitutionary principles to ground a claim for lawyers' costs was recognised by the Queensland Court of Appeal (McMurdo P, Thomas JA and Mullins J) in Adamson v Williams [2001] QCA 38:
"In the present case the claim was '$9,437.82 for solicitor's costs and outlays'. The full statement in the pleading was 'The plaintiff claims $9,437.82 for solicitor's costs and outlays incurred in this jurisdiction from June 1996 to July 1887. An account in taxable form was delivered to the defendant on 25 July 1997.' That would permit a judgment under any cause of action that was established by the facts.
Although the natural inference in such a claim is that based on contract, there is nothing inconsistent in that pleading with the maintenance of a claim based on either contract or quasi-contract. Quasi-contractual claims, including those conveniently described as quantum meruit are now generally classified as restitutionary claims: Pavey & Matthews Pty Ltd v Paul [(1987) 162 CLR 221]; ANZ Banking Group Ltd v Westpac Banking Corporation [(1988) 164 CLR 662, 673]; David Securities Pty Ltd v Commonwealth Bank of Australia [(1992) 175 CLR 353]; Baltic Shipping Co v Dillon [(1993) 176 CLR 344]; Mason and Carter Restitution Law in Australia [At p 11]. Of course a claim cannot be made for restitution when an existing enforceable contract governs the claim in question: Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd [(1990) 20 NSWLR 251, 275]. But a claim for quantum meruit may arise if a party, through breach or wrongful repudiation, prevents the other party from earning the stipulated remuneration: McIntosh Hamson Hoare Govett Ltd v Pinnacle Properties Ltd [Appeal No 166 of 1994, 5 May 1995, 7]."
33 The availability of quantum meruit as a means of recovery where the contract the parties sought to make is void has long been recognised. It is sufficient to refer to an observation of Starke J in Phillips v Ellison Brothers Pty Ltd (1941) 65 CLR 221, supported by a reference to Craven-Ellis v Canons Ltd [1936] 2 KB 403:
"So also it has been held that a person who rendered services under an agreement which was in fact void was entitled to recover for the services rendered upon the basis of a quantum meruit ."