Local Court of New South Wales CITATION: BP Costing Services Pty Limited v Donald Rae Wright and Dean Stell [2005] NSWLC 16 JURISDICTION: Civil PARTIES: BP Costing Services Pty Limited Donald Rae Wright And Dean Stell T/as Wright Stell Lawyers FILE NUMBER: 7088/2005 PLACE OF HEARING: Downing Centre DATE OF DECISION: 01/16/2006 MAGISTRATE: CATCHWORDS: Action for recovery - Bill of costs - Services claimed - Small Claims Division of the Local Court - Legal Practitioners - General Divsion of the Local Court - Costs - Claim due to non compliance with legislative requirements - Question of costs Legal Practitioners Act 1987 LEGISLATION CITED: Legal Practitioners Act 1987 Part 2 Professional Conduct and Practice Rules 1995 Rule 19 Law Society of New South Wales v Hart SC Law Society of New South Wales v Seymour [1999] NSWCA 117 CASES CITED: Lloyd v Hill [2004] NSWSC 652 Chapman v Rogers [1984] 1 Qd 542 Bowen v Stott [2004] WASC 94 REPRESENTATION: ORDERS: Judgment for the Plaintiff on the amount claimed of $9237.05. I allow the costs on issue and service of the summons commencing proceedings in the sum of $194.00. I allow interest in accordance with the scale on and from the date of commencement of proceedings, such sum to be determined by the Registrar JUDGMENT The Plaintiff brings an action for services rendered. Those services are claimed to be the provision of a bill of costs in relation to litigation in which the defendant was involved before the Supreme Court of New South Wales. Action for recovery of the amount claimed was commenced in the Small Claims Division of the Local Court on 24th June 2005. The amount claimed is $9,237.05 plus interest in accordance with the scale on and from the date of commencement of proceedings. The defendant lodged grounds of defence to the action on 1st August 2005. The grounds of defence assert that the work undertaken by the plaintiff falls within the category of "general legal work". The defendant says that Section 48 (1) and (2) of the Legal Practitioners Act 1987 confines the undertaking of such work to an incorporated legal practice or a legal practitioner. Alternatively the defendant claims that the plaintiff, if it be a legal practitioner (presumably within the meaning of the Legal Practitioners Act 1987 is not entitled to claim its costs by reason of failure to comply with the provisions of Sections 173, 175 and 177 of that Act. The Legal Practitioners Act 1987 has since been repealed however both parties agree that it is the provisions of that Act as it then was that are to be considered within the context of these proceedings. The issues between the parties might properly be regarded at this point as simple. There was no issue the services were rendered to the defendant at its request. There was no issue raised as to quantum. There was no issue raised as to competence of the services provided. The only issue, taking the alternative "defences" collectively, is whether the Plaintiff was or was not an incorporated legal practitioner at the time the services were rendered and, if a conclusion as to fact is reached that it was, the provisions of the Legal Practitioners Act 1987 governing an entitlement to pursue costs, operate to prohibit any claim due to non compliance with legislative requirements. Before turning to the evidence it is appropriate in my view to outline briefly the chronology of events leading up to the hearing proper. I do so because the Plaintiff if successful, seeks an order for indemnity costs against the defendant. Despite the clarity and limited nature of the issues the Plaintiff sought to have the defence struck out. On 6th October 2005 before an Assessor of the Court, that application was refused. For reasons not readily apparent on the Court file the Assessor, following submissions as to issues of law – clearly related to the grounds of defence, transferred the proceedings from the Small Claims Division of the Court to the General Division. Jurisdiction in the General Division of the Local Court is exercised by a Magistrate. On 10th October 2005 the matter was allocated a hearing date of 19th December 2005. The Plaintiff sought, and was granted leave to file and serve an amended statement of claim within 7 days. The Court file does not contain any amended statement of claim. Orders were made for the filing and service of written statements between the parties. Those documents were to be filed and served by 15th November 2005. The proceedings were listed before the Court on 29th November 2005 for review. A review is conducted by the Court as a means of ensuring that the parties are able to proceed on the allocated hearing date. On 29th November 2005 the Court confirmed the hearing date of 19th December 2005. Both parties were present before the Court on that occasion. Subsequent to the hearing date being confirmed the Plaintiff filed a Notice of Motion seeking to have the defendant's statement, presumably the one filed in response to the directions of the Court, ruled inadmissible. That Motion came before Lulham LCM on 8th December 2005. Although his reasons are not recorded within the Court file, there is a notation under his hand dismissing the Notice of Motion and ordering costs against the Plaintiff. One might surmise that the decision to dismiss the Motion was because any decision as to admissibility was a matter for the hearing proper before an as yet unassigned magistrate and it would be inappropriate for another magistrate who might not be available or assigned on the nominated hearing date to pre-empt any decision as to admissibility before the commencement of the formal hearing. Whatever may have been the reasoning behind His Honour's decision, the step taken by the Plaintiff, on any objective consideration was "unusual". On 19th December 2005 the proceedings came before me. At the outset the Plaintiff again attempted to have material which might have been relied on by the defendant, struck out. The defendant informed the Court it had no intention of tendering any witness statement in the substantive hearing but confined its case to a cross examination of the plaintiff's witness. That witness turned out to be one Brian Phillips, the author of the witness statement dated 7th October 2005 and admitted as Exhibit 2 in the hearing. Paragraph 1 of that statement describes the author as a "Director of the Plaintiff authorized to make (this) Statement on its behalf". In the introductory portion of the witness statement Mr. Phillips described himself as "Company Director and Solicitor". Despite the duality of roles claimed by Mr. Phillips it is clear that in the context of these proceedings he appears before the Court not as a legal practitioner, but as a Director, and as he stated in his evidence, an employee of the Plaintiff company. It is in my view important to distinguish the guise of his appearance because it becomes relevant to the issue of costs should the plaintiff be successful. In this regard I have no doubt Mr. Phillips is alive to the proscription contained in Rule 19 of the Revised Professional Conduct and Practice Rules 1995. The contents of Exhibit 2 contained both admissible and inadmissible material. Separating out the expression of opinion, assertions as to law and other irrelevancies the Plaintiff's case is simple. It is uncontested that on 29th September 2004 the Plaintiff received correspondence from the defendant instructing it to prepare a bill of costs in assessable form. There is no issue that the defendant is a firm of solicitors. There is no issue that at no time was the Plaintiff asked to provide a Costs Agreement of the type mandated for in Division 2 of Part 11 of the Legal Practitioners Act 1987. A reasonable inference may be drawn in such circumstance that the defendant did not believe it was dealing with a solicitor. The suggestion that a firm of solicitors, affected by those same provisions would fail to request a disclosure of the basis of costs if it believed it was dealing with another solicitor as opposed to a commercial company would require either a finding of negligence or iniquitous conduct on the part of the defendant. Neither alternative has been raised in these proceedings. There is no issue the services contracted for by the defendant were provided. As I have indicated, nowhere in the grounds of defence is it suggested that those services were not of a satisfactory standard. It must be observed that in correspondence between the defendant and the plaintiff it was asserted by the defendant that the standard of services provided was unsatisfactory (see letter dated 21st March 2005 – Exhibit 4) but the failure to raise this in the grounds of defence in my view does not entitle the Court to turn its mind to the issue of whether the services provided were those contracted for. As I have indicated the issue to be determined is whether the Plaintiff is an incorporated legal practice within the meaning of Part 2A of the Legal Practitioners Act. If I find that it is then I must consider the second part of the defendants' grounds of defence outlined above. I return to the evidence of the witness for the plaintiff. Mr. Phillips deposed to the fact that he was a Director of the Plaintiff company, that its sole undertaking was the preparation of Bills of Costs, that he was the person who prepared such documents and was paid a fee by the company for his efforts. He said that the Plaintiff company is not incorporated as a legal practice, does not hold a practicing certificate, does not engage in general legal work, confines its activities to producing bills of costs at the request of legal practitioners and does not provide any services to members of the public. Mr. Phillips said that the Plaintiff does not charge fees but seeks reimbursement in terms of a % of the final costs ordered in those matters where the Plaintiff has provided a Bill of Costs. Although acknowledging that he himself held a practicing certificate as a solicitor Mr. Phillips says that at no time did he or anyone else hold out the Plaintiff as being his legal practice. In the course of cross-examination Mr. Phillips was shown a document (exhibit 3) obtained through the website of the Law Society of New South Wales. That document consists of two pages. Each page contains a statement under the bold print of the words " Search Results" in the following terms – "The authoritative online directory of New South Wales Solicitors who hold a current practicing certificate current as at 15 December 2005. Page 1 of the exhibit at the point identified "Legal Practice" nominates "BP Costing Services Pty Ltd." Page 2 at the same point has the same nomination but relates to details personal to Mr. Phillips. Mr. Phillips response to the implication that BP Costing Services Pty Ltd. is an incorporated legal practice was to deny the accuracy of the information in this regard contained on the Law Society website. He went further to say that he (personally) is not a member of the Law Society. The information contained in Exhibit 3 is of course, at best, hearsay. Absent more compelling evidence as to incorporation within the meaning of the Act and satisfactory evidence in relation thereto the weight to be given to the contents of exhibit 3 is extremely limited. Mr. Phillips was then cross examined regarding the nexus between the preparation of the Bill of Costs and legal proceedings. It was put to him that the purpose for which the work was undertaken was in connection with legal proceedings. The clear import of this line of questioning goes to the issue of what constitutes "general legal work" for the purpose of Section 48AE of the Act, Section 48AE(1)(d) and 48E(2) in particular. Section 20(2) prohibits any person from directly or indirectly doing any general legal work or probate work for a fee unless the person is a barrister or solicitor or incorporated legal practice in which work is done by one of the former. It is clearly the contention of the defendant that the services provided by the Plaintiff were indirectly related to the proceedings in the Probate Division of the Supreme Court inasmuch that had it not been for the existence of those proceedings there would have been no request made to the plaintiff for the provision of services. Mr. Phillips said that it was his understanding that the legal proceedings from which the request to prepare a Bill of Costs emanated had been brought to finality and that the Bill of Costs the plaintiff prepared was not to be submitted to a Court but to the Administrator of the Estate in relation to which litigation had taken place. No evidence was led to rebut this contention. In the course of submissions the Plaintiff submitted a number of authorities on the issue of what constituted direct or indirect performance of services as a solicitor. I have considered the effect of decisions such as Law Society of New South Wales –v- Hart SC 131191/91; The Law Society of New South Wales –v- Seymour [1999] NSWCA 117; Lloyd –v- Hill [2004] NSWSC 652. The Plaintiff tendered other cases in support of its contention but having considered them I am not of the view they are of assistance on the issue of whether the plaintiff was conducting, directly or indirectly the provision of legal services. The general tenor of the cases referred to above is the impression conveyed by the person concerned that they were holding themselves out to be a solicitor and conduct themselves in such a way as to lead to the reasonable inference that they are a solicitor. It is arguable whether that conclusion is to be drawn in a general way, that is whether a reasonable person would regard the conduct as being capable of giving rise to such an inference, or whether the inference is confined to the circumstances of the relationship between the person performing the work and the other party. I raise that issue because in this case, the other party is in fact a firm of solicitors. In my view the inference depends on the circumstances of the relationship. It should not be the case that a firm of solicitors can engage a corporation such as the Plaintiff, remain mute on the issue of pre-disclosure of costs and then when rendered an account, decline to pay on the basis that the conduct of the other party offends the provisions of Section 48E(2) of the Legal Practitioners Act 1987. That, as I indicated above, would be iniquitous conduct. I have no doubt the defendant knew the Plaintiff was an incorporated company. Nothing in the evidence in these proceedings argues to the contrary. Nor does it raise any suggestion that when entering into an agreement for the provision of the service it believed it was in fact contracting with Mr. Phillips as opposed to a Pty Limited company. The defendant is a firm of solicitors. It knows the difference between an individual and a corporation. I have not the slightest hesitation in concluding that it did not, at the time of engaging the Plaintiff's services, believe it was engaging the services of a solicitor, whether as an incorporated legal practice or otherwise. The better conclusion is that this assertion has all the hallmarks of perceived wisdom after the event than any persuasive consideration operating in the mind of the defendant as a rationale behind the decision to engage the services of the Plaintiff. I am of further of the view that the arrangement entered into was for the assistance of the defendant directly and not related either directly or indirectly to the provision of legal work. The fact that the defendant chose to "contract out" the preparation of a Bill of Costs, irrespective of whether it was within its own field of competence created in my view, a lacuna between the Supreme Court proceedings and the service provided by the plaintiff. I hold that the services provided by the Plaintiff were not rendered either directly or indirectly in relation to a legal proceeding for the purpose of Section 48E (1)(d) of the Act. Having come to the view that the Plaintiff is not an incorporated legal practice and did not perform directly or indirectly, work related to a legal proceeding it is not necessary for me to turn to the other issue raised in the grounds of defence, viz., the applicability of Sections 173, 175 and 178 of the Legal Practitioners Act 1987. I find that as a matter of established fact the Plaintiff provided services to the defendant in the form of the preparation a Bill of Costs. That the terms and conditions of such services were known to the defendant at the time the Plaintiff was engaged, that the amount claimed remains outstanding and that the Plaintiff is entitled to a verdict in its favour. I enter Judgment for the Plaintiff on the amount claimed of $9237.05. I allow the costs on issue and service of the summons commencing proceedings in the sum of $194.00. I allow interest in accordance with the scale on and from the date of commencement of proceedings, such sum to be determined by the Registrar. QUESTION OF COSTS As indicated above, the Plaintiff indicated to the Court that it wished to claim costs on an indemnity basis. Under the Uniform Civil Procedure Act 2005 an order for costs is governed by Division 2 of the Act. Section 98 in particular governs the discretionary awarding of costs, whether on an indemnity basis or otherwise. I am not prepared in these proceedings to make such an order. It will be readily apparent from the chronology of events within this litigation that a considerable amount of court time, and that of the defendant has been taken up with the determination of pointless notices of motion lodged by the Plaintiff. Even after the hearing of this matter was concluded and I had reserved my decision the Plaintiff was still seeking, inappropriately as it turned out, to bring the defendant before the court for no apparent reason. The last notice of motion, determined by me on 9th January 2006 sought, in part to have this court overturn a decision of another magistrate that was unfavourable to the Plaintiff resulting in an order for costs against it. That notice of motion was without any merit whatsoever and was dealt with accordingly. It is the view of this Court that the conduct of the plaintiff throughout these proceedings, has been less than appropriate. The overriding purpose of the Uniform Civil Procedure Act 2005 is set out in Section 56(1) of the Act. The responsibilities on the parties are set out succinctly at Section 56(3). Section 56(5) permits the court to take into account failure to comply with subsection (3) in exercising its discretion with respect to costs. I have. As I indicated above, this case was a relatively simple straightforward matter with no complex issues of fact and no complex issues of law. It should have remained in the Small Claims Division. It did not. It should however, having been transferred to the General Division have been dealt with in a purposeful expeditious manner. It was not. I do not see why, given that the largest responsibility for protracting the matter lies with the unnecessary interlocutory applications of the Plaintiff that I should make any order for costs on an indemnity basis and I decline to do so. This however is not the only aspect of consideration in that regard. It is the view of this Court that the manner in which the hearing was conducted does not allow the Plaintiff to recover professional costs on the hearing itself. As indicated above, the Plaintiff cannot be represented by Mr. Phillips as its solicitor and have Mr. Phillips as its principal witness. To do so would seem to this Court to offend Rule 19 of the Revised Professional Conduct and Practice Rules (NSW) and a lengthy line of decisions, such as Chapman –v- Rogers [1984] 1 Qd 542 and Bowen –v- Stott [2004] WASC 94 and others set out in the New South Wales Solicitors Manual at p. 21,025.5. It is the view of this court that the Plaintiff is in an analogous position to that considered by the High Court in Cachia –v- Hanes 179 CLR p. 403 at 413. In the hearing it was represented by its employee, not its solicitor. It cannot have it both ways. I am prepared to make an order for party-party professional costs for the commencement of proceedings, attendance at interlocutory proceedings other than Notices of Motion instituted by the Plaintiff but not otherwise. Those costs may be as agreed or assessed. G. Henson Deputy Chief Magistrate 16th January 2006 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. 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