New South Wales Supreme Court CITATION : Lloyd v Hill [2004] NSWSC 652 HEARING DATE(S) : 19 July 2004 JUDGMENT DATE : 22 July 2004 JURISDICTION: Common Law Division JUDGMENT OF : Studdert J DECISION : (1) I make the orders sought in paragraphs 1 and 2 of the further amended summons filed on 9 July 2004. (2) Costs are reserved. (3) I direct that the defendant deliver to my associate and forward to counsel for the plaintiff submissions as to costs of the proceedings in this court within a period of seven days from today; I direct that the plaintiff deliver to my associate and to counsel for the defendant his written submissions within a period of fourteen days from today; and I direct any submissions in reply be delivered to my associate and served upon counsel for the plaintiff within twenty-one days from today. Legal Profession Act 1987, ss 3, 25, 48B, 48C, 48E, 208G, 208L LEGISLATION CITED : Legal Profession Regulations, reg 56 Local Court Rules, Pt 9, r 1 Supreme Court Rules, Pt 65, r 8 Cachia v Haynes (1993-94) 179 CLR 403 Freeman v McNally [2003] NSWSC 780 Guss v Veenhuizen (1976) 136 CLR 47 Kekatos v The Council of the Law Society of New South Wales [1999] NSWCA 288 CASES CITED : Kenna v Connolly (1943) 17 ALJ 32 Kiwi Munchies Pty Limited v Thai Airways International Public Limited [2004] NSWSC 89 London Scottish Benefit Society v Chorley & Ors (1883-84) 13 QBD 872 Re Sanderson; Ex parte The Law Institute of Victoria (1927) VLR 394 Tolputt & Co. Limited v Mole (1911) 1 KB 87 PARTIES : Anthony Lloyd (Plaintiff) Clive Hill (Defendant) FILE NUMBER(S) : SC 12653/03 COUNSEL : A.P. Spencer/F. Rogers (Plaintiff) M.W. Robinson (Defendant) SOLICITORS : Forbes Dowling (Plaintiff) Longman Hill Solicitors (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION STUDDERT J Thursday 22 July 2004 12653/03 ANTHONY LLOYD v CLIVE HILL JUDGMENT 1 HIS HONOUR: Anthony Lloyd has applied by way of further amended summons seeking the following orders: "1. Pursuant to section 208L of the Legal Profession Act 1987, an order setting aside the certificates as to determination of costs issued on 11 September 2003. 2. Pursuant to section 208L of the Legal Profession Act 1987, an order that the Court remit its decision on the question to the costs assessor to re-determine the application. 3. Costs." 2 The respondent to the summons is Clive Hill, who was previously the defendant in proceedings brought by this same plaintiff in the Local Court at Cowra. Those proceedings arose out of a motor vehicle accident. The plaintiff in the Local Court was unsuccessful and judgment was entered in favour of the defendant. The plaintiff was ordered to pay the defendant's costs of the Local Court proceedings. 3 Since the parties to those Local Court proceedings were unable to agree on the quantum of costs, that issue was referred to a costs assessor in July 2003. On 11 September 2003 the costs assessor issued a determination in relation to the matter and two certificates: (a) a certificate for the assessment of party and party costs in the sum of $13,415.50 (b) a certificate concerning the costs of the costs assessor referable to the assessment in the sum of $1074.79. 4 These are the certificates which the plaintiff now seeks to set aside. 5 The plaintiff comes to this Court relying upon s 208L of the Legal Profession Act 1987, which section provides as follows: "(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." 6 The plaintiff submits that the costs assessor has erred in law, thus enlivening the operation of s 208L(1). The error of law concerns the manner in which he provided for the costing of the services of Mr Longman, a former solicitor of this court. 7 The defendant is a solicitor practising in Orange, and he appears to be the principal of Longman Hill. The earlier letterhead of Longman Hill conveys that Colin Longman was a consultant in that practice, at least until his practising certificate expired on 30 June 2001. Mr Longman did not hold a practising certificate from 1 July 2001 onwards. 8 The proceedings in the Local Court were commenced by way of statement of liquidated claim issued on 18 January 2001 and the matter proceeded to judgment in favour of the defendant some twenty-one months later on 18 October 2002. After Mr Longman ceased to hold a practising certificate, he continued to act for the defendant and, indeed, he appeared for him when the matter was listed for hearing in Cowra on 8 November 2001 but was not reached, and again on 17 April 2002 when the matter was part heard, and finally on 18 October 2002 when the hearing was completed. 9 When the notice of grounds of defence were filed, they were verified by Mr Longman as the solicitor for the defendant and the affidavit verifying was sworn on 22 February 2001. However, there was an amended defence filed in November 2001 and again this was verified by Mr Longman, who still represented himself in the affidavit as the solicitor for the defendant. For the purposes of the assessment of costs, Mr Longman signed the notice pursuant to reg 56(1)(a) of the Legal Profession Regulation as "solicitor for the defendant". That notice was dated 13 June 2003. 10 In the document entitled "S.208G narrative", it was asserted that: "The conduct of the matter on behalf of the plaintiff was undertaken by Mr Longman Solicitor." The defendant claimed costs on a time costed basis at the rate of $250 per hour up to 12 February 2001, and thereafter at the rate of $275 per hour (exclusive of GST). There are many items on the Bill presented referring to work done for the defendant "by solicitor", and these items include attendances "by solicitor" after 30 June 2001: see, for example, items 41, 42, 44, 45, 46, 47, 74, 76, 79, 84, 100 and 107. These items presumably all refer to work done by Mr Longman. 11 The costs assessor was advised by letter dated 23 July 2003 that the defendant objected to the quantification of the costs sought on a number of grounds and on that date the defendant alerted the assessor to the uncertainty as to whether Mr Longman held a practising certificate at the time he performed the services to which the bill related. On 1 August 2003 Mr Longman wrote to the assessor advising that his last practising certificate expired on 30 June 2002: "This matter was the writer's last case and went on longer than anticipated. My last practising certificate expired 30 June 2002. The writer continued to represent the defendant only after gaining the leave of the court, with the consent of the plaintiff." 12 However, subsequently, on 7 August 2003 the plaintiff's solicitors wrote to the costs assessor enclosing a letter from the Law Society which evidenced that Mr Longman ceased to hold a practising certificate as at 1 July 2001. The matter proceeded before this Court on the basis that the information from the Law Society was correct and, indeed, the costs assessor proceeded on this basis. 13 The plaintiff objected to the claim for profit costs as from 1 July 2001 because Mr Longman held no practising certificate from that date onwards. The costs assessor addressed that objection in the expression of his reasons on 11 September 2003, in the letter that accompanied his certificate as to his determination of costs. Relevantly the costs assessor said this: "I accept that Mr Longman ceased to hold a practicing certificate as from 1 July 2001. I accept that he did the work. The solicitors on the record for the applicant were Longman Hill. It seems likely that the applicant Clive Hill was the proprietor of that firm. The fact that the work was done for Clive Hill by a person who did not have a practicing certificate does not mean that the applicant is precluded from claiming fees for the work done by that person. I accept that all the work done by Mr Longman was done for and effectively under the supervision of the applicant Clive Hill trading as Longman Hill Solicitors. The lack of a practicing certificate could affect the rate for the work done by Mr Longman. However there is ample authority sanctioning appropriate rates for experienced clerks in the employ of a solicitor. In Cole and Allied Operations Pty Ltd v Trevor Clifton & Anor. No. 10507/97 Supreme Court, Law Division 27 August 1997, Master Harrison indicated that an unqualified clerk who was greatly experienced in undertaking work which would normally be undertaken by a solicitor with minimal supervision in 1994, now nine years ago, could properly be between $100.00 and $120.00 per hour. On the material before me it appears that Mr Longman was an experienced solicitor, who was retiring but continued to handle this case after 1 July 2001 when he no longer held a practicing certificate. I do not think the fact that he practiced as a clerk working in the employ of Longman Hill does much to alter the appropriate rate for his work. The respondent also suggests that because there was no costs agreement, I should not be satisfied that Mr Hill is liable to pay for the services rendered by Longman Hill, and in particular Mr Longman. That is an irrelevant consideration since Mr Hill would be entitled to claim professional fees for work he did himself. The fact that Mr Hill was sensible enough to have solicitor act for him, although it was one employed by him and a person who ceased to be a solicitor during the course of the work, makes no difference to the liability of the respondent Anthony Lloyd to pay party and party costs. I have already referred to Atlas v Kelyk and the other relevant cases. I have not reduced costs due to these objections." 14 The defendant submits that the above passage evidences error of law by the assessor in his approach to the assessment now challenged. 15 It is correct that a defendant solicitor who appears in person is entitled to recover such costs as he could have recovered had he employed a solicitor to act for him, save for items which do not become necessary because the solicitor is acting for himself: see London Scottish Benefit Society v Chorley & Ors (1883-84) 13 QBD 872; Tolputt & Co. Limited v Mole (1911) 1 KB 87; and Guss v Veenhuizen (1976) 136 CLR 47; but see also Cachia v Haynes (1993-94) 179 CLR 403 where the principle was criticised in the joint judgment of Mason CJ, Brennan, Deane, Dawson and McHugh JJ at 412-413. 16 In Guss v Veenhuizen the solicitor who was party to the proceedings had his costs disallowed as, unbeknown to him at the time of the proceedings, he was not entitled to practise in the High Court because his name did not appear in the register of practitioners. That his name had not been placed on the register was due to some administrative error in the registry. In concluding that that solicitor was entitled to recover his professional costs, Gibbs ACJ, Jacobs and Aitkin JJ said at p 52: "The work was done by him in person and the only question is whether in the special circumstances here existing he was entitled to the benefit of the rule of practice established by the authorities to which we have referred. The answer depends on the true basis of the rule. Since its basis is not one of privilege to a solicitor (in which case it might be argued that the precise qualification must be satisfied) but is that work done by a solicitor can be quantified on a taxation of costs, there is no reason why work done by the appellant whose lack of the precise qualification was the result of an error of an officer of the Court, should not have the benefit of the rule of practice. If the error had not been on the part of an officer of the Court but had been the fault of the party himself, the Court would not attempt to assess his capacity to do the work done by him. He would be regarded as in the same position as an ordinary layman. But when the lack of qualification cannot be regarded as a lack of capacity because it has occurred simply through the error of a Court officer, then the principle to which we have referred earlier in these reasons is applicable and the Court should treat him as though he had the qualification which brings him within the rule of practice." 17 There was a different outcome in Kenna v Connolly (1943) 17 ALJ 32. In that case fees were not allowed in respect of counsel or his solicitor who had failed to register for practice in the High Court as required by s 49 of the Judiciary Act. 18 The present case is to be distinguished from Guss. It is not suggested that the lack of a practising certificate after 30 June 2001 was due to some error of an officer of the court; rather it appears Mr Longman made no application for renewal of his practising certificate. 19 In the circumstances of this case there are provisions of the Legal Profession Act 1987 which require consideration. The first of these is s 25, and in particular the following sub-sections: "(1) A legal practitioner whose sole or principal place of legal practice is this State must not practise as a barrister or solicitor and barrister without being the holder of a current practising certificate… (3) A legal practitioner whose sole or principal place of legal practice is this State must not hold himself or herself out to be a solicitor without being the holder of a current practising certificate as a solicitor and barrister… (4) A legal practitioner or interstate legal practitioner who contravenes this section wilfully and without reasonable excuse is guilty of professional misconduct." 20 Section 3 defines a "solicitor" as meaning: "(a) a legal practitioner who holds a current practising certificate as a solicitor and barrister, or (b) an interstate legal practitioner who practises as a solicitor and barrister in this State." 21 Clearly from 1 July 2001 onwards Mr Longman was not by definition a solicitor and hence s 25 prevented him from practising as such. 22 Moreover, s 48B of the statute provided, so far as is relevant: "(1) A natural person must not act as a barrister or solicitor and barrister unless the person holds a current practising certificate… (4) If a person contravenes this section: (a) no action lies for the recovery of costs in respect of anything done in the course of the contravention, and (b) if any such costs have been paid, the amount paid may be recovered as a debt owed by the person to the other person who paid them." 23 Section 48C is in these terms: "(1) A natural person must not falsely pretend to be qualified to act as a barrister or solicitor and barrister. (2) A natural person who does not hold a current practising certificate must not: (a) take or use a name, title, addition or description implying that the person is qualified to act as a barrister or solicitor and barrister, or (b) do anything, or permit anything to be done, that holds out, advertises or represents that the person is so qualified." 24 Section 48E of the statute provides relevantly: "(1) In this section: fee includes any form of, and any expectation of, a fee, gain or reward. general legal work means the work involved in drawing, filling up or preparing an instrument or other document that:… (d) relates to a legal proceeding… (2) A person must not directly or indirectly do any general legal work, or any probate work, for a fee unless the person is a barrister or solicitor or unless the person is an incorporated legal practice and the work is done on its behalf by a barrister or solicitor. Maximum penalty 20 penalty units…" 25 In Re Sanderson; ex parte The Law Institute of Victoria (1927) VLR 394 Cussen J said, at 397: "… What I do decide is that if a person does a thing usually done by a solicitor, and does it in such a way as to lead to the reasonable inference that he is a solicitor – if he combines professing to be a solicitor with action usually taken by a solicitor – I think he then does act as a solicitor." 26 The above dicta were cited with approval by Giles JA, with whose judgment the other members of the court substantially agreed, in Kekatos v The Council of the Law Society of New South Wales [1999] NSWCA 288. 27 It has been submitted that in swearing the affidavit verifying the amended grounds of defence and in signing the Bill, Mr Longman professed to be a solicitor. He was so described in these documents. He professed to be a solicitor and those actions were actions usually taken by a solicitor. I accept that submission. Moreover, he described himself as a "solicitor" in the Bill considered by the costs assessor (see para 10 above). 28 It was further submitted that in signing the pleadings and the notice pursuant to reg 56(1)(a) he acted contrary to Rules of Court. Notice of grounds of defence in a claim in the Local Court may only be signed by the defendant or the defendant's solicitor (Pt 9 r 1(1) of the Local Court Rules). In a case such as the present where the action was commenced by a statement of liquidated claim, Pt 9 r 1(2) required that grounds of defence be verified pursuant to Pt 9 r 2 and the latter rule required that the affidavit verifying be verified either by the defendant or the defendant's solicitor. 29 The application for assessment of party-party costs filed in this court bearing date 13 June 2003 was signed by Mr Longman. This was contrary to Pt 65 r 8 of the Supreme Court Rules which required that the document be signed by the defendant or his solicitor. Mr Longman was neither. 30 It seems to me that the approach adopted by the costs assessor failed to have due regard to the relevant provisions of the Legal Profession Act which I have set out above. 31 In resisting the relief sought in the summons, Mr Robinson submitted: (i) that the appropriate procedure for the plaintiff to have adopted would have been to challenge the assessment before a review panel. (ii) Mr Robinson further submitted that the challenge is misconceived because it is not Mr Longman who is claiming costs but the defendant, and the defendant is entitled to recover his costs consistently with the decision in Guss v Veenhuizen (supra). 32 I deal with these submissions in turn. 33 Mr Robinson submitted that the appropriate course for the plaintiff to have taken would have been to make an application for review of the determination of the costs assessor pursuant to sub-div 4A of the Legal Profession Act rather than to apply to this court under sub-div 4B. Mr Robinson referred to the decision of Master Malpass in Freeman v McNally [2003] NSWSC 780 and the decision of Master Harrison in Kiwi Munchies Pty Limited v Thai Airways International Public Limited [2004] NSWSC 89. 34 In Freeman Master Malpass was critical of the plaintiff's conduct in appealing to this court rather than to a review panel: "7 Before proceeding further, I should digress to deal with a matter which is of great concern to this Court. In bringing this appeal, the plaintiff has chosen to hurdle the primary avenue of challenge to a costs assessor's determination (a review by a panel). 8 The appeal does not raise any novel or difficult questions of law. It seeks to ventilate questions which a panel of experienced practitioners could be considered more than well equipped to handle. It was the intention of the legislature that cases such as this (if a challenge must be brought), should be taken to the panel. 9 Because of the large volume of appellate work now coming to this Court, it no longer has the capacity to deal with matters that can be appropriately dealt with elsewhere. The time is approaching where this Court may have to give serious consideration to dismissing appeals of this nature on the ground that the challenge should have been brought before a panel." 35 Nevertheless, the Master in that case proceeded to deal with the appeal. 36 In Kiwi Munchies v Thai Airways, Master Harrison expressed her agreement with what Master Malpass had said in Freeman in the passage extracted above. 37 I do not consider that the present case is one in which the plaintiff ought to have sought a review of the costs assessor's determination by a review panel. Sub-division 4B makes specific provision for appeal against the decision of a costs assessor as to a matter of law and the current application before this Court falls squarely within s 208L(1). There is here a matter of law relevant to the manner in which the costs assessor approached the assessment of costs, which matter warrants the attention of this court. 38 Secondly, Mr Robinson submitted that the defendant was entitled to costs pursuant to the order made by the magistrate and was entitled to recover at an appropriate hourly rate for the work that was done in the matter. The defendant was not required to do the work personally but was entitled to have that work done on his behalf. His position is to be distinguished from the position of Mr Longman, who may face difficulties if he was pursuing a claim for recovery of costs in respect of work he did in the matter. 39 I am not attracted by that submission. It seems to me that the relevant provisions of the Legal Profession Act set out earlier do not cease to be relevant simply because the Bill of Costs was a bill presented on behalf of the defendant. Effect has to be given to those provisions of the Legal Profession Act to which I have referred, including s 48B(4). 40 I draw attention also to s 208G which required the assessor, in determining "what is a fair and reasonable amount of costs" to have regard, inter alia, to: "(a) the skill, labour and responsibility displayed on the part of the barrister or solicitor responsible for the matter…" 41 Who was that solicitor? It can only have been the defendant himself. It is by no means clear that the assessor addressed s 208G or that the defendant supervised the conduct of Mr Longman in the matter at all. Moreover, the reasons expressed by the costs assessor in reaching his determination do not disclose that due regard was had to the relevant provisions of the Legal Profession Act, to which I have referred. The assessor's reasons indicate otherwise. If the arrangement between Mr Longman and Mr Hill was that Mr Longman was to charge Mr Hill for the work that he did, then s 48B would prevent Mr Longman from pursuing a claim in contravention of the Legal Profession Act. If the defendant has already paid Mr Longman for services that were provided in breach of the Legal Profession Act, any amount so paid would be recoverable pursuant to s 48B(4)(b). Costs claimed in respect of work done in contravention of the Legal Profession Act cannot be recovered from the plaintiff. 42 I am satisfied for the above reasons that the costs assessor has erred in law in his approach to his task and that the certificates issued on 11 September 2003 should be set aside. 43 The appropriate course is to remit the matter to the costs assessor for re-determination of the application. Doubtless the assessor would be assisted on that re-determination by additional evidence directed to the role played by the defendant in the action and also by evidence as to the precise arrangement pursuant to which Mr Longman was engaged to provide services in the action. 44 Costs would ordinarily follow the event on this summons, but counsel seek the opportunity to address this issue following delivery of my judgment. That opportunity will be afforded by way of written submissions. Formal orders 45 1. I make the orders sought in paragraphs 1 and 2 of the further amended summons filed on 9 July 2004. 2. Costs are reserved. 3. I direct that the defendant deliver to my associate and forward to counsel for the plaintiff submissions as to costs of the proceedings in this court within a period of seven days from today; I direct that the plaintiff deliver to my associate and to counsel for the defendant his written submissions within a period of fourteen days from today; and I direct any submissions in reply be delivered to my associate and served upon counsel for the plaintiff within twenty-one days from today. ********** Last Modified: 08/03/2004 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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