Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Oliveri v P M Sulcs & Associates Pty Ltd (in liq) [2013] NSWCA 84 Hearing dates: 27 March 2013 Decision date: 18 April 2013 Before: Macfarlan JA at [1] Barrett JA at [25] Ward JA at [28] Decision: (1) The applicant is granted leave under s 471B of the Corporations Act 2001 (Cth) to proceed against the respondent. (2) The application for leave to appeal is dismissed with costs. (3) The applicant is to pay the respondent's costs of these applications. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: PROFESSIONS - lawyers - remuneration - s 190(2) Legal Profession Act 1987 precluded charging of interest unless claim for it made in bill of costs - no interest claimed in document entitled "bill of costs" - whether form of costs agreement sent with bill formed part of bill and constituted claim for interest - reg 45(3) Legal Profession Regulation 2002 Legislation Cited: Corporations Act 2001 (Cth) Legal Profession Act 1987 Legal Profession Regulation 2002 Cases Cited: Moloney v Collins [2011] NSWSC 628 Category: Principal judgment Parties: Dominic Oliveri (Appellant) P M Sulcs & Associates Pty Ltd (in liq) (Respondent) Representation: Counsel: M K Rollinson (Appellant) No Appearance (Respondent) C Bolger - Amicus Curiae Solicitors: Purcell Lawyers (Appellant) Johnson Winter & Slattery (Respondent) File Number(s): 2012/332910 Decision under appeal Jurisdiction: 9111 Citation: Oliveri v P M Sulcs & Associates Pty Ltd [2012] NSWSC 1198 Date of Decision: 2012-09-28 00:00:00 Before: Gzell J File Number(s): 2011/66565 Judgment 1MACFARLAN JA: The applicant, Mr Dominic Oliveri, is a solicitor who acted for the respondent, P M Sulcs & Associates Pty Ltd (in liq) ("PMS"), in successful litigation against Daihatsu Australia Pty Ltd. Mr Oliveri ceased to act for PMS in February 2003, when the litigation was largely concluded. 2On 21 February 2003 Mr Oliveri sent a letter to PMS enclosing: (a) A draft application for assessment of costs under Part 11 of the Legal Profession Act 1987 ("LPA") as then in force. (b) An unsigned document entitled "Costs Agreement", bearing a date of 5 July 1998. (c) Mr Oliveri's "solicitor-client bill of costs" for the litigation in the total sum of $1,879,974, including disbursements and GST. 3Thereafter, PMS commenced proceedings against Mr Oliveri in the Supreme Court to establish that it was not liable for the claimed costs. In a judgment of 28 May 2009, Debelle AJ held that there was no binding costs agreement between the parties and that Mr Oliveri's only entitlement to fees was on a quantum meruit basis ([2009] NSWSC 456). Mr Oliveri's claim was then referred for assessment on that basis. The Assessor held that Mr Oliveri was entitled to professional fees and disbursements of $639,808 (after deduction of certain costs), but was not entitled to interest because, in the circumstances before him, the Assessor had no power to award interest. The Assessor said that he would have awarded interest if it had been within his power to do so. 4A Review Panel subsequently confirmed the assessment, including the finding concerning interest. On 28 September 2012 Gzell J sitting in the Equity Division dismissed an appeal by Mr Oliveri against that finding ([2012] NSWSC 1198). 5Mr Oliveri now seeks leave to appeal against Gzell J's decision and seeks leave under s 471B of the Corporations Act 2001 (Cth) to proceed against PMS which is in liquidation. The liquidator entered an appearance in this Court but chose not to appear at the hearing. The Court was informed that he holds a sum of money which will be applied towards payment of any interest to which the Court holds Mr Oliveri entitled. In the absence of a contradictor, the Law Society of New South Wales was granted leave to appear at the hearing as amicus curiae. The hearing was a concurrent hearing of the application for leave to appeal and the appeal that would lie if leave were granted. 6For reasons that appear below, I do not consider that the proposed appeal is well-founded. As a result, the application for leave to appeal should be dismissed. Nevertheless it is appropriate that leave to proceed against PMS be granted to sanction Mr Oliveri's raising of the relevant issue in this Court, albeit unsuccessfully. The issue for determination 7The sole issue for the Court's determination is whether the view of the Assessor, Review Panel and primary judge that the Assessor had no power to award interest to Mr Oliveri was correct. The basis of that view was that, by reason of s 190(2) of the LPA, Mr Oliveri was prohibited from charging interest because his bill of costs did not contain a statement that interest was payable and of the rate of interest. Relevant provisions of the Legal Profession Act 1987 and Regulation 2002 8Relevant provisions of the LPA, now replaced by the Legal Profession Act 2004, are as follows: "173 Definitions (1) In this Part: bill of costs means a bill of costs for providing legal services, and includes a memorandum of fees. ... costs agreement means an agreement referred to in section 184 as to costs for the provision of legal services. ... 190 Interest on outstanding costs (1) A barrister or solicitor may charge interest on the unpaid costs for legal services provided by the barrister or solicitor, if the costs are unpaid 30 days or more after the barrister or solicitor has given a bill of costs for those services in accordance with this Division. (2) A barrister or solicitor may not charge interest on the unpaid costs for legal services unless the bill of costs for those services contains a statement that interest is payable and of the rate of interest. (3) A barrister or solicitor may also charge interest on the unpaid costs for legal services in accordance with a costs agreement. (4) A barrister or solicitor may not charge interest under this section or under a costs agreement at a rate that exceeds: (a) except as provided by paragraph (b)-the rate prescribed under the Supreme Court Act 1970 in respect of unpaid judgments of the Supreme Court, or (b) the rate prescribed by the regulations. ... 192 Bill of costs to be given before costs can be recovered from client (1) Proceedings for the recovery of costs by a barrister or solicitor for providing legal services must not be commenced or maintained against any person unless at least 30 days have passed since a bill for those costs was given to the person in accordance with this Division. ... 193 Form of bill of costs (1) The regulations may make provision for or with respect to the form of, and the particulars to be included in, bills of costs. (2) A bill of costs may be described as a memorandum of fees or in any other way authorised by the regulations. ... 201 Application for assessment of costs by barrister or solicitor giving bill (1) A barrister or solicitor who has given a bill of costs in accordance with this Part may apply to the Manager, Costs Assessment for an assessment of the whole of, or any part of, those costs. (2) An application may not be made unless at least 30 days have passed since the bill of costs was given or an application has been made under this Division by another person in respect of the bill of costs. ... 203 How is an application to be made? (1) An application for assessment is to be made in accordance with the regulations and is, subject to subsection (4), to be accompanied by the fee prescribed by the regulations. ... 208J Certificate as to determination (1) On making a determination, a costs assessor is to issue to each party a certificate that sets out the determination. ... (3) In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed. ... 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. ... " 9Relevant provisions of the Legal Profession Regulation 2002, made under the LPA, are as follows: "45 Particulars in bill of costs (1) For the purposes of section 193 (1) of the Act, the following particulars are to be included in a bill of costs: (a) a description of the legal service provided, (b) the total amount of the costs charged, (c) any intended claim for interest under section 190 of the Act if the costs are not paid (including the rate of interest), (d) - (i) ... (2) However, the particulars referred to in subclause (1) (e)-(i) need not be included in the bill of costs if: (a) the total amount of costs charged is the amount, or an amount calculated on the basis, set out in a costs agreement for the legal service made under Division 3 of Part 11 of the Act or disclosed in accordance with Division 2 of that Part, and (b) the bill of costs refers to the relevant costs agreement or disclosure document. (3) A bill of costs may comprise more than 1 document. ... 53 Form of, and fee for, application for assessment of bill of costs (1) For the purposes of section 203 (1) of the Act, the prescribed form of application for assessment (other than an application for assessment of party/party costs under section 202 of the Act) is: (a) in the case of an application by the client-Form 1, or (b) in any other case-Form 2. The application is to be made to the Manager, Costs Assessment in duplicate. ... " 10At the relevant time, Form 2 in Schedule 1 to the Regulation provided for an application for assessment of costs (other than party/party costs) to state that a copy of the practitioner's bill of costs and any costs agreement that the practitioner asserted was applicable was attached. The decisions below 11The Assessor took the view that he had no jurisdiction to award interest because, contrary to s 190(2) of the LPA, Mr Oliveri's bill of costs did not contain a claim for interest. He rejected the submission that Mr Oliveri's letter of 21 February 2003 and the enclosed draft application for assessment of costs comprised part of the bill also enclosed with the letter. Mr Oliveri had relied on regulation 45(3) which provided that a bill may comprise more than one document. The Assessor said that a purported "costs agreement" that was found not to be a costs agreement could not assist a practitioner to comply with the interest requirements of the Act. 12The Review Panel rejected the challenge to this decision on the basis that there was no binding costs agreement and that interest had not been claimed in Mr Oliveri's bill of costs. 13Gzell J's reasons for rejecting the appeal were as follows: "23 The purpose behind the requirement of a statement as to interest in a bill of costs under s 190(2) of the Act was to ensure that the recipient of the bill was forewarned that a claim for interest might be made at the specified rate if the bill was not paid. 24 In my view, that purpose is not achieved if a number of documents are provided to a client, and the reference to a claim for interest is only discovered by trawling through the documents. 25 When the Regulation states that a bill of costs may comprise more than one document, it seems to me that what is implied is that the documents in combination constitute a bill of costs. That suggests that additional documents must complement a primary document that has the function of conveying the amount of costs billed and which contains the required statement. Collectively the documents must contain all the elements of a bill of costs. An example would be a document that gives a summary of the costs billed together with documents containing a detailed itemisation of the billed costs. 26 Here, four disparate documents were served. One answered the description of a bill of costs. The other three did not. Taken collectively they each retained their individual identities. They did not form a combined identity and they did not complement the bill of costs or constitute it". Resolution of the application for leave to appeal 14The following features of Mr Oliveri's letter of 20 February 2003 and its enclosures (see [2] above) must be noted. 15First, the covering letter refers to the enclosed application for assessment and not to the other enclosures. This suggests that the purpose of the letter was to convey the draft application, with its attachments, rather than to convey a bill of costs comprising all, or a number of, the enclosures. 16Secondly, the draft application referred to the attachment of the bill of costs. This suggests that the purpose of enclosing the bill of costs with the letter was to supply it as an attachment to the draft application, as distinct from the draft application being attached to the bill of costs, or being otherwise intended to be incorporated in it. 17Thirdly, the draft application referred to the (purported) written costs agreement. Whilst it did not, as Form 2 to the Regulation required, expressly state that a copy of the costs agreement was attached, it is common sense that an application (or draft application) for assessment of costs that relied upon and referred to a written costs agreement would attach a copy of that document. Accordingly, a reader of the letter and its enclosures would be likely to conclude that the purpose of enclosure of the costs agreement was to support the (draft) application for assessment of costs, rather than to supply it as part of the solicitor's bill of costs. 18Fourthly, the document enclosed with the letter entitled "solicitor-client bill of costs" was separate from the two other enclosures, these being entitled differently. The bill stated at its end "Amount due on this bill", without suggesting that interest was to be charged if the bill was not paid within a specified period. 19In my view Mr Oliveri's argument that the apparent failure of his bill to contain "a statement that interest is payable and of the rate of interest", as required by s 190(2), was remedied by the enclosure with his letter of 21 February 2003 of the purported costs agreement referring to an interest charge fails for two reasons. 20First, the purported costs agreement did not form part of Mr Oliveri's "solicitor-client bill of costs". Regulation 45(3) confirms what would in my view otherwise be the case, namely, that a bill may comprise a number of documents. However, supply to a client at the same time of a number of documents, including a document described as a bill, is not sufficient to give all of those documents the character of a bill. The circumstances must be such that a reasonable person in the position of the recipient client would regard each of the documents as forming part of the bill supplied by the practitioner. Here, clearly the document bearing that title had that character. There is however no reason to regard the purported costs agreement as having the same character. The document entitled "solicitor-client bill of costs" did not expressly incorporate, or indeed refer at all, to the purported costs agreement. A reasonable recipient would in my view have understood the purported costs agreement to have been enclosed with the letter either because Mr Oliveri sought the client's agreement to it or as supportive of the draft application for assessment, or both. There would be no reason for such a person to conclude that the costs agreement was intended to be incorporated into, and form part of, the bill of costs. 21As the primary judge put it, referring to the letter and its three enclosures, "[t]aken collectively they each retained their individual identities. They did not form a combined identity and they did not complement the bill of costs or constitute it" (at [26]). 22Secondly, the reference to interest in the purported costs agreement would not have sufficed even if that document could have been regarded as part of the bill of costs. The purported costs agreement bore a date of 5 July 1998 (although it appears to have been prepared in 2003 and backdated) and stated that interest "will be charged" on any billed amounts unpaid after 30 days. This did not amount to a statement, speaking at the date of the bill and in accordance with s 190(2), that "interest is payable" in respect of the bill. At best for Mr Oliveri, it purported to confer upon him an entitlement to charge interest. For a variety of reasons, a solicitor entitled to charge interest may decide not to do so. Accordingly, evidence of Mr Oliveri's entitlement to charge interest did not inform the client, as contemplated by s 190(2), that he intended to charge interest in respect of the bill supplied to the client by the letter of 21 February 2003. 23For these reasons I consider that s 190(2) of the LPA precluded Mr Oliveri's claim for interest and that the Assessor correctly held that he had no power to award interest to Mr Oliveri. Orders 24For the reasons I have given, I propose the following orders: (1) The applicant is granted leave under s 471B of the Corporations Act 2001 (Cth) to proceed against the respondent. (2) The application for leave to appeal is dismissed with costs. (3) The applicant is to pay the respondent's costs of these applications. 25BARRETT JA: I agree that this matter should be disposed of in the way Macfarlan JA proposes. I also agree with his Honour's reasons. 26The provisions in question serve a protective purpose. The object of the protection is the client. The legislative intention is that a client is not to be charged interest on overdue costs and disbursements unless the solicitor's bill states not only the amount of those costs and disbursements but also that interest at a specified rate is payable in default of prompt payment. It is the bill that notifies the costs and disbursements payable; and it is the bill that must convey the warning concerning interest on those costs and disbursements if prompt payment is not made. 27In this case, the bill did not convey any warning of the contemplated kind. It did not itself set out any words concerning interest. Nor does resort to any process of incorporation by reference (as in Moloney v Collins [2011] NSWSC 628), if permissible, assist the solicitor since nothing in the bill showed any intention of importing into it words concerning interest appearing in some other document. 28WARD JA: I agree with the reasons of Macfarlan JA and the orders his Honour proposes. ********** 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 April 2013