Supreme Court New South Wales Medium Neutral Citation: Brown v Stephen Paul Firth trading as Firths The Compensation Lawyers [2013] NSWSC 677 Hearing dates: 13 April 2012, 18 April 2012, 2 August 2012, 3 August 2012 Decision date: 30 May 2013 Jurisdiction: Common Law Before: Hall J Decision: (1)An order pursuant to s 728(1)(a) of the Legal Profession Act 2004 that the defendant give to the plaintiff a Bill of Costs in itemised form in respect of the legal services provided by the defendant to the plaintiff in connection with the plaintiff's claim for damages pursuant to a Total and Permanent Disability Policy. (2)Direct that unless submissions are lodged within 21 days of the date of judgment in support of a specific order on costs, the order of the Court will be that the defendant pay the plaintiff's costs on the ordinary basis. Catchwords: COSTS - SOLICITOR - application under s 728(1)(a) of the Legal Profession Act 2004 (the Act) - whether power to order itemised bill of costs where refusal by legal practitioner to comply with request pursuant to s 332A of the Act - whether expiry of limitation period to apply for costs assessment under s 350 of the Act precludes order under s 728 being made - circumstances that may arise by reason of s 350 do not act as preclusion but may constitute relevant discretionary factors - whether accord and satisfaction precludes client from seeking itemised bill of costs - no statutory warrant to limit the power of the Court to make a s 728 order where costs have been paid in whole or in part by a client - whether proceedings an abuse of process - finding of an abuse of process requires cogent evidence before an adverse finding can be made - no evidence available to demonstrate that plaintiff had no genuine interest in the proceedings - abuse of process not established - no facts or matters that, as a matter of discretion, would require refusal of the order sought under s 728(1)(a) Legislation Cited: Legal Profession Act 2004 Cases Cited: Yang v Firth [2013] NSWSC 676 Category: Principal judgment Parties: Justin Haig Brown (Plaintiff) Stephen Paul Firth trading as Firths The Compensation Lawyers (Defendant) Representation: Counsel: M Einfeld QC; P Bolster (Plaintiff) R Stitt QC; R Goodridge (Defendant) Solicitors: Barton Lawyers (Plaintiff) Firths The Compensation Lawyers (Defendant) File Number(s): 2012/82179 Judgment 1These proceedings were listed before me for hearing along with proceedings in Yang v Firth [2013] NSWSC 676. The orders sought by the plaintiff, Justin Haig Brown, in this matter are in similar terms to those sought by Mr Yang, namely that: (1)An order pursuant to s 728(1)(a) of the Legal Profession Act 2004 (the LPA) that the defendant give to the plaintiff a Bill of Costs in itemised form in respect of the legal services provided by the defendant to the plaintiff in connection with the plaintiff's claim for damages pursuant to a Total and Permanent Disability Policy; (2)The defendant pay the plaintiff's costs of and incidental to this Summons on an indemnity basis. (3)Such further orders as this Honourable Court should think fit. 2On an intermediate date, 2 August 2012, Mr Einfeld QC, counsel for both plaintiffs suggested as a possible course that I treat the evidence and submissions in Mr Yang's proceedings as evidence and submissions in the these proceedings. There being no objection to that course, the evidence received at the hearing was admitted in both proceedings. 3While that course of action has been adopted, it is necessary to deal with the evidence for the purpose of making factual findings in these proceedings. The findings and conclusions outlined in the judgment in Yang v Firth [2013] NSWSC 676, to the extent that they relate to Mr Brown, will as indicated below apply in these proceedings. Factual Background 4A Notice to Admit Facts and Authenticity of Documents dated 28 March 2012 was tendered by the plaintiff and admitted without objection. The plaintiff also tendered the defendant's response disputing the Notice dated 30 March 2012 which was also admitted without objection. It contained two factual disputes which the plaintiff subsequently conceded to. These two documents contain most of the factual background to these proceedings which is as follows. 5On 21 September 2007, the plaintiff signed a conditional costs agreement with the defendant by his employed solicitor, Carl Mickels, in relation to a claim for total and permanent disability benefits. Mr Mickels had carriage of the plaintiff's matter. 6On 4 June 2009, the defendant, by Mr Mickels, settled the plaintiff's claim for $70,000 plus costs. Mr Mickels advised the plaintiff that he would receive at least $30,000 clear to him from the settlement. 7On 11 June 2009, the defendant wrote to the plaintiff confirming the settlement. 8On 30 June 2009, the defendant received the settlement monies of $70,000. 9On 2 July 2009, the plaintiff received a cheque in the sum of $30,000. 10On 25 June 2010, Mr Mickels, after negotiations, settled the party/party costs for $35,000. 11On 1 July 2010, the defendant received a cheque for $35,000 in payment of the party/party costs in the plaintiff's matter. 12On 12 July 2010, the defendant sent a memorandum of costs and disbursements dated 12 July 2010. The memorandum attached a Trust Account Statement and a computer generated Trust Statement both dated 12 July 2012, an Authority to Pay and an Authority to Transfer. 13On 16 July 2010, the plaintiff and the defendant had a telephone conversation in relation to the defendant's costs and disbursements. As a result of that conversation, the defendant reduced his account by $5,000. 14On 19 July 2010, the defendant sent an amended memorandum of costs and disbursements dated 19 July 2010 which attached an amended Trust Account Statement dated 19 July 2012, an Authority to Pay, an Authority to Transfer and an Acknowledgement of Receipt. 15On 19 July 2010, a cheque in the sum of $7,927.40 was given to the plaintiff by the defendant in payment of the balance of the settlement proceeds. 16On or about 19 July 2010, the defendant, pursuant to the plaintiff's Authority to Transfer, transferred from the defendant's trust account to the defendant's general account, a sum sufficient to reduce his trust account to nil in accordance with his amended memorandum of costs and disbursements dated 19 July 2010. 17On 23 December 2011, the defendant received a letter from Slater & Gordon, the plaintiff's then solicitors, which attached an Authority signed by the plaintiff on 23 December 2011 authorising and directing Slater & Gordon to forward his file to Barton Lawyers, the plaintiff's current solicitors. 18On 17 February 2012, the defendant received a letter dated 16 February 2012 from Barton Lawyers requesting an itemised bill. 19On 14 March 2012, the Summons in the present proceedings was filed. 20At this point it is relevant to note that there is no dispute between the parties about the following matters: (a)The defendant provided the plaintiff with a lump sum bill of costs by his amended memorandum dated 19 July 2010; (b)A request was made by the plaintiff pursuant to s 332A of the LPA for an itemised bill of costs on 17 February 2012; and (c)To date, the defendant has not provided the plaintiff with an itemised bill of costs. The Evidence 21The evidence before the Court in this case is somewhat unusual in light of a number of aspects. First, the plaintiff chose not to give any evidence. Second, an affidavit in support of the Summons sworn on 13 March 2011 (presumably 2012) by the plaintiff's solicitor, Mr Tony Bakarat, was filed but not read. Third, an affidavit sworn by the defendant on 23 March 2012 was filed but subsequently not read. 22The plaintiff primarily relied upon the Notice to Admit Facts and Authenticity of Documents and the defendant's Response to establish the factual background of the matter as discussed above. 23In addition to the evidence referred to in the judgment in Yang v Firth [2013] NSWSC 676, the following documents were tendered by the defendant and admitted without objection to support the contention that the proceedings were an abuse of process: (a)A letter from the Office of the Legal Services Commissioner (Commissioner) to the defendant dated 8 June 2011 in relation to a complaint to the Commissioner made by the plaintiff; (b)A letter from Commissioner to the defendant dated 25 August 2011 advising that the Commissioner had decided to dismiss the complaint by the plaintiff; 24In response to the defendant's contention, the plaintiff tendered the following documents which were admitted subject to their limited use as going to the state of mind of the plaintiff at the relevant dates: (a)A letter from Salvos Legal (Humanitarian) Limited (Salvos Legal) to the plaintiff dated 10 October 2011 in relation to the complaint by the plaintiff to the Commissioner; (b)A letter from the Commissioner to the plaintiff dated 25 August 2011 advising that his complaint had been dismissed and the reasons for its dismissal; (c)A file note of Slater & Gordon dated 22 December 2011; (d)A letter from Slater & Gordon to the plaintiff dated 6 February 2012 in relation to challenging the costs charged to the plaintiff by the defendant; (e)An Authority dated 13 February 2012 signed by the plaintiff to transfer and forward his file to Barton Lawyers sent to Slater & Gordon; and (f)A letter from Dr Nicholas Cassimatis, the plaintiff's treating doctor, to the Commissioner dated 27 April 2011 in relation to the plaintiff's complaint to the Commissioner. Submissions 25Mr Stitt QC submitted on behalf of the defendant that the correspondence from the Commissioner evidenced that the plaintiff's complaint about overcharging by the defendant had been agitated and disposed of through its ultimate dismissal by the Commissioner. To commence these proceedings in order to obtain an itemised bill of costs, in the defendant's submission, was to commence proceedings "for no explained reasons": Defendant's Supplemental Submissions at [4.8]. It was contended that this course of action was "a continuation of a quite long-standing campaign of harassment by Mr Barakat and this applicant against the defendant" (T 2 August 2012 at 8.36). 26Mr Einfeld in response submitted that to the contrary, the correspondence from the Commissioner, in addition to the documents referred to above at [24], evidenced that the plaintiff has "consistently demonstrated a genuine and legitimate concern with the quantum of [the defendant's] costs relative to the amount he received" up until the commencement of these proceedings: Plaintiff's Concluding Submissions at [4.1]. 27It was contended by Mr Stitt that the documents tendered did not evidence that the plaintiff "consistently" demonstrated any concern. Rather they were admitted on the limited basis of evidencing the plaintiff's state of mind at a particular point in time. Whether the complaints were genuine, legitimate or ongoing was said to be beyond the evidence. Consideration 28The legislative scheme and relevant legal principles have been outlined in the judgment in Yang v Firth [2013] NSWSC 676. I have concluded that the power under s 728 to order a legal practitioner to comply with a request by a client for an itemised bill of costs under s 332A is available and should be exercised by way of an order under its provisions. I am of the opinion that, in this case, s 350(5) does not stand in the way of the plaintiff's pursuit of the orders sought. 29In determining whether to exercise the discretion under s 728 I note the additional matters raised in the present proceedings in respect of the alleged abuse of process and make the following observations. 30The plaintiff was advised through the memorandum provided by the defendant of the solicitor/client costs to be paid out of the settlement monies on 19 July 2010. Subsequently, the plaintiff lodged a complaint against the defendant with the Commissioner on 16 May 2011. There is evidence, being the letter from Salvos Legal dated 10 October 2011, that indicates that the plaintiff received assistance from Salvos Legal in preparing that complaint. 31The plaintiff's main issues of complaint to the Commissioner were: "(a) the solicitor failed to properly disclose their fees; (b) the final settlement figure I received was substantially less than the amount initially claimed for; (c) the solicitor did not act in my best interests throughout this matter." (Exhibit G) 32The Commissioner made a number of findings in relation to the plaintiff's complaint after receiving a response from the defendant. In the letter to the plaintiff on 25 August 2011, the Commissioner noted, inter alia, the following matters: (1)There was a misunderstanding as to the amount of the plaintiff's Total and Permanent Disability benefit. Initially it was understood to be $108,000 but was later found to be $72,000; (2)The plaintiff's claim was settled on his instructions for $70,000 which was almost the full value of the $72,000 benefit; (3)The defendant had complied with his costs disclosure obligations under the LPA; (4)It was the plaintiff's responsibility to seek clarification of any aspects of the costs agreement that he did not understand, either with the defendant or elsewhere; (5)The plaintiff's legal costs of $65,000 were actually less than the amount estimated in the costs agreement; (6)Although the amount of party/party costs reached by agreement was $35,000, the plaintiff was obliged to pay the difference out of the settlement monies; (7)Prior to settlement the plaintiff had been advised that he would received a minimum of $30,000 in hand; and (8)The plaintiff ultimately received approximately $40,000, which was more than the minimum estimate. 33In light of the findings outlined above the Commissioner was satisfied that the plaintiff's complaint raised no issues of misconduct on the part of the defendant. 34The legislative scheme regulating complaints by clients about legal practitioners is contained in Chapter 4 of the LPA which is entitled "Complaints and discipline". According to s 539 of the LPA, in considering complaints about the conduct of legal practitioners, the Commissioner may dismiss the complaint in whole or in part if satisfied that there is no reasonable likelihood that the practitioner will be found by the relevant Tribunal to have engaged in either unsatisfactory professional conduct or professional misconduct. Such a dismissal was ultimately made by the Commissioner in relation to the plaintiff's complaint. 35Despite the finding that there was no evidence of misconduct by the defendant, there remains a question which the plaintiff has raised as to the basis upon which legal costs in the order of $65,000 were charged for a claim of approximately $72,000. Whilst the plaintiff gave instructions to agree to party/party costs of $35,000, that does not of itself indicate that he is not entitled to apply for the exercise of the statutory power to order an itemised bill of costs under s 728. The fact that the maximum benefit of the plaintiff's Total and Permanent Disability policy was $72,000 may arise as a matter that is relevant to the question of whether the legal costs in question were fair and reasonable. Having said that, I do not suggest that that is necessarily so. However, the factual circumstances in which the question of costs arises provides a basis for the plaintiff to apply under s 728 for an order requiring the defendant to provide an itemised bill. 36The defendant's submission that proceedings were not genuinely instituted in pursuit of the plaintiff's statutory rights under the LPA must be considered in light of the chronology of events which I note is as follows: (1)On 16 May 2011, the plaintiff lodged a complaint with the Commissioner; (2)On 25 August 2011, the Commissioner was satisfied that the plaintiff's complaint raised no issues of misconduct on the part of the defendant; (3)On 10 October 2011, Salvos Legal advised the plaintiff that he may wish to consider obtaining advice in regard to a professional negligence claim against the defendant and identified Wyatt Attorney as a firm that may have the expertise to assist; (4)Subsequently, the plaintiff retained Slater & Gordon; (5)On 6 February 2012, Slater & Gordon advised the plaintiff that based on their preliminary view, he had "strong prospects of successfully challenging" the defendant's bill; (6)On 13 February 2012, the plaintiff directed Slater & Gordon to transfer his file to Barton Lawyers; (7)On 17 February 2012, a request was made to the defendant for an itemised bill of costs; (8)On 14 March 2012, the Summons in the present proceedings was filed. 37This chronology plainly demonstrates that the plaintiff has, at various instances since 19 July 2010 when the memorandum was issued to him by the defendant, taken some form of action to address a grievance he has had with the defendant on the question of the costs of the above proceedings. The evidence provides sufficient basis for an inference that Mr Brown has commenced these proceedings in another attempt to pursue his grievance with the defendant, at least to the point of obtaining an itemisation of costs charged, noting that past attempts have been, so far, unfavourable to him. 38The absence of evidence from the plaintiff himself is not a matter that translates into evidence that the proceedings were not genuinely brought by him. Whatever the circumstances by which Mr Brown came to retain Mr Barakat, there is evidence that a retainer exists (the Authority to Slater & Gordon signed by Mr Brown on 13 February 2012 to transfer and forward his file to Barton Lawyers). This is not a case where there is no evidence of a retainer between solicitor and client. Conclusions 39In determining whether to exercise the discretion under s 728 I have taken into account the plaintiff's reasons for requiring an itemised bill, noting that its provision would assist him in considering whether there is or is not a proper basis for pursuing remedies available in Part 3.2 of the LPA. I have had regard to the defendant's allegation that the proceedings have been an abuse of process, and for the reasons set out above, I have concluded that no such abuse has been established. In reaching that conclusion I have had regard to the principles that apply to establishing an abuse of process and the need for cogent evidence to prove that such an abuse exists. There are no facts or matters in that respect or otherwise that as a matter of discretion would require refusal of the order sought under s 728(1)(a). Costs 40On the question of costs, the costs follow the event rule would apply: UCPR 42.1. On that basis costs of these proceedings would be ordered in favour of the plaintiff against the defendant on the ordinary basis: UCPR 42.2. I note that the plaintiff has applied for indemnity costs but without detailed submissions in support of such an order. Unless either party wishes to heard on the question of costs and makes application in that respect within 21 days of the date of this judgment, the order made in accordance with UCPR 42.1 and 42.2 will be the order of the Court in the proceedings. Orders 41I make the following orders: (1)An order pursuant to s 728(1)(a) of the Legal Profession Act 2004 that the defendant give to the plaintiff a Bill of Costs in itemised form in respect of the legal services provided by the defendant to the plaintiff in connection with the plaintiff's claim for damages pursuant to a Total and Permanent Disability Policy. (2)Direct that unless submissions are lodged within 21 days of the date of judgment in support of a specific order on costs, the order of the Court will be that the defendant pay the plaintiff's costs on the ordinary basis. ********** 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: 31 May 2013