District Court New South Wales Medium Neutral Citation: Viselle v Grieve [2014] NSWDC 27 Hearing dates: 27 March 2014 Decision date: 27 March 2014 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) Until further order of the court, the stay sought by the plaintiff in paragraph 4(f) of the summons is granted. (2) Costs reserved, with liberty to apply after conclusion of the proceedings the subject of the costs assessment. (3) Liberty to the parties to apply for the stay to be lifted after conclusion of the proceedings the subject of the costs assessment; these proceedings to remain in the Inactive List with a review date to be allocated by the Registrar. (4) Summons otherwise dismissed. (5) Cross-claim dismissed. (6) Defendant/Cross-Claimant's Notice of Motion dismissed. Catchwords: COSTS - costs assessment appeal pursuant to s 384 Legal Profession Act 2004 (NSW) - whether the plaintiff was afforded procedural fairness - whether the barrister was in fact retained - s 384 appeal dismissed - application for stay based on "no win no fee" costs agreement - proceedings the subject of the costs agreement not yet concluded - application for stay granted until further order - proceedings placed in Inactive List pending resolution of the proceedings the subject of the costs agreement Legislation Cited: Legal Profession Act 2004 (NSW), ss 384, 385, 386 and 387 Cases Cited: Adamson v Miller [2005] NSWSC 971 Arnott v Glissan [2013] NSWCA 138 BP Refinery (Westernport) Pty Ltd v Hastings Shire [1977] UKPCHCA 1; (1994) 180 CLR 266 Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 CSR Ltd v Eddy (2008) 70 NSWLR 725 Foreman v Rattray [2006] NSWSC 260 Ireland v Trilby Misso Lawyers [2011] QSC 127 Lange v Back & Schwartz [2009] NSWDC 180 Legal Services Board v Forster [2011] VSC 292 Levy v Bergseng (2008) 72 NSWLR 178 Lyons v Wende [2007] NSWSC 101 Madden v New South Wales Insurance Ministerial Corporation [1999] NSWSC 196 McCausland v Surfing Hardware International Holdings Pty Ltd [2010] NSWDC 222 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 22 Rahman v Sharpe (No 2) [2012] NSWDC 49 Re Power's Bills of Costs [1996] 2 Qd R 202 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Wentworth v Rogers (2006) 66 NSWLR 474 Texts Cited: Dal Pont, Law of Costs (3rd ed., LexisNexis 2013) Category: Interlocutory applications Parties: Plaintiff: Liliane Viselle First Defendant: Donald Edward Grieve Second Defendant: Robert George Webley Representation: Plaintiff: Ms L Viselle (in person) Defendant: Mr C W Crawley Plaintiff: In person Defendant: Aubrey F Crawley & Co File Number(s): 2013/258949 Publication restriction: None Judgment 1There are three applications before the court: (a)The plaintiff's amended summons filed on 6 December 2013 seeking to appeal from the costs assessor's decision of 11 July 2013 in relation to the assessment of counsel's fees in the sum of $30,250; (b)The first defendant's cross-summons filed on 13 November 2013 appealing from the refusal of the costs assessor to assess his first memorandum of fees for the period 20 May 2011 to 14 September 2011 (see paragraphs 8 to 12 of the costs assessor's Statement of Reasons); and (c)A notice of motion filed on 13 November 2013 seeking orders that the summons be dismissed and the plaintiff pay the first defendant's costs of the summons. 2In practical terms, the relief sought in the notice of motion overlaps with the relief sought by the first defendant in the summons. 3The costs claimed fall within two periods. There is a costs agreement between the defendant and the plaintiff's former solicitor, dated 24 May 2011 applying to the engagement of the first defendant by those solicitors. The costs assessor did not proceed to assess claims under that costs agreement (covering the period up to September 2011) because the solicitors were not involved in the assessment, and the costs assessor was not satisfied that the plaintiff had any personal responsibility for payment of the account. These costs are the subject of the first defendant's Cross-Summons. 4There is a second account dated 29 May 2012 for work carried out between 21 September 2011 and 23 May 2012, where the first defendant was directly retained by the plaintiff, as the solicitor had refused to act and had told the plaintiff that should instructions be continued they should be given direct to the first defendant. There is no costs agreement in writing for this period, but as indicated below the parties agree that the same terms continued to apply, and a claim for quantum meruit is made. The plaintiff's summons 5The plaintiff, a litigant in person, brings her appeal under s 384 Legal Profession Act 2004 (NSW) ("the Act"). 6Although the plaintiff's summons was struck out with leave to replead, the amended summons contains many defects: (a)This pleading is 58 pages long and sets out extracts from a wide range of documents, except, most importantly, the reasons for decision of the costs assessor. The grounds of the appeal have been distilled into the three main grounds set out below. (b)The plaintiff has served lengthy affidavits sworn by herself and her former solicitor. Fresh evidence may not be received for the determination of appeals under s 384: McCausland v Surfing Hardware International Holdings Pty Ltd [2010] NSWDC 222 at [27] - [50]. Section 384 provides that the District Court may, unless it affirms the costs assessor's decision, either make such determination in relation to the application as it considers should have been made, or return the matter to the costs assessor for further determination. It is only in those circumstances that fresh evidence or evidence in addition to, or in substitution for, the evidence of the proceedings may be given. The use of the word "may" should not be read as "must". (c)The assessor has been joined as the second defendant, and both parties seek orders against him. The costs assessor should not have been joined: Rahman v Sharpe (No 2) [2012] NSWDC 49; see also s 387 of the Act. 7The grounds of the amended summons are convoluted, repetitive and obscure but, after inviting both parties to address me, I have identified the grounds as follows: (a)A claim of denial of procedural fairness; (b)Costs assessed are too high and retainer is challenged; (c)The "no win no fee" nature of the two costs agreements does not entitle the defendant to claim costs (or alternatively a stay should be granted until the proceedings are concluded). 8I shall deal with each of these as follows. (a) Denial of procedural fairness 9The basis for this is as follows: (a)The plaintiff was not given enough time to answer the submissions of the first defendant, in circumstances where she advised the costs assessor she was involved in other litigation which required her attention for every waking hour. (b)The plaintiff sought and was given certain extensions of time, principally in relation to health problems, but was not given sufficient extensions of time and therefore not able to prepare her answers as she would wish. (c)The costs assessor did not give her any warning that he was about to hand down his assessment. 10The costs assessor has dealt with these issues at paragraph 5 of his reasons as follows: "5. Both parties have been given ample opportunity and have provided additional information. Besides the Application the Applicant filed the following letters with attachments:- 26th February 20135th April 201310th May 201320th May 201327th May 201328th May 20136th June 201313th June 201327th June 2013The Respondent filed:- Material provided with the Application including a letter to the Manager of 23rd October 2012 Doctors Reports, Costs Applicant's submission to Assessor and material bundled with the Application when filed along with the following further letters and submissions:- 17th March 201321st March 20137th May 201320th May 201323rd May 201326th May 201330th May 20132nd June 201311th June 201321st June 201324th June 2013and Statement of Robert Porter made 29th May 2013." 11He has summarised the plaintiff's case at paragraph 15 as follows: "15. The Respondent relies on a number of issues in asserting very strongly that she does not consider that she has an obligation to pay the Costs Applicant or if so that it was for a very limited time and is subject to a deferred payment arrangement. These include the following (which I have summarised):- She objects to and contests each and every part of the Costs Applicant's Bill of Costs. Assessment should be stayed until the outcome of her case. That Counsel, Dixie Coulton offered to assist her in May 2011 .. but that her Husband the Costs Applicant would assist.. .that she emphatically said no .. that she could not afford him... that Ms Coulton said that his fees would be very much reduced and would be paid at the conclusion of the case. That she refused to retain Mr Grieve ... that Ms Coulton forced him into the case as she was incapable of handling it herself (or words to that effect) ... that his involvement was to assist and reassure her because of her own perceived inadequacies... that the claims are exaggerated Although she did not make it clear to Dixie Coulton she had no respect for Don Grieve because of the way he has treated her in the past... that she trusted Dixie Coulton It is also alleged that in a meeting Mr Grieve said words to the effect of "I will only attend to matters I feel confident in winning. You don't have the privilege of having me attend to all the matters, as you are not paying me regardless. I only attend to items I believe I can win and being awarded costs" to which the Respondent is alleged to have said "That's fair enough as I am not paying you and of course you choose to do only what you think can be successful". This list is not exhaustive but summarises her arguments." 12The plaintiff was unable to identify specific examples of material she had not been able to place in front of the costs assessor as a result of being denied further time. 13The costs assessment procedure is a paper-driven procedure where the emphasis is upon arriving at a fair and accurate figure for work performed. Many of the plaintiff's submissions to the costs assessor are repetitious in nature. I am satisfied that the plaintiff was given ample opportunity to answer each and every matter raised by the first defendant in the course of the costs assessment and that the costs assessor not only gave her that opportunity, but also accurately summarised the issues raised by her. Consequently, the ground of denial of procedural fairness is not made out. 14Mr Crawley, on behalf of the first defendant, raised the issue of whether procedural unfairness is a matter of law (a s 384 issue) or a matter of mixed fact and law (a s 385 issue). The authorities on this issue are inconsistent. In Madden v New South Wales Insurance Ministerial Corporation [1999] NSWSC 196 Malpass M considered, in relation to the repealed legislation, that the term "matter of law" was more restrictive than "question of law" and that consequently procedural unfairness was a question of mixed fact and law. Similar views were taken in Adamson v Miller [2005] NSWSC 971 at [10] and [18] and Foreman v Rattray [2006] NSWSC 260 at [20]. However, the contrary view was taken in Levy v Bergseng (2008) 72 NSWLR 178 at [50] and Lange v Back & Schwartz [2009] NSWDC 180 at [26]-[27] (referring to CSR Ltd v Eddy (2008) 70 NSWLR 725 at [38]-[39] and Wentworth v Rogers (2006) 66 NSWLR 474 at [194]-[198]). I also note the discussion of this issue in McCausland v Surfing Hardware International Holdings Pty Ltd, supra. The issue is discussed in some detail by Professor Dal Pont, Law of Costs (3rd ed., LexisNexis 2013) at [18.74] fn 424, where Professor Dal Pont considers that issues of procedural fairness are matters of law and thus fall within s 384 appeals. 15The issue not being free from doubt, I expressed the view to the parties that while the reasoning adopted by Norrish QC DCJ in Lange v Back & Schwartz, supra, has much to recommend it, it may be appropriate for me to make an alternative finding under s 385 (including the grant of leave), which would enable me to examine the considerable volume of affidavit material served by both parties. Given the fact that neither party objected to the other filing affidavits on this issue, this would seem the best method of resolving the problem of how to deal with this affidavit material. This court has jurisdiction to entertain an alternate grounds under s 385, as the bill in question is a bill between a legal practitioner and a client. The question of whether leave would be granted to bring an appeal under s 385 when the summons refers only to s 384 is one where a series of factors would be involved, one of which is that the plaintiff is a litigant in person. 16Accordingly, if I have erred in determining the issue of procedural fairness by reason of procedural fairness not being a ground upon which a s 384 appeal can be brought, I would have taken the alternate course of permitting the plaintiff to rely upon s 385. The result is, however, the same, in that the affidavit material does not disclose any evidence of procedural unfairness. To the contrary, the assessor gave the plaintiff every opportunity to make submissions, over a considerable period, and the plaintiff has confirmed to me that she received and responded to all of the first defendant's submissions. 17This ground is not made out. (b) Challenges to quantum and retainer 18The plaintiff made the general submission that the costs are simply too high. The appeal process cannot be used to challenge the quantum of costs. As the Court of Appeal pointed out in Arnott v Glissan [2013] NSWCA 138 at [6] per Beazley P: "A challenge to the assessment in terms of its quantification, either in totality or in respect of certain items would rarely, if ever, give rise to a matter of law." 19The plaintiff also challenged retainer. The basis upon which retainer is challenged may, in certain circumstances, be a mixed question of fact and law (Lyons v Wende [2007] NSWSC 101), but generally is an issue of law. I note the discussion of the difficulties of a client challenging retainer on assessment are discussed in Dal Pont at [5.43]. The plaintiff submitted that this is a question of law which should be determined by the court and not by the assessor, but this is not the case, for the reasons explained by Dal Pont at [5.42] - [5.43]; see Re Power's Bills of Costs [1996] 2 Qd R 202 at 204. 20The costs assessor's reasons in relation to the challenge to retainer are set out at paragraph 27 as follows: "27. This is a matter where there is significant factual dispute but in line with recent authorities I have done the best I can to decide the issues before me concerning costs. In doing so I have relied mostly on the objective material placed before me by both parties. I consider that there is an element of truth in the Costs Respondent's argument that she did not want the Costs Applicant's extensive involvement in the matter but also I have accepted that she has accepted the involvement of the Costs Applicant to the extent that I have allowed. I am sure that at the time of that involvement she was grateful for the work and tacitly approved the same being done. To the extent that any work was helping out Junior Counsel (his Wife) I believe I have made sufficient reduced to cover any such item. Generally however my conclusion is that the Costs Respondent's summary of the competency or otherwise of Junior Counsel and her reliance on her Husband was grossly exaggerated by the Costs Respondent, that it was authorised by the Costs Respondent, and that it was reasonable to have the assistance of the Costs Applicant in relation to the attempt to put an arguable case and certainly a case that was sufficiently strong to extract a reasonable offer at the Mediation." 21There are two sets of costs before the costs assessor. The first relates to costs for the period up to 21 September 2011 and is governed by the fee agreement dated 24 May 2011. The second relates to the period during which the solicitor refused to be a party to any costs agreement and a costs agreement was made directly between the plaintiff and first defendant, of an oral nature, and for which a Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 claim is made. The terms of the second agreement were, with this sole change, the same; the same rates were charged, and on the same "no win no fee" basis. 22The costs assessor has set out at paragraph 14 the following: "14. It is common ground that in relation to the work set out in the account of 29th May 2012 there is no Costs Agreement. The Cost Applicant relies on restitution and has quoted Pavey & Matthews Pty Limited -v- Paul [sic] 162 CLR 221. He relies on the fact that he did the work and (paraphrased) having the benefit of that work the Costs Respondent is obliged to pay a reasonable amount for the same." 23Paragraph 15 of the costs assessor's reasons, set out above, summarises the same arguments that the plaintiff puts before me today. The costs assessor (at paragraph 16) found there was a retainer for the work that he had allowed and that that work fell within the limits of the retainer by the client. 24I am satisfied that the costs assessor did not make an error of law in so holding. This ground must fail. (c) The "no win no fee" nature of the agreement 25Paragraph 25 of the costs assessor's reasons provides: "I am satisfied that there was a verbal agreement that the payment of the costs would be deferred until a settlement or judicial determination in favour of the Costs Respondent subject to payment of interest. There was no agreement, as there perhaps should have been, that the costs would become payable if the Costs Respondent failed to accept a reasonable offer of settlement or accept the Costs Applicant's advice. In the circumstances, whilst I have determined that I should assess the costs concerned, I note that it may be a matter for an application to a Court to stay enforcement of any Certificate should the matter not have been resolved. I am not in a position to either make such an Order nor do I have information about the stage that the proceedings have reached." 26The relevant provisions of the costs agreement are as follows: "... My 'standard form' fee disclosure follows, modified to accommodate your client's straitened financial circumstances. ... I understand that your client does not, and will not, have the financial capacity to pay my fees unless and until the matter is resolved, by settlement or judicial determination, in her favour. In that circumstance I will defer any claim for payment until such a resolution is achieved. Nonetheless I will charge interest at the rate prescribed under the Uniform Civil Procedure Rules from the date of rendering my services until ultimate payment." 27The submissions of the first defendant on this issue, set out in the affirmation of the first defendant, are as follows: "(v) in so far as that agreement contained a term that, in light of the plaintiff's limited financial capacity (as I understood it), I would defer any claim for payment of my fees until the matter (being her dispute with Dr Schwartz) was resolved by settlement or judicial determination, that term: - amounted to a waiver of my entitlement to be paid within 30 days which, being unsupported by consideration, could be withdrawn by me at any time on reasonable notice; and - in any event, the term was subject to an implied term that in the event that the plaintiff rejected a reasonable offer of settlement against advice, it would cease to be of any force or effect, such an implied term being: - reasonable and equitable; - necessary to give business efficacy to the contract; - so obvious that "it goes without saying"; - capable of clear expression; and - not in contradiction of any express term of the contract so as to satisfy the tests restated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings [sic] 180 CLR 266 at 283." 28BP Refinery (Westernport) Pty Ltd v Hastings Shire [1977] UKPCHCA 1; (1994) 180 CLR 266 at [40] provides: "40. Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." 29The costs assessor considered, and I agree, that the fact that the costs agreement was "no win no fee" did not prevent the memorandum of costs being assessed, but that the nature of the agreement was such that the plaintiff could, independently of any challenge to the costs assessment, bring an application for a stay. 30The plaintiff refused to accept advice from the first defendant and then terminated his services, following which he rendered a bill. However, as the costs assessor noted, neither the written costs agreement nor the subsequent oral continuation of that agreement contained a provision that the first defendant could terminate the retainer if, for example, the plaintiff failed to accept advice or terminated the agreement: cf Ireland v Trilby Misso Lawyers [2011] QSC 127 at [9]. 31The first defendant submits that a term should be implied to this effect. However, the costs agreement should be interpreted by reference to its terms, and by reference to an explicitly objective approach. The aim of construction is not to ascertain the subjective intention of the parties, but rather to determine what a reasonable person in the situation of the parties would have intended or assumed: Legal Services Board v Forster [2011] VSC 292 at [27], citing Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165. A term will not be implied into an agreement where that term contradicts an express term: BP Refinery, supra, at 283; Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 at 490-492. The terms of this costs agreement specifically provide, as the costs assessor notes at paragraph 25, that the payment of costs would be deferred until a settlement or judicial determination in favour of the plaintiff occurred. The costs assessor had no information about the status of the proceedings, and accordingly assessed the costs but noted the entitlement of the plaintiff to seek such an order in the event that the proceedings had not been terminated in her favour by the time that the costs were assessed. It is agreed between the parties that the proceedings the subject of this costs assessment are listed for hearing later this year. 32The plaintiff's summons seeks, in addition or alternative to her appeal under s 384, an application for a stay (see paragraph (f) in the amended summons) in addition to the orders she seeks. It was open to the costs assessor to make such an order under s 386(1), and it is certainly open to the Court to do so in circumstances such as the present. 33While I have some sympathy for the first defendant's position, the failure to include provisions about early termination of the agreement due to failure to take advice is fatal. Until the proceedings have not only been finalised, but finalised in the plaintiff's favour, the first defendant is not entitled to enforce the assessed costs. The cross summons 34The cross summons filed on 13 November 2013 seeks orders as follows: (1)An order that the second cross defendant re-determine the cross claimant's application to have the costs the subject of his bill of costs dated 11 September 2011 assessed. (2)An order that the order made on 11 July 2013 by the second cross defendant that the cross claimant pay $1748.54 to the Manager Costs Assessment be set aside. (3)Costs. 35The basis upon which those orders are sought are as follows: "(i) it is beyond dispute that Mr Potkonyak acted as the solicitor for the plaintiff throughout the period to which the first bill of costs related (20 May 2011-14 September 2011); (ii) Mr Potkonyak was so acting as an agent for a disclosed principal, namely the plaintiff; (iii) it is trite law that any contract made by an agent on behalf of his principal within the scope of his authority is a contract directly between the principal and the third party: see, for example, Scott v Davis 204 CLR 333 per Gummow J at [228]; (iv) the fees agreement which Mr Potkonyak made with me on i4 May 2011 was one made by him as agent for the plaintiff within the scope of his authority as such and was therefore a contract between me and the plaintiff under which she is liable to pay the fees properly payable to me" 36The first defendant faces the same difficulties, in relation to this memorandum of fees, that he faced in relation to the costs which were assessed, namely the "no win no fee" agreement does not permit the first defendant to claim his costs until the plaintiff obtains a settlement or judicial determination in her favour. 37In those circumstances, the argument about the interaction of common law agency principles and the provisions of the Act concerning clients and non-parties, which was adverted to only briefly in submissions before me, is not an argument requiring any further determination. It may be, depending upon the terms of any settlement obtained by the plaintiff, that the first defendant may prefer to seek payment of his costs from the solicitor with whom he entered into the costs agreement. As the subject matter of the claim appears to be claims arising out of promises made in relation to the existence of a de facto relationship of comparatively brief duration, the range of damages to be awarded is difficult to determine. 38The plaintiff is entitled to a stay of any and all costs of the first defendant until such time as she has obtained a settlement or judicial determination in her favour, and I propose not to make any further orders in relation to the cross summons until that event occurs. Costs 39While the plaintiff's costs appeal has failed, she has been successful in relation to her application for a stay. Further applications, including any application for the lifting of the stay, which is made until further order, are necessary. In those circumstances, I propose to reserve the question of costs. Orders (1)Until further order of the court, the stay sought by the plaintiff in paragraph 4(f) of the summons is granted. (2)Costs reserved, with liberty to apply after conclusion of the proceedings the subject of the costs assessment. (3)Liberty to the parties to apply for the stay to be lifted after conclusion of the proceedings the subject of the costs assessment; these proceedings to remain in the Inactive List with a review date to be allocated by the Registrar. (4)Summons otherwise dismissed. (5)Cross-claim dismissed. (6)Defendant/Cross-Claimant's Notice of Motion dismissed. ********** 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: 08 April 2014